Julianna Balicka: There were downgrades related to the Shared National Credit exam and the syndicated lending portfolio that we have the Term Loan B type portfolio, it’s approximately $300 million, and that’s down from approximately $600 million at the beginning of the year.
Matthew Clark: Okay. And then just last one for me on the deposit costs, if you have the spot rates at the end of September?
Julianna Balicka: One second, let me get you the spot rates. 370 — excuse me, 310 was the spot rate. That’s for total deposits just to be clear.
Operator: [Operator Instructions] And for our next question, we have Gary Tenner from D.A. Davidson. Gary, please go ahead.
Gary Tenner: Thanks. Good morning. A couple of questions. First, in terms of the loan yields in the quarter, was there anything unusual that kind of drove some of that loan yield expansion this quarter? Or was it more of a mix change quarter-to-quarter?
Julianna Balicka: It’s a combination of three things. The mix change quarter-over-quarter (ph). The accumulation of interest rate increases and interest rates moving higher on our variable loan portfolio and interest rate — interest income recoveries. And one thing, I’d like to add to Matt’s prior question was into my answer. Our spot rate on deposits was 310 at the end of the quarter, up from 297 at the end of the prior quarter. So the spot moved 13 basis points quarter-over-quarter.
Gary Tenner: Julianna, the interest income recoveries that you just mentioned. Could you quantify that, I guess, maybe relative to the prior quarter, how much of an impact that was?
Julianna Balicka: This quarter, the interest income recoveries were $3 million.
Gary Tenner: Versus any meaningful amount in the second quarter?
Julianna Balicka: There wasn’t a meaningful amount in the second quarter
Gary Tenner: Okay. Thank you. And then, in terms of the swaps…
Julianna Balicka: Your question, in terms of kind of our net interest margin expansion, even with the net interest income recovery when we back that out, our net interest margin still expanded from the improvement on the liability side.
Julianna Balicka: Okay. I appreciate that. And then on the swaps you mentioned, what is the received fixed rate on those?
Julianna Balicka: 367 over SOFR.
Julianna Balicka: Thank you.
Operator: And we do have one more question from Chris McGratty from KBW. Please go ahead, Chris.
Christopher McGratty: Just maybe Julianna, coming back to the margin, net interest income comments. Normalizing for the recoveries, I guess, maybe a little help on the trajectory of net interest income. It feels like a smaller balance sheet but more profitable, but interested in your comments about whether the trough might be in NII.
Julianna Balicka: I think in terms of our net interest income expectations and net interest margin expectations, obviously, we will talk about 2024 in January. But — and we are pleased with the improvement that we saw this quarter even with the outside of the interest income recovery. One thing I will remind you all about is that we do have some $1.8 billion of CDs maturing in the fourth quarter from a promotion that we ran last year. So that will put some downward pressure or upward pressure rather on the cost of deposits in the fourth quarter. So in terms of the trough in the NII and NIM we’ll talk about that in January. It’s kind of curve dependent, right, higher for longer versus when the interest rate will be coming in.
But we’re pleased with what happened this quarter and our frontline continues to execute excellently on growing customer deposits, which gives us the flexibility to run off higher cost funding. And net-net positions us to have a more profitable balance sheet. And then on my prior answer just now, the fixed rate is 367. I said over SOFR, but I just left it at 367. So just for your clarification.
