So that would be the only difference, as you think about the landscape of opportunity, we still see quite a bit of opportunity and really about us honing in that and making sure that we’re reserving that for people who really want to deepen their relationships with us.
Timur Braziler: Great, thanks for that. And then just last from me, on the expense side. Appreciate the guide for fourth quarter maybe as we look into ’24 and again parlaying on Chris’s question, how much of – how much leverage is there on the expense base in order to drive positive operating leverage. Should we expect expenses to grind higher through ’24 or is there confidence that those can be fairly well maintained and be a positive source of operating leverage?
Ram Shankar: We certainly think we can continue to maintain, at a minimum, maintain what we’ve been able to accomplish. It’s too early to tell what else, and we don’t give any guidance. But there’s always room to improve and to be better, I would think, at any company and we continue to look for those opportunities to do business. I would say to do business smarter and we’re always looking for those opportunities and I think we’ll forever uncover them.
Timur Braziler: Great, thanks for the questions.
Mariner Kemper: Thank you, Timur
Operator: We have a follow-up question from Nathan Race at Piper Sandler. Your line is open.
Nathan Race: Yes, thanks for taking the follow-up. Just kind of curious thing about how you guys are thinking about the margin trajectory next year, you know in a higher for longer rate environment. Obviously you’re seeing less pressure on the index deposits under that scenario and you have some kind of lagging repricing in terms of the duration of the portfolio in and of itself on the loan side of things. So any kind of preliminary thoughts on how you guys are thinking about the margin and NII trajectory next year under those frameworks?
Mariner Kemper: We appreciate the opportunity to make our case for our investment thesis. Yes, we do believe that under a higher for longer scenario if the Fed stops which that would be the scenario where we would anticipate, and under that scenario, the deposits, the pressure on the deposits would alleviate and new and repricing credit would continue to add value, along with the rollout of the investment portfolio into higher-yielding assets. So that is the expectation if the Fed does stop.
Nathan Race: Okay, great. And I know it’s difficult to predict future provisioning impacts under CECL, but just kind of any thoughts on kind of how you guys are thinking about providing for growth and assuming you’re not really seeing any material credit issues on the horizon?
Ram Shankar: Yes, that’s a million dollar question, Nate. So as you’ve seen the last few quarters, given our credit quality, most of our provision really come – came from both macroeconomic variables changing in this past quarter because Moody’s moved towards more of a soft landing. Our provision was low compared – and then charge offs are low as well. So it really depends on what level of loan growth that we have and what happens to the macroeconomic variables. As Mariner said, we had 13% decline in quarter-over-quarter on our pass-watch loans and 6% in our classified. So from a portfolio health perspective, there’s not a lot of pressure, but as we said the magic math that we have to worry sometimes is trying to get our coverage ratio at or close to 1%, right. That’s kind of what we would like entering any kind of cycle whether it’s good or bad.
Nathan Race: Got it. So it sounds like absent material macro deterioration the expectations for you guys to build the reserve close to 1% over the next few quarters. Just in support of loan growth. I’m assuming charge offs…
Ram Shankar: Yes. We’re within spitting distance, we’re at 97 basis points coverage. I would say plus or minus few basis points here and there on what our coverage ratio ends up being.
Mariner Kemper: Yes.
Nathan Race: Got it. And then just one last one, I know you guys don’t pay a ton of attention to end-of-period balances, but I was a little surprised to see the non-interest-bearing attrition accelerate versus last quarter. Any thoughts on kind of when that could bottom based on what you’re seeing in terms of client spending and so forth?
Ram Shankar: So if you look at what happened, they said in the script, our commercial DDA balances, what you’re alluding to about cash usage, that actually was up 1% on an average basis. And the decline in the third quarter DDA balances were more episodic because of some of our corporate trust deals. There’s always a seasonal build up and tax payments go out. So we know, and it’s very predictable from that standpoint. So I would say on the commercial side, things are fairly stabilized. Again, it’s really – as we said, we think we’re approaching the bottom in terms of our 32% DDA to total deposits, which was the cycle low from last time. But that’s the – to your earlier question, that’s the biggest X-factor on what can change our margin or net interest income curve from here.
Mariner Kemper: I mean, I would just – none of us know, right. But I would just suggest that if the Fed is done and the way our income statement has worked and our customer base works, we said this all summer long, we would go through this first because our customers were largely commercial. We’ve seen that, we think that’s largely done and we predicted that, because the last cycle being at 32% that’s done we’re 32% today. So from here, your guess is as good as ours using the history and the behavioral pattern. It seems as though, we’re somewhere near the bottom on that shift.
Nathan Race: Okay, great. And then just in terms of overall deposit expectations, average deposits were flat in the quarter, just curious, based on what you guys see in terms of your pipeline, how you’re thinking about overall deposit growth expectations over the next several quarters.
Mariner Kemper: We continue to have a strong pipeline. This all comes down to cost at end of the day, we have a very, very strong ability. I think in a way than most banks our size don’t to tap deposits. It’s really about paying market rates for them and then really it’s about, how to manage liabilities. It’s about our disciplined approach to pricing assets, not just the deposits. And so we don’t concern ourselves too much with the ability to grow our deposits. We just have to make sure that we’re disciplined on the way we manage our assets and liabilities and making sure which we’ve been able to do till date. As we bring on loans, we feel very comfortable about our ability to price them appropriately to maintain a respectable margins and spread.
Nathan Race: Okay, great. I appreciate you guys taking the follow-ups. Thanks again.
