OSBC 2026년 3분기 실적 컨퍼런스 콜: NIM 5.27%, 신용 지표 개선

올드 세컨드 반코프(Old Second Bancorp, Inc., NASDAQ: OSBC)가 2026년 3분기 GAAP 순이익 2,890만 달러(희석주당순이익 0.56달러)를 기록했다고 발표했습니다. 5.27%의 세금상당 순이자마진과 신용 지표 개선이 나타났으나, 1,270만 달러의 대출 순상각으로 일부 상쇄되었습니다.

핵심 요약

• GAAP 순이익은 2,890만 달러(희석주당순이익 0.56달러)였습니다. MSR(모기지 서비스권) 평가조정을 제외한 조정 순이익은 2,850만 달러(희석주당순이익 0.55달러)였습니다.
• 세금상당 순이자마진은 전분기 대비 4bp, 전년 동기 대비 22bp 상승한 5.27%를 기록했습니다. 순이자이익은 전분기 8,330만 달러에서 8,400만 달러로 증가했습니다.
• 대출 순상각액은 총 1,270만 달러로, 이 중 상업공업(C&I) 대출 상각이 920만 달러, 파워스포츠 대출 관련 상각이 310만 달러였습니다. 경영진은 주요 C&I 부실채권 문제가 이제 대부분 해결되었다고 밝혔습니다.
• 신용 지표는 크게 개선되었습니다. 고정이하자산은 5,780만 달러 감소했고, 무수익여신(NPL)은 1,680만 달러 줄었으며, 요주의여신은 6,130만 달러(38%) 감소했습니다.
• 예대율은 98.3%로 상승하여 조달 유연성이 제한되었습니다. 경영진은 4분기 순이자마진이 약 5bp 하락할 것으로 예상하지만 단기 및 중기적으로 5.20% 이상을 유지할 것으로 전망하고 있습니다.
• OSBC는 해당 분기 동안 150만 주를 자사주 매입했습니다. 연간 누적 매입량은 평균 단가 22.74달러에 340만 주에 달했으며, 회사는 4분기 보통주 배당금을 14% 인상하기로 결정했습니다.

주요 재무 데이터

사업 및 영업 실적

신규 대출 실행은 거의 변화가 없었던 기말 잔액이 시사하는 것보다 견조했습니다. 조기 상환 및 완제 증가와 신디케이트 대출 포트폴리오의 5,300만 달러 감소가 신규 대출을 상쇄하면서 해당 분기 동안 총 대출은 약 780만 달러 감소했습니다. 경영진은 4분기 파이프라인이 소상공인, 중견기업 C&I, 헬스케어, 투자용 상업용 부동산, 스폰서 파이낸스, 투자 리싱 전반에 걸쳐 광범위하게 형성되어 있다고 말했습니다.

평균 예금은 계절적 유출과 금리 민감도가 높은 사실상의 도매 예금 항목에서의 지속적인 이탈로 인해 7,800만 달러 감소했습니다. 경영진은 인수 후 발생한 예금 이탈이 대부분 완료된 것으로 판단하고 4분기부터 예금이 성장할 것으로 예상하고 있으나, 일부 성장을 위해서는 더 높은 조달 금리가 필요할 수 있습니다.

자산관리 부문은 전분기 및 전년 동기 대비 성장을 이어갔습니다. 모기지 뱅킹 수익은 주로 MSR 시가평가 가치가 각각 77만 5,000달러 및 100만 달러 상승함에 따라 전분기 대비 43만 6,000달러, 전년 동기 대비 76만 2,000달러 증가했습니다.

파워스포츠 대출 신청 건수는 전년 대비 소폭 증가한 반면 신규 대출 실행은 전반적으로 비슷한 수준을 유지했습니다. 회사는 소비자 스트레스 징후 및 신용보고서상 부채 증가를 이유로 대출 신청 거절을 약 7% 늘렸습니다. OSBC는 또한 Dukat USA와 다년 계약을 체결했으며, 경영진은 이 계약이 2026년 말 신규 대출을 지원하고 2027년에는 보다 실질적인 기여를 할 것으로 기대하고 있습니다.

비이자비용은 전분기 대비 37만 달러 증가했습니다. 급여, 임원 인센티브, 직원 보험료, 점유비, 부동산세 및 사무기기 비용 증가가 전분기 일회성 항목 제거에 따른 기타 비용 감소로 일부 상쇄되었습니다.

