Good day, and thank you for standing by. Welcome to The First Bancshares, Inc. review of the Q2 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, please press star one one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Mr. Hoppy Cole. Please begin. Well, again, welcome and good afternoon, everyone. I'm Hoppy Cole, President and CEO of The First Bancshares, Inc. Gosh, we've got an awful lot of exciting news to talk about today. We threw an awful lot out yesterday. It was a culmination of a lot of work on the behalf of our team members. We've got a group today. I'd like to introduce who else will be joining us. Dede Lowery, our CFO, J.J. Fletcher, our Chief Lending Officer, George Noonan, our Chief Credit Officer, Leonard Moreland, the CEO of Heritage Southeast Bank, Brad Serff, Chief Banking Officer of Heritage Southeast Bank, and Chip Reeves, the CEO of Beach Bank. To begin today, I thought that we would start with an overview of the transaction announced yesterday after close of business between The First Bancshares, Inc. and Heritage Southeast Bancorporation, Inc. of a potential merger and the signing and executing of a definitive agreement. Leonard and I will give our thoughts a high level overview of the transaction and what that means for both groups of shareholders and really all our stakeholders. Then we transition to the quarterly results, and Dede will give us some financial highlights. J.J. will provide some color on loan production and pipelines. George Noonan will provide some information on the credit trends. Chip Reeves will give an update on the Beach Bank's quarter and where we stand in terms of integration and the transaction that we're getting ready to close tomorrow after close of business with Beach Bank. Then finally, Leonard Moreland will update us on Heritage Southeast quarter. We've got a lot to talk about, and let's go ahead and jump right in. We are absolutely thrilled about the transaction that was announced again after close of business yesterday between The First Bancshares and Heritage Southeast Bank. As some of you know, Heritage Southeast is headquartered in Jonesboro, Georgia, which is just south of Atlanta, but it's in the Atlanta MSA. They currently have $1.7 billion in assets and 23 branches in some of the most dynamic, robust growing markets, not only in the Southeast but in the country, in that Atlanta MSA, Savannah, Georgia, coastal Georgia down to St. Mary's, Southeastern Georgia, that complements our Southern Georgia footprint very well, and then finally, Jacksonville, Florida. Really, it's interesting. This transaction, in my mind, started really about oh, I guess almost a year and like January of 2021, Leonard Moreland, who is the CEO, and I met for an afternoon, casually. There was at the time, no pending transaction. We're beginning to get to know each other and talk about our companies and talk about our strategic visions. I think both of us came away, and Leonard, you can opine better in your comments, but I think both of us came away feeling that our companies share an awful lot in terms of being culturally aligned, how we approach business, the values of our companies, how we approach, you know, the communities that we serve, in terms of business models. We felt that we were very much culturally aligned. Then a transaction came up where Heritage Southeast entered into a definitive agreement with a credit union. You know, we were very disappointed that we were not able to continue our talks, but we stayed in touch over the last year and over the last 15 months or so. We were very excited when we heard that that transaction was terminated. In fact, there'd be a process put together to explore their strategic options and that they'd like us to participate. You know, really, the heavy lifting started, I guess, a few months ago, but really a lot of important parts of getting to know each other started, you know, well over 15 months ago. We're thrilled about that. I'd like to talk briefly about the strategic rationale. We feel strongly that this is consistent with our strategy of building a high-performing community bank franchise in the Southeast. Again, the overriding themes to our expansion strategy have been to seek markets where the overriding demographics were positive and income growths were positive This franchise is accretive to our composite build out in terms of population growth and income growth. They have a strong management team, and as you know, we've been fairly disciplined about growing our company geographically with intention that we don't jump very far in terms of markets that we don't know. We like to link them together geographically. We think it drives synergy. We also like to have strong management teams in place that understand those markets with a demonstrated ability not only at growth but also at risk management. Because as you know, we've been a high growth bank, and having folks that understand their markets and know what to do but know what not to do is critically important to achieving that growth strategy in a safe, sound manner. They are true community bankers just like we are. They're heavily invested in the communities they serve. They understand that our company will reflect the health of those communities. To the extent there are communities that lag, and you know, everyone's familiar with our CDFI mission and the markets, some of the markets they serve will be complementary to that mission. To the extent we can raise the standard of living in those markets, it only reflects positively on the value of our company. They're very invested in those markets and very invested in that strategy. From a management standpoint, we're very pleased that we attract a very strong management team in Georgia. On a composite basis, pro forma, the largest segment of our company will be in Georgia. Over 30% of our loans and deposits will be in the state of Georgia, and then 27% or 28%, I think, will be in Mississippi and about that same number in Florida. Georgia will be our largest partner, and with that amount of market share, obviously, we need a strong management infrastructure. Leonard Moreland, Brad Serff, Paul Herring, those guys bring and Kathy Zrieg bring exceptional executive leadership and management, and they bring a strong infrastructure for us to not only integrate this transaction, which will be critically important, retain the talent, but then understand the synergies that this combination brings together. They've got the ability to lever that and continue to grow the organization on a combined basis. One other strategic item that we're very pleased in, they have some platforms, some lending platforms, that we don't have. We talked about Beach's SBA platform, Beach Bank's SBA platform last quarter. In Tampa, they have an SBA lending group. Heritage Southeast also has an SBA lending group. We're excited about the synergies of putting those two groups together, the ability to generate SBA loans, not only in those metropolitan centers but, you know, being able to roll that out and leverage our market share across our footprint. They've also got a unique line of business, which was very interesting to us, in terms of and if you look at our deck, there's a slide in there about the cash surrender value life insurance business. We think strongly and believe strongly that that's a line of business that we can generate acceptable can be very profitable and generate high returns, but with very little risk associated with it. In addition to that, it's a diversification away from traditional CRE real estate-oriented lending. It gives us a little bit of a diversification, not only in terms of product line, but also in terms of geographic set. These loans are really a national platform. We're excited about those opportunities. Again, they have a wealth management business, which, you know, we've talked a great deal about our wealth management rollout in our private banking area. Those are lines of business, again, that we'll be able to not only achieve scale in order to generate non-spread related income in our wealth management business, but then lever that wealth management sector into the private banking format that we have, which is a product set that HSBI, Heritage Southeast has not had. They serve in markets that generate a lot of opportunities for that. Very complementary, not only in terms of culture, in terms of the markets that we serve, the management team, the strong management team that we'll get, but then also, we believe and we feel strongly that it creates a unique southeastern franchise. It creates a sub-$10 billion community bank in the southeastern U.S. with $8+ billion, essentially $8+ billion in assets. Pro forma, we have extremely high-performing companies. Again, if you take the two transactions together, they're very complementary of each other. The resulting company has, we believe, an ROA north of 