John McWhorter: Yes. It seems like since going public, we’ve always said just count 10 basis points, but we’ve never really come close to the 10 basis points on it, and I don’t see any difference this year.
Graham Dick: Okay. Good to hear. All right, thank you, guys.
Operator: Our next question comes from the line of Jim Mitchell with Raymond James. Please proceed with your question.
Jim Mitchell : Hey, good morning, everyone. I just want to start out. You guys mentioned the loan pipeline still looks strong. I was just wondering if you could give us any color on where you’re seeing that. And then what kind of rate are you putting new loans on in the fourth quarter?
Bart Caraway: Yes. So what I would tell you is it’s still rather difficult on the CRE side, just because as with rates have gone high enough, I’m sure all the other banks are seeing it, too. It’s much more difficult to find a CRE loan that gets past approval, meets our criteria, just because of the rate environment. But we do think that we’ll end up with some good customers that we kind of cherry pick on that. Most of our growth is really going to be on the C&I side and then some on our specialty finance side of it. But overall, I think we’ve just had been very fortunate we have a really strong customer base that as we’re cherry picking the rest of their business coming over, is providing most of the growth to us on it. So John, do you have anything else to add?
John McWhorter: Or yield on new loans, prime 8.5. I mean, we’re typically new loans are going in the books between 8.50% and 9%.
Jim Mitchell: Yes. Awesome. Very helpful. And then when we think about like loan repricing in ’24, do you guys have any kind of breakdown on what your variable rate loan book is and chunky fixed rate loans that are coming due in the year?
John McWhorter: Yes. Our floating rate loans are about 60% of the portfolio. I mean we’re very evenly matched. I think the duration on the asset side of our balance sheet is 10 months or something like that for the entire balance sheet. So we’re very short. And anything that we might have that’s coming up for renewals, say, like older CRE loans, there are certainly loans that we were doing in the 4s back 2 to 3 years ago. As those come up for renewal, they’re going to be priced higher, but that’s probably not going to have a big effect on the margin.
Jim Mitchell: Awesome. Very helpful. And then just one last one on deposit betas, kind of as we think about those on the way down. Do you have a percentage of your book that’s indexed or anything else to call out on that front, kind of your expectations related to beta?
John McWhorter: We don’t have a whole lot to indexed, but we fully expect them to go down just as fast as they went up. That’s certainly the plan. I know our competitors can sometimes make that a little bit harder, but our intent is to mimic the betas for the way it went up.
Jim Mitchell: Okay. Very helpful. Thanks for taking my questions, guys.
Operator: [Operator Instructions] Our next question comes from the line of Matt Olney with Stephens. Please proceed with your question.
Matt Olney : Great. Thanks. Good morning, guys. I was going to pick up on that last line of questioning there. I think you mentioned 60% of loans are floating bit on the liability side, not a whole lot is indexed and you obviously want to reprice deposits lower. Just help me appreciate, being industry neutral with that setup. It sounds like that’d be more of a challenge to keep everything neutral. Any more color you can provide or help us appreciate how you would be neutral with those dynamics?
John McWhorter: Yes. I mean the liability side of the balance sheet is — it should be just as interest rate sensitive. I mean most of our deposits are in money market accounts, and we fully expect to lower those as rates come down. We may have a little higher percentage in CDs today than we did a year ago, but I’d have to go back and look what the percentages are. I don’t think it’s materially different. But most of it is going to be in money market, and we expect it to come down immediately.
Matt Olney: John, what about any kind of lag? I mean is the commentary about being more rate neutral? I assume that would be more of a full cycle over a year or two-time frame. Could there be an initial lag, where the margin could be negatively impacted as loans reset lower faster than the liabilities could reset from repricing lower?
John McWhorter: There certainly could. And again, back to the competitive nature of it, if our peers don’t lower rates immediately, it makes it harder for us to do it. So yes, there could be that lag there that if the first cut, say, for instance, comes in May and is 25 basis points, we can’t be the only ones to lower our deposit costs 25 basis points. So there — yes, there could be some lag there.
