Jim Herzog: That’s right.
Ken Usdin: Yeah. Okay. Got it.
Jim Herzog: Thank you.
Curt Farmer: Thank you, Ken.
Operator: Thank you. Next question today is coming from Brandon King from Truist Securities. Your line is now live.
Curt Farmer: Good morning, Brandon.
Brandon King: Hey, good morning. Just putting the pieces together, how are you thinking about balance sheet growth next year, particularly with earning assets? Are you kind of looking to keep things stable, or could we see some incremental growth?
Jim Herzog: Brandon, it’s Jim. I’ll start off and Peter may want to chime in here. But we’ve been very focused on stabilizing the funding base and the liquidity base in recent months, as you know. We’ve had a lot of success there. We’re actually in better shape than we actually thought we would be back in the spring with the loan-to-deposit ratio of 80%. I think it was right now as being in a period of recalibration. We’re focused on getting the right mix of customers, right mix of businesses, getting the right pricing. And then, we expect this to be at some point — in 2024 to be at a point where we start regrowing loans at a more normal pace again. We’re not quite there yet, but we expect to be there at some point in 2024 with loan growth.
But right now, we’re still going through that period of recalibration, whether it be getting more certainty around our deposit base, getting the right mix in terms of business lines. But we do anticipate some type of balance sheet growth at some point in 2024.
Curt Farmer: Yeah. Brandon, I might just add to what Jim said. I mean, we’re also seeing a lot of, I would say, caution in our customer base. There’s a lot of headline risk, I think you might say, as we go into next year. And Melinda talked a lot about credit, but we’re prepared that it could be a tougher economic environment that we’ll just navigate successfully. We always have as a company really well. So, what that looks like for loan demand, per se, is probably to be determined. I mean, we’ll give some more guidance, as we’ve mentioned, on loans when we get into the fourth quarter call for next year, but we do think we’ll get back to loan growth next year. I think we just don’t know necessarily what that looks like just yet with the environment, with interest rates where they are, and to the extent that we enter a more challenging economic environment, we’ll have to navigate that.
And again, it also depends on business by business what that may look like in geography by geography.
Brandon King: Got it. And then, could you speak to deposit seasonality flows? What are your kind of expectations near term? And just how close do you think we are to maybe a normal seasonality trend?
Jim Herzog: Yeah, Brandon, seasonality has really been a tough one the last couple of years. The typical seasonal trends that we see amongst different business units, whether it be loans or deposits, it’s kind of gone out the window. So, we’re waiting to see whether or not those return back to normal seasonality patterns. We’re in a higher interest rate environment and to what extent a different liquidity environment too in terms of overall liquidity in the economy. So, it remains to be seen if we do return back to those typical patterns that we’ve seen in the past. As I mentioned, we may have a very small bit of seasonality assumed in our outlook, but not a lot. So, we do see some potential for upside there. But frankly, it just feels like the deposit seasonality, much like many other patterns, remains to be seen in this new paradigm as to whether or not we return back to the old normal or not.
Brandon King: All right. That’s all that I had. Thanks for taking my questions.
Curt Farmer: Great. Thank you.
Operator: Thank you. Next question coming from Peter Winter from D.A. Davidson. Your line is now live.
Curt Farmer: Good morning, Peter.
Peter Winter: Good morning. Just going back to the ’24 expense outlook, does that already contemplate some expenses initiatives? Or as you go through the budgeting process, there’s opportunities for maybe some additional expenses versus that guidance?
Curt Farmer: Peter, it’s a bit of both. We haven’t been sitting on our hands, so to speak, and have been looking at opportunities to slow expense growth and to be more prudent. We have some other things that are still in process as we think about sort of the planning process for 2024. So we’ll again have more to share potentially as we get into the fourth quarter earnings call.
Peter Winter: Okay. And then just one housekeeping. Just, what was the end-of-period balance on the Mortgage Banker loans? Just curious how much is left to run off.
Jim Herzog: Yeah, Mortgage Banker, I mean, for the quarter, we were at $900 million, a little bit lower than that for ending, I don’t know…
Peter Sefzik: I think period-end was around $650 million.
Jim Herzog: Yeah, something…
