Unidentified Analyst: Thank you so much. That was all for my questions.
Dimitar Karaivanov: You’re welcome.
Operator: The next question will come from Matthew Breese with Stephens Inc. Please go ahead.
Matthew Breese: Hey, good morning, everybody.
Dimitar Karaivanov: Good morning, Matt.
Joseph Sutaris: Good morning, Matt.
Matthew Breese: The fee income growth as we go up and down in various business lines sounds pretty optimistic, robust. Dimitar, I’m just curious your thoughts on overall fee income as a percentage of revenues, which at nearly 40%, I think, is one of the largest differentiators of CBU versus your traditional bank competitors. I’m curious if longer term, you have any goals, if there is a percentage of revenues you’d like fee income to represent over time.
Dimitar Karaivanov: Yeah. So, Matt, I think that’s a good question. It’s something that we talk a lot about at the Board level and at the management level. And we run a diversified financial services company, not a banquet office. So, all of our four businesses are equally important to our ability to generate returns going forward, our ability to grow the dividend, to create sustainable earnings. So, we’ve organized also our company along those lines. For example, I’ve got four direct reports for each one of the businesses. So our emphasis is to drive each one of those businesses. With that said, as you mentioned, we’re about 40% right now. We don’t really think of it as a hard and fast number of kind of where do we want to be.
I think the more diversified we can be the better. But ultimately, it comes down to quality of earnings. And certainly, in the banking business, there is plenty of quality ways to generate earnings on a sustainable basis. So, as you kind of look at our P&L, you’re not going to see a lot of volatility in terms of mortgage fees or SBA fees or leasing fees. Those are the kind of things that we generally don’t like because of the volatility aspect to it and kind of the quality aspect to it. But high-quality NII that is sustainable with a strong deposit base certainly is a quality earning outcome as well. So, we want to be as diversified as we can. We don’t have a hard and fast rule. I think our goal is to always have quite a bit more than others because of just the nature of the company we run, which is a diversified financial services company, and we do plan on leaning into all of our businesses, both organically and inorganically.
Joseph Sutaris: Matt, I would just add one comment to Dimitar’s, which is with four businesses, we do have the opportunity to deploy capital in four different businesses, where a lot of our peer institutions don’t necessarily have all of those options. And there are times when opportunities present themselves in different businesses. And we’re in the business of allocating capital to the one that makes the most sense, given our other alternatives in that moment. So, I think just kind of to level set that thinking is that we do have options to deploy capital in four different businesses. And I think the best option in the moment when we have that — when we have those opportunities is kind of how we kind of look at that capital deployment. Again, a lot of our peer institutions, they have one or maybe two businesses in which they can deploy capital, and we have four.
Matthew Breese: Understood. Okay. I appreciate all that. I did want to touch just on your comments around the margin/NII outlook. I mean, just curious, so given your overall level of deposit costs, which sub-1% at this stage is pretty amazing. Dimitar, I think you suggested that with rates down, we’ll see a lag. But is it possible for a time we may even see kind of a negative deposit beta, meaning deposit costs at your institution continue to decline, as I said, is cutting just because of that delta? And then second question is you had mentioned deposits that reprice immediately. How much of the deposit base in fact does that?
Dimitar Karaivanov: I think, Matt, if you look at the historical cycles, there is that lag of a few quarters where deposit costs in the industry continue to rise while the Fed is not moving. So, if you want to — I don’t know how we would qualify that beta, but it would be a very large number, essentially, right? So, I don’t think that we’re going to be immune to that. But I just think that the pace, as you’ve seen that our deposit costs are increasing quarter-by-quarter is consistently lower than the aggregate industry and our peers. And I don’t think that, that will change. So there will be some lagging effect on when the Fed is not moving and deposits are still remixing. And Joe can give you the number of the ones that we have that are a little bit more price sensitive and probably more likely to reprice quickly on the down.
