Will Jones: Yes. Okay, great. And then, back to the margin discussion, I hear, so maybe margin troughs this quarter, we see stability and then, up margin at the end of the year. Does that kind of imply that, deposit costs will peak, maybe in the third quarter or late in the second quarter?
Stacy Kymes: Yes. So I don’t know that I’d say deposit cost peak in particular, but the couple of drivers that are positive for margin are the fixed rate securities portfolio. Each quarter $500 million or a little more will reprice from the lower existing rate to reprice up to current rates. The same dynamic happens in the loan book, a little smaller dollar amount, but the same dynamic of pricing up that fixed rate portion of the loan book. And those continue for a while, multiple quarters, and then on the deposit side, you’re just seeing each quarter, the deposit pressure just gets less and less and so that gets much smaller. It might not go to actual zero, but the lines cross here, we believe, this quarter.
Will Jones: Yes, okay, that’s helpful. Thanks, guys.
Operator: We’ll take our next question from Timur Braziler with Wells Fargo.
Timur Braziler: Hi, good morning.
Stacy Kymes: Good morning Timur.
Timur Braziler: Following up on that last line of commentary, just looking at time deposits of 450, was the average rate for the quarter, what’s kind of the terminal rate there, and what is the offer that’s currently being promoted in your markets?
Stacy Kymes: Yes. So if you just look at our highest offer, let’s see, depending on term, it’s kind of 485 to 510 would be the highest particular offer and that’s — not every market has the same offer, but that’s the high point. And we actually brought those down versus a quarter ago by 5 or 10 basis points. And so that gives you a sense for a little bit of the easing pressure that we are seeing. It’s hard to say exactly what the endpoint is because not everything goes to that high offer, because that’s particular terms with particular specials. So the terminal point is certainly lower than that, and it will just kind of depend on the mix within that portfolio. But you’re right, that does kind of asymptotically slow down, if you will, over time.
Timur Braziler: Okay. And then maybe just your broader appetite for time deposits here, so loan to deposit ratio now below 70%. You have plenty of balance sheet liquidity. Is your appetite still the same for time deposits or can we actually see some of those maturities maybe roll off during the course of the year?
Martin Grunst: Those are all core customers. I mean, none of that is anything that’s like brokered or any of that. So it’s not like there’s a piece that is just going to roll off and go away. We’re going to serve what customers are after and so a fair amount of that’s in the consumer book. And so that’s just kind of natural how a consumer book matures over a rate, this part of the rate cycle. So we would expect that to continue to grow slowly as that consumer book just naturally makes that trend.
Stacy Kymes: And if you’re concerned that we’re adding to CDs at the time when the market is beginning to see rate declines, and so does that lock you into some higher cost of funds because of the growth there? We’re set up. We can swap those back to floating through our treasury function as we begin to have a view around that so that we’re not necessarily locked into that from a fixed rate perspective. We think that’s a core deposit gathering operation that we need to have consistently going on. And so how we think about that will toggle with whether we swap it back to floating or not really around our interest rate risk profile and how we think about that. But you have to think about it more holistically than just that particular line item.
Martin Grunst: And those maturities are within a year and some go a little bit longer than a year. Those line up well with the fixed rate portion of the loan book. And like Stacey said, to the extent that they don’t line up well, we very easily swap those and so that will work out well.
Timur Braziler: Great. That’s good color. And then maybe just a couple around the credit side. So looking at healthcare specifically, and I’m referring to the slide, we’re seeing broader issues kind of pop up across the industry within that sector. And then you look at your healthcare portfolio pre-pandemic and post-pandemic and the results are pretty stark. I guess what changed in your maybe underwriting or anything else that is driving such outperformance post pandemic in that portfolio versus some higher levels of charge up activities in 2017, 2018 and 2019?
Martin Grunst: Yes, I don’t know that our — I don’t see our performances as materially different here. I mean, healthcare over a broad range of time has been a very strong asset quality portfolio for us. It’s always had more volatility around criticizing classified level because the risk in that portfolio that we see is typically classification risk, not loss risk. And so our historical performance from a loss perspective in the healthcare book has been very strong. We had a couple of non-core type healthcare loans, seven or eight years ago that we had some losses around. But the portfolio is structured today around senior housing and healthcare systems and doctor practice groups and things like that. That portfolio has been around for a long time and has been a very strong credit performer for us.
And how we underwrite it is consistent and we feel really good about that. I don’t — I think you’re always vulnerable to having some classification risk in the healthcare book just because of the nature of it, but the loss history, which is really what we focus on, has been very stable in the core businesses that we’re in today.
Stacy Kymes: Yes. And the only thing I’ll add is there was just a segment of healthcare that we were in early or mid-2010s that we exited like in 2017, 2018, that is no longer part of the portfolio. The core portfolio has always been the senior housing, which has been the stable portfolio.
Timur Braziler: And just last from me, and I know it’s a small component, but maybe the NPL inflows from commercial real estate, what asset classes were those in? And any kind of underlying thread between some of those migrations.
