Joe Lebel: Well, I think the average construction transactions are higher anywhere between half and 1 over prime. You want to get paid for the risk you take in the environment that you’re in. I’m sure some of our borrowers are disappointed that the rates have continued to rise, but they look at it from the long-term. And it’s a little disintermediation as you would expect. If you build a multifamily project today and it may cost you prime plus one to build it, you can still, at the end, when you fill it up and stabilize it to get an end loan at 200 over a 7 or 10 year treasury, which is 5.5 today. So they look at that as we do. It’s a window to pay for the risk of the construction. And then when you get to the end game, you’re going to stabilize it and get much better cash flows.
Manuel Navas: That’s helpful. How much of your view on loan growth includes the probability of a slowdown. Are you — you did suggest that there’s some slower activity. But if you were as positive on the economy, could you have probably more loan growth? Or is it kind of you’re purposely being more selective, you’re seeing better yields, you’re price conscious. How are you kind of balancing that today versus maybe a year ago?
Christopher Maher: I think that you’re going to start with the market has fewer opportunities, right? As you can see in some of the things that have been growing those quickly in the last few years, I’ll take kind of warehouse as an example, right? There are very few people going out to build net new giant warehouses. So you see a little bit less economic activity, so that does pull down the opportunity for all of us. And then as rates go up, borrowers are a little discriminating over which projects they want to take on. So if they’re going to pay and if you’re paying over prime, you could be paying something with an eight handle, right? So you’re going to be judicious about using that capital when you can make it work for you, but you’re not entering into that lightly.
So I think there’s a little lower demand. I think there’s — our traditional discipline kind of filters out a lot of what’s in the market anyway. And go back to my comments about participating in multiple markets and having a great group of bankers. We can kind of trade off if New York side or Philly side or Boston side of New Jersey’s hot kind of look for the deals you need and the places you need them. So — but the overall tone is slower. To your point about a recession, very hard to understand whether the recession is coming or how severe. The other thing I think that’s greatly overlooked is the geographic impact of a recession. So historically, and I have no reason to believe differently the Northeast has been less impacted by business cycle risk around things kind of boom and bust cycles.
So even in mild recessions, there seems to be a fair amount that goes on in the Northeast. That’s our market. So we don’t we have not observed in our markets, kind of the significant over capacity or overbuild or vacancy rates with some selective submarkets like the central business district office is certainly an area that we’ve got an eye on.
Manuel Navas: That’s really helpful. If the probability of a recession grows, where do you think the loan loss reserve heads to? I know you have about 57 basis points now it’s about 65 with marks. We are — like if that — you have to head more to the severely adverse scenario, where would that kind of push up to?
