A – Joseph Sutaris : Yes, 17, 18.
Dimitar Karaivanov: Yes, basis points. So, frankly better than we expected and frankly, better than our historical averages. So we continue to believe that the historical average of kind of 35 basis points, plus or minus five is a number that we expect in terms of loss rates on that paper. But we continue to be surprised so far about the strength of our type of borrowers, and we are well aware of the kind of the subprime delinquency rates, which I think are at an all-time high as it relates to auto, but we just – those are not our customers.
Joseph Sutaris : And just for a little additional color there, is if we look at kind of the delinquency 30 to 89 days, it’s been pretty flat for about five quarters. It does flux away from quarter to quarter. And if you actually go back to kind of our — kind of normalized loss rates, pre-COVID basis, they were kind of in the mid-30s, and as Dimitar said, A and B paper, grade paper, and they’ve been running about half of that. So, if we normalize, the expectations are kind of the mid-30 basis points, 40 basis points of net charge-offs, which will be half of the – we expect that’s going to be half of the industry average.
Matthew Breese : Got it. All right. I appreciate all that color. Just another one, loan growth remains very solid. Dimitar, like you said, near record levels this quarter, and I know we’ve talked a lot about hiring on your end. That said, I was hoping you could discuss the overall economic vibrancy across your markets and whether beyond just added lending capacity, you’re seeing improving trends on the ground, and if there’s any markets you’d highlight in particular.
Dimitar Karaivanov: Yeah, I mean broadly our markets remain in very good shape, literally in every category. Some of it is the customers we traffic in, and some of it is the markets. And there’s been a bit of an uptick in upstate New York in terms of investments and activity. Certainly, we’re seeing it in central New York quite a bit, and that’s not really just Micron-related. In fact, very little of it is Micron-related right now. But our markets are strong across the board. Northeast PA is doing very well as well. New England remains one of the best markets in the countries as it relates to credit. So it is very positive. We’re not seeing a lot of cracks. We are seeing some of our borrowers putting down more money if they need to, in order to make numbers work with higher rates, but they have money to do so. The cash levels in our commercial borrowers remain strong, and certainly we’re not seeing much in the way of challenges on the consumer side.
Matthew Breese : Understood. Great. Okay. And then Joe, you had mentioned that you expect NII upside from here, but potentially some NIM compression. I was curious to what extent you expect near-term NIM pressure, and where might we see that point of stability as you look out?
A – Joseph Sutaris : Yeah, that’s a good question, Matt. As I mentioned, if deposits hang in there, which so far they seem like they are for us, they are fairly stable. We kind of believe we hit the crossover point for net interest income in Q4. The margin side of it, obviously, I think our margin for the quarter was $3.10. New business is going on at $2.50 something. The next cycle of loan growth is if we can lock in $2.50, we’ll probably take that, but obviously it’s going to negatively impact margin. But our expectation really is that we will just sort of start to come out of the trough in Q4, just as we kind of looked at – kind of as we exited the quarter, we started to see kind of that dynamic change a bit as the increases on loan interest income were sort of outpacing the funding cost increases.
I’m not sure. That’s obviously a couple months, so it’s not quite a trend yet, but our expectations are that that trend will continue and that we’ll see expansion in Q4. I don’t know what the rate environment will be in Q1 of next year and Q2 of next year, but assuming that the rate environment is comparable to what it is now, I think our expectation is that we would just continue to see some potential expansion in NII. Again, just to be aware, some of it is dependent on the stability and growth of the deposit base.
Matthew Breese : Okay. Got it. And then last one for me is just going back to the whole tangible common equity discussion and well aware of your kind of views on the tangible common equity, tangible assets ratio. It’s just that the market seems to be reacting a bit to it, and I’m curious if that, it does have an impact or changes your thinking around capital adequacy as measured by tangible common equity, tangible assets.
Dimitar Karaivanov: It does not change our view on capital adequacy, which remains well, well above the regulatory capital levels that are required for a well-capitalized institution. It doesn’t change how we run the business. It doesn’t change our ability to service customers. As you can see, our balance sheet is in tremendous shape. And again, as we just touched on a couple of minutes ago, the amount of value in our company that is not reflected anywhere in that one single number is just huge. We talked about the value of the insurance business. You can take that and multiply it by three for the value of the benefits business. Then you’ve got the wealth business. So looking at just one number that reflects only one small sliver of the balance sheet as well is to us not a way to economically run the business.
The other thing I would just point out is that, I don’t know how anyone can run a business based on that ratio, given that if you think about what’s occurred in the past two or so years, we’ve done nothing but make money for our shareholders. And we have not dividend out a huge amount of money or done a huge amount of buybacks or diluted ourselves in any other way. The point here is that we’ve continued to add retained earnings to the balance sheet. And the starting point for that ratio was quite a bit higher. So we’ve done nothing but make money, and that ratio changes every quarter. So that’s why it’s hard for us to really manage a business based on external market factors.
Matthew Breese : I appreciate all the thoughts there. I’ll leave it there. Thanks for taking my questions.
Operator: Thank you. And we have a follow-up question from Chris O’Connell. Chris, please go ahead.
Chris O’Connell : This question, I was wondering, you had a little bit more share of purchases this quarter. You have plenty left in the plan before year-end. Is that something that you intend to continue to do in the fourth quarter?
Joseph Sutaris : Yeah. So Chris, I would say potentially yes, and probably continue to be fairly nominal in terms of the grand scheme of our outstanding shares, and even within the repurchase authority, which was 2.7 million shares for 2023. Obviously, with the valuation down, it makes some sense now to repurchase, continue repurchasing some shares probably slightly above what otherwise would be equity plan creep if you will. So we’ve just generally tried to keep our share count flat. There’s an opportunity to take it down a bit just because of where the price is. But we’re not intending to embark on a large repurchase plan here, in at least this quarter. We like to keep a little powder dry for other opportunities. And so we’d rather kind of lean into growth more than we would to buy back our own shares.
