Kenneth Lovik
Thanks David as David covered the loan portfolio. Let's turn to slides 5 and 6 where I will cover deposits in more detail.
The average balance of deposits increased almost $344 million or 8% during the quarter, and period end deposits were up $135 million or 3% from the prior quarter. Driven primarily by growth in fintech partnership deposits.
Nonmaturity deposits were up $122 million or 6%, reflecting the increase in fintech partnership deposits. Additionally, total deposits from our fintech partners were up 27% from the third quarter and totaled $643 million at quarter end.
During the fourth quarter, we submitted a notice of reliance on the primary purpose exemption with the FD related to fintech deposits that had been classified as brokered and as of December 31 we reclassified these deposits to interest bearing demand deposits during the fourth quarter. These partners generated almost $16 billion in payments volume, which was up 38% from the volume we processed in the third quarter. Total. Fintech Partnership revenue was 880,000 in the first in the fourth quarter, which was up over 14% from the linked quarter related to CD activity during the quarter. CD balances were relatively stable with balances increasing only $22 million over the quarter. Although medium to longer term treasury rates increased during the fourth quarter, we held CD pricing constant through most of the quarter and further lowered CD rates in December following the fed's rate cut that month, we originated $242 million in new production and renewals during the fourth quarter at an average cost of 4.23% and a weighted average term of 12 months. These were partially offset by maturities of $238 million with an average cost of 5.01% similar to last quarter. New CD production is coming on at lower rates than those maturing which will continue to benefit our cost of funds going forward.
Looking forward, we have $414 million of CDS maturing in the first quarter of 2025 with an average cost of 5.06% and $351 million maturing in the second quarter of 2025 with an average cost of 4.95%.
So for the next several quarters, we expect a continued positive pricing GAAP between new production and maturing CDs. For example, January month to date, new CD production has been at an average cost of 4% which is a positive spread of 106 basis points over the weighted average cost of CDS maturing in the first quarter.
Moving to slide 6 at quarter end total liquidity remained very strong reflecting cash and unused borrowing capacity of $2.2 billion. We deployed a portion of the elevated liquidity we had at the end of the third quarter, supplemented by continued deposit growth during the quarter to pay off a significant amount of federal home loan bank borrowings and a smaller amount of maturing brokered cds as well as to fund loan growth and securities purchases. As part of paying down certain structured FHLB advances, we were able to capitalize on favorable embedded prepayment features as well as pay down structures hedged with interest rate swaps. We structured these borrowings prior to the fed tightening cycle. And as a result, the positions had significant mark to market gains at the time of termination.
In total, we recognized $4.7 million of gains on the repayment of $200 million of FHLB advances during the quarter. With total deposit balances increasing 3% and loan growth of $135 million or 3%, the loans to deposits ratio was relatively unchanged at 84.5% from the end of the third quarter. At quarter end, our cash and unused borrowing capacity represented 173% of total uninsured deposits and 222% of adjusted uninsured deposits.
Turning to slide 7 and 8 net interest income for the quarter was $23.6 million and $24.7 million a fully taxable equivalent basis, up 8.2% and 7.9% respectively from the third quarter.
The yield on average interest earning assets declined to 5.52% from 5.58% in the linked quarter due primarily to a 54 basis point decrease in the yield earned on other earning assets which are predominantly cash balances impacted by the fed's rate cuts but partially offset by a three basis point increase in the yield earned on loans. The higher yield on the loan portfolio combined with higher average loan balances produced solid topline growth in interest income increasing almost 4% compared to the linked quarter which far outpaced the increase in interest expense. As a result, net interest income was up over 8.2% from during the quarter building on last quarter's increase and further distancing us from the low point in the third quarter of 2023 net interest margin for the fourth quarter was 1.67% and 1.75% on a fully taxable equivalent basis. Both representing five basis point increases compared to the linked quarter. The net interest margin roll forward on slide. Eight highlights the drivers of change in fully taxable equivalent net interest margin during the quarter.
