OSBC - Earnings call transcript Q4 2024 | Old Second Bancorp, Inc.

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Operator

Good morning, everyone, and thank you for joining us today for Old Second Bancorp, Inc. Fourth Quarter 2024 Earnings Call.

On the call today are Jim Eccher, the company's Chairman, President and CEO; Brad Adams, the company's COO and CFO; and Gary Collins, the Vice Chairman of our Board. I will start with a reminder that Old Second's 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. These statements are not a guarantee of future performance and results may differ materially from those projected. Management would ask you to refer to the company's SEC filings for a full discussion of the company's risk factors. The company does not undertake any duty to update such forward-looking statements. will discussing we measures. non-GAAP call, today's also certain be financial On our on non-GAAP reconciled Investor release, our on and are Relations which at their available These described in tab. to measures under homepage the and GAAP counterparts is website the oldsecond.com earnings

Now will ahead. over Eccher. Please to I Jim it go turn

James Eccher

Fourth over prepared additional quarter thank give my and it will and everyone, us and morning, with comments remarks turn for joining certain for we for this up and the of opening the to morning. then conclude Good thoughts you open questions. by equity ratio I the Net details. I future then it of were have Brad on was several summary overview before about the XXXX, XX.XX% or $X.XX was X.XX%. on significantly earnings impacted million return and efficiency fourth XXXX tangible average items. per quarter diluted was tax return common quarter XX.XX%. Fourth $XX.X share equivalent and XXXX in was several quarter income assets

a per First $X.XX absence which by earnings $X.X in reduced after-tax loan the credit of significant losses share. growth, was diluted provision for million

per We or lastly, share. shy share. merger-related a million write-downs $X.X expense in diluted $X.XX $X.XX And per $X.X of million also or had diluted just OREO

was this feel balance profitability both to in cash the quarter, our However, tangible over The our to sheet equity strong tangible Tier at Merchants strengthening year due Common to quarter in continues ratio from tangible past and second equity modestly positioning First despite end fourth with equity fourth the acquisition ratio remains the this dilution X will end and points of we XX.XX%. all quarter, about very last at our basis profitability we from XXX exceptionally to point. equity balance and good sheet increased the decreasing XXXX. only by XX.XX%

exceptionally and Pre-provision reflect strong. Our revenues remained a financials margin, and declined. rates strong stable net as market stable interest interest to net continue even

interest net million and reduction on fourth while the due due reflected over of to to to XX deposits $XXX allowed XXXX First significantly pay waiting million funds. $XX.X our at remixing Loan on For The slight short-term good costs a growth the of the other increased cost the to for income purchase decreased as the of the is million to in of commercial in primarily expense X.XX% owner-occupied net deposit pricing in X.X%, due or December yields rates million short-term on of decrease quarter XXXX as the certain remained total average prior XX% and paydowns year-over-year. Funding estate, quarter fourth from market variable third funding lower borrowing due XXXX X.X%. quarter million due during $X.X increase quarter Comparatively, approximately large rates of of equivalent of increased Home to prior average commercial variable well in and loan well increase liabilities due fourth third to point multifamily compared earning deposits. The The is portions like interest reflected our the quarter to at and of portfolios compared to costs the during year the X costs. driven interest rate trend quarter due quarter. $X.X the as of us X.XX% X.XX% driven impact in the second XXXX the to reductions linked relatively XXXX. portfolios securities base in of other XXXX. and XXXX, expense by basis customers continuing interest ratio compared due and results of as quarter period, XX% and $X.X to down primarily or remains activity including First construction XX, prior for was the early on X is last this assets XXXX, Bank in net end, primarily our a from historical the of some committee and for real in Loan margin interest-bearing how many December fourth and of margin fourth modest XX% tax both loan compared Merchants, margin relative the in any branch our borrowings rate to the the for see periods, the bank quarter as to XX close a XXXX. The prior but play The the and point quarter to was for stable loans on year-over-year election XXXX decrease interest loan period increased shape. X months. Tax to the fourth points growth quarter, has It's basis as volatility Merchants the Loan-to-deposit of and acquired growth interest by our high linked loan basis fourth activities. Currently, in interest primarily out XX, which X securities the was quarter Federal rising seasonal within $XX.X business quarter coming equivalent quarters quarter, million. loan further market year in changes year third growth to loans

