Steph Scouten: Yes, that’s helpful. I mean like at a very high level, is it fair to just kind of think about the €“ and I understand what you are saying, George, is this €“ these numbers are improving every quarter, but almost the inverse of the charts you were showing previously as rates went higher and just how the percentage of loans that would fall into protection from those floors? Is that kind of roughly how we could think about it?
George Gleason: Yes, exactly. And if you think back a year or two, we had a lot of loans at the floor rate was way above what the formula rate was at the time and rates had to rise 50 or 100 or 150 or 200 basis points before we got above those floors and those loans activated. The Fed kept that from being a big issue by raising rates a lot in big chunks and quickly in big chunks. So we quickly got over those floors. You can see the benefit of that in our record levels of net interest margin and core spread that we have been achieving. So yes, the flipside of that is true. And Stephen, that’s why we have made the comment that we will when the Fed stops raising rates and deposit costs catch up, we will see a reversal of some of this significant improvement in net interest margin and core spread that we have had over the past year.
It’s possible that Q4 was the peak in our net interest margin and core spread. It’s likewise possible that we could have another quarter where we have some improvement in NIM and core spread. But based on the fact that the Fed is going, it seems like the 0.25 point increases and the number of those as a legitimate question, is it 1? Is it 2? Is it 3? Is it 4? But those quarter point increases, we are going to see a catch-up in our deposit costs. So we are if we didn’t hit peak NIM and core spread in Q4 would probably would eke out some small incremental gain in Q1, I can’t even I hope we will have a gain in Q1, but that’s questionable. But at a slower rate of Fed increases with deposit costs, which lagged beginning to catch up, we will see some erosion of those recent gains probably in Q2 at least.
Steph Scouten: Yes. Well, the NIM peaks at 5.50 range, you are going to be doing better than 99% of banks anyway. So we are fine with that. I guess the one follow-up is just when you think about that deposit lag in the back half of the year, how do we try to frame that up at all, because that, to me, is the hardest thing to try to anticipate. We can think about betas when rates are rising, but when they are not, how do you think about that kind of lagged pressure in the back half of the year on deposit costs?
George Gleason: Well, our €“ the way we are thinking about it is doing everything we can do to roll floors up and make sure that the deposits that we put on are not too long a duration. Now we added some duration to the deposit base last year, because and you saw that with an increase in the volume of CDs. That was intentional to put some duration in that book knowing that we were going to have strong loan growth in 2023 and probably weren’t going to see rates coming down much at least in the front half of €˜23 and maybe not at all in 2023. So €“ but we are beginning to shorten the duration on new CDs we are adding and still doing a bid out longer, but we are pulling some of those and in some categories the deposits just to get ready to have deposits repricing late €˜23 and early €˜24 as we think that’s probably the likely timing that the Fed might be in a cutting mode if they are.