The yield on funded portfolio originations was 7.26% in the fourth quarter, down from 8.85% in the third quarter, which reflects the 100 basis points of fed rate cuts in September as well as a larger volume of originations in fixed rate portfolios which are priced at lower spreads over us treasuries but are still significantly higher than the current all in yield on the loan portfolio pipelines remain solid, especially in the construction and small business lending lines of business.
And our focus on improving the composition of our loan portfolio gives us further confidence that net interest income will continue to increase in future quarters related to deposits. Looking at the graph on slide 8, that tracks our monthly rate on interest bearing deposits against the fed funds rate. You can see that our deposit costs are beginning to trend down along with the decline in fed funds.
At quarter end, we had $1.4 billion of deposits indexed to FED funds which when combined with the $765 million of CDs maturing over the next two quarters and an additional $200 million of higher cost broker deposits maturing at the end of the first quarter are expected to drive further net interest income growth and provide a strong catalyst for net interest margin expansion.
Turning to noninterest income on slide 9, noninterest income for the quarter was $16 million, up $3.9 million or 32.5% from the third quarter. As I previously mentioned, noninterest income included $4.7 million of prepayment and terminated interest rate swap gains related to the paydown of federal home loan bank advances, excluding these gains adjusted noninterest income was $11.2 million, down 7% from the third quarter. Gain on sale of loans totaled $8.6 million for the quarter, down from $9.9 million in the prior quarter. Loan sale volume was $106.7 million down 16% quarter over quarter. While net gain on sale premiums increased 30 basis points from the third quarter.
As David mentioned in his comments, the decline in loan sales volume was mainly due to timing. We originated $167 million of SBA loans during the quarter. An increase of 2% over the linked quarter with over a third of those closing late in the quarter, the decline in gain on sale revenue was partially offset by higher net loan servicing revenue which totaled $1.4 million for the quarter due to growth in the servicing portfolio and a lower fair value adjustment to the servicing asset moving to slide 10 noninterest expense for the quarter was $24 million, up $1.2 million from the third quarter. The increase was driven in part by higher compensation costs due to staff additions in small business lending, risk management and information technology. As we continue to invest in key areas of our business.
Additionally, other noninterest expense was up due to seasonal expenses and deposit insurance premium increased due to year over year asset growth.
Turning to asset quality on slide 11, David covered several of the major components of asset quality for the quarter in his comments. So I will just add some commentary around the allowance for credit losses and provision for credit losses.
The allowance for credit losses as a percentage of total loans was 1.07% at the end of the fourth quarter. Down six basis points from the third quarter. The decrease in the allowance for credit losses reflects a decline in specific reserves related to charged off B loans as well as the net charge off activity. David discussed earlier partially offset by qualitative adjustments to the small business lending ACL and overall loan growth. At quarter end, the small business lending ACL to unguaranteed SB A loan balances was 5.7%.
Additionally, at a higher level, if you exclude the balances and reserves on our public finance and residential mortgage portfolios, which have lower coverage ratios given their lower inherent risk. The allowance for credit losses represented 1.27% of loan balances.
Provision for credit losses in the fourth quarter was $7.2 million compared to $3.4 million in the third quarter. The increase in the provision for the fourth quarter reflects the elevated net charge off activity. The qualitative adjustments to the small business lending ACL and overall growth in the loan portfolio partially offset by the decline in specific reserves and adjustments to qualitative factors and other portfolio, other portfolios.
Moving to capital on slide 12 our overall capital levels at both the company and the bank remain solid. The tangible common equity ratio was 6.62%, an increase of eight basis points from the third quarter as a smaller balance sheet, more than offset the impact of higher interest rates on the accumulated other comprehensive loss. If you exclude other accumulated other comprehensive loss and adjust for normalized cash balances of $300 million the adjusted tangible common equity ratio would be 7.4% from a regulatory capital perspective. The common equity tier one capital ratio remains solid at 9.3%.
Before I wrap up, I would like to provide some commentary on our outlook for 2025. While the market may be pricing in a rate cut or two over the course of the year, we are sticking with our conservative approach and assuming fed funds and other short term rates remain constant through 2025.
When looking at the estimates for full year 2025 I think the consensus earnings per share number is within the range. We are forecasting for next year. However, how we get to that range is a little different than what the current models are projecting.