1.3%, a return on tangible common of greater than 18%. The company remains well capitalized. Capital ratios, TCE approximately pro forma 7%, 9% leverage, and 17% total capital. Exposure to great markets, great management teams that can grow the franchise. Franchise, a unique franchise that creates significant, or it's a scarcity franchise that we're really not familiar with any other franchise in the southeast that sort of has those metrics, touches those markets, but yet has the sort of growth prospects that it has. It's well capitalized, so we have plenty of capital to deploy. The resulting loan-to-deposit ratio is still 60% or less. Substantial liquidity, again, to support the capacity, liquidity and capital to support organic growth opportunities that we think this franchise creates. This also is the most impactful transaction we've ever done in terms of earnings, particularly EPS accretion. When we think about earnings impact, balance sheet impact in really in terms of two ways. We look at it on a GAAP basis, but we also look at it on a core basis. You know, everyone knows right now, tangible book value multiples, fair value accounting, AOCI other comprehensive income marks are kind of all over the place. It's a very turbulent time given how quickly the interest rates have increased and the level to which they've increased. In thinking about that, if you look at the GAAP analysis, it has a high teens EPS accretion. It has a less than three-year earn back and has less than 8% day one tangible book value dilution. As a shareholder and you know, our board, our management team has a significant position in the company in terms of ownership, we really think about it in terms of core analysis. If you strip away the fair value marks and some of the accounting, for lack of a better word, I'll call it gymnastics, you know, on a core basis, the dilution is really 4%-5% day one tangible book value dilution. But still a 10%+ EPS accretion if you remove the recovery of the fair value marks and the earnings over time. The earn back stays roughly the same, still sub-three. Historically, that has been, those have been metrics that we've acquired or disciplined acquire around. Those metrics still work, and we think in this transaction are certainly very acceptable, particularly given the scarcity of the assets that we've acquired, the markets that they touch, and the management team that help support future organic growth. Based on those metrics and a very reasonable set of assumptions, we think there's a clear path, a very achievable path to a $4+ EPS once we get all our cost savings in. You know, that's a significant increase in terms of where we are today. We think the resulting company on some very reasonable multiples, this is a significant amount of upside in our stock. If you think about individually the transaction with HSB, HSBI is attractive to the franchise. But boy, if you take HSBI, Heritage Southeast Bank and Beach Bank together, what we have accomplished this year, we're extremely excited about. We will accumulate a $2.3 billion of assets centered in the Panhandle of Florida, building density in a market, in a fast-growing market that we already have significant market share. We'll open up the Central Florida market with an experienced management team that has great market knowledge and great contacts in the Tampa-St. Pete area, and then really all of Central Florida. The culmination of this, we open up Atlanta, Savannah, Jacksonville with again another extremely strong management team. $2.3 billion of assets in those markets at what we think are reasonable prices with good financial metrics, we're just really excited about all that this means for our company. Those are my thoughts, Leonard, sort of high level on the franchise, and I'd love to turn it over to you and get your insight. Thank you, Hoppy. I'm Leonard Moreland, the CEO of Heritage Southeast Bancorporation, Inc. and Heritage Southeast Bank. So pleased to be with you this afternoon. Give you a little bit of history of Heritage Southeast Bank for those of you that may not be familiar with us. Our bank came together three community banks in the state of Georgia and North Florida in the Q3 of 2019. Brad Serff, Brian Smith, and myself, we're the three CEOs of those banks. We came together for really one primary purpose, and that was to create better opportunities, better opportunities for our shareholders, better opportunities for our employees, and better opportunities for our customers. That was a huge success for us. We were able to create a balance sheet that allowed us to move up in priority lists with our larger customers and to offer a broader array of services to our medium and smaller customers. As we continued with the consolidation of our organization, we always kept an eye out for where are the opportunities to enhance shareholder value and create opportunities for the other two constituents, our customers and employees. Like Hoppy said, we met in January, and I can remember that day very well. After I left the meeting, I immediately called our chairman, Kenneth Lehman, and I said, I think I've found the right person for us to really boost our franchise and to accelerate the process that we were looking to accomplish. We did get sidetracked most of 2021 and earlier into this year with the credit union transaction. It was great to have Hoppy willing to come back to the table and talk with us and to put this deal together because this is who we are. We're community bankers serving people in our communities and serving our employees, and this just gives us an opportunity to continue that mission. Why do we really like the transaction? It increases the balance sheet for us. It gives us better opportunity. Now we can shift in the highly competitive high growth markets of Atlanta, Savannah, and Jacksonville from that number two or number three player in many of the larger customers' portfolios to number one and number two. That's a real opportunity for our bankers to expand and to grow deeper relationships with an existing very good, strong customer base. It also gives us an opportunity to expand our consumer line. We have a very large consumer base in South Georgia and in North Florida, some 50,000 plus customers in that market. With the array of products that the First brings to us, we'll be able to penetrate those households much better and to make them even more profitable for our company. It's important to us as bankers to be able to continue on the mission that we call our careers. The philosophy, the operating philosophy, the servant attitude of the First combines extremely well with our operating philosophy and the attitude that we approach our business with. We feel like it is a great cultural fit and very little disruption to our bank and the mission that we've been on for our entire careers. For our shareholders, it's a great opportunity. One of our goals with combining our three banks was to increase liquidity in the stock. Many of our shareholders have been investors for decades. As you know, community bank stock is somewhat illiquid. This gives some of our shareholders the opportunity as they move through life that they have the opportunity to add or subtract from their holdings. We think that's something that a shareholder deserves. You combine that along with a dividend that The First provides, that is something we have not been able to provide our shareholder base, because of our growth rate and the other areas that we have focused on the last few years. For our employees, it's great because there's no overlap of markets. Employee retention will be maxed here, and that's great for us, because these are loyal, long-term relationships that we've had with those employees, and we want to reward them with the same opportunities that our customers are receiving. It is just a win-win-win all the ways that you look at it, from top to bottom in our organization. We just think that it's gonna be a great organization that we'll be able to put together and continue to grow at a very rapid pace. I'd like to touch a little bit on what we feel like we bring to the table. Hoppy mentioned a couple of things like the SBA and cash value life insurance programs. We do have a vertically integrated SBA program that carries it all the way from the hunt and the booking, all the way through the maintenance and performance of the portfolio. We have a great relationship with SBA and USDA, and we feel like we'll be able to offer something to the combined company to help support those activities across the entire footprint. We also have the growth markets that I've mentioned and that Hoppy has mentioned. Our loan pipeline consistently exceeds $100 million. So far this year, through June, we've grown outstandings net $70 million. That just does not appear to be slowing even though we hear in the national economy of weaknesses starting to