Q2 2025 Old Second Bancorp Inc Earnings Call
A for Old Second Bank or incorporated's second quarter 2025 earnings call.
Brad Adams: On the call today our gym echa the company's chairman president and CEO, Brad Adams the company CEO and CFO and Gary Collins. The vice chairman of our board.
Speaker Change: I will start with a reminder that old seconds comments today will contain forward-looking statements about the company's business strategies and Prospects, which are based on Management's, existing expectations in the current economic environment.
Speaker Change: These statements are not a guarantee of future performance and results May differ materially from those projected.
Management would ask you refer to the company's SEC filings.
Speaker Change: For a full discussion of the company's risk factors. The company does not undertake any duty to update such forward-looking statements on today's call, we will also be discussing that non-gaap Financial measures. These non-gaap measures are described and reconciled to their Gap. Counterparts in our earnings release which is available on our website at Old 2nd.com on the homepage and under the investor relations tab.
Jim: So, I will now turn it over to Jim, eka over to you.
Jim: Quarter and then turn it over to Brad for additional details.
Jim: I will then conclude with a certain summary comments and thoughts about the future before we open it up to Q&A.
Jim: That income was 21.8 million or 48 cents per diluted share in the second quarter.
Jim: Return on assets was 1.53%.
Jim: Second quarter, 2025 return on average tangible, common Equity was fought 15.29% and the tax equivalent, efficiency ratio was 54.54%.
Jim: Second quarter, earnings were significantly impacted by a couple of items. The first being a 531,000, uh, and MSR Mark to Market losses, or a penny per share.
Jim: And an 810,000 charged in merger, related expenses or 1 cent per diluted share primarily related to the bank Court Financial merger.
Jim: Which closed on July 1st.
Jim: Despite these items profitability Old. Second remains exceptionally strong and Book. Value continue to compound heading into the July 1st. Close of the Evergreen Bank acquisition.
Jim: The tangible equity ratio increased by 49 basis points from last quarter from 10.34 percent to 10.83%.
Jim: That has increased by 144 basis points over the like period 1 year ago.
Jim: Common Equity Tier 1 was 13.77% in the second quarter, increasing from 13.47% last quarter.
Jim: We feel really good both about profitability and our balance sheet positioning at this point.
Jim: Brad will provide additional color on our Capitol positioning in his comments.
Jim: Our financials continue to reflect a very strong, net interest margin with pre-provision net revenues increasing from exceptionally strong levels.
Jim: For the second quarter of 2025 compared to last quarter tax equivalent income on average earning assets. Increased 1.7 million while interest expense on average interest bearing liabilities increased 343,000
Jim: That interest margin improved 22 basis, points year-over-year on a tax equivalent basis and decreased 3 basis points compared to last quarter.
Jim: Total cost of deposits was 84 basis points for the second quarter compared to 82, basis points for both the prior link quarter and for the second quarter of last year,
Jim: The loaner deposit ratio is 83.3% as of June 30th compared to 8, 81.2% last quarter and 87.9% as of June 30th of last year. I'll let Brad talk about that more in a moment.
Jim: Second quarter of 2025 reflected an increase in total loans of 58.4 million from last quarter, driven by growth and construction and Lease portfolios during the quarter.
Jim: the tax equivalent loan yields reflected a 3 basis point decrease during the second quarter of 2025 compared to the link quarter, and a 4 basis point decline for the
Jim: Quarter year-over-year.
Jim: Which was largely stable this quarter with non-performing assets, essentially, flat and only a modest increase in classified assets as well.
Jim: We recorded a 1.2 million, uh, gross charge offs in the second quarter of 2025.
Jim: a single cni credit, which was fully reserved for
Jim: 1 property was moved to Oreo during the quarter with a favorable Outlook regarding its disposition this year.
Jim: The allowance for credit losses loans increased 40 increased to 43, uh, million as of June 30th, or 1.08% of total loans from 41.6 million that March 31st, which was 1.05% of total loans on employment and GDP forecasts using future loss rate. Assumptions remain fairly static from last quarter with no material changes in the unemployment assumptions, on the upper end of the range.
