Jamie Gregory: That’s right. And so let me talk about that for a second, as we look at the margin, you will see the decline in the third quarter, and then you are right, we do expect relative stability. But the benefit of fixed rate asset or exposure repricing will come through, and here in 2023, it will likely be offset by the kind of tail end of this deposit cost increase and then you start to get the benefit in 2024. But just to put numbers on that, in any given month, we expect approximately $250 million of fixed rate loans to paid off or paydown. And when you look at the impact of that as you go forward, looking forward about a year, there’s about an 11-basis-point impact to the margin a year from now, just due to the fixed rate loans repricing and that’s mortgages plus commercial loans.
So we have that tailwind and that’s excluding the benefit of securities, which have a little bit slower paydown and hedges and we have another $1 billion of hedges that mature in the first quarter as well. So, you are right to point out that, that is a tailwind and that’s what we will start to see in 2024 and we believe that, that’s going to be the platform for growth as we look at revenue going forward.
Steven Alexopoulos: Got it. Thanks for all the color.
Jamie Gregory: Yeah.
Operator: Our next question comes from the line of Brady Gailey with KBW. Brady, please go ahead. Your line is now open.
Brady Gailey: Thank you. Good morning, guys.
Kevin Blair: Good morning, Brady.
Brady Gailey: So maybe just a little more color on why you guys are exiting the medical office space and I heard the comments on the call about how it’s a low return business. Maybe just a little more color on what made that a low return business for you all and a little more color on why you made that move?
Kevin Blair: Yeah. Brady, thanks for the question. First, we are extremely pleased with this transaction and the performance of the team that built this business. The pristine nature of the credit in this portfolio, the medical office CRE portfolio was evident really throughout the diligence process and it led to the strong pricing that we have on this portfolio. But to your point, this portfolio performed exactly as designed and it was a great asset for the bank and a zero interest rate environment where a high single-digit ROE was accretive. But in this environment with much higher interest rates our return requirements are a lot higher. And as a part of all of our more broad balance sheet optimization efforts, we determined that this portfolio was one that was not as core of a fit, given that it has very low relationship value, even though it’s pristine credit but a high single-digit ROE.
And so it helped us achieve a few of our key strategic objectives. First, it accelerates the timing to our capital objectives that we believe position us really well for growth going forward. Second, it improves our liquidity profile and it helps increase our core deposit funding percentages. Third, these capital and liquidity benefits will really give us the platform for growth going forward and it also reduces our CRE office exposure. The cost of this, I mentioned high single-digit ROE, it’s really about a 2% spread is the way to think about it and that will be a headwind to us in the near-term. But longer term, we are convicted that we can go and build and grow core clients, deep relationships that offset and exceed the lost NII from this portfolio.
