To investor conference call. At this time, I would like to have our forward-looking statement read. The remarks made at this conference may include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of invoking those safe harbor provisions. Forward-looking statements involve significant risks and uncertainties and are based on assumptions that may or may not occur. They are often identifiable by use of words believe, expect, intend, anticipate, estimate, project, plan, or similar expressions. Our ability to predict results or the actual effect of our plans and strategies is inherently uncertain, and actual results may differ from those predicted. For further details on the risk and uncertainties that could impact our financial condition and results of operation, please consult the forward-looking statements, declarations and risk factors we have included in our reports to the SEC. These risks and uncertainties should be considered in evaluating forward-looking statements. We do not undertake any obligation to update any forward-looking statement in the future. Now I'll turn the call over to Chairman and CEO, Mr. F. Morgan Gasior. Thank you. Well, at this time, all filings are complete for the second quarter. I'd like to note that we updated our investor presentation, and that is also on the website for anyone who's interested in taking a look. Just a short note on July so far. We're off to a good solid month. The loan portfolio grew a little bit. We also put some money to work in securities again, as we did in the second quarter, and the CFO will talk a little bit about that, along with some further margin expansion. Other than that, we're ready for questions. Thank you, sir. To ask a question, you'll need to press star one one on your phone. Please stand by as we compile the Q&A roster. Our first question will come from Manuel Navas of D.A. Davidson & Co. Your line is open. Hey, good morning. Good morning. Hey, growth was pretty strong. I just wanted to get a little more color on the different loan segments that drove it, especially multifamily had some nice origination in there. Just kind of thoughts going into the second half of the year. Sure. Yes, we had pretty good contributions across the board in loan portfolio in second quarter. Multifamily certainly very strong both in the Chicago market and in our other markets. Those pipelines continue into third quarter. Right now we're working through the usual underwriting processes, which take a little bit longer than they used to between appraisal and title and environmental and things. We have good pipelines going into the third quarter for our multifamily. Even we saw some commercial real estate transactions that we liked here in the Chicago market, and we have a couple now in the pipeline we like as much for third quarter. I would say overall, we like what we saw in multifamily and we see a good pipeline going into third quarter. Equipment finance also did well. We had some catch up from first quarter that we were able to get done in second quarter. Second quarter was a bit of a barbell. We had a really good April, and then things were quieter in May, and then June turned out to be very strong. That worked out well across the board. Again, we had good contributions from government in the second quarter, middle market in the second quarter, small ticket in the second quarter. Our corporate department has been lagging now, and we added some new leadership in the equipment finance corporate at the very end of second quarter. We recently added another, a very experienced, corporate equipment finance banker here just in the last week or so. We're hoping to see some stronger contributions, from corporate in the second half of the year, and I'll talk a little bit about that in a minute. Commercial finance also, contributed. We had some pay downs in the healthcare portfolio. Otherwise, we would have probably seen even stronger results for the second quarter. We're seeing healthcare still be a bit volatile, but they're up again this month. We think as time goes on and liquidity continues to diminish, then we'll see some stronger contributions in healthcare. This time of the year in healthcare, especially in the residential healthcare portfolio, their censuses typically are a little lighter. They typically have a stronger season in the colder months for you know obvious reasons. Their draw activity is a little bit lighter in the summertime compared to the winter. The fact that we're seeing a little bit of draw activity now is potentially a good sign. Going forward on those pipelines, I would say generally, our goal is for third quarter, we'd like to see if we get the loan portfolio to $1.175 billion. We have a heavy payment schedule in equipment finance, particularly in government, just in third quarter. It's the fiscal year-end for the federal government. We typically see scheduled payments in that quarter higher than the average for the remaining quarters. On a growth