Dennis Shaffer: Yes, and we’ll have to replace that income. I think we’ve got that. We’ve identified, we think we have the opportunity through our leasing division, as well as we have revenue. We’ve identified a few revenue opportunities within our existing products and services. And I think, you know, we’ll have, you know, we’re up higher expense controls as we move into next year. So, well, we’re still working through the budget, so we really can’t quantify any numbers there, but we’re looking to, you know, kind of make it as neutral of an impact as possible.
Nick Cucharale: Thank you for taking my questions.
Dennis Shaffer: You bet. Thank you, Nick.
Operator: The next question comes from Terry McEvoy with Stephens. Please go ahead.
Terry McEvoy: Hey, guys. Good afternoon.
Dennis Shaffer: Good afternoon, Terry.
Terry McEvoy: Dennis, I think your comments on the income tax refund business in the press release were pretty clear, as is the $2.4 million of fees. What amount of deposits do you still have on the balance sheet connected to this program? And when do you expect them to completely run off and that runoff I noticed the uptick in FHLB or short-term debt. Will that level, kind of, be consistent or potentially grow from here?
Dennis Shaffer: Yes, we’ll maintain some of those deposits. There’s just a certain percentage that sticks around, you know, that we’ll have to achieve over the next five, you know, five years or so. But Rich, do you have the balances there?
Rich Dutton: Yes. At September 30, Terry, we had $73.4 million on our balance sheet. And I think at the beginning of the year, that number was, I want to say $40 million. I mean, I might be exactly right, but it’s close. And that’s that number that Dennis said, for whatever reason and it’s a small percentage of folks that asked for us to give them their refund via check. And then I don’t know if they died or lost check or whatever, but those checks, percentage of them just don’t ever get cashed. And those will remain on our balance sheet again for what is typically five-years. Each state is a little different. But I’m saying for the most part, that will run out or spin down over the next five years.
Terry McEvoy: And where were the peak in balances this year? Where did they peak-out? Any guess or any feel there?
Dennis Shaffer: Oh, yeah. I mean, I think the average got me flipping through my notes here. So we had about $174 million in reduction, I think, in tax deposits for the quarters.
Rich Dutton: So the year-to-date, the average, Terry, was $169 million through the first three quarters. It peaks, as you would think, in the middle of the second quarter, right after March-ish kind of thing. That’s when most of it comes through.
Dennis Shaffer: But that money, Terry, was moving in and out much quicker the last two years than it had the previous, say, five years for whatever reason. We really didn’t know. But our funding, as we move forward, is going to have to rely on more brokered and, you know, FHLB borrowings and things like that. And we hope to offset that funding by pushing our loan yield higher. We think we can do that just because there’s been a number of banks that have gone to the sidelines. You know, the big banks generally were through a recession, so they kind of go to the sidelines. And then there’s a number of other banks that I think are in the same situation. The balance sheets are pretty levered up. And they’ve chosen to stop lending.
We’re not going to stop lending, but our lending will probably slow just because we’ve got to push rates that we spread higher in order to do some of those deals. But we do really have an opportunity to pick up core deposits in other deposit relationships. Because if we’re going to do the loans and no one else is lending, we’re going to require much more of those deposits or all of those deposits.
