Catherine Mealor: Great. And so is there any way — I know if there’s going to be a big range on this, but — is there any way you can help us think about what the LTV is currently on your office book? And as you’re getting up — and I know just one credit part of what drove move to — part of why you charge it off if you had an updated appraisal. So just trying to think as you’re getting updated appraisals in that book, are you seeing that LTV on the overall portfolio start to move up?
Janice Williams: Catherine, every property is pretty unique, and it’s hard to generalize about where and appraisal is going to come out. I think there’s still a lot of price discovery going on in the market. So even appraisers are struggling with this. It really depends on the characteristics of an individual property. What class of building is it, what kind of leases are in place whether or not the property has a parking lot that, for example, could be used a conversion to residential type piece of land and the worst possible scenario based on what I’m reading is a Class C building that’s vacant that has a zero lot line. Mercifully, I don’t have any of those. It’s very hard to generalize.
Catherine Mealor: Yes. Okay. And then I think this was a question that Casey asked, but I just want to make sure that the current modifications, do you have that number and not even just an office, but kind of generally, maybe what percentage of loans have had a modification in the past year or so?
Janice Williams: We do keep a record of a trailing 12, but I honestly haven’t looked at the number for 12, 31 now. I don’t think it’s been full yet.
Catherine Mealor: Would you think there would be a big change from last quarter — we pulled out last quarter? Does this quarter have a big change or you’re probably pretty stable on that?
Janice Williams: I think it’s going to be pretty stable because some of what you’re going to see is that loans that we may be modified for 90 days might have been modified again during the same trailing 12 as we put into place a longer-term solution. So even if it was modified during the quarter, it’s already going to be in the path of trailing 12. So…
Catherine Mealor: Okay, that makes sense. Okay. Great. And then maybe switching over to the margin. Any — just kind of big picture. I know that 250 to 270 margin guide assumes a flat rate environment. But if we start to see — assuming you’re well positioned in a rate cut scenario just given your ability to bring deposit costs down. But what are — how are you thinking about the sensitivity and maybe a deposit beta on the way down that we should assume? Or how are you thinking about how much upside we could potentially see as we start to see rate cut?
Eric Newell: Yes. In terms of how we model on sensitivity and what our approach to sensitivity is that really more of a neutral positioning because I just don’t feel we get compensated appropriately enough to be liability-sensitive, materially liability or asset-sensitive or obviously probably all be in different jobs. But I think our approach is to really be as neutral as possible. But given some of the nuances of our funding profile, I would say that we are positioned quite well and a downward rate environment to pass along those — any changes to market rates to those folks that are — have funding with us. And in fact, our — I had in my prepared comments, but we’ve already taken some actions earlier in January to reduce rates and deposits.
And so we’re going to continue that effort throughout the quarter, even before the Fed potentially could reduce rates. And you mentioned — you asked a question about betas. I would say maybe in a future call, I could probably talk a little bit more about our thoughts on betas in a dollar rate environment.
Catherine Mealor: And then I know it’s everyone’s best guess, right? I think that’s a big question of how this is going to react on the way down. But I mean given you have one of the higher betas on the way up, my hope would be that you would have at least one of the higher betas on the way down on a relative basis, and we’ll see.
Eric Newell: I hope that as well.
Operator: And our next question comes from Christopher Marinac with Janney Montgomery Scott. Your line is now open.
Christopher Marinac: Hey, thanks. Good morning. I kind of want to leverage Catherine’s question, just to get a little bit deeper on kind of PPNR ROA. Eric, where you are now? Do you see that gap narrowing the next year or two? And what are some of the best ways to kind of get there?
Eric Newell: Yes. To me, when we look at our pre-provision net revenue ROA, I think it really is a revenue story and largely spread. I mean, if you look at our Non-interest expense to average assets, we’re industry leading there, and I think that’s a testament to our commitment and focus on operational efficiency. So I don’t think we can cut our way for excellence. And from my perspective, our focus strategically on deposit growth, improving the composition of that deposits that will ease up on our funding costs and our focus on ensuring that we get the margin on loans that the market is giving us and our focus on that will help us on the asset side as well. We have about — call it $330 million, $350 million that’s rolling off the investment portfolio this year that will move into higher-yielding assets as well. So I think that looking over the next 12 months on a PPNR basis, it’s really going to be a spread story.
