Barry Sloane: Thank you.
Operator: [Operator Instructions] Your next question is from the line of Michael Perito from KBW. Your line is now open.
Michael Perito: Hey, Barry. Good morning. Thanks for taking my questions.
Barry Sloane: Thanks, Mike.
Michael Perito: Just one quick follow-up on the guidance just on the margin assumption, the 10.75%, just wondering if you could take that a layer deeper for us. I mean, it seems like I’ve looked around at some of the banks that sell a good amount of this paper, including yourselves. And it seems like the secondary environment was pretty stable in the second quarter after some volatility, the two month — the two quarters before that? And just wondering, you know, why does that feel like the right level based on what seeing today for the back half of the year for selling the loans and what gives you kind of some confidence around that number a bit below where you’ve been historically, but obviously a bounce back from where you were in in the second quarter.
Barry Sloane: Sure. Mike, and I appreciate the question. I’m going to try to dig out a page in the deck that focuses on our sort of history of gain on sale prices. I think the major difference between us and their organizations is the fact that we’re dealing directly with borrowers. Slide number 22 really goes back and shows sort of the history of our net premium trends. And you can see there’s not — there’s some volatility there, but it’s not like — with the exception of 2021 where the SBA had zero fees in the middle, and we’ve got up to 13%. I mean, you’re really pretty much looking at about a 1.5 point swing plus or minus. Relative to pricing going forward, we feel very good about, on a going forward basis, our loans being priced at prime plus 300.
That’s the only rate that we do. So, unlike a lot of our competitors in the space that have different rates for different people, we have one rate. It’s prime plus 3. We deal directly with the borrower. There’s no broker and there’s no expensive banker in the middle of the transaction, and we’re able to quickly ascertain what the borrower’s needs are. We give them a long M schedule. We close the deal, and we give them a lot of other things, which is why I believe they do the loan. So, I think when you look at where the market is, the current price that we’ve used is based upon a very recent mix of loans that we sold. I think also, Mike, it’s important to note and maybe people that aren’t day-to-day in the businesses, we are a 25 year loan by commercial real estate, getting it sold into the market at 114, 115, 116, of which it gets split.
And then a 10 year deal that’s got backed by commercial real estate sells at 110 or 111. So when you look at the mix and the blend of real estate back versus non real estate back, That changes things. Big loans versus small loans changes the discount. So, it’s not that easy a formula to figure out, but we’re pretty good at making the guesses and we obviously look at where the entire market is going, and the market right now seems to be pretty good. The other thing that’s really important also is from a portfolio perspective, when are the rates changing? So, our legacy portfolio in NSPF is primarily at prime plus two and three quarters. Our new loan since the change was put in place is prime plus three. That’s why we’re also getting better prices holding everything else constant.
The extra 25 basis points makes a difference. Hopefully, that was helpful.
Michael Perito: It was. Thank you. And then just a few more for me, and I apologize. I kind of all over the place, but just one last one on the guide. The jumping share count in the fourth quarter, I just wanted to confirm, is it safe — that that’s just kind of like equity grant or stock comp related stuff, right? That’s just an assumption you guys are making around that. Nothing more?
Barry Sloane: It’s a good catch, Mike. You’re very thorough, and I appreciate that. I think that is a plug number in terms of something we may or may not do. I’m not sure we need to do it, but know that that’s not comp. That would prospectively be a raise, but We’ve got access to debt markets. We’ve got access to equity markets, and that’s kind of how we manage our guidance going forward. So, I can tell you that that counts will occur. That’s just the best guess, and that kind of helps us get to these numbers. If that’s helpful, I hope it is helpful. Obviously, our goal–
