Casey Haire: Okay. Great. Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Jeff Rulis of D.A. Davidson.
Jeff Rulis: Hi, thanks. Good morning. Rich, I wanted to circle back on the co-work, you singled out the one credit of, I think $17.4 million. What is the total remaining co-work exposure?
Richard Murphy: Negligible. I think there might be a — certainly under $5 million, I think pretty well below that. There’s a — there might be a couple of small pieces, but generally that we’re largely — with this issue being largely addressed, I think we’re — that largely is behind us.
Jeff Rulis: Okay. So, that was the bulk of it. I guess and then just sort of tracking some of those cables towards the back, was that a — was that credit identified and sliding from kind of past due?
Richard Murphy: No. Loan was current. [Multiple Speakers] Yeah.
Jeff Rulis: Got it. Okay. And maybe on the — just hopping to expenses, safe to assume that quarterly FDIC insurance reverts back to the mid $9 million range? In other words, absent the special assessment, that could be a good run-rate for ’24? And then kind of a follow-on question to that is, just overall expense run rate expectations there would be helpful. Thanks.
Richard Murphy: Yeah. Well, clearly we’ve — the special assessment is a one-time item. I think towards the end of the couple of years out, depending on how those things settle out, they may true it up a little bit. For now, yes, that number goes away and you’d be in that mid-$9 million range. But that assessment grows as the company grows. So, as much as we don’t like to pay the assessment, probably that expense number goes up because we’re going to grow the franchise over the course of the year. But you can see that it’s trended up over time. So, we would only expect it to go up with the growth of the balance sheet, though. And then, overall expenses, it’s sort of similar to what we’ve talked about in the past. If you sort of look at the non-FDIC-impacted run rates of the third and the fourth quarter, those will probably increase slightly in 2024 as we have merit and raises for the employees and the impact of inflation, the impact of the FDIC insurance coverage increasing as we grow.
And we continue to invest in our infrastructure, digital, and technology-wise, but — so probably that 5% mid-single digit range is what we would expect, using the third and the fourth quarter as a base. And if we can grow loans and the franchise in the mid to high-single digit range, we can get that operating leverage out of the system.
Jeff Rulis: Sounds good. Thank you. And then the last one just, and you kind of touched on it a little bit. But in that mid-to-high single-digit loan growth outlook for ’24, do you have anything kind of layered in there? Is it sort of a soft landing type assumption or that’s a crystal ball type question, but for the bulk of ’24, do you have a recessionary or slowdown macro-wise embedded?
Tim Crane: Well, my answer to that would be, we’ve fortunately got a diversified and pretty granular loan book. So, as we’ve talked about in the past, the transportation business and some of our customers are already experiencing challenging conditions and others are doing terrific. So, I don’t know that a technical recession is much going to change the environment and we think across our loan book, we’ll get a pretty balanced level of growth over the year.
David Dykstra: Yeah. It’s a great point, Tim, because we have all these different engines that just fire at different times. If you kind of look at where the growth is coming from over this last year, our life premium finance group essentially had zero or actually negative growth, largely because in a higher rate environment, it doesn’t work. If you got into a recessionary type situation and they bring rates down, that product suddenly looks much more attractive. And a lot of the loan growth that we had two years ago, was out of that product. So as different — as the rate cycles move through, they definitely affect different things. Right now, as we talked about, line utilization in a higher-rate environment really gets impacted.
As rates come down, you’re going to see the opposite effect. So, I think there is some — there is going to be some cyclicality, but it’s just going to affect different products at different times. So, we stay pretty committed to that mid to high-single digit growth forecast.
Jeff Rulis: Okay. I appreciate it.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Brandon King of Truist.
Brandon King: Hey, good morning.
Tim Crane: Good morning.
Brandon King: So, I had a question on deposits. I noticed, most of the growth in the quarter came from money market and savings accounts. And I’m wondering if — is that the expectation going forward where we’ll see most of the deposit growth?
Tim Crane: Well, we think the mix has somewhat stabilized, but with these higher rates than we had a year or 18 months ago, clearly the interest bearing products are more attractive to our clients. And so, I think you’re going to see money market and CD growth that you wouldn’t have seen a couple of years ago. And we’re working hard and hopeful that the non-interest bearing portion continues to stay reasonably stable at around 23%.
Brandon King: Okay. And is part of that strategy also sort of anticipating a Fed easing cycle as maybe those money market accounts, maybe easier to lower those rates, I guess, faster than if we did more of the CD funding?
