Brad Elliott: Yes. So most of that increase that you see is related to 1 larger credit. There was another smaller credit that makes up the difference. But it was, it’s a primary residence, large credit, a large loan on the primary residents that we have a first mortgage that we feel very good about from a loan-to-value standpoint. So we’re hoping to get out of it soon.
Jeff Rulis: Is that a borrower that has other lending relationships with the bank? Or is this a singular residents?
Brad Elliott: This is the only one we have.
Jeff Rulis: Okay. And maybe, Brad, just real quick on the, as you have maybe closed Kirksville, next month, kind of leaning into that, if maybe M&A additional deals don’t transpire. Kind of checking in on your appetite on the buyback if we go some time without any transactions that look attractive?
Brad Elliott: Yes. What I would tell you, Jeff, is even with the M&A front, we’re back in the, looking at the buyback each day. So we’re we’ve got enough capital to close the transaction. We did hold capital back in the last quarter to make sure that we could have excess capital to fund the transaction. So we accomplished that. So we’re now looking at buyback this quarter. As if an M&A deal came to fruition, we’d have 1 quarter or 2 before it would close. And so, and we’re building cash pretty fast and earnings are strong. So we’re back looking at buybacks on a daily basis.
Operator: [Operator Instructions] And our next question comes from Andrew Liesch from Piper Sandler.
Andrew Liesch : Sticking with the outlook slide here on average deposit looks pretty flat throughout the year. I heard you mention you got the new check-in account suite coming up, but you have some brokers there. I guess what are the ins and outs on the deposit growth? And obviously, the loan growth is pretty optimistic. So do we assume that you’re going to use cash flows from the securities book to fund that without much deposit growth?
Chris Navratil: Yes. So first off, just I’m looking at it flat. I mean we’ve got, as we talked about, we had some inflows as we normally do on the seasonality of the public funds business. So that moved up. So we’re going to kind of backfill that throughout the year. That’s why you won’t see a large growth in that. In addition to that, as we add in the Bank of Kirksville, we’ve just taken a more conservative approach as far as making sure that we continue to be very disciplined on what our cost of funds are. And so I think that’s why we’re viewing this as a little bit less growth. We’re also going to try to look and see to make sure we try to push our mix and which is what the new products are geared towards. So continuing to maybe give up on a little bit of that time deposits to replace it, hopefully, with more noninterest-bearing and transactional accounts. But I don’t know Chris you, the other question? I’m sorry, Andrew, you had another question on there?
Andrew Liesch : Yes. funding the loan growth then. Is it really just going to be remixing you have — what are the cash flows out in the securities book?
Chris Navratil: Yes. So we do have some continuing cash flow that’s coming off of our securities book. We’re continuing to look at from a capital perspective, having excess capital and potentially pursuing more opportunities in continuing to sell the market creates opportunity for us to be opportunistic in repositioning the bond portfolio directly as we did in the fourth quarter. And as you look at the end of the fourth quarter, Andrew, we were sitting on a meaningful level of cash at that point. We’ve continued to have meaningful cash levels kind of throughout the year. So part of that repositioning or loan funding is coming right out of that cash. And then when we get the Bank of Kirksville, with that transaction, we’re bringing on more cash and some relatively short-term investments.
So there’s cash flow coming off of that one quickly, too. So without meaningful deposit balance growth, we have, we believe, the capacity to continue to fund the loans at the level that we’re depicting here.
Operator: And our next question comes from Damon DelMonte from KBW.
Damon DelMonte : Just a couple of quick ones here. One on the deposit remixing that’s been occurring. I think noninterest-bearing deposits are now down to around 22% of total deposits. Do you feel you’ve kind of reached the floor there? And it should start to hold from there? Or do you feel like there’s still some rotation or migration out of that category?
Brad Elliott: Well, I wish I could give you an exact answer on that. I mean I think we’re seeing, we’re not seeing accounts decreasing. So what we’re really seeing is we’re seeing balanced balances decrease within those accounts. So we do think that those accounts are getting fairly low in the consumer area. But since we’re so granular, it’s something that we’re obviously continuing to keep an eye on, but it requires us to start growing. And so that’s kind of what we’re looking at. So I don’t think I think it does feel like that number is slowing. And so also, if that’s the case, I mean, I think we might still have a quarter of a little bit more of kind of where it continues to shrink on an average basis. But we’re getting to that final point here.
Chris Navratil: And what I would tell you is, yes, it moved down a tick, but it moved down a tick only because we’re in roundings, right? So it didn’t move down from 23% to 22%. It moved down from just below 23% somewhere into the 22%. So it’s not like it fell a whole percentage points even quarter-to-quarter.
Damon DelMonte : Right. Right. Got it. Okay. And then on the guidance slide, I think for noninterest income, you’re guiding to $8 million to $9 million for next quarter. I think this quarter was kind of in the low $7 million range. Can you just kind of help us figure like walk us through from where you were here in the fourth quarter and how you get to an $8 million to $9 million level?
Chris Navratil: Yes. So we were somewhat light this quarter compared to what we look at as a run rate. Some of that is driven by derivative fair valuation. So when you look quarter-over-quarter, we benefited from derivative fair value change in Q3. We were hurt by it in Q4. We don’t expect the same level of kind of comparative shift. And then as we look into next year, we’re continuing to see opportunities from some of our legacy acquired assets that are bringing in opportunity to realize some benefit from working out some special assets. Similar to what we’ve had in previous quarters with the upticks in kind of repurchase obligations and other things we’ve talked about. We’re seeing some of that come back through again, and we expect to benefit from in the first quarter. and have some additional benefit throughout the year, which is what’s being reflected in that figure.
