Tim Crane: Well, I think what you said is correct that the money market accounts would probably move more quickly than some of the other interest bearing products. But we offer a wide set of options to our customers and they select what they believe to be the best fit for them. So, we are seeing more CD-related activity as you can get rates in the 5% range, whether that’ll continue as rates come down, you may get people trying to kind of lock-in those levels.
Brandon King: Okay. And then another question. I know, I appreciate the commentary on the reserve increase, but I did notice the reserve increase was primarily driven in the C&I category. So, I just wonder if you could speak to just the health of your C&I customers and credit trends there as opposed to a lot of attention is on the CRE space?
Tim Crane: Yeah. I think, a couple of things that I would point to. One is, as we noted earlier, that the level of classified assets remains pretty consistent. So, we try to be very proactive on our risk ratings. And if you start to see special mention, classified assets start to move up, I think that would be a pretty direct reflection. But more anecdotally, we spend a lot of time talking to our customers about where their business is at. And I would say, generally speaking, people still feel like that top-line revenue number is holding together pretty well, and that solves a lot of problems. Obviously, higher borrowing costs can affect them. Clearly, the economy I think has slowed a little bit and so that’s affected them. But while it may not be as rosy when you had zero interest rates and the economy was just really clicking along, it doesn’t feel that bad for most of our C&I customers.
I think that they still feel pretty optimistic about where their overall revenues are coming from and where those levels will be. I think labor has probably become less of a concern for them. And just overall, input costs are — have stabilized. So, I would say just net-net, I think they feel still pretty good.
Brandon King: Great. Thanks for taking my questions.
Operator: Thank you. Please standby for our next question. Which comes from the line of Ben Gerlinger of Citi.
Ben Gerlinger: Hey. Good morning, guys.
Tim Crane: Hey, Ben.
Ben Gerlinger: So, I’m going to ask a question, I know you’re probably going to be a little annoyed, but I’m going to ask it anyway. So, when you think about 2024, what I’m getting is kind of mid-single-digit, maybe upper middle-single-digit loan growth, deposit growth. It’s called a flat margin, like what you said. If three cuts, kind of a 360 range, if the market has a little bit more, probably see a little bit pressure on that. That’s largely just because of back book repricing on some CRE, and then premium finance still has a little bit of tail left in it. But as we get towards the end of the year, and possibly into ’25, if there is a four cut amount rate cut environment, do you think — is there any incremental pressure?
Because, I mean, I get that the premium finance probably rolls over and starts to work against you, but you also have indexed deposit costs. I’m just trying to think, it’s a moving target, obviously, but Just any incremental thoughts on how you might exit the year and into ’25? And I get you haven’t given ’25 guidance at all. So, just kind of finger in the air, that would be pretty helpful.
Tim Crane: Well a couple of things. To be clear, we have very few actual index deposit products. So, while the municipal rates, for example, that I mentioned earlier, are tied to some reference rates, they are not contractual. So, other than our CD book, we’re largely pricing at our discretion. As we talked about, if you get more rate cuts or faster rate cuts or you get 50, they slightly would pressure our margin beyond the assumed three cuts, but our mortgage business would likely perform better. And to Rich’s point, we’re at very low levels in terms of utilization online right now and we would expect to see some rebound there as rates come down. So, while there might be some pressure on the margin as rates continue to drop, we have other aspects of our business that we think will perform well. So, that’s kind of the best way we’re looking at that and why we value the diversified businesses, as an important part of our model.
Ben Gerlinger: Yeah. No, that’s great color. It’s a great point, too, that the fee income aspect will definitely kind of pick up some of the slack, or if not all the slack goes to the softer spread revenue. Can you just remind us any sort of kind of efficiency ratio on mortgage? I guess that we haven’t seen a robust mortgage market. I’m just trying to think, like, if that does start to turn back on, expenses are also obviously going to go up as well. I’m just trying to match the two, if we do see a rebound in mortgage.
Tim Crane: Yeah. It sort of depends on how hot the market gets and how wide gross margin gain on-sale margins are, but I generally think of the efficiency ratio in the mortgage business will be in about an 80% efficiency ratio business, so….
Ben Gerlinger: Got you. That’s really helpful. Appreciate the color, looks like you guys have, kind of a pure growth force power year. It’s good that the margin should stay roughly flat. So, I’m looking forward to it. Thanks, guys.
Tim Crane: Yeah. Thanks.
Operator: Thank you. Our next question comes from the line of Terry McEvoy of Stephens Inc.
