Will Jones: Got you. That’s helpful. And then, where do you feel like we are in the noninterest-bearing remix story? I know balances took another step down this quarter, but do you feel like we’re getting close to kind of a leveling out there? Or how do you think about noninterest-bearing deposits into this year?
Martin Grunst: Yeah. So, the decline we saw in the fourth quarter was largely as we expected and we talked about that on our Q3 call. So, for the first quarter, we do expect another decline that’s a little smaller than what we saw in the fourth quarter, but still pretty sizable, pretty close to that size just as you get a combination of some of the rate-driven moves and some seasonal declines that are normal for us in — as we go into Q1. So, you’ll see Q1 down another step and then — after that, our expectation is much smaller amounts of shift from noninterest-bearing into interest-bearing for the next couple of quarters as we just get into the tail phase of that as that naturally plays out.
Will Jones: Okay. Great. Thanks for that. And it feels like maybe it’s been a while since you’ve updated thoughts on bank M&A. It feels like there could be some pushes and pulls on M&A into the coming year. Could you just update us on how you feel or how you generally think about M&A, in terms of end-market transactions or out-of-market or size? Just any kind of context you could give would be great.
Stacy Kymes: Yeah. So two factors. I think — I do think rates are going to have to come down before bank M&A becomes more realistic. You still have purchase accounting issues that are going to happen until some of these securities portfolios and banks that would like to be acquired are better positioned. It’s going to create some headwind there until that’s resolved. I think for us, broadly, the large bank acquisition is going to be difficult for us to do. There’s just not a lot that would fit the profile that we’re looking for. We would want to stay largely in the geographic footprint that we’re in today. We really like that. We want to continue to grow, particularly in these fast-growing markets like Texas and continue to invest there.
It’s got to be of sufficient size to move the needle for us, but there’s just not a lot to fit that. We’re more interested in technology or product acquisitions that could add on and be incremental, much quicker and not distract the whole company from a regulatory approval and conversion process. And so, I would put the odd that we find a whole bank acquisition in the next 12 months to be pretty low. And we are continuing to look for things on the product or technology that they could be accretive to us and valuable to us long term, although there’s nothing on the horizon there either.
Will Jones: Yeah. Makes sense. That’s it from me. Great year, guys.
Stacy Kymes: Thank you.
Operator: Our next question is from Timur Braziler with Wells Fargo Securities. Please proceed.
Timur Braziler: Hi. Good morning.
Stacy Kymes: Good morning.
Timur Braziler: Starting on the deposit side, do you have what the deposit spot rate was at the end of the year?
Martin Grunst: Yeah. We don’t really have deposit spot rate per se, but our cumulative beta was 63% for the quarter, and for the month of December, it’s 64%. So really not a lot different than the full quarter average.
Timur Braziler: Okay. And then looking at expenses and trying to take into consideration some of the comments around what happens on the fee income side, if we do get rate cuts, is the expectation that the expenses grow in an environment where you see some higher revenues from fees? And if that is the case, is the 65% efficiency ratio in a down rate environment still a good base? Or could you actually see some improvement as some of these fee-income businesses pick up some more momentum?
Martin Grunst: Yeah, I think broadly speaking, the 65% is good, but you could see some incremental improvement from just a higher revenue lift overall that would just accelerate that trend.
Stacy Kymes: If you think about mortgage, particularly, I mean, mortgage is probably running 90%-plus efficiency today. So, if you got any lift there, you’re going to get a better efficiency ratio out of that line of business. So Marty is right, I think we’re very comfortable with the forward guidance we provided there. But any benefit that we get from a lower rate environment should be incrementally positive to our efficiency ratio.
Timur Braziler: Got it. Thank you.
Operator: [Operator Instructions] Our next question is from Brandon King with Truist Securities. Please proceed.
Brandon King: Hey, good morning. Thanks for taking my questions.
Stacy Kymes: Hi, Brandon.
Brandon King: Yeah. So I wanted to follow up on trading NIR. And what are you expecting kind of implied in your NII forecast? And if you could kind of give us the puts and takes on how that could play out, just given better rate cut potentially occurring in the year?
Martin Grunst: Yeah. So, we’re — in our guide, we’re just assuming that, that remains roughly constant throughout the year to the extent that you get some steepening that could be a positive for that line item for sure.
Brandon King: Okay. And then, just another follow-up on credit. So, in your guidance, you expect increase in credit costs more towards the latter part of 2024 and then you also mentioned kind of a normalized range of 30 basis points to 40 basis points. So, is it fair to assume that maybe back half of 2024, we approach that 30 basis points of net charge-offs? Is that how you’re thinking about it?
