Christopher Marinac: Got it. Thank you for that. Got it. And then just one quick question, might be for Pat. But I may have missed it earlier, but the FDIC, a special assessment, do you anticipate that being part of fourth quarter or would that possibly go into first quarter?
Patrick Barrett: Wow. If I could predict that, then I probably wouldn’t be doing this job. We don’t know when that’s going to hit and be effective. And frankly, we’re not 100% sure what the impact will be. But best estimate based on what’s out there.
Christopher Marinac: Got it.
Patrick Barrett: Now, which hasn’t been finalized, is that it’ll be around $2 million, kind of a one-time thing. And that’s roughly a quarter’s worth of our $8 million run rate of our current assessment that’s built into this year’s P&L. So we’ll see. I don’t see an outcome where we wouldn’t be subject to it, although everybody lobbied, particularly those that are around the margin, the lower end. But there’s been no progress that we’ve seen in changing what was proposed out there or further details as to when — if and when that will become effective.
Christopher Marinac: Okay. So it’s told to be determined. Obviously, it may or may not happen in the near term. Okay. That’s what I want to clarify. Thank you, Pat. I appreciate you taking [Multiple Speakers]
Patrick Barrett: You should just pick a date and count on it, because I don’t — I can’t see an outcome where that would not happen because it’s already out there, and it doesn’t require somebody in Congress or Senate to propose something new. It’s just like out there. So we’re not forecasting it at a specific time. It’ll just be at some time during 2024.
Christopher Marinac: Got it. Okay. Great. Thanks very much for all the insights today.
Christopher Maher: Thanks, Chris.
Operator: Our final question today comes from Manuel Navas of D.A. Davidson. Please go ahead.
Manuel Navas: Hey. Good morning.
Christopher Maher: Good morning.
Manuel Navas: I want to stay on the deposit growth. The high yield savings, what channel is that coming from? Is that coming from branches, from your commercial lenders? Where are those funds being sourced?
Christopher Maher: That’s a direct marketing channel. So one of the things you have to do to optimize your pricing is manage pricing by each channel. So we have highly competitive offers that we have in the branch. We have highly competitive offers we bring direct out to customers, and obviously, we negotiate individual deals with our commercial folks. So, it’s kind of trying to figure out, what do you have to pay to move the needle in each of those channels. And it’s a different yield in each one. And you try and come up with the best mix you can, but that is a direct marketing channel.
Manuel Navas: Is that — is the branch opening kind of related to that? Is it a shift in how you want to gather deposits, or is it unrelated?
Christopher Maher: Yes and no. It’s not really a shift in the way we think about deposits, but there’s a little bit of a shift in that. We spent years pruning our branch network. And I think very effectively we closed 77 branches over a series of years. So as we go forward now and the company grows, we’re not going to grow through opening a pile of branches. We don’t think that, that makes sense. There’s a little bit of a hole in our geography here. It’s a county seat. There’s about $1.7 billion in deposits there, a lot of commercial activity. So from time-to-time, I think you may see us in 1s or 2s over time, open a branch here or there because we think the branch has relevance. But I would not view this as a shift where you see we’re going to open any number of branches next year.
We have no plans to open any branches beyond this at current. But as we work in markets and we think we’re kind of resonating, we may from time-to-time open branches that are kind of geographically separated from the rest of our group.
Manuel Navas: I appreciate that. As you paid off most of the short-term kind of wholesale-ish really borrowings or broker deposits and you brought in some more deposits with the high yield channel, some other channels probably will pick up. Where is the trigger for kind of an increase to loan growth?
Christopher Maher: So I think we’re thinking about that hard right now in this quarter and we just want to make sure that we’ve got the best-informed view about how those flows come in, what the marginal cost of deposit gathering is, what the marginal yields we’re going to get in each of the loan segments. So we’re going through that plans now. I’ll tell you this, there is demand in the market. We just have to decide which products we want it in and what yield and structures are going to be best for us. So we’re working through that now. I don’t think you’re going to see meaningful loan growth in Q4. It’ll be around what you’ve seen in Q3, if that. But as we go into 2024, we’re kind of gearing up to figure out what the right growth number is there and what the mix of growth will be.
Manuel Navas: With the operating leverage strategies you’ve been putting into place, at the beginning of that, a lot of it was contemplating lower rates. Has that plan shifted across the year now that were kind of the consensus is today it could change pretty quickly. Is it a higher for longer environment? Can you kind of talk about how that operating leverage strategies have incorporated that shift?
Christopher Maher: I think the main one would be not so much around operating leverage, but we have two different fee income lines that will be constrained as long as we’re in this rate environment. The first is swaps and the second one is the gain on sale and residential. We’re still focused on them because they’re important businesses in the long run. But the outlook for them in the short run is going to be constrained in this rate environment. So I don’t think the operating leverage initiatives would have changed much, but the gain on sale in particular and the work we’ve done around swaps are just going to be kind of not quite on pause, but they’re going to be minimally contributing until we see some change in the rate environment.
