And so, they come across the board, both geographically as well as operationally in terms of how those… And then I want to mention just a couple of investments that we won’t put on the back burner. You said ones that you do. And frankly, I can’t think of ones that — we’re looking around the things, we can’t think of ones that we have, but we have made substantial investments, particularly in data — the data side of the business and making sure that we have actionable data to manage the business. And I talked in my comments about — when we were talking about liquidity and we talked about — I said some of the models have been tweaked and some have been overhauled. That’s what we — so we’ve done a lot of overhauling of models, again, making sure we have the right and actionable data.
The risk management side of our business, we’ve made really substantial investments over the last the last two-plus years. And just third line, defense investments have been substantial as the company gets larger and as you plan to scale the company from here, those foundations or what we’ve spent — the other — one of the other ones, Michael, I’m not sure if you mentioned was professional services, one of the big reductions as we’ve spent a lot in professional services. You can see that actually — again, if you look at that expense line in our supplement, you’ll see the decrease there. And that was intentional spend from some of the best of international consultants out there on things that we wanted to make sure we got right. And so, when it comes to back burner, frankly, I can’t think of what we would put on the back burner.
We hadn’t done a lot of branch expansion would be one thing. That’s about the only thing I can think of.
Alex Lau: And I had a question on security sale. Can you update us on the parameters that you look for in terms of an acceptable earn-back period? And then separately, as bond yields were rising in the quarter, when in the quarter did you sell these securities? And what is the appetite for more sales at the current yield curve? Thank you.
Michael Mettee: Yes. Really, the parameters haven’t changed that much. We want to be around a couple of years. We did kind of move a little bit off that just because, as I mentioned earlier, the securities we sold were so low yielding that it really didn’t matter the rate environment, the duration was the duration. And so, we saw some opportunity. But I think as we look forward, it’s going to be in that couple of year range on earn-back. We sold — it’s kind of probably in middle September, and it was before the 10-year and everything shot up at the end. And so we really paused reinvesting. We put about $90 million to work in mid-September, and we paused that last couple of weeks. Now subsequently, the 10 years come back down 25, 30 basis points.
So, we’re comfortable in this range, but it’s about finding the right investments. Our portfolio has gotten smaller. It’s about 10.8% of total assets. That’s fine. It depends on what other options are. And so, we’re not growing the book to 20%. We’re not shrinking to 5%, and it will stay in this range.
Alex Lau: And then just a follow-up on the public funds. If you look at last year’s fourth quarter, that grew in the $400 million range. Is that a fair amount to assume for this year, or is there something different going on in the fourth quarter?
Michael Mettee: Yes. That’s fair. We expect $400 million to $500 million or so. And yes, we’re managing that with profitability and liquidity and competitive environment. So, it’s a daily grind, I’ll say. But yes, that’s — as we kind of forecast out, that’s what we’d expect, and we’re kind of managing through all the moving pieces there.
Chris Holmes: Yes. I’d just say, yes, I’d say you’re right on our assumption. Yes, Alex, I mean it’s going to be right in that range. Well, that’s what we anticipate it will be.
Operator: The next question comes from Kevin Fitzsimmons from D.A. Davidson. Please go ahead.
Kevin Fitzsimmons: Just want to — so I know we’ve got a few questions on this, but I just want to think — make sure I’m thinking about this correctly. So, we’re going to have a positive tailwind for the margin from the securities transaction, but this is being outweighed in fourth quarter by the public funds, right, being a drag on — in terms of being higher cost and coming in. And we still continue to see a deposit mix shift, right? However, the velocity or the pace of deposit rate increases is abating, it seems like you’re saying. So if we look — I appreciate that margin range, but apart from the effect of the public funds, are we at a point where margin is going to trough here in the next quarter or two and then position maybe in the first half of ‘24 to start expanding. I know that’s a big preamble. I’m just trying to make sure I’m catching all the variables. Thanks.
Chris Holmes: I appreciate the preamble. Because those are all the things we talk about. I think you got it. I think you nailed it. And with one thing I would say there was something you said that the public funds should outweigh the securities trade, and it will certainly — those two will work against each other, Michael, totally outweigh it.
Michael Mettee: Yes, because it’s kind of a rate volume challenge, right, is the volume of the public funds we expect to come on 4x, 5x with securities trade.
Chris Holmes: Yes. That’s true. And so the — but the rest of that, Kevin, is what’s going on. And you called it a preamble, but it’s those and other factors, which filter into the model to help us forecast where it’s headed. And that’s why we use a range, and we’ve described it as kind of range bound over the next couple of quarters. But again, I think you said — and then after that, we’d expect it to begin to increase, and that would be the case getting into ‘24.
Michael Mettee: I will say, the mix shift, if you think about from noninterest-bearing to interest-bearing has moderated as well. We’ve been in this 22% range for a couple of quarters now. So, the velocity of deposit or the velocity of rate increases has slowed. We’ve seen that moderate as well. I always point back to kind of pre-pandemic as we talked about the combination with Franklin, we expected that number to be around 20%. So I would say this range feels about right for migration from NIB to interest-bearing. We do see some move between products, interest checking to money market more so, a little bit in CDs, but we’re trying to keep those fairly short. But competition there, as I mentioned earlier, some community banks and then treasury, but not too as much outflow anymore to treasuries.
