Thomas Travis : I would also add that we are hedged and just think of 70% more or less is a good number. And so the portion that’s unhedged, the oil and gas — while the oil prices are significantly more than they were six weeks ago and so we’re in a good position. I guess one could argue that we bought the insurance, the hedge, so to speak to protect against the downside. And the typical hedge, if we hadn’t done it, well we’d be collecting more. But we all understand the reason that we’re doing this is to recover most of the assets and not speculate. So in addition to being on target with the production amounts, we’re in a strong position financially with regard to the hedging and the pricing.
Operator: [Operator Instructions] The next question is from Nathan Race with Piper Sandler.
Nathan Race : Just going back to the last question, just curious if you guys are actively shopping those oil and gas assets? Or is the expectation that you’re going to retain those assets through the recuperation period going forward that we just touched on.
Thomas Travis : Honestly, Nate, it’s such a small item on our balance sheet. It’s really small. It’s working as we thought it would and it’s rapidly being recollected — I mean, collected. I’m not going to say that we ignore it but we’ve been really busy around here and we just really haven’t focused hard on selling off the asset. So we may look at that over the next two or three months and we may do that. But it just isn’t enough for us to worry about.
Nathan Race : And then just maybe a technical question on fees and expenses for Kelly. Can you just kind of help us think about the fee income and expense run rate that we should be expecting as these assets remain going forward?
Kelly Harris : Yes. I think for core non-interest income number $650,000 is a good guide. And then on non-interest expense, I believe we were closer to $8 million, excluding the oil and gas activity. I think on a go-forward maybe for Q2, $8.3 million is a better run rate, excluding the oil and gas activity. But I think that maybe the first quarter would provide a good estimate on your go-forward for the oil and gas gross revenue and gross expense.
Nathan Race : And then, just thinking about the margin outlook fees going forward, I think you mentioned the core margin in March was around 4.50% or so or 4.45%. How do you guys kind of think about the margin trajectory in a higher-for-longer interest rate environment going forward?
Kelly Harris : Yes. And then just a correction, the core NIM, excluding fees in March was 4.58%. And so that was with the fully baked in migration of treasuries into higher-yielding assets. On a go forward, we still feel really comfortable operating in that similar range. And you may see some slight movement either way but more of the same.
Nathan Race : And then how do you guys anticipate the margin reacting or responding to each Fed cut as they occur?
Thomas Travis : I would say that, Nate, as you know, if we had a slide in here, if we expanded the NIM slide back to — for the last 10 years, you would see that we just operate in our normal ranges. And we really don’t see a big change to that. I think that it wouldn’t surprise me if the margin, what do you say is 4.58% real time, I mean, it wouldn’t surprise me if we were to bleed down a little lower than that just given the dynamics of the yield curve in the markets. I have noticed the last couple of weeks though that some of the online and some of the banks, money markets and high-yield savings accounts actually have come down without the Fed making any changes. And so I think that we’re very close to the end of any cost of fund increases for us. I don’t even know if we have $100 million of CDs left to reprice.
Kelly Harris : Yes.
Thomas Travis : Right. So I think when you think about our cost of funds and our margin, it’s really a function of do we have to go obtain more deposits to keep up with the loan book, and if you do that, do you have to pay a little bit more. So I think that’s the only dynamic that could cause the margin to come down a little bit, but we’re going to be in our historical ranges and we should be fine there.
Nathan Race : And then maybe a question for Jason, just on kind of the loan growth outlook. Nice to see some growth in the first quarter here. I think you were a little more guarded last quarter in terms of growth here starting out the year. So just curious to get your updated thoughts on how we should be thinking about loan growth and also deposit growth in 2024.
Jason Estes : Sure. I think you’re going to see us continue our commitment to profitability over growth, right? And so when we were talking three months ago, I kind of emphasized heavily don’t expect a 2022 type growth year. We’re going to be absent some kind of meaningful change in interest rates or something that really gives us an opportunity to maintain our margins while growing, it’s just going to be a single-digit number in my opinion. And so I think that I’m just going to reiterate what I said then we are valuing profitability over growth.
Nathan Race : And then maybe one last one for you, Jason. Just curious what you saw in terms of criticized and classified trends in the quarter?