Jim: Based on recent fed projections.
Jim: The impact of the global tariff volatility was considered within our modeling.
Jim: Provision levels.
Jim: Quarter over link quarter, reflect no material. Change, is our projections. Continue to be aligned with the prior quarters assumptions for allowance allocations.
Jim: non-interest income continue to perform very well in the second quarter compared to the prior year, like quarter, after excluding 893,000 in death benefits in boldly realized in 2024
Jim: As wealth management fees, increased 324,000 or 11.7% and service charges on deposits increased, 280,000 or 11.2%?
Jim: Mortgage Banking income, reflected a slight increase in the second quarter of 2025 compared to the prior link quarter and a and a decrease in the prior like quarter, primarily due to volatility of mortgage servicing rights Mark to Market valuations,
Jim: Excluded the impact of Mortgage Services in REITs Market adjustments. Mortgage Banking, income, increased anomaly quarter over link quarter, and from the prior year, like period.
Jim: Other income is flat in the second quarter compared to the prior link quarter and higher compared to the prior year like quarter.
Jim: Expense discipline continues to be strong with total non-interest expense for the second quarter of 2025 at 1.1 million, less than the prior link quarter.
Jim: Our efficiency ratio continues to be excellent as the tax equivalent efficiency ratio adjusted.
Jim: To exclude core deposit and tangibles. Amortization, acquisition costs, and Oreo costs was 54.54% compared to 55.48% for the first quarter of 2025.
Jim: Our Focus now is on the effective integration of Evergreen bank and optimizing the balance sheet for its impacts. We have sold the bulk of the acquired Securities, portfolio from Evergreen, and reduced Reliance on wholesale funding within the legacy of a green Bank as it was merged in Old Second.
Jim: Nothing really has changed relative to our expectations in terms of financial performance and targets associated with the transaction.
Jim: Cost saves estimates are on Target and earnings expectations or maybe biased just slightly higher.
Jim: Next quarter will of course, be slightly messy and feature the bulk of acquisition related expenses.
Brad Adams: With that, I'll turn it over to Brad for additional color.
Speaker Change: Thank you. Jim now interest income increased by 1.3 million.
Speaker Change: Or 2.1% to 64 million for the quarter, end of June 30th, relative to the prior quarter of 62.9 million.
Speaker Change: Also, increase 4 and a half million or almost 8% from the year ago like quarter.
Speaker Change: Equivalent yield increased 16, basis points and Loan yields were 3 basis. Points lower in the second quarter of 2025 compared to the first quarter.
Speaker Change: total yield on interest, earning assets, decreased 2 basis points over the link quarter to 568
Speaker Change: An interest bearing deposits in total interest bearing, liability costs experience. A 2 basis point increase. The end result was a 3 basis. Point decrease in the tax equivalent Nim to 485 for the quarter ended from 488. Last quarter, we believe this continues to be exceptional margin performance.
Speaker Change: Average deposits, increase 51 million or 1.1% quarter overlay quarter.
Speaker Change: Uh, that's primarily seasonal, not a lot going on underneath the hood there.
Speaker Change: Hold second. Should continue to build capital.
Speaker Change: Is evidenced by the 144 basis point Improvement in the TC ratio over the past year.
Speaker Change: Which means we have added a $1.78 of tangible Book value over the last 12 months, pretty strong performance.
Speaker Change: Evergreen will absorb some of this Capital cushion? However, Old Second will still have an exceptionally strong and flexible Capital position.
Speaker Change: To that end.
Speaker Change: And subsequent to the end of the quarter, we repurchased approximately 327,000 shares.
Speaker Change: and a privately, negotiated transaction at a modest discount to Market
Golf given the Evergreen Bank, acquisition consumes significantly less capital.
Speaker Change: Than almost any other potential deal we could have done.
Speaker Change: Our financials will remain relatively uncluttered by the impact of purchase accounting. Going forward due to the lack of significant fair value marks associated with the transaction.
Speaker Change: non-interest expense was materially on track with the previous quarter, decreasing, 1.1 million,
Speaker Change: primarily due to significantly lower Oreo expenses in the current quarter.
