Brandon King: Okay. And then on your comments about the higher-cost deposits, how many of those are index, if not if they’re negotiated? Could you give us a sense of how you plan on going about lowering those deposit costs to get rate cuts and kind of how you are approaching the customers with that?
Paul Burdiss: Yeah, the majority of those deposits are not specifically indexed, that is that they will not sort of automatically reset. But we’ve got an army of bankers who are talking to our customers every day. And as rates, the value of money falls if short-term rates fall, then I’m confident that we’ll be able to manage those rates down pretty quickly.
Brandon King: Thanks for taking my questions.
Paul Burdiss: Yeah. Thanks, Brandon.
Operator: Thank you. Our next question comes from the line of Matthew Clark with Piper Sandler. Please proceed with your question.
Matthew Clark: Hey, good afternoon. Thanks for the questions. Just the first one around the customer-related fee income. I know it’s only just under 10% of your overall fees kind of annually or at least in 2023, but just on the wealth management side, little surprised to see that dip down. Can you just from — can you just update us on the flows there, ins and outs, and how those fees are recognized, the timing of those fees?
Paul Burdiss: Well, I think it’s — when you say, dip down, I think it’s kind of bouncing between 14% and 15%, I think that’s probably kind of rounding, that’s driving that. I would say, particularly notable in our wealth management group, you’ll notice that there has been some market volatility over the course of the last couple of years and I think that strength of our program is demonstrated in the consistency of revenue that you see there.
Matthew Clark: Okay. But in terms of how those fees are — the timing of those how those fees are recognized, is it on a delay? Is it kind of a one-quarter lag or is it consistent with the performance in the quarter?
Paul Burdiss: Yeah, it’s consistent, it’s up-to-date and consistent with the performance of the quarter. There is not a lag there.
Matthew Clark: Okay. Okay. And then just one quick one. Do you have the spot rate on deposits at the end of the year?
Paul Burdiss: I don’t have it handy, we’ll have to call you back with that one.
Matthew Clark: Okay. Thank you.
Operator: Thank you. And our next question comes from the line of Brody Preston with UBS. Please proceed with your question.
Brody Preston: Hey, good afternoon, everyone. Paul, I just wanted to follow up on the NII guide on Slide 16. So it says, 4Q ’24 expect to be stable to slightly increasing when compared to 4Q ’23, so that would be considered 0% to 2%, correct?
Paul Burdiss: Well, we use words not numbers, but it’s certainly low-single digit.
Brody Preston: Got it. Okay. And I wanted to follow up on the deposit beta commentary, I understand that you have a mix of high beta and low beta deposits. So I was hoping to better understand what the interest-bearing deposit beta on the way down as it’s underpinning that specific guidance. It kind of implies a 40% to 50% — 40% to 45% interest-bearing deposit beta on the way down, is that about right?
Paul Burdiss: Let me think about that. That might be in the ballpark. Again, looking — thinking about the amount of relatively high beta products we have, we think we are going to have very high beta on those. Our cumulative beta on interest-bearing deposits has been — interest-bearing has been 60% over the cycle. [And so we’re — sort of net interest-bearing that excludes the DDA] (ph). So, I’m certainly hopeful that we would have — be able to have a beta that looks like that on the way down.
Brody Preston: Okay, great. And then my last one is just around the swaps. You terminated another $800 million of received fixed swaps this quarter. I just wanted to better understand what’s the — what drives the decision to terminate the swaps. And then you’ve done that a few times, I think over the last year or so. Could you clarify what the NII impact of the accretion of the swap losses will be in 2024?
Paul Burdiss: Well, I don’t have the chapter and verse details in front of me, but the reason that we have been canceling those swaps is that the swaps are there to help add asset duration and the asset duration was to sort of balance the deposit duration. Depositor behavior has evolved differently than we expected. And so we’ve seen the DDA runoff, and we’ve seen higher betas, perhaps than what we would have modeled a year ago. And so that effectively shortens the duration of deposits in the canceled swaps. And then the pay-fixed swaps that we put on, have all been for the purpose of shortening asset durations to try to create that balance between asset durations and liability durations. As we look ahead, the net interest income outlook that we provided incorporates the effect of the amortization of those swap maturities that you just asked about.
Brody Preston: Okay, got it. Thank you for taking my questions.
Paul Burdiss: Sure, thank you.
