Ben Gerlinger: Got you. And then is that embedded in anything or is that kind of just icing on the cake for a 2024 if they start to bring over wealth or something like that?
Bryan Jordan: Well, inherently, that’s embedded in our estimates of fee income and net interest margin. So, yeah, inherently, it is embedded, but there’s not a specific add-on at this point in terms of the way we manage our forecasting and budgeting.
Ben Gerlinger: Got you. And then just to completely switch gears here in terms of just lending appetite, I get there’s so many competitors here in the Southeast that are pulling back or reorganizing or something that might have them take their eye off the ball. Are you seeing additional client ad potential? Just from a commercial perspective, if you could highlight any areas within any lending categories where you’re seeing better risk-adjusted spreads or conversely kind of shying away because it really just doesn’t make a lot of sense? I get office is an easy little thing to prove to call up, but just anything more granular than that would be helpful?
Bryan Jordan: Yeah. I’ll start and then ask Susan to sort of pick up. We sort of get varying degrees of information and a lot of it is anecdotal. I would say, in the middle of 2023 and in the early fall, you saw more people actually pulling back from the markets in terms of lending appetite and getting out of lines of businesses, which we think created a number of opportunities for us in things like mortgage warehouse finance and mortgage warehouse lending and restaurant finance and things of that nature. The markets seemed to stabilize a little bit as you got into late 2023 and whether that was the Feds essentially loosening financial conditions by talking about the speaking of rates and potential for rate cuts being the topic of 2024.
The market seems to have stabilized a little bit in terms of lending appetite and has probably gotten a bit more competitive. There are one or two examples of folks who are not taking new or new-to-bank relationships that are now back into the market. So it ebbs and flows. All of that said, we feel very good about the opportunities that we are seeing. We try to execute with a very consistent and steady go-to-market approach. We try not to pull into and out of markets based on what’s happening in the next 25 days or 30 days by our estimate and essentially, what we believe is how we conduct ourselves in those periods of volatility are the things that define us for the next 25 years with our clients and our customers. We literally try to just be very steady and very stable.
And as a result, I think, we continue to see a number of attractive opportunities. It’s not a high volume because the economy doesn’t support that, but we’re very encouraged by what we’re seeing in the market. Susan?
Susan Springfield: I agree with what Bryan was saying. We do take a through-the-cycle approach. As Bryan says, we try not to have the pendulum swing too much either way when times are really good or when things are a little slower or more challenging like they are today with the higher interest rate environment. We want to be there for our clients and communities and we have been. There were some instances mid-year where we were able to step up for existing clients when others were not. But it is a market where we’re able to get good core underwriting metrics, good structures and some good risk-adjusted returns on the pricing as well. So, again, we want to be there for clients. I think there are some opportunities in our specialty lines as well as in our market to take some generational opportunities potentially away from some competitors who might be having some kind of disruption in their ability to execute.
Ben Gerlinger: Got you. That’s really helpful color. I’ll actually email, I have a couple of those real small modeling questions. But I’ll sit back in the queue. Thanks.
Bryan Jordan: All right. Thanks, Ben.
Operator: Our next question comes from Brady Gailey from KBW. Brady, your line is now open.
Brady Gailey: Hey. Thank you. Good morning, guys. I wanted to start on the credit quality front. Last quarter, we saw the little blip with the shared national credit loss. This quarter we saw NPAs increase by about 17%. They’re still at a relatively low level, but maybe just updated thoughts on, it feels like credit is normalizing here, but just updated thoughts on how you’re thinking about credit into 2024?
Susan Springfield: Hey, Brady. It’s Susan. I’ll take that. We are being, as I just said in answer to the last question, very disciplined in our approach and we have been, we have been for years and so I do believe that that disciplined approach to client selection, the fact the markets that we’re in are very strong will continue to serve us well. As you pointed out, we’ve had some downgrades into non-performing and classified, but it’s very manageable at this point. We’re not seeing any specific things related to markets, industries, product types at all. We did a lot of deep dive work in 2023. We’ll continue that in 2024. We do it — really do it all the time, especially in a higher interest rate environment, we’re making sure that we’re touching the portfolio and even at a higher level where more executive management is involved in portfolio reviews.
So I feel very good about the fact that we’ve got discipline in how we’re grading and servicing credit. I think the outlook is one where we will perform well, our eyes on the ball and we’ll continue to be conservative both at origination, but also in how we think about grading and marking our loans each and every quarter.
Brady Gailey: All right. That’s helpful. And then, First Horizon is about $80 billion in assets now, so you still have some time until growth takes you to $100 billion. Maybe just updated thoughts on how you’re preparing for that and what you think the impact will be and when you think First Horizon could see that $100 billion mark organically.
