things that we think that we're going to have a rocky road as we go client by client, loan by loan through this repricing cycle over the next six quarters that ultimately could create some noise inside delinquencies, inside of non-performers, et cetera. But in the end, there's nothing that we see systemic. If it does show up, it's a negotiation is really what's going on. Which is, by the way, is what's going on. Thank you for that.

That's exactly what we're saying.

The craziest thing that's never happened in my career, and I've only been doing this for a few decades, I've never had a loan that actually has the capacity to pay, has more than one-to-one debt coverage, has an appraisal that shows that there's equity in it, and the borrower says, I'm not making any payments. And we've commenced foreclosure. And we've started foreclosure. I've never seen that in my entire career. It's negotiating is what they're doing.

Understood. Thank you for sharing all that. And then, just last related question. Does the reserve already anticipate some downgrades? Some of those happen on a case-by-case basis that the reserve may have already covered a portion of it?

I missed the beginning. Has the reserve, increase in the reserve already covered some of the potential downgrades? It's a mix. There's some yes and some no.

It's a mix. I mean, we would get an updated appraisal and sort out the specific reserve when something hits substandard. And so of the ones that we just downgraded to non-performing for them, the appraisals are pending at this point. But one of the appraisals that we did get in, the reserve that we had to put against it was only like $80,000 or something. It was minimal. But every quarter, anything that's in non-performing, every single quarter, we're looking at the value of the collateral in order to make a determination and the specific reserve is adjusted at that point in time.

We had sort of communicated at the end of last year, third quarter, fourth quarter last year, that we thought we would have an elevated provision in the first half of this year. We've aggressively attacked a lot of the stuff that's there. Having said that, we believe that at least through the end of this year, that it's going to remain sort of at that $7.5 million level. And it's a consequence of not something that we're seeing right now, but it's something that would arise because of what I just started in a negotiation. So there's some hard conversations. that are going to take place that has the potential of keeping it sort of at that $7.5 million quarter would be sort of our best guess.

Well, I was going to say loan growth and the economic conditions have had an impact. About half-ish of the reserve that we've put up this quarter is due either to the loan growth or because of weakening economic conditions, which the model factors in.

At this time, we would like to reprompt. So, if you would like to ask a question, please press star 1. Again, that is star 1. We shall hold for any additional questions. There are no further questions at this time. I will now turn the call back to Doug for closing remarks.

Well, thank you all for joining us today. Q2 was clearly a validation of the strategy that we laid out during the disruption in our industry in 2023. We've invested where a lot of the other institutions that we compete against in this market pulled back. But I want to really the message to deliver this quarter is that that investment is clearly behind us. And what you're seeing now is a platform that's producing the ninth consecutive quarter of revenue growth, our seventh consecutive quarter of efficiency improvement, and we've also got an accelerated earnings and profitability path. And so in some ways, you know, a lot of the risk of us going into New York is behind us. And we do see a lot of momentum turning into the third quarter and continuing out right to the end of the year. So with that, I want to thank you all, and we look forward to sharing our progress, continuing as we pull up in October. And of course, our door is open for anyone that wants to give us a shout. We're an open door here, and we'd love to be able to address any questions that you may have regarding our company. Thanks for your investment, and thank you for your loyalty and a lot of great stuff happening at Feedback Private.

This concludes today's call. Thank you for attending You may now disconnect