We’ll see how this plays out as we come up to Q4 maturity, but we believe there’s plenty of protection there and it’s probably a relationship. To be honest, we’d look to exit if we can.
Jeff Tengel: We have a couple other tenants, I think, that are getting ready to sign up that’ll, I think, push the occupancy up into the 90s. So we don’t feel like there’s any lost content at all in that.
Laurie Hunsicker: Okay. Very helpful. Okay. And then just switching back to margin, what was your March spot margin?
Mark Ruggiero: March margin was 3.21%. I think what’s interesting on that too, Laurie, we talked a lot about the pickup in period end deposits. So even for most of March, the average deposits were in the 14.8% range, which means we had higher allocation of wholesale borrowings. So, again, just later in that month, having some core deposit growth already provides a bit of a boost to that level heading into April. So just wanted to put that caveat on the 3.21%. It’s really reflective of the lower deposit balances as well.
Laurie Hunsicker: Got it. And just remind us, when in the quarter, Mark, did you guys actually redeem the $50 million in sub-debt? What was the timing on that?
Mark Ruggiero: That was late February, early March. But that was at 4.75% prior to redemption. If we held onto that, that would have repriced to a floating rate. So you really just shifted a 4.75% fixed debt to borrowings at 5%. So it won’t have too much of an impact.
Laurie Hunsicker: Okay, perfect. And then Jeff’s last question for you. You mentioned considering another buyback. Obviously, you’re down substantially below where you just repurchased. Can you help us think a little bit more about that?
Jeff Tengel: Yes. We’ve had a pretty consistent answer here that I think will obviously continue to weigh that as a tool that we think we would be able to have in the toolkit to be opportunistic with. You mentioned our valuation in our levels of capital. I think you’ll certainly suggest it’s something we would want to be considering to have available. So we haven’t made a decision. Obviously we haven’t announced anything yet there, but I think it’s safe to say it’s something we will continue to talk about here in the near term.
Laurie Hunsicker: Great. Thanks for taking my question.
Jeff Tengel: Thank you.
Operator: [Operator Instructions] Our next question comes from Chris O’Connell with KBW. Please go ahead.
Chris O’Connell: Hey, good morning. I just wanted to follow-up on the kind of robust capital levels that you guys have here and the opportunity to kind of deploy that going forward. You have enough capital and the securities yields, it’s still a big book and the yield’s still just under 2%. I mean, is there any potential for securities restructuring at some point in 2024?
Mark Ruggiero: Yes, it’s a strategy we’ve done some analysis on, Chris. And I think it’s one that personally I’ve struggled a little bit with just the optics of taking the loss now to improve the earnings. I would say I think there’s better margin now where that structure probably makes a bit more sense. But we’re getting to a point now where, I think we even have this material on one of the slides. If you look at what’s expected to pay off on the securities portfolio in the near term. That book will get down to probably 13.5% of total assets by the end of the year. And that’s really a level where we’d be much more comfortable. We’re a bank that historically has operated around 12% to 13% of assets in the securities book. So accelerating to get to that level, I think, isn’t completely off the table, but even just allowing for normal payoffs, we get there relatively shortly.
And I think that’s a much better balance sheet profile for the longer term that we’d like to be in. So long way of saying we’ll continue to assess that opportunity, but it isn’t something that I would — I think, we feel compelled to do given the trajectory of where it’s already heading.
Chris O’Connell: Got it. And you guys mentioned still looking at M&A opportunities, as always. I mean, has there been any uptick in conversations there at all in your markets?
Jeff Tengel: Not really. I mean, not appreciably. I think everybody is continuing to struggle with the same issues around trying to make the math work and uncertainty around the regulatory environment.
Chris O’Connell: Got it. And then, just circling back to office here, for the total Office portfolio, do you guys have a reserve number that’s applied against that entire portfolio?
Mark Ruggiero: Yes, we don’t disclose anything publicly there. We still have — our formal pool allocation is total commercial real estate and construction. But we do look through to the underlying property types to guide how much from a qualitative perspective we would want to be allocating to that total pool. So I would say, we definitely have increased reserve allocation as a result of the office book. I’d say we do some analysis to support the overall allocation by looking at risk ratings and stressing valuations on those that are criticized and classified. And that type of analysis probably suggests that, I think, though not publicly disclosed, we probably intuitively are around 2.5% to 3% on the office book with the rest of commercial real estate at, call it, 75 basis points. And we think that reserve allocation is actually pretty conservative in terms of allocating loss containment where we see the risk in the criticized and classified bucket.
Chris O’Connell: Great. That’s helpful. And I appreciate the detail on the 2024 maturities. Do you have what portion of the 2025 maturities are currently criticized?
Mark Ruggiero: I do. Of the 2025 maturities, there’s one large criticized loan that’s a $50 million exposure in 2025. That’s the biggest, really the only notable criticized loan in 2025. And that one where –we’ve had conversations with the borrower that we don’t have a near-term expectation of that, but it’s something we’ll provide a bit more of an update as we go over the next couple of quarters.
