Commercial Bancgroup achieves 4.6% revenue growth and maintains strong asset quality post-IPO, signaling positive outlook for Q4 and beyond.

OPERATOR - (00:00:00)

Thank you for standing by. At this time, I would like to welcome everyone to the Commercial Bancgroup third quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Terry Lee, President and CEO. You may begin.

Terry Lee - President and CEO - (00:01:17)

Good morning. Thank you for joining us today for our first earnings call as we successfully completed our public company offering in September 30, 2025, the last day of the third quarter. I'm Terry Lee, President and CEO and with me today is Adam Robertson, Chairman Flip Matheny, our Chief Financial Officer and Richard Sprinkle, our Chief Credit Officer. Before we begin, I must remind everyone that this call may include forward looking statements within the meaning of the Private Security Litigation Reform act of 1995. These statements are based on our current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. For a discussion of these risks and uncertainties, we encourage you to review our full safe harbor statement and cautionary language, including our earnings press release and in our latest SEC filing. Also during the call today, we may discuss certain non GAAP measures. Reconciliation of those measures to the most directly comparable GAAP measure can be found in our earnings release which is available on our website and filed with the SEC. We're pleased to report the successful completion of our IPO at Commercial Bancgroup became a public company September 30th. As mentioned early, as each of you are aware, the IPO process is an expansive and very time consuming process that requires a tremendous amount of human resources commitment coupled with a lot of professional guidance. And even this time, with all this effort directed toward our ipo, CBK has produced another impressive financial performance quarter. This performance demonstrates the depth of our many talented members that understand our core mission, our values, staying focused to produce strong financial results while at the same time working on a once in a lifetime project. I would like to just review a few of our financial Metrics for the first nine months of 25. Our net income 27.1 million. That's a 4.9% increase year to date. Return on assets 1.60, 1.9% increase. Return on equity is 15.5%. Slight decrease over 24, 8.5% decrease. Revenue came in at $66.9 million, a 1.9% increase. Our expenses actually failed 31.9 million. What was 8 basis points reduction? Earnings per share came in at $2.22 per share, a 6.2% increase. Our tangible book value per share $19.05. That's a 14.5% increase and our efficiency ratio held strong at 47.6% through the first nine months of 25. We experienced moderate loan growth year over year due to headwinds from some large payoffs we experienced first half of 2025. These payoffs were for long term borrowers selling their business. The loan portfolio activity remains robust enabling us to keep pace with the loan payoffs. We anticipate a strong loan closing volume for 4Q25 which will more than offset the payoff volume and provide for a moderate growth for the entire fiscal year. In 2025. The asset quality remains very strong. Our loan delinquencies are at historical lows of 1/2 of 1% and our trouble debt ratio is at 2.19%.. Looking ahead, we are confident in our strategy and our direction as we move into the public bank space and with our ability to navigate this new opportunity. The public market provides for us to continue to grow our franchise, providing long term value to our shareholders and providing positive experiences for every customer every day. With that, I will now turn the call over to Philip Matheny, our CFO to provide a more detailed review of our third quarter. Philip and thank you Terry. I would like to provide to highlight our financial metrics for the third quarter 2025 compared to the third quarter 2024. Net income for 2025 was 9.5 million compared to 9.2 million for 2024 for a 3.3% increase. Revenue we had 22.5 million for a 4.6% increase over prior year. Our expenses were maintained flat at 10.6 million compared to 10.5 million in the prior year. For the third quarter for just a minor increase of 1%. Earnings per share for the third quarter of 2025 was 77 cents a share, 4% increase over the prior year. Tangible book per share was $19.05, a 14 and a half percent increase over the prior year. Our efficiency ratio remains strong at 46.19% compared to 48.4% decrease from the prior year. ROA for the third quarter 2025 was 1.69 compared to 1.65 for 2024, a 2.2.4% increase from the prior year. ROE was 15.7, excuse me, 15.76%. A 9% decrease from the prior year. Gary, this concludes our prepared remarks. I'll ask the operator to open the call for any questions that listeners may.

OPERATOR - (00:07:39)

Have at this time. I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad and your first question comes from the line of Brett Rabadin with Hobdi Group. Please go ahead.

