So that’s what we’re thinking, and that’s also just inclusive of specialty deposits. And then again, maybe later in the year, we get some of those core related expenses, and we’ll have a better sense for what those numbers are in the upcoming quarters.
Damon DelMonte: Got it. Okay. And then did you say that for a 25 basis point cut in rates, that’s about a $4 million positive impact on the specialty deposit expenses?
Keene Turner : Yes, that’s correct. And I think the proportions there are roughly half of the compression you get on a quarterly basis in net interest income would be offset in that noninterest expense line item. Some of that may be subject to timing, but once you run that out and flush it through, that’s generally what we’re expecting.
Damon DelMonte: Okay. Got it. Great. And then just other question on the ag portfolio. I think, Jim, you said it’s about a $200 million portfolio, and you’re going to look to wind that down. Given what happened with this 1 particular credit, are there any early signs that you could see other areas of stress within that portfolio as you go through your review? Or is it still too early to tell?
Jim Lally : So Damon, our cursory review on top, and we focused — and this was — the problem we have was in the livestock area. So we focused initially in this area — and the course review at the outset shows that we feel very good about where we stand. That being said, there’s more work to do on it, not only by us, but we’ll also bring in a third party just to validate what we’ve seen. As it relates to the rest of the portfolio, Doug, maybe you can talk about what we see because this only — livestock only represent 1/3 of the portfolio, correct?
Doug Bauche: Yes, Damon, it’s Doug. So you’re right, $200 million portfolio spread across 40 or so relationships consisting of a pretty well-balanced mix of agricultural real estate, real crop and livestock collateral to farm operations really throughout the Midwest here. Many of these have been long-term strong performing clients of our team. And listen, I want to make sure we reiterate, right? This is a credit to that we were monitoring. We had good historical financial information. We were receiving regular collateral and financial information and reports, it’s just the irregularities as it relates to the information that was revealed and disclosed an information that we received in early December to cause the problem here. So what we’re doing now is simply just reaffirming our risk in the portfolio and intensifying the inspections and the collateral audits that we have historically done.
Damon DelMonte: Got it. Okay. And then just lastly, on the tax credit line item, Keene. Obviously, very strong fourth quarter. As you kind of look at the full year of ’24, do you kind of have a targeted range of what we could expect, knowing that the fourth quarter tends to be the strongest of them?
Keene Turner : Yes. Just a reminder, I think we were negative until year-to-date until we got here. So fourth quarter was maybe even a little bit more robust. But I think net-net, we’re expecting roughly $10 million through that line item for next year. And I think we’ll — with what we’re expecting on CDE and private equity will get almost back to the level of income, maybe slightly weaker through that line item, if we don’t sell SBA loans and then an opportunity to get back there or exceeded if we decide to execute on any SBA loan sales like we did last year.
Damon DelMonte: Got it. Okay. That’s all I had for now.
Operator: [Operator Instructions] Our next question comes from the line of Brian Martin with Janney.
Brian Martin: Keene, just on that last question on the fee income line outside of the tax credit. I think the — were you referring to the other line as far as what you said, Mike], you’re trying — just misunderstood what you’re saying there as far as getting back to even or how you’re thinking about that?
Keene Turner : Yes. I think in total, Brian, we’re thinking about getting back to even, I guess, if you stripped out the SBA loan sales and you have $10 million of tax credit and the numbers on both CDE and PE going through other that I mentioned a couple of million each. I think that basically gets you back to comparable levels for 2023. And then if you sold SBA loans, again, that would get you back to the full year level or exceed?
Brian Martin: Okay. You’re talking total fee income, not just that total other line, just to be clear.
Keene Turner : So yes, I’m talking — yes, both. Correct.
Brian Martin: Okay. Got it. Okay. And just 1 question. The tax rate, I think you guys mentioned it was a bit lower this quarter. I guess, going forward, revert back to kind of low — the 22% range. Is that fair?
Keene Turner : We’re actually right around that 21% effective tax rate for ’24. That with some state planning and some other things that have worked through. There’s a point lower for the upcoming year that we think will continue. So 21% is a good number for the year.
Brian Martin: Okay. And then just back to the margin for just 1 minute Keene, just your comments, I think I heard what you talked about on the asset sensitivity side with the rate cuts what it does to the loan side. Can you just walk back through what you said on the deposit side, what the offset is if rates are going lower?
Keene Turner : Yes, on that deposit service charge line item and 25 basis points obviously affects the earnings credit rate and that’s about $4 million annually or $1 million a quarter for every quarter point cut. So I think that proportion is roughly half of the compression on net interest income. So it doesn’t totally mute it, but it makes it more manageable and gives us the opportunity to grow through it.
Brian Martin: Yes. Okay. And your commentary was that the I guess, you think you can grow through that or stabilize it absent rate cuts, otherwise, maybe it’s a bit lower depending on the timing of the rate cuts or how many rate cuts?
Keene Turner : Correct. I think the view is that — I mean, we have continued status quo on deposit pricing in my comments of 5 basis points of drift. And that rate of deposit repricing has been improving. So it continues to reprice higher, but at a lower rate. I would say 2 factors in the first quarter are we’re going to probably have some unfavorable DDA remixing just with seasonal trends at the fourth quarter, and then the day count. So like I said, sometime midyear, although we’ve got margin drift and depending on how growth shapes up, there’s a chance that we’ll be able to start stacking positive net interest income dollars on top of that, — it’s just a matter of how those factors interplay, but we’ve been pretty good with our ability to forecast net interest income even as early as after the first quarter events of last year and we hit stable net interest income per dollars.