appear. We have a very large pool of funding base. About 36% of our deposits are non-interest bearing. That has always provided us a lot of stability in the changing rate environments, and it also produces a very high level of non-interest income, thanks to those many consumer households and large commercial base that we have. Most of all, we think we bring to the table a group of very strong seasoned bankers that know their markets, that have worked in our environment and our culture for a long time. Since those cultures align so well, we feel like they will thrive in the First environment as well. Just excited to be here and be a part of this transaction. I see just great things ahead for our company. Thank you, Hoppy. Thank you, Leonard. Again, real quick, in summary, you know, we're thrilled about the transaction. We think what this creates is a southeastern franchise with real scarcity value. It's a $8+ billion franchise with exposure to not only the best markets in the Southeast, but some of the best markets in the country. As you know, as most of you know, we're shareholders first. When we think about strategic moves, we think about strategic moves that only enhance our optionality. That's been part of the strategy since we started. It continues to be part of the strategy today. You look at this franchise, be it, you know, getting the attention of potential upstream partners, we think it creates more value in that regard, just about what I've talked about in terms of construct and structure of the franchise. The opportunity for continued organic growth that we have with established community banking teams across, again, some of the most dynamic, robust, fastest-growing markets in the country. Then finally, a company that has superior returns in terms of profitability, in terms of efficiency ratio, in terms of return on capital to its shareholders, in terms of dividend capacity, and that we continue to increase our dividend. This only creates more capacity to do that as we think about how we demonstrate, how we return, or how we provide returns to our shareholders. We're really excited about it. Again, we look forward to getting after it, and look forward to joining forces with all the team at Heritage Southeast, and then really with all their stakeholders. With that, I'd like to transition to the quarterly results. Hey, I'll be brief in my quarterly results. I know everybody's going to do. Strong quarter. Great improvement in terms of core profitability. Outstanding loan growth. You know, pretty good expense management. So, you know, really excited about the results for the quarter. Donna Lowery, if you'd like to give us a little more insight into that in terms of the financial highlights. Sure. Hoppy, thank you. A couple of things I'm gonna note, provided in the release, several of our one-time items we had this quarter, just to kind of start off and get that out of the way. The biggest piece of that was acquisition related charges and our charter change, some charges related to that. We kind of like to take those out and look at just core, like Hoppy mentioned, we like to focus on our operating income and what can we do core basis. Several numbers I'm going to give is just really core. Our net income, the operating core net income for the quarter increased 10% this time from $15 million up to $16.5 million. We increased $1.5 million or 10% in our core net income. Our operating return on assets increased for the quarter as well, 11 basis points up to 108. We're happy about being excited about several things this quarter. A lot of improving numbers for the quarter. One of the things you noticed in the couple of times we've talked over the past, I guess, two years now is all the excess liquidity. We actually had a decrease in our excess liquidity this quarter, so that's very exciting. So we actually were down about $400 million on average, and so that was put into work in the loan portfolio, as well as some in the securities portfolio. Then we had a small slight decrease in average deposits for the quarter. Loans, one of the things I wanna talk about, too, on our margin, we did have great improvement in our margin, 31 basis points. That was up to 3.09% for the quarter. One of the things to note, we did have loan growth ex-PPP loans of $167 million. If you look on our average balance table, we only recorded on average $67 million of that showed up on average for the quarter. When you look at our net interest income growth, it was, I think, $3.9 million, when you exclude the PPP fees, which was a 10% increase as well. A large portion of that was from the securities portfolio that got booked largely in the Q1, but really kind of showed up full count in the Q2. Which is gonna be the impact of these loans in the next quarter since, you know, on average, we only had $67 million. I think we'll see strong net interest income from that into the next quarter. The excess liquidity that we still have is about $230 million this quarter, and that's probably about 13 basis points for the margin. We depressing the margin by 13 basis points there. Another note of improvement is our operating efficiency ratio. We improved that 71 basis points to 57, 66 for the quarter. Our average interest-bearing cost on deposits, we improved by three basis points to 15. Great improvement in all those areas for the quarter. One of the things I did wanna mention as well was our deposit balances. We did show a decrease in deposit balances of $131 million. We do have a large public fund portfolio, and we mentioned this a lot about the seasonality of that. We get a large increase in public funds at the beginning of the year, typically mostly in the Q1. Then they start spending those public funds, they start decreasing over the course of the year. Deposit balances were down $130 million. About $70 million of that was related to the seasonality of the public funds. Time deposits were down for the quarter, about $36 million. But half of that was really related to the Cadence portfolio that we acquired in December, and then some public fund CDs as well. The positive on our deposit balances is that our non-interest-bearing deposits actually increased about $10 million. We're excited about that as well. I believe that wraps up all my comments, Hoppy, for the quarter for the financials. Thanks, Dede. Appreciate it. J.J., would you like to give us a little color on loan production for the quarter and also what you see in terms of pipelines? Yeah. Thank you, Hoppy. You know, to Dede's comments, June of quarter was a huge month for originations. We had about $220 million, but not until June. The quarter is kind of back-end loaded. I think the other thing that contributed to the net was our payoffs and pay downs. We've been looking for those to subside, and they were down about $60 million in the Q2 over the Q1. I think those two things together really combined for the net growth. Unfunded commitments on trailing 12-month origination, $341 million. That's in line with, consistent with, previous quarters. Pipelines are good, in line with historical averages. Really looking forward to Beach Bank acquisition, expanding the presence in Northwest Florida and then Tampa as well. I think Chip's gonna talk about that some too, Hoppy, so g reat quarter. You know, a lot of, I think things led to that. You know, we had a renewed focus on business development starting in January, had some organizational changes, and I think we're seeing results of that, too. Great. Great quarter, great job. George, would you like to tell us a little bit about what you see in our credit trends? Thank you, Hoppy. Generally, we're seeing continued improvement, positive trends in a rebound in credit quality coming out of the pandemic years, if you will, where there was some slight upticks during that time. Leading that charge really is what we're seeing in our hospitality and leisure and food and beverage segments. A lot of those businesses were obviously impacted with some disruptions during the pandemic. Both in our tourism destination markets, and we have a number of those along particularly the Gulf Coast, as well as our business travel markets. We're seeing some real improvements there and we're able to get very timely reports in that segment, STR report that give you month-to-month updates. Improvements in ADR, RevPAR, occupancy trends have all been very favorable in the last, really over the last couple of quarters. In terms of delinquency trends, continued improvement there. We've been trending in the Q2 under 25 basis points in our delinquency trends, which has certainly been a favorable improvement over prior years, as well. In terms of overall credit quality in our criticized and classified loan segment, we've seen nine months of continued improvement there coming out of the pandemic-related quarters. A lot of this improvement has really been attributable to some