Steven Alexopoulos : I want to start. So looking at this quarter with the second quarter where you funded loan growth with excess liquidity, talking about issuing sub debt, when do you think you’ll start growing deposits again? Is this back half ’23? And where do you see the loan-to-deposit ratio trending through the year or maybe ending the year?
Darren King: There’s always an ability to grow deposits. It’s just at what cost, right? And so we’re always looking at — number one, our focus is on customers and customer relationships. And so for situations where we would have single-service time deposits or money market accounts, we may not choose pay rate there because we can fund the bank more efficiently in the wholesale markets. But for customers who are operating account customers, which is our core funding base and part of our long-term strategy, then we’re more willing to pay rate. And so we’re always making that trade-off. And so to say that it’s going to officially end in the second half of the year, I think would be would be a little foolhardy. But our idea is, obviously, there will be a spot you get to where customers maintain balances in their checking accounts, if you’re a consumer or your operating account, if you’re a business and you kind of hit that floor.
And when will that floor hit, I think we start to see it as rates stabilize, and you’ll see that as we go through 2023. But also, we know that the deposit pricing lags movements in Fed funds and moves — lags movements in loans. And so our goal will be to stabilize it as we go through the year. But obviously, making those trade-offs that I mentioned as we work with clients.
Steven Alexopoulos : Okay. And then — so where do you see the loan-to-deposit ratio moving?
Darren King: Oh, sorry. Right. The — I think over time — and again, time, maybe, let’s call it, 3 years, aha, just to pick on our #3 is, over the long term, loan-to-deposit ratios for us and for the industry will trend back to their long-term average. And when we think about those loan-to-deposit ratios and those long-term averages, that’s also part of the reason why we talk about that net interest margin over the long run, normalizing back to where it’s been historically. And so we’re kind of, we think, maybe around 80-ish a little bit above as we get to the end of 2024 — sorry, 2023. But it’s obviously a function of how we choose to pay and fund the bank.
Operator: And our last question comes from Gerard Cassidy from RBC Capital Markets.
Gerard Cassidy : I was going to say, and I know the 3 was in the middle of the call, your stock was up 3%, but now it’s up over that, so I can’t use that.
Darren King : Well, we appreciate that and the 3 reference. There’s something that happens in every call and it kind of seems to run its course. So 3 is this one.
Gerard Cassidy : There you go. A question for you regarding your comments about the commercial real estate portfolio. When you look at it, particularly for office, there’s a concern, of course, with the work-from-home possibly being more permanent and there’ll be less space needed, possibly vacancy rates go up in the office space. What do you think is the greater risk? The occupancy rates going higher because of that trend or the refinancing risk where your customers having to refinance because their mortgages are terming out, they have to refinance it and the rates are just so much higher today than when people took down these mortgages maybe 5 years ago?
