Terry Turner: I would think it’d be more momentum in ’24. This has been quite a year, lots of concern about interest rates when you had it in, lots of concerns about inflation quickly into the bank failures and [indiscernible] just lot of opportunity for caution. But I would say, Steve, you know better than I do what all the variables are out here to fear, but it feels a lot more stable as I look at what our business model is today than it did in early ’23.
Operator: The next question is coming from Brett Rabatin from Hovde Group. Brett your line is live.
Brett Rabatin : Good morning. Thanks for the questions. Wanted to talk about the kind of the normalization of credit and just you obviously we’re into one credit that quite a few regional banks were that raised net charge-offs a little bit this quarter. But I wanted just to ask about the $65 million increase in classified assets, if there was anything that was sort of more normal? Or can you talk maybe just about that in general? And then just maybe we can talk about the SNC book and how big that is and how you think about that?
Harold Carpenter : Yes. As far as charge-offs for this quarter without the Mountain Express charge-off, I think we’d be somewhere consistent with the prior quarters. We think going into the fourth quarter, we don’t see anything outsized currently that would warn us thinking that charge-offs are going to increase significantly from that where we are today. Brett, did that get what you were talking about? Or are you interested in more information on.
Brett Rabatin : Yes, I know that one credit kind of impacted that charge-offs, but just wanted to kind of hear about the increase in classified, if there was anything that was underlying there that had a commonality. And then just maybe if you could give any color on the SNC book and just any characteristics of that portfolio? How much you lead, how you kind of run that portfolio?
Harold Carpenter : Yes. The classified did bump up on us. I think the credit officers are all over that one. It’s a health care credit that we have banked for a while and they just believe that their metrics are not looking where they — they’re not performing at where they need to be performing, and so they’ve downgraded it. That contributed to primarily the increase in classified this quarter was that one credit. So that was that. As far as the SNC book is concerned, we’re running about 7% of total loans in our shared national credits. So, the way we approach that largely is we want in market — the loans themselves, we want them to be in market. We want them to be relevant to our business development such that we can bank the principles of the business.
And we’ve traditionally done that here in Nashville and in other markets. The one credit that charged off this quarter was a little bit of an anomaly for us, not only — I know there’s been a lot of discussion about it being idiosyncratic and all of that. It was also kind of unusual for us because there was a bunch of banks in it, and we were at the end of the line. And so, with that, that’s not something we normally like to do. So, I don’t think you’ll see a similar event on that on both particular matters.
Terry Turner: Brett, on that thing on the sort of normalization of credit metrics. I think you probably heard me say they’ll have to normalize. There’s no chance we can operate at historic lows forever. And so, they’ll have to normalize. But when you sort of look in there, your nonperformers are down during the quarter. Classified, my bet is, even after that increase will probably still be the third best in the peer group. And so again, they’re going to have to pick up normalized, but it still feels really good from my perspective.
Brett Rabatin : Okay. That’s helpful, guys. And then maybe I just want to make sure I understood on the guidance back on the margin in the fourth quarter. It kind of seems like you’ve got — assuming the trend continues, of slower upward trajectory of funding costs and quite a bit of assets for pricing in the fourth quarter. I’m not saying you’re sandbagging in the margin guidance, but it just seems like the tenor would be a little bit better. Are you just being cautious on that relative to the deposit struggles for the industry this year and potentially an increase in competitiveness around deposit pricing? Or is there something else that I’m missing?
Harold Carpenter : No, I don’t think you’re missing. We do believe that we’re — like we said, we’re near a bottom, if not at the bottom on our margin. We think we’ve got great opportunities on loan repricing like you talked about. We think the deposit book is behaving well. We will keep our fingers crossed as to whether or not we can move the margin up. But as we sit today, we think we are where we are, and we think we’re going to be in pretty good shape as we go into 2024.
Operator: The next question is coming from Timur Braziler from Wells Fargo. Timur your line is live.
Timur Braziler: Thanks for the question. Just keeping with that same line of comments, a lot of discussion around net interest margin. I’m just wondering about net interest income and how that acts in a higher for longer environment. Is the expectation here that as long as the Fed is higher for longer, NII is accelerating, the growth in NII is accelerating? Or is there some offsetting dynamic that might keep that growth rate more limited?
Harold Carpenter : Yes. That’s a great question. I think from our perspective, the way our book typically behaves as we’ve got all these fixed-rate loans that are going to reprice and this higher for longer kind of narrative. But if the Fed kind of keeps the lid on short-term rates, that’s where most of our deposit pricing will likely be influenced by. So, if you don’t see any more rate increases, then the competitive pressures will be what drives kind of our deposit costs, and we believe that we’re really competitive on deposit costs presently. So, we don’t think we’ve got a lot of — I mean, we’ll obviously have some increases in deposits due to competitive rate pressures. But at the same time, we don’t think we’ve got nearly the hill to get over that we’ve already conquered.
Timur Braziler: Okay. And then maybe one for Terry in the release, you mentioned a couple of times more vulnerable competitors and asking your line leaders to accelerate their efforts in recruiting. Can you maybe just talk through the competitive landscape? I know you’ve had good success in picking up talent and market share from some of the larger banks. Now there’s some dislocation from regional banks in that space as well. Maybe just talk through the broader competitive landscape? And then if you could put some numbers around what I know accelerating effort for recruiting might look like in ’24.