upgrades that we were able to do in the hospitality and leisure segments, hotel properties, other tourism-related transportation-related businesses. Some nice recovery there. We think we're likely positioned to see that continue for the balance of the year, as well. Nonperformings, we have good improvement there with our NPAs in nonaccruals, OREO and other assets continued improvement below the 100 basis point mark as we hit the mid-year point, and we think that will continue to improve as well. We have some relationships that once we get year-end financials in from some of these additional accounts that are in some of those sectors we've talked about, we think we can see some likely continued improvement there. Loan-related net charge-offs, we're continuing to be in a negative position, which is positive. We've got a nice net recovery for the year and we think sometimes you kind of eat away at that over the course of the year, but it has been maintaining pretty well. I think we're positioned well. We know with inflationary trends out there and that likely will be a major point of focus for us as well as all of our peer banks as we end the year in the next two quarters. We believe like I think our emphasis we kind of approach it as a four-legged stool, if you will. We've got good debt service coverage in our loan base. We've got a good primary, secondary source of repayment culture in how we underwrite good collateral positions, and liquidity and guarantor support. All those things kind of combine to, I think give us the general notion that we're positioned pretty well to weather any recessionary headwinds that we might encounter along the way. I think we're in a good place. Good deal. Thank you, George. Well, as everyone knows, I know we talked about it a little earlier, but we will be closing the Beach transaction tomorrow after close of business. We're really very pleased that we continued our trend. From the time we announced the pending transaction with Beach in late April until closing, what will be August first, will be in that 90-day time period. In this environment, we were very pleased with our efforts on both sides there to get this transaction approved and through the regulatory requirements. Chip, would you update us on Beach's quarter, and then where we stand in terms of integration? Sure thing. Thanks, Hoppy. Everyone, welcome to the call, and to Leonard and Brad and the team coming together. What an outstanding transaction. Hoppy, first, for everyone on the phone call, I do owe Hoppy a steak dinner because when he said we could get this done in 90-120 days, I wasn't quite certain. A huge congratulations to all the teams to close this transaction in an accelerated timeline. It's been outstanding. Well, I think our quarter results truly begin to show the strategic rationale for our combination with The First, and I'll be brief, but go through a couple of these. You know, loan growth for Beach Bank in the Q2 continued to expand. We're at $29 million of net growth for the quarter, which is a 26% annualized percentage. As we enter the Q3, our pipelines frankly are more robust than they were going into the Q2 of the year. Non-interest-bearing demand deposit account growth was a raw number of $12 million increase, which is 37% annualized. Many of you know this was Beach Bank was a recapitalization story from July 2018. At that point, non-interest-bearing demand was about 9% or 10% of the overall deposit balance sheet. That now is at 29%. The investment that we've had in our treasury management initiatives, that will be carrying through to The First as well, are beginning to show increased velocity. As we look at our asset sensitive balance sheet, and as we began to lean into the first liquidity position, our net interest income growth, just on a linked quarter basis, increased 19% or annualized at 76%. The quarterly NIM average moved 44 basis points to 3.49. Just in the month of June, that was actually 3.69. So you see the combination that we spoke of in April's earnings call of merging these balance sheets together, and we're already taking advantage of the first liquidity position and size of balance sheet. Credit quality, NPLs were only $171,000 or three basis points. 30-89 day past dues remain subdued at only 19 basis points. The story of Beach again in the recapitalization and turnaround, there was a significant amount of OREO assets. Those are now down to only $9 million with $6.75 million of that under contract to close here in the Q3. The job is almost effectively done there as well. Hoppy, in terms of the integration, I can't tell you what our teams have been extremely excited and so have our client base as we begin to move and take advantage, frankly, of the additional products as well as the size of the balance sheet of The First. Two specific examples, one, an expansion of one of our larger clients, that we were able to work together with J.J. Fletcher, George Noonan, and The First team, and we were able to move to an overall credit relationship of, just north of $20 million. Even more importantly, with that expansion, the operating entity moved, their entire primary business to us, which is about $6 million of, non-interest-bearing deposits and a full treasury management relationship. Then another success story, frankly, tomorrow, with an institutional CRE company, we close on a $20 million Central Florida acquisition loan. Again, both of these would not have been possible without our combination with The First. We look forward to frankly being The First on Monday morning and continuing some of the success we just spoke of. Yeah. Thanks, Chip. In addition, obviously, the spread-related income generated by the loan growth, we were able to make use of your swaps and derivatives business in one of those transactions for a pretty significant swap fee. We're excited, obviously, working together, the synergies, the opportunities for growth in terms of loan production, but then also in terms of increasing our fee income. Great job for the quarter. Appreciate it. I will shift over to Leonard now. Leonard, if you would update us on HSBI's quarter, please. Thank you, Hoppy. Chip, I'm a little scared if you owe him a steak dinner for 90 days. I've been in 15 months of regulatory limbo, you know, no telling what I'll owe him if we get closed in 90 days, but I hope that's the case. As Phil Resch, our CFO, and I often say each quarter, there's just a lot of noise in the numbers. As you can imagine, going through 15 months of a pending transaction, it's hard to identify what core is on the outside looking in. We try to tell you from the inside looking out. For the quarter, we earned $3.3 million, which was $0.46 a share, and that did have noise in it. We had two executive retirements that we accrued retirement benefits for in the quarter and also transaction-related expenses. Earnings per share excluding those items was $0.61, which is in line with the prior quarter of $0.59 and $0.57 one year earlier. We basically feel our core run rate is in that low $0.60 range. Net interest margin did increase exclusive of PPP in all periods, increased to 3.31%, and that compared to 3.20% in the prior quarter and 3.26% in the prior year. Q2 non-interest income increased to $4.3 million. That's up from $4.1 million in the Q1 of 2022. That was non-interest income, excuse me. Non-interest expense increased $1.4 million, and that was related to the retirement and separation packages for those two individuals. The current quarter reflected that was $1.2 million charge that we took, and $315,000 of transaction-related expenses. Excluding those items, our efficiency ratio for the quarter was 65.3%. Total deposits increased to $1.49 billion, and that was up slightly from the prior quarter, and non-interest bearing deposits continue to make up just shy of 36% of total deposits. Classified assets, which include non-performing assets and accruing classified loans, is $3.2 million. Non-performing assets, which exclude those accruing classified loans, total $2.9 million or 17 basis points of assets. The loan loss allowance for loan loss reserves is $15.3 million, represents 1.38% of total loans, and we still carry some merger marks from our consolidation. A very consistent solid quarter for HSBI and still plenty of liquidity to expand on that. Thanks, Leonard. Great quarter. Great quarters, great performance, everyone, all around. We've talked about the transactions. We've talked about how complementary these transactions are. We've talked about the strategic impact. We've talked about the financial impact. When I say these transactions are complementary, I don't want to lose sight of the fact that because of the Beach transaction, we were able to be more competitive in the process for Heritage Southeast. If you guys remember, Beach was overcapitalized, had excess capital, okay? We view this when we were doing