Bob Derrick: Yes, hey Chris, thanks for the question. Right now, we’re at around 10% of our total loans is our SNIC book, and that’s what would be defined as sort of the official SNIC definition. We also have another 2% to 3%, a little over a billion dollars in what I would call sort of club syndicated deals, more of a regional level, so you kind of take those two together, we’re sitting around 13%, 10% of that being sort of true SNICs. Of that number, we’re agenting around $500 million of that, so for what that’s worth, we think that’s good fee business for us, etc. I think we’re comfortable in this range in terms of percentage relative to concentration limits. We kind of like that 10% to 12% range. We’re sort of there.
I think that’s our expectation, is we kind of manage the business going forward. We’ve been in this space a long time. Obviously it can bite you occasionally, as you saw, but nonetheless, we think we’ve got a really good group of bankers running that business, very focused on opportunities that that book can present us, and there are some, and we feel like we’ll just be more strategic there. But in terms of balances, I think we’re kind of where we need to be and we’ll stay in that range as we look ahead, it not slightly decline, but certainly in that range.
Christopher Marinac: Great, that’s helpful, thank you for that. Then Kevin, just a quick question about DDA flows from Maast. Are you seeing any of those now, or is that still going to be fourth quarter and 2024?
Kevin Blair: We’re starting to see some deposit flows. They’re still immaterial at this point because with the $500 million of payment transactions I referenced, that money moves pretty quickly, so the deposit story and the revenue that will come with it, we’ll make about $3 million in revenue in Maast this year, so it’s still in the infancy stage, Chris.
Christopher Marinac: Great, but a year from now, we can probably talk more definitively about progress there, just thinking about–
Kevin Blair: Yes, I think as you see the payment facilitation business pick up, and I think it’s important to note with that business, we’ve been intentional about slowly on-boarding clients. That’s why we talk about only having nine on the platform and 40-plus in the waiting room, just because we want to make sure that we get the product right. To your point, once we start on-boarding some of these new relationships, we’ve talked about getting half a billion to a billion dollars in deposits just from the payment facilitation business, and if we expand it into the banking-only side, there’s obviously a lot more in deposits that are at play there as well.
Christopher Marinac: Great, thank you very much for all the information today, and last night too.
Kevin Blair: Thank you.
Operator: Thank you. We now have Brandon King of Truist Securities. Please go ahead when you’re ready.
Brandon King: Hey, good morning.
Kevin Blair: Morning Brandon.
Brandon King: Jamie, I wanted to take another angle at expectations for NIM expansion in the back half of next year. You already laid out your assumptions, but could you just–you know, how are you thinking about it, just lay out what you think the biggest risk is to that potentially being pushed out or maybe not being realized according to your current expectations?
Jamie Gregory: I think the biggest risk when you think about the margin out there, I would say first is Fed policy. If you have big moves on either side of Fed policy with their balance sheet, if they were to draw down the RRP significantly and take a lot of liquidity out of the system, I think that could be challenging for the banking industry. But then also, if they were to start easing in the second half of next year, the same lag that benefited the industry on the way up would be a headwind, so if you’re just simply looking at the margin at the end of next year, if you assume that the Fed starts easing in the second half or third quarter of next year, then that will be a headwind. Now, I would argue it’s a temporary headwind because it’s the lag, and as we’ve said before, we believe that our sensitivity to the front end of the curve in an easing cycle is relatively flat, so we would not expect that in itself to be–to contract the margin.
But the lag would definitely be impactful whenever that happens, so Fed policy is a risk, and then I would say just general deposit mix shifts are a risk. We’re pleased with the trend of the slowing decline in NIB in the third quarter. We expect the decline to slow again in the fourth quarter and then slow again end of 2024, but that’s–I would point to those as some of the risks to that outlook.
Brandon King: Okay, very helpful. Then a follow-up to your commentary on the loan spreads and how that could impact the loan growth of the bank. You also mentioned that you expect to grow faster than the market, and you would think, I guess with higher loan spreads, maybe that would slow down growth theoretically, but could you just help us square those items?
Kevin Blair: Brandon, I’ll take that. I think those two are not necessarily correlated in that what we’re doing today in the marketplace is we’re just being more selective at where we want to lend capital, and that allows us–with the competition pulling back a little bit, it allows us to pull up our pricing, and as Jamie mentioned, when you look at the variable rate spread over index, we’re up 80 basis points year-over-year. When we look into the future, and a lot of the loan growth will be based on where demand goes, we’ve talked a lot about production was off about 9% this quarter over last quarter, pipelines are relatively flat right now. The economic impact to demand will determine kind of how fast we grow loans, and as Jamie mentioned earlier, we also want to correlate that back to the similar level of growth we’ll see on deposits.
But what we’re optimistic about is our ability to continue to grow C&I loans through our CIB organization, through middle market and through some of our speciality areas. Maybe the one question mark and wildcard for 2024 will be what happens with the pay-off/pay-down activity in CRE. As you know, we haven’t seen a very constructive marketplace there, given where cap rates and interest rates have moved, and so we haven’t had a lot of pay-offs and pay-downs, so our production next year in CRE, it may be hard to keep up with some of the pay-offs and pay-downs that have been delayed through this cycle. But we’re just as bullish on the areas that we can grow, and as you noted, our goal is to continue to exceed the rate of growth of the underlying economy.
Brandon King: That is very helpful color. Thanks for taking my questions.
Kevin Blair: Thank you.
Operator: Thank you. We now have Kevin Fitzsimmons with DA Davidson. Your line is open.
Kevin Fitzsimmons: Hey, good morning everyone. Just a quick question on the bond portfolio. Some banks have pulled the trigger on restructuring. Is that something that is on the table, or would you focus more on just doing what you’ve been doing, using the cash flows to help fund loan growth or perhaps pay down wholesale borrowings? Thanks.
Jamie Gregory: You know, Kevin, as we look at the bond portfolio, we would consider restructuring. I don’t think it would be incredibly significant. I mean, you think about the capital we have, that we call excess capital, being at 10.13, there’s limitations to how we would use that capital and how much we would use on something like a bond restructuring. But I think similar to what you’ve heard from others in the industry, if there is a restructuring that makes sense and you get a two-year payback, two and a half year payback or something like that, it could be something that we entertain. But at this point today, we don’t have any intention to do that, but it’s something that we do look at from time to time.
Kevin Fitzsimmons: Okay, great. Thanks. One quick follow-up. On the sale–on the Globalt, you mentioned that–about streamlining your–I forget the exact wording you used, but about streamlining, so I’m just wondering if you can add a little more color on was it competing with some other–you know, the bank’s larger wealth management platform, or what was it about it that made you want to streamline with that sale? Thanks.