to we balance our focus on minute. optimization, a talk more be prior that let have in continues As calls, and Brad said about sheet I'll

loan declarations. We facts actions downgraded with more on come as current financials, audits collateral some credit, mixed indicate this and news, of point, otherwise, dollar. losses much that charge-off and cases our This $X.XX and bankruptcy terms field believe represents bankruptcy effectively positioned which We on Subsequent workout is they to is estimate this investigation our this an happens first. bad some a additional quarter balance carrying bad credit. in news news unfortunately recovery better both was audited best a million develop. Currently, last light. on the as in we are but the quarter and $X.X possible recorded based good In on C&I at

protect to will continue matter actively interest. to and take We monitor actions this our best

and the way quarter. with loss and resolution criticized this the When now in expect loans OREO and foreclosed a duration, balances worked continued for and long continued near we XX% and portfolio These million expense XXXX represented further news, for XXXX, are loans a in both identified acquired, been real learn in levels fourth linked term. Special sale balances years. credits optimistic strength dramatically. investors the appraisals its $XXX.X been valuation as also the to process. to significant year-over-year remain been X.X $X.X contract seen in on did. These earners improve ago will and to clear year have a quarter. and a XX% important weak fourth was expected through $XX.X of realistic $XXX $XX in few quarter charges your the recorded On million X the next substantial mention and good nearly we've down aggressive their sell in is addressing loans from near loan nonaccrual levels substandard no on already improvement confident decreased about asset from interest contractually soon. These its basis, largest ourselves. the and and clear the a than quarter weeks. book also they loans and rise We've have knowing properties more year-end We And short Classified for million were that be remain our bulk recent portfolios. The the the in the quarter. In our the quickly first ago. quarter. below significantly We in been and quarter received. from important rates commercial of we are Notably, have mistakes noncost or estate very immediately by a and million It's but and from improve XX% balances better. significantly These under to very properties in X is money are of first have made criticized those as decline substandard pragmatic few last lowest problems their balances of peak million, be total and impacts. decreased We'll from represent

new largely in criticized million the income. and on to of our wealth and allocations assumptions on total and last of assumptions bulk the Fed in the allowance mortgage transitioned our not red the was loans range for end reduction quarter, provision decreased future quarter, to rate perform of quarter recent fees, no with the XXXX, total on rate loan has credit has The X.X% charges testing the $XX.X used $XX.X static projections. allowance reflects substandard in any in GDP growth end income quarter losses as from which X.X% changes relates will third level into of of be us our in going continues Flex on material environment reduction deposits forward. The with December XX% in rate unemployment XXXX, Unemployment to linked the change the impacted stress Continued which of flags fourth XX, quarter-over-linked loans quarter the year-over-year. Noninterest higher or with remained to for assets also portfolio loans. and at movements loss loans compared raised management based million well the downward forecast in of upper on fairly the service from banking

discipline adjustments, recoveries linked-quarter than $X.X quarter 'XX. Expense in mark-to-market income rights, with in due contract with prior XXXX year of accruals Mortgage the $XXX,XXX quarter. of over compared first was Other third of merchants fourth to due third in the flat be increase on compared in like to and contract to banking vendor $X incentive incentives noninterest million total quarter servicing other link XXXX the XXXX in the the fourth mortgage acquisition million linked the of of the costs to impact prior the quarter incurred an expense fourth quarter of strong more and quarter continues received and primarily in income prior quarter. the Excluding primarily quarter quarter variance decreased quarter, linked to

adjusted to compared of for the OREO quarter. efficiency prior efficiency Our continues costs was costs as equivalent ratio, for fourth linked be acquisition ratio XXXX XX.XX% quarter the exclude and excellent XX.XX% to the tax to

to long to building we the sheet same, liquidity, origination securities returns The the recent capability the more obviously commence create for forward, balance is doing building to featuring equity over to it turn Brad now on long-term As additional the more over focused of mix we color. are loans, term. continue is also loan performance. I'll on which look in capital goal less a and commercial more stable managing maintain order for

