On the other hand, that puts a little pressure on loan yields as we move ahead. As Dimitar indicated, we will try to hold in there on our new rates, new originations. And obviously, if we can get a downstroke or two from the Federal Open Market Committee on the short end, that will release some pressure on our ongoing funding costs. Most of our funding sources kind of look at the short end, and we have an inverted curve at the moment. So, if we can get a little bit of a, again, a decrease on the short end, we think that will really help us level off the funding costs going forward.
Steve Moss: Okay. Great. Thank you. Appreciate all the color, Dimitar and Joe.
Operator: The next question will come from Chris O’Connell with KBW. Please go ahead.
Chris O’Connell: Hey, good morning. I just wanted to follow up on the NIM discussion. You guys have been holding in very well on the funding cost side. Do you have where the average CD cost was in Q4?
Joseph Sutaris: On new CDs?
Chris O’Connell: No, just average for the quarter.
Joseph Sutaris: Yeah. So, we could provide that. Just give me a moment here, Chris.
Chris O’Connell: And then basically, like on the interest-bearing deposit cost side, I mean, do you guys have full-cycle beta in mind or where you think that those costs could top out at, at some point over the course of 2024?
Dimitar Karaivanov: I think, Chris, as we’ve discussed previously, generally our expectation for full-cycle beta, and that includes the noninterest-bearing piece for us, which is — or the very low interest-bearing piece for us, which is about 68% of the balances right now. We’ve talked about 20% to 25% in terms of beta. I think we still feel comfortable in that range. We’re pretty close to the low end of that. So it might be depending on how long this cycle takes. There is a few quarters after the Fed stops raising rates. And even when they cut, there’s a couple of quarters potentially of still kind of lingering impact of remix on the balance sheet, but kind of in that mid-20%s — mid-20% kind of 22%, 25% probably is pretty reasonable for us in terms of total beta for the cycle.
Joseph Sutaris: And Chris, just to follow up on your question on time deposits, so blended cost in Q4 is about 330 on time deposits.
Chris O’Connell: Great. And then on the borrowing side, as far as the bulk of them, you guys have put on in the last couple of quarters, in the mid-4%s range, for the balance, which is mostly those customer repurchase agreements, which I know act a little bit more like deposits in terms of their cost structure. I mean, do you see more pressure on those costs as we enter 2024?
Joseph Sutaris: I think typically, we do see a, I’ll call it, significant repricing opportunity on the customer repurchase agreements around midyear, some of which are municipal customers, and it sort of depends on the rate environment sort of when we get closer to that point. But overall, these are not high cost funding — a high cost funding source for us on a complete blended basis in Q4, about 1.5% because it’s largely kind of operating in nature, a lot of these accounts. So it’s not a high cost of funds for us.
Chris O’Connell: Great. And just kind of tying it all together on the margin, I mean, in the event that we start getting Fed fund cuts around midyear, the initial reaction of the margin just off of that first quarter, do you expect that to be directionally upward or downwards? Any sense of the magnitude?
Dimitar Karaivanov: Chris, I think the really hard question there is what continuing remix mix will happen on the balance sheet in the year or in the quarter. I think if everything else is equal and we get a rate cut, there we do have clearly a number of accounts that will immediately reprice down predominantly in the money market space and kind of in-line with that cut. So again, because our deposit base is heavily into noninterest-bearing or very low interest-bearing savings accounts and checking accounts, we might have benefit. But I don’t think it will be as huge of a benefit in that immediate aftermath of a cut or two. So probably directionally in the direction we want to see it, which is a help, but probably not by a huge amount.
Chris O’Connell: Great. And then last one for me is just what’s a good go-forward tax rate?
Joseph Sutaris: I think it’s fair to use somewhere between, call it, 21% and 22% on a go-forward basis. I think I mentioned in my prepared comments, the last two years, the weighted average has been about 21.5%. I think that’s a fair expectation going forward.
Chris O’Connell: Great. Thanks, Joe, Dimitar. Appreciate it.
Dimitar Karaivanov: You’re welcome.
Operator: [Operator Instructions] Our next question will come from Manuel Navas with D.A. Davidson. Please go ahead.
Unidentified Analyst: Hi, everyone. This is [Sharanjit] (ph) on for Manuel Navas. Thank you so much for taking my question. So, I was wondering what are the biggest wildcards for driving positive operating leverage in 2024.
Dimitar Karaivanov: So, thank you for that question. If you look at just the magnitude of our P&L, the biggest wildcard for us is always NII. So depending on where NII trends, I think that’s going to determine how much leverage we can drive in terms of efficiency to the bottom line. I think we feel reasonably good about our expense outlook for 2024 in terms of that mid-single-digit rate off of the core base that Joe mentioned. So I think that side of the equation is a little bit easier to put your arms around. But what happens with NII, depository mixing, Fed cuts, pricing in the market is going to largely determine the outcome of the operating leverage.
