Operator: Thank you. Your next question is coming from Casey Haire from Jefferies. Your line is live.
Casey Haire: Yeah, thanks. Good morning, everyone.
Terry Turner: Hi, Casey.
Casey Haire: Wanted to just follow-up again on expenses. So, just to clarify, the base, I’m assuming that’s off the 922, which includes the FDIC assessment. And then just what is the — what are some of the factors, given it’s a wide range, you know, about five percentage points between the high low? Like what are some of the factors that get you to the high end of that range versus the low end?
Harold Carpenter: So, Casey, just to be clear, what — you said a 922?
Casey Haire: Yes. Sorry, whatever your, I’m sorry, whatever GAAP expenses were in ’22. Basically, your guide is based on ’23 expenses, which includes the FDIC assessment, correct?
Harold Carpenter: Yeah. What’s on the slide would not include the FDIC insurance special assessment. So with the mid to high double-digit, you need to take out that special assessment.
Casey Haire: Okay. Got you. All right. And then — and then just what are the, you know, some of the factors that get you to the high-end versus the low-end?
Harold Carpenter: I think if we can hit our revenue targets in the way we think we can, I think that will drive our incentive costs up, and that will drive our expense base up. I think if we have a strong year in our hiring, that will also trend our expenses up. Our expense guidance does include Jacksonville, so we’ve embedded that as well in there, and we’ve got high aspirations for what we believe the leader we hired in that market can accomplish.
Casey Haire: Thank you.
Harold Carpenter: Terry?
Terry Turner: I think that’s it, Harold.
Harold Carpenter: Okay.
Operator: Thank you. Your next question is coming from Michael Rose from Raymond James. Your line is live.
Michael Rose: Hey, good morning. Thanks for taking my question. Just a follow-up on BHG. In the press release, you mentioned that they exited some businesses. Can you just discuss what those are and what the — kind of the impact was to their kind of origination guidance as we think about 2024? Thanks.
Harold Carpenter: Yeah, they had that buy now, pay later franchise that they were developing. I think last year, they originated like 50 million in production, something like that. So they will wean off that. They’ve always experimented with this patient lending franchise. I think they’ve decided to abandon that as well. There’s a couple of others that are also on the list that I’m aware of. I’m not sure where they are with discussions with the people that work in those units. I think they’ve had discussions with them. I’m just not sure, Michael. But that is embedded in the production guide they have for this year.
Michael Rose: Okay, that’s helpful. And then just as my follow-up back to the margin, I think, if I’m doing my math right, it implies a pretty steep ramp in NIM progression as we move beyond kind of the fourth quarter, even against your expectations for rate cuts. Just wanted to kind of put a finer point on just that progression or earning asset growth, if you could. Thanks.
Harold Carpenter: Yeah. I think we do see NIM increases this year. I don’t know how fast you have it going up, but I think it will be fairly gradual. We might have kind of a down. The first quarter is going to be a challenging quarter. I think after that, we ought to see NIM progression that you all ought to be happy with.
Michael Rose: All right. Thanks for taking my questions.
Harold Carpenter: Thanks, Michael.
Operator: Thank you. Your next question is coming from Brandon King from Truist Securities. Your line is live.
Brandon King: Hey, good morning. Thanks for taking my questions.
Harold Carpenter: Hi, Brandon.
Terry Turner: Hi, Brandon.
Brandon King: So I noticed — hey — so I noticed that the spot rate for deposits was lower at the end of the year compared to the average for the quarter. So is it fair to say that deposit costs have already peaked?
Harold Carpenter: Well, I think until we get a rate cut formally, there will be some deposit creep, but it won’t be nearly at the pace we saw in all of 2022.
Brandon King: Okay. And then, on the mix side of things, how are you thinking about how the mix shift will trend this year, and how does that kind of flow into your assumptions on deposit costs?
Harold Carpenter: Yeah, that’s a great question. As far as the mix shift out of DDA into higher yielding deposit products, we still plan to see some more of that, but again, not like we saw earlier in 2023. But we do believe there will be some more attrition out of non-interest-bearing into interest-bearing products, but again, not at the same pace.
Operator: Thank you. Your next question is coming from Matt Olney from Stephens. Your line is live.
Matt Olney: Hey, thanks. Good morning, everybody. Just wanted to go back and revisit the ’24 outlook and what this implies for the year-over-year PPNR growth. It feels like you’re trying to say that there will be modest year-over-year PPNR growth even with the higher expense guidance, but just looking for any clarification around that.
Harold Carpenter: Yeah., I think our planning assumption is that we will. I think it will be, if you look at what the peers are looking at for next year, it’s a modest at best kind of year for 2024, but we fully intend to outperform the peer group. It probably won’t be consistent with, call it, years prior. But at the same time, we fully expect to see PPNR and net earnings accretion in 2024.