Bradley Adams

a me for Thank There's of lot to controversial you, not Jim. about. talk

soapbox for loan don't seasonality to remains pricing point this Public But million borrowing last due pass a provided is a decreased treasury XX acquired then increased exceptionally million stabilization. believe aggressive X to puck the the levels. to Deposit performance. of headwind the equivalent from equivalent markets quarter up largely from in Total [ for Merchants flows to basis the to interest-earning deposits XX It's with quarter alternative. always X.X% and quarter many X a is and So than point branches. Deposit net was economic X.X% interest-bearing period to back and deficit NIM fixed fourth relative on by feel have X.XX% the But from primarily quarter to have compared and much continues The time last million in a the a X.XX% or basis the the this end when interest $XXX,XXX we quarter. X nonsense. total from continue years, to quarter liabilities the deposits third conditions realistic which to decrease comments need quarter, offer and were really in $XXX few much I'll more be basis pricing lower increase securities It's the result million basis and prior add decreased expectations deposits forward exceptional over overnight ago quarter. the this funds don't the out curve increased $XXX XX in Jim. curve $XX.X That basis a ] I $X last claim by relative a our point Net be the little and income end quarter, bit. on Average relative constraints. points quarter points. to nice decline increased yield the of the yields in basis and that markets attractive more income federal a and to to relative as a aggregate. tax absolute first go on yields an display increased prior of quarter. Tax year was XX points First interest-bearing offset to $XX.X assets NIM I of deposits million cost or signs in the quarter to become bit times

We the as well of we positioned are attractive we to a today. the very come. over decisions to made bit and continue balance the cycle of we here have Duration is proud are is for sit sheet more what entirety believe

leans that our but poor dramatically and value is in direction So not Relatively spreads continuing compounding and so. to Second persist on bias Old maximizing returns. focus marginal book

careful expenses appropriately. risk with being pricing means that and us, For

offers are the in result cuts and upside of for funding the a As down newly growth indices, to the trends expectations. to their rate on loan with margin to XXXX these opportunity Success recent slowly. deposits impact expected acquired trend

ratio XX% and third to mentioned, that's XX% and plus the the fourth deposit deposits compared sub from now quarter, those in due the Jim branch to deal. quarter loan the As purchased is

ability liquidity means capital, short-term Our the the by basis which added our TCE as year, fairly astonishing have $X.XX portfolio borrowing evidenced securities we over value source XXX a remains intangible time. the to and is from over that improvement to continues in build Old current Second book point past negligent. level

This given of acquisition. purchase for of not rates fruition, in Capital we and cash from minor the to result securities the quarter. that our AOCI flat. overall backup was do the here investors M&A build third favorable the in should of short quarter, like is Merchants of move that is portfolio indicate exceptionally Old Second. will essentially environment use First the will to I does the believe how that a the capital. note just would relatively remains return come capital That slowly bank relative more magnitude a I to to If

things overall X% XXXX, below the the write-downs Noninterest officer the operating various Our buyback bonus But in that That's modestly calculate the it trends base relative have for tangible the would hopeful function that impaired as peer performance was it remediation increased bright. And -- and turn I continues on efforts. Incentive acquisition-related the digits. because of we of ROA excellent. last other is credit we the this We're of have at more probably Jim. we're primarily table. from our is million the our where as growth I'd to about expected like in to in to the feel costs higher expense place quarter. a accrual. year. Overall, with optimistic I stable quarter, very as overall proud and thought year that OREO due performance be believe well that as and previous of call despite in we we X%, performed targeting is metrics $X percentile, and fourth to primarily are of accruals future well the expense fact equity like on so what return I and our adjusted Margin but us great. exceptionally in for payout again, to who are as over feel extremely capital are it's have that, for not bulk relative for essentially mid-single which to huge XXth the performance to groups, year, we hitting second in people back AOCI, slightly maybe down. overall, position loan know outliers for said the positions. Old puts We're and the range, than

James Eccher

confident closing, ahead In opportunities we are our the and in Brett. sheet old for very Thanks, balance Okay. second. that remain

made and good optimistic the we're quarters very future for but be not with this the on this will credit, year, only progress pleased front. that entire quarter we on are We

had the optimistic this focus the profitability. in expect Our assessing risks trends mix excellent margin proud prepared and efficiency ahead. That on remains earning year are statement interest our of within comments the more portfolio very about in a remains perhaps asset we concludes the morning. some monitoring than order loan little and and at I'm maintain optimizing record levels. year XXXX resilient and Net to income

it we open the to turn to So I'll it Q&A. up moderator, over can

Operator

is [Operator Instructions] first with from Rulis Davidson. D.A. Your Jeff question coming

