Dennis Zember: We made $700,000 or $800,000 or so in the second and third quarter. I think we’d be probably 25% higher than that in the second and third quarter. I don’t think we normally would have broke even — I mean, excuse me, lost money in the fourth quarter. So I think a little bit of that has to do with some rate fluctuations and the fourth quarter seasonality. But I mean we made — I think altogether, we made like $300,000 in mortgage during the year.
Matt Switzer: $600 million.
Dennis Zember: $600 million. And the incremental, I think, would probably could be somewhere $900 million, maybe even $1 billion, and it’s going to be incrementally much more profitable, just given the fixed expense burden there is not expected to grow. If we made $300,000 this year, and we were able to increase volume to $900 million, which it looks like we’re going to be able to do. Probably $3 million…
Matt Switzer: Yeah. That’s what I was going to say, pretax.
Casey Whitman: Sounds good. Thank you.
Matt Switzer: Yeah. Thank you.
Operator: Your next question comes from the line of Russell Gunther with Stephens. Please go ahead.
Russell Gunther: Hey, good morning, guys. Just wanted to start on the loan growth commentary about 10% for 2024. Can you just spend a minute touch on the mix, maybe particularly addressable Life Premium Finance and Panacea as well?
Dennis Zember: I mean I think Life Premium and Panacea both could — if we let them out of the barn, I think they could probably get good enough growth to move the needle for a much larger bank. So some of what I’d tell you here is muted relative to what their real opportunity could be. But Tyler has got great production capabilities, but he’s also working on flow agreements and loan sale opportunities. So I don’t know that as much of that will hit the balance sheet, probably $100 million to $150 million on our balance sheet for Tyler for Panacea. I think Life Premium finance probably in the $150 million range probably. Life Premium is getting yields that are just remarkable, the expense burden is just unimaginably low. And then I think the core bank probably could do the same as either of those divisions.
I just think the — I don’t know for sure that the market is there. So kind of what gets us back. It’s probably $150 million in each of the divisions and probably somewhere around $75 million to $100 million in the core bank.
Russell Gunther: Okay. That’s very helpful.
Dennis Zember: Yeah, long term, I’ll just make sure everybody knows, long term, we would love to be driving more activity through the core bank, and there is the potential there, and we’ve got the horses. I think we’re all just realistic. I don’t know that the market or the economy is going to be there for that.
Russell Gunther: That’s really helpful color, Dennis. And then maybe just switching gears to the margin. So again, you guys talked about the success you have with new deposits at a much lower rate than where the loan yields are coming on and we’re looking at 10% loan growth. So could you spend a second just thinking through how that core margin trends in 2024, maybe set expectations for us, what you’re thinking with regard to Fed funds in that expectation as well?
Matt Switzer: I don’t know that we have a core [fit] (ph). There’s a heated debate internally over the passive Fed funds, Russell.
Dennis Zember: Matt is laughing because he won the bet last year .
Matt Switzer: Yeah. I won the bet. I feel like I’m going to win it this year. I mean, I’ll give you scenario, if rates were flat, we think margin would continue to grind higher from repricing and we think we could continue to moderate deposit costs. And on the balance sheet growth that Dennis just alluded to, I mean, we’ve already got $100 million of that essentially funded. So we think margin will continue to grind up probably by the end of the year to the mid-3.30s, 3.35% range. A couple of rate cuts depending on when they came in the year arguably may cost us a couple of basis points. And I think that’s going to be true for the whole industry. I don’t think we get as an industry, a whole lot of benefit from two rates cuts because of the shape of the curve. So maybe we’re 3.25% to 3.30% if we get a couple of rate cuts, but that’s all — it’s hard to predict, but that’s kind of what we’re thinking.
Dennis Zember: I think overall, we’re — I wrote this in my comments, and then I deleted it because it was just numbers the way I wrote it. But I think we’re positioned really well. Rates going up, rates going down. Matt and I both believe that a couple of rate cuts is not going to bring any relief. I mean a 5% Fed fund is not going to bring relief on deposit costs. I mean, because deposit cost for the industry is still in the 2s mostly. So I just don’t think that deposit costs are going to start drifting lower dollar for dollar. I don’t think we’re going to have a pretty high beta on the first couple of rate cuts anyway. So…
Russell Gunther: Well, that’s helpful, guys. I appreciate just framing that narrative. The follow-up would be that margin guide is relative to that core $309 million from this quarter?
Matt Switzer: Yes. Yeah.
Russell Gunther: Okay. Great. Thanks for that. And then just last one. It seems like you’re getting increased capital flexibility here. I’d just love some comments on buyback expectations and hurdles to getting that done.
