Jon Arfstrom: Yes, what’s the provision message going forward, I guess? Because obviously, the lower ROA was driven by that. Yes.
Leslie Lunak: We think — yes. the provision this quarter was pretty heavily influenced by the Moody’s S2 downside scenario. So, I think we’re well-positioned from a reserve perspective in the event of a mild recession. Obviously, if the economy totally goes off the rails and we have a severe recession, well, all bets are off for the whole industry. But I’m not expecting that to happen. So, I think we’re very well-positioned. And I expect provisioning — sitting here today, I expect provisioning for 2023 to really be mostly a function of production.
Jon Arfstrom: Yes, growth plus charge-offs is what I’m thinking.
Leslie Lunak: Yes. Yes.
Jon Arfstrom: Okay. Are you guys seeing any changes in the quality of your pipelines at all?
Raj Singh: Not in the quality, but in the quantity, we have seen some — a little less robustness in the pipeline. And some of it is probably because we had a pretty good quarter, and we closed a lot of stuff. Nothing really spilled over into January. But some of it, I suspect, is also customers basically looking at the environment and saying, maybe I want to wait a little bit to make the next investment, build the next factory or the next payoffs. So some of that, when we talk to clients, I can see the intended effect that the Fed wanted to have, it’s actually happening in the real economy. People are more cautious. People are thinking hard about their expansion plans and being, on the margin, a little more cautious. So that is also influencing our guidance we’re giving you about loan growth that in next year, in which everyone is expecting a mild recession, you’re not going to see some outsized level of growth. It would be responsible.
Jon Arfstrom: Yes. Okay.
Tom Cornish: Yes, I would add, you particularly see that in the real estate business where pipelines and investment is driven by — there’s a substantial amount of capital on the sidelines today in the real estate markets. But if people kind of read into what they think the curve is going to look like or at least what the curve looks like today, that towards the latter part of the year, people are thinking the cost of debt will be — fixed rate debt will be less than it is today. So investment strategies are being paused a bit, particularly in the CRE markets.
Jon Arfstrom: Yes. Okay. And do you guys think a pause probably changes that, that outlook a bit?
Leslie Lunak: No, I think that is encompassed in the outlook that we gave you.
Jon Arfstrom: Okay. Okay. And then just one more on commercial real estate, the $30 million number last quarter. So maybe that’s the number we’re looking at. You guys don’t have a single non-performer the way you categorize commercial real estate?
Leslie Lunak: Correct.
Jon Arfstrom: Talk a little bit about what you’re seeing in the quality of the portfolio. It’s obviously on every investor’s mind, but it looks like your portfolio is very, very clean. Are you seeing any roading? Are you being more cautious, or do you feel like this is more symbolic of your portfolio and maybe the industry is going to get a little bit worse? That’s all I had. Thanks.
