Terry McEvoy: And I’ll squeeze one in. Brendon, any thoughts on expense growth for next year? Any targets in mind.
Brendon Falconer: No specific targets, like, at this stature that we have, we have a good track record of making sure our expense base does not grow much beyond sort of a typical merit increase. And we have some levers there to pull. But as Jim said, it’s not going to stop us from investing in ourselves, but we got to find ways to pay for that.
Terry McEvoy: Thanks for taking my questions.
Jim Ryan: Thanks, Terry.
Operator: Your next question comes from the line of Jon Arfstrom of RBC Capital Markets. Your line is open.
Jon Arfstrom: Hey, thanks. Good morning.
Jim Ryan: Good morning, Jon. Good to hear from you.
Jon Arfstrom: Hey. Thank you. Brendon, just one for you, back on Scott’s question. Your NII guide suggests a pretty big step-down in the fourth quarter in the margin. Can you just help us understand a little bit more some of the puts and takes there in terms of what’s going on?
Brendon Falconer: Yeah, largely that’s kind of 3% to 4% decline in Q4 is almost entirely deposit cost related. Again, we’re not getting a lot of help on the asset beta side at this point other than the fixed-rate repricing. But the question on the NII side is going to continue to kind of grow through that and help bolster NII. And that’s the game plan.
Jon Arfstrom: Okay. All right. And then, I guess, on Slide 17, you talk about the exception pricing on deposits. How is that trending? Is that intensifying or easy enough at all?
Brendon Falconer: Not intensifying. We’re still less than 30% of our book of exception priced or promotional related. And again, those are in the very low 4% and we feel really good about that marginal funding opportunity that we have.
Jon Arfstrom: Okay. Good. The loan sale, I think, I understand it. But was that a — the SNC that you talked about?
Brendon Falconer: One of them was I shared in the script and the rest out of the capital markets book.
Mark Sander: You’re talking — it is out of our capital markets book, which was a transactional book that we had used to soak up excess liquidity over time. And so all of the loan sales of $400 million came out of that book.
Jon Arfstrom: Okay. More to come on that or not?
Mark Sander: At a lesser pace. If there is additional, it’ll be at a lesser pace than that in the next couple of quarters, I would say.
Jon Arfstrom: Okay. Okay, good. And then you kind of touched on it, Jim, with Terry’s question. But the pipeline change, it feels like maybe the market is slowing down, but you’re seeing better opportunities, but can you just maybe touch on some of the elements of the pipeline change? Thank you.
Mark Sander: I think the pipeline change is reflective of what’s going on in the economy more broadly, as well as our selectivity that Jim alluded to. There’s certainly less CRE activity overall in the marketplace clearly and even C&I has a little bit — we’re projecting little slower growth over the next couple of quarters than we saw the quarters before as an industry. We think we’re still well-positioned to outgrow the industry. We think industry growth is going to be a little more muted going forward.
Jim Ryan: Yeah. I do think we’ve seen a significant appetite change out of some of our regional competitors, and that is creating new opportunities. We were with a client last night, would fall into that camp and I think that’s going to create nice opportunities for us both on our ability to get the right credit profile picture, a full relationships and full pricing. So those are expectations. We’re definitely open for business. We’re still on the offense and still believe we’ve got room to continue to grow here.