Speaker Change: The conversion, we expect to be kind of early fourth quarter type range early in the mid.
Speaker Change: So by the time, we report fourth quarter and kind of December is the first time that youll see.
Speaker Change: Closer to final run rate on operating expenses, and then first quarter should be relatively clean.
Speaker Change: Got it.
Speaker Change: And then if you can remind us does that at acquisition date, the amount of deposit balances brought over.
Speaker Change: I don't have that much forever.
Speaker Change: They were just.
Speaker Change: They were just north of 90% 90% of all deposits.
Speaker Change: Well the actual the actual levels I think it was one of the outbreak.
Speaker Change: $3 billion, yes.
Speaker Change: One two at volt, one two and change.
Speaker Change: Okay.
Speaker Change: Got it and then.
Speaker Change: And just the last one on that.
Speaker Change: You called out.
Speaker Change: Owner occupied.
Speaker Change: Sorry that brought into classifieds, if he could just wrap a little more detail about kind of geography or.
Speaker Change: Your position on that on that one.
Jeff: Yeah, Jeff it really.
Jeff: It really stems from one one large healthcare transaction.
Jeff: In Oregon.
Jeff: We don't see a loss of this at all.
Jeff: We're a very strong collateral position.
Jeff: 70%.
Covered loan to value.
Jeff: The facility had some restrictions put on by the state of Oregon, which which cause a drag on their ability to lease up the facility a lot of those restrictions have been have been freed up.
Jeff: We expect cash flow to get stronger in each subsequent quarter. So we've got a good sponsor behind us as well so we don't see any loss given default here.
Jeff: Gotcha, Okay I'll step back thank you.
Jeff: Thanks, Joe Thank you.
Andrew: Thank you very much Andrew.
Speaker Change: Next question is coming from David long with Raymond James David Your line is nice.
David Long: Good morning, everyone.
David Long: Just first question relates to just the overall commercial client sentiment you know when we were back in April having this call we were coming off of a liberation day in and everything seemed to be coming down a bit just curious what youre hearing from your commercial customers and their appetite to grow their business and close some of the loans that may be in your pipeline.
David Long: Yes, I think first of all Dave I would say our commercial clients are weathering the tariff on certainly exceptionally well.
Advertising for for Capex has been muted I would say for the first half of the year.
David Long: It shows up in <unk>.
David Long: Pretty low levels of <unk>.
David Long: Wind utilization.
David Long: We are seeing pockets of growth.
David Long: And our leasing group.
David Long: And some are commercial real estate.
David Long: We haven't even though we had a pretty good quarter from a loan growth perspective that did not come with.
David Long: But then a growth in our sponsored finance groups that group has been obviously, a historically very strong performer for us.
David Long: Loan demand in that area.
David Long: Is that somewhat weak although they are reporting.
David Long: Pretty strong second half pipeline and then you couple that with.
David Long: Evergreen bank, which are.
David Long: Typically historically has a very strong second and third quarter.
David Long: Ask the generator and the power sports area. So we're encouraged by by loan pipelines.
David Long: The second quarter for us that was our strongest growth quarter in over two years or so.
David Long: We think low to mid single digit growth as possible still four.
David Long: For 2025.
Speaker Change: Got it thanks, Jim I appreciate it and then as a follow up.
Speaker Change: Mentioned, the evergreen deal and maybe having a little bit more of a positive bias than than when the deal was announced does that is that tied to the performance of that.
Speaker Change: That bank since you've announced the deal and then it is.
Speaker Change: As a tie in to that just any turnover worth noting with with that transaction.
Speaker Change: Yes.
Speaker Change: They are performing well ahead of what we would assume I mean the way. It works is it's basically a stub period yet to project in terms of what is going to be and what level of profitability is performing and projected forward one year two year three years.
Speaker Change: As a standalone entity, that's for better or worse kind of industry standard that was done.
Speaker Change: They are already as a standalone entity performing at the profit level.
Speaker Change: Soon.
Speaker Change: For all of next year.
Speaker Change: So they are a lot better.
Speaker Change: And what we had expected.
Speaker Change: It's a great asset.