Jeff Rulis

follow-ups, as comments a the pretty seems margin, got inclusive drift Really in level if kind just of well. 'XX. it for the the of your couple poked if terminal expectation And a of about we in slow there? maybe of other Any pullback maybe we've of rate your is couple you've the in of color at Brad, cuts that on see before, the terms Or margin? digested a cuts, impact a slow for kind

Bradley Adams

soap force I box, about cuts. that see that talk for me really X I see do core inflation, underlying strong my do sticky trends I X a see said, more. I you up But rate being mechanism realize overall. fairly and want Jeff. persistent both macro further on So fairly employment don't or and some to

I $X.XX I what trend if pretty get we will to a to but see margin margin of us towards significant level. think contraction be a above think see margin confident ahead to just eventually, path don't is feel kind overall. the you're $X.XX likely get there. I more, to that us has XXX it a I significantly slow

Jeff Rulis

are that... in than XXX something Brad, then more cuts, and there better no

Bradley Adams

be would yes. my That expectation,

James Eccher

a on the acquisition very Merchants December expense thing. in One benefit have borrowings. interest closed full so on the FHLB early did we quarter not savings

Bradley Adams

some some laddering that hundred with a matured swaps detail that had higher year received much probably at by margin had margin to don't obviously, of flows reinvest were stability fixed benefit XXXX, things, of and that in a bonds stability. well managed. allowed a planned. We at us we are has that see. And level there was anybody had we've people well Now It couple was this better of cash our than helped often through that which expected. contributed rates. a us matured of design, The ton million that to

Jeff Rulis

follow-up then base expense And a the or 'XX... reported the X% just on growth, full year X% of it. Appreciate of a side. is that maybe off

Bradley Adams

be all merger try to an to the are we're I the of on caption drift core stuff. call the across in stuff. the transparent of expectations Ex know that than may X. ex our targeting the time out, We increases they certainly the significant our sit what basis, there's is the is number. we terms the about a and as some get have in operating looks what the But look we you can that, pretty Ex you on those We We it heroes. yell nonrecurring bulk to here this bulk And department it seeing employee with in our if are. we inflation that at of order side better in HR it And today, expense benefits live on that like like that. in do significant nonrecurring, I past. number

Jeff Rulis

was... that And Okay.

Bradley Adams

right I on got about HR X people too. the now, call

So they're their I now. all right know just eyes rolling

Jeff Rulis

X% expectation, of that That's The it. would quarter right? on inclusive I of growth potential inclusive basis. guess, full the merchants a love be

Bradley Adams

it, because like long. have an this to operating with From to expense look do our are us. for -- overnight deposits that with don't they didn't funding mix get for lot OpEx we added month with the of very in isn't for X loans And standpoint, were but going we borrowings overnight pay here. borrowings First we $XXX,XXX a December Merchants about Obviously, the

managed what will terms But today be that's of Balance we sit as here impacts whatnot. are. happen. will and Something the sheets in

Operator

queue. has McGratty is KBW. Seems from next coming the Chris question Chris Your left with

is Piper Race Your Sandler. from with next question coming Nathan

Nathan Race

us front. kind more just fourth the the could on what's cut cuts margin rate of that the impact? you get a Or remains point there? in And the margin for in how of as XXX if the of quarter, a on points starting absorbed maybe Maybe you you if would just basis pause, update good X full XQ? July, in of impact maybe little can just the Brad, help guys you on from Fed so kind us cadence

Bradley Adams

would in we sit we'll July, kind like or like down get is bleed the that X shape per And feel to X%. time the XXX in to an down X% right of if X% out we'll feel rate will additional where believe now. Fed I take there. and about cut X, order quarter cuts I X

on biggest pouring difficult and is because and So this us fair Fed guidance Fed what money I'm the has since Brad, obviously, in to futures now. X so out is an makes what so terms you're for our duration, about they now move points a end. wrong around And SOFR schizophrenia impact say. I going that's when But we're whoever bleeding of margin it's something. its And of there's to and jump it because happen. -- OIS happen. intra-quarter it fund when points rates. going XXX really moved no cut, then around. per rational in terms is basis around SOFR. SOFR short basis talking And on and the X impact on not assumes don't or basis That's you're rates that's rate XXX I to quarter, It's know X loan move those to last wildly short said yields can points on idiot

crazy look of in also futures confidence like. interest rate feel rationality as makes I there's gives less of a fair more XXXX both people of amount for right me can better what a are. what little -- and terms said, So terms in bit me now, that directing and And

