Jeff Rulis: Okay. So yes, I was looking at that relative linked quarter pipeline increase. So it’s up over 3Q. I don’t know what the percent is, but something of an increase. Is that fair?
Nick Place: The pipeline?
Jeff Rulis: What was the balance of the pipeline and entering the fourth quarter to — till today basically?
Nick Place: Yes, the pipe — on a percentage basis, the pipeline is up probably 35% from where it ended Q3.
Jeff Rulis: Great, thanks, I’ll step back.
Operator: [Operator Instructions] The next question comes from Nathan Race with Piper Sandler. Please go ahead.
Nathan Race: Yes. Hi, guys. Good morning. Thank you for taking the questions. Going back to margin discussion. I appreciate the guidance in terms of how to think about the cadence and the margin with Fed rate cuts that are expected in the back half of this year, but just kind of think about the outlook for the next couple of quarters if the Feds on hold. I noticed that the cash balances were a little higher quarter-over-quarter on the average balance sheet. So not sure if the plan, just given that loan growth may be a little slower in the first half of the year versus the second half is to maybe pay down some wholesale funding, which may support some margin expansion over the next quarter. And within that context, I would be curious to hear what maybe the spot rate on deposit cost was at the end of December.
Joe Chybowski: Yes, Nate, I think that’s always an option. I think we’re constantly trying to balance that with, obviously, a growing loan pipeline. So we certainly evaluate that. We’ve also supplemented some of that loan growth with securities purchases that have been at fairly attractive yields. But obviously, at the end of the day, its loan growth is the driver. So I mean, while balances might have been a bit higher in 4Q, I think ultimately, we look at the entire balance sheet and really try to optimize it as much as we can. From a spot rate standpoint, so spot rate December was $3.18 on deposits. It’s actually the first quarter, it’s been down relative to the average deposit rate. So I think that’s another point that we want to highlight is when you think about from stability and potential inflection on the deposit cost standpoint.
Nathan Race: Got you. So put all pieces together, it sounds like it’s sort of assume that the margin likely troughed in the first quarter — I’m sorry, in 4Q. Relative to…
Joe Chybowski: Yes, I think as we’ve been saying yes. As we’ve been saying, I think it’s — we’ve seen stability in a path to stability for the last couple of quarters. And I think ultimately, loan fees, which obviously are really tied to payoffs will cause it to bounce around here or there. But I think long-term, it’s — as we think about it, I mean, we feel like it’s hit stability, and I think the key point there is September NIM, as I said in prepared remarks, was 2.30% and December NIM stand-alone was 2.30% as well. So I think that’s I think certainly highlights the stable nature of it.
Nathan Race: Yes, definitely. And just kind of thinking about the composition of loan growth expectations for this year. Any thoughts perhaps, Nick, in terms of how you’re thinking about the composition of C&I growth versus multifamily and CRE and just kind of what that makeup looks like in the pipeline coming out.
Nick Place: I don’t expect our portfolio to shift meaningfully throughout 2024. I mean we certainly have a lot of initiatives around growing our C&I base and our C&I clientele, those transactions, the onboarding times of those are much longer and given the low interest rate environment that we are in for so long, it does make a lot of those more difficult to try to refinance over. So if we think about near-term opportunities for pipeline, those tend to be more CRE driven through some transactions that our clients are getting in front of. So there’s probably more opportunity in the near term in our typical multifamily and CRE book to build the pipelines in a faster nature. And the C&I initiatives are really more longer term in nature. And we’ve made good progress there. It’s just those — it tends to be a slower build.
Nathan Race: Yes. Got it. And just maybe turning to expenses. I think the expectations there are pretty clear kind of follow asset growth, new expenses were up 5%. In 2023, you grew assets 6%. Assuming kind of a similar low to mid-single-digit loan growth outlook for this year, is it fair to expect expenses to follow a similar kind of growth trajectory this year? Even with some of the technology stack upgrades that were described by Jerry?
Joe Chybowski: Yes, Nate, I think that’s a good way to think about it. I think we continue to optimize the technology stack and continue to see benefits to. I think as three years ago, we put a loan origination platform in place, and we’ve really seen a ton of efficiencies from that. I think that’s part of the reason we can grow to the pace we are and net FTEs were only up 9% on a year-over-year basis. So I think, yes, we look at those that the technology efficiencies, whether it’s the small business platform that we look to implement at the back half of ’24 or it’s even just generic workflow solutions. I think all of those are helping us become more efficient. And then obviously, we continue to invest in our people that’s obviously our greatest asset.
So yes, the expense growth as it always has. It’s on a year-over-year basis, should run in line with asset growth. As we highlighted quarter-over-quarter, similar to deposits, it’s not linear. But generally, if you look over the long haul, it’s in line with asset growth.
Nathan Race: Got you. And A couple more for me. Just in terms of fee income. With some of the C&I initiatives that you guys have in place, I imagine it’s generally a longer sales cycle in terms of kind of onboarding clients and given the treasury suites set up, but just kind of any thoughts on just kind of the fee income run rate of some of those initiatives take hold this year?
Nick Place: Yes. This is Nick. I think certainly, there’s more opportunity to build some [ TM ] related fees associated with those higher treasury clients. You’re right that, that’s a longer onboarding cycle. I think we have been diligent about providing our clients with all the tools and resources that they need and then also diligently doing digging through and looking at the market to determine are we charging the appropriate amounts for those. So I think that’s been a big initiative here over the last couple of years. that will be something we’ll continue to focus on. But as you know, it tends not to be a really large component of our income.
