Chris McComish: I would say that if you look through the year of 2023, Mike, as Fed funds got to the fore handle is when the competitive intensity for rates in the marketplace really picked up and that was significant all the way through the third quarter. We took the approach of being proactively working very closely with our customers to retain and grow deposits as they made sense. We built a very efficient pricing process to be able to be beneficial to our customers while at the same time doing everything we could to manage the margin. We feel very good about that performance and we’re seeing it in our customer experience surveys and then how we manage through that. We will continue to stay focused on customer retention and as well as expansion of wallet within our customer base as well as new customers out there.
The deposit intensity is still there. I would say it’s a notch lower than it may have been earlier in the year that $100 million worth of customer deposit growth that’s the best quarter we’ve had in a while. And it’s representative of a couple of things; one, just day-to-day, everyday outreach; but two, some of the work we’ve been doing, particularly in the commercial business around development of some treasury products and treasury management products and capabilities and distribution networks that’s helped increase a lot of activity.
Michael Perito: And then just lastly for me, you guys, even the tougher market performance today for the bank group aside, I mean, you guys still have a pretty decent relative currency here. Any updated thoughts, Chris, on where the M&A market kind of stands here? I mean, it feels like we are close to maybe turning the page a little bit and at least seeing smaller size fuel activity, would love to hear what you are seeing?
Chris McComish: I would say that — I would characterize that — you are using a little bit different words I would, but the way I’ve described it as people seem to be talking about talking about it, where earlier in the year they weren’t talking about it. And so yes, we absolutely expect to and desire to participate in consolidation and lead those opportunities, and it’s the work we have done. Mark talked a little bit of the expense growth that we have had and a lot of that’s been built on adding talent and infrastructure both within the front line to be able to support the growth of the company but also in risk management areas and other functions of the company to be able to build that foundation for growth that’s — I have been here now just almost two-and-a-half years and that’s been two years of solid work, and I feel great about where we are from a foundational standpoint.
And we think the opportunities are going to be more attractive as we move forward into ’24 and ’25.
Operator: Your next question comes from the line of Manuel Navas from D.A. Davidson.
Manuel Navas: In the past, you have talked a little bit about some NIM protection with rate cuts kind of a little bit more closer to happening. Have you added more since last time we talked added more swaps? What are you kind of thinking on how the NIM can perform on the way down?
Mark Kochvar: We haven’t had any more swaps but we have continued to add some fixed rate loan exposure. And unfortunately, depending on how you look at it, the increase in the cost of deposits, especially those that are non-CDs, gives us something to reduce on the way down. So in the last cycle, from the last cycle, current to now, we have reduced our sensitivity to rate by about half. So we still have that exposure that I talked about before that is about half of what it was in previous cycles due to the better mix of deposits that we have and the swaps and better loan mix from a fixed to float standpoint.
Manuel Navas: Chris was excited about the 5.5% core deposit growth, is that — and you talked about some of the initiatives that you are doing. Is that kind of all tied up to like keeping the loan-to-deposit ratio where it is, you see it improving? Just can you talk a little bit about deposit trends on the volume side?
Chris McComish: So it is — whether it’s to keep the loan-to-deposit ratio at a certain level or not, we firmly believe that the essence of a customer relationship stops and starts with their deposit relationship. It’s been the focus that we have had for a while. And so we have added talent, we’ve built product. we have done a lot of work within our company from a data and customer analytics standpoint, which is allowing us to be a lot more targeted from the standpoint of spending time with those customers who we believe have more opportunities and a lot of proactive customer outreach. And it’s a positive thing for our company where if you look at our net promoter scores and some of the things we have from a customer experience standpoint, we’ve got really strong relationships, and that gives us an expansion opportunity.
So the team, their focus, their skill set, the product capability that we have, the data and information that we’ve got backing us up, all of those things factor into some of that loan growth — or that deposit growth that you’re seeing. And our goal is to continue on those trends.
Manuel Navas: My last question is on like loan growth speed. I understand there’s some seasonality. But do you need rates to improve that pace, if they come down, like, how do rates kind of impact your kind of your appetite for loan growth…
Chris McComish: I’ll ask Dave to jump in. But one argument could be if rates go down really fast that might tell you there’s a slowdown in the economy, which might be a slowdown in loan demand for our entire industry. We have a lot of conversations with customers, they’re certainly attuned to the rate environment. But for the most part, they’ve worked through this rate cycle and it’s really more of being with the right companies at the right time that are looking for growth and being able to deliver for them. And that’s where the work that David and the teams have done to add talent to the company and stay focused. I don’t know, Dave, if you want to add?
