And so that’s probably some issues. I mean, if you’ve got an office building that’s refi-ing [ph] now and you don’t have the capacity or the willingness to right size it, there could be some issues there. And then there’s just the one off thing that’s just business that we see. We’ve seen some things in, let’s say, contractors. There was a big electrical contractor, but they had government work, which is always a little bit dicey, and for our experience, but they’re working hard to write that shift. But if you didn’t bid the right way and cost went up, you got a fixed rate deal, fixed cost deal, that could be some issues. So those are the kind of things we’re seeing. But like we said on our prepared comments, they’re holding in there and look, I’ll say – let’s say multi-family.
They were underwritten it 2 years ago, 2.5 years ago. It’s in construction, they’re going to have to – if rates don’t go down, they’ll have to right size some of the stuff, but they know that, and we’ve been talking to them about that. And it matters who you’re doing business with and who your sponsors are, and so it’s not something that we’re really worried about at this point, and I think most of that stuff matures, or has to be dealt with in 2025 and 2026. There’s very little of it, I think there’s 17% in 2024, yeah. And I’ll give you one other thing that, because maybe you think I’m whistling past the graveyard, there was a multifamily deal, we’re aware of, and we’re Texas a customer, it was right at one times coverage, okay?
And that thing sold at a 4.5% cap, and again to the borrower. So, just because, I mean, it tells me there’s still a lot of demand for that out there, and so even though you might not be making a debt service coverage ratio somewhere that if you’re in the right asset class, there’s still some demand for what you’ve got. So, I know I didn’t answer very specifically, but I think things are still hanging in there pretty well right now. And, finally, I’ll say is, as a relation to the consumer, they still got a job. In taxes, the unemployment numbers look pretty good. And as long as they’ve got a job, even though maybe spending down their savings, they’re able to hang in there, spend money.
Ebrahim Poonawala: Got it. That was a good color. Thanks, Phil. And apologies if I missed it, but can you remind us in terms of new branch of store openings over the next year like what’s in the pipeline beat in Austin or Dallas?
Phillip Green: That’s a good question. I’m going to have to guess a little bit here, but I’m going to guess 15-ish or so locations.
Jerry Salinas: Yeah, I think some of it’s going to be dependent. We’re having some conversations earlier this week. I’m especially when you talk about a market like Austin, where we’ve got the permitting process is different, we’re having to deal with different municipalities and such. So that can kind of affect certainly the number that we’re talking about. But I think the last number I saw combined in 2024 was around 15, I think, across all three markets.
Phillip Green: Yeah, I think it makes sense.
Ebrahim Poonawala: Got it. 15 combined. And how would that compare, Jerry, to what we did this year in 2023?
Jerry Salinas: I think it would be right now a little bit lower than where we were in 2023.
Ebrahim Poonawala: Understood. All right. Thank you for taking my questions.
Jerry Salinas: Sure.
Operator: Our next question is from Manan Gosalia with Morgan Stanley. Please proceed.
Manan Gosalia: Hey, good afternoon.
Phillip Green: Good afternoon.
Manan Gosalia: I wanted to check in on deposit beta. You spoke about seeing a mixture from lower cost to high cost deposits, again this quarter. Can you help us think through peak deposit betas in 2024 as rates stay higher for longer, and also give some color on the competition that you’re seeing?
Jerry Salinas: Yeah. So right now, I guess I’ll talk a little bit about 2023. So for the third quarter, I think cumulatively on this cycle were up 2%. On interest bearing, we were at 37% in the second quarter. We’re at 39% at the end of the third quarter. I’d expect that same sort of a little clip between the third and the fourth quarter on interest bearing and on same sort of movement on total deposits. I think we increased from 23% to 25% through the end of the third quarter. Right now from a competitive standpoint, we’re really – we try to keep an eye and we do keep an eye on our competitors really at all levels. We don’t feel like we need to be the top, but we do want to be competitive and we look at rates weekly.
One thing we’ve seen more competitive pressure today in the last couple of recent weeks, it’s been more on the CD side. I think that’s really what large consumers and commercial customers are looking for is kind of what the CD rates are to keep it at the bank. And so that’s what we’re seeing most of the price. And we tend to price – we keep an eye on what the comparable treasury security is doing to determine our pricing there. So, I think we’re really pretty competitive and feel good about where we’re at.
Manan Gosalia: Got it. And maybe a follow-up on expenses. I know you noted the expense growth rate would likely come down next year. But at the start of this year, when you got it to the mid-teens expense growth, I think you’d mentioned you’d be investing in some IT and cyber projects, upgrading a couple of core systems. And I think you also noted that the timing of several large projects were just coinciding in 2023. So should we think about some of these one-time costs coming out next year? Or are these multi-year investments that you’re making in the business?
Jerry Salinas: Yeah, I think most of the things that we’re talking about are multi-year investments. Most of these are going to be either positions that we hired from new IT staff or projects that will get capitalized. I think what we’ve seen is that some of this has moved into latter parts of 2023 a little bit. And so feeling a little bit of some of the upside that we probably are seeing when we talked about earning expense guidance, being a little bit lighter than where we originally thought had a little bit to do with some of that timing. So we’re not really – I’m not thinking anything that comes to mind immediately of one-time sort of expenses that we’re driving that expense growth this year. It was more people and capitalized projects.
And like I said, we have a little bit that’s moving into next year, but as Phil said, we don’t expect, certainly, that our expense growth for next year will be in the double-digits that the mid-teens that I’ve been discussing for this year. Does that help?
Manan Gosalia: It doesn’t sound like there’s a lot chunk of investments that are getting delayed and moving from this year to next year.
Jerry Salinas: Yeah, I think that’d be a good conclusion.
Manan Gosalia: Thank you.
Operator: Our next question is from Brady Gailey with KBW. Please proceed.
Brady Gailey: Hey, thank you. Good afternoon, guys.
Jerry Salinas: Hey, Brady.
Phillip Green: Hey, Brady.
