And never know what the future holds, but we feel like we’re pretty well positioned as an institution to look at other opportunities in the commercial space. We are thinking about those and watching closely for opportunities we might be able to capitalize on. So that’s where our head is at today.
Stephen Scouten: Fantastic. Thanks for all the color and congrats on a great year.
George Gleason: Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Matt Olney of Stephens Inc.
Matt Olney: Hey, thanks for taking my questions. I wanted to ask about the pace of loan growth in 2024. Any insight you can provide about if the pace will be weighted towards the front half or the back half? And then on the topic of loan repayments, I am curious what you are hearing from the sponsors from some of these RESG loans that have reached stabilization but still remain at the bank. It seems like you’d be getting more requests given the dip we have seen in rates here, but just curious, any comments you have there?
George Gleason: Brannon, do you want to comment on the second part of Matt’s question?
Brannon Hamblen: Absolutely. Matt, good to hear from you. Thanks. Yes. So it’s largely a timing issue, Matt, and also lender supply out there. There are a lot of institutions that have been less active, but there have also been those that have pushed in and there are some names, non-bank names that we are seeing that are active in that space. But I think the proceeds from a refi today are not what they were when a sponsor kicked off this project. So I think a little bit is just managing expectations and trying to find that particular point in time where they feel like they’ve, whether it’s – they want to burn off some concessions, if it’s a multifamily deal perhaps or get that – the next turn and link that up to the optimal interest rate.
So it’s a combination of factors. I mean, we are – given the environment that we’ve been in, we’re pleased with the payoff activity we’ve had. But we’ve talked about it a good bit, if – as the short-term comes down, and I focus on the short-term because not all of these are going to go to permanent financing. Some will jump from presumably a lower proceed loan with us to a higher proceed loan with trying to minimize the interest rate impact, but certainly getting the higher proceeds, but not necessarily permanent loans. So the short-term rates are more in play there and you guys all know what’s happening with the curve there. So there maybe some delay waiting to get further down the curve and pull the trigger on that.
George Gleason: Yes. And Matt, as we alluded to in our management comments, we think that the lower interest rate levels that were much lower a couple of weeks ago and have gotten higher over the last week or two, but still relatively lower, and the expectation, the Fed is not going to increase rates further in the next direction is down in rates. We think that that is going to create a higher level of payoffs in 2024, either to bridge financing, as Brannon alluded to, from construction – from our construction loan to a bridge loan, or from our loan to permanent financing, which is happening on a lot of apartment deals. There is still a very active refinance market on the apartments out there. The first part of your question is, can we give you some guidance on growth quarter-to-quarter?
I think the best presumption we could probably give you at this point is that that’s probably going to be fairly linear over the course of the year. It will vary from quarter-to-quarter, but we can’t predict that. We would have expected a higher level of originations in the quarter just ended. But several pretty significant opportunities got delayed or otherwise terminated, I guess because of the fact that sponsors were having trouble putting equity together on it, which is an item Brannon alluded to. The equity guys had a very challenging year and getting new equity for new projects is more challenging than it was a couple of years ago and interesting things that are on the drawing board that get late in the process that, for one reason or another don’t get closed or get delayed and it takes another few months to get everything together.
Deals are moving fairly slowly. So we have a projection for every quarter this year. And if we were confident that those quarter-to-quarter closing numbers were going to be close to accurate. I’d share those, but those things are moving around from one or two quarters plus or minus. But some things are getting done sooner than expected. We had a couple of those in the last quarter and a number of things from the last quarter got delayed for a while or perhaps indefinitely. So it’s hard to predict quarter-to-quarter. I think your best assumption would be to assume a fairly even distribution.
Matt Olney: Okay. I appreciate the commentary. And then just as a follow-up, I think in the management commentary, you mentioned the RESG loan concentration, 65% of non-purchased loans, it sounds like that will likely increase in 2024 before contracting in ‘25 and ‘26. I had thought that the previous commentary assumed that the RESG could peak in ‘23 and would work lower in ‘24. I could be mistaken on that. But any color on kind of why that’s now – inflection is now being pushed out to ‘25? Thanks.
George Gleason: Yes. Well, I don’t know that we specifically gave that comment in ‘23, but I could certainly understand why you would infer that. And the reason that the RESG percentage, which got down to about 62%, I think, is back up to 65%, it’s simply because of the slower rate of refinancings and payoffs. And that’s a coiled spring that’s going to spring probably in 2025. So you are correct that we would expect when that spring in coils that, that will lead to an elevated level of RESG payoffs at some point. And our best guess is that is a meaningful number in 2025. So we are cognizant of that. The second thing I would tell you is we enjoyed mid- to high 20s percent loan growth last year. And as was alluded to in Brannon’s comments, we have constrained the growth potential of our equipment finance, capital solutions and ABL groups and fund finance groups, frankly, by limiting them to relationships that also included substantial deposits.