경영진 가이던스

• 경영진은 견조해진 파이프라인과 2027년 1분기로 이어지는 모멘텀 기대감에 힘입어 2026년 4분기 대출 성장률 목표를 1%대 초반(low-single-digit)으로 설정하고 있습니다.
• OSBC는 한계 조달비용, 예금 경쟁, 자사주 매입이 무이자 조달에 미치는 영향 등으로 인해 4분기에 순이자마진이 약 5bp 하락할 것으로 예상하고 있습니다.
• 경영진은 단기 및 중기적으로 순이자마진이 5.20%를 상회할 것으로 예상하고 있습니다. 향후 3~4분기 동안 대출 포트폴리오의 약 45%, 유가증권 포트폴리오의 약 25%가 금리 재조정될 것으로 전망됩니다.
• 경영진은 전반적인 비용 압박에도 불구하고 완만한 비용 증가를 예상하며 3%~4% 증가율 범위를 유지했습니다.
• 회사는 인수 관련 예금 이탈이 대부분 완료된 것으로 판단하며 4분기부터 예금 증가가 시작될 것으로 예상하고 있습니다.
• 경영진은 소규모 보완적 인수 여력을 유지하면서 연간 약 5% 수준의 자사주 매입을 합리적으로 기대할 수 있다고 언급했습니다.

리스크 및 관전 포인트

해당 분기 1,270만 달러의 대출 순상각은 주요 수익 압박 요인으로 남았습니다. 경영진은 주요 C&I 부실채권 문제가 대부분 해결되었다고 판단하지만, 파워스포츠 상각은 분기별로 계속될 것으로 예상하고 있습니다.

98.3%의 예대율은 경영진 상한선에 접근하고 있으며, 이는 향후 대출 성장이 현재 한계 금리로 조달되는 자금에 점점 더 의존하게 될 것임을 의미합니다. 따라서 지속적인 자산 금리 재조정에도 불구하고 예금 경쟁 심화로 인해 마진이 압박받을 수 있습니다.

금리 상승은 유가증권 포트폴리오의 가치를 하락시키고 주당 유형장부가치 감소에 기여했습니다. 자사주 매입 또한 자본과 무이자 조달금을 줄여 순이자마진과 주당순이익 사이에 상충 관계(trade-off)를 형성했습니다.

비용 인플레이션 역시 또 다른 제약 요소로 남아 있습니다. 경영진은 2027년 예상 직원 의료비 비용이 20% 가까이 높게 추산된다며, 제시된 범위 내에서 전체 비용 증가율을 유지하려면 다른 부문의 비용 통제가 필요하다고 말했습니다.

애널리스트 Q&A 주요 내용

애널리스트들은 신용 손실이 변곡점에 도달했는지에 초점을 맞추었습니다. 경영진은 고정이하자산, 요주의여신, 무수익여신의 감소를 제시하며 지난 몇 년 동안보다 대출 포트폴리오 상태에 대해 더 긍정적으로 판단하고 있다고 말했습니다. 또한 반복적인 파워스포츠 상각분을 보충해야 한다는 점 등을 이유로 대손충당금 적립률이 1.23%에서 크게 하락하지는 않을 것으로 보인다고 밝혔습니다.

마진 민감도에 대해 경영진은 대출 포트폴리오의 약 절반이 변동금리형이며 일반적으로 SOFR 대비 30일의 시차를 두고 금리가 재조정된다고 밝혔습니다. 수익률이 낮은 고정자산의 금리 재조정은 순풍 역할을 하겠지만, 이는 높은 한계 예금 비용과 자사주 매입에 따른 조달 영향으로 상쇄될 것으로 예상됩니다.

경영진은 신디케이트 대출 사업을 프랜차이즈 가치를 제고하지 못하는 단순 거래성 사업으로 판단하고 있어 재무제표 내 비중이 계속 줄어들 것이라고 언급했습니다. 다만 이 포트폴리오가 완전히 없어지지는 않을 것이며, 이 포트폴리오의 잔액 감소(runoff)가 전체 대출 성장에 미치는 역풍도 점차 줄어들 것으로 예상됩니다.