basis, we'd like to see the loan portfolio push north of $1.2 billion. If we were at $1.215 billion, in other words, another $40 million over and above third quarter, we'd like that. If the corporate department and commercial finance continue to grow their pipelines, I could see us pushing north of that. $1.215 billion-$1.225 billion, we'd consider that a pretty good year. Anything north of that would be, you know, a great year for us. The mix, I would say, will be relatively consistent. Third quarter, you'll see more contribution from real estate. Fourth quarter, I'd see it shifting a little bit to equipment finance and commercial finance. Part of it, we'll have to see what the rate environment is for multifamily in the fourth quarter. Obviously, rates have come down in the middle part of the curve. That may result in fewer customers wanting to jump into a rate now. They may think rates are going to retrace a bit, and they want to wait on a refinance. That could have a chilling effect on real estate. Net-net, if we could get to $1.175 billion at the end of third quarter and north of $1.2 billion, $1.215 billion at the end of fourth quarter or better, that would be good momentum to carry into 2023. That's really helpful. That's actually interesting that you're still so strong into the fourth quarter. Is there any feelings of caution starting to creep in with higher rates? Or just you're seeing the pipelines there, so there's some confidence. About 75% of the activity, maybe even a little higher, in the second quarter were refinances. People trying to lock in a good rate, especially when they saw the middle part, you know, the 5- and 10-year part of the curve move up so substantially. We're seeing about the same thing coming into third quarter. You know, still 60%, 65%, 70% refinances. That's why I said I could see some people, you know, in fourth quarter, if rates were to continue to retrace downward, you could see some people who wanted to wait and see. Maybe rates will be lower in the early part of the year. I'll just wait and see what happens. That's why I. A little bit of caution as far as volumes are concerned in real estate because it's still very rate driven. We also know that our competitors, particularly Freddie Mac, you know, continue to get aggressive on rates from time to time to hit their volumes. All in all, we had a good second quarter. We have reasonable pipelines going into third quarter. I think fourth quarter would not surprise me to see that the volumes drop down a little bit, but you never know. We've got good marketing outreach going on. People might look at the rate environment and say, this is a good place to lock in, even if I could get 25 basis points less someday. You know, the upside, the ability to lock in now and protect against a significant move up in rates, in 2023 or late 2022, might get them off the middle ground and get them into a refinance. Purchases, you know, the properties are still at or near all-time highs. We have seen some properties not appraise out like people thought they would. There is some, I think, topping of that, even though rents continue to increase, so do the expenses, particularly taxes. All told on real estate, we're having a good run. If rates, you know, head north of 3%, I think that gives us some room to work the refinance market, in the 5- and 10-year tenors. Then we've got the products and the outreach to capitalize on that if that happens. If rates are in the mid-twos, then I think you might see some people that remain on the sideline. Can you give a little bit of early guidance on some of that NIM expansion you're seeing already here in July? You've previously talked about a gain of $1 million-$1.5 million in NII per 50 basis points hike. Does that still hold? Just kind of your thoughts on the near-term NIM. Manuel, actually, it's expanded now. With the recent 75 basis point hike, our annualized net interest margin grew by about $2.5 million. It really depends on where the industry goes with deposit pricing. We've made some tweaks in terms of our deposit pricing but not really moved much, and the industry seems to be in the same place right now. If that continues, then I could see, let's say, the next rate hike, if it's 50 basis points, should probably expand the net interest margin. I would imagine another couple of $1 million. We started the quarter at a net interest margin of 3.30%, and as of the end of July, we're at 3.50%. With the loan growth we're talking about, and again, the deposit cost being the wild card, our goal would be to see if we can stabilize net interest margin consistently, you know, right around 3.75%. If we can, even in a rising rate environment on the deposit costs. If we can, that just gives us some solid growth opportunity, one, as we continue to put excess cash to work in loans. Late next year, as we see the securities portfolio mature, we'll be able to redeploy those proceeds in substantially higher yields. Again, we see an ability