Craig Nix: You’re talking about 92% of the —
Tom Eklund: I think 18% of the deposit beta?
Craig Nix: 18%. Yes, I think it’s — but not significantly. If you look at sort of where we’re projecting things to shake out, I think that the Direct Bank might increase marginally, maybe by a percentage point or two, but we anticipate that the branch network is going to be close to that 70% level going forward.
Christopher Marinac: Got it. That’s helpful. Thank you for that clarification. And then just on the CET 1 ratio over time, what would be the lower bound that you’re comfortable with? And is that at all changing from what you may have thought a few quarters ago?
Craig Nix: Our low end of CET 1 is 9% and that’s consistent with prior quarter, and we don’t anticipate a change there.
Christopher Marinac: Okay, very well. Thank you for all the background this morning. It’s very helpful.
Frank Holding: Thank you.
Operator: We have a follow-up question from Brian Foran at Autonomous. Your line is open.
Brian Foran: Hi. Just two quick ones or I guess maybe one has a couple of parts, but on capital just following up on that. So absent the buyback, what you would accrete kind of 30 to 40 bps of CET 1 a quarter, does that sound about right?
Craig Nix: You’re close. Yes, that’s very close.
Brian Foran: And then you said the low end is 9. Is it 9 to 10 is the full through the cycle range, or what’s the range of capital? Just remind me what the capital target is?
Craig Nix: 9 to 10 is the range for CET 1.
Brian Foran: Okay. And then I just want to come back to the front book, back book new loan pricing. So you’re saying it’s 5.5 to 6 for new production. And was the message that’s good, because the existing portfolio yields 5 or was the message that’s less good, because it’s 200 basis points above the marginal cost of funds, or I just didn’t know which to lean on in terms of the takeaway?
Elliot Howard: Brian, this is Elliot Howard. I think we would view it as positive. We look at 5.5% to 6% pricing. Specifically in the branch network, we’re a lot more into fixed. Current yield on that portfolio is a little less than 4%. So we’ve got a pretty favorable gap when we look at that. Some of the fixed repricing will kind of be a win that are back in the second half of 2023.
Brian Foran: So that’s just for the fixed rate piece of the loan portfolio?
Elliot Howard: That’s right. And that’s where the pricing differential — I mean variable pretty much prices to moves up and down with the variable rate index.
Brian Foran: And just remind me the fixed rate piece is half of the book or a little bit more than half the book?
Craig Nix: It’s 55% fixed, 45% variable.
Brian Foran: Okay, so relative to like a lot of other banks. I guess every bank has this dynamic, but it’s a bigger piece of your loan book. And so just in terms of the puts and takes into next year, it has a little bit more of a tailwind for you, because you got a little bit less of the immediate Fed funds benefit in ’22 than a typical regional bank. But next year, you get a little bit more of the trailing front book, back book kind of ratcheting up than the average bank would?
Craig Nix: Well said.
Brian Foran: Yes, I realized that wasn’t even a question. I was just like making a statement. Okay. Thank you. That’s helpful because I was thinking you are comparing it to the entire loan book and the marginal cost. So that’s helpful. That clears it up. Thank you very much.
Frank Holding: Thank you, Brian.
Operator: I’m not showing any further questions at this time. I’d like to turn the call back over to our host for closing remarks.
Deanna Hart: Thank you. And thank you everyone for participating in our call today. We appreciate your ongoing interest in our company. And if you have any further questions or need additional information, please feel free to reach out to the Investor Relations team. I hope everyone has a great rest of your day.
Operator: Thank you. Ladies and gentlemen, this concludes today’s conference call. You may now disconnect. Have a wonderful day.
