Nathan Race: Okay. Great. And just thinking about the size of the securities portfolio going forward, I appreciate the disclosure around how much cash flow you have coming off this year. Is the expectation that just the portfolio shrinks by that amount or — and you are able to just redeploy that cash flow and incremental deposit growth into new loans, or do you guys see need to maybe grow the securities book to some extent?
Michele Kawiecki: We’re not planning to grow the securities book. We are planning to use that liquidity for loan growth.
Nathan Race: Okay. Great. And then just one last question on credit maybe for John. I think in the past we’ve talked about a normalized charge-off range between 15 basis points and 20 basis points. Is there anything that you’re seeing on the horizon that would cause you to deviate from that kind of historical trajectory into this year and next? Obviously, nice improvement in most credit metrics here in the fourth quarter, but just any thoughts on that kind of historical range as we kind of enter a still somewhat uncertain environment this year?
John Martin: Yeah. Well, no, I don’t — actually, I wait for the question of what the run rate on charge-offs, what I think it would be, and I think of it really between that 10 basis point to 20 basis point range, absent any individual name that might pop up and you go through and you continue your portfolio reviews and your analysis of individual credits. And that still seems like it’s reasonable to me given the level of classified, the level of criticized to pencil in.
Nathan Race: Okay. Great. And obviously, you guys are still operating with a very healthy reserve as a percentage of loans and MPLs for that matter. Any thoughts on just kind of where the reserve maybe bottoms over the next year or two as a percentage of loans in terms of kind of how you guys need to provide for kind of that mid-to-high single digit loan growth outlook?
Michele Kawiecki: Well, I mean, it’ll be likely that we’ll take some provision to cover at least our loan growth during the year. We’ll have to look at the changes in the economic scenarios. Obviously, that’ll play a part in that determination. It might still tick down a little bit. We’re at 164 for a coverage ratio now. We’ll just have to kind of see how the year plays out with whether we get a soft landing or we get a recession. I think that’s going to make a big difference.
Nathan Race: Got it. Makes sense. And then just one last housekeeping question. Does the tax rate go back up to around 15% for the first quarter of next year or ’24, excuse me?
Michele Kawiecki: Yeah. Typically our effective tax rate is around 15% to 15.5%. So I think that’s what you should expect in 2024.
Nathan Race: Okay. Great. I appreciate you guys answering the questions and all the color. Thank you.
Michele Kawiecki: Thank you, Nate.
Mark Hardwick: Thank you.
Operator: Thank you. Our next question comes from the line of Brian Martin with Janney. Your line is now open.
Brian Martin: Hey. Good morning, everyone, and thanks for taking the questions. Maybe just one for John or two. Just — I joined late. Just — John, did the — did you talk about what the special mention credits did in the quarter? I know that you’ve got the classifieds in the deck. Just curious what the leading indicator there looks like. It sounds like everything is just very strong on the credit front. Just trying to look a little bit deeper at that.
John Martin: Yeah. We don’t have a slide — sorry, Brian. My voice — my speaker muted, getting waved down here. So, I don’t have my — we don’t disclose our criticized assets within on the slides, but they’ve kind of trended with the classifieds and we’re, from a commitment standpoint, pretty much flat for the quarter.
Brian Martin: Okay. Yeah, that’s help. I just want a direction just kind of how it’s looking and it sounds pretty good. Just wanted to kind of confirm that.
John Martin: Yeah.
Brian Martin: And then maybe just one for Michele on the deposit repricing. Michele, that $2.5 billion, is that pretty immediate on the deposit repricing? I guess, I don’t know what that was tied to index-wise, but assume it’s pretty immediate.
Michele Kawiecki: It is, yes.
Brian Martin: Okay. I got you in that front. Okay. And then maybe just last too, just on the growth outlook, it still sounds very strong. And obviously the focus is on the organic side. I mean, do you guys view or see opportunities out there on the M&A side? I mean there’s a lot on your plate, listening to the call and everything going on, but just trying to understand what the opportunities may be on the M&A side, I guess in ’24 and beyond.
Mark Hardwick: Yeah. We continue to have communication with a handful of banks that we think would be great fits as part of our franchise. But I’m not sure the environment has really changed to make M&A really attractive yet. A reduction of interest rates helped some return of stock price has been helpful. And we’re just going to continue to have conversations. And when sellers are ready and looking for partners, we’ll — hopefully it fits with all of the other initiatives that we have happening. Really pleased to get some of these tech projects behind us by mid-year, by June 30. And when we’re in the middle of that kind of activity, there’s just no way to really even think about M&A. So — but the conversations are continuous and we continue to build relationships.