to support that. A broad range of, you know, 3.50% on the low side. I think we'd have to have a really optimum mix and almost no growth in deposit interest expense to get to 4%. If we can do right around 3.70%-3.75%, we're pretty happy over the next 6-12 months. Just to be clear, you said you're at 3.50% here in July with minimal deposit increases. That doesn't yet include the 75 basis points in July priced in, correct? There should be another bump, and then get to 3.70%-3.75%. No. The 3.50% was adjusted for the increase in July. Okay. Got it. All right. That's helpful. Yeah. the running 3.70%-3.75% if there's a couple more. Yeah. Yeah. That's how we see it. Okay. That's really helpful. I'll step back now. I appreciate the responses. Thank you. As a reminder to ask a question, please press star one one on your telephone. One moment for our next question. Our next question comes from Jaime Garza. Your line is open. Yes. Thank you. Jaime Garza, private investor. Congrats on the strong quarter. I think you addressed some of my questions. I was unable to join last quarter, but I heard the replay, and I think you had mentioned that part of the liquidity that you had kept at the Fed was based on your, you know, the projection that rates were going to go up, so you didn't want to lock it in. It appears you did take some of that liquidity and put it into Treasuries. I suspect they're more short-term. The goals that you just mentioned, is that also considering rebalancing some of the portfolio as we kind of get into an environment where we might not see more moves in locking in some longer rates? Then I suspect your betas. I thought you did great on, like most of the other banks that I've analyzed on, the betas are certainly right now not showing large increases. The question would be really around, are you planning on continuing to take some of that liquidity and going a little longer on the investment portfolio given the goals you've already stated for the loan portfolio? Well, certainly we saw an opportunity to put liquidity to work in the securities in second quarter and now again in third quarter. In second quarter, we put just under $30 million to work, with about a 2-year average life at an average yield of around 3.30%. Then in July, we put a little over $20 million to work, at about 3.20% with about a 12- to 13-month term. At the moment, I would say if we see, you know, shorter tenor yields climb back north of 3%, that starts looking a little attractive. We've also balanced out our maturities, pretty much month by month all the way out to 2024, 2025. When we were looking at July, we saw an opportunity to put something to work, relatively short term, and we took it. We'll just have to watch and see how rates are. It's somewhat unusual to see this level of inflation, apparently aggressive Fed, quantitative tightening and rates coming down. Usually, those combinations don't necessarily happen at the same time. They may continue, but they may retrace. We'll watch and see. As far as extending out duration, we think that our first priority, our first preference would be to do so in the equipment finance portfolio, both on the government side and on the corporate side. The benefits of doing so, one, we're just getting a higher overall yield on the assets compared to Treasury. Two, those credits amortize. You can push the duration out a bit, but you're still getting cash back over time. If the rate environment continues to increase, then you can take advantage of those cash flows. Also managing liquidity from a deposit and a balance sheet perspective at the same time. If rates were to drop, well, then we got the benefit of some extended duration. We also did so in what I would call a credit sensitive way. If we're putting the duration extension risk in government and in an investment-grade corporate, then we're accepting a certain amount of interest rate risk, but we're not really giving up anything on the credit risk to speak of. Recently, we worked with one of our customers on a state transaction. They want to go out a little bit further than the normal two or three years. It's essential use assets, long duration agreements. We feel comfortable with that, even with a certain amount of additional non-appropriations risk. Those that particular transaction is on a monthly payment. We can go out a little bit further. We're still getting the cash back over a reasonable period of time, kind of the best of both worlds from a credit risk and an asset liability risk perspective, and picks up a little bit of earnings over and above the treasuries at the same time. Yeah. Thank you. Just as a follow-up to that, I mean, I certainly can see the yields on C&I and CRE go up from the prior quarter. Now, are you I suspect there's a mix of fixed and floating there. Because if it was mostly floating, I would have expected a little higher unless credit spreads changed. Is your index that's floating still pretty much prime, or do you have any SOFR