전략적 기회와 관련해 경영진은 인수 논의가 여전히 활발하지만 1년 전보다 더 구체화되거나 확대된 것은 아니라고 설명했습니다. 회사는 소규모 보완적 거래에 집중하고 있으며 2027년에 기회가 찾아올 수 있기를 기대하고 있습니다.

실적 발표 전화회의 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning, everyone, and thank you for joining us today for Old Second Bancorp, Inc.'s Third Quarter 2026 Earnings Call. On the call today are Mr. Jim Eccher, the company's Chairman, President and Chief Executive Officer; Mr. Brad Adams, the company's Chief Operating Officer and Chief Financial Officer; and Mr. Darin Campbell, the company's Head of National Specialty Lending.

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 also 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.

On today's call, we will also be discussing certain non-GAAP financial measures. These non-GAAP measures are described and reconciled to their GAAP counterparts in the earnings release, which is available on our website at oldsecond.com on the homepage and under the Investor Relations tab.

Now I would like to turn the call over to Mr. Jim Eccher.

James Eccher

Okay. Good morning, and thank you for joining us. As customary, I have several prepared opening remarks. I'll give you my overview of the quarter and then turn it over to Brad for additional details. I will then conclude with certain summary comments and thoughts about the future before we open it up to questions.

From a GAAP perspective, net income was $28.9 million or $0.56 per diluted share in the third quarter. Return on assets was 1.69% Third quarter 2026 return on average tangible common equity was 15.77% and the efficiency ratio was 52.34%. Excluding all adjusting items, which for the quarter was limited to MSR valuation adjustments, net income for the third quarter was $28.5 million or $0.55 per diluted share.

Third quarter 2026 earnings were impacted by $12.7 million of net loan charge-offs, which consisted of commercial and industrial loan net charge-offs of $9.2 million, primarily related to relationship one relationship we have discussed on prior calls, $6 million of that $9.2 million was previously reserved for. This credit is a warehousing and distribution business that has seen its cash flow position deteriorate over the last year. We feel this credit is now largely behind us. The remaining portion of the charge-off is related to the powersport business, which totaled $3.1 million, which is comparable to the prior quarter powersport charge-off level.

Tangible book value per share decreased slightly to $14.75 as of September 30 from $14.77 as of June 30, and the tangible equity to tangible asset ratio decreased 19 basis points from last quarter from 11.19% to 11%. The modest declines in these metrics are primarily due to stock repurchases of approximately $39.5 million and the change in the value of the securities portfolio due to higher rates during the quarter.

Our financials reflect an exceptionally strong net interest margin at 5.27% for the third quarter of 2026. That's a 4 basis point improvement from last quarter and 22 basis point increase over the prior year on a tax equivalent basis. Pre-provision net revenues increased in the third quarter of 2026 from the prior quarter, primarily due to day count, slightly higher average loan balances and lower average savings and time deposit balances. Total cost of deposits was 102 basis points for the third quarter compared to 100 basis points for the prior linked quarter and 133 basis points for the third quarter of 2025.

For the third quarter of 2026 compared to last quarter, tax equivalent income on average earning assets increased and interest expense on average interest-bearing liabilities increased nominally. Loan-to-deposit ratio is now 98.3% at the end of the third quarter compared to 96.4% last quarter and 91.4% as of September 30, 2025. Total loans declined nominally about $7.8 million during the third quarter. Tax equivalent loan yields increased 3 basis points during the quarter compared to the linked quarter, but reflected a 1 basis point decrease for the quarter year-over-year. The increase in yields in comparison to the prior quarter is driven by higher short-term rates and repricing of lower yielding loans. We expect this to continue in the near term.

Turning to credit. Asset quality trends improved significantly during the quarter, excluding the elevated charge-offs resulting from the single credit we just discussed. Classified loans decreased $57.8 million and nonperforming loans decreased $16.8 million. Criticized loans, an early indicator of stress, declined by $61.3 million or 38% during the quarter. As a percentage of loans, classified loans have not been this low since before COVID. Needless to say, we are extremely pleased with the credit trajectory and its implication for future quarters.

The allowance for credit losses on loans was $64.2 million as of September 30 or 1.23% of total loans from $70.4 million at the end of the second quarter, which was 1.34% of loans. Unemployment and GDP forecast used in future loss rate assumptions remained fairly static from last quarter with no material changes in the unemployment assumptions on the upper end of the range based on recent Fed projections. Noninterest income declined $191,000 in the third quarter of 2026 compared to the prior linked quarter and nominally from the prior year linked quarter.