Nathan Race

to XQ? you. because million quarter million in you're the you Okay. I Got at And out are think you posted of guys suggesting coming just clarify, $XXX fourth $XXX

Bradley Adams

were you me feeling XXX. it's you I if which be to asked like going what quarter, first margin the to I what is guess was doing, would be I'm going thought in

Nathan Race

for Thanks clarifying. you. Got

that this within thinking context, mid-single-digit growth you're Just year.

aspirations XXXX? shortfall how And bond cash kind us just So coming your to terms off deposit of are flow can what have the fund that? of you in much in update there's the maybe a gathering book to you extent

Bradley Adams

this assets entirely get $XXX the it million have there growth months yields That which so portfolio bond of being you we for get X times would said, have about loan type off if probably fund we'll the of exceptionally elected. been attractive. been over year. last portfolio, Bond and

have at rate last whenever out been. tremendous rates, most the XXXX. I if the securities but very well. that doing, duration up things than in recall I It's take but were got and of more hasn't that's asset than for say of out XXXX, and that stability like be picked there, thrilling it value the to you is I in thing better it's when wanted We not. really the would investors today what's slightly to middle attractive variable, worked and you've -- towards variable investors in be over it some our has entirety growth been bias would than more you

even out interested purchases We've there. capital. lot lot of with of I We supplementing be levers. if loan I would growth of flexibility. there's a So got got value a got a loan in We've lot

a of and shape, good cash got a very at us. we're lot in of lot making coming is sheet money. we and balance Our

things pretty are So good.

Nathan Race

take Right. capital -- it And to for M&A would that's if curious that optimistic these get thoughts maybe share what Yes. you're environment has And reengage guys built you're that speaking and on continue less building repurchases? or to may seeing feeling to you on what would build be be in your the of days. updated front, we'll on all

James Eccher

Yes, Nate, all active that is we'd ongoing. say and are around discussions

Bradley Adams

sensitive. nothing a relative at price preclude there's at are that the levels you're all that would not earning at valuations, I'm the buyback buyback, these of When we levels. terms and In

Operator

coming Long Raymond is from question next with Your James. David

David Long

to wanted back Just go expenses. to the

want OREO. Just $XX.X maybe we're $X.X to at as you're here make sure to about you're million million, XXXX, on added thinking I the the clear expectation

So at are million. you $XX

a again closer is we're it up you full the for number the $XX simply growth If number you in based looking year that merchants first you're the add posted, that Or on? X%. the that that comes to talking Is million. quarter at

Bradley Adams

for the and number the year the merger OREO. It's related the ex

David Long

the talked was do as building opportunities. in is you then about veteran see capabilities you I advantage just some banking Great. look appetite opportunities? XXXX, about your of That's to very what any to ask Okay. to wanted And specialty C&I? Or other of and clear. you bankers on add the strategic trying to focus core And take commercial your it advantage investments lines? take further is thing into

James Eccher

producers. a budget to we that, prudent in in we year. We are Yes, just pulled and grower. did estate, made real sense which Dave, say, risk-adjusted always one-off better were capability be team were internal on front, -- very active for us. we we the spread do be and not for the a that definitely some curve commercial careful to pipelines -- more last were of that a mid-single-digit not grow with growth pricing said back seeing feel new or open instance, yield the for whole individual we on find build, have it was it such commercial believe are we lot Having 'XX We obviously, talent the we're bank, getting whether in things

year. pipeline So in year on it to the based this indications better early be we get a team that going feels like this is discussions there and and can confident

Operator

coming Terry with Inc. is from question Stephens Next McEvoy

Brandon Rud

other on then I on have Did have say you Quick. Brandon is you Credit million industry any to the do questions for for expenses This under expect two, C&I the Rud X of contract. that? do OREO not you Terry. I related the charge-off? that guess, And $XX.X

James Eccher

those sell remain first. We Yes. take that the sale very with the quarter. these for X valuation We've confident larger I will guess OREO positioned in first properties a write-downs. of couple I'll

don't there. we write-downs any So see further

something when in a credit, of a say can credit As relates And C&I the here. the legal process. situation, twists a at it concentration is second that but Brandon, all. tell can meaningful all turns that a bankruptcy get careful to I into can't you industry and of the need a middle to little is the all I I there's gets not We're I really into can happen. be industry, lot has

it's say not about on focused that that we credit this growing. on all I fact, That's something it's at In -- can are point.