We expect loan yields to increase as we continue to originate new production at rates well above the current portfolio yield, we also expect deposit costs to continue declining as one, the last two fed rate cuts get fully incorporated into quarterly run rates. Two, the significant CD repricing GAAP on over three quarters of a billion dollars of CDS maturing over the next six months and three, the paydown of higher cost broker deposits at the end of the first quarter, assuming loan growth in the range of 10% to 12% for the year and deposit growth in the range of 5% to 7%. We expect that annual net interest income will increase in a mid 30% range over 2024 and fully taxable equivalent net interest margin will increase throughout the year and should be in the range of 2.20% to 2.30% by the fourth quarter of 2025. If the Federal Reserve were to begin reducing short term interest rates, our net interest income and net interest margin would likely exceed these projections with regard to noninterest income. As our SB A team continues to grow and deliver consistently higher origination activity. We expect annual core noninterest income to be up in the range of 9% to 12% over 2024.
A potential risk to this forecast will be loan sale pricing in the secondary market while gain on sale premiums are currently attractive. If pricing were to soften it may, it may make more economic sense to hold a loan yielding 10% or more versus selling for a premium far below the annual spread income we would earn looking at the provision for credit losses with quarterly provisions higher than what we have experienced on a historical basis. We are taking a conservative approach in our forecast for 2025 and are modeling an annual provision that is in the range of 15% to 20% higher than what we recognized in 2024.
And finally, from a noninterest expense perspective, we added a number of personnel throughout 2024 to support growth in small business lending as well as in risk management and information technology. And with the planned growth in SBA originations and the continued investments in key areas of our business, we do expect compensation expense to increase in all2,025 in. We expect annual noninterest expense to be up in the range of 10% to 15%.
One additional point I would like to make when looking at the quarterly earnings per share estimates for 2025. I think the distribution might be off a little while the total for the year is in the range due to seasonal factors and the time that it takes CD repricing to work its way through our to work its way through. Our forecast is a little lighter in the 1st and 2nd quarters of the year and a little higher in the back end of the year. With that, I will turn it back to the operator so we can take your questions, Jenny.
Operator
(Operator Instructions) Brett Rabatin, Hovde Group.
Brett Rabatin
Hey, good afternoon guys wanted, wanted to start on the asset quality clean up and then you know, any color that you can provide on the SB a charge off and just, you know what you're seeing in the SP A portfolio generally and your guidance for provisioning to be 15% higher in 25 that's probably 45, 46 basis points. You know, are you expecting some continued charge offs in the SBA portfolio?
Kenneth Lovik
I guess? Maybe let's just start with our assumption increased provisioning for the year. I mean, I think as you know, over, over the last several years, as the SB A business has grown, there have been more chargeoffs and more provisioning, certainly you have just growth in the overall portfolio. We're, we're reserving at a higher rate on those loans and the charge offs are certainly higher in those than say, a single tenant or others. So I think we've just seen a higher run rate over the last couple of, over the last, 4 to 6 quarters of that.
And I think we're just kind of going to take a, take a conservative approach and, and, hopefully we're provisioning more than what we need. But I think we'd rather just be conservative in our forecast and add a little bit to that is again, keep in mind that the, that the portfolio is going to continue to grow and we have bumped up just the overall ACL coverage there. So there's a piece of that driving that as well.
Brett Rabatin
Okay. And then on the clean up, what, what, what that entailed and you had the one specific charge off that had allocated reserves, but we were just trying to get a little more color on what you were seeing in the SB A portfolio. You know, I know that the credit trends in SP A for the industry have been a little softer, but I know everybody kind of does things differently and the rules changed two years ago on underwriting, just any, any thoughts on the SB A portfolio. As you see it from a credit perspective.
David Becker
I'll take that one, Brett in the SBA portfolio actually in the bank in total, there is absolutely nothing going on that causes me to lose any sleep at night.
