Operator: [Operator Instructions] Our next question comes from Will Jones with KBW. Please go ahead.
Will Jones: Hey, great. Good morning, guys. This is Will. How is it going?
Duane Dewey: Hey, good morning. Thank you, Will.
Will Jones: Hey. So, I just wanted to start out on the margin, I know and I understand that we may take a step down here in the next quarter and I really appreciate the guidance of a little bit of further compression until we moderate into the middle half of next year, but just taking that into account and appreciating the fact that, you still plan to grow earning assets. Do you feel like you can grow NII again in 2024? Or does it really feel like more of a leveling out in NII and maybe just trying to protect the margin?
Tom Owens: So certainly — Will, this is Tom. So, certainly, earning asset growth will drive an increase year-over-year in net interest income. But that — but the headwind from compression in net interest margin, we’re not going to be able to overcome. No, I mean, I think when you look at the dynamic in the industry, right, I mean that’s the challenge for the industry heading into ’24 is the compression that we’ve experienced and that we’re facing in terms of net interest margin, just mathematically, you can’t get there. You’re going to be off year-over-year in a meaningful way in terms of net interest income. If I heard your question correctly, I hope I answered it. And if not please, please follow-up.
Will Jones: Yeah, that was helpful. But it just — it feels like it would be a challenge to maybe see that high single-digit growth again in 2024, not trying to hash 2024 guidance out now or anything, but I guess that was really more the precedent of the question, if we keep seeing more margin compression, but understanding that you’ll still be growing the earning asset base as well. But, no, that was helpful. But I guess just to lead into it, assuming maybe the revenue environment stays somewhat more challenged next year, do you have offsets maybe on the expense side with understanding that you guys are fairly active with your FIT2GROW initiative? How do you feel — or what is the outlook for where you feel expenses could go in the next year or so?
Duane Dewey: I don’t know if I can give you a full year, I can tell you directionally, we are very intensely focused on expenses. As noted in the FIT2GROW initiatives, we’ve invested in technology. We’ve invested somewhat in talent and people, like equipment finance in Atlanta office, et cetera. So, we’ve done some things that we think over time really enhance shareholder value. And there has been some other factors in there, some of the legal resolution that we completed here this quarter, et cetera, that we think there are definite opportunities for cost savings moving into 2024. And you could one-off things like we changed disaster recovery sites, that’s a $1 million savings. We renegotiated some big vendor contracts that are additional savings and the like.
So those things combined with some third-party spends and then we have some employee initiatives that we’re working on as we speak today that we also think will help. That combined with some of the efficiencies of technology that have been implemented, we definitely, moving into 2024, feel the cost saving side is a big opportunity for us. And we are in position to take advantage of that and will likely at our fourth quarter call give a real thorough guidance on where we think will be for the year 2024.
Will Jones: Okay, that’s great. That’s helpful. And Tom, I just wanted to clarify, did you mention earlier that you expect total deposit cost next quarter in the 2.12% range and a 39% total beta? I just wanted to clarify.
Tom Owens: That’s correct, Will.
Will Jones: Okay, thanks for pointing that out. And lastly, I know you guys mentioned buybacks are fairly unlikely in near-term. Although just with where the stock trades at today and capital remaining in a healthy manner, just curious what the thought process is on maybe not taking a more serious consideration and look at it, it just feels like it could be an opportunity for you guys right now.
Tom Owens: Yeah, Will, as we’ve said consistently in the past, I mean, our highest priority in terms of capital deployment is supporting lending growth. And as we’ve demonstrated, we’ve continued to have opportunities in that area. And so, I think that will be the case. I mean, I think we’ve given pretty strong guidance in the last couple of earnings calls that, in all likelihood we would not be engaging in repurchase activity for the remainder of 2023 and I think that’s still the case.
Will Jones: Okay, that’s fair enough. Thank you, guys.
Duane Dewey: Thank you.
Tom Owens: Thanks, Will.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Duane Dewey for any closing remarks.
Duane Dewey: Thank you again for joining us for today’s third quarter call. We look forward to catching up at the end of the fourth quarter in January, and appreciate your interest in Trustmark. Have a great week.
Operator: The conference is now concluded. Thank you for attending today’s presentation. You may all now disconnect.
