Cuộc họp công bố kết quả kinh doanh Quý 3/2026 của OSBC: NIM đạt 5,27%, các chỉ số tín dụng cải thiện

Old Second Bancorp, Inc. (NASDAQ: OSBC) đã báo cáo lợi nhuận ròng theo GAAP quý 3 năm 2026 đạt 28,9 triệu USD, tương đương 0,56 USD trên mỗi cổ phiếu pha loãng. Biên lãi thuần quy đổi thuế đạt 5,27% và các chỉ số tín dụng cải thiện đã bù đắp một phần cho 12,7 triệu USD khoản xóa nợ vay ròng.

Điểm tin chính

• Lợi nhuận ròng theo GAAP đạt 28,9 triệu USD, tương đương 0,56 USD trên mỗi cổ phiếu pha loãng. Lợi nhuận ròng điều chỉnh đạt 28,5 triệu USD, tương đương 0,55 USD trên mỗi cổ phiếu pha loãng, không bao gồm các điều chỉnh định giá MSR.
• Biên lãi thuần quy đổi thuế tăng 4 điểm cơ bản so với quý trước và tăng 22 điểm cơ bản so với cùng kỳ năm ngoái lên 5,27%. Thu nhập lãi thuần tăng lên 84,0 triệu USD từ mức 83,3 triệu USD trong quý trước.
• Tổng số tiền xóa nợ vay ròng là 12,7 triệu USD, bao gồm 9,2 triệu USD xóa nợ thương mại và công nghiệp (C&I) và 3,1 triệu USD liên quan đến cho vay mua xe thể thao địa hình. Ban quản lý cho biết sự cố tín dụng C&I chính về cơ bản đã được giải quyết.
• Các chỉ số tín dụng cải thiện mạnh mẽ: dư nợ nhóm phân loại giảm 57,8 triệu USD, nợ xấu giảm 16,8 triệu USD, và dư nợ bị phê bình giảm 61,3 triệu USD, tương đương 38%.
• Tỷ lệ dư nợ trên tổng tiền gửi tăng lên 98,3%, làm hạn chế sự linh hoạt về nguồn vốn. Ban quản lý dự báo biên lãi thuần sẽ giảm khoảng 5 điểm cơ bản trong quý 4 nhưng vẫn duy trì trên 5,20% trong ngắn và trung hạn.
• OSBC đã mua lại 1,5 triệu cổ phiếu trong quý. Tổng số cổ phiếu mua lại từ đầu năm đến nay đạt 3,4 triệu cổ phiếu với mức giá trung bình là 22,74 USD, đồng thời công ty quyết định tăng 14% cổ tức cổ phiếu phổ thông trong quý 4.

Dữ liệu tài chính cốt lõi

Kết quả kinh doanh và hoạt động

Hoạt động phát hành khoản vay mới diễn ra tích cực hơn so với sự đi ngang của số dư cuối kỳ. Tổng dư nợ vay giảm khoảng 7,8 triệu USD trong quý, do tỷ lệ trả nợ trước hạn, tất toán khoản vay gia tăng và khoản giảm 53 triệu USD trong danh mục cho vay hợp vốn đã bù trừ cho các khoản vay mới phát hành. Ban quản lý cho biết danh mục khoản vay tiềm năng trong quý 4 rất đa dạng, bao gồm doanh nghiệp nhỏ, C&I thị trường tầm trung, y tế, bất động sản thương mại đầu tư, tài trợ nhà tài trợ và cho thuê tài chính.

Tiền gửi bình quân giảm 78 triệu USD, chủ yếu do dòng tiền rút ra theo mùa và sự sụt giảm tiếp tục ở các nhóm tiền gửi bán buôn có hệ số beta cao hơn. Ban quản lý tin rằng phần lớn sự sụt giảm tiền gửi sau sáp nhập đã kết thúc và dự kiến tiền gửi sẽ tăng trở lại từ quý 4 trở đi, mặc dù một số đợt tăng trưởng có thể yêu cầu mức lãi suất cao hơn.

Mảng Quản lý tài sản tiếp tục ghi nhận đà tăng trưởng so với quý trước và so với cùng kỳ năm ngoái. Thu nhập từ hoạt động ngân hàng thế chấp tăng 436.000 USD so với quý trước và tăng 762.000 USD so với cùng kỳ năm ngoái, chủ yếu do định giá theo giá thị trường của MSR tăng lần lượt 775.000 USD và 1,0 triệu USD.

Trong mảng cho vay mua xe thể thao địa hình, số lượng đơn đăng ký vay tăng nhẹ so với năm trước, trong khi số khoản vay mới phát hành nhìn chung duy trì ở mức tương đương. Công ty đã từ chối nhiều hơn khoảng 7% số đơn đăng ký do các dấu hiệu áp lực tài chính của người tiêu dùng và mức nợ cao hơn trên báo cáo tín dụng. OSBC cũng đã ký hợp đồng bảo chứng nhiều năm với Dukat USA, điều mà ban quản lý kỳ vọng sẽ hỗ trợ hoạt động phát hành khoản vay mới vào cuối năm 2026 và đóng góp đáng kể hơn vào năm 2027.

Chi phí ngoài lãi tăng 370.000 USD so với quý trước. Chi phí lương, thưởng cho quản lý, bảo hiểm nhân viên, mặt bằng, thuế bất động sản và chi phí thiết bị văn phòng tăng lên đã được bù đắp một phần nhờ các chi phí khác giảm xuống sau khi một số khoản chi phí một lần đã phát sinh trong quý trước.