As you just stated, the SBA world is a little tougher. Right now. We've analyzed the top to bottom, underwriting loan issues, looked at everything. The only real as Nicole like to continually say every loan is a snowflake. It's one of a kind, there is no scene. We don't have any in a state and a product and anything out there is just kind of one off. The only thing that is somewhat of a common denominator, about half of our delinquent accounts have some kind of tie to the hurricanes that blew through the country last year through Florida and up through to North Carolina.
They're having problems getting things rebuilt, restructured, catching up or losing 2 to 3 months of income, et cetera as you well know too in the sp a world, they bend over backwards to assist the small business owners. So sp A does a lot of things and we're working through some of those mechanics. We're not as familiar as some of the processes as Ken said, it takes longer to get through things to both on the sales side, as well as recovery side as well as the collection. So we took advantage in the fourth quarter of looking at some of the loans, we might get some recovery, we might not get recovery. We were doing okay on earnings and we just wanted to set a clean stage for going into 25.
Ken said we bumped up reserves a little bit because if you look at our credit history for the last five years, we've done more outside of the Wahoo experience we had in early 23 we charge off more loans over the past year than we probably have in the last three or four years put together outside of Yahoo. But the bottom line is the SBA even with those charge offs in the fourth quarter, we made $4 million more in SBA at the bottom line than we did a year ago.
And I think that's kind of watching the market reaction to today. I get a little perturbed when peers are out here selling hundreds of millions of bad, not bad security, solid security. The low rate security is taking millions of dollars of hit, getting a 3 to 4 year payback. We get a little aggressive knock down a few loans to really set the stage for a great 2025 and we get beat up in the marketplace and their stock goes up. It doesn't make a lot of sense to me what's going on out here.
But yeah, it's there, there's nothing fundamentally wrong. We have some of the best videos and people in the country in the B A world. We built out a phenomenal team over the last three or four years and we think it's just a hell of a great opportunity for us going forward. There will be more losses than we're used to seeing. And there's more work that goes with it because of all the rules and regulations in SP A but it's a, it's a very diversified solid portfolio and we're going to keep the pedal to the metal and keep it moving forward.
Brett Rabatin
Okay. And I didn't hear, lastly for me, I just, I've got a bunch of questions, but I'll ask this last one hop back in the queue. You did $540 million of SB A in 24. And I heard, I think I heard the fee income guidance for 9% to 12%. What are you assuming for production for SP A for, for 25? And then I didn't quite understand what you were employing the on sale could create some very in that, but didn't quite get what you were assuming for gain on sale margins.
Kenneth Lovik
Yeah. Well, 22 things, Brett, we're assuming $600 million of originations next year. I think, we're our right now our, our gain on sale net premiums have been in the range of say 108 on average, probably maybe a little bit higher. But in our forecast, we're assuming 108.
And then the one, the one, the one piece I said that could be variable. Brett is that if you know the gain on sale premiums, have been a little, we've seen volatility in those over the past 18 months. And you know, again, if say gain on sale premiums drop to say 106 and we got a loan that's, prime plus 275 that's a solid loan. We may just elect to keep that on the balance sheet versus selling it. So that would be, again, it's the volatility and gain on sale premiums could be a risk to gain on sale income should we choose to hold the loan.
David Becker
As Ken stated, we carry forward into January where $60 million in production from December. So that here over the last couple of weeks and we again did net that 108, we had one loan that came in at a 106 and we just kept it on the books. There was no reason to sell it in the market. So, and all of that appears to be stable as we well know President stating today that he's going to force us to drop interest rates and blow everything up. It could change at a moments notice, but we we're pretty comfortable that it's as Ken stated, we are not forecasting any additional rate decreases. So that should stabilize somewhere in that low 108 range and carry forward for the balance of the year. That's what we built into our budget.
Brett Rabatin
Okay. Appreciate all the color guys. Thank you.
Kenneth Lovik
All right, thanks Brett.
Operator
Tim Switzer, KBW.
Tim Switzer
Hey, good afternoon. Thank you for taking my questions.
David Becker
Hey, Tim.
Tim Switzer
I have a follow up on the commentary around credit performance particularly for the SB A. Are, are there, is there any specific industries that you're seeing a little bit more pressure or types of borrowers at all?