Wealth Management continues to reflect strong performance and growth quarter-over- linked quarter and prior year linked quarters. Mortgage banking income increased $436,000 compared to linked quarter and increased $762,000 compared to the period -- prior year period, primarily due to the changes in mortgage servicing rights mark-to-market valuations. MSR mark-to-market valuations increased $775,000 quarter-over- linked quarter and $1 million over the prior year period. Total noninterest expense for the third quarter of 2026 increased $370,000 from the prior linked quarter, driven by higher regular salaries, higher officer incentive and employee insurance costs within salaries and employee benefits and an increase in occupancy, furniture and equipment due to continued capital projects and growth in real estate taxes and office equipment costs. These increases were partially offset by a decrease in other expense from several one-off expenses in the prior quarter.

Our efficiency ratio continues to be excellent as the tax equivalent efficiency ratio adjusted to exclude core deposit intangibles, OREO costs and the adjustments to net income, as noted earlier, was 52.0% % for the third quarter compared to 50.8% for the second quarter. Overall, the company continues to perform at an exceptionally high level. Operating leverage is strong. The margin was largely stable and fee businesses are performing well. The improvement in key credit metrics, including reductions in classified and criticized during the third quarter will allow us to finish the year over the next quarter in a much better position to demonstrate the full earnings power of Old Second.

I'll now turn it over to Brad for more color.

Bradley Adams

Thanks, Jim. Net interest income increased to $84 million relative to last quarter at $83.3 million. It also increased $1.3 million from last year. Loan yields increased 3 basis points, while securities yields declined 5 basis points in the third quarter. Total yield on earning assets increased 6 basis points. over the linked quarter to 640 basis points. Cost of interest-bearing deposits increased modestly at 2 basis points and total cost of interest-bearing liabilities increased 1 basis point to 174. The end result was a 4 basis point increase in the tax equivalent NIM to 5.27% versus 5.23% last quarter. Obviously, we believe this continues to be an exceptional margin performance.

Average loans increased $5.5 million or only 0.1% over linked quarter and average deposits, however, decreased by $78 million or 1.4%. Deposit runoff is largely seasonal this quarter with some residual runoff and high beta effectively wholesale deposit captions. Loan origination activity in the third quarter was much better than it appears and in line with budget. but was offset by significant paydown and payoff activity. Loan prepayments through the first 3 quarters have already reached full year 2025 levels.

Certainly, the market environment, including ongoing interest rate volatility and due to high energy prices and broad-based inflation has resulted in outsized payoffs, it appears to us. Our lending teams are continuing to work very hard and pipelines for the fourth quarter are building, which should also bode well for the first quarter of 2027 as well.

From a stock repurchase perspective, we acquired 1.5 million shares during the third quarter, resulting in a reduction to equity and a growth in treasury stock of $39.2 million. Year-to-date repurchases totaled 3.4 million shares at an average price of $22.74. That's a $74.7 million reduction in equity. This has a negative impact on the net interest margin, obviously, but a positive impact on earnings per share. We do expect to continue being active in the repurchase of shares given our extremely strong capital position and current and expected earnings trends.

In addition, based on the strength of the balance sheet and resilient income statement trends, Old Second elected to increase the common dividend in the fourth quarter of 2026 by 14% as we continue to deliver growth commensurate with the bank's performance. Overall, margin trends still feel very good. Obviously, rates along the curve went up quite a bit with recent instability in the Middle East and previous expectations for rate cuts have reversed course into rate hikes. If those trends remain stable from here and high-cost deposit attrition slows, I would expect to maintain exceptional margin performance.

I do believe at this point, however, that we are likely to give back 5 basis points or so with our current loan growth expectations and the rapid rise we have seen in deposit competition recently. Loan growth in the fourth quarter of '26 is being targeted in the low single-digit level. Expense growth will continue to be modest in the quarters ahead.

That's it for my view, and I'll turn the call back over to Jim.

James Eccher

Thanks, Brad. In closing, we feel despite the isolated charge-off was a pretty solid quarter for the company. We're optimistic due to the improvement in credit metrics this quarter, and the rest of the bank is performing ahead of our expectations. We remain positive about loan growth opportunities and the potential for more strategic growth opportunities as well.

