Ty Abston: Shalene, do you want to go over kind of your projections and ALCO modeling?
Shalene Jacobson: Sure. Yeah. So in our budget, we went a little bit conservative back in December, and we only budgeted into rate cuts during 2024, one in July and one in September. And if those rate cuts occur, as we expected, along with the repricing, which our model has our loan level and deposit level instruments built in within it, so it knows exactly when those are repricing. We’ll still have positive NIM increases throughout 2024, Brady, at the bank level for sure. So, yeah, I mean, we’re predicting that even with those, we’ll still be in a, I guess, liability-sensitive position.
Brady Gailey: All right. That’s helpful. And then you saw a modest amount of share repurchases in the fourth quarter. I think if you look at the full year, you bought back about 3.5% of the company. How are you guys thinking about share buybacks in ’24?
Ty Abston: I mean our current valuation and price on our shares is above kind of our target for buybacks. So as long as we’re above that, we’re probably not going to be in the market buying. But like last year and prior years, if it gets below that, and it’s a priority for us, and we’ll be buying back with our excess capital. So we haven’t bought any in several months because we’ve had some strength in our price. And as long as that stays in place, and we probably won’t be as active.
Brady Gailey: Okay. All right. Great. Well, thanks for the color and Cappy, good luck in retirement.
Cappy Payne: Thank you, Brady.
Shalene Jacobson: Nona, are you there?
Operator: No, I guess you couldn’t hear me. Our next question is from Matt Olney with Stephens.
Matt Olney: Hi. Thanks. Good morning, guys.
Ty Abston: Good morning.
Matt Olney: I want to drill down on the loan yield commentary. It sounds like — or I guess it looks like in the fourth quarter, the loan yield performance was really good, and it sounds like you expect some additional loan risk set to further benefit the margin. Any more just color on the amount of loan resets you expect during the course of 2024.
Shalene Jacobson: So Matt, our loan portfolio turns over about — well, it’s got a duration of about a little over three years. So we expect it to continue turning over that rate. I don’t know the exact dollar amount, but we’ll continue to see some improvements in loan yields, I think, through at least third quarter of 2024.
Ty Abston: Yeah. It’s about $100 million a quarter, that’s changed all math, but that’s ballpark on loans that are maturing that are repricing or not floating rate loans.
Matt Olney: Okay. That’s helpful. And I guess the other side of that on the credit front, I guess there was a mention in the press release about working with borrowers on loan resets, I guess, implying that some borrowers may need some assistance with a lot of resets. Any more color you can give us on just how many borrowers you’re seeing that need some assistance. And when that’s the case, what type of assistance do you typically focus on?
Ty Abston: Well, we focus on, I mean, kind of the position of the credit, the strength of the credit to borrowers and what type of issues that they’re facing, if it was just a cash flow issue that we address — try to address that cash flow side of it. But I mean, we’re not seeing anything systemic in the portfolio. We are seeing one-off credits like I said in my opening comments, as you would expect, I think every bank is going to be dealing with that if credit repricing from 4% to 8%. That’s a material change and obviously the debt service for that credit. So we are seeing one-off stresses that we’re addressing, either through restructuring, additional collateral, additional guarantors or moving the credit out of the bank if they have better opportunities outside the bank to refinance the credit and we’re working with them to get that done.
And we’re just addressing them one at a time as we see them. And there’s probably five or six credits that we’re dealing with at any given time and getting them resolved to our satisfaction and moving on. Main thing is, we’re keeping the deck clear as far as any problem assets or foreclosed properties or just keeping our balance sheet strong. So there’s additional credits that come in, we have the capacity to deal with those and do it on our time line.
Matt Olney: Okay, Ty. That’s helpful. And I guess kind of circling back on that same topic, when you provide assistance, how often does that fall into the category of a, I guess, a loan modification if it stays within the bank, there’s something else that you’re forgiving?
Ty Abston: Well, there’s not, I mean there may be a modification, but there’s not forgiving, we haven’t done any debt or given us at this point, but there may be a restructuring again, getting additional collateral, additional guarantors are just restructuring credit where the credit works, it’s a passing grade credit in today’s environment. And that’s any — a variety of restructurings that we may do, but it’s basically to get it to that point.
Shalene Jacobson: And Matt, to elaborate on that just a little bit. We have a process in place where if there are any material changes to terms, there’s a material change form that needs to be filled out, and that gets captured in our system so that we can go through and evaluate whether the four criteria that are required to be disclosed around modifications are met. So if we do have those, you’ll see those in our loan modification disclosures.
Matt Olney: Okay. Yeah, That’s helpful. Okay. That’s all for me. I appreciate the color. And Cappy, congrats on the retirement and best wishes in the future.
Cappy Payne: Thank you, Matt.
Ty Abston: Thanks, Matt.
Operator: Our next question will be from Tim Mitchell with Raymond James.
