Christopher Maher: Also kind of talk a little bit about the risk characteristics of that. If you think about our construction book, a significant chunk of it, approximating 40% is non-speculative, another 40% of that spec is apartment-based. So –and those are underwritten to a very modest rental expectations. So there really shouldn’t be an issue as those kind of mature and only 20% of it would relate to a single-family home. And as Joe noted, in the Northeast, we tend to have a much more stable level of inventory and prices. In fact, the home prices in New Jersey despite all the slowdown in unit sales or continue to be up about 6% year-over-year. So it’s very prudently underwritten, very conservative a very thoughtful portfolio that we feel very good about.
David Bishop: Got it. That’s great color. And then I noticed in the slide deck, pretty substantial improvement in the substandard loan bucket. Maybe just some commentary what drove that decline?
Christopher Maher: I think it’s a combination of factors, David. We’ve had improving economic conditions post-COVID. And we were, as we tend to be typically very conservative in looking at the client base that was adversely affected by COVID during that period, we were quick to downgrade credit into classified or criticized because we had concerns, the vast majority of those folks were paying, but it made sense for us to do what was prudent for the company. As they’ve rebounded post-COVID, it’s allowed us to upgrade those. And we’ve had some payoffs from that bucket as well and some recoveries, which we anticipated that we would. So I think it’s just a foundational aspect of the way we approach things when we have uncertainty, we will downgrade when we need to. And when we see some more certainty, we are not afraid to upgrade.
Christopher Maher: We made two important decisions during COVID, which may not have been super popular at the time. The first was in the third quarter of 2020, we derisked the portfolio by pushing out the stuff we thought would have a higher likelihood of having a post-COVID issue and sold that off. The second thing that we did is we did not care no long-term Cares Act deferrals in our commercial base. So we took a position that we gave a lot of short-term deferrals, worked with our borrowers, really made sure that we kind of got them through a difficult time, but we did not restructure the facilities, and enter into these kind of longer-term IO periods or payment plans that would have allowed weakness to continue. So we were able to move through that, I think, pretty effectively.
When you think about last 8 quarters, 2 years in a row, having net recoveries on a balance sheet our size. I think that kind of proves out our thesis back in the third quarter of ’20, which was not very popular, I think, held true.
David Bishop: Got it. Appreciate the color, guys.
Christopher Maher: Thanks, David.
Operator: Thank you. Our next question today comes from Christopher Marinac from Janney Montgomery Scott. Christopher, please go ahead. Your line is open.
Christopher Marinac: Hey, thanks. Good morning, Chris and team, you’ve all mentioned 2024 as part of your thought process for managing the bank now. As we possibly have a different rate then, are there any lessons learned from the 2019 era when rates kind of peaked the last time with the Fed that you can implement now? I know the portfolio is a lot different. But just curious kind of if loan floors and other tactics can work or if there’s any particular way you think through the structure from the past?