our model, we were looking at this transaction as an immediate deployment of their excess capital. If you think about it, that allowed us on a pricing basis to be more competitive and to, you know, to win these assets, so to speak, because of what we had structured with these. We think it's a natural extension of our strategy, and we also think it creates a significant value for our shareholders. One final highlight in the prepared comments before we move to questions. You may have also seen today an 8-K announcing that John Levy would be joining the board of directors of The First Bancshares. We're thrilled to have John, excited about him coming on board. John is a native of Youngstown, Ohio. He's been in the real estate business for 30+ years, as a real estate developer in the construction industry. He currently lives in Tampa, Florida. I think he's been in Tampa some 20+ years, so he's very connected. He gives us representation in Central Florida and really throughout the country and throughout the Southeast in terms of his business acumen and his relationships and interaction. He also served on the Huntington Bancshares board for 11 years, and so he served on their executive committee. He served on their risk oversight committee. We're excited to have John join our board. As we approach $10 billion, we're gonna lean hard on him about his experiences that he saw serving on a board of a much more larger organization. In addition to that, I think you all, Chip, know that Chip Reeves has a background in larger organizations. He served as president of a company that was north of $10 billion, comes from a background at Fifth Third. There are a number of folks in Leonard's organization that have experience at larger banks. We talk about strategic, we talk about financial, we talk about the management impact, but we also talk about accretive to management talent. With that, I think we'll open it up for questions. Ladies and gentlemen, if you'd like to ask a question at this time, please press star one one on your telephone. Please stand by while we compile the Q&A roster. One moment. Our first question comes from Kevin Fitzsimmons of D.A. Davidson. Your line is open. Okay, good afternoon, everyone. Hope everyone's doing well. Good afternoon, Kevin. Hoppy, can I maybe just. You kinda touched on it right at the end there, and I was gonna ask, and you know, you can answer it any way you'd like, but I guess I'm wondering your intentions with the $10 billion mark. On the one hand, you're gonna be right on the doorstep, and I know the regulators start treating you differently when you're approaching that doorstep. On the other hand, you mentioned at some point during the presentation about still having optionality and still being able to, I forget your exact wording, but being attractive to upscale partners, I thought was the wording. Just curious what your thoughts are on that front. Depending on when this closes, say it closes in early 2023, can you or would you manage the balance sheet in such a way that maybe you don't cross it until early 2024? Thanks. Yeah. The first part of it is it really doesn't change our thinking in those terms, Kevin, of what you're used to. I know we're getting closer to it, but we've talked about maintaining and enhancing our optionality. If you remember, we talked over the last couple of years as we approached $5 billion, we begin to think about, okay, what is going to be the expectation? What areas of our company do we need to upgrade as we approach $10 billion? We leaned on our regulator, and you saw a number of strategic moves, not the least of which was changing regulators. Quite frankly, the state of Mississippi, based upon where we were the district and our former regulator, we were regulated in, there are not any banks like us. There's certainly not any $10 billion banks, but there are no other banks, even of our size. If you think about the state banking part in Mississippi, they supervise some of the largest community banks in the Southeast. Leaning on them in terms of best practices when we were talking about, you know, what is the expectation and how do we get ready for $10 billion, they'll be an integral part of that as well as the Federal Reserve. 'Cause historically, when we approached $5 billion, the Federal Reserve was the first to come out and say, "Hey, look, we love what you guys are doing, but here are some things as you get to $10 billion that we want to see improved." The audit function, which you know, we've improved that in terms of process, procedure, platform, and then the leader of that division, Emily Agostinelli, came from a larger bank, and so she has that perspective of how the audit function of a $10 billion+ bank should look. We upgraded our BSA software platform and the leadership of the BSA department. We hired a young lady from First Interstate Bank, and so that's a $15 billion+ company, and she was in a management role there. Over the last 2.5 years, she's revamped our BSA department in terms of not only processes, procedures, but also software platform. We've installed a new software platform, which is Verafin, which is used by a number of banks, particularly banks over $10 billion. We've upgraded our enterprise risk system. We hired a young man in terms of model management from the Federal Reserve Bank of Dallas, and he's been a great addition to our risk management department. We've upgraded our enterprise risk system to a program called Riskonnect, again, which is a $10+ billion-dollar solution. We've upgraded our MIS systems internally, particularly in terms of loan portfolio and loan production, to do away with some manual processes to improve data integrity and have more automated efficient processes. We've got all that on the board. Look, in terms of integrating, this transaction announced yesterday is like buying three community banks at once, really. It's not different in terms of business model and integration risk, we don't think, because the business models align so much, but it is larger. We'll be very disciplined, and we'll take our time making sure we've got the integration right. You know, that's how we think about it. Again, we talked about it or I talked about it here, you know us well and know how we think about the value of our company and how we maximize that value for shareholders. You know, continuing to look for opportunities to grow profitability, return metrics, to continue to increase our dividends. Those are all forms of shareholder return management. Looking at who might be our upstream partners and when it's time, you know, to join a larger organization and when that makes sense for our shareholders, we continuously evaluate that. We do that at least twice a year, if not more often. We're always cognizant. We're always looking for that. We think that these two transactions this year, if you think about where we started the year, at a roughly $6 billion company, still the majority of our business in Mississippi, and the assets that we will have accumulated this year and what that means in terms of franchise scarcity and what we think is long-term franchise value. Quite frankly, we think that gets on the radar screen of what might have been a handful of potential upstream partners at $5 billion-$6 billion. When we approach $8 billion-$10 billion with that sort of market share, with that sort of structure across the Southeast, we think it just makes it more valuable to someone. Again, we continue the same thought process. We're shareholders first. We look upstream, we look downstream. We look for opportunities to grow our business, all with the overriding thing of how do we improve our shareholder return. That's great. Thank you. And one just follow on. With this deal, you enter Atlanta, Savannah, Jacksonville. So those are bigger markets, and they've got a nice growth profile. But can you talk about what that position in those markets is and what your intention there is? In other words, do you need more scale, and do you need it soon to be able to really grow and do what you want in those markets? Or do you feel it'll be more gradual, you got a good running start with what HSBI is bringing? Leonard, would you like to address that? Sure. Hi, Kevin. This is Leonard Moreland. You know, when you're a $1.7 billion bank and you have Atlanta, Savannah and Jacksonville, you have to give a lot of thought to where you're putting your resources into the organic growth. It has been our belief that that North Atlanta area that Brad Serff is so familiar with and where his bank was headquartered gives the greatest bang for the buck. We love the suburbs of Savannah. And of course, we love Jacksonville. So having a balance sheet and capital position of The First, it gives us an opportunity to do more in more places than we could do as an independent bank. We do plan to continue the organic push in the Georgia market, but also