Mike Price: I think it will be. We’ve pinched the consumer a bit just because of spreads, but we’re still certainly open for business, certainly enough to keep our top performers, plus those are big portfolios we have a little bit of runoff there that needs to be replaced. But on the commercial side, we just feel a little reinvigorated around the C&I business, equipment finance. We brought in a pretty good number of new larger relationships last year, maybe a half a dozen to a dozen in our top three markets. And we feel like we can continue and kind of accentuate that momentum. We also have just found some access in the last quarter or two to some different caliber of athlete that can help us. Just two or three doesn’t sound like a lot, but it’s good at our size.
So, that’s kind of from 10,000. I would also just say, we are — we really are shifting our approach to markets. And as my bank President likes to say, it’s a matter of will and execution. And we’re pretty good at that. And we’ve been consistently — we’ve gotten better every year over the last five to 10 years at just executing in the trenches. And we need to do that, quite frankly, on the deposit side. But last year, notwithstanding the acquisition, we grew deposits 7.5%. Now, we had to hang rate to do it, but certain everybody else.
Karl Shepard: Okay. Thank you, both.
Operator: Thanks for your question. Our next question comes from the line of Michael Perito with KBW. Your line is live.
Michael Perito: Hey guys. Good afternoon. Thanks for taking my questions.
Mike Price: Hey Michael.
Michael Perito: I was wondering if you could maybe spend a minute, the $68 million to $69 million, I think, if I heard correctly, on the overhead per quarter in 2024. Just where are you guys looking to spend some more money? Is there any kind of has disruption or anything settled a bit from some of the volatility we saw earlier in the year? Are you starting to see lenders maybe get a little uncomfortable at their banks where they’re not being allowed to pursue growth because whether capital liquidity issues? Just curious if there’s anything built in the budget around that? And just generally speaking, beyond that, what you guys are allocating investment dollars to in 2024?
Mike Price: Really, some new talent on the commercial side. We have good talent, and that’s probably the primary place. And then also just a better run rate in our new capital region where we had a transition between lending teams and we lost a portion of the people and will certainly be replacing some of those. Is that helpful, Michael?
Michael Perito: Yes, it is. And especially tying back to kind of the growth in commercial leading the way. I think that makes a lot of sense. What about on the fee income side, understanding the year-on-year comp is a little tough because of the interchange hit. But any expectations in your local area for kind of mortgage activity to pick up, particularly if rates start to leak back down? Or we’ve also seen some other banks choose to exit the insurance business. Just curious if there’s any kind of initiatives or conversations you guys are having that we should be mindful of as we think about where that growth rate could move even if we just back out the interchange for a minute, what could be some of the positive drivers in 2024?
Mike Price: Yes, we feel like our teams, particularly on the gain on sale side with SBA and mortgage are already very capable and build out. So, I would just start with SBA. Gain on sale there has been down. And we just — we have that tied to our regional model and underneath our regional Presidents and that’s gotten better every year. Mortgage as you and I both know, could come back in a given quarter. And it could be off to the races and the economics of that could change. And so that could certainly be an opportunity. But a lot of the rest of it is just slugging it out, cross-selling, doing the things we can do well for our clients connecting them to wealth and other services and cross-selling the consumer businesses and just the basics and blocking and tackling. Jane, anything you want to add? Okay.
Michael Perito: Yes. No. I mean — I’m sorry, I didn’t mean to cut it off Jane, if there’s anything you’d love to add. I’d love to hear it.
Jane Grebenc: No, I think Mike covered it. Thanks.
Michael Perito: Okay. And then just lastly for me, and I’ll jump back. Just the $12.50 kind of buyback level where you guys become less active, just wondering, is there a level of capital where if you guys continue to accrete capital and grow where that drifts higher? I mean I understand theoretically, right, the ROI on that doesn’t change just because you have more capital. But just wondering if there’s any kind of — what some of the inputs are that you guys get where we should be mindful of that level may be moving and capital deployment materializing in buybacks in 2024 at some point?
Jim Reske: Yes, we have thought of it as a way to manage capital levels. So, if capital levels get to be excessive, could you have deployed some of that in buybacks. We’ve been kind of very willing to do that in the past. Part of it is where we’re trading. We’re trading at a nice premium valuation, a 1.8% tangible and so that makes buying back stock at the us little more difficult. And then there are other alternatives of capital. We always say organic — funding our organic growth is the first piece of capital. So, we want to always be clear about that. But if capital continues to build and loan growth is moderate, you can get some really nice capital build, which could allow for further buybacks. The big thing on the capitalizer for us is that we have two tranches of subordinated debt outstanding, $50 million and $50 million for a total of $100 million.
