Jeff Rulis: Great. Okay. I’ll step back. Thanks.
Peter Ho: Thanks, Jeff.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Andrew Liesch with Piper Sandler. Your line is open.
Andrew Liesch: Hey, good morning everyone.
Peter Ho: Good morning, Andrew.
Andrew Liesch: Just a quick question on this liquidity build that came on later in the quarter. Has all that been deployed into earning assets? Or there is still some investments to be made on that front?
Dean Shigemura: It’s primarily sitting in Fed funds sold right now. So, readily available liquidity on balance sheet for us. The yield we’re earning — it’s at the Fed, so we’re earning fed funds effective. We’re also looking at the — in terms of investments, that’s where we’re placing the funds?
Andrew Liesch: Got it. So I mean, it seems — it sounds like that the net effect on the margin will be lower, but on net interest income, maybe you’re picking up a little bit NII. Yes. Is that right?
Dean Shigemura: Right. Yes.
Peter Ho: Yes. So it’s — that’s exactly right. It’s dilutive to margin, accretive to NII and dilutive to capital.
Andrew Liesch: Got you. All right. And then on loan growth going forward. It seems like you had some pretty good gains on the commercial side. I’m just curious what drove that. And then looking out, I mean, how do you expect the total portfolio trend just modest, like low to mid-single-digit growth?
Peter Ho: Yes. I think we had a good C&I quarter. I’m not sure that’s necessarily replicable in the coming quarters. So we had growth in both commercial as well as consumer. And what I would anticipate is, likely loan growth to be flat at this point moving forward. It just seems like the consumers slowed down a bit based on rate, seems like commercial clients are sitting on their hands a bit on transactions. Hopefully, we’ll see that change as more positive signals come out of the economy, hopefully. But for now, feels reasonably muted, I think.
Andrew Liesch: Got you. Thanks for taking the question. I will step back.
Operator: One moment for our next question. Our next question comes from the line of Kelly Motta with KBW. Your line is open.
Kelly Motta: Hi. Good morning. Thanks for the questions. I think — I really appreciate the color around deposits and the updated outlook for deposit betas. And I believe in the commentary you suggested some continued pressure on noninterest-bearing deposits. Just wondering what your outlook incorporates in terms of noninterest-bearing run off into a higher rate accounts and kind of where those could bottom in terms of a percentage of deposits, as well as timing? Is this really the last quarter of it? Or could there be a continuation, assuming we get another rate hike or two?
Dean Shigemura: Yes. The guidance around the beta, it does incorporate the mix shift, so some drawdown on the noninterest-bearing into interest-bearing deposits. So that was at 30% peaking in the fourth quarter. We’re looking at it. Right now, we’re at 29% noninterest-bearing mix coming down to maybe 27% — 26%, 27%.
Peter Ho: Yes, Kelly, that would put us at about, interestingly, the midpoint between the pre-pandemic levels, which were, call it, 30%-ish. And kind of the 2007 levels where rates, obviously, were higher kind of the mid-20s. And so not knowing which — kind of which base we’ll head to kind of we’re thinking that’s about a right way to handicap it. So, we do see some mix shift continuing into this quarter, the third quarter, potentially into the fourth. I would mention, however, that we have seen some flattening — a bit flattening around that decline. It looks like June was down just over 1%, which compares to on-average of the past year, down kind of like 2% per month. So that was an improvement and July is looking pretty flat right now. So, we still have a few days left to the month. But if that holds true, that probably would be our best performance in about a year on a monthly basis.