with our connections and relationships that we have with other banks in Georgia that Brad and I especially have. We know there are a lot of other banks in Georgia that are looking for alternatives. Because they approached us as HSBI to ask what the opportunities were of joining forces with us. I think Georgia will continue to be a very fertile target-rich environment, and we're excited to be able to continue on the hunt. Just a quick follow-up to that. Leonard, you mentioned the potential for expanding further in Georgia. You know, I know deals can change the overall direction, but it seemed like when the Beach deal was announced, there was a lot of excitement about Florida and making Florida a much bigger part of the company and what it was going to do for the growth profile. How do you balance that further scale, whether it's a community bank coming in Georgia coming to you and getting cost savings versus having that, you know, more Florida and maybe in turn getting the, you know, that attention of the larger upscale partners that you talked about, Hoppy? Well, Georgia and Florida both have demographics that are accretive to, you know, the franchise. There are high-growth markets in both of those. Obviously, you know, people are moving there, as we've talked about, Kevin. I guess we've got a lot more reach. We've got a company that pro forma is a, you know, loan deposit ratio less than 60%, 17% total capital. When Leonard talked about allocating resources, those can be allocated to those larger growth markets in Florida, I mean, in Georgia. But you don't have to, we're not sacrificing growing market share and additional opportunities in Florida. We've got, given the capital that we currently have, given the earnings ramp that we'll see from these two transactions, given our, you know, relatively. I don't know if modest is the right word, but we have a conservative payout policy. We continue to increase that, but as a percentage of earnings, it's below peers, in terms of our dividend payout ratio. You know, there's a lot of excess capital, a lot of resources, liquidity and capital to be invested. I don't think we sacrifice one for the other. I think that as Leonard has talked about the opportunities for him to grow and expand his management team, under his leadership in Georgia, it's the very same scenario in Florida, that we talked about last quarter with Chip. He's got a team of folks that know the Florida market. They know bankers in Florida. You know, we've talked about the lift-out strategies organically of hiring teams, really, I guess, in both these markets, but particularly in the Florida market, where Beach was such a small bank at $600 million, it was difficult to attract folks from larger institutions, when you had resources of $600 million dollar bank. I feel strongly this will bear some fruit, in the near term, in terms of team lift-outs and additional management and lending talent in Florida. But I don't think we have to sacrifice those. Kind of, you know, tying into your $10 billion dollar question, you know, we have to manage. We've talked about this. We manage our company. We make the decisions about our company, and we do it through the lens of shareholders because we are. I mean, we being the board and the management team, that's who. We think about, well, we have to make the decisions that we're going to run our company independently forever. We can't hold back on, well, let's not do this because we might, you know, cost $10 billion, or let's don't take this opportunity. It's not that we don't consider it and what it might entail in terms of a different structure, a different support level, but we really have to manage, at least in our view, like we're going to be independent forever. Now, as we do that, we think that is obviously supportive of creating value for, you know, potential upstream partnership. When we exercise that, when that gets exercised, we can't know. We feel if we continue to create value, franchise scarcity, high-performing returns that, you know, whether we do that as a $10 billion, $15 billion bank, or somebody recognizes that and is willing to realize the value for our shareholders and that we can accomplish something together that we couldn't do standalone, that's always part of our plan. Day-to-day, we look at it, hey, we've got to operate, we've got to manage like, you know, we're going to be independent, in order to create the value that could be recognized from the upstream partnership. That's kind of how we think about it. It's not kind of, that's exactly how we think about it. All right. That makes perfect sense. Thank you very much. Thanks, Kevin. One moment for our next question. Our next question will come from Catherine Mealor of KBW. Your line is open. Thanks. Good afternoon. Good afternoon, Catherine. Hey, at The First, you had a lot of excess liquidity, which you deployed $40 million of that this quarter, Dede, congrats on that, but still have a lot sitting on balance sheet. It looks like if I look at Heritage Southeast, you've got another 17% of your balance sheet sitting in cash. Which was amazing to me that that's not even part of your 10% accretion number. Maybe just kind of big picture, how do you think, I feel like we've got our arms around Beach's loan growth. How do we kind of think about what you're expecting for Heritage loan growth and how quickly we should be able to deploy some of this excess liquidity? Catherine, in our modeling, we use what we believe, given their markets and looking at their loan portfolio and their lending platforms and the quality of their loans, what we thought was a very reasonable growth. We budget about, I believe, Dede, 7% loan growth in our modeling assumptions. Given Atlanta, Savannah, Jacksonville, we think that's very conservative. To your point, I think there's a lot of upside. Now, Leonard, I'm sitting here holding this. When I showed him my model, he looked at me and goes, "Only 7%?" No. [crosstalk] Underpromise, overdeliver. He doesn't know the Hoppy way yet. Yes, you know, managing expectations. You had a great point in that for modeling purposes and pricing purposes, there are some revenue synergies here and growth assumptions that we think are very reasonable and we hope to overachieve. When we talk about high teens on a GAAP basis, EPS accretion or, you know, low teens on a core basis, that's under those, what we've determined to be fairly conservative assumptions. I just, you know, you all, you know, I've talked about this, and Dede talks about this a lot of times. If you look at this company pro forma, what it creates in terms of return metrics, and I know we talked about it, but you've got a company that will have a, what we believe to be, and Dede's pretty good at making her numbers. I know you're shocked at that. She's pretty good at making them. This pro forma company will have a greater than 1.30 ROA, greater than 18% return on tangible common. To your point about the liquidity, we didn't include that in any of those metrics. The ability to deploy that is again, just and now you're getting all my found money. You know me talking about the found money because you all the time, and try to keep that back, but now she's bringing out the found money part of our model. We've told the world, this is why you don't have a call. This is why you have this one-on-one. She's exposing our found money. There could be an additional revenue to be generated from deploying that excess cash, which is not in this modeling. In the markets that they serve, they not only I mean, but Beach as well, and I think about the Beach markets in Tampa, St. Pete, Central Florida. I mean, those are high growth markets, again, where that excess liquidity can be deployed. We talk about, in our thinking, how these transactions are complementary, what it creates, you know, the ability to take Beach's excess capital, immediately deploy that, be more competitive in this process, win the bid, and then secondarily take not only our excess liquidity, but some of the excess liquidity that HSBI has and be able to deploy that across the whole footprint. We talk an awful lot about Georgia and Florida, but we've got some very nice markets in other areas as well, again, which is really not in our modeling. We think that's an ability to your point, overachieve. I'm trying to think about and so much of the margin expansion that you can build into your model is just the deployment of excess liquidity. But as we look at Heritage, how are they positioned from an asset sensitivity perspective, just excess liquidity aside? How, you know, kind of with their percentage of loans that are variable versus fixed, and just by putting the balance sheet together, does this make you more asset sensitive or less, again, excess liquidity aside? This is Leonard. We are very asset sensitive. We have about $280 million in overnight funds, which greatly