Dave Antolik : Yeah, it would be the most recent appraisal available. So in some cases, where we have a reason to update the appraisal, we would use that number, otherwise at that origination.
Matthew Breese : Is there any sort of way to frame that time-wise weighted average of two three years old? Or is it, for the most part, four or five years old?
Dave Antolik : Look, the way we look at this book and the way that I look at value is, we focus on debt service coverage right? And that operating income because that ultimately determines the value of the property. So that’s what we spend most of our time looking at testing, stressing — so the rent roll that goes into making up that service coverage is what we focus in on.
Matthew Breese : And how often are those debt service coverage ratios updated?
Dave Antolik : At a minimum annually.
Matthew Breese : Okay.
Dave Antolik : Yeah. So all the numbers that I referenced today would have come out of the most recent annual review and most of those are done in the back half of the year. So those are pretty current numbers that I referenced relative to debt service coverage.
Matthew Breese : Okay. So along those lines, if I look at the maturity by year, you have $48 million maturing in 2024. I’m assuming some of those have kind of already matured and renewed or gone elsewhere. I’m just curious as even if it’s a limited sample set, as those have kind of come up for renewal, how have the debt service coverage ratios reacted? And have they been able to kind of maintain a north of 1 or 1.2 times level from what you seen.
Dave Antolik : First part of the question, these numbers are just moving forward. So the things in Q1 that would have reset have already reset. They’ve matured, and we’ve either rewritten them or are they have been taken out by others. And we haven’t seen any deterioration relative to resetting in the current interest rate environment. I think the biggest question here for Randy Bank is what does that occupancy look like Unlike the multifamily, office CRE has — is usually limited to the number of tenants and those tenants pay a fixed rental rate for a longer period of time. So the — as I mentioned in the call, the office CRE debt service coverage ratios tend to lag multifamily because multifamily landlords have the ability to adjust rental rates on a more frequent basis, typically annually.
Matthew Breese : Okay. That makes sense. Could you just go into the biggest office loans, the $10 million bucket and the biggest multifamily loans, similar to the $10 million north? How are those larger loans performing? Any sort of past dues or any sort of issues there? Just some broader color on the big stuff.
Dave Antolik : Yeah. I think the biggest takeaway is that those largest loans particularly those above $10 million have stronger debt service coverage ratios for both office and multifamily. And in the multifamily space, the debt service coverage ratios are significantly higher than what we would test to in terms of an annual review for a debt service risk coverage covenant that we have in place on most of these loans. And they’re geographically diverse for the most part. As I said, that other category is really just a deeper dive into our geography. But they’re pretty well dispersed. Obviously, the larger concentration by number and dollar is in Pittsburgh, but they’re not outsized. It’s not a $140 million loan. The average sizes are significantly larger than $10 million for the largest type of loan that we would have.
Matthew Breese : Okay. And then are any of these loans criticized or classified, not considered past?
Dave Antolik : There’s one loan in the office space that’s criticized — of the top — you’re referring to the top 29 here is what —
Matthew Breese : Yeah. The biggest ones tend to do the most damage when they go sideways. I just wanted to get a —
Dave Antolik : There’s one loan in the office pool. There’s nothing in the multifamily. There’s one loan in the office pool of those $5 million and larger that is a — that’s a criticized loan.
Matthew Breese : Okay. The last one I had just in regards to the NIM, and I appreciate taking all my questions. The pace of loan yield expansion has also slowed. And I was just curious, in the absence of rate cuts, is this kind of a 4 to 6 basis point range of loan yield increase? Is this a good kind of near-term proxy for what we should expect until there’s rate cuts?
