Stephen Scouten : No, 100%. That’s very helpful, Terry. Appreciate that. And then maybe kind of hopping back to credit. I mean I know, Terry, you said you obviously expect some normalization over time, and you guys have been running the bank successfully for a while and gone through credit cycles, there seems to be a big disconnect between what people are expecting or what fears there are around credit and what banks are actually seeing. Can you tell us for you guys what gives you the most confidence that, that normalization won’t be catastrophic or what have you or what some people seem to be expecting on the downside?
Terry Turner: Yes. I think the principal thing is how we develop our business. And so just a quick reminder, what we do is we target experienced bankers who somebody has seen be successful at that job or the average experience of the people we hire is 26 years. And so, when you’re hiring people that have been at it for 26 years, handling the book of business for 2.5 decades. It does produce rapid growth because generally, they handle that book that long, and they could move the book quickly. But more importantly, it produces outsized asset quality, because they leave the bad credits behind because they’re well familiar with what’s going on with those credits and so forth. And so again, my belief is that, that has accounted for the outstanding credit performance that we’ve had.
And I believe that it will continue to do that. Some people can go back and say, “Well, Terry, how did you do in the great recession, you have outside losses.” I think I’d say two things on that, Stephen, for whatever it’s worth, it’s a little more than yes, but I just — I don’t mind the comment on it. When you look at the — if you call the Great Recession, the period from first quarter 2008 to fourth quarter of 2012. In that period of time, we lost a little less than 5%. That’s a horrible number, but all our major competitors, the banks that we’ve talked about here, regions, First Horizon, Bank of America, SunTrust at the time lost anywhere from two times to three times that level. And so, it was an outperformance, although it was a bad number.
And so, we said, well, what made it bad? We had just completed two acquisitions immediately prior to going into the Great Recession. Our natural model didn’t produce much in the way of commercial real estate, but the acquisitions that we made left us with the concentration in residential real estate at the worst possible time to have one. We don’t have that concentration today. And so, the combination of the model and the differences in our company today versus prior cycles are the principal reasons I feel good about where we are.
Stephen Scouten : Perfect. Helpful. And maybe one just last clarifying question here. You just mentioned consumer real estate, which you guys don’t have a lot of this time around, which is great. But I did notice that you took the reserves up there to like 148 as a percentage of those loans from 127. Harold, is there anything meaningful there that drove that increase? I think there’s recoveries in that portfolio year-to-date. So, we’re just kind of surprised to see it tick up there.
Terry Turner: Yes. I think the Moody’s model is what is driving that increase in the outlook for those borrowers may require that small percentage increase.
Stephen Scouten : Got it. But nothing specific that you’re seeing there right now that gives you any real outside comparison.
Harold Carpenter : No, not really. I don’t think we’ve seen anything of any consequence in that book — we certainly — I don’t think we anticipate any losses in that book.
Operator: The next question is coming from Brandon King from Truist Securities. Brandon your line is live.
Brandon King: Good morning. So just wanted to get an idea of thoughts on the securities portfolio. I know there was some more restructuring in the quarter. Just what are your plans there for how that should trend going forward?
Terry Turner: Yes. I think we’re about where we need to be on securities. I don’t — we don’t have any imminent plans to do anymore. We will probably hold right here and see what happens with intermediate rates here. I think we’ve gotten the segments of the securities book that we were looking to get. So, we’re going to hang on right here and see how it goes from here.
Brandon King: Got it. And then, Terry, I just wanted to take another angle, just to plan to accelerate hiring. Could you just talk more about the type of talent that’s available and kind of how that compares to maybe a more normalized environment?
Terry Turner: Yes. I think the — so the type of talent that’s available are the biggest category of revenue producers for us is — we use the term financial advisers. Most of the industry calls them relationship managers. But what we’re speaking of are bankers who control a book of business, a book of clients and the focus there would be what wealth management advisers, small business advisers, and middle market advisers. So that’s really where most of that hiring should occur. The other categories of revenue producers, we’ve been pretty successful in other wealth advisory. And when I say that, I’m speaking to both brokers, trust administrators and so forth. So those are sort of secondary categories of revenue producers. But the largest segment is just what you might think of as an old-fashioned relationship manager that handles a large book of banking business. Am I answering what you’re asking, Brandon.
Brandon King: Yes. And I just wanted to get a sense of are you seeing kind of maybe a higher level of talent that’s more available now compared to a couple of years ago?
Terry Turner: It would be hard for me to say that the talent itself would be at a higher level than the talent that we’ve hired, but I would say that the — we have an expectation that the volume that’s available is more than it’s been over the last 12 months to 24 months.
Brandon King: No, that’s fair. And then just lastly, Harold, if you could give us a sense of what you’re thinking about as far as the runoff of FHLB advances and runoff in broker deposits and wholesale funding.
Harold Carpenter : Yes, the FHLB advances, I think, have longer terms. I don’t think they’ll be running off very much here until next year. Broker deposits, I think we have some meaningful deposits that are coming up for renewal in the first quarter of next year, Brandon. And so right now, we intend to just pay those off and rely on our core funding growth to replace it.
Brandon King: Got it. Got it. And do you know — do you have the amount on hand of what’s up for renewal in the first quarter?
Harold Carpenter : I think it’s about $300 million something like that, $300 million or $400 million. We reduced our wholesale deposits on this quarter, and we intend to do it some in the fourth quarter as well, but I think there is a meaningful number that comes up in the first quarter.
Operator: The next question is coming from Matt Olney from Stephens. Matt your line is live.
