And that doesn’t preclude any M&A happening throughout that period, because in taking of the markets we’re looking at to expand in, opening three or four or five branches in any of those markets is not going to be the end game for us. So we’re going to continue to be looking for M&A in all of our markets, but it just will be a complement to what we’re doing organically, as opposed to the only way of growth going forward.
Alex Twerdahl : Great. Thank you for taking my questions.
Dimitar Karaivanov: You’re welcome.
Operator: And our next question comes from Chris O’Connell from KBW. Chris, please go ahead.
Chris O’Connell : Good morning, and congratulations Mark on the retirement and best wishes on the next chapter. I wanted to start off to see what your thoughts are on the insurance business and given recent peer transactions in the market, whether that’s something that you would ever consider selling. And if so, just what your thoughts are in terms of the cost and benefit analysis and what goes into that thought process.
Dimitar Karaivanov: Morning, Chris. Well, our thoughts are that it’s an extremely valuable business. Roughly at 5.4x revenue, it seems to be the going multiple these days, and $45 million of revenue. It’s a very, very valuable business, which as a reminder, is not reflected anywhere on the balance sheet the same way with our benefits business or wealth business. So as it relates to the value to us and to our shareholders, that is the value, and we look at our company as a precious collection of businesses that work in different ways through an economic cycle. I mentioned in the beginning that our revenue has been essentially the same, right around $175 million over the past five quarters. And just think about what’s occurred through that time frame.
You had NII expanding way up. You had NII contracting way down. And you had market values contracting, then going sideways, then going up, now contracting again, and now our revenue has not budged. If we were just in one of those lines of businesses, we would have a much tougher time sustaining that revenue and the low volatility and the predictability of our company. So we think that it adds tremendous value, the insurance business, the benefits business, the wealth business. It adds tremendous value to the banking business and tremendous value to the aggregate company. So we just think it’s really valuable.
Chris O’Connell : Okay, got it. I mean, just to be clear, I mean is it something that you – I mean, obviously you guys see a lot of value with it internally. Is it something that you have explored or looked into or is it – or is the value so high to you on an organic basis, that you think it’s more valuable in-house?
Dimitar Karaivanov: We have not, because we like to focus on keeping our most valuable businesses to our company and our investors, and we don’t think that we can replace that kind of a business, nor could we buy it again. So it’s something that we have that is precious and we intend to grow it, which we have done pretty successfully. That was a $20 million business when we acquired it in 2016, and I think it’s on track for well over double that this year.
Chris O’Connell : Great. I appreciate the color. And then on the $300 million of the FHLB that you guys locked in at $469, what was the maturity or duration on that?
Joseph Sutaris : Yeah, so Chris, this is Joe. It’s about a, call it a three and a half year average life. We locked in some amortizing advances and some fixed components effectively that matched the effective average life of the loans that we booked generally. And it also bridges us to some of the securities cash flows in some of the out years.
Chris O’Connell : Okay, great. And on the remainder of the borrowings and balance sheet, which I believe are customer repurchase agreements, what was the rate on those this quarter?
Joseph Sutaris : Precisely Chris, they tend to run in the – close to – it’s a municipal book largely and it’s kind of in the two’s from an overall cost perspective. Some of that is operating accounts and some of that is more, call it, rate sensitive repurchase agreements. But they are all with our customers, which I think is important. Internally we look at that as it’s more akin to a customer deposit that just happens to be set up and our repurchase structure.
Chris O’Connell : Got it. Thanks. And then lastly, can you just remind us as to what the securities cash flows are coming on, off at in Q4 and then into 2024 as well please?
Joseph Sutaris : Yeah, so securities cash flows are pretty nominal in Q4, about $17 million, $18 million, so just a couple of sort of trickling amortizing payments. And in 2024 it’s about $60 million. And if you recall Chris, when we did the repositioning, we brought forward 2024 and 2025 cash flows, because of the inverted curve and the opportunity that we have. So effectively what is remaining for 2024 cash flows are basically amortizing cash flows off of our MBS portfolio largely.
Chris O’Connell : Great. And do you have just what the duration of the AFS and the HCM book is right now?
A – Joseph Sutaris : Yeah, so the AFS duration is about six years, and the HCM duration is about 11 years.
Chris O’Connell : Thank you. Thanks for taking my questions.
A – Joseph Sutaris : You’re welcome.
Operator: And we proceed with a question from Matthew Breese from Stephens. Matthew, please go ahead.
Matthew Breese : Thank you. Good morning. And Mark, congrats on a long and successful career and best wishes to you in retirement.
Mark Tryniski: Thanks, Matt.
Matthew Breese : On the question front, first I was hoping you could touch on the auto book. There’s some data points out there just showing kind of gradually deteriorating conditions, delinquencies, and I was curious if you’re seeing any signs of that on your end and how should we be thinking about charge-offs within this book?
Dimitar Karaivanov: I think Matt, as a reminder, our book is prime and super prime essentially. The average FICO is 750. You’re looking at values, debt-to-income levels that are kind of in the 30’s – 20’s and 30’s, and the credit performance over multiple cycles has been outstanding. So if you actually look at our charge-offs year-to-date, and Joe can correct me here, but I think it’s in the 20’s.