Brandon Rud

you that's on Can one. seeing maybe spreads? in impact talk and Okay. larger the my about just markets specifically banks your any loan the last having from competition you're And

James Eccher

banks, decision Chicago year curve that changed. made we'll the think typical with getting better normalized, lower We see with, a we last We It's just hasn't now -- really banks we yields. environment compete to that the more book really opportunities. loans at not

So a not pursue us. credit. of It it just of decision looks lack was wasn't yielding for our lower function to

Bradley Adams

a be I And period and where is you in weren't X feels appear look be obviously was sheet. more you the right? And means that in interest mean, terms balance took head curves going did for cuts XXXX, XXXX which what on as doesn't XXXX. because growing that it better getting paid that, dive lot into And we was rate at constraint that the curves to a the a rate of to risk. in

Operator

with question McGratty next KBW. is Your from Chris

Christopher McGratty

coming Brad, just back NII minute. to for a

right to or that of that of You've stronger about Is quarter. Absent purchase of kind running been feels it? It growth. how a XX kind saying. on a about you're what loan based loan like thinking that's something XX kind you're like

Bradley Adams

that, it, but throw is that I may to that occur. That how thinking wanted I'm about out there

Christopher McGratty

you would most And what of be assets I interested Okay. guess, in? type

Bradley Adams

already Life option. looked I at a mean, certainly an are things equity I few loans

estate. participation of comes full management classes some at consumer on get that sense look real in If option, an as not with that, well. would don't certainly commercial interested treasury in the are Some side that at participations things. and make typically you economics but assets we of really there's an And opportunity C&I, that can

were our general largely be would it's jumbo markets, buy if one-offs. today. asset I So tell I would I now X/X that think class at. they right would to say going know I buy arms what I'd don't I would in But you be in it

So well, we that put competitive as rate about turn and good I that There's of options right internally origination now. feel can more a on pretty that. that asset off lot get on sheet. the

Christopher McGratty

about public difference you And in provide bit. M&A you versus then private all. [indiscernible] maybe, a guys conversations. little Any Jim, could in pricing any more color preference, talked in

James Eccher

bias a that's level we risk. at accretion to who we're I No, like And feel Investors most credit our looking is There's There's we're we're I rational, that what against is a criteria not like should interested investors to a certain know that rational. know are. least size in. There of think required. reinvent

pretty So for all a well-defined think. draws people, of I box that kind

Christopher McGratty

-- How would the you in throw just you of lever there a mean, piece some you to the cash. of use I would cash -- would

Bradley Adams

a Absolutely, or absolutely. to we why That's built ever the XX the big -- last been the part of cost as certainly capital carry as it's about because low months so. it why talked for we

access in equity optionality. few M&A in really in that interested last and this everything I raises concurrent that we're is and years. kind to lot So feel for I'm there's capital well spot. over the don't. of cash you by, M&A driven do no people negate a great like real And that not of have we've cost the done in sort of a environment

Operator

question next Your Scott. Janney with is from coming Montgomery Brian Martin

Brian Martin

being so of maybe terms clear in I can comments. I've clear, larger, on just if just -- the of you just variety, can you have on any it on a is M&A on, past Or sense -- just of -- in more Brad, general missed simple you terms that? give guess, give smaller lastly we're it in size,

Bradley Adams

mean, afford love we buy can I I but think JPMorgan, to it. don't we'd

Something bigger than $X something less than billion. $XXX million,

Brian Martin

That's good.

the outlook, on And Okay. just X the clarifications then margin Brad.

versus in of then guess, transpire. things that? do you kind midyear. in cut trend of impact below you big better you earlier, all can do Or it that you said kind than able basis happen, you you're give thought you out sounds you that's a don't a how quarter that or... do And of if kind rate the you just a how point right, potential -- on I where and like shake on to get $X.XX if $X.XX that where then of maybe think rate where It's I have just depending if get kind is than maybe you seeing you -- if of have picture? if you at band the getting today Is to that decline are and better if