Speaker Change: It's certainly.
Speaker Change: Yeah.
Speaker Change: Previous probably to our market, which I had assumed it would be.
Speaker Change: That's difficult to say with fair value not completed.
Speaker Change: That's the bias right now my gut is usually pretty good.
Speaker Change:
Speaker Change: <unk> was right on margin this quarter.
Speaker Change: Nobody got Mad if I missed it by 20 basis points last quarter.
Speaker Change: I missed it in the right direction, but.
Speaker Change: But overall things feel pretty good.
Speaker Change: Great. Thanks, Brian appreciate it.
Speaker Change: Thank you very much.
Speaker Change: Our next question is coming from Nathan race of Piper Sandler Nathan Your line.
Nathan Race: Hey, guys. Good morning, Thanks for taking my questions.
Speaker Change: Youre going to Youre going to ask about the tax rate or anything no I would not go in that.
Nathan Race: Arena with you.
Nathan Race: Covering your long enough.
Nathan Race: But I was hoping to.
Nathan Race: Talk about the outlook for charge offs going forward you know obviously you are picking up.
Nathan Race: Our risk reward business from evergreen and when you think about their lending specialties. So just curious with that business in the fold and you know all the improvement on the legacy old second side of things, how youre thinking about kind of the charge off trajectory going forward.
Nathan Race: Yeah, I think obviously this is a solid quarter for us.
Nathan Race: A charge off perspective, I think we just have one.
Nathan Race: It's about $1 million, which was fully reserved for but yeah. I think you know investors should know that empower sport lending in general.
Nathan Race: You know what loss rate can run a little bit higher but you have to look at that.
Nathan Race: Hand in hand, with the contribution margin that that portfolio generate so you know losses in that book could be anywhere.
Brad Adams: Between what Brad one and one 5% yeah, that's pretty good luck, but what you're also looking at a portfolio with an average coupon today, a new new assets going on around 9%. So you have to look at those same candidate.
Nathan Race: Going forward.
Nathan Race: Right. So if I was doing some quick back of the envelope map on their portfolio and overlaying that loss rate.
Nathan Race: And I in the ballpark of around kind of 30 basis points going forward charge offs, yes.
Nathan Race: I think that's good.
Nathan Race: Okay, Great and then obviously with evergreen you're picking up a higher beta deposit franchise, particularly relative to legacy.
Nathan Race: Legacy old second.
Nathan Race: So just curious Brad to maybe get your updated thoughts on how you think the margin responds following a 25 basis point fed cut at some point going forward.
Nathan Race: Yeah when does that.
Nathan Race: I'll, let you pontificate on that Brad.
Brad Adams: Oh man hours, it takes away yesterday, and what used to be $13 is now $16 and that happened like in the last two weeks in.
Speaker Change: Somebody just forward made the price increases at Walmart in the last 30 days of Iron.
Brad Adams: Yes.
Brad Adams: You know.
Brad Adams: My interest rate Prognosticator newsletter has a really hard time, Santa Ana rate cut this year I don't see a basis for it.
Brad Adams: I think people will squawk for it.
Brad Adams: Here, we are also in Atlanta of mean stocks running again.
Brad Adams: Jim had to exit this call for a little bit to go buy some gamestop.
Brad Adams: And Kohl's I think he'll be back in just a second.
Brad Adams: So.
Brad Adams: It's against my moral fiber and something approximating religion to think about a rate cut this year doesn't make any sense to me.
Brad Adams: Whereas before we had said we'd lose somewhere between four to seven basis points for every 25 basis point in time, I would say, that's 25% lighter conservatively on a pro forma basis.
Speaker Change: But there's more margin movement for US right now just in and balance sheet movements as Jim mentioned, we sold the entire securities portfolio.
Brad Adams: And renew some wholesale funding.
Brad Adams: All of those assets were eliminated they were being carried at a net negative margin contribution. So there are there are a number of things going on under the hood that are more powerful than then.
Brad Adams: Then movements and expected interest rates within the fed futures curve.
Brad Adams: Put it this way we gave up three basis points this quarter, despite something approximating 40 basis points of movement.
