We’ll just have to see how that plays out. But we’re pretty cautiously positive about that as we look at the remainder of the year.Brian Martin Yes. I agree, positioning looks really good there. And maybe just last one for Tim was just — Tim, can you just give any color on — just I know you gave some comments in the prepared remarks about the margin. But just given how quickly it’s gone up with the benefits over the last 12 months, just how quickly you expect that to maybe come down as the funding costs kind of catch up here and just kind of just directionally how to think about or maybe where we end up, whether it be in margin percentage or margin dollars, whatever you can offer on that front.Tim Hicks Yes. Thanks, Brian. Certainly, what the Fed does throughout the year is going to impact my answer.
But assuming the Fed increases once more in May and holds for the rest of the year, then certainly, our loan yields will go up slightly more, based on that may increase. But our deposit costs are going to go up more than that. We’ve got good growth opportunities in RESG and our other business lines. We will fund that, as George said previously, through our retail branch network primarily, and that’s primarily going to be CDs.We, obviously, are always working on grabbing core deposits, and we’ll continue to do that and ramp up those efforts. And we’re supporting those efforts with enhanced marketing and advertising that will help all of the deposit raising efforts that we’ve got. We are adding additional staff in our retail network, which we’ve talked about for the last few quarters.
That will help with gathering core deposits and opening time deposits as well. But it’s likely that our margin will continue to decrease each quarter this year.But as we said in our comments, we think the average balance of earning assets will help offset any decline we see in margin. And as we look at net interest income for the year, obviously, we had a great quarter, record quarter of net interest income in Q1. I think we’ll have other great quarters as we go throughout this year on net interest income. And if you certainly look at our net interest income year-over-year, really strong growth there as well. So Hopefully, that provides you some commentary, Brian, and certainly willing to answer any more questions you may have.Brian Martin Yes.
No, I think that’s good. And just — it sounds like directionally the NII will just be down sequentially in the next three quarters or so, just as that plays out.Tim Hicks Not necessarily. I don’t know that the NII will be down. NIM will be down, but NII has the opportunity to increase in one or more quarters this year based on our average balance.Brian Martin Got you. Okay. Understood. All right. Thanks for the questions, and great quarter, guys.George Gleason Thanks, Brian.Operator Thank you. One moment for our next question. Next question comes from the line of Catherine Mealor with KBW. Your line is now open.Catherine Mealor Thanks. Good morning.George Gleason Good morning, Cath.Catherine Mealor I wanted to step back on the deposit conversation.
Can you give us an idea of where new deposit rates are coming on and maybe where you — where your spot rate on average deposit costs were coming out of the quarter?George Gleason Cindy, do you want to?Cindy Wolfe Sure. Okay. I think this will give you an idea, Catherine. So the quarter cost of interest-bearing deposits was 220. March was 237. Does that give you an indication of what you’re looking for?Catherine Mealor That’s great. Yes, that’s helpful. And then, I mean, I was looking at some of your offerings online. It looked like you’ve got a 13-month special CD at 5%, seven-month at 4.40%, does that feel like kind of on average range of where you’re seeing new CDs coming on?George Gleason Yeah. Those rates went into effect on March 10 and continuing.
In fact, we have one exception to that, which for competitive reasons, I’ll not talk about. But yes, that’s the general rate out there today.Catherine Mealor Okay. Great. And it seems like you still feel like you have capacity in your branch network to grow your funding through core CDs, not having to really tap the brokered market yet, even if your loan growth kind of continues at this $1 billion, $1.5 billion per quarter pace, is that a fair conclusion from what you were saying earlier?Cindy Wolfe It is there. We — if you look at our branches in the aggregate, now we’re in a lot of small markets as well as metro markets. So the nature of our branch network we have a slightly lower total deposits per branch than our peers. So that is something that we don’t want.
We want to get as many deposits for a branch as we can. But that gives you that proof that there is capacity. In any given market, we do have room to grow and do better competing against our competition, and we work on that all the time in our core deposits. So we know there’s capacity there to continue to grow.Catherine Mealor Were there any specific markets where you found more success in growing these core CDs?Cindy Wolfe Well, sure. I mean, to me, it’s a function of talent primarily, and culture is a culture of being the best and winning in every market. So we focus a lot on our talent as a way to win. And another huge focus is service quality. Consumers really do care about service quality in any retail business. So we’re extremely focused on that.
I know the story is mostly about pricing, but I spend most of my time on talent and service.Catherine Mealor And was there a market that you felt like there was more dislocation just given all the drama of March that you felt like it was — you had better traction in X study or X market?Cindy Wolfe Sure. Maybe the answers to all of that we know which markets are doing well, and we talk on a very granular level to each individual leader in those markets. We have the same products, we have the same nice buildings, and we have the same general competitors. I mean, we have a good diversity in our competitor set, which I consider a strength. You don’t want to line up 100% in every market against just big banks or just community banks.So the factors that go into it are pretty complex as to why you might be winning in one market versus another, and it’s not just price driven.
So I would take a way too much time in this meeting to go through why one market might be doing better than another. I’ll just say, it’s not necessarily price. And we work on all aspects of the equation all the time, not just pricing.Catherine Mealor Okay. Great. And then back to the kind of credit conversation. As your construction loans continue to reprice up and they’re now at about an 8% yield, can you talk about your ability for your borrowers to continue to afford that rate? And any impact you’re seeing that it has on interest reserves and any stress you’re seeing in your borrowers just with the higher rates on the construction loans today?George Gleason Yes, I’ll take that. Obviously, Catherine, our sponsors, the equity in these transactions are the guys that are most impacted by those higher rates.
And the continued increases in interest rates are cutting into their profit margins on projects that they’re pursuing, which is frankly why you’re seeing fewer new originations, new projects being created this year than you did last year the significant ramp up in interest rates over the last 14, 15 months has impacted the profitability and hence, desirability of a lot of those projects.Our sponsors and the quality of our sponsorship and the structure of our transactions is very protective of us in those situations. Almost all of our RESG loans would require sponsors to buy an interest rate hedge, an interest rate cap, and those are beneficial to protecting our sponsors and those are assigned to us as additional collateral for our loan.In addition, we’re very diligent and continuously monitoring in our asset management department every loan, evaluating the adequacy of reserves and adequacy of the cap stack our completion guarantees require as part of the guarantee structure that if a deficiency in the cap stack or any of the reserves develops, that the sponsors have to rectify that by putting in more equity.So that’s a fairly common occurrence and goes without a hitch in the normal course of managing these credits that as interest rates have risen, additional reserves are sometimes required and our sponsors have to put that up.
And that’s a discussion that they would rather not have, but they honor that obligation and do that almost without exception. So yes, it’s a legitimate issue. It’s a issue for the sponsor of the equity as opposed to an issue for us if we manage and administer it right.Catherine Mealor Okay. That’s really helpful. And then my last question on credit is just I think pay downs have slowed, obviously, for the reasons we’ve talked about for the past hour. But you have seen some of your projects obviously pay down. So for those that you are seeing success in moving the project to the permanent financing market, can you just give us a flavor for what that looks like, what the pricing looks like, how active the market is, what type of buyer you’re seeing just to kind of give us a sense as to what that process in market looks like today?George Gleason That’s all over the place.