David Becker
No, not at all. As I stated a minute ago, we've analyzed that portfolio six ways to Sunday and trying to see if there's a common theme, if there's a common broker, if there's a common b, if there's a common underwriter, if there's a common anything and outside of about half of the loans having some kind of an impact due to the hurricane issues, there is no common denominator so, well, I'll take it back.
One thing that did kind of show up for the loans we originated during COVID that were either had real estate components or pretty heavy buildouts or they got delayed. They couldn't get supplies, they couldn't get team, they ate up a lot of their excess working capital and cash with that 12 to 18 month delay.
And so some of those folks we're working with today to try and help them get back on their feet. But outside of the hurricane and outside of the issues related to the pandemic. And most of those were people that had significant buildouts or physical building construction in order to get open there is you can find no common denominator. So it really is just that as Nicole says, snowflakes that, sometimes they work and sometimes they melt. So right now it seems to be stabilizing. We're not seeing anything really crazy going on, but time will tell that's why we're being conservative, helping the reserves a little bit.
Tim Switzer
Okay. Okay. And you know what, I guess, what, what impact do you see looking forward on the outlook from like the rate environment if rates are higher for the longer, how do you see that impacting your SB A borrowers and I guess the rest of your credit portfolio as well?
Kenneth Lovik
You know, that we've, we've looked at that in terms of the rate environment. If you, if you think about like when we've gotten into SB A right, I mean, we've really experienced our, our strong growth in, beginning in 20 a little bit 21 and more 2223 24. We've been originating in a high rate environment to begin with.
You know, we're doing credit, we do interest rate, stress testing and underwriting where, your shocking rates up 200, 300 basis points to make sure there's good debt service coverage and there's still working capital. So a lot of our loans have been originated in the high rate to begin with. So, we've gotten 100 basis points of relief thus far. It's not, when you do the math on an average loan balance and you look at what a 25 basis point decrease or a 50 basis point decrease is, it's not on a monthly basis, on a monthly p and I basis, it's not really a significant amount. So, I mean, we haven't really, none of, none of the, I would say any of the charge off we've experienced have been due to high rates.
David Becker
I don't think there's going to be any impact in our client base and, or our numbers, if it holds steady, what would impact us? And I think would totally demoralize a lot of our commercial accounts if the rates start to go up if inflation blows up for whatever reason. And the fed makes a move the other way that could have some significant impact and it's not us, it's going to be the whole industry. But I think as long as it stays stable, there's kind of a light at the end of the tunnel. As Ken said 100 point decrease last year is a couple of 100 bucks a month maybe on a loan payment. But it was positive news inflation is coming down, employment is going up, consumers still spending day in and day out. The real economic news is pretty solid and folks think there's a chance nobody's losing hope today. But I would tell you that the one to watch is if it turns and the fed has the bump rates, then that could be a different story, but not only for us, for everybody in the industry.
Tim Switzer
Okay, great. Thank you. And the last question I had was in regards to your fintech deposits, obviously very good trends this quarter in the last few quarters. Can you provide some commentary on like how much of that deposit growth and some of the revenues being driven by current customers you've had versus new onboardings. And then can you give us an update on kind of the pipeline you see and what kind of customers you're looking to bring on board?
David Becker
Yeah, I think that on the fintech space, a couple of things out there as we discussed several times here, we had a good core component of fintech customers. Yeah, we have some folks a little irritated with us that the onboarding process instead of being 60 days, it has been six months to get through all the regulatory issues and stuff. I think we discussed a couple of calls back that after our spring exam last year, we finally got the working guidelines from the regulators of what they want us to do and how they interpret. I still call it BSA, whatever it is. A L something or the other.
Nowadays, we, we've got great customers that are growing significantly. Literally all the growth here over the past year. For example, in 23 we finished the year $1 million in the hole on the Bass division. We added expenses and staff quadrupled some of the staff over $1 million increase in expenses related to that this year. Yet, the earnings flipped to a positive $1.2 million at the end of the year. So we made a $2.5 million dollars swing in earnings and we added up staff.
