Nathan Race: Got you. If I could just ask one last one on just kind of the outlook for deposit growth. It looked like you had some nice core deposit generation in the fourth quarter. Is the expectation that core deposit growth will largely follow that kind of low to mid-single-digit outlook for loans in this year?
Alberto Paracchini: I don’t know that we’ve ever given guidance in terms of deposits, Nate. But as you’ve been covering us for a long time, and I think you know how important we feel deposits are and the ability for us to continue to grow deposits, and I think the plans are to continue to do that. Obviously, that’s subject to client preferences, that’s subject to doing the right thing for customers. And obviously, our competitors who are trying to do the same thing. But I think broadly, I would say, look, we continue to want to have strategies in place to continue to grow deposits. I think this quarter, as Tom mentioned, we saw a nice decline on our loan-to-deposit ratio. We want to continue to drive that. Over time, we’re operating — we were — if you recall, we were operating closer to 95%.
We gave guidance that said that we wanted to bring that ratio down over time, and we are very much wanting to continue to do that. So, I think you should think in the context of continuing to see that ratio come down closer to 90%, even below 90% over time.
Nathan Race: Got you. And was there any seasonality in the core deposit growth in the fourth quarter? Or was it more just kind of blocking and tackling and ongoing market share gains?
Tom Bell: Blocking and tackling.
Alberto Paracchini: Yes. I think the latter. As you know, we tend to see seasonality. We have obviously a commercial focus in our business, inclusive in the liability side. So you have tax payments, you have all those things that tend to happen right around the first quarter. So, we’ll see some seasonality there. But that was not the case at the end of the year.
Operator: Your next question comes from Terry McEvoy from Stephens Inc.
Terry McEvoy: Hi. Good morning, everybody.
Alberto Paracchini: Good morning, Terry.
Terry McEvoy: Hi. Just maybe start with a question on expenses. If you grow organically, let’s say, 10% a year, you’re going to cross $10 billion in less than two years. So I guess my question is how much of the incremental expenses from crossing $10 billion are in that current run rate of, what, $53 million to $55 million? And should I be worried about a step-up in 2025?
Alberto Paracchini: I think — let me answer the question maybe two ways. First off is, Terry, we’ve always kind of run the business on the expectation that we want the company to be able to, from a risk management, from a kind of reporting, from a control perspective, not get behind to the growth of the business. And what I mean by that is, over time, we’ve always consistently invested to make sure that we have the requisite level of controls, the requisite level of investment to keep in conjunction to the growth of the business. So, to answer your question, just by the mere fact that at some point, we will cross that $10 billion mark, doesn’t necessarily mean that you’re going to see a step function of an increase in expenses that would be, call it, very significant.
That being said, along with growth in assets, along with growth in revenues and the growth in expenses that would correspond with that, I think you can anticipate expenses to increase to continue for us, to continue to make sure that we’re making the right investments to meet the higher expectations that come with crossing that $10 billion mark. So, proportionately, I think we want to continue to operate along the lines of what we’ve mentioned during our calls. We have always been keeping an eye on expenses, maintaining discipline around expenses. As you saw this quarter, we saw a nice decline on the cost-to-asset ratio. We took that to — on an adjusted basis to 228 basis points. That’s a material decrease from where we were operating last year.
So, we want to make sure that we continue to proportionately gain scale irrespective of if we cross the $10 billion mark or not. So hopefully, that gives you some color in terms of how we think about that.
Terry McEvoy: Yeah. Thanks for the color there. Helpful. And then just kind of getting out of the earnings model, what’s it going to take to get utilization rates back to pre-COVID levels, which kind of what 62%, 63%? And if we get back there, what does that mean to noninterest-bearing deposit balances? And is it that case where you got to watch what you wish for?
Alberto Paracchini: So, that’s a really good question. The short answer is, Terry, we really don’t know. You would have expected that you would have seen utilization revert back by now post COVID. I think there’s a couple of things that are probably coming into play. We’re a larger bank now. We’re a little different than we were right before COVID, so maybe the mix that we have today is slightly different, which could be impacting kind of overall line utilization or call it, the line utilization percentage that we report. The second piece is, I’m a little skeptical of mean reversion going back to, call it, kind of 2019 levels from the fact that, given the discrepancy from borrowers with much higher interest rates today, if you were sitting on cash and you had the flexibility, you would probably just pay down the line or you would frankly move the money to a higher-yielding alternative.
We’ve seen some of it, but we haven’t seen that in mass in our book. So, I guess what you’re hearing is, we’re probably a little skeptical of that utilization rate, fully mean reverting back to what it was in 2019.
Operator: Our next question is from David Long from Raymond James. David, your line is now open. Please go ahead.
David Long: Thank you. Good morning, everyone.
Alberto Paracchini: Good morning, David.
David Long: I want to follow up on the deposit discussion. And as you look out for the rest of the year, if we do get some rate cuts, what do you expect out of the deposit beta on the downside at this point?
