And put that in broader perspective, when we talk about that, we had about a $1.2 billion in payoffs this past quarter. We’ve been running about $700 million to $800 million a quarter in our loan book, so about $500 million more in payoffs. If you look at a three-year average, we generally run about $1.3 billion in payoff activities. So we’re back to a more normalized level. So you could continue to see things like senior housing and some other CRE portfolios decline, just given the fact that production has slowed and payoff activities picked up. Bob, if you want to touch on some of the credit metrics?
Bob Derrick: Sure. Yeah. Specifically, to the senior housing metrics, 90% of our portfolio in that space is still pass-rated credit. So we have a fairly low ratio of rated loans there. Our charge-offs have been small and manageable, and non-accrual loans are also small. Specifically, the shrinkage there, to Kevin’s point of really the market — the payoffs beginning to pick up and the net effect of that would just be a reduction in that specific portfolio. Overall, though, we’re pretty comfortable with healthcare as an industry, we have a specialty vertical in our corporate and investment banking business that specializes in healthcare. It’s just that the senior housing portfolio itself, it’s a lot of real estate characteristics, is probably seeing some reduction relative to the increase in payoffs, but the credit quality certainly still remains managed.
Timur Braziler: Great. Thank you for the color.
Operator: Our next question comes from Christopher Marinac from Janney Montgomery Scott. Please go ahead.
Christopher Marinac: Thanks. Good morning. I wanted to dive into the deposit growth and the success you’re having there. Kevin and Jamie, can you give us additional background in terms of where that growth is focused? Are you looking at the sort of standard customer, using Jamie’s explanation, a few callers ago, or even would you take on a new exception customer, if it sort of fit your objectives?
Kevin Blair: You go ahead.
Jamie Gregory: As we think about deposit growth, it’s a very important component to our outlook for 2024. But before speaking to this year, I’d like to speak to 2023, because we had 3% core deposit growth in 2023 with significant headwinds in the first half of the year, including the $2 billion decline in non-interest-bearing deposits. And I think that that shows the strength of our production. I mean, production was up 83% year-over-year, and that strong production is basically result of renewed focus, driving deposit growth, incentive realignment. And we think that that’ll continue, and we think that that’s what is the underpinnings of our core deposit growth forecast for 2024. And so we have — our incentives are pushing it.
We have the intentional build-out of our businesses aligned around bringing in the full client, which will include increased deposit growth. We have a new leader in private wealth focused on full relationships. CIB is growing, and they’ve hired a liquidity specialist who’s partnering with new and existing clients to help bring liquidity solutions to our commercial clients. And our commercial lines of business continue to target clients with full-balance relationships. And one data point on that is, in our middle market business, we had 8% core deposit growth in 2023. And so we believe that fundamentally, we’re well positioned to grow deposits this year, and we think that that should see continued success.
Christopher Marinac: Great. Do you think that lower rates could actually trigger more C&I related movements in your business?
Kevin Blair: Well, number one, it could trigger line utilization increasing just as rates come down. We did see a modest increase in just same line balances this past quarter. But as, you know, Chris, for the last several quarters, we’ve seen folks using their cash to pay down lines. So I think lower rates will drive up some line utilization, one. Short term, if rates are going lower, it tells us that the economy is slowing, so there may be a latent impact of that. But longer-term or more moderate term, yes, I think it could drive up C&I as people are looking at projects again and starting to expand their facilities or add inventory as prices come down and the economic — the underlying economic conditions remain constructive. Yes, it would result in having stronger loan growth in that, kind of the out quarters.
Christopher Marinac: Great. Thank you both for the background. We appreciate it.
Kevin Blair: Thank you, Chris.
Operator: We will now take a question from Russell Gunther from Stephens. Your line is now open. Please go ahead.
Russell Gunther: Hey, good morning, guys. I just have a couple of points of clarification on the margin commentary. So, first the 4Q ’24 outlook of around 3.20%, that’s down from the 3.25% expectation earlier in the month, despite the better result in 4Q ’23. So could you just walk us through what’s changed?
Jamie Gregory: That is simply the reduction in the long end of the curve. So that’s the move from 4.5% tenure to a 4% tenure. That drove the decline from 3.25% to 3.20%.
Russell Gunther: Okay, excellent. And then just a follow up again then on the 2% to 4% decline using the forward curve. So are you guys talking relative to the margin on a percentage basis or is that NII dollars? And then are you guys thinking of the starting point as the 4Q ’23 result or relative to your 4Q ’24 expectation?
