Greg Robertson : Yes, that’s correct. And a little bit of nuance that I may not have conveyed, but we think that’s probably a clean run rate for ‘24 because we had some one off SBIC, for example, and there was unexpected revenue in ‘23 that really we expect that noninterest income number to grow, but because we’re going to back out that, for example, $2 million out of that run rate that we experienced in ‘23 holding that 8.4 flat really is a growth number for us.
Kevin Fitzsimmons: Got it. Okay, that’s good clarity. And then on expenses, you made the point that 39.5 is a better run rate, right? And there were, and then in ‘24 more like mid to high single digit off of that. Is that, and I know you went through a couple of nuances from expenses, MasterCard, FDIC, assessment.
Greg Robertson : Yes, that’s right. That’s the right thing in the 39.5 is the kind of launching point and then that percentage that I mentioned is right.
Kevin Fitzsimmons: Okay, great. And then it might make, maybe it’s, I don’t know if it’s something you’re just looking at right now, but given what’s still a challenging revenue environment on the expense side, is there anything specific you guys are looking at or in terms of moves or is it more just an everyday battle on the expense side? How you’re going to approach that?
Greg Robertson : Yes, I think as far as interest expense, yes, it’s, we’re just working hard every day to try to gather those deposits and those expand customer relationships that ultimately help us win and reduce, like I mentioned, our reliance on borrower or broker, those kinds of things. And we think we’ve set up the balance sheet to where as we keep winning on the deposit side, we’ll have the optionality to pay that off and help us on that overall. And certainly your question was also, though, about noninterest expense.
Kevin Fitzsimmons: Yes, I just kind of leave that —
Jude Melville: Yes. I think it’s more of just a daily decision making. There’s not a part of our franchise that we feel like we need to cut off in order to save expenses. And we feel like one reason I mentioned the branches earlier is that and we have a slide in deck that speak to this but I think we’ve done great job of continuing to rationalize that network over time as opposed to allowing branches that we bought and are required in M&A or have become obsolete of our legacy branches as opposed to letting that kind of hang out there, or we have to come back and do a 10% reduction. I think we’ve done a good job of every quarter analyzing our infrastructure and figuring out where we might, if not cut, maybe redeploy into more productive growth-oriented locations.
So we’ll continue doing that real-time on a quarterly basis. And that’s kind of how we view hiring as well. One of the reasons that we’ve had that we’ve displayed good expense control this past quarter and the quarter before that is that we made some decisions about hiring or putting off hiring until we felt comfortable that the revenue would justify it. And so we’ll continue on a quarterly basis to or actually on a real everyday basis to think hard about investments in infrastructure and in people. We did in 2022, 2021, we made quite a few hires of bankers. And we feel like there’s still some capacity there in terms of portfolio and workload, particularly at this kind of slower, longer rate. As we’ve kind of transitioned over to focusing more on deposits as well, so I feel like we’ve got a staff that is capable of continuing to incrementally build.
I think that’s a good spot for us to be in right now versus embarking upon a particularly really expensive growth option. So expense control is something that we ought to be thinking about on a daily basis as opposed to ignoring it until we have to, I guess, and that’s the way we try to approach it.
Kevin Fitzsimmons: Yes, okay, thanks Jude. And one last quick one from me on the subject of deposits, you guys called out the Financial Institutions Group for contributing, just curious if that was more something deliberate you guys were pushing or was it more just the behavior of the client banks themselves in terms of giving deposits over to you guys. Thanks.
Jude Melville: No, I think our approach to FIG in general is we want to make sure that that’s a relationship with banks that also are looking at other pieces of our product offering, and for example, loan sales, customer relationships with our SSW group. So it’s not, we are looking for deposits, but I think it’s not a deposit stall call strategy, we’re looking for more of a relationship with all of those bank clients.
Kevin Fitzsimmons: Got it. Okay, thank you guys.
Greg Robertson : That’s about $200 million right now. So it’s still a fairly small part of our balance sheet.
Operator: The last question comes from the line of Feddie Strickland with Janney Montgomery Scott.
Feddie Strickland: Hey, good evening, gentlemen. Just curious as we look into 2024 and beyond, are there markets outside your footprint you’d be interesting expanding to, it’s organic, more like an organic in the near term and maybe longer term M&A or do you feel like you have plenty of opportunity within the footprint you have now.
Jude Melville: I don’t really view it as a binary choice, I guess, is the way that I would say it. I mean, I think our priority and our most immediate opportunity is certainly within our existing footprint and enough opportunity there to say grace over for many years. So if that’s what we choose to do, I do think that as we gain momentum and as we gain brand recognition, one of the, that’s not just among client base, but it’s also amongst potential teammates and employees that may be attracted to a bank such as ours. And if we come across the right employees, then we would be open to moving to other geographies. If it’s a right fit, we’ve always, but we have a general thrust to where we want to invest. We also have been very banker specific in terms of the specific markets that we’ve, it’s been more about the banker than has been the location.
For example, the McKinney operation that we just opened, although certainly on a numerical basis when you think about the demographics, McKinney is a very attractive place to be. But we wouldn’t have opened a McKinney if we didn’t find a banker and a banking team that we felt were the right teammates in that market and that we trusted to help us grow our franchise. So as we think about future geographies, I do think we’ll look in other places in the Southeast over time, most likely the Southeast. But their order of preference will be determined by the quality of partnership that we feel we can put together. And so if that happens, that happens. If it doesn’t, we feel like we can deploy capital constructively over time within our current footprint.
Greg Robertson : I would, this is still if I would just add as far as the McKinney hire is concerned. We are very excited about that opportunity, but he’s actually been on staff over a year and came to our Frisco office immediately built up a portfolio. So when we did open McKinney, it wasn’t a cold open. I said sorry, paid for itself.
Feddie Strickland: Appreciate that. That’s a great additional color, and I get it. It’s all about find out the banker first. And just one last one from me. As we look forward in 2024, appreciate talking about all the [inaudible] parts, ROAA, everything else. But do you think we could see efficiency ratio, core efficiency ratio below 60% potentially in the back half of ‘24?
Greg Robertson : Yes, I think that’s what we’re striving for. I think looking at that, as you will know, really the deposit gathering and deposit costs would be the key to that. But that is our goal. I think that’s probably a fair enough way to answer that.
