Mike Stewart: Yes. I think from a provision expense perspective, it’s going to be a replacement, kind of a trading dollars on a replacement side, meaning that we’ll provide for charge offs with potentially some release in the ACL. As far as charge-off scale, I think we’ve given guidance in the past of those being between 10 and 20 basis points a quarter.
Brian Martin: Okay. And just your thought, John, on the — as far as credit goes, kind of, you talked about this next being pretty good, maybe better than the other portfolio. But just within the traditional portfolio, where are the concerns? I mean, we’ve seen a handful of other banks have some issues this quarter and just kind of ongoing, but if you look to your portfolio, as far as where the greater, I guess what you’re maybe more mindful of today, looking, paying more attention to. Can you give us any thoughts there?
Mike Stewart: Yes. Brian, when I think about potential impacts from higher rates, I think about it in the construction portfolio, just because what you underwrote to and the appraisals that you had potentially up front are going to necessarily drive tighter cash flow coverage. When I think about the broader portfolio, across the spectrum within the commercial loan portfolio, we underwrite, we stress, we do multivariable stress tests up front on our C&I borrowers. And so, there’s not one particular portfolio that I’m looking at that concerns me maybe more than another. But even in the construction portfolio, and as we add new names, those are requiring additional capital, as I mentioned in that portion of my speech, Brian, around the sponsor finance portfolio.
The things we’re underwriting today, I feel pretty good about because they have the higher interest rates already built into them. So I don’t know if that answers your question. I wish I could say it was this portfolio or that portfolio. But generally speaking, to this point, absent the, and I’m not going to use the word idiosyncratic. But the fraud event that occurred, I– maybe construction, but that would be it.
Brian Martin: Okay. And getting the renewals today on some of these credits, the commercial real estate credits, has that been a problem, given the increase in rates that are coming into these folks? Or I guess, has that been, those loans really are getting renewed without an issue at this point today?
Mark Hardwick: Well, what happens, Brian, at some level is that when you have a construction project, you’ve got a conversion covenant or requirement that they need to meet. And in order for them to move to the secondary market and with higher short-term rates, the way we measure it on short-term rates, it’s tighter. And so, we’re requiring at maturity a number of different strategies, but one is potentially additional capital being put in, maybe marginal right sizing, maybe additional guarantees, additional collateral. But from a extend and pretend, as the industry, my colleagues like to say, it’s more just a strategy around what to do when interest rates maybe are challenging on a particular project.
Brian Martin: Got you. Okay.
Mike Stewart: And I think it’s safe to say most. I just jump in, it’s safe to say most of those loans aren’t going through a renewal process. They’re moving into secondary markets.
Mark Hardwick: Those are strategies we would employ if we needed to, but to date we’re not necessarily seeing any of that, right?
Mike Stewart: Right.
Mark Hardwick: And on a renewal, renewal specific, if I’m understanding your question, something that might have had a renewal after three or five years, borrowers have had the opportunity to increase rental rates and change the dynamics of an individual project or an individual property. So we haven’t seen issues necessarily related to a borrower’s inability to get renewed as a result of the higher interest rates.
Brian Martin: Yep. No, I appreciate it. I was really talking about the commercial real estate, not construction. But I appreciate all the commentary on it and just trying to understand that. So, but thank you for taking the questions.