That concludes our prepared comments this morning. So I will turn it over to the moderator and open it up for questions.

Operator

[Operator Instructions] Our first question today is coming from Nathan Race with Piper Sandler.

질의응답

Nathan Race

Jim, obviously, disappointing charge-off number. Obviously, you mentioned you had this previously allocated for. And we've been through several quarters with some credit noise. But just given the reductions in both nonperformers and criticized loans in the quarter, can you just help us in terms of your degree of confidence that we're now in a position today where we can expect charge-offs to be consistently lower. I think we've talked about a range of maybe 35 to 40 basis points is kind of a normalized range going forward. But can you just speak to kind of your degree of confidence that we can expect that to unfold going forward?

James Eccher

Sure, Nate. Yes. I mean obviously, the one charge-off, this has been a lingering credit that we've been working out for the better part of the year. We -- the company is under contract to be sold, albeit at a much lower price. So -- we feel we've got this now largely behind us. I think what we're most encouraged about, Nate, is a significant reductions in classifieds and even a special mention, you got to go back to October of 2019, way before COVID to have classified at this level.

So we think we've turned the corner at an inflection point with a lot of this credit and understanding we are going to have a certain degree of powersport charge-offs on a quarter-over-quarter, but we feel as good about the loan book today as we have in several years.

Nathan Race

Okay. Great. That's helpful. And Brad, a little surprised to hear your comments around giving back 5 bps of margin in the fourth quarter, just given how low beta your deposit franchise has historically been. I appreciate deposit pricing competition is increasing these days, but just given how much repricing you have in assets tied to short-term rates, curious if you can kind of just unpack some of that a bit just in terms of what your beta expectations are for the fourth quarter. And again, if you could remind us kind of what you have repricing on the left side of the balance sheet tied to short-term rates.

Bradley Adams

So there's a couple of things going on. What I would say from the expectation of giving back a few basis points, the drivers of it, one is how many shares we've repurchased. Obviously, we're giving up a fair amount of free funding in order to do that. That has a negative implication. The other thing is the loan-to-deposit ratio is pretty much nearing the ceiling at this point. So for the first time in a while, we are participating at the marginal funding rate relative to our loan growth expectations. And I think that's probably the biggest driver in what I'm talking about. There are, as you point out, things on the other side that are to the good.

At any given time, 50% of our book is variable. And generally, it reprices with a 30-day lag, and then we move relative to SOFR, but SOFR is ahead of what the Fed has been doing, and that rate has been high for a while. So we've been seeing that benefit for quite some time. That being said, we do have -- Jim was positively by the other day talking about this 3.5% commercial real estate loan that repriced in the 6s. And we are seeing some of that. And that's obviously a big benefit.

James Eccher

Yes. I mean I would say 45% of our loan book is going to reprice in the next 3 or 4 quarters. 25% of our securities portfolio is repriced at the same time. So there will be a tailwind there. The net-net of all that is we're going to hang out pretty high at these levels, but guessing within plus or minus 5 basis points. Clearly, I've been pretty bad at it over the last year or so, but I've been bad on the right side of it. So maybe I'm hedging a bit, maybe I'm right. But I still think we're solidly above the 5.20% margin for the near and intermediate term.

Nathan Race

Okay. Great. And then can you guys just kind of speak to just the buyback appetite, obviously, really stepped up on the buybacks in 3Q and over the course of this year. To what extent do you guys want to continue down the path at a similar clip to what we've seen recently? And within that context, curious how you want to balance buybacks with perhaps an acquisition at some point, perhaps sometime next year?

Bradley Adams

I have plenty of capital to do both, Nate. I mean, as you can see, even this quarter, we didn't shrink capital and we bought back 3% of shares. I think it's reasonable for investors to expect us to take out 5% of shares a year and still have the ability to execute on the type of M&A that we're looking for, which as we've talked about in the past, is relatively smaller than what we would have talked about a couple of years ago. It's kind of fill-in type stuff is from our perspective is where the value would be at this point.

Operator

Our next question is coming from [ Mark Shutley ] with KBW.

Unknown Analyst

So loans were roughly flat this quarter with prior prepayments. And I think you said the outlook is low single-digit growth from here. But I was just curious sort of how the pipeline is looking and where you expect to see that growth in the coming quarters.