We've got a great team. We've got some really solid clients that are really starting to grow. We've got a young lady on the west coast. We just double down her card opportunities. So we should see some I would be remiss if we don't wind up doubling tripling quadrupling that $1 million earnings could end up being $4 million in earnings by the end of this year. Just with the folks, we have, we have a good pipeline. We have good opportunities out here.
But with all the noise in the industry from synapse and all the problems there being extremely cautious, there are a lot of people running for the hills in the banking world as well as the fintech world. So we want to make sure we're not taking on somebody else's problems. So our due diligence, which was very tough. Everybody tells us compared to peers to begin with has gotten even tougher. So we think we're going to have significant growth and we could have exponential growth in a couple of them, but we're not going to go out just because the market is frothy now and sign up somebody else's problem. So we're in it, we're going to stay in it and we're going to grow it and we think there's a heck of a future for us in the fintech space.
Tim Switzer
Nice. That sounds great. Thank you for all the color. Appreciate it.
Operator
Nathan Race, Piper Sandler.
Nathan Race
Hey guys, good afternoon not to beat a dead horse on the SB a front. But you know, just thinking back to the call in October, it seemed like SB a delinquencies kind of peaked over the course of the summer. So, some of the charge offs that we saw this score a little surprising. So just curious if you can shed any additional light in terms of what occurred between now and then to necessitate these charge off and the elevated provisioning. Was it more? So just around getting some updated financials from clients or any other light on any other light you can shed on that would be appreciated.
Kenneth Lovik
Well, part of it, yeah, I mean part of it was like, as we referenced, we you know, of the of the large charge off $3.4 million of that had to do with loans. We already had reserves on whether in full or in part. You know, some of those were borrowers that were, trying to work towards some kind of resolution help, whether it's a sale of the business pending or, or trying to get something like that done where it just became evident that the outlook wasn't going to be as optimistic as we would have liked.
So I think we just decided, let's just charge the loans off, remove the specific reserve and, and move on. You know, we have sometimes it's hard to tell. We had probably maybe a little bit higher than usual. A number of, of maybe perhaps a borrower who was, had a, had a deferral and, a lot of times they come off of deferral and, and, their business is back and, and they get back to making payments and probably had a little bit higher number than, than one would expect this quarter where they came off deferral and just really, business was struggling.
And it's all as David mentioned before, he used the term snowflakes. A lot of it is just really everything is borrower specific. No, no common theme, no geography, no industry. It really just seemed like there's just kind of more, more than what we had usually seen in the.
David Becker
Past one of the things we did over the last few months. And like I said earlier, we analyzed that portfolio to death. We've had outside reviews of the portfolio. We wanted to make sure we hadn't missed something that we didn't have fundamentally a bad decision maker or a bad referral source. A bad BDO and it all came out spotless and clean. So it is just a factor of the industry right now is one of our peers, a much larger sp a shop than us announce some pretty tough numbers last night this morning, it's, it is what it is and the industry, we were on the right path.
Everything was smooth for months and months on end and it got a little bit sideways. But with the earnings component that's coming with this product on gain, on sale, on servicing on all the revenue and the interest side of things, even taking that pop. If you remember back in early 23 when we took a $9 million hit, we ended up the quarter with a $5 million loss.
We sucked up this hit and, and improved earnings fourth quarter over third quarter. So we had the luxury of taking, getting a little aggressive on calling some of this stuff and just getting it out of the way. And that's what we opted to do. And I, and we have, I can guarantee you we will have more SB a losses over the course of the next year, I hope they're not $9 million every quarter.
But I will tell you with the growth play. If it turned out to be $9 million every quarter next year, we're still going to put another $10 million to 15 million to the bottom line. So it's built into the pricing. It's built into the structure. And as I said earlier, I'm not losing any sleep that there's anything fundamentally wrong with SB A or any of the other assets we have on the books.
Nathan Race
Got it. That's really helpful. I'm familiar with some other SB A lenders and, typically, normalized charge offs for them and in this business is, anywhere between 30 to 40 basis points a quarter. Is that how you guys are thinking about the future charge off trajectory?