exposure? Right now, we're all indexed to prime. Okay. Customers understand it. It makes it simple from a controls perspective. Totally agree. Okay. Thank you. Thank you. One moment for our next question. Our next question will come from Brian Martin of Janney Montgomery Scott. Your line is open. Hey, good morning, guys. Good morning. Good morning, Brian. Hey, just Morgan or maybe Paul, just going back to the margin for just one moment. The 75 that we just got in July, that it sounds like the number Morgan mentioned, the 3.50% margin, that's fully baked in with that. Is that right on the 75 basis points, the 3.50% margin is kind of fully baked in there? Yeah. The annualized 3.50% margin took into consideration the Fed rate hike in July. Okay, and June. Your comments about just kind of the next potential increase, if you got a 50 basis point increase, maybe I missed what you said there as far as what the add to margin prospectively on the next 50 basis points would do. I think conservatively $2 million, maybe a little higher, but that's considering no adjustments or minimal adjustments to deposits. That $2 million would be the benefit with basically no beta on there, no deposit beta. Minimal deposit beta, yeah. Okay. Of course. Okay. Go ahead. I'm sorry. Of course, the extent we're able to put some cash back to work in loans, then we'll see some further expansion on top of that, just taking it out of the cash account. Again, we're seeing a reasonably good mix so far in July. Our yield on originations for July was approximately 5.6%. That was, you know, a reasonable mix of assets. We have some decent opportunities right now in commercial finance, and we're repricing the middle market portfolio up a bit. You know, 5.6% was a good number for us. If we're able to roll assets, you know, and pick up a couple hundred points at least from cash into loans, then that'll add a further contribution for third quarter and then going into fourth quarter. Gotcha. Okay. As far as the investments, you guys upped the investments this quarter. I think you said year-to-date, you know, quarter-to-date, you've done a little bit more. Can you just give a little color on what. I guess, are you kind of done with giving the outlook for loan growth. I guess, is there much more to do from the investment standpoint, or, you know, how are you thinking about that going forward. Well, in terms of volume, as I said, if we see opportunities to get into the you know mid-threes, 3.25 or better in a relatively short duration basis, that starts looking a little attractive. You know, just pushing it forward, I probably would see the securities portfolio maybe getting to $200 million, you know, maybe not quite much more than that. If again that opportunity presented itself between now and year-end, we would certainly take a hard look at it. I would say probably $200 million on the high end is what we think about right now. Obviously, if loan growth slows down and, you know, particularly, say, in the real estate portfolio, and those yields are still available in the, you know, mid-threes in the securities side, again, we would not necessarily rule that out. But as far as July activity, Paul, why don't you pick that up? Yeah, we saw spreads move out on the agency side. We did about $23 million in July, of which $13 million was Treasuries and $10 million were agencies. As Morgan mentioned, we got a weighted average yield on that of 3.20%-3.25%, right in that range. Gotcha. Okay. That's helpful. In the loan growth, and I guess, Morgan, your comments about kind of where you think things trending, at least where you'd like to be by year-end, I guess it sounds like those are doable even with kind of the real estate maybe not being great. Is that fair? I guess, Is that kind of couched that, you know, maybe it's a little bit less if that real estate doesn't- I think real estate will help us push to $1.175 billion in the third quarter, and then it's just hard to forecast it going forward. We'll certainly see activity, but it's hard to say how much right now. Obviously if rates retrace, you could potentially see some prepayments. Yeah. Right now, the prepayments we're seeing are almost exclusively sales of buildings. You know, people just realize harvesting profits and moving on. I think the $1.215 billion will largely be equipment finance and commercial finance with some support from real estate. I think that's how we probably get there, especially if our corporate side can contribute in the second half, more strongly than it did in the first half. If that takes hold, especially if you also get a little help from government in the fourth quarter, like we have before. I think all those things are feasible. That's why we're not necessarily saying we're gonna have, you know, $60 million or $70 million of growth per quarter because we don't know that real estate is sustainable at the level it was in second quarter. It still should contribute. We've added some banker support