Craig Nix: Well, on the rate cycle turns, I think you’re right. I mean, we entered the quarter 39% noninterest-bearing, we exited at 32%. I mean ultimately, in normal business cycle, we like to see our noninterest-bearing around 40%. So where it was coming into this transaction is a good spot for us. And then beyond that, we like to see core checking around 65%, which includes now accounts and noninterest bearing. And right now, we’re around 50%, and that’s totally due to the rate environment. So we see that optimizing as the interest rate environment moderates going forward.
Kevin Fitzsimmons: Got it. And 1 last one for me. What is the rough percentage of the direct bank right now of total deposits? And do you have any upper limit on what you want that to be? Or do you view that as just — if that’s better than borrowing, you’re willing to take that up with no upper limit.
Craig Nix: It’s around 20% of our deposit base, the branch network remains overwhelmingly largest concentration around 40%. We do see those deposits as core. Obviously, they’re a little bit more expensive, but they are at the margin, less expensive than FHLB borrowings. So — and 91% of those deposits are insured. So we view those as core deposits, but acknowledge they’re more expensive than branch network deposits.
Kevin Fitzsimmons: Right. And I guess as the rate environment evolves maybe over time, those would get replaced in a different rate environment by branch-based deposits, this sounds reasonable?
Craig Nix: That sounds reasonable.
Operator: Our next question is from Brian Foran from Autonomous Research.
Brian Foran: Maybe on that loan-to-deposit point, I mean, what would be like a rough time line to get back to the mid-80s in your mind or a range? Are we talking multiple quarters or multiple years or somewhere in between?
Craig Nix: Yes. It’s multiple years and it sort of tethered to this note with the FDIC. So I would put it out 3 to 4 years to get that ratio into that range.
Brian Foran: Okay. And then I know it’s too early for 2024 outlooks and guidance. But just when you think about the 4Q NII, I think everything ties out to about $1.8 billion reported and $1.65 billion ex accretable yield, if I got all your comments right. Is that $1.65 billion kind of a base to work off of in your mind? Or are there still obvious puts or takes? I guess is that like a stabilized run rate that then maybe you could sustain or grow off of in your mind? Or is there still some pressure to think about in the first half of ’24.
Craig Nix: Well, in ’24, if you look at the forward curve, there’s 5 rate cuts projected next year, given our asset sensitivity, we would have both declining net interest income in absolute dollars and in margin if that was to occur, although I think our margin will be very respectable compared to peers even in that environment. But I would work off of the $1.8 billion to $1.9 base and then consider what 5 rate cuts might do on the back half of ’24.
Operator: Our next question is from Christopher Marinac from Janney Montgomery Scott.
Christopher Marinac: I wanted to follow back up, Craig and team on the liquidity. If you look at the liquidity information you’ve given us, would you already be kind of at the full LCR if that’s imposed on the new capital guidelines?
Craig Nix: Yes, I think we would exceed it.
Christopher Marinac: Okay. That’s what I thought. I just wanted to verify that. Great. And then is there anything that you are doing or have done here in the last several months about sort of retaining staff? Is there anything kind of different that you’ve implemented now that you’ve had a full quarter to integrate SVB?
Craig Nix: Are you speaking with respect to SVB or just in general?
Christopher Marinac: Really SVB.
Craig Nix: We have retention and severance payments promised in terms of our merger costs that I just mentioned. So we do have retention. Peter, I think you’re doing — I think we’re doing a great job keeping our revenue producing bankers in place. So all of that sort of accrued and ends up in the run rate. So like we’re doing really well with retention.