David Becker
Yeah, shame on, shame on us. As Ken said, we had already reserved $3 million in the 2nd and 3rd quarter on a couple of loans and trying to, this is our first experience on the bad side of the SB A figured it out. We should have just popped some of those earlier on and that's exactly what I think is going to happen is being in that 3,040 basis point range going forward. We might, we got one guy that has a couple of two or three businesses. We could be, I don't think we're going to be $9 million here in the, in the first quarter, but Yeah, we anticipate leveling off spot on in that 3,040 basis point. We've taken a little extra provision our numbers going forward just to be safe. But yeah, we think that's a good place to work with.
Nathan Race
And that's just 30 to 40 basis points, off the SB a portfolio itself, not the entire portfolio got you. Just trying to change the ears, think about the margin trajectory for this year. You know, I appreciate the guide around 2 2230 coming out by the fourth quarter. Just curious in terms of kind of the cadence to get to that margin. Do you think it's more kind of first half loaded? Just given some of the CD repricing that Ken described earlier or just any thoughts on kind of the progression of the margin over the course of this year?
Kenneth Lovik
Yeah, it, well, it's, it's, it's the, I think the first quarter is going to be a little tricky to see that because what, what we really get a nice pop is in the second quarter when we pay down some very expensive brokered, and start getting a again at some of the timing of the CD maturities. Well, those will start to kick in more in the second quarter and certainly in the back end of the year. You know, like I said first quarter, I mean, we're expecting a nice increase in the first quarter, but sometimes that's a little bit tricky to pin down. That range is a little bit wider, but I really think we'll, we'll get a nice one in the second quarter and then kind of in the back end of the year.
David Becker
As Ken said earlier. And I think all of you guys have averaged out somewhere around $4.20 in earnings for next year. We think that's a very achievable number probably starting somewhere in that low, mid $0.80 range here in the first quarter and working up in calendar year 2025 we're going to be, we're going to pop up by another $13 million, $14 million in earnings over 24. So we're not changing anything on the overall side. We did not expect to have interest rate decreases last year. That's helping us.
So we're more than confident we can keep the earnings trajectory as we thought it was going to be in 2025. If we don't have the losses that we think we might have an SB then the bottom line gets even better. So being from the Midwest, we are a little more conservative than most folks who are. I'm not going to sit here and tell you we're going to whack $5 a share, but I can tell you with the four bucket kind of where you guys have us today. As Kim said, some of the parts in between are moving a little maybe from what your model showed at the beginning of 23 but it's 24 is going to be a great year for us.
Nathan Race
Okay. Really appreciate the color guys. Thank you.
Kenneth Lovik
All right, thanks, Nate.
Operator
George Sutton, Craig Hallum.
George Sutton
Thank you. You did call out franchise finance in terms of the provisions. Or at least the delinquencies. Can you just give us a little bit more of a picture there? Is that still a program you're planning to continue to grow quite a bit?
Kenneth Lovik
I, no, I mean, we're, we obviously we got about a $500 million portfolio there. It, you know, has grown quite a bit over the last several years. I think we've, with other, when you think about allocating capital and growth in SP A and some other things going on our growth there is, will probably be pulled back significantly from what you've seen in prior years. I mean, I think year over year balances were actually down.
You know, we've probably seen a little bit, we, we've certainly seen a little bit of increase in the nonperformers there as we've tried to get in front of, certain, franchisees that have been struggling and our team's working very closely with our partner on that. But I mean, we're, we're probably, doing, I don't know, call it, maybe $6 million to 8 million a month of new originations there, probably the amount of originations that, that are offsetting paydowns in the portfolio. But just, again, it's a, it's a nice yields. It's been a nice earnings contributor to us. But it's, it's obviously one part of a, of a much bigger pie.
David Becker
I will tell you, George, the folks at apple pie and working with our team, they changed and I made some comments, I think in the last earnings call or the call before about servicer and having some of the issues, they have a new servicer. Our team is in constant contact with them. We're starting to see a light at the end of the tunnel on that one and Ken said their volumes off a little bit.
