Matthew Breese: Okay. Very helpful. All right. And I appreciate all the guidance. One thing I was hoping for a little bit more color on was, expectations around deposits for this year in terms of both growth and then composition as well. It sounds like we’re starting to hit the stability point on the critical non-interest-bearing piece, but I wanted your thoughts.
Brian Richardson: Yes, Matt. So this is Brian. As it relates to deposits, well, we really look to match, or we’ll look to match the loan growth with deposit growth. That said, with public funds kind of being at an all-time high in 2023, if you saw some normalization there and then normalized growth on the remaining deposit book, you might see a slight mismatch there. The overall goal as we progress forward is matching or exceeding loan growth with the deposit growth. As it relates to composition, we saw, again, a slight increase in the quarter in non-interest bearing. But that said, I think, if that stabilizes in that low 20% range, we ended at 23% here at the fourth quarter. I think that that’s a reasonable component to look at. As Mike said, we’ll look for public funds to kind of be cap out at that level that we saw in 2023 and be backfilling with other components of deposits to help bolster the deposit base.
Matthew Breese: Okay. And where do you expect the cost of total deposits to peak out this year? Does it align with your NIM guidance? So, first half of ’24, do you expect it to peak out after that?
Brian Richardson: No, we expect it to really peak in ’24. That’ll kind of be a little bit more of the tail end. There’ll be slight ratcheting up that would occur throughout the year, but really kind of expect it to normalize by the end of ’24.
Matthew Breese: Okay, you mean peak at the end of ’24?
Brian Richardson: Correct. Peak at the end of ’24.
Matthew Breese: Got it. Okay. Last one for me was just on the securities portfolio. Just any color or guidance there on expectations? Whether it’s growing or shrinking or staying flat?
Brian Richardson: You know, we really look at a portfolio to remain where it’s at. We’ve kind of always targeted that to be in that 6% to 8% range, give or take, of total assets. That’s where it currently stands, right around 7%, when you exclude the mark-to-market. And we look to keep that in a similar size and composition as we’ve had in the past.
Matthew Breese: Okay, got it. Just sneaking in one more. It sounds like from a credit front, the provision will kind of be determined by what comes your way. I’m curious what you’re seeing boots on the ground, customer by customer. Are you starting to see weakness on rate rolls? Are you starting to see concerns on debt service coverage ratios, things like that, and your general expectations for kind of credit trends, NPAs, and charge-offs in ’24?
Mike Keim: Let Brian give you the specific on the guidance as we go forward, but just the – a feel for the environment. Elevated rates obviously put more pressure on everybody, but we’ve been doing a very good job proactively working with our customer base, getting out ahead of things, making sure that we know what will happen when rates reset on given projects, and working through that. For the most part, generally, everybody’s doing still fairly good. About the only thing that we continue to look at that has some level of slowness is luxury townhomes that exist in the Philadelphia market itself. And to be honest, our exposure there is $26 million. So it’s not significant. But those projects seem to be struggling the most at that – this point in time. And that’s a combination of just price point and interest rates, if somebody was going to do the financing with it.
Brian Richardson: This is Matt – this is Brian. As it relates to guidance, we do not normally kind of give detailed guidance on expectations of non-performing in criticized loans, but criticizing classified loans. But as Mike said, nothing at this point suggests a fundamental change that’ll continue to be event-driven quarter by quarter.
Matthew Breese: Perfect. I appreciate it. That’s all I had. Thanks for taking my questions.
Brian Richardson: Thank you.
Operator: We have no further questions at this time, so I will now hand you back over to Jeff Schweitzer for any final remarks.
Jeffrey Schweitzer: Thank you, Drew, and thank you, everybody for listening in today. While it was a challenging year in 2023 for the industry, I feel we’ve made a lot of good progress and pulled a lot of good levers to position us as we head into ’24 and beyond. As Brian noted, we feel that there’ll be some wind at our backs as we get into the second half of the year. And we’re optimistic about what we have in place, the team we have in place, and the markets we’re in. So we look forward to talking to everybody at the end of the first quarter. Thanks a lot.
Operator: That concludes today’s Univest Financial Corporation fourth quarter 2023 earnings call. You may now disconnect your line.
