Damon DelMonte: Got it. Okay. Thank you. That’s all that I had. Appreciate it. Thanks.
Operator: [Operator Instructions] Our next question today comes from the line of Brian Martin from Janney Montgomery Scott. Please go ahead. Your line is now open.
Brian Martin: Hey, good morning guys. Nice quarter morning. Say just maybe one just for maybe for Tom, maybe just pick picture. You mentioned that you’re you may be taking steps to reduce the asset sensitivity. And I think you previously talked about maybe a $3 million number for 25 basis point cuts. Just kind of wondering how — what you’re planning to do on the potential to put some heads down or reduce the sensitivity or just kind of you can give us some thought of how you’re thinking about that.
Tom Bell: Yes, sure, Brian. Thank you. I think a couple things. One, you have to recognize the rates in the middle of the curve are up about 100 basis points. So, we obviously weren’t going to do any hedges in that lower rate environment. I think now it can make more sense. We’ll still have to see how the data comes out and what the Fed does here, but we’re asset sensitive. So we’ve benefited from the rate up movement and then we just think that we’re trying to get — I don’t know that we’ll ever get to neutral, but we’d love to be at neutral at some point and just earn our spread and go home. But in the deck on page six, we kind of have our sensitivity for rates down And we’ve been able to bring down the sensitivity just from organic things. We’re doing on the balance sheet And I think that’s primarily our focus right now.
Brian Martin: Okay, and I guess specifically on the organic side, I guess so there the actions you expect to maybe be able to reduce it by I guess what specifically is anything you can talk about that you are planning to do that will lower that?
Tom Bell: I mean, we brought it down about 1% from the last quarter and so obviously our leasing business is doing very well. That’s fixed rate nature product We like to spread on that transaction for us and that’s a short term, cash flow transaction three years typically. So that’s one area obviously any, fixed rate loans that we do either in CRE or commercial will help us as well. And then we obviously have the security support portfolio the cash flow is running off of that. I mean security investments, is not a core business, but for liquidity reasons and also just given where spreads are that looks more attractive today than it did say three months ago. So there’s opportunities to at least for sure replace cash flows and potentially add to the position if needed.
Alberto Paracchini: Yes, I think Brian to add to what Tom said there I think generally it’s really looking to take advantage to a degree that we can That we can originate well-structured rate protected fixed rate loans. I think we would look to do that and that’s really the primary tool on the on the balance sheet side.
Brian Martin: Okay, and just curious. I mean the mix of what you’re originating today in terms of variable versus fixed. What’s the proportion? Is it more variable and I guess is that what’s worth that today and you’re shifting that?
Tom Bell: Yes, it was 70-30-ish kind of and we’re moving towards more 50-50.
Brian Martin: Got you. Okay. Perfect. Thanks for the color. And then maybe just one for Mark on, I guess, from a credit perspective, any change in the quarter from a criticized perspective or kind of special mention credits? I know you talked about classified, but just any, it doesn’t sound like there’s much movement there, but just wanted to confirm that.
Mark Fucinato: No, there hasn’t been a lot of movement in the stats, whether it’s criticized, classified, etcetera. It’s been pretty flat. Obviously, we’re hoping to do better.
Brian Martin: Got you. Okay. And then maybe just one last one for Roberto. I guess just, I think you, I don’t know if you’ve talked about this recently, but just with getting the $9 billion and closing in on $10 billion, just kind of how you’re thinking about that in terms of, if and when you do consider, I think last quarter you talked a little bit about the M&A being more interested. Just wondering how you’re thinking about that in terms of the $10 billion threshold and is that a focus on potential targets you may be considering?
Alberto Paracchini: I don’t know that we would say, Brian. Go ahead, Roberto. No, go ahead.
Roberto Herencia: Yes. So, and feel free to chime in. But we, as you know, our strategy has organic focused and obviously we’ll take it. Inorganic has always been part of the strategy as long as it is within the parameters that we’ve described to you before. We’re going to cross that $10 billion threshold, right? Organically, I mean, you can see it happening right in 2025. We’re not going to change our M&A strategy because of the $10 billion threshold. And as we’ve shared with you previously, we’re not a consumer oriented bank. So, the impact from the interchange fee, while there is some impact, it’s not what banks that have robust consumer businesses will be, right? It’s going to be a smaller impact on us. So, it’s not the driver, right?
We need to continue to execute on the organic opportunities that we have in front. Of course, we’re going to be smart about that $10 billion line, but it really does not consume our thinking. We’re much more focused on executing on our plans. And if there are some opportunities on the inorganic front that help us cross that threshold in a way that is more efficient, great. But if not, it is not. We’re not worried about that, right? The opportunities will come when they come. And the $10 billion threshold is just a demarcation point. And having had the experience of crossing that before with other institutions, right? We are focused on working internally and being prepared for the higher regulatory scrutiny that occurs after you’ve crossed $10 billion.
Alberto Paracchini: Well said.
Brian Martin: Thank you for taking it. Yes, well said. Thank you, Roberto. And thanks for taking the questions, guys. I appreciate it.
Roberto Herencia: You bet.
Operator: Thank you for your questions today. I will now turn the call back over to Mr. Alberto Paracchini for any closing remarks.
Alberto Paracchini: Great. Thank you, operator. And we’d like to thank all of you for joining the call today. And I think that wraps up the call for this morning. Thank you.
Operator: This concludes today’s call. Thank you all for your participation. You may now disconnect.
