Steve Moss: Okay. Great. That’s helpful. And then in terms of the Bill, your upbeat on the loan pipeline here. Just curious what you’re seeing for the underlying business mix here going forward into 2024. It sounds like more C&I and maybe owner-occupied commercial real estate.
Billy Carroll: Yes. I think it’s a good mix. I don’t know, Rhett you got — can add any color you want to. But yes, I think it’s a mix. Obviously, we looked at a little more C&I growth in ’23, we think we will want to continue that same pace. Yes. But we’re still — when you look at our CRE ratios, right, you can speak to those. We’re still seeing some nice a fairly lower risk CRE opportunities out there, too. So I don’t know if you got any color you want to add?
Rhett Jordan: I would agree completely, Bill. I think as far as pipeline currently and most of what our teams are out finding opportunities in is still predominantly C&I owner-occupied type of projects. To Bill’s point, I do think as we go through the year, if we do see some of the interest rate movements that are forecast it will help the CRE aspect just because of the metrics associated with underwriting performance on income-producing properties that might create some opportunities in this space that are just a little stronger in the profile than what we saw with rigs going up at the pace they did last year. So it could be a really good mix as we go through the year.
Steve Moss: Okay. Great. That’s helpful. And then in terms of just the — on credit here. Just curious, how large is the small trucking piece of the fountain portfolio that you guys talked about where you’re seeing some stress?
Rhett Jordan: The overall portfolio for fountain, it’s the trucking industry is about 40% of the weight. But the ones the challenged operators that we were working with and through as the year progressed is about a little over 1.5% of their total portfolio. So it’s a small group of operators. We feel like we have identified the vast majority. I can’t say there won’t be one or two here or there that may that may have an issue as we go through ’24. But we think the majority of the ones that are that are at a higher risk point we’ve identified or working through those. Most of the challenge just simply comes in the valuation of the underlying assets in the marketplace. Those have fluctuated as the year went. But as I stated, we certainly have seen that plateau and we think it’s going to hold a little more soundly as we go through this next year.
Steve Moss: Very minimal. Okay. Great. And maybe just curious also, is that what — are any of those credits appearing in the line item in the release of restructured loans and leases not included in nonperforming assets, I see that’s up to $4.2 million. Just wondering if that’s the driver there.
Rhett Jordan: No. That’s all included in the nonperforming aspect.
Steve Moss: Okay. And then maybe just what is driving that bucket there? Of restructured loans and leases?
Rhett Jordan: I’m sorry. I think your question was what’s driving that. Was that right?
Steve Moss: Yes. Correct. What’s driving the bucket of restructured loans and leases not included in nonperforming. You’re trying to think as far as restructured on the leases, I’m going to have to get back to you off the top of my head. I’m not sure what I have to look at that specific metric I’ll get you that information. I’m not my head. I’m not — I don’t have that drop.
Operator: Our next question today comes from Catherine Mealor from KBW. Your line is now open.
Catherine Mealor: It feels like just from some of your commentary on the call so far. So look, we’ve got some really good revenue momentum, especially if we get cuts, especially as we kind of move into ’25 with the loan repricing opportunity. And so as we think about improving revenue through the back half of this year and into next, how do you think we should balance that with expense growth? Do you think expense growth accelerates a little bit of that revenue rebound? Or is this going to be a really kind of big switch in your profitability to get some bigger operating leverage as we move into next year?
Billy Carroll: Yes, I’ll start and then Ron, you chime in. I think, Catherine, obviously, expenses or yes, I think we’ve done a nice job. When you look at our efficiency ratio, ratio is elevated just because of net interest income got a little echo there. I’m sorry. But I think at the end of the day, I think we can control a lot of those expenses. There’s not a lot — we’ll have a little bit of occupancy add this year with some branches that we’ve got adding down in Alabama and particularly. But — and then there’s obviously some variable component in there and that salary line related to incentives, but those only those typically are going to be — that should ramp as revenue ramp. So yes, I think at the end of the day, we’ll see some increase in there, but we’re going to work very hard to make sure that, that’s contained and Ron, I don’t know if you’ve got any just comments related to expense growth.
Ron Gorczynski: Yes. Really, as a percent of revenues, in the first quarter, we’re estimating the noninterest expense to revenues at 72% and that we’re expecting that to widen out. So meaning that by the time of our Q4 2024, it represents 67%, 68% of the revenue. So the revenues will widen out quicker than the expenses will increase. Does that make sense?
Catherine Mealor: It does. That’s great. And are there any kind of expense investments, either teams, technology, processes, anything that you’ve been holding back on while we’ve been in this constrained revenue environment that we may see? Or you kind of feel like you’ve got the infrastructure that you need to move revenue where you see going?
Billy Carroll: Yes. I think we’ve got a pretty good spot. We’re continuing to evaluate some tech options with some digital platforms. There are some things that we have got on the horizon that we don’t necessarily have in our ’24 forecast because we want to make — number one, we want to make sure that the revenue growth comes back as we project. But not a lot, not a ton of spend out there. Our systems are in place. There’ll be a little bit here and there, but with nCino being in, KlariVis being in. We’ve got a lot of this stuff already built in and built into our run rate. So there’s a couple of broader strategic things that we might want to look at as we get into the later part of the year. related to potential upgrades of some digital platforms.
