And there’s not a lot of maturity yet. Although, as Phil said, man, they performed really, really well. So as far as our projections to our – performance to our goals, we’ve done really well. But no – we’re not in a point where we say Dallas is going to be profitable next year. We are saying that Houston is paying more and more of the expansion that we’re doing. So it’s really working as we planned, as those branches mature, really helping us pay for future expansions.
Peter Winter: Great. Thanks, Jerry.
Jerry Salinas: Sure.
Operator: Our next question is from Brady Gailey with KBW. Please proceed.
Brady Gailey: Hey, thanks. Good afternoon, guys.
Phil Green: Hey, Brady.
Jerry Salinas: Hey, Brady.
Brady Gailey: I just wanted to circle back to the loan growth guidance to make sure we’re understanding that rate, the mid to high single digits, are you saying that’s on an average basis full year over full year?
Jerry Salinas: Correct.
Brady Gailey: Ebrahim’s point, so you’re – I mean, if you didn’t grow loans a single dollar, you’d already be up 5% on an average year-over-year. So on an end of period basis, if you look period end to period end that loan growth will take a decent step back from the 10% you did last year.
Jerry Salinas: I guess, what I would say is that, obviously, we tend to rely more on the averages than we do on the period ends. But the guidance that we’ve got, we certainly will review that as we get through the quarter and as we get through the year. But right now, I feel like that sort of guidance is really very realistic based on what we saw. I think this year, if I went back, if I’m remembering correctly, I think the full year average of 2024 – excuse me, 2023 over 2022 was a little under 8%. And so really, we’re guiding towards something in that arena, maybe a little bit better than that without knowing exactly what sort of environment will be in. So I think that we’re sticking with it and if we can do better than that, that will be great.
And we continue to – we have plenty of liquidity. We’re not holding back. But at the same time, all the deals that we’re doing have to make sense to us. And I think we’ve been really good about growing relationships that we want to grow. We talked last quarter, I think it was about an unusual amount of opportunities that have come our way just given from the stability that we have and the liquidity that we have available. But we’re just not going to say yes to every deal that we get, right? We’re going to be very selective and on – and make sure that these are the quality sort of relationships that we want to continue to develop. But we’ll certainly continue to give up – we’ll give guidance, and if it’s upward on loan growth, we’ll certainly support that.
But at this point, this is kind of what we’re comfortable with.
Phil Green: Just my tag on to what Jerry was saying about looking at deals and making sure they work for us. If you look at the third quarter and then compared to the fourth quarter, we saw a sharp uptick in the number or the percentage of deals that were lost to structure versus pricing. We lost 66% of the deals in the third quarter to structure. And that compared to 76% of deals lost to structure in the fourth quarter. And a lot of that in the – I’d say the majority of that would be in the CRE space. So it’s still competitive out there. And I think this shows that we’re not just going to do whatever deal comes our way. We’re still going to be careful making sure it’s quality stuff and it’s done our way.
Brady Gailey: Understood. Then my last question is just on the share repurchase. I saw the new $150 million of authorization. I think you bought back about $40 million of stock last year in 2023. Should we expect Frost to be active on the buyback in 2024?
Jerry Salinas: I wouldn’t – yes, I think that certainly we like to have it available. We like to have that tool in our toolbox should the opportunity arise. I wouldn’t count on us being significant buyers of our stock unless we really felt like there was an opportunity something happened. We’d hate to be in a position where we thought we had a great value, and we didn’t have a program in place. So for us is just making sure that if there’s some sort of market dislocation, and we think there’s a great value for us. So we’re able to take advantage of that without having to jump through a lot of hoops.
Brady Gailey: Okay, thanks, guys.
Operator: Our next question is from Brandon King with Truist Securities. Please proceed.
Brandon King: Hey, good afternoon.
Jerry Salinas: Hey, Brandon.
Brandon King: So philosophically, with the expectation of Fed cutting this year, how are you thinking about managing deposit costs lower? Compared to your peers, you’re a little more proactive with rates on the way up. And I just wanted to know just your insight on how you plan on managing that on the way down? Certain account types, exception pricing things of that nature.
Jerry Salinas: Brandon, we don’t. We do very minimal exception pricing. We do some, but it’s not a big part of our business. So let me start with saying that. I think we said earlier, when we went up, we went up pretty fast. We reacted very quickly. I thought that was the right thing to do for our customers. We’ll just really look at, I said earlier, I’d expect that the betas that we utilize going up will be kind of the first reaction that we have on a down cycle. But at the same time, we’re not going to have our head in the sand. And if there is the competition that we feel we’re competing against is really pricing a lot more aggressive than we are than one may have to react. We don’t think we have to be the highest.
We’re not the highest today. I think we’re fortunate in that having won the J.D. Power Award for 14 consecutive years. I’m looking to Phil, I think it’s 14 or 15 and the Head of the Consumer is going to get mad at me if I missed it, but that’s based on customer satisfaction. So it’s not all in the rate. We realize that. A lot of it is on customer service and how – what we do to take care of the customer, both on the commercial and the consumer side, but more on the consumer. And we’ve got a great app, mobile app that I think we get a lot of credit for and that we really try to stay on top of and make sure that we’re keeping that at the forefront. And so I don’t feel like we have to be the highest, and we’ve proven that in our relatively stable deposit volumes, but we do have to be competitive.
