And so that’s what we anticipate in 2024. You mentioned high circle. We do have banking as a service capability. I don’t want that — I don’t want to — for us, that’s perhaps different than some others. We really weighed into that as opposed to dive into that. It’s not a strategy that we really even are counting on from a — let’s say from a budget projection standpoint. But we have the capability, and that’s a lever. We try to keep levers on the deposit side and the funding side. I mentioned the fact that we focus on the customer balances. Notice, we do — as you know, we do very little on the wholesale side. That’s always a lever to help us sort of even out our loan growth, but it’s never a long-term play for us. And so all of those strategies come into play on the deposit side, again, it’s not one single thing.
Brett Rabatin: Okay, that’s helpful. And then Michael, you’ve been helpful with the multifamily market here in Nashville, and I’ve seen some discounting but — and some free rent months, but perhaps that’s actually healthy, just kind of given the strength of the market. Wanted just to talk a little bit about multifamily and just how you see that space playing out for Middle Tennessee this year.
Michael Mettee: Yes. And I’ll let Travis jump in here because he is the expert. But while we have seen a lot of units absorbed specifically in Nashville in the last 12 months, as you’re aware, and pretty much everybody on the call, I’m sure, although you’re local, we got about 20,000 units coming online, and so I think it takes a couple of years to probably absorb that. Still seeing the positive end migration. I think the latest count 96 people a day or something that’s what I saw in the business journal. So I think that it gets absorbed over time, but there’s certainly a lot to absorb and concessions have picked up, I think, for new communities or for communities. So it’s just going to take a little bit and hopefully bring down some of these rent prices, I would say, for the people moving in. Travis, is there anything you’d add to that?
Travis Edmondson: No, I think that’s pretty spot on, Michael. We are worried about the absorption, but we’re not super worried about it. There’s a lot of new units coming on, but they seem to be absorbing at a normalized pace. The waiting lists are not as drastic as they used to be so people are having a little bit easier time finding a unit before some people could be on a waiting list for many, many months. So there’s still some demand out there, but we’re keeping a close eye on it, especially in downtown Nashville. We don’t have a whole lot of exposure to downtown Nashville multifamily, where most of those units are coming on. So overall, we think it’s still a healthy area. We still think multifamily is a healthy asset class, but we’re not jumping in to try to do more construction in that arena, so…
Brett Rabatin: Okay. One last quick one. And I’m finishing up Jim Ayers book, which is really good, and I was curious, just culturally, if there’s anything from his presence that you think is a key point for the FBK franchise in terms of what he is instilled in either management or rank and file people.
Chris Holmes: Yes. Brett, you know, I’d say the list is long, and Jim’s presence even today, I mean, he is not here in the office every day, but he is absolutely 100% keyed in, included into what goes on with the company. He still owns 22% of the company, and so you will find a higher, more respected guy in our eyes in terms of his legacy around here. And like I said, it’s a legacy, but it continues today. His presence continues today. You know, here’s one, but as just an off the cuff response to your question, it’s funny, I was thinking of this quote just this morning. One of the things that he and I used to say back and forth to each other all the time was don’t get effort confused with results. And that was a line we would use a lot towards each other and towards others in the company.
And if you go back to our performance, our financial performance, we usually talk about our financial performance post the IPO, because that’s all on the record and documented and it’s, you know, when you’re a private company, it’s less so. But if you look at our performance record for almost a decade before we were a public company, it would have still — it would have ranked very, very high among a peer group. And so that DNA of performance and winning is the one thing I would say that is Jim Ayers strongest legacy is, you know, at the end of the day, it’s all about winning. That’s weaved into the company’s DNA and that comes directly from Jim Ayers.
Brett Rabatin: Okay, great. Appreciate all the color.
Chris Holmes: Sure.
Michael Mettee: Thanks, Brett.
Operator: The next question comes from Thomas Wendler of Stephens. Please go ahead.
Thomas Wendler: Hey, good morning, everyone.
Michael Mettee: Hey, Tom.
Chris Holmes: Good morning, Thomas.
Thomas Wendler: Last quarter we saw C&D balances contract in line with your guidance down to the 93% capital you highlighted earlier. Can you give us any more color on your expectations for C&D moving forward into 2024, and maybe any of the other concentrations you’re managing?
Chris Holmes: Yes. Travis, I’m going to let you come in. I’m going to make just a couple of comments. We’ve got, oh, man, I don’t know, dozens of concentration management metrics beneath the headline metrics that become public and the one — the couple I’ll comment on C&D. Michael actually made some reference to, we’d like to manage that down closer to, say, the 85%, where maybe up to 90%. It’s at 93%. So we view that as just for our sort of risk tolerance and risk appetite that we’d manage it down just a little bit from where it is. But it’s in a very manageable range right now. Same way on overall CRE. We’re at [2.65] (ph) again, we would manage that down just a little bit from where we are, we’d be down [2.50] (ph) or less or so.
Just — again just very manageable from where we are, but we’d like to manage each of those down just a little bit. And then we manage a couple of the ones that just come to mind — all of the major asset classes, but even within those, I think about managing hospitality within CRE, which we don’t want to get too high right now. We’ve talked about multifamily. We’re watching that concentration fairly closely. And then I think it goes all the way down to concentration in things like rent to own and things like that, where we have some specific concentration limits. And so Michael or Travis, either one of you have any other comment on that?
Travis Edmondson: The only other comment I would have is that we do watch multiple concentrations internally. Obviously, the ones that we’re getting a lot of the headlines right now, which is office and multifamily, which we just talked about, those are higher on our list. We’re within our tolerances internally on those and so we don’t have a hard stop, but we’re being very mindful of any time we get a request in those categories. And then Chris alluded to ADC, and did a really good job explaining that. So we still have a ways to go in reducing our exposure to ADC. We’re probably in that 75% to 85% range is where we want to be over the next few quarters, and quite frankly, we would want to stay there. So not significant growth in that category over the coming quarters.
