But that’s — so there’s both of those things kind of going on at the same time, I guess, sort of the challenging environment that we’re working through. And again, just myself hinting out and meeting a number of the bank executives across our landscape.
Steve Moss : Okay, that’s helpful. And then on the credit that was — you had the $5 million charge-off. Was that resolution through a note sale? Or just kind of curious if you could give any color on that.
Mark Ruggiero : Yeah. That actually went to auction, believe it or not, Stephen, which we — there was a lot of discussion here internally around the appropriate resolution for that credit. This isn’t necessarily the optimal environment for an office loan to be sold at auction. So we could have potentially looked for a different alternative route and held on to that and maybe look for a slightly better resolution. But at the end of the day, we felt it was appropriate and prudent to go to auction, get the resolution we did and just get that loan behind us. So it did go out a foreclosure sale.
Jeff Tengel : I would just add to that, just to put words to Mark’s comments, we could have kicked the can down the road. That was an option for us. And we just made the decision that we didn’t see the level of commitment on the part of the sponsor that we felt was going to be appropriate. And so instead of kicking the can down the road, we decided to take our medicine now.
Steve Moss : Okay, that’s helpful. And then in terms of just the — maybe just going back to the margin here. With the dynamic of margin stabilizing here in the fourth quarter, what are you guys assuming for a deposit beta — a cumulative cycle we hold steady at 5.25-5.50 funds rate?
Mark Ruggiero : Yeah. No, we’re at 20% cumulatively today. When I look out into 2024, I’d say the biggest driver is going to be primarily the level of CDs maturing. And if you play out essentially the entire CD book, if you just assume that matures at current rates, I think this the potential for anywhere of 10 to 15 basis points impact on the margin. I haven’t done the math on what that does to the beta in particular, but I’d suggest that it certainly goes a bit north from where we are today. So I think if I were to do the math in my head, it feels like it probably stays in that mid-20s range.
Steve Moss : Okay, great. Thanks for all the color. Appreciate it.
Mark Ruggiero : Thank you.
Operator: Our next question will come from Laurie Hunsicker with Compass Point. You may now go ahead.
Laurie Hunsicker: Yeah, hi. Thanks. Good morning. Just going back to office here, and I really, really appreciate all your details. So the $14.2 million on performer that’s sold, was that a Class A or Class B.
Mark Ruggiero : That was a Class B.
Laurie Hunsicker: That was a Class B. Okay. And so it was — if I’m doing the math right, that was a 35.7 on the dollar haircut.
Mark Ruggiero : Yeah, compared to what we added on the books at, I think that’s yeah.
Laurie Hunsicker: Okay. And then as far as the breakdown of your maturity, I mean, I think you guys were sort of put in the penalty backs because you had so much debt to mature and reprice over the next two years compared to your peers that we’ve already walked back from in June, it was 41%. Now you’re 33%. You’ve got this huge chunk that’s coming in the fourth quarter, this $100 million, that’s 9% right there of your whole balance. And Mark, thank you for the update on the one loan, but could you help us think about the other two loans? How do we get comfortable that, that $100 million is going to renew? How should we be thinking about that?
Mark Ruggiero : Sure. I mean the biggest of those three, just to give some facts to it, it’s 85% occupied. It’s currently at a 5% rate. So if we were to likely just renew and continue to price at the five-year part of the curve, you’d suggest pricing maybe only result in a 175, 200 basis point increase in their rate. And when you look at debt service under that scenario, I think we continue to feel very good about that. So that’s another one where I think our expectation is that renewal at current rates does not create undue risk or concern. And then the other is, again, pretty well occupied. There’s a little bit of tenant rollover that they’re looking for replacements on but based on the cash flow and sort of what we’d expect the LTVs at reappraisal, we think there’s a pretty good story there.
They’ve been very communicative with us through the process. We have really good direct relationships with most of these borrowers. So again, those three loans in the very near term, I’d say all three of them, we feel pretty good about.
Laurie Hunsicker: Okay. And then the one that you already renewed, how much of the $100 million does that comprise?
Mark Ruggiero : That was about $18 million.
Laurie Hunsicker: $18 million, okay. Great. Thanks for the color on that. And then just one more question on office. It looks like maybe you did a bit of a restatement, and I realize you gave a whole lot more details in so many of the other banks, but I’m just trying to make sure that I’m comparing apples-to-apples here. So your premixed use that was primarily office had it last quarter at $401 million, it looks like it’s restated to 269. I just wanted to know what was the difference there.
Mark Ruggiero : Yeah. So hopefully, you can appreciate, Laurie, as we continue to mine the data and really do deeper dives into a lot of the portfolio. We thought it was appropriate to just continue to further clarify last quarter was mixed-use regardless of how much office was in that relationship. And what we want to do now is really start to highlight those loans that have primarily office exposure. So i.e., greater than 50% of it is office. So when you look through that same lens at the last quarter, that $400 million gets reduced down to 269. And that’s more of the focus now going forward.
Laurie Hunsicker: Okay, perfect. Okay. And then just one quick question on your owner occupied, and I realize owner-occupied is much lower risk, but is there anything that’s concerning you in the owner-occupied book? Any trends that you’re starting to see percolate from higher rates? Or how are you thinking about that?
