Jeff Tengel: And I also think as we continue to try and emphasize C&I, a lot of that are lines of credit that tend to be floating. And so we’ll get the benefit from that as we continue to emphasize that segment.
Mark Ruggiero: But not as big of an impact. I’ll just add, Steve, we are seeing a bit of an uptick lately in home equity utilization as well on our lion side, which is all prime based. So, we’re seeing a little bit of a lift there on the home equity side as well.
Steve Moss: Okay. And in terms of just the construction balances you guys had have come down, probably call it, 20% year-over-year. Just curious, are we getting closer to a bottom in commercial construction or do you see further runoff in that portfolio?
Jeff Tengel: I think we’re going to probably see further runoff with some ups and downs. I don’t know that it’s going to be a linear line down, but we’re obviously much more disciplined or I should say we still are very disciplined as the market has made it more difficult for a lot of the construction loans to pencil out because of the interest rate environment and the increase in construction costs. So I don’t see that bucket increasing much from here. And again, if anything, I think it’ll be down.
Steve Moss: Okay. Appreciate that. And then in terms of the office portfolio, two questions on that. What was the class — was the office property that went to Non-performing status this quarter Class A, B, or C? Any color you can give around the rate of occupancy for that loan.
Mark Ruggiero: The one that went non-performing, I believe, is a Class B, but I don’t have that at my fingertips here, Steve.
Jeff Tengel: That’s right. What was the second part of your question?
Steve Moss: The occupancy, if you have that by any chance.
Mark Ruggiero: Yes, so that’s where we have the situation with the major tenant looking to downsize and they take up about half of that building and the rest of the occupancy there has been somewhat challenged. So it’s looking to be trending towards somewhere in the 50% to 60% range, which is why there’s expectation that this may come to a sale or some sort of resolution here in the near term with some pressure on the valuation to the extent of a 20% to 25% loss exposure.
Steve Moss: Right. Okay. And then just in terms of the other office property, the $8 million one that was non-performing in the fourth quarter, just curious, is that — I was thinking that was going to be resolved here in the near term, just any update on the resolution there?
Mark Ruggiero: Yes, we were hoping so too. There was a pending note sale on that, as we talked about it last quarter. Unfortunately, that deal fell through. But right now, there’s an expectation or negotiations that we may, again, this is a club deal. We’re not the only participant on this one, but there’s potential for a direct workout with the borrower at a discounted sort of payoff price. And if that plays out the way it is, we would expect that the loss there would be pretty much in line with the charge off we took based upon where we thought the note sale was going to happen.
Steve Moss: Okay. Great. I appreciate all the color. I’ll step back.
Mark Ruggiero: Thank you.
Operator: Our next question comes from Laurie Hunsicker with Seaport Research. Please go ahead.
Laurie Hunsicker: Hey, good morning. Just wanted to stay with Steve’s line of questioning on the office. And obviously, outside of office, things look great. Appreciate your new multifamily slide. But just going back to the first credit that came on last quarter, it started, and I have it in my notes, it started at $11.3 million, you had $2.8 million of charge off, so down to $8.5 million. That’s still an $8.5 million loan?
Mark Ruggiero: It is, yes. So that is still in [NPA] (ph). I think it’s actually paid down to about [Technical Difficulty] a different resolution. But we still believe that’s the right value based on our understanding of where that could get resolved [Multiple Speakers] at this point.
Laurie Hunsicker: Okay. So you don’t have any other specific reserve against it? Just it’s down to $8 million?
Mark Ruggiero: Correct.
Laurie Hunsicker: Okay. And then you’re…
Mark Ruggiero: [Multiple Speakers] charge down to $8 million, right.
Laurie Hunsicker: Down to $8 million. Okay, great. And then you’re — the $11 million, and I think you flagged this as showing an early stage delinquency last quarter. I’m assuming it’s the same one that just went. What did you set aside in provision this quarter? If we look at your provision, what’s the [market] (ph) for that?
Mark Ruggiero: Yes, So we took about a $2.5 million specific allocation on that loan.
Laurie Hunsicker: Okay, great. And then just looking here at your criticized, your link quarter criticized in office, maybe just help us think about that. That went from $55 million up to $115 million late quarter. Certainly no surprise, we’re seeing weakness, but just can you help us think about those and what we should be watching or worried about here, how you’re thinking about that? Any color would be helpful. Thanks.
Mark Ruggiero: Sure. And I think I want to make sure I heard you right. You have in your material that went from $85 to $115?
Laurie Hunsicker: I had it going from $55 million last quarter criticized. $55 million up to $115 million this quarter. At $55.3 million last quarter and now at $114.9 million.
Mark Ruggiero: Okay.
Laurie Hunsicker: Maybe that’s the wrong number, but I mean maybe if…
Mark Ruggiero: No, no, you’re right. Some of it actually — actually some of it, I think, is improvement going from classified to criticized, but the biggest one I think that’s worth noting, there’s one new relationship that downgraded to criticized, which is the $30 million that you see reflected in our material as a Q4 maturity. So that’s a syndicated deal. It’s a much larger relationship. It’s really our only true downtown Boston financial district exposure. The occupancy on that property is pretty good at 85%. It got downgraded because the debt service coverage had dropped a little bit over 1%. So the FDIC, as part of their [SNIC] (ph) review, actually downgraded that to the 7%. So we have some insight based on our conversations with the lead bank suggesting there’s still adequate value from an LTV perspective.
