Curtis Myers: Yes, I mean, Frank, if you think about for us historically, we tend to operate on an organic basis, that kind of 4% to 6% range. I would say, for what you’ve seen in the back half of 2023 has been kind of at the low end of that range and I think you should expect that to continue into 2024. We’ve been protecting profitability in the fourth quarter, new originations pretty much across all channels, we’re in that kind of high 7s, about 7.70, 7.75. It was kind of our rate on new originations. So with that, until we would see any kind of expected rate decreases, which again we currently expect — are expecting in the back half of 2024, I would expect to see growth continue to be moderate, but we are open for business. We’re not shutting down any lines of business as maybe you’ve seen from others.
Frank Schiraldi: Okay. And then, on the assumption, you mentioned the three rate cuts in the back half of the year, any sort of color you can provide? I know you talked about it last quarter on the way up that the NII will be impacted given the variable rate book about little over $20 million annually from a 25 basis point move in rates, is it the right way to think about the same on the way down, offset by the back book repricing, but what’s your — what is the incremental 25 basis points kind of due to full year margin or NII?
Mark McCollom: Yes, on an annualized basis we have about $10 billion of loans tied to SOFR and about $9 billion of that $10 billion are adjustable-rate loans, which would reset within 30 days of after that rate move occurs. So, absent any moves to our non-maturity deposit book that’s how you get to that $20 million on an annualized basis for a 25 basis point move. What we’ve assumed is, we’ve taken — what we think is a conservative stance for the first couple of rate moves downward that you’re not necessarily going to see deposit pressures abate. But at some point, whether that’s 50 basis points, 75 basis points, or 100 basis points, at some point, I think the industry will start to feel relief on deposit pricing pressure and be able to react with that non-maturity deposit book.
Frank Schiraldi: Okay. So maybe incremental rate cuts would be less impactful to the bottom line just given hopefully deposits start repricing or providing some benefit on the deposit side to offset any contraction on the loan yield side, is that the way to think about?
Mark McCollom: That’s correct.
Frank Schiraldi: Okay. All right. Great.
Mark McCollom: And then overnight borrowings costs, obviously, resets out immediately.
Frank Schiraldi: Right. Okay. Thanks.
Operator: Thank you. One moment for our next question. And our next question comes from Feddie Strickland with Janney Montgomery Scott Research Division. Your line is now open.
Feddie Strickland: Hey, good morning, Curt and Mark. Just wanted to start on deposit costs. I know we can discuss this a little bit, but are you starting to see that pressure lessen a little bit with the pause in rates, and any different behavior from competitors there as well?
Mark McCollom: Yes, the one other thing, Feddie, is that when — we’ve been obviously repricing our CD book and we’ve been growing CDs throughout the year and those have been repricing higher as you’ve seen kind of roll rates of what matures per quarter. In the first quarter of 2024, we have $1.1 billion roughly of deposits that will — CDs that will mature, but that cost now of what’s maturing is now up to almost [$440 million] (ph), so that churn that you’ve been seeing upward in our CD cost is definitely going to lessen throughout 2024, so that will provide some relief and allow those betas to ultimately slow.
Feddie Strickland: Got you. That was — you actually beat me into my second question. So that was $1.1 billion CDs maturing, what was the cost they were rolling off versus what’s rolling on at?
Mark McCollom: $440 million is what they’re rolling off at, and then rolling on it would depend on, obviously, whether they’re retail or brokered.
Feddie Strickland: Got it. And I’ll just — sorry, go ahead.
Curtis Myers: Hi, it’s Curt. I’m just going to add that we continue to have high roll rates, blind roll rates in CDs, so as we’re adding customers we still have really strong metrics in the blind roll rate, promotional acquisition rate, blind roll rate are different, so that helps as well that we’ve been able to continue to do a good job for customers and roll a lot of CDs over and keep that business.
Feddie Strickland: Understood. That’s helpful. Then just switching gears for a second here, I appreciate the continued disclosure on office in the deck, is that $683 million outstanding inclusive of medical office? And if so, do you have on on-hand ballpark how much is medical office?
Curtis Myers: It does include all office. It depends on the use overall and we’re digging here for the stratification in that. As we — look, we’re looking for it here just own office overall, balances came down linked-quarter. We actually are really positive. We have one trending in the wrong direction and it was already in the classified, criticized that it’s about $30 million that paid off, and we originated the new $30 million that’s a really strong credit that kind of replace that. So we’re seeing — as we continue to manage that overall book, we continue to manage effectively through those dynamics and we were pleased with being able to move out a significant credit trending in the wrong way this past quarter. So, we have the numbers here, the healthcare is really split, it depends on use, so some of that would be in our healthcare outstanding and somewhat would be in office as well.
