But how quickly we can move on some of our exception and rack rate deposit pricing, I think that’ll still be partly driven by competitive pressures in our market. So I think that’s a little bit of where there’s probably some wild card as to whether you can completely negate the asset repricing down and fully offset, or whether that’ll take a little bit of time to materialize.
Steve Moss: Right, okay, that’s fair. And then, Mark, you also mentioned — excuse me — downward pressure on new loans here, given the change of the yield curve. Just curious, where is loan pricing these days? And also just curious, you have lower construction balances here if that’s also kind of driving a component of your loan yields lower going forward?
Mark Ruggiero: Yes, it is. Some of the products that are typically priced off the short end of the curve, like construction, we’ve seen declining and less opportunity there. So that’s somewhat of a little bit of not a new trend, but we’re seeing more of that. And my reference to the yield curve, when you look at anywhere between the three or seven year part of the curve, just from September to where we are today, on average, it’s down about 50 or 60 basis points. So we’d like to think we can still get some fixed rate commercial pricing around 7% in this environment. But that is down from how we were thinking about it just a few months ago. And I think on the consumer side, similarly, home equity continues to be pretty constrained in terms of net growth because of the high rate on lines of credit.
So we’re not seeing much of an ability to increase there. And customers are just not drawing on some of these lines as well. So utilization rates both on home equity and the C&I business are at low points over the last year or so. So it’s been a combination of things that we’re putting a little bit more pressure on what we still think will be benefit of asset and loans repricing. But I think it’s going to be a bit more mitigated than how we were thinking about it.
Jeff Tengel: One other thing I would…
Mark Ruggiero: Sorry.
Jeff Tengel: Sorry, Mark. I was just going to add one other thing to that, which is, as you think, longer term, as we move forward and we begin to focus a bit more on the C&I segment of our business, those typically are going to be a lot of lines of credit, which will be priced very short term, right, typically off of SOFR, and so I think kind of long term secular trend would be a greater percentage of our loan portfolio would be floating rate versus fixed rate.
Steve Moss: Okay, that’s all very helpful. And then maybe just on the credit front here, delinquencies were up 44 bps this quarter versus 22 last. Just curious what’s driving that, if you have any color there.
Mark Ruggiero: Yes, the biggest drivers are the two new to non-performers as well. So those were performing as of last quarter. Those are now new to delinquency. And there’s essentially one other office loan that is now early stage delinquency that’ll be maturing here in the first quarter in 2024. We’re working with that borrower to see what the resolution may be, but basically limited to three loans, the two that are non-performing and one other office.
Steve Moss: Okay, maybe, just curious, you mentioned that office loan maturing here, you have $125 million of office loans maturing in the upcoming year. Just curious, do you expect that’ll be the primary source of potential credit issues and that drives your loan loss provision as you guys referenced in the deck? Or will maybe potential office NPAs just be idiosyncratic? Just kind of any color you can give there.
Jeff Tengel: I’ll start, Mark, I think you hit the nail on the head. It’s going to be idiosyncratic. As I said in my prepared remarks, it’s difficult to paint that portfolio with one brush. Every loan has unique characteristics, whether it’s location, sponsor, resources that they can bring to the party as we look at extending, or if they look to refinance elsewhere. So each one is different. We feel pretty good as we sit here today about managing through that because we are on top of all of them. But I don’t think we necessarily feel like we’re going to see a bunch of new non-performers out of that $125 million of maturing loans.
Mark Ruggiero: I concur. When you look out over the other portfolios, there’s really been no uptick of any note in terms of delinquencies or early downgrade credit migration. So the rest of the portfolio continues to feel really good. And even the near term on the office side, when you look out over even just as short term as the next two quarters, it’s really just a handful of larger credits that we have really good eyes and ears on and working directly with the borrowers to hopefully find good resolution plans. So it does feel very well contained.
Steve Moss: Appreciate all the color. Thanks, guys.
Mark Ruggiero: Welcome.
Operator: The next question comes from Laurie Hunsicker with SRP. Please go ahead.
Laurie Hunsicker: Yes, hi, thanks. Good morning, Jeff and Mark. Just staying on office — of the office loan that’s in an early stage delinquency, how much is that loan and is it Class A or Class B? Anything that you can share on that?
Mark Ruggiero: Yes, that balance is about $11 million. I believe it’s a Class A, Laurie, that one — to be fully transparent, we may see that move to non-performing in the first quarter, but again, we’re working closely with the borrower on that and I think if there’s any loss exposure there, it feels pretty well contained.
Jeff Tengel: That’s also one. We’re not the agent. We participate in somebody else’s deal in that.
Laurie Hunsicker: Okay. And then of the $125 million that’s maturing in ’24, how much of that matures in the first quarter?
