Jack Plants: Yes from what we observed in the fourth quarter.
Damon DelMonte: Got it. Okay. And then with respect to the growth you guys have been getting in the Mid-Atlantic, could you just give a little bit more color on the size and the type of industries that these loans are for? I know they’re predominantly office space but what kind of businesses are these supporting?
Marty Birmingham: So it’s really kind of been across the board. We’ve seen some very nice health care-related opportunities related to tenants related to the federal government and others in between.
Damon DelMonte: Got it. Okay. And what about like the average size of these credits?
Marty Birmingham: It was $7 million to $12 million €“ summer have been larger. But on the whole it’s been fairly granular.
Damon DelMonte: All right. Great. And then lastly the guidance calls for 35 to 40 basis points of net charge-offs. So when we think about loan growth, when we think about that level of charge-offs, the reserve was around I think 112 in this last quarter. Is your goal to hold that? Is your goal to grow that a little bit kind of just given growing uncertainty trying to kind of triangulate to figure out how we should think about actual provision each quarter.
Jack Plants: Yes. Damon, I think, you’re spot on there. The coverage ratio of 112 basis points is consistent with where we were from our day one CECL modeling, and there are moving parts of the CECL model related to unemployment forecast, which is our quantitative driver, but that coverage ratio makes me comfortable when I look at the credit quality of our portfolio. So holding that against loan growth and modeling 35 to 40 basis points of charge-offs should get you to the number you need from a provisioning standpoint.
Damon DelMonte: Perfect. Great. That’s all that I had. Thank you very much.
Jack Plants : Thanks, Damon.
Operator: Our next question is from Erik Zwick from Hovde Group. Erik, your line is now open.
Erik Zwick: Good morning guys.
Marty Birmingham: Good morning, Erik.
Erik Zwick: First just wanted to start, make sure I’ve got something right, Jack. In terms of the outlook for non-interest income to be relatively flat in 2023 versus kind of that adjusted 2022 number — sorry, if I missed this. Can you just refresh me on what that kind of adjusted 2022 base number should be?
Jack Plants : Yes. We stripped out $2 million of gains that we had from or additional income we had from a bank-owned life insurance enhancement realized in the third quarter when we surrendered and redeployed part of that portfolio. So we consider that to be non-recurring.
Erik Zwick: Okay. Just that $2 million?
Jack Plants : Yes.
Erik Zwick: Great. Thank you. And then in terms of — you talked a little bit about the cash flow coming off of the securities portfolio. That book has shrunk over the last year or so in terms of percentage of total assets down to about 20% now. What would be the optimal size relative to total assets for the securities portfolio in your mind?
Jack Plants: Yes, if we get down to the 18% range, I think, that would be comfortable.
Erik Zwick: Got it. And then in terms of the $350,000 of restructuring charges related to the branch closures, I think, you mentioned there are write-down in the real estate assets to fair market values based on current market conditions. Curious if those fair value marks are kind of something specific related to those branches, or if there’s anything larger you’re seeing in terms of real estate values in your markets, or any kind of broader view or read through we could take from those marks?