We're still buying, we won't see tremendous growth and quite H1stly, we have some better channels right now. But the relationship between us and apple pie and their customer base has really come a long way in the last 90 days. So we're not really worried about the portfolio. There are things there. You got a store that's operating particularly some of the smaller coffee shops and you got an owner that thought they were going to make a quarter million a year working six hours a day and they're slugging it out at 12, 14 hours a day and making 40 grand and they just give it up.
So that's a little bit on human nature, but we've reserved for it. We're working with them and we just have, we're getting to the table with people that are going south much earlier in the game and we're able to help them. And in the, I will tell you, the franchisors are stepping up as well. They don't want a bad reputation in the market. So they're finding other services and players and people to help or take over stores. And when we're in there early on, we can do that before it becomes a crisis and everybody wins in the end.
George Sutton
So David, just one other question. If you've been paying attention to the news, we days ago entered a new golden age. I'm curious what you think that means broadly defined for your opportunities. Are you seeing a, a legitimate increase in enthusiasm demand for growing businesses and loans? Just curious your thoughts there.
David Becker
I haven't seen any impact from the golden age yet, but what I can tell you and again, maybe it's just back to kind of being in the Midwest. You're located here in the Midwest. Hopefully you're seeing the same thing, what I love about being part of the Midwest and that being our home base, we don't go to extremes one way or the other. We don't get appreciation and property values and prices like other areas of the country do, but we don't get the depreciation when things fall apart. It's not as tough.
We don't get the upside but we don't have the wild crazy downside. I think we and all of our businesses across the line outside of B and the super growth that's going on in B is over the last two or three years. We just put a hell of a team of people together there. We have some of the best, highest producing BDOS in the country that because of our consistency and our focus on the market and call Midwest values that we do. What we say we're going to do and we get it done timely.
Our business is just pretty rock solid and consistent. We're not expecting any massive spikes nor are we expecting any massive problems. So yeah, I've, I've, we had that discussion a little earlier this morning. If you heard that some of the stuff that was being discussed in Davo this morning that the world is oil is going to go down and we just, that's noise. We don't pay much attention to it.
George Sutton
Got you. Thanks for the thoughts.
David Becker
Thank you.
Operator
John Rodis, Janney.
John Rodis
Hey, good afternoon, guys. Hey Ken, first off, just the tax rate we should use for, for 25.
Kenneth Lovik
Yeah, I think as you, if you think about, the earnings trajectory if on a quarterly basis for next year, we have nice, kind of similar to this, this past year in 24 kind of a nice stair step up in terms of, of earnings except we're at a much higher level. So, from our perspective, on a quarterly basis, looking at a tax rate of say, maybe somewhere in the first quarter of 9% ranging up to about, 16%, 17% at the end by fourth quarter. That's the way we're looking at it. So I guess on average you're 13% to 14% for the year. So that's kind of the way that we're modeling it right now.
John Rodis
Okay. Thanks Ken. And then Ken just to clarify, I think you said on key income, year over year growth of 9% to 12%. Would that as far as the base for 24 is the base with or without the games in the fourth quarter of $4.7 million?
Kenneth Lovik
It's without the gains. So back out the gains that gets you to say 42.6 and then go off of that.
John Rodis
Okay, thanks guys.
Kenneth Lovik
All right. Thanks, John.
Operator
Thank you. There are no further questions at this time. I will now hand the call back to David Becker for the closing remarks.
David Becker
Thank you, Jenny and thanks everybody for joining us on today's call. As I said, we wrapped up 24 with some strong performance. We're entering 25 with a lot of great momentum and a lot of backlog and business and opportunity. We're highly optimistic about the future outstanding performance of the lending teams along with emerging opportunities to the fintech and other partnerships positions us to greater more diversified revenue growth.
We have the wind at our back with a more favorable interest rate environment and an improving business climate. Adding all that together creates a great, a great foundation to build on and deliver stronger earnings and profitability in 2025. And going forward as fellow shareholders, we remain dedicated to maximizing shareholder value. We appreciate all your ongoing support and wish you a pleasant afternoon. Thank you.
Operator
Thank you, ladies and gentlemen, the conference has now ended. Thank you all for joining. You may always connect your lines.
