Jeff Rulis: Okay. Thank you. I’ll step back.
Mark Grescovich: Thanks, Jeff.
Operator: Thank you. Our next question comes from the line of [Eric Specter] (ph) of Raymond James. Your line is now open, please go ahead.
Unidentified Analyst: Hey, good morning, everybody. This is Eric on the line for David Feaster. Thanks for taking the questions. Starting on the credit front, just given the uncertain backdrop, I know you’re very conservative on the credit front, but just curious how maybe you’re stressing the book and how you’re approaching upcoming maturities and the process for modifications now that TDR rules have changed.
Jill Rice: Yes, Eric. Thanks for the question. We are regularly stress testing our portfolio. So we take a look at reviewing income and debt service coverage. We stress vacancy levels as to the real estate loans and their impact to the net operating income, debt serviceability look at changes in cap rates based on the interest rate and what that does to the collateral coverages. When you think about our commercial real estate portfolio, that has about — 15% of that will have a rate reset over the next 24 months. And our most recent review reflects no significant concerns with regards to the repayment ability based on the current yield curve and their current most recent operating statements. Additionally, because the portfolio is still lowly leveraged on an average basis, where the properties are generally well positioned to sustain those changes in asset values.
So we have not seen to date any issues with people who need to refinance, whether it’s off balance sheet or in our portfolio.
Unidentified Analyst: Okay. That’s helpful. And then maybe just outside of the margin, I’m just curious how you think about the impact of declining rates on the balance sheet and income statement. Would you expect to see additional loan growth potentially from that? And at what level would you expect to see and what segments do you think you’d see it first? And just curious how you think about your ability to reprice deposits and drive additional core deposit flows if rates begin coming down.
Jill Rice: So I’ll take a stab at our loan growth and then let Rob talk about the deposit side of the equation. But going into 2024, we are expecting a low to mid-single-digit growth rate. As the rates come down, we would expect activity to pick up, both in commercial real estate and I would say construction as well, we’ll just get more activity that has been on pause. Some of that will be offset by what I would anticipate to be a higher refinance on the residential mortgage book as they refinanced down. So those combined together, even in a shifting rate environment is what leads me to say low to mid-single-digit growth rate.
Robert Butterfield: Yes. And on the deposit side, I guess what I’d say there is that clearly, in the current environment with the rate environment right now, it doesn’t really pay to try to go after deposits right now, other than through full relationship. So I think as part of that loan growth that Jill is talking about there as rates start to come down, we’re focusing that loan growth either on existing clients or clients that are bringing in a full relationship within them, meaning that they’re bringing their primary deposit accounts with them as well. So there certainly could be some opportunities there as rates start to come down.
Unidentified Analyst: Okay. That’s helpful. And then just maybe just touching on capital. It was great to see there on TCE given lower rates. Just curious your thoughts on capital just more broadly and capital priorities are at this point, what the capital returns in the cards at all? Just curious your ideal methods of capital deployment today.
Robert Butterfield: Sure, sure. So I mean, just a reminder, kind of our capital priorities. First and foremost is the core dividend, which we kept at $0.48 for the quarter as we have been paying. And then beyond that, historically, we have done share repurchases and occasionally, some type of special dividend. And beyond that, I mean, of course, we’re always interested in M&A activity if it’s the right opportunity at the right price. And the capital has continued to build. So we haven’t repurchased shares for all of last year at this point. So capital levels continue to build. And we think in this current environment with a bit of economic uncertainty, it makes sense to be building that capital currently. And so, I wouldn’t expect in the near term that we would change any of our priorities or change the capital actions that you’ve seen really over the last year, once we get into maybe the second half of the year, maybe there’s better economic certainty out there, and then we can look at changes in our capital actions at that point in time.
Unidentified Analyst: Okay. Thanks for taking my question. And I’ll step back.
Mark Grescovich: Thanks, Eric.
Operator: Thank you. Our next question comes from the line of Andrew Liesch of Piper Sandler. Your line is now open, please go ahead.
Andrew Liesch: Thanks. Hi, good morning, everyone. Just a question on some of the last prepared comments. You mentioned expanding loan production capacity by adding new bankers and then investing in initiatives grow fee income. Any more details you can provide on that? What sort of like hiring plans you may have? What locations? And what some of these initiatives may be?
Jill Rice: Sure, Andrew, this is Jill. I’ll take that one. as we have discussed throughout the year, we have been adding new bankers and it has included not just commercial and commercial real estate lenders, but we’ve added business bankers, treasury management officers other back-office personnel as well. It’s been across the footprint really. And as to relationship managers more up and down the West Coast I5 corridor, but not limited to that. And we expect to see that continue into 2024. We’re still having good conversations. We kind of hit a slight pause, I would say, right here in the first quarter until people get their annual or quarterly bonuses, but the conversations are still going on, we would expect to continue to add.
