Michael Perito: Great. I appreciate you guys spend so much time on that and thanks for taking all my question.
Chip Mahan: Thanks, Mike.
Operator: Your next question comes from Eric Spector from Raymond James. Please go ahead.
Eric Spector: Hey, good morning, everybody. This is Eric dialing in for David Feaster. Congrats on a good quarter.
Chip Mahan: Thanks, Eric.
Eric Spector: Just wanted to touch on – hey, good morning. Just wanted to touch on the loan growth side, like loan growth accelerated in the quarter pretty nice uptick in origination. Just curious how demand is trending from your perspective on what segments you’re seeing the most growth? And it seems like solar is especially strong. Just curious what you’re seeing across the board and especially in solar.
BJ Losch: Yes. If you look at Slide 17 Eric, this is one that I like looking at every quarter and we put in every quarter to just kind of give you an idea of where you’re seeing it. So solar had a really, really big year. Jen Williams, who is kind of our primary lender out there has just done a wonderful job Taylor King and others. So we’ve seen huge opportunity the inflation Reduction Act and all of the government incentives combined with the network that we’ve got has just continued to create great opportunities. So that’s certainly one. But if you look in lots of our other areas like I talked about earlier specialty healthcare and seniors housing have been quite strong in our conventional lending businesses senior care, educational services, self-storage in our SBA verticals are up year-over-year versus where they were last year.
So those are very strong. So we’ve got a very diverse set of verticals that complement each other quite well. And so we’re very pleased with the performance of all of our verticals.
Eric Spector: I appreciate all the color earlier on credit. Just kind of ask it another way. More anecdotally you have a pretty diverse production engine and tend to have a good pulse on markets. Just curious as you talk to borrowers and see new loans come across your desk are there any segments that you’re starting to see weakness in? And have you noticed any shift in tone in your conversations with your small business customers?
Chip Mahan: Steve and I will address that together I think. I think the number one thing that they say to us is people, I’m having a hard time finding people that will actually work. I do not see trouble with price increases Steve. I mean most of our borrowers seem to think that inflation is here but they can pass that cost along. Those would be my two headline comments there.
Steven Smits: Yes. I would say that our borrowers for the most part have done a very good job in adjusting their cost of their services or their products commensurate with increase in debt with the rate environment coupled with any inflationary pressures depending on the industry. These are questions that we dig into quite deep with each one of them. I would say a pocket. We continue to watch our breweries and just to put that in context we have about $20 million in total exposure in small breweries that were prior to the pandemic years I think 2019 and before. So they’ve been on the books for four-plus years. However, they continue to navigate challenges from the rate environment and just – which is probably a common theme that we hear.
Obviously, no one likes to see their payments going up because of the rate. So we do get a lot of questions there. But also there is legitimate shift in the industry for smaller breweries. Customer behaviors have changed. They’re – you could argue oversaturation in brands in many markets. And many of these small breweries their plan was to distribute and distribution model really doesn’t work real well. So they had to pivot and change to hyperlocal tap room and then you have taprooms that were closed due to the pandemic. And they’re just a mountain of challenges that they’re navigating. One thing I can tell you is this $20 million have been on the books for four-plus years. We feel very confident in they’re fighters. They’re very communitive, working really hard.
Some will navigate perfectly fine. Others will continue to have some challenges and we’ll watch it. But that is a space that I think that we’re continuing to watch.
Eric Spector: I appreciate all the color there. Just one last question and then I’ll step back maybe more longer-term. Can you provide maybe an update on your embedded banking build-out? I think you talked about the onboarding of the first client coming online pretty soon here. Just curious, how that’s progressing and if you have any color on your pipeline for additional clients.
BJ Losch: Yes. Short answer, it’s gone great. We wanted to really tune in on one partnership, make it a deep one, make it an excellent experience for our partner and the customers that would be onboarded via that platform. So that is still going quite well. We expect that to launch early next year. And then from there we are building our capabilities and candidly learning a lot from each other in this partnership to then expand to further partnerships over the course of 2024 into 2025. So –but we’ll probably have a more fulsome update for you once we actually get to launch early next year. But it’s gone quite well.
Eric Specter: All right. Thanks for answering my question. I will step back and congrats again on a great quarter.
BJ Losch: Thanks, Eric.
Operator: Your next question comes from Stephen Sokolov from JPMorgan. Please go ahead.
Alex Lau: Hi. Good morning, everyone. This is Alex Lau on for Steve.
Chip Mahan: Hey, Alex.
BJ Losch: Good morning, Alex.
Alex Lau: I want to start with the gain on sale income line. The premiums for the loan sales have been stable in the 5% range for the past few quarters. Are you expecting to remain in the 5% range in the next few quarters? And what would need to happen in your view for these premiums to expand and for USDA loan sales to return?
