Matthew Breese: No, that was it. You hit on all three. I appreciate it, Frank. Thank you, Bill. That’s all I had.
Frank Sorrentino: Thanks, Matt.
Operator: Your next question comes from the line of Michael Perito of KBW.
Michael Perito: Obviously, a lot has been addressed, so, I’ll try to be brief here. First, I wanted to just kind of — I was working on my model, Bill, as I listened to you answer a lot of these questions. So I guess just really big picture, I just want to clarify. So, I mean, it sounds like operating revenues were about $67 million in the third quarter. You think that should grow modestly from here? And with your expense guide, is it fair to think that the efficiency ratio should kind of be topping out next quarter with some modest improvement next year? Is that kind of directionally fair if I’m trying to piece together everything that was disclosed thus far?
Bill Burns: I hope so. That sounds good. Yes, I think that’s a good way of looking at it. I just think we’re going — if rates are cut middle of next year, towards the end of next year, we’ll see a big bump up in profitability. So, the things that you’re talking about now are just really on the margin, but directionally I think you have them right.
Michael Perito: And do you have any early expectations around your tax rate for 2024, just as we think about the model? It’s been a little up and down the last few quarters. Just want to make sure I’m in the right range.
Bill Burns: I haven’t really given guidance on that but there’s — and I think I mentioned this before that there’s a bias towards a higher rate of tax rate as the tax – basically our REIT is utilized to reduce local — state and local taxes and there’s always pressure for that number to come down, as the bank gets bigger. So that’s what’s really driving it. We’re not big believers in investing in municipals and other tax advantaged assets. So, you could see the tax rate inch up.
Michael Perito: And then just lastly for me, I think you mentioned kind of new yields in the mid-8s and roll off yields in the mid-5s, ballpark, if I have those wrong, I apologize. But question more in terms of, I know this is a question for Frank, but just what’s the appetite for customers at this yield level? I mean, is it generally accepting of, the reality, is there still some sticker shock when you’re talking about this pricing level with small businesses, a lot of which are probably still trying to deleverage just given the uncertainty, just curious what the feedback is as we try to think about growth for next year and what some of the pros and cons are?
Frank Sorrentino: I think if you asked me that question three or four months ago, I would tell you there’s just an enormous amount of sticker shock and people are just not accustomed to hear an 8% as a handle on an interest rate. There are people in the industry that never saw an 8% handle. I mean, I remind people my first home mortgage was 13.75% in 1984. So, it’s not surprising to me. I actually counsel people and say, hey, rates really aren’t that high. If you can’t run a business with a 7% to 8% cost of money in it, then maybe you got to reevaluate what you’re doing. I would tell you today, when we’re speaking to clients, people certainly are more accustomed to what’s actually happening in the rate environment and most banks including the largest have caught up.
And so, even home mortgages are approaching 8% or right at 8%. So, everyone’s sort of gotten the message. I think the challenge now or the conversation now has shifted to, hey, look, I get where the rate environment is. And by the way, most of those people have also renegotiated their deposit relationships as well. And now all of a sudden, they’re getting 3%, 4% and 5% on money. And so when they look at the net differential between those two, that’s not so bad. The conversation today now is, I have something with a 3.5% rate attached to it, it’s going to refinance. What can we do? Is there — what’s the best way for me to think about it? Should I go short-term? Should I go long-term? Should I lock this rate in? Should I wait for better times?
Is there something we could do? Can I increase my deposits with you, so that you’ll afford to better rate? And so, I think the conversations now are definitely more constructive around the banking relationship. I do believe and I hope that came across, we’re very optimistic here at ConnectOne, people are putting a large value on their banking relationship today. I think this became too much of a transactional business back a year or so ago and before. And I think people now are starting to look at, hey, I need to understand the cost of my money. I need to understand the services that are required to run my business and I’ve got to pick a partner. And so, in one regard, I actually think it’s all good news.
Operator: There are no further questions at this time. I’ll now turn the call over to the management team for closing remarks.
Frank Sorrentino: Well, I want to thank everyone again for your time today. We look forward to speaking to you again at our year-end and fourth quarter conference call. So, everyone, please have a really nice day. Thank you.
Operator: This concludes today’s conference call. You may now disconnect.