Dự báo từ Ban quản lý

• Ban quản lý đặt mục tiêu tăng trưởng dư nợ vay ở mức một chữ số thấp trong quý 4 năm 2026, được hỗ trợ bởi danh mục khoản vay tiềm năng dồi dào hơn và đà tăng trưởng kỳ vọng khi bước sang quý 1 năm 2027.
• OSBC dự kiến biên lãi thuần sẽ giảm khoảng 5 điểm cơ bản trong quý 4 do chi phí vốn biên gia tăng, cạnh tranh tiền gửi và tác động của việc mua lại cổ phiếu đối với nguồn vốn miễn phí.
• Ban quản lý kỳ vọng biên lãi thuần sẽ duy trì trên mức 5,20% trong ngắn và trung hạn. Khoảng 45% danh mục cho vay và 25% danh mục chứng khoán dự kiến sẽ được tái ấn định lãi suất trong 3 đến 4 quý tới.
• Ban quản lý dự báo chi phí sẽ tăng trưởng khiêm tốn và đưa ra mức tăng trưởng kỳ vọng từ 3%-4% bất chấp áp lực chi phí chung gia tăng.
• Công ty kỳ vọng tiền gửi sẽ bắt đầu tăng trưởng trong quý 4, khi hầu hết sự sụt giảm liên quan đến sáp nhập hiện được coi là đã hoàn tất.
• Ban quản lý cho biết các nhà đầu tư có thể kỳ vọng tỷ lệ mua lại cổ phiếu hằng năm vào khoảng 5%, trong khi ngân hàng vẫn duy trì khả năng thực hiện các thương vụ thâu tóm bổ sung quy mô nhỏ hơn.

Rủi ro và các yếu tố cần theo dõi

Mức xóa nợ ròng 12,7 triệu USD trong quý tiếp tục là áp lực chính đối với lợi nhuận. Mặc dù ban quản lý tin rằng sự cố tín dụng C&I lớn về cơ bản đã được giải quyết, họ dự kiến các khoản xóa nợ trong mảng xe thể thao địa hình sẽ tiếp tục diễn ra theo từng quý.

Tỷ lệ dư nợ trên tổng tiền gửi ở mức 98,3% đang tiến gần đến mức trần của ban quản lý, đồng nghĩa với việc tăng trưởng dư nợ vay trong tương lai sẽ ngày càng phụ thuộc vào nguồn vốn có mức giá theo lãi suất biên hiện tại. Sự cạnh tranh tiền gửi gia tăng do đó có thể gây áp lực lên biên lãi thuần bất chấp việc tái ấn định lãi suất tài sản tiếp tục diễn ra.

Mặt bằng lãi suất cao hơn đã làm giảm giá trị của danh mục chứng khoán và góp phần làm giảm giá trị sổ sách hữu hình. Việc mua lại cổ phiếu cũng làm giảm vốn chủ sở hữu và nguồn vốn miễn phí, tạo ra sự đánh đổi giữa biên lãi thuần và lợi nhuận trên mỗi cổ phiếu.

Lạm phát chi phí vẫn là một hạn chế khác. Ban quản lý cho biết chi phí chăm sóc sức khỏe cho nhân viên dự kiến vào năm 2027 sẽ tăng gần 20%, đòi hỏi phải kiểm soát chi phí ở các mảng khác để duy trì mức tăng trưởng chi phí tổng thể trong phạm vi đã đề ra.

Điểm nhấn phần Hỏi & Đáp với chuyên gia phân tích

Các chuyên gia phân tích tập trung vào việc liệu tổn thất tín dụng đã đạt đến điểm đảo chiều hay chưa. Ban quản lý đã dẫn chứng về sự sụt giảm của các khoản nợ nhóm phân loại, nợ bị phê bình và nợ xấu, đồng thời cho biết họ cảm thấy an tâm hơn về danh mục cho vay so với vài năm qua. Họ cũng chỉ ra rằng tỷ lệ dự phòng khó có khả năng giảm mạnh từ mức 1,23%, một phần vì các khoản xóa nợ định kỳ trong mảng xe thể thao địa hình sẽ cần được trích lập bổ sung.

Về độ nhạy của biên lãi thuần, ban quản lý cho biết khoảng một nửa danh mục cho vay là lãi suất thả nổi và thường điều chỉnh lãi suất với độ trễ 30 ngày so với lãi suất SOFR. Việc tái ấn định lãi suất của các tài sản cố định có lợi suất thấp hơn sẽ tạo động lực hỗ trợ, nhưng điều này dự kiến sẽ bị bù trừ bởi chi phí tiền gửi biên cao hơn và tác động huy động vốn từ việc mua lại cổ phiếu.

Ban quản lý cho biết danh mục cho vay hợp vốn sẽ tiếp tục giảm tỷ trọng trong bảng cân đối kế toán vì họ xem mảng kinh doanh này mang tính giao dịch thuần túy thay vì nâng cao giá trị thương hiệu. Tuy nhiên, danh mục này dự kiến sẽ không bị loại bỏ hoàn toàn và sự sụt giảm của nó sẽ ít gây trở lực hơn đối với tổng tăng trưởng dư nợ vay.

Về các cơ hội chiến lược, ban quản lý cho biết các cuộc thảo luận về thâu tóm vẫn đang diễn ra tích cực nhưng không sôi động hơn so với một năm trước đó. Công ty đang tập trung vào các giao dịch bổ sung quy mô nhỏ hơn và duy trì hy vọng rằng một cơ hội có thể xuất hiện vào năm 2027.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

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.

Phần hỏi đáp

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.