Kevin Fitzsimmons: Okay. That’s great. And I appreciate the guide on your outlook for deposit growth and the fact that the bond portfolio can supplement that. But based on what you see now — like on the one hand, the balance sheet is still very liquid and with the loan-to-deposit ratio down at like 80% or a little below, actually. When you think about allowing that loan-to-deposit ratio to move higher, so in other words, maybe you’ll go after deposits, maybe you won’t, versus a strategy of getting out in front of it. Like some banks have taken a hit to the margin in the short term because they’re kind of front-loading that deposit beta in effect, where maybe that’s not the situation you guys are in because of the liquidity. So, can you speak to those moving parts in terms of how you view that loan-to-deposit ratio and whether you expect to grow deposits each quarter or if it doesn’t make sense, you won’t necessarily.
Mike Achary: Yes. I’ll start, Kevin, and I’ll pivot over to John after to let him talk a little bit about our strategy to grow DDA deposits from core customers. But certainly, the way we’re looking at 2023 is really to be in a position where between the runoff from the bond portfolio that we’ll use to fund loan growth, between that and any difference really coming from deposit growth, that would really be kind of the most optimum way that we’d like to manage the balance sheet from a loan deposit perspective. And I think that we’re certainly doing some proactive things to ensure that we kind of get a jump on that. We talked about the 9-month CD at 4% that we did last quarter. And even right now, we have a 4.5% nine-month CD that we think will be very helpful in terms of adding some liquidity to the balance sheet.
We’re not really willing to give up a lot in NIM on the front end, certainly not a significant amount of it to kind of warehouse liquidity. But we do think that what we’re doing is a good mix between some proactive actions and then certainly some ability to maintain a little bit higher NIM going forward. So hopefully, that makes sense. So John, if you want to talk a little bit about DDA?
John Hairston: Sure. Just a couple of points to add. And Kevin, to your prior question about 4Q NIM, for some time, we’ve kind of given guidance to expect as the commercial line utilization numbers begin to go back up towards pre-pandemic levels, which we still got a long way to go to get to that number. As that happens, and typically, in other rate cycles, you see some of the free money from those same relationships off just as people spend it. So, there’s not — there’s some disintermediation of free money to IBTs, but the primary leakage in that bucket is not account loss, it’s really just people spending money, which is not necessarily a bad thing for the economy. But the line utilization up about — I think it was up 106 basis points for the quarter is one of the larger ones for the past three or four quarters.
And while fourth quarter typically has a bit of a runoff, it was pretty handsome. So, some of the runoff really just companies the same type of behavior and oversight decisions paid by commercial clients as they look at their own balance sheet. So with free money out and 100% variable money getting charged up as part of the line utilization increase, the spread on that is not going to be quite as attractive as it is if you still have that free money sitting on the books. So that’s just one additional point for you to ponder. In terms of a going-forward strategy, we had almost no digital capacity to gather deposit accounts just a year ago. A lot of the tech uplift has occurred in the past 12 months. As it draws to completion, we would anticipate gathering more client accounts digitally.
