Steve Moss: And then a similar question on the loan growth side here. You mentioned the VC fund finance, community bank C&I and equipment as drivers of loan growth. Just kind of curious, do you do like fund finance and community bank as the primary drivers relative to VC and [fund] finance? Just how do we kind of think about that mix and the opportunities you see?
Sam Sidhu: So in terms of originations, I think you hit the nail on the head. It’s really it’s fund finance, venture banking, equipment finance, healthcare, on the corporate side and then community banking really will be on the sort of the more traditional C&I and nothing really to report on CRE. What’s worth noting on venture banking is, as you can appreciate, these lines are typically not like, say, a fund finance line where their average — typically average outstandings are hovering within a tight range. So you have a sense of what a commitment leads to in terms of outstanding. These are typically slow draws. So we may have originations and that also helps to be the catalyst to bring over deposit relationships, but we don’t expect draws and outstandings really in the first half of the year.
Operator: Your next question comes from the line of Frank Schiraldi from Piper Sandler.
Frank Schiraldi: Just as you talk about maintaining higher levels of capital here in the near term, and you mentioned, I think, 11.5% CET1 assumed for 2024. Just curious if what you think the right level for the bank is longer term, is the TCE ratio a bit of a governor on that or any sort of targets maybe when things calm down a bit and a little more certainty in the marketplace where you think the right level of capital is?
Sam Sidhu: So from a CET perspective, I think we had set an ambitious goal at the beginning of the year of 11%, 11.5%, which we crossed and really got to top quartile from a regulatory capital perspective in the third quarter. TCE, as you rightfully noted, has really been our governing constraining capital level, which we’ve gotten to sort of what I would call the minimum of a target range and expect in the near term in the next quarter or two to be at that 7.5% plus type range. And that gives us flexibility if we do feel that deposit growth is — deposit mix is more or less complete and deposit growth could potentially lead to balance sheet growth, but that’s not something we expect in the next couple of quarters. So I think 7.5% feels like the right target from a TCE perspective.
So as we think about going off of there and sort of casting a bit more of a longer term range, I think we’ve always talked about a broad range of 7% to 8%. I think now that we’re talking about a minimum level of wanting to get to that 7.5%, I feel like that is going to be our more medium term target. Our organic capital generation has really ramped up and we expect to continue to operate within that sort of minimum range.
Frank Schiraldi: And then I believe you’re just under 20% total brokered at this point deposits. And it sounds like given maturities over the next 12 months that probably should fall below 10%. Just curious if there’s any sort of a hard line in terms of where you want to get below? You mentioned brokered or wholesale is part of the mix for a bank going forward. So just curious on that front.
Sam Sidhu: Yes, we’re at 17% today or as of 12/31 and declining even further. So I think we’re more or less at the level where we would have targeted that we wanted to get to. I think even getting — building off further from here, it’s really going to be dependent on core deposit growth. So I do think that we’ll continue to make significant headway as the year progresses, getting closer to that 10% plus or minus range. There’s no immediate target. There are benefits and I think the bias and stigma for any bank for some portion of wholesale contractual insured CDs as part of an overall funding base and funding strategy, especially for a commercial oriented nonretail branch based bank makes sense. It’s something we’ll continue to evaluate over time. I don’t have a specific number for you in mind but do feel that we’re going to continue to significantly reduce even from the 17% we have today.
Frank Schiraldi: And then just on the — sorry if I missed it, but on [CBIT] deposits, in the past, you’ve talked to think about a 15% max sort of from a standpoint of concentration. Is that kind of where these are sitting now? And then as you think about core deposit generation, how do you think about it, is this still core? I mean, obviously, if we get some rate contraction that could become a little less attractive in the near term unless you move to a fee model. So just curious where those are and how you’re thinking about that business longer term?
Sam Sidhu: So the answer to your first question is, yes, we have and continued to. And frankly, it’s been very, very stable. So $2.2 billion, plus or minus, again in the quarter, so on an average deposit perspective, so that’s constant for three quarters in a row. So we’re managing it very well and also managing it well with our customers and holding those in cash. On a longer term basis, we’ll continue to evaluate as rates evolve. We’re in discussions with customers, we’re providing business critical services to customers and holding operating accounts where those customers cannot necessarily fully operate without the technology we are providing. So I think we feel very privileged to be in that type of position. Our customers are very privileged to be working with us.
Over time, as rates decline, we’re really at a significant NIM at today’s rates. And so there’s several hundred basis points before that would necessarily be below our NIM average. And there are different things that we’re exploring and including fees over time that we’ll continue to evaluate. But we’re not really holding any excess funds there, these are truly sort of payment services and operating accounts at current levels.
Operator: Your next question comes from the line of Matthew Breese from Stephens Inc.
Matthew Breese: Just looking at loan growth guidance for the year implies kind of a rough figure $1.6 billion. I know you talked about coming from cash and securities. Could you break down for us how much do you expect to come from cash and how much from securities?
Sam Sidhu: I’ll give you sort of rough directional numbers, Matt, just sort of based on maturity schedules and cash flow amortization. It’s typically going to be in that range of $600 million to $800 million that’s going to come from the securities book and the balance would come from cash. And we’re at a 72% loan-to-deposit ratio today even with sort of thinking about the high end of the range would still be have a seven handle below 80% or below from a loan-to-deposit ratio. So hopefully, that gives you some governors and some framework to think about that.
Matthew Breese: That’s great, that’s what I mean there. And then going to the NIM, it sounded like the pipeline’s blended yield is in that kind of [350] range, it’s not too dissimilar from where we are now. Is that [350] a good proxy for where we might see peak deposit costs in ’24 and when do you expect that to occur?
