And I do believe that we will continue to drive fee income, and that loan growth will return for us in 2024. We’ll provide more guidance at our fourth quarter earnings call. So, we’re focused there on the revenue side. And then secondly, we are going to be focused on the expenses and we’ve done that historically well as a company. And we are going to be careful to strike the right balance between sort of short-term expense management and sort of the longer-term investment in the company. So, I can’t promise sort of when did that sort of positive operating leverage equation tilt. But it’s our objective and we are very focused on delivering positive operating leverage for the company and for our investors long term.
Steven Alexopoulos: Got it. Thanks for taking my questions.
Operator: Thank you. Next question is coming from Chris McGratty from KBW. Your line is now live.
Curt Farmer: Good morning, Chris.
Chris McGratty: Great. Good morning. Hey, good morning. Jim or Curt, maybe on the $100 billion going back to that, you are about 15% below that. How are you thinking, I guess, within the budget for expenses? Like what needs to be spent to be compliant for $100 billion? I guess what’s already been spent that you could kind of grandfather in? And then also, can you remind us on the pension expense? I think it’s tied to the 10 year, and just remind us the magnitude of how you’re thinking about it? This year was a big year. Thanks.
Curt Farmer: Chris, I’m going to take the beginning of that question on the $100 billion target. And I’ll let Jim address the pension issue. We, obviously, with the significant build-up in deposits, we were getting closer to the $100 billion mark, which we really never thought was maybe a sustainable situation that we had a lot of build-up in liquidity because of sort of stimulus and monetary policy overall. So, that has pulled down as we’ve moderated some on the RWA side of the equation. We are very comfortably right now below that $100 billion mark at $86 billion. And if you just look at organic growth, which has always been our focus as a company, it would take us some time, we think, to get back over the $100 billion mark.
So, it’s important that we are positioned to be over $100 billion in terms of regulatory compliance and what would be required to be a Category IV bank. And we’ve had a project and initiatives underway for some time. We’re probably 40%, 50% through sort of what would be necessary for us to comply in terms of the technology and sort of infrastructure to support that. But we’ve got some time to sort of make that happen. But it is one of the expenses that has applied some additional expense pressure for us sort of longer term. I made some comments previously that I think at one of the investor conferences just around M&A. And just — maybe just to be clear there, nothing has changed for us in that equation. Getting close to $100 billion really does not change whether we would do M&A or not.
We were focused, first and foremost, as I said earlier on organic growth. If the deal came along, it still has to make great strategic sense for us. And again, we think we can sort of manage where we are today and we’ve got some time to sort of evaluate the landscape longer term. But I don’t anticipate any sort of pressure on the $100 billion level at least for the foreseeable next couple of years.
Jim Herzog: Yeah. And I might take that even a step further. Chris, you mentioned 15% below. We do plan on repaying more debt in the fourth quarter. We’ll get the full quarter effect of what we did in the third quarter. So, we do see cash and purchase funds coming down another $4 billion in the fourth quarter on average on an lending basis, more like probably a $1 billion or $1.5 billion. So, we are well below the $100 billion. Now, as AOCI comes back and we make — we have loan growth, we’ll start moving back towards $100 billion, but as Curt said, we’re probably a few years away from that. And I’ll just say that in terms of what we’re focused on in terms of complying with $100 billion as it might impact expenses, we’re only focused on that subsection of the requirements that potentially take more than a couple years to make sure you’re comfortable with.
So those things that have a longer tail to them, we are focused on working on, and that will be one of the expense pressures we have to offset. But we don’t feel like we need to jump into it entirely in terms of getting ready at this point in time. A lot of the requirements, we can wait until we’re a little bit closer to $100 billion. In terms of the pension question, pension counting is one of our favorite topics and a great one to waddle through. A lot of variables there. But interest rates are the key one, market performance in general, but interest rates most specifically. If you go back to our K, we do have a sensitivity in there that shows that for every 25 bps rate change — and the 10 year is a pretty good proxy for our liability and the assets we have offsetting that.
Every 25 bps translates to about $11 million of expense. So obviously, we strike that on 12/31. There’s been a big step up since then. But I would also say there are other variables that are likely to make us come in below what that sensitivity would suggest. Most importantly, we have a number of advertised credits from past actuarial assumptions that we outperformed on. And so we will outperform that sensitivity, but a lot of variables involved there. So, that’s something we’ll have more clarity on as we approach the end of the year.
Chris McGratty: That’s really helpful. Thanks, Jim. Just one final one in terms of the targeted, I guess, level of cash and bonds on the balance sheet. You haven’t reinvested the bonds in the last year. Remind us that, either as the percentage of earning assets or maybe an absolute level, where you could ultimately see those levels shrinking down to?
Jim Herzog: Yeah, that’s going to depend on just the overall composition of the balance sheet, how close we are to $100 billion, as it might relate to liquidity rules and debt requirements. But I would see us moving closer towards $14 billion, $15 billion securities, probably closer to $14 billion. So, we have a ways to go. And what that might suggest is we’re likely not going to be buying securities at least for the next couple of years.
