But just curious, your thoughts.Mark Grescovich Yes, David, thank you. Thank you for the question. And yes, I suppose that means I’ve just been here a long time. We’ve gone through so many cycles. But I think the point is we instilled that strategic pillar in 2010 of having a moderate risk profile, so that we can be successful through all economic cycles. And that’s how we position the balance sheet, that’s how we positioned our product offering, and our delivery channels.So, the fact that we’ve entered this unprecedented speed of deposit flows and banks — some of the bank failures of speed with which they failed really proves out our resiliency as an organization, coupled with our strong capital position, our very strong reserve methodology really positions us well to take advantage of the current market conditions going forward in terms of disruption that Jill mentioned, which there will continue to be.I also believe that from this cycle, what we’re seeing, my view is that this is going to have a longer tail to it than people realize.
And that in and of itself, given our moderate risk profile, we’ll present great opportunities for Banner going forward.So, I think we’re well-positioned and we’re actually excited to take advantage of some of this disruption, so that we can continue to grow and thrive as an organization. Hopefully, that’s helpful, David?David Feaster Yes. No, that was extremely helpful. I appreciate it. Thanks everybody.Mark Grescovich Thanks David.Operator And our next question is from Kelly Motta with KBW. Your line is now open.Kelly Motta Hi, thank you so much for the question. I apologize if anything is redundant. I had to join a little bit late. Just looking at your deposit costs, they accelerated. Although at 51 basis points for interest bearing is — compares still pretty favorably to most banks out there.
Just wondering if there’s any updated thoughts on how we should be thinking about deposit betas through the cycle.Rob Butterfield Yes. So, Kelly, this is Rob. The deposit beta for the interest bearing deposits was about 25% for the last rate cycle and at this point, we are expecting to experience something similar to the cycle.And then as far as the changes in the cost to deposits over the quarter, I would say it increased kind of pretty much the same rate throughout the quarter. So, there wasn’t any spikes in it necessarily.Kelly Motta Got it, that’s helpful. And kind of as we look ahead with deposit balances, you guys clearly have a lot of flexibility on balance sheet still, although this is the second quarter of declines. How should we be thinking about the movement of deposits out to maybe wealth management or treasuries?
And when do you expect kind of pressure from that to start to abate here?Peter Conner Yes, Kelly, this is Peter. As we mentioned earlier, our deposit outflows in Q1 were actually less than they were in the fourth quarter. And the drivers were very similar to what they were in the fourth quarter, which were outflows of non-operating balances, primarily with small businesses and commercial clients moving some portion of their operating balance to treasuries or money market fund off the balance sheet for higher yields while we retain the core relationship.Going forward, we expect some continued outflows related to rate drivers, how we expect that, the pace of outflows will decline as we get towards the bedrock of our core deposit base, which by the way, is very granular.Our average deposit size is $20,000, and our diversification of deposits across both, metro and rural markets, along with a very diversified client segmentation, gives us confidence that that bedrock floor on our core deposits is not that far out into the future.So, again, we’re not a bank that will chase deposits for the highest rate in the land, but we will offer a fair rate to our clients as a function of our value proposition and client service model.And as we mentioned earlier, we have plenty of dry powder to fund any additional high rate sensitive deposit outflows with our securities portfolio and some other on balance sheet cash.And we’ll do that as long as it’s accretive to margin and ROA and EPS.
And that’s been the case for the last two quarters, and we expect to carry that view going forward on the deposit outflows.Kelly Motta Great. Thanks for taking my questions.Mark Grescovich Thanks Kelly.Operator Our next question is from Andrew Terrell with Stephens. Your line is now open.Andrew Terrell Hey, good morning.Mark Grescovich Good morning Andrew.Andrew Terrell I wanted to start maybe just on the deposit front. I was hoping just to get a sense of kind of deposit flows throughout the quarter. Did you see any kind of acceleration in flows or outflows during the month of March?And then more specifically, can you just talk about how deposits have fared thus far in April, both for overall deposits? And then have you seen the cadence of non-interest bearing compression slow quarter-to-date?Peter Conner Yes, Andrew, this is Peter.
