We’ve made investments in — to be more specific, we’ve made investments in treasury management, which I think will assist us in becoming a primary client for mid-market and larger companies. We made investments in the digital platform to help us go after more share of wallet more quickly, right, with clients by presenting them to a more efficient platform to onboard clients. We’ve invested pretty heavily in our institutional capabilities from a capital market perspective, with different position with clients. So I think really, we have a number of areas that we’ve worked on. And I think that we’re definitely going to experience better than peer results because of it. Well, that’s my commentary. We also, by the way, built out our small business lending platform.
We continue to focus on that. Where our plan is to integrate merchant and treasury management services into a bundle program similar to the common app. So that is going to be worked on in the first quarter of next year. We have about 90,000 clients that are either depository or loan clients in the small business segment. So there’s quite a bit — I think we have about 3% to 5% penetration with merchants in that space. So there’s quite a bit of opportunity there from a fee income perspective, and we’ve been focusing on moving into next year. And those are some of the strategic investments that we’ve made. And I do believe that at this time, it makes sense for this company to continue to pursue those investments and drive revenue growth during 2024 when it might be more difficult for others to do that.
Michael Perito: Yeah. No, that makes a lot of sense. That’s a great flavor. Thank you for walking through all that. Just lastly for me and then I’ll step back and let someone else jump in. Just curious, more of a high-level question than a near-term question. But as you think about the franchise, the size, the growth projections, I imagine you guys have constant conversations with the Board and the executive team around what the right level of capitalization is. And obviously, at the higher end of the spectrum on the asset side, there’s a lot of conversations about capital. I’m just curious — what — any updated thoughts around what you think kind of the right capital level for F.N.B. is like over the next few years here? I mean do you think it’s a higher number than maybe what it was over the last 24 months?
I mean, obviously, you don’t have to get there right now, but just kind of curious what the conversation is internally around capital just given everything that’s happening. And as you think about taking share and continuing to grow the balance sheet moving forward?
Vincent Delie: Yeah. Well, we cover capital and liquidity position of the company in every board meeting that we have. So we have a pretty separate team when we go over various elements of our financial performance. We discussed the balance sheet in detail and strategies around maximizing returns. That happens in every Board meeting. And then we talk about what the investors expect and what the street expects and how we’re performing relative to those expectations. I think capital is a topic that we had on the table for a long time. I think given the AOCI impairment that you’ve seen impact others capital position, we reviewed as having less capital because we actually operate with a lower risk profile within the commercial loan categories that we participate in, in the consumer businesses while we’re very conservative.
If you look at where we are today with CET1 at 10%, our TCE ratio is 7.5% and growing, we feel pretty comfortable with where we are from a capital perspective. I understand that $100 billion and greater, you’re going to see greater expectations from regulators for capital. But I think given where we are today, we’re in one of the better positions we’ve been in years. We have a very solid portfolio. We’ve spent a lot of time in energy. Gary has done a tremendous job de-risking that portfolio with the sale of Regency, with the sale of hospitality, the sale of adverse credits and we basically have done a lot. We’ve moved over $1 billion off the balance sheet before the pandemic even occurred. So I think we’re in a great position from a capital perspective.
We feel comfortable where we are today, and we address it at every board meeting. If you look at our returns on tangible common equity, we’re upper quartile. So we — even with higher capital ratios, we’re still at 18% ROE, so pretty very good solid performance and profitability.
Michael Perito: Great. All right. Thank you, Vince. I appreciate you taking my questions today.
Vincent Delie: One more thing on capital, by the way. We’ve dividended out over $1.5 billion to or through share repurchases or dividends over $1.5 billion in capital deployment to shareholders as well. So I think when you think about the company in capital management, that’s part of the discussions that we have with the Board, just to throw that in there. So our shareholders have benefited from that distribution of capital immensely. And obviously, we have retained that capital, we have much higher capital ratios. That’s part of the equation. So we feel that we need to evaluate where we are every quarter anyway, sorry.
Michael Perito: No, I appreciate all the color. Thank you, guys.
Vincent Delie: Thank you.
Operator: [Operator Instructions] The next question comes from Manuel Navas from D.A. Davidson. Please go ahead.
Manuel Navas: Hey. Good morning. I just wanted to follow-up on the NIM. What are thoughts on where it could bottom next year? Just kind of updated there and then I have a follow-up on deposits.
Vincent Delie: Yeah. I’m not sure that — I think guidance for next year. I’ll let Vince answer the question. Go ahead, Vince. Give us a little bit of color where we are today.
Vincent Calabrese: I mean as far as — we’ll provide our thoughts when we provide guidance for next year in January, but I mean I think, as I mentioned, fourth quarter kind of coming down at a similar level to the third quarter. And I mean maybe first half of the year next year, but again, we have to do our — we just started our budget projects for next year. So I think there’s still some movement down exactly when it bottoms is a hard thing to call for sure, but somewhere in the kind of middle of ’24 would be kind of based on the way things are today, but they could change by the time we finalize our budget and put out guidance in January. But the compression I talked about is clearly it’s moderated. If the fourth quarter comes down similar to the third quarter, the net interest income, as I mentioned earlier, only came down $3 million.
So I think the sustainability of the net interest income is very important, right? And driving our efficiency ratio in the low-50s. That’s a key part of it. So more to come in January. I don’t know as far as what level it actually might bottom out. But it’s definitely moderated to the compression as I commented on.
