Brian Karrip: Yeah. We have a prime business. We don’t have sub-prime. As I mentioned earlier, delinquencies are up from quarter in June 30 basis points to 40 basis points this quarter. We’re watching it closely. We’ve got a very experienced leadership team in that business. They’re managing the business well. The underwriting is tight. And we’re going to continue to watch it Matt. Thank you for your question.
Matthew Breese: I also wanted to ask just staying on the topic of credit. What is the size of your syndicated if you have one loan portfolio? How is the credit performance there? And how much of that if you have any is that of market?
Mike Price: Yeah. So our — do you want to — go ahead.
Brian Karrip: So the SNC book is $90 million. It’s down significantly over the past several years and it’s performing fine.
Matthew Breese: Okay. And then I did want to touch on the specific reserve this quarter. It was based on a reappraisal. What was the credit? Was it a commercial real estate or commercial credit? And what were some of the primary factors that changed the appraisal enough where you had to put some money aside?
Mike Price: Brian?
Brian Karrip: Yeah. Thank you for your question. So this is an office property in the eastern part of the state, Central Business District. The loan was originated in 2018 and the pandemic, the property became 100% vacant. In 2021 we put it on non-accrual. Our procedure is to get an annual appraisal and the appraisal value that came in most recently showed a significant decrease in value, so we add a specific reserve of $4.1 million. So the appraisal year-over-year reflected a 100 basis point increase in the cap rate and as I mentioned earlier the lease-up assumptions from the appraiser, the conclusion it would take a fairly long period of time to lease the property. That’s why the value decreased.
Mike Price: I think we have just one additional non-accrual borrower that is an office property. They’re paying as agreed. It’s a $2.2 million loan and we feel pretty good about that one.
Brian Karrip: That’s correct.
Matthew Breese: The loan where you put aside a specific reserve this quarter, what’s the total loan size? And how much are you now covered for on the reserve?
Brian Karrip: The loan size is $12.6 million and the specific is $4.1 million.
Matthew Breese: Thanks. I’m sorry specifically is how much? 6.1 million?
Brian Karrip: It’s $4.1 million is a specific reserve, the loan…
Matthew Breese: Okay. Okay. Sorry for the pregnant pause. I’m just curious how much — how confident are you in the $4 million reserve covering potential loss content there?
Brian Karrip: We’re as confident as the most recent appraisal which is one month old. We continue to actually monitor this. Should they find tenants or should they have a desire to sell the building or special asset people will update the numbers and then we’ll post up on a quarterly basis.
Matthew Breese: Okay. Last one for me is just around M&A. You still have a pretty strong multiple relative to the group and I’m curious if you’re hearing more from your nearby peers that might not be in a strong position there’s more conversations whole bank or fee income?
Mike Price: Yes, there’s more whole bank and there’s definitely a lot more conversation than I would say in the last five years. And we talk to everybody and people in the past have come to us a couple of times first and that’s been nice. We’re a good partner quite frankly and we tend to do right by the people that partner with us and they do well and we do well. I think we have a slide in our investor deck that shows how we’ve grown organically and with small M&A generally $1 billion or less. And that’s been very accretive to us over time. And those would be ideal transactions kind of tongue in cheek particularly a rural depository and so you just don’t know. And we’re not overaggressive, but we do talk to everybody and it would be a great way to continue to supplement. We can grow the bank. We’ve just flat out can. It’s just you got to do it right and you got to do it with low-cost funding. And Jane is all over that trust me. So, is that helpful?
Matthew Breese: Very helpful Mike. I appreciate it. Thank you for the time.
Mike Price: Thank you.
Operator: [Operator Instructions] Your next question comes from Daniel Cardenas with Janney Montgomery Scott. Your line is open.
Mike Price: Hey Dan.
Daniel Cardenas: Hey guys, good afternoon. Most of my questions have been asked and answered. Just kind of a couple of modeling questions here for you guys. What — how should I think about your tax rate on a go-forward basis? I mean it’s been fairly consistent here. Is that 20-ish percent still kind of a good run rate?
Jim Reske: It is about — yes, it’s 20.02, but call it 20.
Daniel Cardenas: Okay. And then Jim I missed your comments on fee income. I guess I can’t multitask. Can you maybe just kind of quickly go through those again?
Jim Reske: Yes, sure Dan. I can’t multitask either by the way. But the fee income is — we think it’s relatively stable. There’s — next year of course we have the Durbin impact right? So, that’s going to affect fee income but we are looking at sources like growing SBA income to help offset that.
Daniel Cardenas: Okay, great. Thanks guys.
Mike Price: Thanks Dan.
Operator: There are no further questions at this time. I will now turn the call back over to the CEO, Mr. Mike Price.
Mike Price: We always appreciate your interest in our company and the opportunity to interact and hear what’s on your mind. Thank you for your time today and thank you.
Operator: Ladies and gentlemen this concludes today’s conference call. You may now disconnect.