So, we — in terms of the quarter itself, we actually saw deposit flows higher in January than we did in the last two months of the quarter. So, we didn’t see any material effects from the bank failures or safety and concerns.In March at Banner, in part because all of our large deposit relationships had direct outreach by our bankers in terms of communication. And then we’ve had, obviously, a very conservative risk profile for all of market tenure here, so there’s is no surprise in terms of our capital liquidity position going into this — into these events.In terms of what we expect going forward in terms of non-interest bearing, as I mentioned earlier in our prepared comments, we typically see some seasonal outflows in Q2 related to tax payments that we’re seeing here normally in a normal year without the fiscal stimulus impact.But overall, we’re not seeing any real material change in the cadence of outflows related to rate-sensitive clients moving up the balance sheet.
The tactics we’ve employed to retain those deposits in terms of exception pricing and a couple of selective CD specials have been effective.I mean, retaining those deposits on balance sheet maybe not in non-interest bearing or lower yielding account, but they’re staying on balance sheet in some of those higher yielding products and we’ve been effective with that. And our clients are really just looking for a fair rate, they’re not looking for the highest rate out there.Andrew Terrell Okay, I appreciate that. And maybe just thinking on kind of margin topics. At kind of the onset of the Fed raising rates, I remember the way we talked about the margin and its response to higher rates as the margin beta would be around 33% to the change in Fed funds.
You guys have actually performed relatively in line with that kind of expectation even though the world has changed quite a bit.If we look at just the forward curve, there’s quite a few cuts in there. I guess the question is, would you expect a similar net margin beta around 33% on the way down? Or do you think some kind of — some of the laden kind of asset repricing within those adjustable and fixed rate loan buckets could help to keep that kind of net margin beta lower on the way down than what you’ve experienced on the way up?Peter Conner Yes, Andrew, as we’ve guided to previously, we — our goal through this rate cycle was to reduce our asset sensitivity as we got towards the top of the rate cycle through a combination of organically migrating the loan portfolio for more duration and putting loan floors in on the floating and adjustable-rate loans as we went up.And we’re in a good position now as we get towards what we presume as the top of the rate cycle.
And in the way down, we’re going to have a slower pace of repricing on the loan book when rates do begin to come down.And so we — our goal is to hold this — the range of our margin where it is with just a little compression going forward, given the fact that we put in this asymmetry into our asset sensitivity as rates have gone up organically.And so we feel pretty confident that, that margin — that range of margin will hold here in the near-term, even as the Fed stops tightening rates. And even if there’s some additional inversion along into the yield curve because of all the organic work we’ve done that not just treasury but all of our bankers in working with our clients to price and structure the loans to preserve our margin on the way down.Rob Butterfield All right.
David — Andrew, the only thing I would add to that, Peter’s comments is two-thirds of our loan book is variable and adjustable. About 60% of that is adjustable, that hasn’t necessarily adjusted through this rate cycle at this point. So we will see some further upward adjustments on those.Andrew Terrell Right. Okay. Very good. I’ll go back in the queue. Thanks for taking the questions.Mark Grescovich Thanks Andrew.Operator Our next question is from Andrew Liesch with Piper Sandler. Your line is now open.Andrew Liesch Hey good morning everyone. Just a question here. I know you mentioned funding loan growth of cash flows from the securities portfolio or borrowings. But just a couple of quarters now where you’ve sold securities at a loss. I guess, how are you looking at the securities portfolio and managing capital?And the valuations of those securities are now improving, should we see more security sales?
Or is it really just going to be borrowings and maybe some core deposit growth or higher rates that you guys are offering to fund loan growth?Rob Butterfield Yes. Andrew, this is Rob. So, yes, from a wholesale borrowing standpoint, we’re planning on using it on a tactical basis, really have an infilter funding needs based on the level of loan growth and deposit outflows.As far as looking at the future investment sales, that’s something that we’ll continue to consider based on those similar deposit flows. Our criteria is the earn back. So, as long as we have an earn back within three years and then we’re willing to do that from a capital perspective.And then I think the other part of it is just the current quarter probably is, I would say, going forward that might be similar levels or a little bit lower than that.
But again, it’s going to really depend on deposit flows.Andrew Liesch Got it. Okay. You’ve already covered most of my questions. I’ll step back. Thank you.Mark Grescovich Thanks Andrew.Operator Our next question is from Andrew Terrell with Stephens. Your line is now open.Andrew Terrell Hey, thanks for the follow-up. I apologize if I missed this. It looks like the 1Q expenses were in kind of squarely in that low to mid $90 million a quarter range that we talked about.Last quarter — I was just hoping to get updated kind of expectations for the expense base moving forward. And if that low to mid-$90 million a quarter is still a good way to think about the expense run rate from here?Rob Butterfield Yes, Andrew, this is Rob. So, our guidance really hasn’t changed there.
