Dale Gibbons: Well, I think residential loans are going to move much. I mean the CPRs on that stuff today are 5%, kind of about the lowest anyone’s ever seen. And so that’s just kind of generally bleeding off. That said, this is kind of the point on why we mentioned, hey, we have about 2.5 — $2.4 billion of loans rolling off repricing every quarter. And so that could come up. Now a small piece of that is going to be residential, but the rest of it as well. So if you take the residential and those loans are — again, are coming in, something that begins with an eight. I mean, they’re basically — it looks SOFR today at 3 to 3.5 of that. So those run off and are being replaced at kind of notably higher rates. And even the variable rate ones are being replaced at higher spreads because maybe uncertainty in the economy and the relative tightness. Did you hear Dale’s answer, Brody?
Brody Preston: Yes. It just cut out there for a minute. I guess, that makes sense. It’s just that the loan yields jumped up a bit this quarter on the resi book, and that kind of caught me by surprise.
Dale Gibbons: Well, we did some modest dispositions of residential loan.
Operator: Our final question today comes from Jon Arfstrom of RBC Capital Markets. Jon, your line is open. Please go ahead.
Jon Arfstrom: Thanks. We’re going to get out of the weeds here for a second. Are you signaling flat EPS for the fourth quarter? Just when I look at the guidance on Slide 19, is that what you’re signaling?
Dale Gibbons: Yes. So we’re signaling flat PPNR with some sensitivity to the gain on sale on the mortgage business, depending on the backup on rates that you’re seeing here. That’s what we’re signaling.
Jon Arfstrom: Okay. Okay. So that’s difficult for us to model, but you’re saying PPNR, excluding that, it’s going to be relatively stable.
Dale Gibbons: Yes. I think that’s a fair answer. Yes.
Jon Arfstrom: Yes. Okay. Okay. And then what’s your level of confidence in loan growth returning in early 2024? Dale mentioned your organic loan growth has slowed, but what’s your level of confidence in getting that greater than $500 million a quarter back in the run rate?
Kenneth Vecchione: Yes. If you’re talking about getting it back, say, starting in Q3 or towards the end of Q2, I’m confident about that, yes. We have enough channels, Jon, to bring in that loan growth. I will say subject to macroeconomic events, right, subject to the economy and what we see. So it’s not loan growth for loan growth’s sake. It’s if we don’t like the credit, we’re not lending against it. But everything being equal, we have a high degree of confidence in this company to grow loans in excess of $500 million, and loan growth will follow the deposit growth that we’ve laid out.
Jon Arfstrom: Right. Okay. How about as you look to 2024? I mean it seems like you have a couple of quarters left, maybe one or two left, to do what you need to do on funding. I’m assuming that means that the margin starts — especially if the Fed is done, I’m assuming that means the margin starts to lift in early 2024, which means PPNR also starts to lift in early 2024. Is that — am I looking at that the right way?
Kenneth Vecchione: So for us, we’ve got a rate increase in December, which will carry into the first two quarters of 2024. At the end of the second quarter, we have three rate decreases modeled in there to the back end of the year. So you’ve got to keep that in mind. But as we think about 2024, as I said, with deposits following the $2 billion guide and loans growing at a moderate pace, which is that $500 million, we see sort of the dexterity and agility of the national business line framework and the regional growth gives us confidence in that balance sheet construction going forward. So that’s sort of what we’re seeing along with stable asset quality as we go into 2024.
Jon Arfstrom: Yes, I’m just — I’m looking at the $8 consensus number. And it feels to me like it’s good. It puts you at 5 times earnings, but your stock is down 8%. And I’m just curious if I’m missing anything when I think through your kind of medium-term to longer-term outlook.
Kenneth Vecchione: I’m also surprised that the stock was down 8%. We were very pleased with this quarter. And relative to other banks that have reported, I thought we did fairly well. And we’re not ready to give full 2024 guidance, but I think you can take what we said directionally correct and model from there.
Jon Arfstrom: All right. Eight bucks from me, anyway. All right. Thank you. See you in November,
Kenneth Vecchione: Okay. Thanks, Jon.
Operator: Ladies and gentlemen, this is all the time we have questions for. So I hand back over to Ken Vecchione of the team for any closing remarks.
Kenneth Vecchione: Thank you all for your questions and your participation. And we look forward to the Q4 earnings call. Thanks again.
Operator: Ladies and gentlemen, this concludes today’s call. Thanks for joining. You may now disconnect your line.
