Christopher Maher: I also Chris that, if you think about the credit characteristics of the loans that we have rolling that we apply this to, we’re talking low LTV, high debt service coverage ratio. Many times, personal guarantees or other structures, for those loans in the market today those would typically carry a high six handle there. They’re not in sevens yet. And I don’t see that coming soon, there may be other credits that go into the sevens that would have different risk characteristics, but 45% LTV, two times debt service. You’re not seeing sevens on those, at least not in the Northeast, at least we have not seen.
Pat Barrett: And I think we’re being more thoughtful for our existing clients versus those new opportunities, where we recognize what yields we need to get going forward.
Christopher Marinac: Got it. That’s very helpful. So the low LTVs, the non-spec that makes your 7% not the same as someone else 7%. Got it, okay. And then my next question just goes back to the concentration of office. I know half is in the credit tenant and medical, as you described, did you want that just kind of slip back over time. Will it naturally fall back to another level. I’m just curious how you think about that now.
Christopher Maher: I think it’s well diversified, but I think we’re also smart enough and cognizant of what’s going on in markets today. I’ve always taken the approach of you do good loans when good loans present themselves to you, you don’t take undue risk. And we run our business for the long-term. So there are certain asset classes that maybe out of favor today. But you look at things one-off, one-by-one and you make the decision. That being said, I think we’re enough to understand that if we don’t get the return that we need, that will purposely stay away from certain asset classes as they go forward.
Pat Barrett: We’ve seen a little bit of this, Chris. I don’t know if this will turn into a trend, but given the negative commentary about office nationally. It’s become like a pariah asset class. We’ve seen a couple of exceptional conservative deals, LTVs and debt service and tenancies that government agencies, things like that, that are priced just very differently than they would have been six months ago. So we don’t intend to build this concentration. But if we have a client that has an exceptionally conservative property, we’re going to work on the credit, we’re not going to work on the popularity.
Christopher Marinac: That’s great. Thank you for that. And just last question is. I know we don’t have all the granularity on kind of reserve allocations by pipe, but just generally speaking, is it — would it be fair to presume that you’ve got a higher allocation of reserves to office, just given the property type as well as the criticized level relative to the rest of the portfolio.
Pat Barrett: Interestingly within our under our covers the offices performed pretty well, so the historical losses don’t have any need to generate significant reserves. And then our distribution of past versus substandard is very similar to our other office class, our other real estate classes, collateral classes. So there’s nothing unusual about the allocation there. We do have — I would point out that the majority of our reserve is actually qualitative. Because over the last year, we’ve been trying to make sure we account for not just risk we see today in the book, but risk that may emerge based on economic conditions and some of these things we’ve talked about this morning. So, if anything you might see a reallocation of reserves down the road if we see a flip anywhere inside that reserve.
Christopher Marinac: Got it. Thank you both. I really appreciate it.
Pat Barrett: Thanks.
Operator: Our next question is from Matthew Breese from Stephens. Matthew, your line is now open. Please go-ahead.
Matthew Breese: Good morning. I was hoping to get a little bit more color on buybacks. It feels like concerns around capital for the industry are really focused on unrealized losses in securities portfolios, which — given your book and lack of meaningful AOCI, you’ve done a really good job on. So understanding being conservative, but also recognizing where the stock is why not buy it on the buyback?
Pat Barrett: Well, look, I would kind of classify it this way, we have the capacity to do buybacks. So we have the powder to do that. We just want to make sure that we get to — put a little bit of distance between us and the expectations in the market around capital and liquidity and all of that and we keep it as an open option for the future. So we have an authorization, we have the financial wherewithal to do it, we just want to know a little more about the operating environment before we do that.
Matthew Breese: Understood. Maybe a follow-up to that. You are understanding capital ratios, but also commercial real estate concentrations. Are the regulators paying any more attention to CRE concentrations in the wake of all this? If so, maybe you can give some sense for how and what they’re looking at?
