Chris McGratty: Okay.
Tim Crane: And Chris, I can maybe chime in a little bit. I think if you look at it sort of globally without getting too far into the weeds, if you look in the presentation, our criticized assets that we have a special mention on substandard and good, those percentages held very stable. Charge-offs were still low at 14 basis points, a little higher than second quarter, but still pretty low. And we had a little bit more growth in the quarter. But all those things weren’t too different quarter-to-quarter. So, as you look at that increase, I think most of that is the macroeconomic factors and the biggest one that impacted us in our models. And everybody uses different factors for their modeling, but the BAA credit spread has a high correlation to many of our loan lines that we model for and that spread over the eight-quarter period that we look at, going out, expanded quite a bit, which had a big impact on our provisioning.
So, if the soft landing thoughts gain traction and the consensus view amongst the economists out there are that those spreads should tighten in, then we should see some benefit going forward. But in the fourth quarter, it was worse than the third quarter and it really generated the extra reserves.
Chris McGratty: Thanks for that. That’s great color. Thanks. Just I know some banks have disclosed which are the Moody’s scenarios and S4, S2, what they weigh. Have you — can you remind us if you’ve communicated like what scenario is currently factored or the weight into the scenarios?
Tim Crane: Yeah. I mean, well, we look at all the Moody’s factors. We also look at some blue chip, other sort of consensus forecasts that are out there. But we are using the baseline scenario of Moody’s, but various factors out of that baseline scenario.
Chris McGratty: Okay. Maybe just one more and I’ll hop back. The capital outlook mid-to-high single-digit balance sheet growth. Your ROE can certainly support more growth. How do we think about perhaps other uses of capital in 2024? Any thawing in M&A conversations, is that something you would consider? Any color on capital use would be great. Thanks.
Tim Crane: Yeah. Well, the straightforward part is that, as you said, the earnings of the company should support the loan growth, that’s been the case for several quarters now, but isn’t a long-term trend for Wintrust, where, typically we’ve needed to add capital to the extent: one, we continue to build capital, that’s good. And on the M&A front, I would say that the conversations are still active, but there’s also not a lot of activity and I don’t know that others who might be in a position that — that’s better to talk about that would think that there is going to be a short term change there. Clearly, the rates coming down have helped the AOCI situation for a number of people who had impaired either loan books or securities portfolio. But we’ve been acquisitive in the past. I think we may be in the future, but we’re disciplined about it.
Chris McGratty: Great. Thank you.
Operator: Thank you. Our next question comes from the line of Casey Haire of Jefferies.
Casey Haire: Yeah. Thanks. Good morning, everyone.
Tim Crane: Good morning.
Casey Haire: Wanted to touch a little bit on the NIM stability guide. Just along those three cuts, what kind of deposit beta you guys are assuming throughout the year, if we get those kind of cuts?
Tim Crane: Yeah. Well, I think generally we’re believing that at this point that if the Fed cuts 25 for the non-CD — term CDs that are fixed, that we should be able to reduce the rates fairly quickly by 25 basis points. So, we are expecting, as we increase rates rapidly as rates went up, we’re expecting to be able to follow fairly closely with cuts in our money markets and savings and the like.
Richard Murphy: Casey, the other thing we’re seeing, we don’t have a huge book of municipal deposits, but some of those have reference rates, if you will, and we’re starting to see as a result of what’s happening with rates, those Index or reference rates come down. And so, we’ve seen some minor benefit on a portion of the book already.
Casey Haire: Okay. Great. And just a question on the fixed rate asset repricing benefit. In the release, you guys call out about $8 billion that matures within or reprices within the next year. Just wondering, do you have the — what the yield is on that and what the — what it could reprice to?
Tim Crane: Yeah. No, we haven’t disclosed that, Casey. I don’t have it handy here right now, but we’ll think about putting that in future releases.
Casey Haire: Okay. Great. And just lastly, the loan-to-deposit ratio ticked up a little bit to 93, I think you guys talked about 85 to 90. I know you’re talking about funding loan growth with deposits, but just wondering if there is a hard cap on that loan-to-deposit ratio.
Tim Crane: No. We think we like it. Sort of — this range is fine with us. It ticked up a little bit. I would expect it to come down again next quarter. A lot of our loan growth just happen near the end of the quarter and so we were just trying to match deposit to loan growth and there is a lot that flowed in towards the latter part of December. So, just a little probably mismatch on the timing of the deposit raising, but probably expect that to drift back down to 92 again next quarter or so.