James Eccher

Yes. I think as Brad pointed out in his comments, loan production was better than maybe what the results showed, and it's probably one of the stronger quarters in the last 6, 7 quarters. I think what we saw was outsized prepayments 2x of what we would normally see in a quarter. Couple that with the fact that we've been actively trying to work down our syndications portfolio. As you know, we have had a significant syndication portfolio come over with West Suburban. We reduced that $53 million this quarter alone. So had we not had that and any outsized payoffs, we would have had a really good quarter.

As far as the pipeline is concerned, as of right now, it is looking like one of the more solid fourth quarters we've had in a long time, and we're optimistic we're going to get out of the gates pretty well in the first quarter next year as well.

Operator

Our next question is coming from Jeff Rulis with D.A. Davidson.

Jeff Rulis

I wanted to kind of maybe a jump off of the loan demand and higher rates. I guess, initially, are you seeing any pullback on the consumer powersports from a loan demand standpoint? Is that any impact that you're seeing out there?

Darin Campbell

Yes. This is Darin Campbell. Yes. No, we're not seeing any pullback at this point. Application volume for us this year is up a little bit over last year from the application process. I will say we've turned down more applications this year compared to last year just for consumer distress. So we're accounting for more debt that we're seeing on credit reports. And so we've turned down, as I said, about 7%. But originations is very similar to the same time last year. Applications is up a little bit. So overall, strong. Our collective card business is actually up quite a bit this year as well. So we're seeing a lot of demand in that area as well. So overall good.

James Eccher

Yes, Jeff, I think when you look at the commercial bank, our pipeline build right now is pretty broad-based. We're seeing it building in small business, middle market C&I, health care, investment CRE and even sponsor and investment leasing. So we're as pleased as we could be with -- and normally, fourth quarter is pretty soft, but pipelines are really pretty good right now.

Jeff Rulis

Appreciate that. And I guess the other side of that is, I think, Jim, you noted that nice to see the benefit of repricing in the book. The flip side of that is any thoughts on kind of repricing risk on the credit side as maybe higher rates as customers face that. I guess, any color on -- are you helping with borrowers in terms of that repricing risk potentially?

James Eccher

Yes. I mean keep in mind, our loan book is very short duration. So a significant part of some of these credits have already been in a higher rate environment. But we stress test constantly. We feel early-stage indicators are low and no concerns at this point. Darin, do you want to add on the consumer?

Darin Campbell

Yes. I think, Brian, just one of the things that's worth mentioning on the call, we're very excited to announce that we signed a multiyear endorsed agreement with Dukat USA. So we -- something we've been working on for quite some time to get to the finish line. That partnership was announced and launched last week. The dealer feedback that we've received from the dealer network has been tremendous. The application flow has already started to come in. So that's been exciting.

And as we think about growth going forward, even in our fourth quarter, this will give us a little boost for the fourth quarter. But if you think about for '27, there will be a substantial boost for us in originations next year. And Dukat is one of the best motorcycle brands that's in the market. So we could not be more excited about this opportunity for us.

Jeff Rulis

Okay. Sounds good on the production side. But again, on Jim, the credit and the repricing on the credit front, feel good about that given the short duration.

Bradley Adams

Yes, this is Brad. I think what you've seen from us in terms of the spike in classified and criticized over the past 3 years has been that very thing. But again, I think it's pretty safe to say we're through that.

Operator

Our next question is coming from Ken Kohut with Raymond James.

Kenneth Kohut

I'm filling in for Danny Tamayo. A lot of my questions have been asked and answered, but maybe just on deposits. You've been talking about optimizing your deposit base really since the Evergreen acquisition closed to more resemble the legacy Old Second deposit base. And we saw another step down in deposits this quarter, and you specifically called out the runoff of higher cost funding acquired from Evergreen. So I'm just wondering how much work is left to do on that front? And should we expect to see further deposit runoff in the coming quarters?

Bradley Adams

I think you'll see deposit growth in the fourth quarter, and I think that most of the attrition post that acquisition is largely behind us. My expectation would be that deposits would grow from here. Some of that will come at a little bit more rate. And obviously, we remain on the lookout to supplement our deposit base through M&A activity as well.

Operator

Our next question is coming from Brandon Rud with Stephens Inc.

