Brian Martin: Say, just one back to the margin. I think you guys — George, you talked about the dollars of NII and kind of the outlook there. Just as far as the commentary in the past about once the Fed does stop, that the margin in past cycles has kind of taken a quarter or two to kind of reach that inflection point of that trough. Is that still how you’re kind of thinking things play out here based on kind of the pricing you’re seeing on the new originations that maybe the margin bottoms here over the next couple of quarters and then stabilize thereafter. Is that still the right way to think about it?
George Gleason: Brian, what I would tell you in that regard, if we get just to a flat Fed environment, say, in ’24 and there’s no Fed moves either way, our CD issuance is laddered throughout every quarter when we issue new CDs, it’s a very laddered book, but there’s a small chunk in the seven-month time frame and a really big chunk in the 13 month time frame. So the 13-month CDs will basically mean that when the Fed is done, and market rates have stabilized, you’ll still see that final tail of our deposit book repricing 13 months after the last Fed move. So it’s really probably a four quarter phenomenon to get to. If the Fed is stopped, it’s probably four quarters of rising deposit cost to get to a point where deposit costs are stabilized and full effects are in there.
Brian Martin: Got you. Okay. That makes sense. And then as far as where we exited on the cost of interest-bearing deposits for the month of September, would you have that or?
George Gleason: I don’t have it, but I have someone here that probably has it. Cindy, do you have that?
Cindy Wolfe: Yes, I do. So September was 3.67% compared to 3.48% for the quarter.
Brian Martin: Okay. 3.67% versus 3.48%. Okay. Perfect. Thanks, Cindy. And then maybe just one or two others. Just on the expenses in the quarter. I think you saw a decline and talked about kind of the guide for the full year, but just thinking about — you have a decline in the quarter and just how you’re thinking about the investments you’re making and kind of outlining in the management comments. I mean the rate of expense growth as we look into next year, is it — should we expect to see some moderation in net expense growth given the investments you’ve made this year, albeit that you still expect kind of continued growth going forward in the investments?
George Gleason: Tim, please.
Tim Hicks: Yeah, Brian, yeah, if you look through the expense lines, you would see some pretty significant increases in salary and benefits. You’d see significant increases in the FDIC insurance given the rate increase on [01/01] (ph) that impacted the entire industry and then, of course, our growth in deposits, and then our advertising has certainly been elevated. So those have generated a bigger growth rate this year over year compared to what I would expect next year, for thinking year-over-year. However, on expenses, what we focus on is how do we grow our bank, how do we invest in growing our bank, invest in our people. So we are super focused on expenses, but we’re more focused on ways to grow our bank. And we try to do that in the most efficient way possible.
But we’ve got good prospects for growth. George has talked about good prospects for adding new teams throughout the coming quarters. So that’s really our focus. And, but on the rate of increase year-over-year, I don’t expect ’24 to be at the same rate of increase that we had in ’23.
Brian Martin: Got you.
George Gleason: And I would comment that the fact that third quarter noninterest expense was a few hundred thousand dollars below second quarter. That’s a countertrend anomaly I would expect, and Tim, you can comment on this. I would expect noninterest expense to generally go up every quarter going forward.
Tim Hicks: Yes. I would agree with that being an anomaly. We’re growing.
Brian Martin: Got you. Okay. I know if I saw that. And then how about just on the RESG front, kind of you talked about the payoffs still being somewhat muted here. I mean, is it likely that we see, I guess, some pickup next year? I mean talking about how long the loans are on the books and the payoff cycle, I mean, should we expect the, some of the payoffs that don’t occur this year to spill into next year? Is that the right way to be thinking about this?
George Gleason: Certainly, it’s correct to think that some of the payoffs that might, in a more typical interest rate dynamic would have paid off this year, will pay off next year or the year after. I would expect somewhat of an increase in the payoff volume next year. That’s going to depend on market conditions, interest rate conditions and so forth. But I would expect to see somewhat of an improving trend. And we’ll try to — an improving trend, I guess, is I probably shouldn’t use improving because if you want payoffs, it’s an improvement, if you’re enjoying the tremendous earnings we’re generating off of them, it’s not an improvement. Every time we have a payoff in this environment, we have very mixed emotions about it. It’s nice to see that guys are still able to migrate to the secondary market or sell out projects when they want to migrate to the secondary market or sell them out, we also hate losing that spread income.
So it’s — there’s pluses and minuses both ways.
Brian Martin: Got you. And then maybe just the last one on RESG. With the fundings, fundings have steadily picked up each quarter this year given, I guess, the strong originations in ’22. I guess, is that — I guess is the current — I guess, year-to-date type of level at kind of a sustainable level given that record originations in ’22 and what’s going to continue to fund up here. And I think as we look into ’24, maybe not at the pace we’re at as the third quarter, but kind of on a year-to-date blended basis?
George Gleason: Yeah. The — obviously, the record origination volume that was exceptional performance by our RESG team in 2022 is leading to significant fundings in 2023, and that fund up of that big chunk of the portfolio will continue in 2024. And I would cite you to the cadence — kind of the payoff funding cadence chart that we’ve included in our management comments for years now that gives you a visual picture of what’s funded out of that ’22 book and that gives you an indication of what is still to fund out of that ’22 book. And as we’ve said a lot of times, these loans tend to fund in the one, mostly in the one to two years after originations and pay off in three and four years after originations.
