James Mabry: Good morning. Catherine. This is Jim. So —
Catherine Mealor: Morning.
James Mabry: Morning. So, as you know we — talking about margin, other profitability performance metrics to really start with the balance sheet. I do want to see it in the numbers, but I think we’re very proud of how we’ve grown deposits here in the last, you know, couple of quarters. I think our growth in core deposits in Q3 was about 11% annualized. And so the balance sheet remains a focus. And certainly, everybody’s focus was sharpened by the events in early March. And we, like others, leaned in the wholesale funding, and since that time, we’ve tried to, you know, reduce our reliance on those wholesale sources, and that remains a goal. On Federal Home Loan Bank, we’re down to $100 million, and that will not go any lower because we’ve got a very attractive rate on that $100 million of about 70 basis points.
And now the focus remains to lower that reliance on broker deposits. I think we reduced that a little over $300 million in the quarter. And our goal is over the next few quarters to get that down to essentially zero. So I say that as a backdrop to margin because the balance sheet, we start with a focus there. And then as we think about margin and looking for a couple of comments, we do see continued pressures on the margin. I think as we look at Q4, my expectation is that the margin will continue to compress and probably a bit more than we saw in Q2 to Q3, but less than the compression that we saw Q1 to Q2, in terms of margin. NII will sort of follow that, you know, trend, I guess, and it certainly grows, will help a bit, but I think NII directionally will follow what we foresee in the margin.
As it relates to, you know, looking forward to ’24, we see some really encouraging signs, Catherine. You know, it remains uncertain and, you know, volatile environment, as you know. So sort of predicting where things might bottom is a tough thing. But, you know, one of the things that we were struck by in our quarter was the moderation in NIB decline. So we did see a decline in noninterest-bearing balances in the quarter, but it was meaningfully less than the decline we saw from the Q1 to Q2. So things like that give us hope that we’ll see some stabilization in ’24, but remains too, I guess, uncertain to call when that might be.
Catherine Mealor: Great. And on loan repricing, that’s I think, the tailwind that we’re all looking for ’24 as we think about, you know, when then bottoms and then when we start to — how much of an increase we can see throughout ’24. Is there any — can you kind of talk about, you know, maybe the amount of loans that — fixed rate loans that you know are going to be repricing over the next year and what kind of upside that can — might bring to your margins?
James Mabry: So a couple of things. I think in terms of fixed rate loans and the repricing opportunity there, we’ve got about $200 million in Q4 that will reprice next. Those loans are roughly carrying like a 5.40% or 5.45% rate. And then for ’24, I think it’s a little over $600 million in loans in a slightly lower rate, like 5.25% or 5.30%. So there is some repricing opportunity there. Another thing may be helpful, Catherine, I think in prior calls, we’ve talked about, you know, sort of giving you a monthly look, not just a quarterly look, but a monthly look. So I would tell you that if you look at loan repricing for the quarter, new and renewed was 8.27%, and for the month it was 8.34%. But, you know, the other side of that is when we just talked about in terms of the pressures, interest-bearing deposits for the quarter were at 1.98%, and for the month of September were 2.10%.
So you can see those pressures still persist. But again, there are certainly some repricing opportunities in ’24, and we look to capitalize on those.
