William Black: Yes. So if you’re talking about on the non-accruals, the bump there was, in particular, related to some Civic loans. We’ve already seen some of that back off, and we have an NPL sale that is being teed up. So we feel that’s kind of ordinary course, Chris. I mean we did an NPL sale in, I think, last quarter, and we’re not seeing anything indicative in credit. As Paul said, we feel really good about where the book is. The team has done a great job over the past years in terms of making sure that the underwriting is solid, and our team has going through everything with a fine-tooth comb. And if you were to look at our non-accruals, for example, it’s really granular in there. Our top 20 NPLs, for example, averaged about $3 million.
And they’re all kind of stories and individual stuff. But if you look at the absolute level of non-performers at 36 basis points, it’s pretty low compared to history. So you could see things bounce around. We don’t see anything driving that, but just realize we’re kind of operating at the lower end of stuff, but we’re not concerned about anything in particular, although we are obviously paying a lot of attention given to where we think things are going.
Christopher Marinac: Great. Thanks again for taking all of our questions.
Paul Taylor: Thank you.
Operator: And we’ll next go to Jon Arfstrom from RBC Capital Markets.
Paul Taylor: Good morning.
Jon Arfstrom: Good morning. A couple of model questions and a couple of strategic ones. Kevin, on the margin guide, I think you talked about 2022 as the baseline. Is that what you’re thinking 350 is the baseline we should be thinking about for the 2023 average margin?
Kevin Thompson: Yes. 340 to 350 average margin probably dipping lower first half of the year and then increasing latter half.
Jon Arfstrom: Okay. That’s good. And then with the flat loan guide, are you basically saying relatively flat earning assets, but the churn in earning assets likely leads to that lift later in the year. Is that another fair way to think about it?
Kevin Thompson: I think that’s a good way to think about it.
Jon Arfstrom: Okay. On provision, you guys are talking about flat reserves, flat loans, lower risk loans and clean credit, which suggests to me that may not need a provision in the model for 2023, but what kind of
Paul Taylor: And we just got to preface that again with the year we’re in, is that we could have a recession so that could be a little dynamic. We’re planning, at this point in time, that it will not be dynamic, but we have to remember that.
Kevin Thompson: There’s some replenishment of small charge-offs that happen over time mix shift. So there will still be some provision we anticipate, but not large.
Jon Arfstrom: So on a quarterly basis, you’re talking about you’re not insignificant from what we’ve seen in prior quarters?
Paul Taylor: Good way to say it. Yes, not insignificant from what we’ve seen in 2022.
Jon Arfstrom: Okay. Good. Thank you for those two. In terms of the investments and some of the maybe changes you’re going to try to make, do you need to make investments in lenders or refresh the community bank loan production machine?
Paul Taylor: 2022 was a really good year for loan growth. We’ve got very seasoned, experienced lending teams. So I don’t really anticipate we need to do anything like that. Again, I think our core competency here is credit.
Jon Arfstrom: Okay. And then I guess the last one of all the metrics that you laid out, the one that stands out to me is the top quartile EPS growth. And can you talk to us a little bit about that? I know there’s some restructuring and refreshing that you’re doing, but is this something that we can start to see this momentum later in 2023?
