Brad Adams: Yes. So, inside two years post deal, it’s really starting to look and feel like one bank. And a lot of the kind of the cultural stuff that we’ve been measuring as well is trending solidly in the right direction. So, hats off to the team on what we’ve been able to accomplish, both from a technical conversion standpoint and also a cultural conversion standpoint, it’s been pretty good.
Nathan Race: That’s great to hear. So trying to put all those pieces together, probably like $36 million to $37 million is maybe a good run rate with some of those…
Brad Adams: Yes, I think so. I think we’ll be a little better than that in the third quarter and then the fourth that feels about right.
Nathan Race: Okay, great. I believe that’s all I had. I’ll step back. Thank you.
Brad Adams: Thanks, Nate.
Operator: Our next question is coming from Chris McGratty with KBW.
Chris McGratty: Brad, just going back to the margin for a second. Expectations are obviously for a high — in the next week or so and then steady for the rest of the year. But then ‘24 has anywhere between 3, 4 cuts. Interested in kind of how you see if that scenario played out, what your downside risk to NIM would be given that you’ve been reducing the rate sensitivity? Like, how much NIM is at risk if we get the forward curve?
Brad Adams: All right. So, you’re firmly in the gut feel territory here. But, — so I’m probably being overly conservative if we get that rate hike next week in terms of what margin will do, but I think that’s prudent at this point. In terms of rate cuts next year, let’s say, it’s — let’s say, soft landing lives as an animal that actually exists in nature and assume that it’s kind of 25 basis-point spread over the year. Let me first say that I don’t envision a scenario where we go back to zero. And in a zero rate scenario, Old Second loses its core advantage, which is the deposit base and basically the crappier funding you have, the better you do in that scenario. But in the absolute zero scenario, we probably run to a 3.50 margin from the 4.70 we’re hanging out at today. In a scenario where there are modest and slow cuts, we would trend towards kind of 4 to 4.25 would be my guess, but it would take a while to get there. It would be slow.
Chris McGratty: Okay. That is reasonable. Thanks for that. And then you mentioned you have a big reserve on the office. Did you — have you quantified that, or could you quantify what the actual reserve percentage…?
Jim Eccher: It’s north of 10%.
Brad Adams: On Chicago…
Jim Eccher: At Chicago office, which is where we see the most stress. We only have one suburban office property that is under duress. And we’ve got a pretty good sized reserve on that as well.
Chris McGratty: And what’s — that’s a big number. What’s the dollar of Chicago office?
Jim Eccher: I have that. I think it’s roughly — that’s $12 million, 8-storey building. We are seeing — that’s one I commented on last quarter, Chris. We are encouraged to see some leasing activity finally pick up on that. We’ve also got a good sponsor that’s looking to secure new equity to assist with some of the build-out. So, we’re optimistic that this one is trending in the right direction.