Brad Adams: The sofa curve.
Brad Adams:
Brad Adams: So I think we're less sensitive than maybe people expect at this point.
Brad Adams: And I have been somewhat surprised at the margin durability, given what the curve has done over the last year.
Brad Adams: I think that the.
Brad Adams: If you had three beers in me I would probably raise with what I believe the long term margin, Florida is for one second even on a standalone basis before evergreen was added to it.
Brad Adams: So this is if you know me this is about as bullish as I found.
Speaker Change: Monoszon at all.
Brad Adams: <unk>.
Brad Adams: I'd say if you make me assume there is a rate cut this year I would say four basis points and give up.
Brad Adams: Man I answered that with a lot of work.
Brad Adams: Say two or three weeks after the close rates of evergreen and <unk>.
Brad Adams: You're right they are higher beta.
Brad Adams: Funding shop, but we.
Brad Adams: We started bringing high yield money market is down.
Brad Adams: Deposit levels have been remarkably.
Brad Adams: Solid we have not seen a whole lot of runoff again, it's only been three weeks, but.
Brad Adams: I would agree with Brad right now laser.
Brad Adams: About as good as we could've hoped.
Brad Adams: Got it.
Brad Adams: Really helpful color.
Brad Adams: And thoughts.
Brad Adams: So Brad just maybe start for the third quarter, given the repositioning of some of the securities portfolio of evergreen and some of the other impacts in the deal. How are you thinking kind of like a range for the margin for the third quarter Nate.
Brad Adams: I'm Gonna go flat, but they are in the wider margin of error than is typical with me.
Brad Adams: It's flat plus or minus 10 basis points plus or minus five.
Brad Adams: And bearing in mind, when I answer that.
Brad Adams: Last quarter asset.
Brad Adams: And it went up by 40 basis points.
Brad Adams: Without the fair value marks being done it's difficult to say with any precision.
Brad Adams: It doesn't feel like that.
Brad Adams: Is what I'd say.
Brad Adams: Okay.
Brad Adams: That's helpful. It sounds like Youre more keyed in on the margin outlook on tax rate. So I'll leave it there thanks guys.
Brad Adams: Hey.
Brad Adams: Thank you very much.
David Conrad: Next question is coming from David Conrad That's K B W. E. David Your line is nice.
David Conrad: Yeah, Hey, good morning, just a little bit of a follow up to that recent discussion just maybe add a little color too.
David Conrad: Absent of of what you paid down and wholesale deposits kind of what is their cost of funds, bringing over maybe maybe the leverage that you guys have over the next year plus of just working down that with your strong deposit franchise.
David Conrad: Thank you you can see what their cost of funds were.
David Conrad: And their standalone financials is in the four range, where do I expect to be by the end of next quarter I would expect reliant.
David Conrad: Purely market responds and thats something with a 4% handle.
David Conrad: To be $100 million to $200 million labs.
David Conrad: So I'll, let you manage your way to that.
David Conrad:
David Conrad: But in aggregate the overall standalone cost of funds, but within evergreen should be down.
David Conrad: Between 30, and 70 basis points.
David Conrad:
David Conrad: Again, there is there is movements here and I'm speaking about a quarter that is.
David Conrad: It is only a third of the way done.
David Conrad: So it's a little difficult.
David Conrad:
David Conrad: Decisions are being made on the fly here for example, nobody that.
David Conrad: I don't think we'd be able to sell that solar loan portfolio.
David Conrad: We had mentioned previously.
David Conrad: I don't want to sell where we have to market.
David Conrad: Okay.
David Conrad: Mark so steep that it actually becomes a very good asset.
David Conrad: So yeah.
David Conrad: We're learning as we go here.
David Conrad: That's about as precise as I can get at this point.
Speaker Change: But moving past past this quarter I guess your deposit growth.
Speaker Change: You know absorb their loan growth or you continue to kind of fund marginally with with that set of hobbies.
Speaker Change: We've got we've got we've got a substantial amount of room, given where our standalone loan to deposit ratio is.
Speaker Change: Time deposit run off coming in future quarters.
Speaker Change: It's not an overnight thing that as we exit next year.
