Archie Brown: Yes. Terry, this is Archie. Look, it will be somewhat I think broad-based commercial, you may have seen in the slide, our commercial numbers were a little bit softer in the quarter, and a lot of assets related to continued line paydowns last year, where customers just had liquidity and chose to use that liquidity and pay the line down since rates have moved up. So we don’t think there’s a lot more of that. If anything, maybe we should start to see some line draws as we go into 2024. But — so I think commercial banking will be stronger. Our Oak Street unit had a really good Q4. I think they’ll continue to have some strength early into the year. Summit, Jamie was talking about some of it but Q4 is always just their largest quarter of the year.
So that will soften up a little bit in Q1 and then keep ramping through the year. Mortgage has been one that’s kind of been a steady grower, mainly originations may be a little softer, but the payoffs have also been a lot softer. So we think that will continue to grow because of low payoffs. And then ICRE grew a little bit in the quarter, that was — in Q4, that was primarily line draws on construction loans that drew up. I don’t know that, that will continue at the pace that it did in Q4. Otherwise, the origination activity there is a little softer. So I think we’ll get some decent broad-based growth, but it won’t be at higher levels. With regard to areas we’re deemphasizing, probably most notably is the franchise fixer portfolio.
You know that portfolio in the story that over the years, down about $0.25 billion at the end of the year or so. And that’s — we think that will just continue to amortize down as we have really deemphasized the originating side of that. On the ICRE side, we have certain product areas that we’re — our team is focusing on. But as you can imagine, we really have deemphasized, really for three to four years now, office, hotels, and we’re very selective even in multifamily and healthcare, industrial. So I think ICRE will be kind of a slow grower as we go through the year.
Operator: [Operator Instructions] Our next question comes from the line of Chris McGratty with KBW. .
Chris McGratty : Jamie, maybe on net interest income, if I put the pieces together of the remixing of the earning assets and your margin comments, it would feel that kind of the trough would be mid-year, Q2, Q3, kind of mid-140s. Is that about right?
Jamie Anderson: That’s right. Yes.
Chris McGratty: Okay. And at that level, like kind of 146, 147 is kind of a fair step down?
Jamie Anderson: That’s right. Yes.
Chris McGratty: Okay. And then on — Archie, maybe on capital, you guys have been consistent like dividends stable and strong buybacks aren’t a priority. Is there a capital return narrative for the bank in 2024? You guys have a multiple. Obviously, marks are less onerous. But is M&A something that might be on the horizon?
Archie Brown: Yes, Chris, thanks for the question. First, supporting growth, we think we’ve got a diverse kind of a diverse business now that we think is pretty resilient and can grow. And so we’re going to support growth, internal organic growth first. The dynamics of M&A need to continue to improve. We saw some — with rates moving down in December, we saw some I think changes in how purchase accounting may impact capital. And we think that needs to continue to improve to really make that something that’s more I think, more realistic in 2024. So we’ll have our mind on it some. We’re not a — probably about six years since we’ve done any bank acquisition mergers. So we’re not out there doing a lot of it. There are some areas, markets, types of companies where, I think, have an interest in.
And to the extent the accounting works and we feel good about the economy, then I think maybe in the year, you could see us use capital in a way like that. But first and foremost, organically.
Chris McGratty: Okay. Great. And then in terms of credit, your charge-offs and provisions have been a little bit higher than peers. I think it’s partly business mix. But can you help us about forecasting what you think is normal in this kind of environment? Should provision levels stay kind of elevated in this range? Or do you expect movement either way?
Archie Brown: I was looking at some of this — Chris, if you just go back over the last five or six years and look at, for example, ROA, our ROA is running kind of top quartile of the KRX over that window. And our net charge-offs were maybe 10 basis points higher than kind of the median for KRX. So we like the trade of much higher, consistently higher earnings in that performance. And where is it going to end this year? If you said 25 basis points of charge-offs, plus or minus, that’s probably how we think about it for this year and as we said at the current level of provision at current reserve levels staying stable, slightly increasing. We think we can do that and have a really good year on the earnings side.
Operator: I would now like to turn the call over to Archie Brown for closing remarks.
Archie Brown: Mondy, thank you. I want to thank everybody for joining today’s call and hearing about our results in the fourth quarter and the full year, we really are proud of the results, and we’re excited about 2024. We look forward to talking to you again next quarter. Have a great day and weekend. Thank you.
Operator: This concludes today’s call. You may now disconnect.
