Bryan Jordan: Brady, good morning. The way we’re preparing is we’re practicing treading water right now. We think at the end of the day that we have some flexibility in terms of managing the balance sheet and while it’s not clear what becoming $100 billion then for LFI entails and particularly with the proposals that are out on Basel III, we’re taking the time to understand that and to navigate through it. Some aspects of it we’re likely to have to deal with earlier, particularly if the final rule gets issued on resolution planning for $50 billion to $100 billion organizations. Some of those things will start to work their way into the system. But right now, we’re studying what becoming an LFI looks like. We’re preparing the groundwork for it.
But at the end of the day, we’re not going to just stumble across $100 billion. We have a few years of flexibility and as I’ve alluded to, the ability to tread water and keep our balance sheet at a level that doesn’t push us over a bright line threshold accidentally.
Brady Gailey: Okay. Great. Thanks, guys.
Bryan Jordan: Thank you.
Operator: [Operator Instructions] Our next question comes from Timur Braziler from Wells Fargo. Timur, your line is now open.
Timur Braziler: Hi. Thank you. Maybe a follow-up to Brady’s credit quality question. Just any color on what the increase in non-performers was in the fourth quarter?
Susan Springfield: It was really several different industries reflected on the top four that were added. You had one that’s an online retailer. We had one, a CREE Hotel [ph] project that was added. Then, a couple of other just general C&I credits more kind of the drivers of the — bigger drivers of the increase. One was a Hub and then one, Franchise Finance restaurant credit.
Bryan Jordan: It looks to us like, as we see the credit portfolios performing, that it’s still largely driven by idiosyncratic trends as opposed to broad-based, this category of asset or that category of asset. So what I’m really sort of suggesting is, borrowers that start in a more stressed position, more levered, inability to take price, higher cost pressures, interest rates, again, some — that’s stressing some borrowers more than its stressing others. We’re not seeing broad-based trends in the portfolio right now. As Susan said, we’re spending a lot of time doing deep dives and analytics, but at the end of the day, the trends seem to be driven by more idiosyncratic stories than anything.
Susan Springfield: Yeah. As an example, the hotel project that we added experienced some construction delays. So they’re just a little behind on where we thought they would be according to plan. That’s an example, like Bryan said, where it was related to something not necessarily industry-related. The others would have similar stories of one-off situations.
Timur Braziler: Okay. Thanks for that. And then, going back to expenses and the technology spend specifically, I think, the commentary prior had been around $100 million in technology spend over the next three years. Can you provide maybe some greater clarity on the cadence of that spend? Is that pretty even over the next three years or some of that remedial spend, as you call that? Is that something that’s going to be maybe a little bit more forward skewed?
Hope Dmuchowski: Timur, thanks for the question. Technology spend tends to be back-loaded. As the project’s gearing up, you’re capitalizing costs, the software doesn’t go into maintenance yet and so it is a little bit more back-loaded. We talked about in Q3, undershooting our expenses in the quarter. We’ve seen that hit in Q4. Those projects have started up. I said in my prepared remarks, we expect that the back half of next year, we will see those costs increase and then increase going into 2025 as the bulk of what we started in the second half of this year starts to hit the run rate at the full size. And that being said, we are, as we continue to say, looking at operational efficiency just to figure out how we can offset some of that investment.
We do expect — in 2024, we expect that in the back half of the year, we’re going to offset on a P&L basis the increased technology spend with the retention dollars that are running off that we have somewhat flat expenses throughout the year and we’ll continue to focus on looking at how we do that.
Timur Braziler: Okay. That’s good color. And then one more, if I could. Just on the promo deposits rolling off, that retention is impressive at 96%. I guess, what did those borrowers or those clients roll into? Are those back in CDs? Did that move to money market? I guess, what is the current CD specials out there right now for you guys?
Hope Dmuchowski: That was all money market, that repriced in Q4. Our CDs were actually a nine-month or 11-month CD, but we’re not as material. We’re repricing Q2.
Bryan Jordan: Those rates were down 75 basis points, 76 basis points from the special rates.
Timur Braziler: Okay. Thank you.
Hope Dmuchowski: The second part of your question was, what was the current offers? So our current offer is a deepening relationship of 4.25% [ph]. As you’re coming off promo, if you bring more money to the bank, you deepen your relationship with us, the offer’s 4.25%. You can see we ended up at about 75 basis points, 76 basis points down. We’ve gotten pretty far to that 4.25% rate. There’s always some negotiation in the discussion, but we believe that overall, that 4.25% is the target for new money coming in.
Timur Braziler: Great. Thank you.
Operator: Our next question comes from Christopher Marinac from Janney Montgomery Scott. Christopher, your line is now open.
Christopher Marinac: Hey. Thanks. Good morning. Just one more credit question for Susan. Do you think that the C&I specifically would see some deterioration this year or should this quarter still stay intact?
