Derek Meyer: Correct.
Andrew Harmening: Yes. Going back to it, I mean, I don’t want to be contrite on this, but we’re in the business of doing loans and deposits. And the deposit market, if we had a significant headwind, that could create a challenge. What gives me confidence, going into 2024, is the second half of 2023. So the deposit market was challenged for the year, but we had a six month growth rate of 3%. So clearly, if you have a funding issue that costs more, then you have a challenge, but we don’t see that as of the trend right now. The second piece of it is that — we emphasize with the team is the importance of getting out of the gate with good commercial bankers. And I say good commercial bankers, we have a very good team already. We’ve attracted talent over the last two years that I’m pleased with.
And then we have people that were here before that, are talented. So when we add 10 bankers over the course of 2.5 months, we’re adding very high-quality bankers. And so it takes 90 days to ramp up, then you accelerate it six months, nine months, 12 months. So for that, the question is how quickly can we get quality bankers. And the answer so far is quite quickly. The next question is how quickly can they ramp up their pipeline. And we’ll see what that timing is. And so that could be a positive for us, and that could create the biggest execution risk. But as I sit here and I look at the hiring and where they come from and what they’ve done in their past, that gives me some confidence that we’re right on track with what we’ve suggested. The third part of it is I do think expenses are controllable.
And going through the exercise, expense exercise line-by-line, business-by-business, category-by-category in the detail that we went through that and already outlined it and have specific measurements on it, gives me confidence that we’ll be able to execute on the expense line item of the budget.
Scott Siefers: Perfect. Okay. Good. Thank you very much.
Andrew Harmening: Thank you.
Derek Meyer: Thanks, Scott. Operator Our next question comes from Terry McEvoy with Stephens. Please state your question.
Terry McEvoy: Hi. Good evening, everybody. Maybe just start with an expense question. Could you maybe just talk about the trajectory of quarterly expenses in 2024, given kind of some of the hiring plans and initiatives throughout the year?
Derek Meyer: Terry, this is Derek. The way it works out in our current forecast is it’s pretty flat for most of the quarters during the year. So that implies coming down a little bit off the core fourth quarter that we have and then flat going forward. The hiring plans obviously started this quarter and have been pleasantly — we’ve had pleasant results at the speed and interest. So we don’t want to slow that down. And then we obviously look at the other areas where we have control and discretionary expenses to make sure that we have a balanced timing. But there’s not a hockey stick implied in there. We’re mindful of where we’re going to finish the year in delivering economics and setting ourselves up for 2025 also.
Terry McEvoy: And then the company has aggressive deposit growth goals this year versus peers, and Andy just ran through what gives you guys the confidence. Derek, I guess, for you, how are you modeling deposit betas? Where do you think they’ll peak? And if the forward curve is correct and we get the rate cuts, how are you thinking about betas on the way down?
Derek Meyer: Yes. So we think they’ll peak, obviously, at the end of the first quarter, around 61%, 62%. You could — if you — there’s a number of ways of looking at them. But if you start the betas going down, we’re probably looking at between 45% and 55%. The challenge, as you know, is how long after the last rate hike and hopefully, we’ve had ours, do this competition to keep rates high before they start cutting it. And we tested that in the fourth quarter, I may have shared before, with lowering some of our CD rates and competitors. Even large banks kept the rates high. And so we went back to our seven month 5% CD because of that. But — so I feel good about our plans. They’re not all rate driven, but rates matter. And so I think that’s hard to answer that.
Andrew Harmening: Terry, I’ll also reiterate, when I got here almost three years ago now, we were quite asset sensitive. And we’ve drawn that asset sensitivity significantly down. So we’re not playing in the same space as we were three years ago relative to the market or even our bank.
Terry McEvoy: Thanks for taking my question.
Andrew Harmening: Thank you.
Operator: Our next question comes from Jon Arfstrom with RBC Capital Markets. Please state your question.
Jon Arfstrom: Thanks. Good afternoon.
Andrew Harmening: Hi, Jon.
Derek Meyer: Hi, Jon.
Jon Arfstrom: Quick question on loan growth drivers, that Slide 10 that you lay out, I guess it could be 11 as well. But what do you think that looks like in a year? Where are you seeing the opportunities to generate that kind of loan growth?
Andrew Harmening: Well, a few different areas. We’ll have very modest growth in CRE and be mindful of what the market is. Clearly, if we add 20 to 25 commercial bankers, we expect for them to increase their productivity. And right now, we’re saying that should be about — for the year, I think it’s roughly $0.25 billion increase versus what run rate is. Then the question of what run rate really is, and I would tell you that I think utilization was slightly down last year, and I think that’s unlikely. I think there’s a dislocation in the regional banking market that I don’t anticipate having again this year. We had some purposeful runoff in C&I that we were able to get out of some loans at par that we thought would be wise if there’s softening.
