Chris Holmes: Yes. I’ll give maybe a thing or two and Michael and Travis, you guys chime in if there’s something. One thing is, as we went through the challenges of 2023, where the two biggest — in my mind, the two biggest ones were the failures in March or the failures in the early half of the year of Silicon Valley signature first republic. The fact matter is our customers didn’t — never wavered in terms of confidence in our institution. And so we prepared like crazy with messages and with materials to show our safety and soundness. But our customers, it was almost like, wait, I know you’re safe. I know I’m in a good spot. And so that was a big positive surprise, I would say and the same with I’d say what’s been a positive surprise is as rates have gone up and if treasuries have really the interest rates — interest that you can earn on a treasury versus maybe a deposit account, again, the willingness of customers to have a conversation about that instead of you just find out enough the money has gone.
And we — going back to I think it was Catherine’s question and some others about how we really think about that fairness of value as a part of our value proposition and customers understand that, and that’s been a positive for us.
Michael Mettee: Yes. I mean, not a surprise to us, Stephen, but I think maybe a surprise to the industry, and the downfall of the community banking system, which was all over the news headlines in March-April. We — actually, as Chris mentioned, we’re steadfast in the other corner, and I think that that’s been proven out. In fact, we hear from customers all the time that they still believe in. And really, back to your other question, the model, the local decision making, the serving of the customers. So not a surprise to us, but maybe a surprise to the aforementioned CNBC crowd a little bit, but.
Chris Holmes: Yes.
Stephen Scouten: Yes. Great guys. So that’s super helpful. I appreciate all the commentary as well.
Chris Holmes: Hey, Stephen, I got one more.
Stephen Scouten: Yes. Surprise.
Chris Holmes: That deposit insurance remains and it’s — maybe it’s not a surprise, but this is a plea, deposit insurance remains antiquated. It would be a surprise that — it’s not a surprise because we have trouble getting anything out of Washington. But the deposit insurance system needs to be reformed, and there needs to be some thoughtful folks that change how deposits get insured. And at the end of the day, that side of the FDIC — the insurance side of the FDIC is a big mutual insurance company with the banks that are the customers and therefore the owners and the funders of that. And we — regulatory from a by law and regulation, we’re kind of barred from doing much with it, but it’s a surprise that we just can’t get any momentum to modernize it, so.
Stephen Scouten: Yes, yes. I second that flee. I agree with you. Thanks, Chris.
Chris Holmes: All right. Very good. Thanks, man.
Operator: The next question comes from Feddie Strickland of Janney Montgomery Scott. Please go ahead.
Feddie Strickland: Hey, good morning, gentlemen.
Chris Holmes: Good morning, Feddie.
Michael Mettee: Good morning.
Feddie Strickland: Just wanted to ask a clarifying point to kick off on the public funds flows. So it sounds like that was deliberate that they were a little lower than what we would normally see this quarter. Will we see still some flow in the first quarter? And then it sounds like going forward, the impacts from public funds should be a little lower, just as you said, you’re prioritizing some more of the relationship public funds. Is that right?
Michael Mettee: Yes. Feddie, good morning. It’s Michael. Definitely deliberate in the fourth quarter and really going forward, I kind of put in a plug for deposit concentration deposit management. We have a lot of really solid relationships on the public fund side so I don’t want that to get lost, and we have actual core deposit relationships where these are our strong customers. Where we really focused in on is some of the more transactional, higher interest, kind of excess funds. There is a couple of things going on there. Some other financial institutions were still paying fed funds plus on some of those deposits, which we just were not willing to do on excess interest, and then there’s some state-funded insurance deposit rates that are actually pretty high right now.
And so some of those, it’s just better for those municipalities, yes, they’re doing what’s best for their taxpayers, and so they move some funding over there. I would expect first quarter, right, you got taxes coming in, you still see some of that flow higher in the first quarter. So you’ll still see it, but we are managing it just like we manage all of our other relationships and trying to be fair to everyone, shareholders and institutions and our customers. So expected to flow up. We’re really working on that being a much smaller impact to the overall deposit base.
Feddie Strickland: Understood. That’s helpful. And kind of along the same line of questioning, I think, Chris, you may have briefly mentioned this earlier, but can you talk about how you view broker deposits as part of your funding base going forward? I mean, do we see those decline all the way to zero? Or is there some small degree that maybe stays on the balance sheet as a sort of asset liability management tool?
Chris Holmes: Yes. So the way that we use broker deposits if you notice, they went down this quarter, and we use — we do not use broker deposits as — to fund our loan growth, okay. For us, it’s a vehicle that we will use to maybe lower our cost — our overall cost of funding at different points when we see some value in that particular funding channel. But that’s why you will see it go to zero from time-to-time, and you — and matter of fact, if you went over the last five years — if you went pre-Franklin transaction, you would have seen it sit at zero for long periods of it. And so we don’t use it — we view it as — we don’t use it to fund growth. We use it as one more funding source to basically lower our cost of overall funding, and that’s why we’re in and out of it from time-to-time.
Feddie Strickland: Got it. That makes sense. And one last quick one for me just — I think I pegged a 57% core bank or bank efficiency ex mortgage this quarter. I think last quarter we were talking about potentially getting down in the mid-50s on the core bank on efficiency. Do you still think that’s potentially achievable in 2024, even with all these moving parts?