Speaker Change: If I have to guess I would say, we would be at a 90% loan to deposit ratio.
Speaker Change: And.
Speaker Change: Overall cost of funds is substantially better than a plus b.
Speaker Change: I spoke previously about a desire to pick up some supplemental a small deposit franchise.
Speaker Change: Equivalent to Sam first merchants branch deal that we did prior.
Speaker Change: That would that would meaningfully basically return us to where we were before.
Speaker Change: So theres certainly room for that.
Speaker Change: Will it come to fruition.
Speaker Change: Wholesale.
Speaker Change: Got it thank you.
Speaker Change: Yes.
Speaker Change: Thank you very much.
Speaker Change: Question's coming from Terry Mcevoy of Stephens. Your line is open.
Terry Mcevoy: Thanks, maybe just a follow up Brent on that last question would your preference be to wait until evergreen is integrated before.
Terry Mcevoy: Your next transaction or something along the lines like he just mentioned became for sale would you would you take a serious look this year.
Terry Mcevoy: I mean, we're always looking but.
Ideal time, it wouldn't be before October at all.
Terry Mcevoy: [laughter].
Terry Mcevoy: I think there will be serious risk of like a house to an mi falling out a window or something like that.
Terry Mcevoy: People will be very upset with me internally.
Terry Mcevoy: Acquisitions are a lot of work.
Terry Mcevoy: And.
Terry Mcevoy: You hear of any bandied about in this industry. It's only four branches. There is only five branches, where it is only 10 branches.
Terry Mcevoy: And that as well.
Terry Mcevoy: While understatement on the amount of work that's involved.
Terry Mcevoy: This one does have some advantages that help us.
Terry Mcevoy: A similar core.
Terry Mcevoy: That makes things a little bit easier, but there are a whole lot of eyes and a whole lot of Ts.
Terry Mcevoy: That needs to be dotted and crossed so you get it right.
Terry Mcevoy: It's a lot better than it used to be but small linzess and conversions can and Kendall Jenner newspaper as we've seen in some deals around this town in the last couple of years.
Terry Mcevoy: We don't we don't want them.
Speaker Change: I think in a perfect world, we'd like to pause here digested deal integrated.
Speaker Change: Started growing organically, a little better, but as you know M&A timelines are unpredictable rarely seller or buyer timelines.
Speaker Change: Come into alignment so well.
Speaker Change: We will continue to be opportunistic, but we've got plenty to do today.
Speaker Change: I appreciate that and then you mentioned repurchasing 327000 shares in a private sale did that happen after the deal and where the sellers connected to the bank that sold or was that separately.
Speaker Change: Separate and then I guess as a follow up what's the appetite for incremental buyback.
Speaker Change: Who is a.
Speaker Change: Private equity investment.
Speaker Change: And.
Speaker Change: It was subsequent to the deal closing.
Speaker Change: The execution price was $18 per share per quarter.
Speaker Change: Bye bye.
Speaker Change: Viable option for us here.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Thank you very much just a reminder, if at all any remaining questions. You can join the queue now by pressing star one on your keypad.
Speaker Change: Our next question is coming from Brian Martin of Janney, Brian Your line is now.
Brian Martin: Hey, good morning, guys.
Speaker Change: Hey, Brian it's Brian.
Speaker Change: I'll leave the tax question, Brad since it sounds like you don't want to and then that anyhow. So.
Speaker Change: Maybe just one back for the margin Brad just bigger picture you.
Speaker Change: Once things reset in third quarter, and you get through some of the noise, which it.
Speaker Change: It sounds like you're more optimistic than pessimistic, but just directionally from there how should we be thinking about the margin kind of in a flat rate environment, and who knows what happens with the bad but once you kind of reset and get through the noise like you were talking about this quarter.
Speaker Change: Can you give any thought distractedly, how the margin and kind of what the puts or takes on the outlook thereafter.
Speaker Change: I mean, a flat rate environment, along the curve, meaning that we don't see this whipsaw and so for an overnight index rates.
Speaker Change: That we've seen over the last 90 days, but truly flat along the curve our margin is stable and durable.
