Steven Young: Yes, Michael, it is Steve. You’ll remember, in March when we had sort of the banking turmoil, we, we went ahead and, and did a brokered CD offering. I think it was $1.2 billion or so and then we also borrowed $900 million of Federal Home Loan Bank and that was just sort of an abundance of caution with all the turmoil going on and what you’ve seen over the last couple of quarters is; one, we paid-off the $900 million of Federal Home Loan Bank as worries have died down and then the brokered CDs are starting to roll-off. So, we typically right now I think our brokered CD is at around 3% of our deposits, give or take. I could see that coming down a little bit but it, I wouldn’t be at an abnormal level for us to be around 3% brokered deposits, it could go lower, but it wouldn’t be an unusual event for us to stay, hang out in that general range.
John Corbett: And I would say, and echoing comments that I think some of our peers have made in their calls, we’re seeing the — while there’s still deposit cost pressure, the rate of change has slowed a bit in the — it looks like the heaviest competition in that regard is behind us.
Michael Rose: Okay, great. Maybe just finally for me, do you have a sense for what the new loan production yield was and maybe what the margin was for September? Thanks.
John Corbett: Yes, so our new loan production yield for the third quarter was around 740. I think it is a little over that, 742 on the new funded yield, it is a little higher than that for September. I don’t think we just have the September margin numbers, but I think it was for the most of the quarter, it was not all that far different from our ending quarter. But a few basis points here or there. The margin moves obviously a few basis points on 30 days versus 31 and so on, but it was reasonably stable most of the quarter.
Michael Rose: All right. Thanks for taking my questions guys.
John Corbett: Thanks. Michael.
Operator: We will move next to David Bishop at Hovde Group.
David Bishop: Yes, good morning gentlemen.
William Matthews: Good morning.
David Bishop: I’m curious, circling back to the preamble, you mentioned sort of a lifecycle that the banking industry and paying attention to the credit cycle here we saw them, the one-off, net credit you alluded to in the charge-off, but maybe peeling back the onion, just curious your recent reviews of our financials, anything that’s standing out from a credit deterioration perspective that maybe not be, not showing up in the numbers, but areas where you are pulling back from or are being a little bit more cautious on these days?
John Corbett: Yes, I mean, David, the pipelines are, are, are trending down. I mean, I think the, the Fed is getting what they wanted with liquidity being tight. I think, borrowers are more cautious, banks are more cautious. So, so we anticipate for the industry that, that pipelines will shrink. Now, the interesting part is I think the loan growth will be a little bit disconnected from the pipeline trends. While pipeline trends will be going down and probably new loan production will be going down. Payoffs have screeched to a halt. And there still some funding of the loan production that we did the last couple of years, so, I think that we’re going to see probably mid-single-digit kind of loan growth continue, but it will be on lower production levels than we’ve had in the past, but from a credit standpoint, we’ve talked about in the past, the areas that we see having the most stress in the short-term is probably a small-business, SBA kind of loans.
The assisted-living space just never really recovered from COVID and they continue to face labor pressures and everybody is talking about office. We think we’re going-in and our loan review team is being very conservative and forward-looking on how we’re looking at grading loans. And so, I think it’s forcing the conversations with borrowers in advance of maturities, which is the way it should work. So, anyway, that gives you some picture of our sense of where the credit risks are and where the production trends are headed.
David Bishop: Great. Appreciate the color.
Operator: And we’ll go next to Brody Preston at UBS.
Brody Preston: Hi guys, how are you this morning?
John Corbett: Good morning, we are doing well.
Brody Preston: I just wanted to clarify something on the expenses, real quick. Will, did you say, you said mid-240s, is that accurate?
William Matthews: Yes, mid — the exact middle pointed out would be $245 million, that’s the mid-240s I was referencing. Sorry, that one more clear.
Brody Preston: No, no. I just wanted to make sure because the live trends were picked-up mid-220s which [Multiple Speakers]
William Matthews: And let me also clarify, I should point out that it does not include, of course, the FDIC special assessment, which has not, if it gets finalized this quarter, we’ll all be booking it in Q4. And for us, it’s around $25 million. But that’s not in those numbers obviously.
Brody Preston: Got it, okay. On the, on the portfolio restructure, you said that you’re not going to do the whole kitchen sink maybe nibble around the edges I guess. What, what does nibbling around the edges look like in terms of size and I guess maybe the securities that are coming due, more near-term that maybe have lower loss content to them like — are there — is there a sizable portion of the portfolio that’s may be lower-yielding that’s maybe coming due at some point in the next 12 months that you could look to punt on that could generate some reasonable EPS accretion?
Steven Young: Sure, Brody, this is Steve. As we have thought about it and continue to monitor and think about it, yes, I think, yes, we are thinking about like size, I don’t think it would be certainly not more than 15%, probably 10% or so of the available, excuse me, of the investment portfolio book would be something to look at and then I guess as we think about EPS accretion, earn-back, all that would be anything else we do on the capital side. We would want that earn-back to come within three years. So, I think as we think about the whole options on the table relative to capital whether, as Will mentioned, the buyback, whether it’s bond restructuring, whether it’s growth, whether it’s M&A, we’re thinking about them and inside the same lens of course on bond restructure, you have less execution risk, but at the same time, there is other, other pieces and parts that we’re looking at from a capital management.
And I’m really glad that we’re in a position where capital has grown over the last year, the earnings, the PPNR earnings have been really good and, and the loan-loss provisions have been stocked away, so I think we’re in a good position to have some flexibility.
