Michael Perito: That’s helpful. And then just in terms of the 2024 outlook, any kind of initial thoughts around noninterest income, which I didn’t see necessarily anywhere in the guide. Just is there obviously, probably a couple of key pieces, maybe swaps mortgages. Just any thoughts about what might transpire over the year in your budget as we think about what the contribution looks like?
Christopher Maher: So we have — look, there’s an opportunity, we wouldn’t provide guidance and be very difficult to quantify for you. But the three main areas that could be impacted by 2024 volumes are, as you mentioned, swaps, but also gain on sale income in residential and the title insurance business that we own as well. So it’s really far too early to tell how much the unit volumes will increase. But you could imagine over the course of 2024, we certainly expect units to be higher in ’24 than they were in ’23, which should bode well for swap income, gain on sale and title insurance revenues.
Michael Perito: Thanks, Chris. That’s helpful. And then just lastly, and I’ll step back. Just on — I know you commented a little bit on it already, just to maybe go a layer deeper, just around buybacks. I think you were pretty clear in terms of why you didn’t elect to use them in ’23. It was kind of a build liquidity build capital year. It feels like the footing underneath you guys is much more certain now. As we think about the $2.9 million authorization remaining, are you willing to provide any more color about how kind of attractive the opportunity is to deploy capital that route today, particularly if loan growth might be a little bit more back half heavy in ’24? I mean it’s kind of now the time to maybe buyback some shares? Or just any expanded thoughts there would be great.
Christopher Maher: Mike, thanks for bringing that up. The — and you’re exactly spot on. When you get into a period like we did in ’23, you want to be extra careful to make sure that you understand your risk positions, you understand your liquidity position and you don’t have anything that would be a lean against capital. So we built capital up over the course of the year. We’re really happy with where capital is now, and we expect to maintain it. So the math around this, I think, will be pretty straightforward. To the extent we can grow customer relationships, that’s always the best thing we can do with capital. But if that growth is a little more back-ended or takes a little more time than these valuations, we would expect to deploy capital through repurchases to maintain our capital ratio.
And kind of interestingly, as we do the math, that’s about a neutral proposition. So whether we’re doing an incremental repurchase or bringing on new clients has about a neutral impact to earnings per share. And that’s fine. We’d always rather have a customer, so that’s our priority. But if we can’t have the customer, we can get the same benefit by doing the buybacks. And certainly trading below book value is a great opportunity to take advantage of.
Michael Perito: Got it. Helpful guys. Thanks. Stay safe with the storm and I appreciate you taking my question.
Christopher Maher: Thanks. Take care.
Operator: Thank you. Our next question is from David Bishop from Hovde Group. David, please go ahead. Your line is open.
David Bishop: Great. Good morning, gentlemen.
Christopher Maher: Good morning, David.
David Bishop: Chris, quick question in terms of, you noted another quarter may be challenging in terms of the noninterest-bearing deposits. Has there been any change in terms of, I don’t know if you track where they go, is it continue to run off to some of the bigger the JPMorgan’s of the world, are you retaining them in other OCS product, OceanFirst products? And remind us if there’s any seasonality in that end of year runoff?
Christopher Maher: Yes. No, we’re certainly keeping the deposits here at the bank for the most part. As Joe mentioned, we’ve taken the opportunity to deepen relationships. The good news about that is you get customers to bring money in from other banks. The bad news is sometimes they want to move some of their noninterest-bearing accounts into other accounts. So we’re not seeing any competitive losses of magnitude to anyone, whether it’s a big bank or a small bank. So that’s really what’s driving it. And as we look forward, I would also mention that we have a lot of transaction accounts that are not captured in the noninterest-bearing designation. So we have a lot of interest-bearing checking that are truly transactional accounts. So while the noninterest number is important to us, the transaction account number is more important to us, and that’s been pretty stable.
Patrick Barrett: I’d just. Hey, David, it’s Pat. I’ll just throw into — we do have seasonality, but it tends to be intra-quarter. So if we changed our year-end to October 15th, then you would probably see kind of peak noninterest-bearing levels every quarter instead of trough, which is wait and see today, but it’s a very — it’s the government business. So that does drive inflows throughout the quarter that come back out again, just in time for us to report.
David Bishop: Got it. And then I noticed a modest uptick in substandard loans. I don’t know if any — was there any commonality in segments? Just curious some color behind that increase?
Christopher Maher: Yes, there’s no theme and there was nothing of note in terms of a trend that would cause any concern. The — I would note that the level of substandard remains well below our long-term average of around 2%. It’s below the level of pre-pandemic. So this is really just kind of a reversion to normalcy, right? That credits go through cycles and all that. But there’s no segment of the portfolio that gives us any concern and no commonality among them.
David Bishop: Got it. Appreciate the color.
Christopher Maher: Thanks, David.
Operator: Thank you. Our next question is from Matthew Breese from Stephens, Inc. Matthew, please go ahead. Your line is open.
Matthew Breese: Yeah, thank you. Good morning, everybody. The first one for me is maybe for Pat. Taking the lower end of the NIM guide, which is calling for stability, what is the expectation for deposit costs by year-end? And is there any sort of peak and reduction in deposit costs within that assumption throughout the year?
Patrick Barrett: I think we’re assuming that we’re peaking on deposit costs right now with some a little bit of adjustment for some of the more institutional deposits that we have and allowing for runoff with those, but we’re assuming we’re going to be rolling our OceanFirst CD program at generally kind of similar rates to where we are today. We’ve been pretty successful at rolling at those. We’re not aggressively growing institutional and sweep deposits right now, but we always have that to turn on. And then across the core deposit base, we’re assuming a fairly stable mix in pricing. And as we touched on earlier, if we do begin to see improvement or i.e. lowering of cost, that’s certainly going to be on the back half. So we look forward to being able to put a couple of months together and start talking about a trend like that, but we just aren’t seeing it quite yet.