Speaker Change:
Speaker Change: Slightly higher.
Speaker Change: What.
Speaker Change: Green brings to the table.
Speaker Change:
Speaker Change: Obviously different per scenarios from some that.
Speaker Change: Totally stable yeah.
Speaker Change: It doesn't really exist in nature things are always moving in one direction or another.
Speaker Change: Yeah.
Speaker Change: But I feel I feel very good about what our market outlook is.
Speaker Change: We're not offside on any of that we do have.
Speaker Change: Sunday issue that we'll have to deal with next year that will be negative to margin.
Speaker Change: I don't know what the plan is for that yet.
Speaker Change: <unk>.
Speaker Change: But assuming that.
Speaker Change: That gets taken care of them in a way that is not the leading to margin wholesale margins stable and durable.
Speaker Change: Gotcha.
Speaker Change: Talked about is kind of a long term floor, maybe being raised kind of how are you thinking about that kind of that long term floor on where the margin is.
Speaker Change: As you look prospectively.
Speaker Change: You've heard me say it before that I do not believe that there is a pathway back to a zero percent interest rate world.
Speaker Change: And that bank like us are fundamentally better positioned even though there aren't many banks like us but.
Speaker Change: <unk>.
Speaker Change: And I had said previously.
Speaker Change: Save everybody at a time of going back to the transcripts I had said previously that I believe.
Speaker Change: <unk>.
Speaker Change: Our margin floor was probably around 4%.
Speaker Change: If you issue.
Speaker Change: <unk> me down and maybe answer the question today, which you kind of our.
Speaker Change: It's probably more like 425.
Speaker Change: Would be my guess.
Speaker Change: On an absolute floor.
Speaker Change: Got you well I appreciate all the color and then how about just in terms of once you given some of the noise that's going to play out here in the near term with the deal can you talk about what.
Speaker Change: When you get to that maybe the first quarter of next year with the deal closed integrated kind of how you're thinking about ROA.
Speaker Change: So we kind of back into kind of how we should think about things, but what do you think are away is going to trend to in <unk> and 'twenty six whether you pointed to a quarter or a year Brad whatever you can offer just in terms of your outlook from.
Speaker Change: From where we stand today.
Speaker Change: There continue to be now because we are we talking about rate cut land again are we talking about are we still talking about stable interest rates what are we talking about here whenever we.
Speaker Change: We'll go with your scenario, Brad I don't know it just like you don't know I guess I'm. Just wondering what do you think are away is going to land in your and your thinking it sounds like probably no rate cuts. So we'll go with that that's fine.
Speaker Change: I would feel very comfortable or above a 150 ROA.
Speaker Change: Okay.
Speaker Change: Okay, and then I think you answered the question about buyback.
Speaker Change: On the table at this point.
Speaker Change: Core open open to it yes, okay. Okay, and then just last one was loan growth it sounds like you're a bit more optimistic on on loan growth yeah that works.
Speaker Change: Yeah Yeah.
Speaker Change: Second the second and third quarter generally are better quarters, Brian you know that Oh, what I'm most encouraged about it.
Speaker Change: Having you know more lending verticals.
Speaker Change: To help sustain that growth has been encouraging.
Speaker Change: To be fair, we did not have as.
Speaker Change: As many payoffs or paydowns in the second quarter, but.
Speaker Change: It was one of our stronger origination quarters than we've had in some time so I.
Speaker Change: I would expect I would expect some growth again.
Speaker Change: In the third quarter, and then probably some.
Speaker Change: Some stabilization in the fourth and first quarter.
Speaker Change: Okay perfect well. Thank you guys for taking my questions.
Brian Martin: Thanks, Brian.
Brian Martin: Thank you very much well we appear to have reached the end of our question and answer session. I will now turn the call back over to Jim <unk> for any closing remarks.
Brian Martin: Okay. Thanks to everyone for joining us this morning. After your interest in our company. We look forward to speaking with you again next.
Brian Martin: Next quarter Goodbye.
Speaker Change: Thank you very much. This does conclude today's conference you may disconnect. Your phone lines at this time and have a wonderful day, we thank you for your participation.