John Connerton: I think we’re still seeing a little – as I mentioned, we’re seeing a little challenge on our C&I side from our customers drawing on their lines, and that draw percentage is down significantly, and we haven’t seen that move. So that does temper some of our growth. The areas that we see in the growth, we do have a good pipeline, a lot of that pipeline is C&I. But I think we’re seeing in both C&I and commercial real estate, and it’s kind of across our regular typical stuff that we do within our portfolio. Back to the rates, I mean, the rates that we’re getting on the lines is north of 8% and our term is north of 6.5%, 7%.
David Nasca: But let me say, additively, we are being considerate of our credit quality at this moment, we’re making sure that we’re living to our credit quality and getting the returns we want out of these deals, one. And two is, your question directly is, we’re seeing a little less activity in the marketplace right now. But we’re pretty open for business right now if the market heats up that number could move a little bit. But we do have a good pipeline as John said, but we’re making sure that we’re doing deals that fit our credit to quality.
Alexander Twerdahl: Okay. And as you’re thinking about, I guess, back to the capital question, and sort of the uses of capital, would you consider M&A as one of those uses of capital? I know there’s not a lot in the way of sort of that plain vanilla bank out there maybe. But if you kind of look a little bit more and think about branches or other things like that, is that something that you’d consider?
David Nasca: Yes, I think we consider – we’re considering all opportunities. So short answer is yes. As you said, there’s not a lot of opportunities to do a lap right this second. But we’ll consider those things. But we also think that there’s growth on our horizon, and that capital helps us get there to our native growth too.
Alexander Twerdahl: Okay. Very good. Thanks for taking my questions.
John Connerton: Thanks, Alex.
David Nasca: Thanks, Alex.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Chris O’Connell with KBW. Please proceed with your question.
Chris O’Connell: Hey, good evening.
David Nasca: Good evening, Chris.
Chris O’Connell: Just wanted to start off on the expenses, appreciate the guide. And hoping to just get a little bit of color as to the starting point particularly in the comp line, given the insurance fall off in the incentive accruals in the fourth quarter? Where do you think that line item kind of starts off the year?
John Connerton: Yeah so probably in the first quarter, our expectations of our salary line item will be around $7.3 million. That if you if you take – if you normalize our fourth – any of the quarters, insurance was about $1.5 million on that salary line.
Chris O’Connell: Great. Does the 2024 guide, does the OpEx guide assume like that percent of accruals are being hit at 100%.
John Connerton: Though we reduced from this year just based on our expectation of where our performance is going to be.
Chris O’Connell: Okay, great. And then can you talk about the deposit base and how much of the outflows this quarter were muni related, and how much of those you think come back in in the first quarter? And if you think they’ll coming back into the same product?
John Connerton: Sure. So in the fourth quarter, we can have variability on a day-to-day basis. So spot balances are sometimes a little misleading. So that’s why I talked to the average balance. And if you look at the average balance, it’s down close to $20 million. And almost all of that is the muni portfolio. And as far as we do expect, we expect to get that back and more, the first quarter is when our municipals get their tax collections and they come in and sit there through the first quarter quite a bit and trail off and get utilized through the rest of the year. Until the schools get it back in the fall. So our expectation is, we will give that back as well as and more.
Chris O’Connell: Do you think – I mean, it looks it looks like much of that came out of the non-interest expense or non-interest-bearing deposit line? Do you think it comes back within that line or into different interest-bearing products?
John Connerton: Yeah, I think within those line items, the aggregate story is municipal. The line item stories, it is our commercial accounts are continuing to move to some of our interest-bearing transactional accounts like our NOW accounts. It is at a low point. But we don’t expect it to fully come back on the demand deposit line. A lot of those customers have rotated into interest-earning transactional lines like our [inaudible]. Yeah.
Chris O’Connell: Okay, great. And just thinking about the NIM on a go-forward basis, appreciate the flat guide for the first quarter. I mean, how do you guys think even I guess just assuming no Fed cuts or any movement on that side just stable rates. How far into 2024 do you think the NIM can bottom?
John Connerton: I guess, what I would say is, as our assets reprice right through principal pay downs or renewals, we expect a good chunk of the continued beta to be offset by that. So, if we look forward, our expectation, our hope is that even after fourth quarter, our balance sheet reprices itself, but we do think there is a potential again based on where the market goes, that betas can pick up here or there without any Fed movement, and that there could be some continued pressure, and most likely that pressure will be in the second quarter. But then as we move out, and the Fed takes their movements, we would expect that third and fourth quarter see a minimum stabilization and maybe some expansion.
David Nasca: The vagary, if you will, Chris is the competitive environment. And we see a little bit of moderation there.
Chris O’Connell: And do you guys have how much of the assets are set to reprice in 2024?
John Connerton: So I share that. I mean, between our investment principal runoff, our loan runoff renewals it’s around $300 million.
Chris O’Connell: Great. That’s all I had. Thanks for taking my questions.
