F. Morgan Gasior: So roughly about $30 million to $35 million to $40 million — $30 million to $40 million would be healthcare and the rest of it would be in the other commercial finance categories. So about 3% to 4%…
Manuel Navas: Okay. Got it.
F. Morgan Gasior: of the total is healthcare, half of it within commercial finance.
Manuel Navas: Okay. Got it. And your — the thought process on multifamily, CRE being less of a focus, just kind of rate driven. Are you already seeing slower demand there? You did have a great end of the quarter in multifamily?
F. Morgan Gasior: Yeah. A couple of things. One is we are pricing cash — we are reallocating cash flows. So right now from a profitability perspective and an asset liability perspective, continuing to maintain a bit shorter duration and also picking up some improvement in yield seems important to continue the improvement in profitability. So we are really looking at doing is allocating cash flows for the year. And again, the equipment finance side and the commercial finance side give us the most flexibility from an asset liability perspective. Just, for example, in 2023, we will have over $600 million in assets re-pricing, the bulk of the greater portion of it in the second half. So what we are really doing is reallocating assets and cash flows.
For example, the multifamily portfolio is expected to have significantly reduced prepayment rates, in part because of market conditions and in part because of where rates are right now. So we will see less cash flow coming off that portfolio to reinvest. Equipment finance, we will probably have close to $200 million coming off of the portfolio. We expect we will be able to reinvest that back into equipment finance, take some of the excess cash flows we might have from securities or multifamily, put it into equipment finance. And then in commercial finance, as we mentioned last quarter, we will have about $60 million coming off of the securities portfolio this year, at an average of 2.66%. Our goal is to put that into commercial finance at an average of about 9.6%.
So pretty strong contribution of growth there and that’s why it’s our priority.
Manuel Navas: So with that kind of re-pricing and improved asset yield performance, what are your kind of thoughts on the NIM going forward. At the same time, you are having a little bit increase in deposit costs, but just kind of what are your thoughts on the NIM outlook?
F. Morgan Gasior: Well, we would expect net interest margin to stay relatively stable in the first half. I want to caution all these observations with the uncertainties of deposit re-pricing. So far we are able to maintain a good funding base with the pricing we have so far. But we have to watch what market reactions are as more customers seek higher yields. We will also see communications from the Federal Reserve on their expectations for rates during the year. And then those have — that does drive some of our deposit customer perceptions on what they should be seeking for rates. So our big wildfires this year is going to be deposit interest expense. So in the first half, we expect net interest margin to stay relatively stable.
In the second half when we have more cash flows re-pricing, we have an opportunity to expand the net interest margin, especially as we get better deployment in higher yields in equipment finance and especially in commercial finance. The securities re-price in the second half of the year, if we time the deployment of those cash flows into commercial finance at that time, then you see a strong opportunity for net interest margin expansion in the second half.
Manuel Navas: I appreciate that. Switching over to expenses. It did a little better this quarter than I would have thought and then you had the branch savings planned for, I believe, next year. What’s kind of a good expense run rate in 2023?
