So, we’re not opposed at all to M&A and have ongoing dialog with some institutions in those markets, but our focus right now is on talent acquisition as opposed to M&A. But we would pivot if we needed to or if the opportunity presented itself.
Jeff Rulis: That’s good. Thank you.
Bruce Lee: Thanks, Jeff.
Operator: Thank you. One moment, please. Our next question comes from the line of Terry McEvoy of Stephens Inc. Your line is open.
Terry McEvoy: Hi. Good afternoon, everybody.
Bruce Lee: Hi, Terry.
Terry McEvoy: Kevin, welcome to the call, and Bryan, best of luck to you in the future. Maybe if I could start, when I was looking through Slides 8 through 9, I just keep seeing dollar signs, just a significant investment in a lot of important areas. So, I guess my question is, how are you paying for HTLF 3.0? Is it all footprint and facilities optimization? And I guess how do you alleviate any concerns that there’ll be some expense creep as we move through 2024 and into 2025?
Bruce Lee: Yeah. So, maybe let’s talk first about facilities for a moment. I think it’s pretty obvious as we look at all of our facilities and how we’ve grown over the years that our facilities are 20 to 30 years old. They are too large. They were built at a time where branches were utilized by consumers and it’s a whole different world. So, this — we’re now going to attack our cost structure. We believe that not only the real estate but also the people will all come down. So, I’m not really worried about account or expense creep, because what we’re doing and we’re also investing in additional technology, particularly the digital bank for the consumers and small business. So, we’re really — we feel very confident that our delivery system will actually decrease pretty significantly over this three-year period of time. Did I answer that — your question there, Terry?
Terry McEvoy: Yes. And just as a follow-up. When you — in your prepared remarks, when you say kind of take a look at your footprint, do you mean individual locations within a region or state, or you implying looking at a state or something larger than just one branch, if my question makes sense?
Bruce Lee: Yeah. Terry, in my comments, I was really talking about much more than a branch or potentially even a region. We are really taking a deep dive into each of our markets and looking at the capital that we have invested, the returns that we’re getting and where we look out a couple of years to see whether or not the growth will be there in those markets. So, we’re taking a very heavy look at that which honestly, we’ve never really done in the past.
Terry McEvoy: Okay. And then maybe just a quick question for Nathan. The increase in nonaccrual or nonperforming loans, it was company-specific, not connected to any broader weakness in your manufacturing customer base. Is that a fair statement?
Nathan Jones: It’s a very fair statement. And again, it’s well collateralized. So, it’s something we’re actively working and have a hopeful as we look forward on it. But we continue to work through it.
Terry McEvoy: Thanks for taking my questions.
Operator: Thank you. One moment, please. Our next question comes from the line of Andrew Liesch of Piper Sandler. Your line is open.
Andrew Liesch: Hi, good afternoon…
Bruce Lee: Hi, Andrew.
Andrew Liesch: …and thanks for taking the question. Hi. The provision, though, looks there was a company that voluntarily is shutting down. Is that tied to this manufacturing credit? Just kind of curious on the specifics around that?
Bruce Lee: I’m going to let Nathan take that one, Andrew.
Nathan Jones: I’ll take that one, Andrew. No, that’s a different company. It’s one of the ones that we just decided to take a very conservative posture. As you start to get into accounts receivable and a lot of there as we’re working through that one, we decided to go ahead and just take it [indiscernible] so we don’t have to keep coming back. We can just deal with it upfront and then move through it.
Andrew Liesch: Got it. All right. And then, the expense guidance here does not include any tax credit amortization. I don’t know, I guess you’ve had those down for several quarters. So, it’s kind of — we have to kind of forecast those out some way or another. So, I guess what’s your expectation on that going forward?
Kevin Thompson: Yeah, you’re right. The tax credits we’ve been doing recently are solar tax credits that are more short-term in nature, and they do impact expenses, but they also benefit the tax line. And so, we don’t currently anticipate any for this year, but we will be opportunistic if anything interesting comes up.
Andrew Liesch: Got it, okay. So, it should be a pretty clean year for the tax rate and for the expense base, right?
Kevin Thompson: That’s what we expect at this point.
Andrew Liesch: Got it. All right, you’ve covered all my other questions. I’ll step back. Thank you.
Kevin Thompson: Thank you.
Bruce Lee: Thanks, Andrew.
Operator: One moment, please. Our next question comes from the line of Damon DelMonte of KBW. Your line is open.
