Casey Orr Whitman: Appreciate the update guide. I guess I’m wondering what kind of position you will be in if the Fed does begin to pivot. Like, have you taken some of your assets sensitivity off the table at year-end from where you were at 09/30? Or maybe just walk us through how expectations might have to shift in that sort of environment?
Robert Gorman: As I noted in my comments, we do expect that the Fed will get up to around 5%, maybe a little higher, kind of stay there for a while, likely, in our minds, in 2024 before they start thinking about lowering rates back down. Certainly, we don’t expect that they would go back to a zero rate environment. But we have taken some asset sensitivity off the table. We’ve entered into a few swaps in terms of protecting ourselves on the downside where we’re capped out on where SOFR goes, for example, put about $500 million on the books where we’re in the money if SOFR drops below, I think, about 3.60% or 3.75%. So there is some of that going on. Of course, that doesn’t take the full asset sensitivity off the table. So, there would be some compression, if you will, net of that, those strategies we put on, if that were the case.
Operator: Our next question comes from the line of David Bishop with Hovde Group.
David Bishop: John, just curious from maybe a macro perspective. As you look out, depending on how the Virginia economy holds up and your experience in the market, do you expect anything different, if we do enter a recession in terms of how the state is positioned to respond? And then, in that, how you’re positioned relative to maybe the financial crisis in 2008/2009?
John Asbury: Well, I don’t expect anything different, which does not mean that we couldn’t experience something different. It actually was not here in 2008/2009. I was in the southeast. But I can tell you, and you know this, David, because you live in the area, Virginia would have been one of the more resilient areas, the greater Washington DC for the reason we keep pointing back to, which is you just have the stabilizing fact force of the US government, the US military, etc. The economy has only become more diversified since then. You look at all that has happened across the state, we feel quite confident. One of the things that keep looking at is the unemployment rate. And so, the unemployment rate right now is 2.8%. It ticked up 2 basis points. 2.8%. US average is something like 3.6%. And it’s really hard to see it falling off a cliff. I think our CECL modeling, Rob, assumes we go to what, unemployment standpoint.
Robert Gorman: From that point of view, we’re very conservative in our CECL modeling, assuming there’s a recession. It averages about 6% over the two years.
John Asbury: That is a long way away from where we are currently. So, David, I would just say bottom line, if anything, the fundamentals should have only gotten better in Virginia in terms of the diversity of the economy. So, I would fully expect that we will do much better than average. Anything could happen. But that’s our view of it. We’re ready for anything. But we should, as we have traditionally done for good reason, fare better than most.
Robert Gorman: David, maybe just another data point on that. During the height of the unemployment and during the Great Recession, Virginia’s unemployment peaked at 7.6%. So if you look at that relative to where we’ve got our CECL modeling at 6%, you can see we’re pretty conservative in that.
David Bishop: That sort of ties to my next question regarding the CECL model. I don’t know if you have this offhand. But like you said, Virginia unemployment rate forecast to 3.1%. Under Moody’s, you guys are using 6%. If you were even to say to tamp that down to 5%, just curious, maybe what that would have an impact maybe from a provisioning perspective and if that’s the proper way to look at it.
