Ray Reitsma Yeah, this is Ray. There’re really two elements in that. There’s a light industrial construction element, and then there’s the multi-family. On the light industrial side, the buildings that are being constructed, have tenants and the space is required. It’s in very high demand here in West Michigan. So, we feel very good about that sector. Moving to the multi-family side, the recent evidence has been pretty strong that the inventory shortage continues to exist in terms of housing, from studies that have been done for the city of Grand Rapids to information that we’re hearing from realtors about how intense the competition is for homes when they go up for sale. All those things support anecdotally the need for more housing units, and in the form of multi-family.
So, I would offer that, yesterday we took 14 apps in the bank for mortgages. 12 of those had no address associated with them, so they were pre-qualifications. And that would speak to the shortage of inventory. Occupancy rates are extremely high in the existing inventory. So, all those factors together make us comfortable along with sponsors of these projects that are very strong and experienced and have the ability through their existing portfolio to accurately ascertain the conditions in the market. Bob Kaminski Yeah, this is Bob and I certainly underscore what Ray just said. And as we talked about all through the pandemic and even going back further than that, coming out of the great recession, we had implemented many concentrations, reports, examination of what’s going into the portfolio, what’s coming out, and looking at those diversification levels of our real estate.
And as Ray said, partnering with experienced developers who’ve got many years in working on the projects that they’re engaged with at the current time. And it’s something that we’ve historically watched, had a very close watch on, and continue to do so today, especially with what’s some people are predicting in the form of recession coming up. So, we feel really good about our entire portfolio and certainly the CRE gets, captures a lot of our attention on an ongoing basis, but we feel really good about what’s comprising that bucket of loans at the current time. Eric Zwick That’s great color. Thanks, guys. Next on I guess for Chuck, maybe just looking at what the futures, the Fed funds kind of futures curve and the yield curve is suggesting that we’re getting towards the end of the rate hiking cycle and potentially see, a normalization maybe starting at the end of ‘23 or into ‘24 with rates coming back down.
With the balance sheet still being constructed with their relativity kind of asset sensitive positioning, how do you think about that longer-term, if rates were to start to come back down? And would you potentially look to utilize any — is there anything to protect the downside or limit the negative impacts there?Chuck Christmas Yes. I don’t think we have any specific programs on our balance sheet with derivatives, specifically speaking to your question there. I think what we have tried to do on an overall basis is, shorten the duration of our balance sheet as much as we possibly can. One of the things that, when you look at any graph out there, even over Mercantile’s existence, which isn’t that long. And what we see is just a tremendous amount of volatility in interest rates for a myriad of reasons.
A couple of — nobody probably would have ever put into any type of analysis. And so, I think the best defense is to make sure our balance sheet is as short as it can. So, if there is any timing mismatches within our balance sheet, it’s only relatively short lived. And that if we do see a rate environment decline, yes, it’s going to impact our floating rate commercial loans. But we also are looking at the liability side to make sure that we’re matching up the duration and repricing opportunities on those liabilities as best we can. But on an overall basis trying to match up the duration repricing opportunities of our assets with our liabilities. And on an overall basis, in addition to that, is try to just shorten the duration of our entire balance sheet.Eric Zwick Got it.
Thank you. And just one last one for me. I think you mentioned about 6.8 million shares available under you repurchase authorization. Just curious about your appetite for potentially buying back some shares in ’23 relative to other uses of capital at this point?Chuck Christmas Yes. So, we have $6.8 million in our current plan. We didn’t buy back any shares last year. And as I mentioned, and as you just repeated, we don’t do anything this year. I think given what took place in March, capital is incredibly important and we have made the decision at least to date that we will maintain our capital position as best we can and not engage in any repurchase activity. We come out of our blackout period on Friday of this week. And clearly, admittedly, when we look at our stock price and our valuations, this is definitely very tempting to get into the market and start buying back our stock.
