Scott Wylie: The composition of the loans?
Brady Gailey: Yes, the several loans that make up the $42 million that’s on balance here, are those C&I, CRE.
Scott Wylie: They’re commercial loans that are secured with all that real estate collateral that we’ve talked about in the past.
Brady Gailey: Okay. All right. And then, Scott, I heard you say that you’re expecting a modest level of long growth this year. I mean, should we interpret that as low single digit or could it be better than that?
Scott Wylie: Let me check my crystal ball here. I think that for us, we don’t think 2023, we’re hoping 2024 is not another 2023. So we have historically found lots of opportunities to grow our types of loans with our types of clients across our 19 offices. And I think that will be the future for us. I’m not sure if that plays out entirely in 2024. One of the things we were thinking about in 2023 are — we had a 114 basis point loan deposit ratio in October of 2022. And it’s just really hard to grow loans when you’re not sure where your deposit growth is going to come from to support that. And so, a lot of our thinking in 2023 was, let’s grow loan — deposits, I mean, back to — get our loan-to-deposit ratio down where we have historically ran it, which is kind of 90% to 95%.
And I think what we’ve talked about on these calls is, we would like to get that down to 100% by year-end 2023, which we did. So I think we were in a little bit of a chicken and egg problem in 2023, where we were saying we’re not really going to grow loans if we don’t have the deposits to support it in-house. And so, let’s focus on getting deposits in-house. The other side of that, though, in the past, I’ve seen — if you kind of shut off the loans they get, it’s hard to turn it back on. So we tried to be mindful of that with our relationship bankers and support loan requests for loans that do fit well into our credit approach and our strategy and our type of client and whatnot. So a long way around of saying we’re planning on kind of mid-single-digit loan growth in 2024, because we don’t know.
And for us, that drives a guesstimate of mid-teen revenue growth. And if we can do what David was saying in terms of managing our operating expenses, which is, if we grow mid-teen revenue growth, then maybe $20 million or so in operating expenses per quarter. If we did mid-single-digit revenue growth, maybe $19 million in the quarter in operating expense. I mean, that’s kind of how we’re thinking about it, Brady, and I know that’s not a very satisfying answer, but that’s, I think, the best you can do, given the environment we’re in.
Brady Gailey: I understand it. That’s really helpful. Thank you, guys.
Operator: Thank you. One moment please. Our next question comes from the line of Adam Butler of Piper Sandler. Your line is open.
Adam Butler: Hi. Good morning, everybody. This is Adam on for Matthew Clark. If I could just touch on the deposit side first. You guys had nice deposit growth during the quarter and looks like the majority of it was based on time deposit growth. I was just curious if you could touch on the nature of that growth and the maturity of those deposits and what you put them on at?
Scott Wylie: Yes. Adam, just before we address that, there’s one more point I’d like to make about Brady’s question, which I think was obvious, but in case it wasn’t, I would just follow through and make the point. I think that the more important measure for me of all those things I said is what is the run rate EPS and what’s happening there. And I think our core EPS run rate would improve significantly with those conditions I described, a 15%-ish revenue growth and the expense growth we talked about, and gets us by the end of the year into an earnings position well above where we were in 2022 and 2023 on a run rate basis. So I just think that’s an important conclusion, Brady, of what you specifically asked about. So sorry to take a detour there, Adam.
But let’s go to your question about deposits in — I think the increase that we put on in deposits in the fourth quarter, some of them were noninterest-bearing. We actually grew DDAs, I think, for the first time in a year. So that felt good. Of the CDs, I think we added about $49 million in three month deposits, $45 million in six month deposits and $7 million in nine month deposits during Q4. So those would roll over appropriately going to roll off over the course of the year and give us the opportunity to reprice those. As we talked about, either because rates are falling or because markets are normalizing, and we talked about that several times in our comments, because historically, we have been able to grow kind of core deposits with clients pretty effectively.
For example, as we’ve tripled the balance sheet since our IPO. And I just think that 2023 was this abnormal environment that I don’t think it’s going to continue forever. It may continue some into 2024, but I don’t think it’s going to continue forever. So, I do expect we’ll have the opportunity to refinance those higher cost deposits as they roll off in 2024.
Adam Butler: Okay. I appreciate the color there. And I failed to mention the increase in noninterest bearing, but I was getting there. It was nice to see that too. And I was just going to — just looking at overall deposit flows. I was — given your guide for potentially mid-single-digit loan growth, are you thinking kind of the same in deposit growth and keeping that loan-to-deposit near the 100% range? Or has that guidance changed on your end? Thanks.
Scott Wylie: No. I think we would like to see it trend over time back to our historic numbers in the low to mid-90s. I think that’s where we feel comfortable. I would tell you another data point that helps the argument or hope that we bottomed out on NIM is our spot rate for deposits at 3.31% was — December 31, I mean, was 3.31%. So we’re seeing that increase moderate as we go through the fourth quarter.
