Jeff Rulis: Got it. So yeah, not so much geographic concentration, just kind of where they were.
Misako Stewart: Yeah.
Jeff Rulis: So it sounds like it was spread throughout the footprint.
Tim Myers: Yes, both geographically and asset class diversified. If you look at the largest migration we had, which was in the special mention within criticized, it’s all over the place. There’s nothing alike there. There was C&I on the wine industry side, a motel, a retail commercial real estate space and a multifamily space, none in the same geography, none in the same asset class. So we have not seen meaningful deterioration in any one particular class. The problems we have on the substandard side remain the same ones we’ve been talking about for multiple quarters. And again, the increase in that as Misako noted was outstanding usage on a C&I revolving credit that we’re negotiating full real estate collateral for. So we’ve been able to focus on those properties.
Misako Stewart: Right. And that line has since paid down. And I also wanted to note too, the migration from watch to special mention isn’t necessarily indicative of deterioration. We just haven’t seen any meaningful improvement and we kind of treat the watch category as a transitory. So if we don’t see any meaningful improvement, or deterioration for that matter, we do move it to special mention. In this case, it was a matter of not seeing any improvement.
Jeff Rulis: Okay. And maybe, Tim, to go back to the capital and I appreciate the buyback, a prudent cautious approach. Just a philosophy kind of question, I guess, on the TCE, I think you got I think an 8.6% current and I think 6.7% with AOCI baked in?
Tim Myers: Yeah.
Jeff Rulis: What do you value more? I mean, do you — is that guiding kind of thought, I mean the regulatory capital is very robust. I don’t know if you look at that. Is that part of the cautiousness of — with AOCI, do you value that metric or do you look at 8.6%? I guess I’m trying to get to what’s the capital target that you value most that we could — we should look at?
Tim Myers: It’s a good question, Jeff. And I’m not sure I have a solid answer, meaning, we look at all those factors all the time and those are the conversations we have amongst ourselves and with the Board. Meaning yes, we have high regulatory capital. But right now, TEC ratio is important. It’s important to the investment community. It’s important to us. And we do have to look at that adjusted for AOCI or the impact of unrealized losses in the HTM book. And so — and certainly we’ll look at that within the context of our deposit trends and our asset growth and our earnings generation. So it’s — we look at all of that and yes, we want to take advantage of the stock value and we’d love to buy back more shares. We just look at all those factors and say, okay, what the right thing to do at this time.
So there is no one clear answer for you and I’m not saying that to be evasive. But if we continue along the balance sheet clean-up path that we’re on, our earnings start to improve and we don’t feel like we’re going to have any other marginal — I’m sorry meaningful impacts to capital, then we’ll certainly take a lot closer look at that.
Jeff Rulis: Appreciate it. Thank you.
Tani Girton: Hey, Jeff, back to your month of June net interest margin question, that was 2.4%. And just to give a little bit of color to that, our Fed funds borrowed — sorry, our funds purchased or borrow balance peaked in at the end of April, a little over $400 million. And for the month of June, that had come down to a little over $300 million. And now if you net out the excess cash that we’re holding because we are keeping the $83 million or the proceeds from the $83 million sold on balance sheet, the borrowing level is now close to $225 million. So that’s going to have a significant impact on the margin improvement.
