David Feaster: Okay. Terrific.
Katie Lorenson: Does that answer your question? Al, do you have?
Alan Villalon: Yes. David, just in terms of pricing, the way I would like to think about it is that our index deposits typically reprice in the first month of a new quarter if there’s any hikes in the prior quarter. So you’ll see a little bit of repricing in October from those. And those will hit on money market, specifically but we only have about 14% of our deposits are indexed, okay? We’re not seeing much more pressure in terms of broad-based lift. That was kind of all front-end loaded at the beginning of the year. So we’ve seen our deposit beta stabilize at this point. So I think at this point, it would just be a little bit on the margin here and there outside of this index liabilities. But again to something we were focused on two from a strategy standpoint is constantly looking at where we can get new relationship/low-cost funding for us and that’s why we highlighted in the prepared comments HSAs because those are really a great source for us, especially when they carry a cost of only about 10 basis points to 20 basis points.
David Feaster: Yes. That makes a ton of sense. And then maybe kind of just following up on — maybe touching on the other side of the coin, right? I mean you guys have done a great job growing loans. Obviously new loan yields are much improved. I’m just curious, how do you think about the pace of remix in the earning asset and the repricing schedule there? And ultimately kind of how does that play into the pace of margin expansion? I appreciate the guidance on the next quarter but — and then we’re going to be expanding throughout 2024. I’m just curious, how do you think about the pace of expansion because you guys are doing a great job defending deposit costs and repricing higher. Just curious, how you think about that.
Alan Villalon: Yes. David, this is Al. I can take that one on. In terms of our expansion, I mean the way I kind of think about it there’s kind of two parts of the net interest margin. The first part of it is that we do have a securities book with about a five-year duration, okay? So if you think about that now granted there was some investments of that came in — those came in later in 2021, in 2020 — early 2022 but that should roll off and provide us a source of liquidity. And that investment portfolio right now is yielding somewhere in like the 2.5% mid-2s range. So that’s going to mature. We’re remixing that into funding loans on a go-forward basis. Now also too when you look at our commercial book ex resident and quoting ex residential loans, our commercial book has about a five-year also life in there as well.
So as those loans kind of some of those loans that were done pre-pandemic that were done at lower yields kind of come off, they’ll be remixing as well until higher-yielding products loans for us as well. So those are two components. But then the third component also to be aware of is that about 40% of our loans are floating as well or adjustable.
David Feaster: Okay. Okay. Perfect. And then just last one for me. You guys have done a great job managing expenses. You talked about that in the prepared remarks. I guess first, I was hoping you could maybe elaborate on the decision to sell the ESOP business and maybe the plans to redirect that capital in those resources. Just how you think about additional investments going forward? Is now the right time to be maybe a bit more opportunistic with hiring and maybe segment or geographic expansion, while others are starting to pull back? Just curious how you think about that.
