Curtis Farmer: Yes. Steve, this is Curt. I’ll take that question. And you’re right, we are within a certain range of that $100 billion mark around $91 billion in assets. And assuming that we just see organic growth that we would eventually cross that number, we’ve been planning now for the last two years and have a little bit more work to do just to be prepared for whatever regulatory increased oversight going back into the stress test capital planning, et cetera, if we became a category 4 bank. We think just through organic growth, that would probably be a few years out. And our view has continued to be that we’re going to focus on doing the right thing for the shareholders, growing the company, growing the assets of the company as we have over a 174-year history.
And if that means across to that $100 billion mark, it would mean crossing that $100 billion mark. But we think that we’re trying to think about it from a long-term perspective. And you’re just trying to be prepared for whatever cost on regulatory oversight might be associated with that if it is crossing it from an organic perspective.
Steven Alexopoulos: Thanks for all the color.
Curtis Farmer: Thanks, Steve.
Operator: Your next question comes from the line of Ebrahim Poonawala from Bank of America. Please go ahead.
James Herzog: Good morning, Ebrahim.
Ebrahim Poonawala: Hey, good morning. I guess just following up on Steve’s last question on these capital changes. Even if you don’t cross $100 billion, what are the changes you expect to make in terms of just balance sheet management, either loan-to-deposit ratio, liquidity, et cetera, once these rules are out?
Curtis Farmer: The rules — this is Curt, Ebrahim, the most anticipated ruling is really around the treatment of AOCI and regulatory ratios. And while all the conversation thus far has been focused on banks north of $100 billion, we do anticipate that there might be some eventual phase-in below $100 billion, nothing official on that right now, but we’re just trying to be prepared if that comes to pass. If you look at sort of where we are from a CET1 perspective at 10.31% if you factor in AOCI, we would be slightly south of 7%, like 6.93%. And so we would have a little bit of work to do to raise capital, but we believe it would be phased in. And just through normal earnings of the company, we could get back to an appropriate CET1 level.
We do not believe that we’d have to go to the external market to raise capital to get back to that level. So we think we’re well positioned. With whatever ruling might come out, and again, given that we’re below the $100 billion mark, we think we would have some more time if you got applied to banks below that level.
Ebrahim Poonawala: And just in terms of liquidity, the loan-to-deposit ratio in the 80s still seem like the right place to be?
James Herzog: I believe, Ebrahim, you’re asking about the stabilization of the loan-to-deposit ratio?
Ebrahim Poonawala: Yes.
James Herzog: Yes, we do expect to stay in the mid-80s. We do think it was, again, just slightly elevated on June 30th, but we do have a plan to stay in the mid-80s and certainly some of the asset optimization things we’re doing will help ensure that. So we’re right around that area that we’re comfortable in.
Curtis Farmer: And it also is below our sort of historical average as well where we’ve normally operated.
Ebrahim Poonawala: Understood. And just one separate question, if I may. Given your customer base, give us a sense of your outlook of credit, health of the customer, there’s not a lot of like corporate bonds that have yet repriced to the higher rates over the last 12 months. What’s your expectation in terms of the next year and the likelihood of recession of lending, et cetera?
