Steve Moss: And then just on the deposit pricing moderating here, just curious Joe, you seem to imply a further slowdown in interest bearing deposit costs. Just any incremental call you can give around the pace of slowdown or kind of where you think deposit costs could shake out in the next couple quarters.
Joseph Sutaris: Yeah. So we did experience a little bit of a slowdown in costs in Q3 versus Q2. And I think on the Q2 call we used the word abate, that we expected those pressures to abate a bit. We are seeing some evidence of that. It’s not – we still aren’t seeing increasing costs, but kind of our expectations is that or belief is that we’ve maybe have crossed over into positive territory. In other words, we hit the trough on net interest income in Q3. At least that’s our expectations and that we would start to sort of come out of that, if you will, in Q4 and hopefully through 2024. Obviously the wild card in the deck is just deposit funding. It’s kind of held in well for us. I mean, we’re kind of flat on a full year basis, which is okay.
But if we see a turn in the tide, obviously if you flip from what is roughly a little under 100 basis points in terms of your deposit funding costs and you were going to flip in a varying [ph] position, that could change. But right now we believe we have kind of hit the crossover point or the drop in the third quarter and that we should see some NII expansion in Q4, not necessarily margin expansion. As Dimitar mentioned, the new loans went on at a little north of 7%. We took down some funding kind of in the high fours that generated about a 250 basis point kind of, we’ll call it marginal spread, if you will, on the new volume. So that’s not going to necessarily be additive to NIM on a go forward basis, but it should be additive to net interest income.
Steve Moss: Okay, great. And then on the employee benefit services, good quarter from a revenue standpoint. Quite a bit of crosswinds here, especially in the last couple of months. Just curious, you are seeing year-over-year growth, but maybe do we come off those highs just given what we’ve seen in the bond market and some of the volatility we’re having in equities here?
Dimitar Karaivanov: Yes, I think Steve, I think it’s hard to predict that line too much, because as you know, it is tied to market values. And if you look at the aggregate portfolio, it’s a retirement business, so which not surprisingly kind of resembles a 60-40 type of split. So there’s a fair amount of bonds that are trading at a lower value today than they were during the third quarter. With that said, we have also continuing the organic momentum. So if you – if there is a bit of a pullback in that line, I don’t think it’s going to be that big. And in fact, if asset values stabilize, I think we could have as good of a quarter in the fourth quarter.
Steve Moss: Okay, great. I appreciate all the color. Thanks very much, guys.
Dimitar Karaivanov: Thank you, Steve.
Operator: And we’ll proceed now with a question from Alex Twerdahl from Piper Sandler. Alex, please go ahead.
Alex Twerdahl : Hey, good morning all. And again, I’ll reiterate, congrats to you Mark. It’s been a pleasure working with you over the last decade or so and I certainly wish you all the best in the next chapters of your life.
Mark Tryniski : Thanks Alex.
Alex Twerdahl : I wanted to ask about this branch optimization program. And you guys have a top-in-class deposit profile, and I always sort of assumed or associated that with the branch network and sort of what you have built from a legacy standpoint. How do you think through the branch optimization and closing branches, and then opening into new markets without tainting the quality of the deposit profile?
Dimitar Karaivanov: So Alex, to give you some color, in the past four or five years, we’ve consolidated close to 50 branches. Some of those acquired, some of them our own. So we’ve already had a fairly sizable number of branch closures, which has not really impacted the quality of our deposit base. And clearly, as we move into the larger markets, we’re going to have different strategies for winning market share and deposits. And there’s going to be a tradeoff between volume and rate in the larger markets, they’re more competitive. With that said, if you just think about the quantum of what we are doing here on a 200 branch network and $13 billion of deposits, 15 branches, let’s call it, at whatever number you want to assume they get to in a larger market, which should be fairly good, is not going to meaningfully change the quality of our aggregate blended deposit base, which we believe will continue to be one of the best in the country.
Alex Twerdahl : Okay. And then, maybe you said it earlier and maybe I missed it, but just in terms of the timeframe, it sounds like you’re closing a bunch of branches this quarter. That’s going to result in some severance in 2023. And then how long before some of these markets get up and running? And I guess, does that wind up? I guess, back to the expense question, can you just sort of layout, exactly what that means over the next couple of years? I get your sort of high-level guidance for next year, but just kind of specifically associated with this program.
Dimitar Karaivanov: Yeah. So, I think the way to think about the expenses of the expansion is, and the timing of it. One, the timing varies, because you’ve got to sign leases. We’ve been at this for a few months, so we’ve got a number of locations identified. Most of them are just remodeling or existing branches that the large banks abandoned that we’re going to be going into. But still, you have leases, you have to redo the branch a little bit or the location. You have to hire people, and then you open the branch. So you are talking about nine months of a process if you were to start today in most cases. In some cases, there’s more work to be done. So that’s why we think of it over kind of an 18-month period. And in that time frame, I think what our expectation is, is that everything else that we’re doing with the branch network and existing retail business, including what we did this quarter, is going to offset the cost for net zero.
Alex Twerdahl : Okay. And then, it seems based on the markets and sort of the expansion that you mentioned earlier that you’re going into, it seems like a pretty clear signal that organic has now, maybe officially, maybe it was a quarter or two ago, officially overtaken M&A as sort of the primary growth mechanism for Community. Is that a fair characteristic?
Dimitar Karaivanov: I think the fair characteristic is that it will be a mix going forward. And as we’ve communicated, it will just be less reliant on M&A. And that’s why you’re going to see some of these expenses every once in a while pop up, a little bit more unusual in a given quarter, because we’re now investing through the P&L versus investing through the balance sheet. And I think given where rates are today, given the time that the regulators take from a bank approval transaction kind of timeline perspective, the math on the M&A side is just harder and we frankly can’t wait for that in order to grow our company. So, we need to find ways to follow our success, which has been great on the commercial side, and now we’re going to follow it on the retail side.
