Chris Holmes: Yes. So, I’d say three things. Construction and CRE would be the ones that would concern you most. Certain pockets of the CRE. I say construction because it’s a risky asset and you can get surprised, but €“ I just go stick my head on the credit folks , especially often just go, hey, how we feeling, how’s your day going. And so, and I ask about construction, and we know our construction customers well. And so, while I think that’s probably a bigger €“ a concern for the industry, and I say all the time, every bank thinks their credit is great, and they’re not going to be the ones. And I always say, I didn’t come up on the credit side or the commercial side of the bank, so I don’t say that. That being said, I know most of our big construction customers, and we’ve had them for a long, long time, and we feel really good about them.
So frankly, I don’t worry about it quite as much for our portfolio, as I do for the industry. I do worry about pockets of commercial real estate because there are things that can €“ office can get €“ again, we don’t have a lot of office, but I think the office space could get soft. I think it has gotten soft in places. Our residential book, again, we can have some small €“ we could have some small stuff in there on construction or other residential, but again, the big stuff we have, we feel quite good about. The other one I think about is, remember, we have a specialty portfolio in manufactured housing. And so, I watch past dues on that quite a bit. I’ll watch anything else from a nonaccrual standpoint. And again, it’s performed as the we’ve been €“ if you go back to the acquisition of Clayton, we’ve been in that business for 14 years.
And before €“ you know the , they’ll go, well, here’s what’s going to happen in the past dues and they’ve been calling it right. And so, past dues are up a little bit, but they’re not out of line with where they were back in 2019 or so. So, those are the €“ but those are all the ones that I stay particularly vigilant on.
Jennifer Demba: Could you give us a sense of what the office portfolio does look like for FBK?
Chris Holmes: Yes, there’s a slide in the deck. On our CRE, we got €“ about 23% of our CRE exposure is office-related. We don’t have any high rises in downtown Nashville, downtown Memphis or any other downtown right now, at least I don’t think we do. I don’t think we have that. We do have some smaller office buildings with really, really good clients that are sitting out there, but again, we feel pretty good about that. As I said, it’s not €“ we don’t have big €“ and we don’t have pieces of $250 million office buildings. We just don’t have those in our portfolio. It’s going to be, again, direct to a customer that we know, we originated and it’s going to be a manageable balance is what would be in that office portfolio for us.
Jennifer Demba: Okay. And one last question, if I could. What kind of economic scenario is assumed in your loan loss reserve as of the end of the year?
Michael Mettee: Hi Jennifer. We actually have a mix between baseline and . It’s about 75% baseline, 25% S2, but there’s some in there as well. The economic scenarios change pretty rapidly here between third quarter and fourth quarter.
Jennifer Demba: Thanks so much.
Chris Holmes: Yes, Jennifer, one thing that we haven’t touched on, I don’t figure any question on is, of course, we did have a . If you look at our loans of HFI, we actually had a very small provision, which would have added again, a small amount to our ACL. We did have a negative provision €“ or a provision release related to our unfunded commitments and those unfunded commitments. Again, we’ve been managing those commitments down, particularly in the construction area, and that’s what led to the small release. And we were comfortable with that even though we’ve tried to be absolutely as conservative as we could be in managing the loan portfolio and in managing that ACL, and we’ve kept it at €“ it’s still at 1.44% of loans held for investment, which we, again, find to be quite high actually in terms of €“ if you look at it relative to loss experience. And so, we still €“ we feel pretty good about where it sits.