in a new market here recently both in Chicago and another market in the Carolinas. We will continue to see some support from it, probably just not at the pace we saw in the second quarter. Like I said, if we get to $1.175 billion at the end of third quarter, $1.215 billion or better at the end of the fourth quarter, we'd feel like we had a pretty good 2022, and it'd set it up well for 2023. Gotcha. Morgan, the people you hired, can you just give a little background on what areas you added people to? It sounds like a couple people may be added this quarter. Yep. We added leadership in equipment finance corporate and a strong banker in that department as well. Somebody we've known for a while working for actually a customer of ours, a lessor. They actually worked for a competitor of ours most recently. We've got some much greater strength than we've had in corporate equipment finance, and we're looking forward to getting out there and pushing that originations rate up from what it's been over the last 6-12 months. We added some strength in the multifamily space both here in Chicago and in the Carolinas. That gives us some opportunities to penetrate some markets in the western suburbs that we wanna do some more work in out in the DuPage, Kane, Kendall County areas. A lot of our product out there, and now we have somebody who's very accustomed to working in those markets. Kind of rounds us out in Chicago a little bit too. With those, we like, you know, like the markets we're in, we like the people we added, and then we'll go from there. We were looking to expand commercial finance a little bit too, but we haven't put anybody on board yet. I think that will likely be a fourth quarter move to strengthen us further in 2023. We're seeing, you know, some pipeline opportunities. I wouldn't say they're done deals yet in commercial finance, and also in government finance. If the leadership there can bring those in and we get some momentum, it'll be time to add some depth to those departments and build on that. Gotcha. Okay. No, that's helpful. It sounds like some good opportunities there. Just the, maybe the last two for me was just on the expense side with some of the people you've hired, any change in the expense kind of outlook just in general for, you know, the next couple quarters or into next year? Well, on the compensation side, you know, we continue to work through performance reviews, so, you know, there will be some people remaining and some people not. We'll also have to put some money away for incentive payments as loan production continues. So there'll be a little volatility there, but I don't think it would materially take us off of track on expenses. We will put some more money into marketing, given the markets and the opportunity we have. We have to continue to broaden the awareness and the product awareness out there, especially in the newer markets. I think expenses should generally remain, you know, within a range of what we've talked about before. On the occupancy side, we will continue to refine the footprint. We opened up our Flossmoor office here in July. That office is one quarter of the size of the Hazel Crest office. We're seeing some good adoption by the Hazel Crest customers, and I think there may be an opportunity to continue to reduce the square footage for customer service and then keep customers really happy with it. We're off to a good start there. It's early, but we're off to a good start there. Rudy's worked hard to get that to that point. If we can continue to evolve that, then hopefully we see our occupancy expenses trend down a bit and then remain at that lower level. Gotcha. Okay. No, that's helpful. Still pretty similar to being kind of flat for the year and then up in 2023 and then just maybe the kind of the outlook, given the growth you're expecting by, you know, maybe more on the equipment finance side, maybe just talk about kind of how to think about the reserve levels, as we go forward. I mean, credit looks great, so it just appears to be funding really, you know, provisioning really for new growth, which maybe is in the, you know, more commercial-oriented areas. Yep. Well, before we leave expenses, probably the one note is we may see a little bit of expense on the compensation side due to deposits. We're running thin in some of the branch facilities just because of labor markets generally. We're making it work, but we have a couple holes that we'd like to fill, especially on the sales side in the branch operations that relate to businesses. One of our key goals is to keep growing the commercial deposit accounts and our business finance, community finance products with the small businesses. I could see a little bit there, but again, it won't take us materially off of our track. We wanna add some strength to that function and continue to grow the lower cost commercial deposits. As far as provisions are concerned, if the mix, especially in, say, fourth quarter leans towards corporate investment