Brett Rabadin - Analyst - (00:07:58)

Hey guys, good morning. Morning. Wanted to start off just, you know, Terry, we, we've talked about the loan pipeline being strong. and you said fourth quarter you expected some solid loan growth. Can you maybe just give us any idea of the magnitude in 4Q and then just what you're, what you're growing and what the outlook is and you know, maybe what payoffs activity you experienced during 3Q? We didn't have a lot of payoff experience during the third quarter. We did, I think we had one at the very start that concluded maybe it actually started. Some of us paid off in the second quarter and finished up in the third quarter. But you know, we, I mean our loan activity has been brisk. You know, our pipeline is, is really full for quarter closings. We feel confident that we will end the year in a positive. Where we started last year, one of the things is one of the customers that paid us off, they all, at the end of every year they drew up a huge line of credit to the tune of about $30 million for distributions to a doctor's group. So as a result of that, every year we would have a huge run up in our outstandings on loans. And then it, you know, it worked its way down through the first quarter. We're not going to have that this year. But even not having that, we're still going to end the year positive in loan growth over where we were last year. We won't meet budget, but we'll have a nice long growth for year end. That's assuming of course, the attorneys gets everything done, we get everything closed and, and those type of things. But the pipeline looks good and we've got a lot of closings lined up. Okay, great. And I know you guys are slightly asset sensitive. You know, the Fed's possibly going to cut one or two times here. End of the year. Any thoughts on the margin and 4Q and just, you know, what you guys are seeing on loan and deposit pricing that might either help or hinder the margin? Well, I mean, yeah, we're, I think we're more neutral as far as our asset situation right now. You know, and we just finished our board report yesterday and we were for the month of September. Make sure I get my months right here. For the month Of September, we were 405 in our net interest margin. So I mean our net interest margin holding strong, you know, a quarter basis point. We just got so much flexibility in our balance sheet because we're so short. We can adjust pretty fast to any, any rates, be it up or down. We just got a lot of flexibility. I think again, if you look at our historical trends in earnings that we provided through this IPO process, you saw our earnings increase in every rate environment to the extreme that most of us have experienced in our entire lives. So you know, we just got flexibility. The way that we manage our balance sheet more, our balance sheets manage more following the loan portfolio and to do that we kind of match things up with the loan portfolio and it gives us, you know, that keeps our spread pretty good. So you know, if I'm telling what our spread's going to be, it's going to be 375 to 380 as standard. But right now it's, you know, it's a little bit over four. So I don't anticipate that changing at all. Deposit pricing? No, we're probably like, probably like every other banker. We feel like we probably pay more for some CDs than we should, but we're paying like 385 I think right now is the highest CD we've got, but it's only for seven for nine months. So again, keeping that pricing really short in an environment that we're going to see decrease and we are just, I think we are just in a good spot right now from a balance sheet perspective to react to whatever we need to do and maintain our earnings going forward. Okay, that's helpful. And then maybe the last one I wanted to ask was just around M and A and you know, we saw acquisition in West Tennessee yesterday. Was just curious. I know you're excited about the environment for possibly adding additional bank size scale to your franchise. Just any thoughts on how you see the M and A climate environment for you? And you know, I know you're looking at deals, but just any thoughts on what you're seeing out there? You know, again, I really think it's good. You know, I've been able to attend a few meetings where CEOs are at and just general conversation. It's just a positive buzz for us. You know, I think everybody's now will begin to recognize us as kind of the only buyer that's in the marketplace for that half a billion to $750 million size bank. We've got a ton of relationships already built throughout the state. You know, I've got a network of CEOs that I talk with constantly, getting a lot of very positive feedback for the opportunities that even they see, even the ones not interested in selling right now that they see that we've got available to us. And there are several that we're kind of looking a little bit at now. Nothing that I can announce officially or seriously, but we never stop looking and we never stop asking. So, you know, that's the key to it, is don't ever stop looking and never stop asking. And sometimes ones that you don't even anticipate show up on your doorstep. Okay, that's really helpful. And congrats on the strong profitability in the quarter. We're really happy with it.

OPERATOR - (00:14:12)

Again, if you would like to ask a question, press Star, then the number one on your telephone keypad. There are no further questions at this time. I will now turn the call back over to Adam Robertson, Chairman of the Board, for closing remarks.

Adam Robertson - Chairman of the Board - (00:14:34)

On behalf of the Board of Directors, I'd like to thank you for joining us today and your interest in Commercial Bancgroup. Our focus remains on quality growth, maintaining solid asset quality and driving consistent earnings performance even in a challenging rate environment. The board remains confident in our management team and pursuing opportunities that enhance shareholder value, all while preserving the principles that define our community banking model. I look forward to speaking with you again in the next quarter.

OPERATOR - (00:15:04)

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.