Bradley Adams

than do better If changes. Brian, curve, we if we than will right we the in we are will that. substantially interest that stay of better terms nothing rate do today where

Brian Martin

the that's rate even midyear. in cut Okay. with And

Bradley Adams

yes. mean, I

Brian Martin

about the of just And terms kind in you. think then talked in Got your maybe -- credit you improvement of the I Okay. remarks. Jim, prepared

for the front about But that here what just loss little see you of potential of would potential X Just on expect on side should improvement can losses look the as on into... outside give notable that, early risk type the And going sense we year? think bit meaningful how credit on could sounds forward? C&I any of we you still nothing that, It there's then the credit. a some like we in on

James Eccher

fortunately, NPAs. aggressive some this the hard special We XX% I down year. down the dealing bucket, progress large the also worked meaningful a year. would last sale income Nonaccrual think, XX% be mention to think we to we've for That XX% I a OREO that we've profitability quarter. were made. And Brian, of over positioned we've early-stage from of this what's quarter. couple pleased and properties improvement then think these. Obviously, got with for our that's a loans be important quarter, we're down this And just in with category,

So is this of that we dealing credit great at we're red don't see with. balance the flags this sheet any outside bankruptcy think shape. in point We

very on positioned we're for year next think I credit the a front year. strong

Brian Martin

Okay.

improvement. it's the of that at get looking aboard. coming nothing you just that, just So is from of And outside seeing really, here of is number, new OREO down kind kind that the where reduction move

James Eccher

Correct.

Bradley Adams

largely can this Health been has year. We've credits we tell. lot as better. a as care strengthened with lot over commercial estate dealt a real looks Office of far

whole the credit of the that, through with and our of headlines year. been just like a across terms there's job. We've borrowers position nice a just negotiations stuff this it's portfolio done lot So in not improvement

Operator

Roth Your Black with is coming from next Kevin question Maple Capital.

Unknown Analyst

Happy New Year.

the with regard of of your focus could In still are market. with be going trying bit talk Just to other originations that geography? to footprints changed at originations, that, the about you and and out great. to a avoid little words, primarily to terms Midwest in thinking regards you in just would trying has all if I mean

James Eccher

in sponsor finance to do of health Yes, have name the couple and nationwide primarily just verticals Kevin, we come call, question. the lending are thanks up, the focused a care MSA, We although couple. a for Chicago that focus

sense. will year. will kept pretty we're based I a on favorable like opportunities and And demand our said, be borrowers are it that having net discussions make feels where a I we've improve think much this And wide this those with just more active so better spreads year

Unknown Analyst

and other -- question by I risk I example, seemed an insurance reason of markets to it up amongst premiums factors. just the And like Florida, Yes. -- the mean, is be ask and profile as the just California I driven going

I don't know playing underwriting. how into your that's So

James Eccher

close attention markets, you had care the assisted to not those and can area markets. that. give those opportunities Health We an done example. living prior that pay an some dramatically, Absolutely. we is back to nursing at pull pandemic skilled in in we'd looking I done

we So it's a very fair point and monitor something closely.

Bradley Adams

in I from We from aren't California think that. certainly learning immune wasn't great.

Operator

Sandler. Race Instructions] Piper [Operator is Your with from Nathan next coming question

Nathan Race

Yes.

just earlier realistic one to charge-off thinking of for year. about this what's the Just going questions, of back Brian's kind range

portfolio the of done obviously loan year. derisking a have heavy lifting in terms guys You last lot of

the some in suboptimal acquisition. exiting from credits So

a XXXX for just have on if and kind charge-off what's beyond. of any range thoughts So you curious realistic

James Eccher

we A lot and to the less basis If than the XX had maybe 'XX, guess, better. points best XX in I this do year. I hope

Bradley Adams

don't we now. of to spooking us reserves have There's We left. how you have go calculate really a that's specific right think lot nothing I by really reserves.

Operator

additional any no to queue Eccher the time. floor this are for would now questions in Jim turn I back There like over remarks. at closing to

James Eccher

joining We you look for speaking next Okay. Thanks, to Goodbye. this morning. everyone, forward again with us quarter.

Operator

Thank today's you, call. everyone. conference This does conclude

day. a have your phone for you at disconnect lines You your participation. may Thank this time, wonderful and

Old Second Bancorp (OSBC) 23 Jan 252024 Q4 Earnings call transcript