We would say that right now, we still have an appetite for CRE loans. And so we’re able to take advantage of that dislocation in the market. Similarly, that with a lot of the — David, as you know, in Chicago, we’ve had a tremendous amount of disruption with the players in Chicago, and we’re seeing lots of opportunities on the C&I side for companies that we’ve been actively trying to bring over for some time. And they just, for whatever reason, stuck with the incumbent until they just couldn’t take it any longer. And so as a result, we’ve been able to bring over a lot of those. So we continue to be pretty bullish about growing that portfolio, particularly on the core side, we really see a lot of nice opportunities right now.
Tim Crane: And, David, we’ve been disciplined on pricing, but there’s — loan demand is there. You just have to pick your spots, and we’re getting a lot of looks.
Richard Murphy: Yeah, that’s a great point, Tim. I mean where structures have been, if you go back 18 months ago, 24 months ago, structures were pretty loose. Pricing was pretty tight. And those were times where we were — there were deals that we just stepped away from. Right now, you can get better structure, you can get better pricing. And we try to be very disciplined in that space.
David Long: Got it. Thanks for that color. Go ahead.
Tim Crane: Yeah. Well, I’d just say we can continue to grow deposits. We’ve proven for a couple of quarters that we can fund the loan growth, and our desire would be to continue to grow the deposit base. It’s kind of the core of our franchise. And we’ve talked several times about the fact that we’re 6%, 7%, 8% market share in deposits in the Chicago area, opportunities in Milwaukee as well. So even though the 6/30 deposit share results were pretty good for us, we think that’s just the beginning.
Richard Murphy: Yeah. I would say sort of the macro summary on the — your question is that there is no shortage of opportunities to lend money out there right now. And I think there’s a lot of banks that are just maybe unwilling for the deposits and capital reasons. So our job is to take advantage of this moment.
David Long: So it sounds like the strategy is still focused on organic growth because that’s what the market is giving you. What is the appetite for M&A at this point? And what does the backdrop or what needs to change in the backdrop, maybe for you guys to be more opportunistic on that front to accelerate growth?
Tim Crane: Well, there are acquisition-type opportunities. So whether that’s a portfolio of loans or whether it’s a piece of a business or in some cases, the conversations around kind of bank M&A are picking up. But we’re pretty disciplined and some of these portfolios are challenged from a pricing perspective. And we don’t need to do that kind of growth given the opportunities that we have. If some of those look up like good opportunities to us, we may add some people, for example, in areas where we’ve got good businesses. There are some folks available in the market right now, but I think we’ll stay pretty disciplined.
David Long: Got it. Thanks guys. Appreciate the color there.
Tim Crane: Yeah. Thanks, Dave.
Operator: Thank you. Our next question comes from the line of Casey Haire of Jefferies.
Tim Crane: Hi, Casey.
Casey Haire: Hey, thanks. Good morning, guys. I guess just — sorry if I missed this, I wanted to follow up a little bit more on the NIM discussion, but did you guys disclose what spot loan yields were and deposit costs at 9/30?
David Dykstra: No, we haven’t done that. But what we could tell you is that the margin was right near the current level at the end of the period, and we’re really focused on the net margin going forward. But we — deposit pricing has moderated, as you can see, and we expect that to continue into the fourth quarter. But no, we didn’t provide that.
Casey Haire: Okay. Very good. And then just, I guess, switching to credit. The ACL on the core book at 1.51%, obviously very strong. Just curious, what kind of scenario are you guys baking in, be it slowdown, S3? Or any color on what kind of unemployment rate that which is driving your CECL modeling.
David Dykstra: Yeah. Well, I mean we use a number — we look at it a number of different ways. I mean, we use as a base, we use Moody’s base case scenario, but we do also look at other economic scenarios to build our case. We don’t have a big consumer portfolio. So unemployment is generally not a big impact in our models with correlation. We use a consumer real estate price index, the BAA credit spreads and a few other factors. Those didn’t have a major impact quarter-over-quarter change. The real reason the provision was less this quarter was we just had less loan growth this quarter. All the other factors sort of washed out. But roughly $10 million of that reduction was just due to less loan growth in the third quarter relative to the second quarter. But to answer your question generally is we use the Moody’s model and we supplement that with a couple of other economic sources.
Casey Haire: Great. Thank you.
Operator: Thank you. Our next question comes from the line of Jeff Rulis of D.A. Davidson.
Jeff Rulis: Thanks. Good morning. Just a couple of housekeeping items on the — I just wanted to follow up. The co-work office credits you pushed out last quarter, is that largely done? Is there anything else you’re trying to kind of manage out within the office side?
Richard Murphy: As we disclosed last quarter, that sale took up a roughly half of that portfolio. We will continue to explore options related to the rest of that exposure, and my guess is we’ll hopefully get something done here relatively soon, but it just depends on what that market looks like. We are always looking at assets within the portfolio and determining kind of the best course of action, but nothing pending right now.