grade to government. You're gonna get a lower provision rate out of those, especially if the growth is material. To some degree, middle market and small ticket are higher reserves. Net-net, you know, if you saw that we did something like 63, 64 points in second quarter, without a real estate component, that might still be 65, 70, 75 because of the weighting between government, corporate, middle market, and small ticket. It'll just be relative. But the dollars in government and corporate would be larger, therefore, it would skew to a little bit lower provision. Now, if you add some strength in commercial finance and healthcare and government finance, then that might skew it up into the 75, 80, 85 range. But if I had to say net-net, I'd probably say 70 basis points seems like a good place. Might be in the lower 60s, might be in the higher 70s, but somewhere in that 65-70 range seems like a safe place to forecast. Gotcha. Okay. No change to your, you know, I guess, the outlook, Morgan, as far as kind of where you think the EPS kinda ramp up to or kind of how you're thinking about that or the profitability, I guess, just in general. Well, first of all, I think we're in a position now where our goal for third quarter and fourth quarter is to sustain, you know, right around $0.23-$0.26 a share. Try to hit that $1.00 per share for third quarter and fourth quarter. Building into next year, the goal would shift to getting into the thirties, somewhere between $0.30 and $0.34. That would require a couple things. That would require, you know, continued loan growth, maybe not quite as fast as we've been doing, you know, in the second quarter and 2022 overall. Some help, probably a little bit of mix, more towards the commercial finance side. A little bit of help on non-interest income. Obviously, deposit interest expense is gonna be the wild card there. Right now, if we can stabilize $0.23-$0.25 a share, third quarter, fourth quarter, right into that $1 a share, then move into over $1 a share, maybe somewhere between $1, $1.10, $1.20 on the outside. Those are the next steps ahead. Gotcha. Okay. Just the buyback. I think you guys recently made a little change to that, but just still a pretty modest outlook as far as what you do on the share repurchase front. Well, fortunately, we have more flexibility from the regulatory side than we did in the first part of the year. The board was comfortable with increasing the overall level of the buyback. I will also say that, you know, given where we're trading as a discount to book, I would think it would be predictable to see us get more aggressive here even in the third quarter and, you know, get that share count down to 13 million, for example, because of where we're trading. Obviously, if we start trading higher, that ratably might come down a little bit. Where we're at right now, it seems like a reasonably good time to take advantage of where the market's at in that context and be more aggressive. Would we get all the way to 225,000 shares in one quarter? Probably not. We can only buy a certain amount of shares per day, and we've been having relatively light trading volumes. Under that math, you know, I'd say 150,000 shares, 175,000 seems reasonable for the third quarter. If a block shows up, maybe a little bit more. Then we'll take another look at it in at the end of the quarter. Then the board will make another decision. Again, we'll have some more resources available for this. We'll take it a quarter at a time. This seems like given the resources available to us and fewer constraints on the regulatory side, seems like a good time to jump in and get some shares. Yeah. No, it makes a lot of sense, especially with the outlook here, where you're at today. A lot of good things happening. Okay. I appreciate the update and congrats on a nice quarter, guys. Thank you. Appreciate your interest. Thank you. One moment for our next question. Our next question is coming up. Next, we have Ross Haberman of RLH Investments. Your line is open. Morning, Morgan. How are you? Good, Ross. How have you been? I just have one quick question. I applaud you with those earnings aspirations. The allowance, could you touch upon that? They look superficially low at 60-some-odd basis points in aggregate. Tell me why you believe it's conservative and/or you and like everyone else, I guess, are gonna adopt the CECL the first quarter of 2023. Tell us why you don't think you're gonna shock us with a multi-million-dollar adjustment based on CECL and what you're currently reserving for commercial real estate loans. Thanks. Thank you. Okay. Well, let's work through that. First, if you look at the composition of the loan portfolio as a whole, 97.6% is commercial and a very small proportion is residential. Within the commercial portfolio, we do not have construction loans. Compare us to peers, where the construction loan portfolios are reserved, or at least they should be reserved, you know, well in excess of 100 points. That's