contributes to that. Our portfolio mix is 51%, 49%, 51% fixed, 49% floating, and overall asset sensitive in all periods. We are benefiting from the increasing rate environment. We just have a lot of liquidity to deploy, as you mentioned. Picking up on Hoppy's comments, you know, we grow loans, you know, 10%+ a year typically, but we've had extraordinary deposit growth over the last couple of years as well, which has not allowed the loan to deposit ratio to increase as much, whether it's through any of the government stimulus programs or just the health of our customers. Just average deposits across the board, both commercial and personal, throughout our footprint are much higher today than they were two years ago. I don't think that's a different story than you're hearing from any other bank right now, but even with good solid loan growth, it still just doesn't allow that loan to deposit ratio to creep up as quickly as we'd like for it to. Catherine, I guess we're gonna have to mess up. [crosstalk] I thought about a couple other things since we're baring our soul and found money here. You know, in the modeling, I know we may have touched on it briefly in the Beach transaction, but, you know, repositioning their balance sheet is something we didn't model as well. They, I believe, Chip, is it close to $100 million or so of high-cost CDs over the next couple of years? I mean, CDs that are like in the 4% price range. Is that right? 2.5%? Okay. What's that come out like? [crosstalk] 2.5%. My point being, with the excess liquidity, repositioning that because they were at a 90%+ loan-to-deposit ratio, that's not something we modeled either. I think Chip touched on it a little bit, but I did want to emphasize there's an opportunity there, again, to generate additional revenues or additional income that was not modeled in. Then if you look at Heritage Southeast balance sheet, they've got you know it's about $40 million, $35 million in holding company lines of credit and debt or $40 million that I believe the pricing is prime-based there. We're borrowing more now. I think one is at 5.5 and one's at prime or, you know, somewhere around 5% money, Catherine, that we did not model paying off, but we'll pay off. We won't need that, given our capital position, our liquidity position. You know, there's another, you know, what's it? More money. What? Just telling it all. I know, we're giving it all away. [crosstalk] You want me to add to that since you're telling it all? Well, I guess so. If we're gonna do it, let's just do it. [crosstalk] Beach Bank also had debt that we'll be paying off as well. Anyway. How much money? I think it was down to $40 million this month as well on the FHLB advances. Yeah. Anyway. You know, we take into consideration when we're thinking about it, but we don't model that in the numbers that we present to the market, per se. Well, it gives you a lot of balance sheet stability, which is important right now. That's great. Great. Then on expenses, I know you had a couple of kind of temporary items this quarter in Heritage. What is your cost savings number, based off of? [crosstalk] Go ahead, Dede. I was gonna say, I'm digging here for the number, but we did back out. We, you know, showed 30%, but we did back out those one-time items. I think it was about $5 million on a run rate. Do you know, Leonard? I'm, I can find it, Catherine. But yeah, I believe it was net of that, and then we took 30%. [crosstalk] $5 million is ringing a bell. Our, our [crosstalk] 48? Okay. Yeah. Our monthly expense run rate's about $4 million. In the modeling, how you say 50% realized in 2023 and 100% thereafter, that. I feel like typically y'all are pretty quick on realizing cost savings. Are you being conservative there or is there a conversion date or something that's kinda pushing some of those cost savings back? Yeah, we're looking at, I think we're being a little conservative there, but the conversion date we have right now penciled in is the end of March. Typically, you know, we'll have some of the staff, you know, stay on about 60 days post conversion. You don't really realize complete staffing until, you know, post 60 days. That would be end of May. You know, that's why we, you know, we did use the 50%, but it could be a little more than that next year. Great. I'm gonna ask one more question then I'll get off. Just on buybacks, I mean, the stock is down today as kinda typically happens when deals are announced. But how active or ready would you be willing to step in and buy back shares just given where your stock is trading? We just had a little social gathering for Leonard and Brad, who are here with us today in Hattiesburg, with our board. The very first question, they walked in and started saying, "Hey, when can we buy shares? When can we buy shares?" It seems like we're in a perpetual blackout because we seem to always have something going. I think if you looked at our trading policy, both company and, you know, that includes some other people, we would have announced earnings, I think it's three business days post that. However, with the shareholder vote coming up for the announced transaction, counsel is pretty adamant about the company not being in there influencing the share price before their shareholder votes are held. We may have a little [crosstalk] A little ways to go there before we can actively. As you know, historically, that has been. Again, we've ramped up earnings, which has supported capital. That's been one of the methods, you know, we've used to improve shareholder return. We will use it when we can. Great. Wait for the shareholder vote and see where the trading is and go from there. Yeah. You saw we will have to have a vote as well on this transaction due to the size. Both companies will have to have a vote. Great. Well, congrats on the transaction and the quarters, and we'll just see you everybody soon. Thanks, Catherine. Thanks, Catherine. One moment. Our next question will come from Brett Rabatin of Hovde Group. Your line is open. Hey, good afternoon, everyone. Hey, Brett. How are you? I'm good. Wanted to, I guess first to stay on the topic of expense savings and maybe get, just given that, you know, it's new markets, kinda get, a better flavor for it, if you can, you know, what the expense savings are coming from. Wanted to just talk about the conversion and what systems the various banks are on. You know, all that's lining up here in the next year. Dede? Sure. I'm looking for my page. [crosstalk] She's looking for pages. I'm getting my page over here, Brett. I turned them down before the meeting. Now I can't find it. Give me one second. Let me get there. I looked at that. Okay. So yeah, we had projected or modeled 30% cost savings, and we were using. Here's my number, what we were running off of, Catherine, if you're still listening, showing 2023 projected expenses of $48.5 million. Really the, you know, big piece of that would be salary and benefits would be about $5.5 million of that. Or, you know, basically other, the other probably $5 million, and that's gonna come in your, you know, core conversion, data processing piece is always, you know, your largest piece. You'll have a lot of smaller things, but that's the two items that will drive that number up. What systems are all these banks on? Just kind of, you know, seeing what you're going through in terms of conversion processes. They're both on FIS. Of the 13 transactions we've done over the years, I'm gonna guess that probably 10 of those, or nine or 10 were on FIS. Well, let me take that back. No, it may be a little short because a couple were on Jack Henry. We have done a number of. In fact, it's the majority of the conversions we've done have been from FIS to Jack Henry. The folks at Jack Henry and FIS and us know each other well. Okay. Wanted to get back to, you know, early in the call, you know, there was discussion about the excitement around the SBA businesses for both the banks that are being added here. You know, we've seen this quarter, you know, some volatility with SBA gain on sales spreads being compressed considerably. Wanted just to make sure I understood, you know, the opportunity in SBA and, you know, maybe any thoughts on what you're thinking about the gain on sale margins of that business. From a strategic standpoint, one thing that we may not have highlighted or emphasized as much as we should, and, you know, you're aware of our CDFI status, and there's part of that mission is creating, again, improving standard of living in underserved markets. Part of that is increasing homeownership, and we've talked a lot about that and the things we're doing around that and how, and probably need to visit with me in a minute about how HSBI is complementary to that. Second one's about small business creation. We have, at our company, culturally tried to do SBA loans, you know, since I've been here, and it's just, we