Will Jones: Got it, understood. Thanks for the color guys,
Graham Dick: So I just wanted to hit on the loan side of things. I saw that you had about the $300 million in commercial loans that you exited. I just wanted to hear a little bit more about your strategic thinking here. What kind of yields around these portfolios or what kind of spread rather if you include the deposit relationship? And then you mentioned that there’s a little more to do here. I’m just wondering what that would look like maybe over the next couple of quarters and how it might impact your overall growth outlook? Because if I back this out the $300 million this quarter, it looks like balances were actually essentially flat. So just wondering about the size of loan portfolio going forward and maybe the overall direction that takes the balance sheet as well.
Raj Singh: Let me go sort of loan category, bad loan category. So Resi was down 2.25%. I expect Resi to behave very similarly next quarter for that matter, even the quarter after that. Two or three, four quarters. Because like we’ve said, we’re [Indiscernible] very heavy and taking it down about $200 million or so every quarter, sounds like a good strategy. C&I was up $100 million, but that was net of about $300 million that we pushed out. As Tom said in his comments, we don’t see that kind of a push out happening in the future, maybe some here or there that we will still exit. The stuff that we’re exiting generally is non-deposit transactional business. Some of them are SNCs. And where we don’t really have an expectation that we will be able to get deposits.
Sometimes you just do it in eventually deposits come. But when we convince ourselves, this is not happening and spread is too tight, then what are we doing in that, and that’s what we’ve exited. So I would say that what we were exiting the business we on a year or 2 years ago at spreads of like sulfur plus 150 to 200 in that range. The business that we’re doing now, the pipeline that Tom referenced in the C&I space is over 300. So SORs 300, 320, 330 in that range. So it’s a really good time to be writing new paper and the old stuff that is being run off is meaningfully lower in terms of profitability. CRE, while we grew about $45 million, $46 million this quarter, just looking at the pipeline, it doesn’t look like it’s going to grow — given there’s not much happening in the CRE world in terms of transactions.
So our best guess is it will probably be flat. Small business will grow, but it doesn’t really move the needle that much in terms of the total balance sheet. And our commercial finance subs, which is the franchise finance and the equipment leasing business, has been running down now for a better part of 2 or 3 years, that trend will continue. So when we’re out landing your guess is as good as mine, I always say that it can’t go any lower utilization, but it keeps surprisingly me, does go down. The mortgage market is probably having one of the toughest years ever in terms of origination volume. So it’s very much tied to that. If there is a bit of a pickup, in rates turnaround doesn’t feel like they are going to, but if they do turn around, there’s a little bit of a refi opportunity.
It will grow. Otherwise, it won’t. But again, the numbers are so small. I don’t think it really moves the needle at the top of the house.
Tom Cornish: Yes, I might just add a little bit of detail to that. If we look at — when you exit, there’s 2 kind of time frames for exiting. One is when you have a maturity, those are obviously easier to predict. The second is when you have an event. And usually, the event is a redial because there’s a transaction opportunity or whatnot. Those are not as easy to predict. So — while I don’t think there’s going to be too much more of that to the extent that it was in Q3 from a strict maturity perspective, there are situations that could come up, with existing credits that are not maturing where there’s an opportunity to exit because what’s really clear is we look through the dynamics of this trade-off that we’re consistently making is if you take any large credit in the marketplace, let’s say it’s a $50 million deal, and we have the opportunity to exit that, we can put on $225 million deals in bilateral relationships.
Which probably at 75 basis points higher than what we’re exiting and comes with deposit and treasury management business. And that’s the trade-off work consistently looking to make.
Graham Dick: So all in, it kind of sounds like flattish to maybe slightly down loan balances as a whole. But a much more profitable portfolio. Is that kind of a fair way to look at it right now?
Leslie Lunak: Yes. I think over the course of the next quarter, yes.
Graham Dick: Okay. Cool. And then I just — you mentioned shared national credits in there. I just wanted to know — what’s your all total SNC exposure right now as a percentage of loans?
Leslie Lunak: It’s about $4.7 billion in the aggregate. Based on the strict regulatory definition of a shared national credit, which is Tom, if you want to provide any more color on question.
Tom Cornish: The definition has expanded a lot over the last couple of years. So it can encompass anything from what you might think of as being a traditional shared national credit, which would be a multibillion dollar credit led by one of the major banks with 25 banks in the deal to a deal that we agent as long as the debt stack is more than $100 million. It can be deals that we would typically be in that are club deals among us and a couple of banks, where we have a significant share of the wallet. We might be the collateral agent we might be the dock agent. We could be in a couple of different positions. We would have part of the depository business. So when you look at kind of a classical shared national credit business, it’s a portion of the overall SNC business, but it’s certainly not the entirety of it and the other parts of it.
We have built syndications capability on both the real estate side and the corporate banking side. We want to syndicate credits. We want to be a lead bank and control the deposit business. So that portion that would be over the $100 million threshold and have 3 or more banks would be a SNC. And we continue to be interested in club deals where we like a relationship and have business, but have a certain guideline on how much exposure we want to take in those deals, that’s highly desirable business from our perspective, but it would also be a SNC. So as the guidelines have changed over the last few years, you’ve got to be a bit more careful with this nomenclature than maybe we were a few years ago.
Graham Dick: Yes, I totally understand. And I get if you don’t have this number, but it definitely seems important and much more profitable the lead agent on these deals. What amount of that $4.7 million are you guys believe in?
Leslie Lunak: We don’t have all of that detail available right now.
Graham Dick: Okay, I understand.
Leslie Lunak: Yes, absolutely.