a key distinction. You know, by contrast, we have $200 million in equipment finance to governments, whether it's the federal government or state or local governments, but that is a pretty low-risk portfolio. Add another $75 million for equipment finance, investment-grade corporate. Add another $70 million for corporate others, so double B-rated credits. You have a very strong equipment finance portfolio that does not require very much in the way of reserves. That's historically been borne out by the loss ratios over quite a period of time. In the Great Recession, that portfolio has traditionally performed very well. If you look at the multifamily portfolio, the weighted average debt service on the multifamily portfolio is 1.8 with a 52% loan-to-value ratio as of 6/30. Again, over many years, that multifamily portfolio, and particularly the A notes, have performed extremely well. That number is somewhere in the neighborhood of $400 million. You quickly get to the point where you've got a very strong loan portfolio within the commercial side. The balances are, you know, insignificant at the moment, but in the healthcare portfolio, that's, you know, $25-$30 million in balances. Those are monitored credits with field audit, borrowing base certificates. Those are government, Medicaid, Medicare driven pay receivables. What we've tried to do across the board is build the strongest loan portfolio we can do that is still consistent with accepting enough risk to drive our financial results, but no more risk than we need to. That's how we. We've never had a problem supporting the reserve at these levels. If anything, it's harder to support it at higher levels. Now, as time goes on, we do more of the medium risk assets, the middle market, small ticket equipment finance, commercial finance, government finance, even the small business credits in the community finance area. You'll see that reserve ratio trend up over time. That's why we said earlier we might see, you know, 75, 80 points, something like that, through the mix of the portfolio. The results have, you know, the loss ratio results have supported themselves over many years. Even if you compare us to some local peers, you see a, you know, large company in the $50 billion range have a very similar reserve. I might argue their risk profile is a little more aggressive than ours. You know, it's not unusual, it's not completely unknown to see it. As far as CECL is concerned, you know, it's a little early to be talking about that, but the preliminary thinking we have right now is the loan portfolio is very short duration. The equipment finance portfolio is short duration. The C&I portfolio is short duration. Even when you apply a reasonable prepayment ratio to the multifamily portfolio, that turns out to be a reasonably short duration. Just look what happened to us in 2019 and 2020 in terms of prepayments to support that point. We think at the end of the day, the CECL impact is likely to be modest, and especially if the duration of the portfolio continues to shorten. It will, as we do more and more variable rate floating, you know, lines of credit as opposed to fixed term assets in the multifamily portfolio. Finally, to your question on commercial real estate, I think that Paul, that reserve ratio is something a little bit over 100, something like that. For the CRE, both the non-residential and multifamily taken together, it is under 100 basis points because of what you mentioned with the A notes on the multifamily side. Right. If it's just CRE, I think we're over 100 points on CRE or close to it. That piece of the portfolio is like 93-95. To your question, Ross, the commercial real estate portfolio is probably right at or just under 100 points. Again, that's a pretty conservatively underwritten portfolio. You know, after everybody went through the Great Recession, we decided that multifamily was by far the better performing asset. To the extent we see customers and opportunities in Chicago with commercial real estate, with well underwritten properties, we'll certainly take advantage of it. That's why if multifamily is around, you know, 65-70 points on maybe even a little bit less on reserves, commercial real estate is proportionally higher in the 90s or just touching 100. Just one follow-up regarding the CECL. Are you running a parallel program today? I don't know if you can touch upon, are you close to what that hypothetical number would be today based on your parallel scenarios? Yes, we're starting to run a parallel, and no, we're not ready yet to talk about the differences yet. We're not far enough along in the testing. Okay. Thank you. The best of luck. I appreciate it. Thanks for your interest. Thank you. Again, to ask a question, please press star one one on your phone. One moment for our next question. We have a follow-up from Manuel Navas of D.A. Davidson & Co. Your line is open. Actually, most of my questions are answered, but I just wanted to, I guess, circle back