But you have seen some bites at the apple at just basis where either, A, they don’t think they can lose or they’re — they’ve been in the market forever. They’re not trying to turn it in three years. They’re going to have been there. They’re going to be there. They’ve got the patient, money to see it play out over a longer period of term. But again, interest rate certainty, figure out how the world of office is going to play out more, capital markets a little bit freer to help lever deals. All those things are going to play into the rate at which that velocity begins to increase.
Manan Gosalia: That’s great. Thank you.
Operator: One moment for our next question. Our next question comes from Timur Braziler with Wells Fargo. Please proceed with your questions.
Timur Braziler: Hi, good morning.
George Gleason: Good morning.
Timur Braziler: Looking at the deposit trends in a higher for longer environment. I know you guys were able to bring down some deposit pricing in January. It sounds like half of that was brought back in just with a higher for longer environment here. Just looking at net interest margin and the linked quarter decline there at a decelerating pace. Can we actually see NIM kind of compressed at a decelerating pace going forward? Or some of the deposit dynamics such that if we do end up in the higher for longer environment, then margin compression can actually pick up a little bit here as we go into the next couple of quarters?
George Gleason: I think if we stay in a higher for longer environment at current rates, assuming that the tail risk of Fed rate increases don’t materialize and the timing of the Fed cuts doesn’t happen near-term. I think we get to a relatively flat cost of interest-bearing deposits a couple of — three quarters out.
Timur Braziler: Okay. Got it. And then maybe on the way down for…
George Gleason: That assumes we continue to achieve growth of $1 billion to $2 billion a quarter in deposits.
Timur Braziler: Okay. That makes sense. And then, I guess, on the way down and the ability to reprice time deposits lower, do you think that’s going to be fairly formulaic as rates come down, you’re going to have the ability to reprice those lower? Or is there something more idiosyncratic to just the reliance on time deposits that maybe costs are going to have to stay elevated for a longer bit of a lag as we start getting some of these rate cuts in place?
George Gleason: Cindy, do you want to take that?
Cynthia Wolfe: Sure. I think formulaic is probably a good way to describe it. We have begun the rise in maturities based on what we were doing a year ago. So that will pick up in May and June. And I’ll say the only thing that we’ve noted that is better than we anticipated is our retention. So I’ll just give that little bit of color that we’ve been really pleased so far with our retention rate on our maturing CDs, and we hope that, that continues because that makes it even more predictable.
Timur Braziler: Great. Thanks. And then just looking at an update on substandard credits. The Seattle office that was new this quarter. I know last quarter, we had a couple of office loans in Seattle that were reappraised quite higher from an LTV standpoint. I’m wondering, is this one of those loans from last quarter? And then maybe just give us broader expectations around your exposure in the Pacific Northwest and what you might be seeing there that’s a little bit more punitive than some of your other markets?
George Gleason: Brannon, do you want to take that?
Brannon Hamblen: Absolutely. Yes. The Seattle office that we called out, that we did downgrade the substandard was one of those bubbles that had floated up that we had previously described to you. So same issue there. I think to the broader question of the Northwest, I mean obviously, we can’t overgeneralize, but that has — that particular market has had some various submarkets that have been sort of more affected by some of the turmoil in 2020, ’21? Obviously, as it relates to office, you’ve got work from home that has impacted the entire industry made that more challenging. But you’ve got other situations where mixed-use outcomes are superior — having superior leasing results and just the place-making aspect of that really offsets the risk you might have in one product or the other, offset some of the risks that might be sort of overstated in any region.
But we’ve — I will say, we’ve not been as active in the Northwestern part of the country for a while. So I would say that our views are somewhat laid out just in terms of the lower origination value. So we’re very happy that such a substantial part of our book does exist in the geographies that are having more positive trends in the last couple of years, although I did — I don’t recall the source, but did see Seattle return to sort of a top 10 opportunity list. I don’t remember the resource or who was reporting on it. But I do think there are probably some more positive trends developing there. It will take a long-term to play out. But yes, we’ve been less active in that part of the country.
Timur Braziler: Okay. Great. And then just last for me. Any update on the Chicago land loan? I know it’s been extended to October. How would you handicap that being resolved in advance of October? And how should we think about it as that loan is still on the books in October?
