Mark Sander: Yes. We feel good about where we are with credit, certainly, Chris — this is Mark. We saw a little further modest risk rate of migration in Q4, but consistent with a little bit of a slowdown and more limited growth. I mean, we feel good about where our portfolio is at, there are certain areas we’re watching more closely, obviously, CRE office, like everyone, and that will remain to be play out. Senior housing is something that is slowly recovering, but — portfolio quality there, we feel really good about. So no real changes in our underwriting and feel really good about where we’re at.
Chris McGratty: Great. Thanks. And then maybe, Brendon, a question just on the balance sheet. How do we think about maybe adding bonds at this point to reduce more rate sensitivity, just overall size of earning assets for 2024?
Brendon Falconer: Yes. Great question. So I think there’s some opportunities and work to do on our rate risk position that will include likely some reinvestment of cash flows in the invest portfolio and probably adding some to floating rate debt to offset. So I think that would enhance our rate risk position and not have a negative impact on net interest income.
Chris McGratty: Okay. But just beyond the maturing cash flows in the bond book, will the bond book grow in absolute basis or just…
Brendon Falconer: No, not expected to grow, but I do think we’ll start to replace it and hold it at approximately these levels.
Chris McGratty: Okay, great. Thank you.
Operator: Your next question comes from the line of Brody Preston with UBS. Please go ahead.
Brody Preston: Hey, good morning, everybody. Thanks for taking my questions.
Jim Ryan: Good morning, Brody.
Brody Preston: Jim, I don’t know — I guess I’ll speak for Terry and say we’re both called up here in Maine.
Jim Ryan: I appreciate it.
Brody Preston: I just wanted to ask on the — running on the nuances of the deposit beta commentary. So we’re going to peak at 39%, is that happening in 1Q? And then the declining to a total beta of the low 20s by ’24, feels a bit more conservative than what some of your larger peers have kind of outlined in terms of talking about pretty aggressive down betas within their NII guide. I guess what makes you feel more conservative when you talk about your beta?
Brendon Falconer: Yes, sure. I’ll answer the first part of that first. So we think our deposit beta peaks on the up cycle, not until 2Q, although kind of a very slight modest kind of quarter-over-quarter impact on total deposit costs in our model. On the back half, we didn’t go up a side. We have 35% of our book as exception priced. We think we can drive a really strong beta down on that side. But I also think deposits are still really valuable. And we got to pay attention to maintaining and continuing to grow deposits to continue to take advantage of lending opportunities. And I think that probably informs the more conservative guide on the way down.
Brody Preston: Okay, got it. And I wanted to just also ask on the securities. Could you remind us, I think you have over $1 billion in securities that are set to mature or reprice in 2024. Would you plan on kind of running those down and using it to fund the good loan growth that you’ve talked about in the guidance?
Brendon Falconer: I think a little bit of a mix, Brody. Certainly, we will start to reinvest some of the cash flows off that book and that will come at a positive spread of about 150 basis points. And we’ll see how the rest of the year plays out. And a lot of that is dependent on our ability to continue to grow the cost as well and then ultimately, the loan demand.
Brody Preston: Got it. And if I could just sneak one more in, the $2.5 billion of balance sheet hedges that you have are — just to clarify, are those — is that just on the loan book? And then do you have any maturities of swaps occurring in ’24 or ’25 that are meaningful that we need to be aware about?
Brendon Falconer: Yes. So it’s a mix on both the investment portfolio and on our loan. We don’t have a time maturing, we actually had the duration of these put pretty far out as we’re trying to — we didn’t want to be too precise on the timing of expectations around rate cuts. So we have sometimes no major maturities or anything rolling off of significance there and probably some more work to do if we’re done with the year.
Brody Preston: Okay, great. Thank you very much.
Jim Ryan: Thanks, Brody.
Operator: Your next question comes from the line of Jon Arfstrom with RBC Capital Markets. Please go ahead.
Jon Arfstrom: Thanks. Good morning, everyone.
Jim Ryan: Good morning, Jon.
Jon Arfstrom: A couple of follow-ups. By the way, Slide 16 is really good. That’s a great slide. Terry took one of the questions on CD repricing, but you talked about exception pricing on 30% of your deposits. Has that eased at all? Is that just a product of last spring or early summer, is that persisting.