up on the expense run rate. I think you gave some good color on some of the puts and takes and some of the new hires. You think you can stay in that $10 million ± $250,000 quarterly run rate range, even with potentially new hires. Yep. Yeah, we do. Okay. Yeah, we do. That was my only follow-up. I appreciate the time today. Thank you. Thank you. Thank you. Again, to ask a question or make a comment, please press star one one on your phone. One moment as we compile the Q&A roster. We also have a follow-up from Jaime Garza. Your line is open. Yes. Thank you. Just on the top of expenses again. You know, a metric that I look at actually at the bank level is revenue per FTE and expense per FTE. Certainly, with the growth in your revenue compared to like September 2021, for example, the growth, your revenue has exceeded the expense growth. You mentioned some of the things that you may do at the branches that may increase expenses. Is there any thought around using automation or some things to try to bring those expense levels down to help the overall efficiency ratio by also reducing expenses? Apart from what you mentioned, that was the occupancy. I'd say a few things. One, automation itself is not cost-free. You know, the software companies and the vendors have taken every opportunity they can to pass costs through, especially when they can justify it with inflation and other things. Right now, what we're trying to do in certain ways is get customers to use the existing automation we have. That we've seen some success. If you looked at our investor presentation, you know, 90% of the transactions we conduct are some form of electronic. That being said, we have a substantial number of customers that are extremely valuable core deposit customers that like to the branch environment. They need the branch environment. They're the most comfortable with it. We absolutely need to support those customers. Automation itself will not provide a tremendous benefit to expenses. In some ways, you're substituting people for automation, but the trade-off is not that substantial in terms of the bottom line. Having said that, what we're also gonna try to do is use technology and automation to expand the footprint of a given location. You know, traditionally the trade radius around a branch, depending on the density of the location of population and traffic, you know, it might be a mile in the city of Chicago, two miles, it might be broader in the suburbs. What we're going to try to do is use the automation to create a greater density of customers for the cost of a given location. Particularly so in the commercial space, where you could use remote deposit capture technology. You could put a better merchant processing product out to the customers. You could even use delivery services for inbound cash deposits or outbound negotiable instruments if they need that. All those things are possible that would extend the footprint of the branch for the same cost. If you can keep your occupancy costs coming down to the best of your ability and then leverage the staffing in that facility through technology and create a greater outreach and a greater density of customers and therefore a larger branch deposits and even a little bit of fee income per branch, that's probably how we're going to best deploy technology on the deposit side. On the credit side, there are some opportunities to add some automation, particularly in the smaller credit space. Right now I think we're taking advantage of it in the context we're working about as good as we can. We are putting in some additional automation in the credit processing area for a more efficient processing of new credit originations on the commercial side. Trying to do a better job of gathering information efficiently for loan reviews, which are a necessary component of portfolio management. Again, that technology has its own costs. You still need, you know, qualified people to review the results and make sure we're documenting the analyses properly. I'd say that's probably the more difficult challenge is leveraging technology appropriately. We have some opportunities to do so. Would it make a 5%-10% differential in the branch level expenses in the next, you know, 12-18 months? I would say probably not much more than that at this point. If we just work on the occupancy costs, that will probably be the bigger bang for the buck in the next 12-18 months. Okay. Thank you. Thank you. Again, to ask a question, please press star one one on your phone. Stand by as we compile the Q&A roster. I am seeing no further questions in the queue. I would now like to turn the conference back to Mr. F. Morgan Gasior for closing remarks. Well, we thank everyone for their excellent questions and interest in BankFinancial. We wish everyone a good remainder of the summer and early fall. We will keep pushing ahead. We look forward to talking to everyone at the next conference call. This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.