Casey Haire: Goit it. Thank you.
Mike Achary: You bet. Thank you, Casey.
Operator: Your next question comes from the line of Stephen Scouten with Piper Sandler. Your line is open.
Stephen Scouten: Yes, thanks everyone. Appreciate it. I guess one more question kind of around capital usage. I mean, you guys kind of outlined your capital priorities in your slide deck, and I would kind of view the potential for this securities restructuring somewhere within that. I’m not really sure, I guess, maybe below organic growth above dividends is kind of what I’m hearing. But can you talk about how you think about the math versus a buyback at this point? I mean, it seems like with your stock at 115 intangible or something like that, it might be more attractive at these levels. So just kind of curious how you’re thinking about the various pieces of the capital, especially relative to the buyback?
Mike Achary: Yes. Yes, Stephen. So again, on slide 18, as you mentioned, we have kind of the priorities. And we’re careful in terms of how we think about those. And really haven’t changed or adjusted those priorities. So I think they really do kind of speak for themselves. And you asked about buybacks. And certainly, buybacks is something we think about and consider. But I don’t know that in this environment, it’s something that we’re going to rise to the level of actually executing on buybacks right now. I’m not sure that the environment in terms of how examiners look at that in the context of bank failures back in March. And in the context of wanting to continue to kind of build capital going forward, really fit right now.
So certainly, aside from those things, buybacks are an attractive way to deploy capital. We’ve done that in the past. And I dare say, at some point in the future, we’ll reenter that method of deploying capital. So back to the bond restructuring, I mean, that is and could be an attractive way of deploying some capital. Again, not going to go into too much in the way of details of that, but that’s out there under consideration as we kind of mentioned.
Stephen Scouten: Yes. I guess my question is more like as you evaluate those, I mean is there an earn back calculation? Is that what you’re thinking about? Or it sounds like maybe more of the bond restructuring or other things to be more palatable to regulators versus share repurchase? I’m just trying to understand the dynamics of what creates that priority set.
Mike Achary: Well, in terms of a bond restructuring, the way we would think about that is having to earn back or pay back somewhere in the ‘24, a little bit less than 30-month range. We think that makes sense and pull those kinds of transactions to the point of serious execution.
Stephen Scouten: Got it. Got it. That’s helpful. And then if we could talk about the SNC exposure briefly, I think, what is it, $2.8 billion, I think you noted at $930 million. Can you give us any more detail there in terms of what percentage of those loans you guys might be the lead on or if there’s a geographic focus primarily within that book? And kind of, obviously, we saw just one kind of go bad and that doesn’t mean there’s some greater issue, but that becomes the fear, I think, for some. So just wondering if you can give us any color that might provide comfort, if you will.
Chris Ziluca: Yes. This is Chris Ziluca. Yes, I mean geographically, obviously, we’re more focused on the markets that we generally operate in. So kind of Texas to Florida. But we also do have a health care specialty group that does participate in some transactions that would have more of a national focus. So there’s a little bit of a mix there. There really isn’t any sort of geographic or industry focus. We took a deeper look into that, kind of anticipating this call and some discussions on it since we highlighted it here on the page, on page eight, but we feel pretty good overall about the SNC book. And I certainly can understand the question, given what happened recently. But as I think we’ve all indicated, it is a bit idiosyncratic.
And I think the final chapter of that book hasn’t been written yet anyway. So we’ll learn more over time. But we have in the buildup of liquidity during the kind of pandemic period there. We deployed some of that excess capacity in that area. And as we kind of look forward, since many of those relationships don’t necessarily have full service opportunities, we’ll look to dial that back over time.
Stephen Scouten: Okay. That’s extremely helpful. And is the reserve against those loans, I mean, kind of in line with the $128 million loan loss reserve overall? Or is it maybe I guess, the commercial reserves like $130 million as well. So is it kind of fair to assume it’s in that range of commercial loans?
Chris Ziluca: Yes. I mean, we don’t necessarily segment the portfolio that way when we’re deriving our reserve estimates. So they’re generally sprinkled in with our C&I based on their asset quality.
John Hairston: And Steve, this is John. Just to add maybe a little more clarity. As rates begin to go up last year, we knew as we got into the second half of this year that the desire for any type of — and not just SNC, but syndications and general growth would begin to get upside down just given the cost of funds, right? We want to preserve that liquidity for use in core growth and clients that have a little deeper wallet share with us. And so the dial back that Chris mentioned a few minutes ago, that was going to happen with or without the aforementioned idiosyncratic bad news on that one credit. So we expect to top out somewhere around the 15% of commercial loan levels. That’s where it topped out. And the expectation is that it would dial back in terms of percentage and probably absolute exposure as we repatriate those credits with smaller slices or maybe a few less credits that we’re in, coupled with the amortization and redeploy the liquidity gains from that into things that have a little bit more of an annuitized value over the long term.
So I want to make sure we’re clear that one charge-off had nothing to do with our posture on syndications. That’s really around the balance sheet.
Stephen Scouten: Got it. That’s really helpful point of clarification. Thanks so much for the color guys.
Mike Achary: You bet. Thank you.
Operator: Your next question comes from the line of Brandon King with Truist Securities. Your line is open.
Brandon King: Hey, good evening.
Chris Ziluca: Good evening.
Brandon King: Yes. So I appreciate the guidance on the CD renewal rates, but I just wanted to get a sense of how those renewal rates have trended over the last couple of months? Have we seen some stabilization in where the renewal rates have been? And are you anticipating any potential increases going forward?