Brandon Rud

The first one may be kind of an adjacent question to a prior one. Just on the reserve, it's come down for the past few quarters now. Are there any remaining specific allocations within that? Or is this 123 kind of the steady state you kind of anticipate going forward?

James Eccher

Yes. I mean there's certainly some reserve allocations built into the portfolio, but I think the drawdown in that reserve is largely reflective of the fact that our classified have come down significantly, right? We won't run much lower from here just due to the fact we'll continually have to replace powersport charge-offs quarter-over-quarter, but I don't see a majority drawdown of reserves.

Brandon Rud

Okay. Perfect. And then just one on expenses. It came in a touch higher than we had in our model. Is this like $51.5 million a good expectation for the near term and then growing 3%, 4% annually after that?

Operator

Yes. Our next question is coming from Brian Martin with Brean Capital.

Brian Martin

Brad, maybe just one follow-up on the expense one. Just the resolution of some of these credits that you've gone through the last couple of quarters, is that a tailwind to the expense line? I mean I get your comments about the outlook, but is that part of the reason, I guess, maybe we get a little improvement or if there is any on the expense side?

Bradley Adams

So I mean that's the big delta between kind of the way you look at things and the way I look at things, Brian, there's always ins and outs and what avenues in every quarter. And this quarter, for example, our third-party expense is elevated. The next quarter, it will be something else, but there's always stuff coming and going. And I look at it much more granularly than probably it appears. Like my income statement has like 42 captions for expenses and yours has like 4.

So there's always stuff moving around. I think that in a world where inflation in any real sense is probably between 4% and 5%, being in that 3% to 4% range is a pretty good thing, given I mean I don't know if you noticed your employer is probably cutting your health care benefits and increasing your costs, but our costs are projected in that caption to be up pretty close to 20% next year, which is shocking. So there's a lot of things going on. And I actually feel like kind of that 3% to 4% range is doing pretty damn good, and I feel great about it.

Brian Martin

Yes. That's what I meant, Brad. I guess it seems like you're going to have other stuff this gives you a little bit of a tailwind or at least a little help to offset some of those other items. So just...

Bradley Adams

I mean it helps us deliver on that guidance I just gave for sure. I wouldn't expect -- I think we're doing a lot of heavy lifting to be at that level is the point I'd like to make.

Brian Martin

Got you. That's clear. And then just on the opportunity set on -- I know you talked about strategic opportunities, Jim, just the opportunity set in terms of what's out there. Are you seeing more opportunities today? Are there less out there today? Just kind of how is the environment on opportunities in the...

James Eccher

I mean, Brian, you know Chicago as well as anybody. There's been a handful of transactions obviously announced, and we continue to have conversations. I wouldn't say it's more robust now than it was a year ago. They're active and ongoing. We're hopeful that opportunity arises next year.

Brian Martin

Yes. Okay. And then the last 2 for me were just the new rates on loans and, I guess, what you're putting on the securities book, Brad, just we kind of reconcile those numbers Jim gave in terms of what's repricing here. What are new rates on securities you're thinking about it kind of 5%-ish and then on loans?

Bradley Adams

I'm not adding the securities book at this point, given where we are in deposit competition. It would be largely static in terms of what you'd see there. If there are flows coming out, will be replaced at similar rates. So I wouldn't expect any real movement in the securities book. In terms of loans, it's still in the kind of mid-6s type range would be my guess.

Brian Martin

Okay. Got you. And the last one was just on the syndication book. I know you mentioned it's been running off, Jim, obviously. Just where it stands today? And I guess that runoff is just going to continue. It's just a steady decline in that book. Is that how to think about that, it's not going to really impact the.

James Eccher

Yes. I mean at our peak, we were $550 million in syndications. We've reduced that by over 60% since the end of '21 roughly $285 million. Will it go to 0? No. It's just not going to be a material part of our balance sheet. We just view that business as transactional non-franchise enhancing type business, but we'll continue to do some of it. It's just not going to be a primary focus.

Brian Martin

Okay. And the payoffs will just -- I guess that's what I was getting at. The payoffs won't be a major factor in terms of -- as we go forward here, like maybe it has been as you owned it.

James Eccher

It won't be as much of a headwind as it has been you're correct.

Operator

Okay. As we have no further questions on the lines at this time, I would like to turn the call back over to Mr. Jim Eccher for any closing remarks.

James Eccher

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

Operator

Thank you. Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time, and we thank you for your participation.