Tim Laney: Yes, it’s a good question and that’s a big number.
Jeff Rulis: Yes. Thanks, guys. I’ll step back.
Tim Laney: All right. Thank you.
Operator: We’ll take our next question from Kelly Motta with KBW.
Tim Laney: Good morning, Kelly.
Kelly Motta: Hi. Good morning. I apologize if you covered this in your prepared remarks if I missed it. How much — you had such strong NII and your margin came in well ahead of what I had. How much of the margin right now is accretable to yields? And what does your guidance imply for that contribution this upcoming year?
Aldis Birkans: Yes. So accretable yield is — it’s that $33 million mark amortizing. I’d say it’s about 1.5 million per quarter is included in there approximately.
Kelly Motta: Okay. Thanks, Aldis. That’s really helpful.
Aldis Birkans: I do want to point out though is it’s kind of good and bad acquiring a loan book in the rate environment that had moved quite substantially from the time those loans are booked. So a good chunk of that accretion is actually rate mark. And we effectively bought a 4% loan in a 5% world and therefore got to markets a discount. So it’s a good accretion practice from both credit perspective, but it’s a true loan yield rate the way we look at it, because had we originated that loan, it would have been originated in my example 5%, not 4%.
Kelly Motta: Got it. That’s helpful. And then turning to your fee income guidance, that’s a pretty big — a pretty decent step up from where you were in 4Q. I’m just wondering if 4Q included any SBA gains from Rock Canyon or if you’re working to build the pipeline, and kind of the outlook for that business as we look to 2023, given I think secondary market premiums have compressed a bit?
Aldis Birkans: Right. It’s a great question and a good patch there. Our guidance is a bit higher than where if you were to analyze fourth quarter really. So breaking it down kind of and call it three buckets, our service charges, bank cards, kind of core banking service fees that were looking to grow, we look to grow that along with the rest of the balance sheet, call it mid single digits. We grew that 6.3% in 2022. So I think that’s nice and achievable. Then there is mortgage, which I’ll come back to and then there’s other, right, and we did pick up trust business through the Bank of Jackson Hole so that is expected to grow and is embedded in the other income. There’s SBA gains, which we did not have any SBA gains in the fourth quarter.
Rock Canyon Bank in the prior several years had generated about, call it, $6 million to $9 million of SBA gain fee income. We are not counting on that type of levels. As you mentioned, the SBA margins have come in quite a bit. So call it — approximately half of that is what is embedded in our guidance. And then just the rest of the kind of the other non-interest income that we typically have had isn’t that line item. And then coming back to mortgage, clearly the fourth quarter was — seasonally is and first quarter seasonally are slow months in a way for purchase market. We are projecting that to recover in the coming — a little bit in the summer months and summer quarters. But our projections embedded there are in line with what MBA is projecting, which still if you were looking to year-over-year volumes still being down 15%, 20% in 2023 over 2022 in purchase market.
But nevertheless, clearly the fourth quarter was — it feels like as I mentioned in the prepared remarks a bit of a trough.