cannot, it's a different operating segment. It takes a focused team to do it. It's just hard to take your general lenders, given the uniqueness and the administrative focus that it takes in SBA lending to be successful at it. As we talked about in Beach's call, they have a platform that they were scaling up, but Heritage Southeast is already there to include an administrative support function, which Beach did not have. Beach uses a third-party administrator. Heritage Southeast has that support function in place. We think, again, Catherine put spring in here, more found money, the ability which we've not modeled in, but essentially have that administrative support in place, but be able to leverage the volumes coming out of Beach over that and what we generate across the footprint, over that administrative function. For SBA, not only from a profitability standpoint as a line of business, but also as further to our CDFI mission, making sure we stay attuned to that in small business lending. That's kind of well, I failed to emphasize about it, but Leonard, if you talk a little about the specifics of the business. Yeah. You know, we saw 2021, especially late Q3, a lot of demand in the SBA arena because of the payment assistance program from SBA and the 90% guarantee, which made it even more attractive for the lender. We feel like some of the demand from early 2022 was pulled into 2021 so that the customers could take advantage of those payment assistance. Of course, it did balloon up a little bit, and I think we had $3 million of premium income in 2021 compared to $2 million in 2020. This year appears to be more in line with the $2-$2.5 million range halfway through the year. We are seeing a full pipeline at this point. Some are, you know, SBA can be construction-type projects, and so sometimes premiums are a little lumpy from quarter to quarter. But overall, on a pretty consistent basis, we see the originations at, you know, certainly 2020 and most of 2021 levels, with the exception of that third and Q4 when everything got squeezed. The yield curve shift earlier this year had an effect on premiums as well. But we've seen premiums come back now more in line with the 10%-12% range. Last year, we saw premiums in some cases, you know, above 15%. There is influences to the program, but a lot of good folks out there hunting deals and have quite a large network that they work every day. We do see the volume remaining steady. Sometimes the influences outside of the company affect the premium dollars year-to-year. Okay. That's great. Appreciate y'all calling. Thanks, Brett. One moment for our next one. Our next question will come from Matt Olney of Stephens. Your line is open. Mr. Olney, your line is open. If your line is muted, please unmute your line. There's been no response from Matt's line. Moving forward. Our next question will come from Christopher Marinac from Janney Montgomery Scott. Your line is open. Hey, good afternoon. Hoppy and team, I wanted to ask about the price paid for Heritage Southeast. It's higher than the original VyStar deal a year and a half ago. I guess I wanted to see if I can't tie back that there's been an increase of equity, particularly if you exclude out the AOCI in Heritage Southeast. Should we simply look at that difference in price tied kind of related to the buildup of equity that Leonard and his group have had the past 15, 16 months? It's that, Chris, you know, you're right. You're hitting the nail on the head. The company has grown again, minus the AOCI marks, which has kind of got tangible book value, both its and ours all over the board. But also the earnings stream has improved, the core earnings stream. That's what we really focused on when we thought about pricing was in order to get the metrics that we liked and the metrics that we think were very acceptable, the company was in a different position today, particularly on a pro forma basis, than it was 15, 18 months ago. Leonard, am I hitting it about right there when we think about it? I know you and I have had a lot of conversation about pro forma run rates. Yeah. I think coming out of 2020, the real hard pandemic year, you know, we built reserves significantly in 2020, which significantly impacted earnings per share. I think the acquirer saw through that and saw the potential of the earnings machine. As we moved into 2021, we started to prove the existence of that machine. I just think it was a lot less risk today and what the future earnings look like compared to where we were 18 months ago. I think we're just being paid for what we've produced and what our potential is. Okay, great. Thanks for that. Dede, could you remind us as you close Beach this quarter what happens with the AOCI marks? I know there's a small loss position that they had last quarter and maybe it's better at the end of June. But just curious kinda how that gets washed out, because I guess it also gets applied when Heritage Southeast is closed here in a few months. Right. That'll just wash through capital. But you know, in your modeling, technically, you pick that back up because that's just a, you know, a paper loss because you know, we're not selling them, we mark them to market. We'll have them on our books, you know, at current market value. There's no, you know, Chris, that return of that mark and that stream of income. There's really no risk, particularly if you look at it, where the mark's heavier in the Heritage Southeast transaction. There's no risk there. It's kind of that. That's locked in when we fair value that at close. Getting that back over, I think we modeled some of the year's digits over about five years, which is about the average life of the bond portfolio. Again, we're back to that core versus GAAP. We can either do it GAAP and look at it's kind of the same numbers, although optically you may say, "Oh, I got 8% dilution, you know, 17%+ EPS accretion on a GAAP basis." If you back it down to core, it's kind of optically, or at least at the end of the day, you're kind of the same place in terms of earn back. You know, we'll also think about hedging that position to be sure there's no additional, or we're not thinking about. We will hedge that markdown in terms of their bond portfolio from now till close, so that we don't take an additional mark on that. We've seen some other transactions that significantly impact the day one dilution in terms of moving the bond portfolio. Got it. Back to your earlier point, Hoppy, at the very beginning of the call today, you kind of just said it here a second ago. I mean, the price to book gets skewed by virtue of this AOCI mark. It does complicate just the P/T ratio as well as just the traditional metrics people use. Again, the earn back is what it is. Your point's well taken. That's absolutely true. Chris, one other thing, you and I have talked about this multitude of times over the years. You know, I don't know how much time you've had to study the deck, but when I talk about these transactions as being complementary to each other and the fact that Beach put us in a very good position to win this transaction. Page 19 in the deck, you know. We, when we talk about it, I hope this represents kind of what we think about the tangible book value that's called. And what it shows is, I mean, if you think about it, hey, here we are at the end of Q2, our tangible book is $18.32. Look, you go across what the financial impact will be from both of these transactions, what we think the financial impact will be of both of these transactions to our tangible book value, we end up at $18.09. I'm not gonna say, I understand. At least we can think about it in terms of me as a shareholder, well, what is that, what really is the impact of these two transactions together on my tangible book? Well, it's not. I mean, the practicality of the entries on the page, you know, you could argue that's 1.5% taken together. Yep. A follow-up on that Slide 19 was very helpful, so thank you for doing that. I think we all would appreciate having that updated in future quarters, so it's a good look back. Thanks, Chris. Thank you very much. I'm showing no further questions. I would now like to turn the conference back over to your speaker, Hoppy Cole, for closing remarks. Well, thanks, everyone. Again, very exciting times for our company. We're absolutely thrilled with the transactions that we've been able to. Transactions that we have upcoming, the closing of Beach Bank this weekend, and then our upcoming transactions with Heritage Southeast Bank. Also the strong performance for the quarter, great job around everybody's quarter was extremely good. We're just absolutely thrilled of the opportunity to continue to grow our company and create value for our shareholders. With that, appreciate everybody's attendance today, and have a great weekend. This concludes today's conference. Thank you for participating. You may now disconnect.