David Feaster: Okay, that’s helpful. And then maybe just touching on the other side, touching on the funding side of the coin, you’ve done a great job driving core deposits in the quarter, reduced reliance on wholesale funding. I’m curious, maybe — you talked about kind of deposits being down modestly, focusing on the remixing. Just curious where are you seeing opportunities to drive core deposit growth? How is pricing on new core deposits that you’re seeing in that interest-bearing side? And then just kind of — how quickly do you think you’re going to be able to reprice some of these? If rates do get cut like you’re talking about, how quickly do you expect to be able to reprice some of these relationships lower?
Jay Brogdon: Yes, some good questions there, David. So I’d say this on — again, we were very pleased with the results and some of the underlying trends on the deposit side. NIBs were down again in the fourth quarter, but at a slower pace, a moderating pace. We hope that trend will continue here early in the year. So we’d love to see that NIB troughing out. But, you know, on the interest-bearing side, savings accounts, money market accounts, et cetera had an incredibly strong quarter there. That really bucked the trend relative to other recent quarters. I’d tell you if you unpack that piece of the deposit growth for the quarter, the consumer front remains very, very stable as candidly it has been for some period of time. You know, you have a little bit maybe of downward pressure in the quarter, but it’s very modest and it’s probably nothing more than just kind of holiday spending, if you will, on the consumer side.
So feel really stable there. But we saw some good growth on the commercial side. That’s been a key focus for us is to continue to grow in the commercial area. And so, we had some — we had some nice wins in that regard in the quarter. Some of that will be timing-related, some — you know, we won’t — not 100% of those dollars are going to be sticky. Some of that is commercial customers planning for some things in the first part of the year, et cetera, but again, very good indications and good results of strategically what we’ve been focused on there. You know, the results of that combined with the portfolio sale in the quarter allowed us to really pull down some of the higher cost wholesale funding that will continue to be a focus for us all throughout the year here.
On your other question kind of related to timing of, you know, in a rates down scenario, what that would look like. We do screen a little bit liability sensitive right now, especially if you look at it on a 12-month basis, I think you’d see maybe a three-month to six-month period in there where we’re more neutral to maybe even a little bit asset sensitive. But as you move past those first few months, you’re going to see some liability sensitivity in our balance sheet, and we have some information on that on page 16 of the slide deck.
David Feaster: That’s helpful. Thanks, everybody. Great quarter.
Bob Fehlman: Thanks, David.
Jay Brogdon: Thank you, David.
Operator: The next question comes from Brady Gailey with KBW. Please go ahead.
Brady Gailey: Hey. Thank you. Good morning, guys.
Bob Fehlman: Good morning, Brady.
Brady Gailey: I want to make sure I understand the expense guidance on Slide 11. So you’re basically looking at adjusted annualized expense base of $548 million and saying that you could see roughly 1% growth. So that would translate into expected 2024 expenses around that $555 million mark. Is that the right way to think about total expenses?
Jay Brogdon: Brady, I think — I think you’re all over it. That’s exactly right. And again, that’s another one where there were a lot of puts and takes in 2023, particularly given some accrual adjustments and whatnot. We think, you know — what we really tried to outline on slide 11 is that when we launched into the Better Bank Initiative, our infrastructure, our you know run rate from a non-interest expense point of view was around $566 million. We guided to $15 million of savings as a result of those initiatives. Exceeded that really throughout the year this year. And as we look at the guide that 2024 guide is sort of a two-year outlook from when we initiated the Better Bank Initiative. And we see expenses down kind of 1% to 2% on a two-year outlook there.
So we’re very proud of the progress we’ve made there. Again, I don’t want to call that sort of finished with a bow on top. We are continuing to focus on those initiatives. We’ve got some as I’ve alluded to in prior conversations. We have some investment opportunities that will continue to evaluate, but we have a very strong, continuous improvement mindset. And we think we’ll be able to offset a lot of the inflationary pressures that are out there. And all of this, I think, is going to result in some positive operating leverage for us as we move into the future here.
Bob Fehlman: And Brady, one thing I’d just reiterate what Jay just said is we showed our baseline of Q4 ’22 and the savings there, but the inflationary pressure was there in ’23. It will be there in ’24, but yes we’re still showing that we’re going to relatively hold the line on the expenses.
