Damon DelMonte: Got it. Okay. And then just lastly, obviously some good recapture on the AOCI, which boosted tangible book value and intangible common equity. I think the TC ratio ended around 8.5%. Just kind of wondering what your thoughts are on capital management and a buyback in particular.
Mark Hardwick: Yeah. Thanks, Damon. Yeah. We were really thrilled to see the return to that TC ratio over 8%. And it was the catalyst to paying down $40 million of our sub debt. We decided to tackle it first. We’ve got a remaining $25 million, which we’re likely to pay down next quarter. And just feel good about managing the bank based on a TC and total risk-based capital level, primarily off of common equity. So thinking about that first, there may be a time, assuming that we have stabilization in rates where we have the — as we continue to add capital through earnings, we have the capacity to be active in the market. At these prices, I’m inclined to do that, but we have not started that process.
Damon DelMonte: Got it. Okay. That’s all that I had. Thanks a lot. Appreciate the color and commentary.
Mark Hardwick: Great. Thanks, Damon.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Terry McEvoy from Stephens. Your line is now open.
Terry McEvoy: Thanks. Good morning, everyone.
Mark Hardwick: Good morning, Terry.
Terry McEvoy: Hi. The $214 million of C&I regional banking loans caught my eye, and I think there was some mention for prepared remarks about pipelines being healthy kind of starting the quarter. Any specific industries, markets that contributed to the outside growth last quarter? And what are your outlooks kind of specifically for the C&I business, which is a big part of the portfolio?
Michael Stewart: Yeah. Good question, Terry. It’s Mike Stewart. You know, the muted growth that we saw the prior quarter was simply because a lot of the C&I transactions really hadn’t closed at that point. So we ended the quarter with a really strong high pipeline that didn’t materialize. I think John even pointed that out. And it really was through that whole region bank model, which is traditionally the commercial industrial space. And that’s the space that I think that we still have good outlooks as we turn the year into 2024. Fully staffed in our marketplace, taking advantage of competitive disruption, strong economic factors, when you think about Michigan, Indiana, Ohio. So that’s what’s driving a stable pipeline of that.
We saw some nice growth in the investment real estate portfolio, solid transactions. Some of it could be growth underneath construction draws, but more of its just the origination has been good in the asset classes that we are deploying in, in addition to some fully funded term loans that we focused on. So just a nice balance mixed across the Midwest here.
John Martin: And Terry, I might just add, in terms of industry, it’s pretty much across the board. I mean, we’re a Midwest C&I bank or commercial bank, and when we pick up C&I, it’s just what’s in our footprint. It’s not a vertical that we’re in, any particular area. So it comes in kind of a broad base as to what it happens to be.
Terry McEvoy: Thanks for that. And Michele, do you have the level of index deposits as we all attempt to potentially model out lower rates and how that could impact your funding costs?
Michele Kawiecki: Yeah. We have $2.5 billion of deposits that are tied to an index that we’ll be able to reprice along with rate cuts if those occur.
Terry McEvoy: And then just a last question is kind of the expenses, early retirement, severance lease. Are those connected to kind of broader expense management actions to manage expenses in 2024? And I’m trying to think of the — their real numbers and how do you think about the earnback on the, call it, $8.4 million?
Mark Hardwick: Yeah. The earnback is quick. It’s less than a year. So we’re really pleased with the way the voluntarily retirement played out. And as much as anything, just excited about the opportunity that it creates for hungry employees that are ready for the next stage of their career.
Terry McEvoy: Great. Thanks again for taking my questions. Have a good day.
Mark Hardwick: Thanks, Terry.
Operator: Thank you. One moment for our next questions. Our next question comes from the line of Nathan Race with Piper Sandler. Your line is now open.
Nathan Race: Yeah. Hi, everyone.
Mark Hardwick: Hi, Nathan.
Nathan Race: Good afternoon. Appreciate you taking the — I jumped on a little late, but I think I heard kind of a mid-to-high single digit loan growth outlook for this year. And just curious how you guys are thinking about the opportunities to grow the core deposit franchise in 2024. Obviously, it was a difficult year to grow core deposits in ’23. So just curious how you guys are thinking about those opportunities, particularly in light of some of the improvements or enhancements on the technology side of things.
Mark Hardwick: Yeah. I would just say that we feel great about our liquidity position, which is you saw us lead with that in the press release and early in the call, we talked about that $585 million change, $300 million of new cash, a reduction of borrowings of $285 million. And so I think it allows us to be smart around our deposit pricing, maybe a little more conservative than what we were in 2023. But I still think our expectations are always mid to low-single digit deposit growth. So if you think about 3%, 4%, is our target kind of year after year. If you think about normal environments, obviously COVID and all the stimulus kind of changed those things, but it does feel like we’re starting to settle into a banking environment that feels more like it used to.
