Valerie Toalson: Yeah. No, at this point, it’s going to be incremental improvement. That’s a fair point. Absolutely.
Brody Preston: Okay. Thank you for that. And then, Dan, I wanted to ask you, just — I think, the Head of the OCC had some comments and they put an NPR on M&A yesterday. I know you aren’t OCC regulated, but it feels like they’re taking a little bit firmer of a stance in terms of, like, vetting each individual transaction. When you consider future M&A, does that make you think about leaning one way versus the other in terms of acquiring an FDIC institution versus an OCC institution?
Dan Rollins: No, I don’t know that I’m familiar enough with yesterday’s guidance that you’re talking about. But no, I don’t really think there’s a difference. The acquiring institution, that’s who has to make approval. So, where it’s coming from is usually not that impactful in the decision process. But I think getting some clarity — as I said a few minutes ago, getting some clarity on what process the regulators want to use to get approval faster is going to be really important. It’s very damaging for both institutions inside of a merger when things delay, and if things go on and on and on, it’s very difficult.
Brody Preston: Got it. Appreciate that…
Valerie Toalson: Hey, Brody, let me come back. Actually, on that securities, let me — the 2.60% is not tax equivalent. Apologize about that. So actually, if you go back in and you get the tax equivalent adjustment, it’s closer to 2.75%.
Brody Preston: Awesome. I appreciate that follow up. The last one I had for you, Valerie, is…
Valerie Toalson: No, I appreciate you asking, it helps clarify it. Thank you.
Brody Preston: The last one I had for you was just, if you’re assuming the forward curve, I was hoping you might kind of give us some insight as to what you’re assuming for your down deposit beta, either on an interest-bearing basis or total basis within the guidance.
Valerie Toalson: Yeah. I don’t have that forward beta available, but we do, like I said, show the deposit cost peaking in the first quarter and then started to gradually come down. But simply given, the redeployment of cash flows into loans, the loan growth, the loan repricings that we have, combined with, obviously, the securities repositioning, again, anticipating positive net interest margin quarterly throughout ’24.
Dan Rollins: Yeah. If you look back at 2023, and you look at the growth and the time deposits that have come in, the lion’s share of that, huge majority of that is eight months. And so you can back into how fast that can roll off.
Brody Preston: Awesome. Thank you very much for taking the questions, everyone. I appreciate it.
Dan Rollins: Thanks, Brody.
Operator: Our next question today comes from Gary Tenner with D.A. Davidson. Please go ahead.
Gary Tenner: Thanks, everybody. Good morning. I had a couple of just bouncy questions moving forward. Once you get through the additional reinvestment of the bond sale proceeds here in the first quarter, do you expect that for the rest of the year securities book is pretty flat and just reinvesting cash flows, or is there a number where that might trend to otherwise over the course of the year?
Valerie Toalson: Yeah. You know what, it really depends on the opportunities within loan growth and our deposit growth and kind of the pay for that. And so it may bounce around a little bit. I would say, on a kind of as a floor — and not a hard floor, but the 15% total asset range is probably a range that we would like to keep our securities portfolio to total assets just for pledging purposes, liquidity purposes, et cetera.
Gary Tenner: Okay, great. I appreciate it. And then the follow up to that is, as you think about the BTFP repayment, whether it’s sometime earlier in ’24 or at the end of the year, what — and assuming part of that comes out of available cash, what’s the kind of cash target level under balance sheet, even as we’re thinking out to the end of the year into ’25, some minimum on balance sheet cash liquidity?
Dan Rollins: Yeah. That’s changed after March of last year.
Valerie Toalson: Yeah. And there’s probably $1.5 billion or so that would be anticipated as kind of a base level. There’s a lot of volatility in some of our customer activity, and just maintaining a fairly stable level of cash is probably always going to be there to some extent. That being said, we do have more cash than that right now. And so, there is opportunity as we look forward.
Dan Rollins: And large availability at the Federal Home Loan Bank, which is where we were funding prior to the BTFP.
Valerie Toalson: Yeah, absolutely. We may bring it down a little below that target level time to time. Yeah. Again, variable.
Dan Rollins: Thanks, Gary.
Gary Tenner: Thank you.
Operator: And our next question today comes from Jon Arfstrom with RBC Capital Markets. Please go ahead.
Jon Arfstrom: Thanks. Good morning.
Dan Rollins: Hey, Jon.
Jon Arfstrom: Popular call.
Dan Rollins: Good morning, Jon.
Jon Arfstrom: Yeah. Popular call today. Just had a few questions. Slide 20 you referenced the FTE being down by 125 in 4Q, excluding the sale, what’s left to do there, Dan? And what do you think is the right efficiency level for the company going forward? Where do you want to be?
Dan Rollins: Yeah. So, ask that question one more time. I want to make sure I’m hearing you.
Jon Arfstrom: Yeah. What’s left to do on FTE and where are you adding, where are you trimming? And what do you think is the right efficiency level for the company going forward — efficiency ratio?
Dan Rollins: Yeah, well, clearly the efficiency numbers came down with the sale of insurance and with the 400 or 500 people less that are — came out of the system in 2023. We continue to look for opportunities to be more efficient. I think there’s a lot of hand-to-hand combat that’s going on, on efficiency today, whether that’s technology investment that turns into efficiency, whether that’s another move in restructuring to consolidate some areas where we can consolidate more together. The headcount reduction from here probably is not anything to get excited about. I would anticipate that we would be hiring on the other side. So, we continue to invest in our franchise, we continue to look for people that can help us grow, and so as we can reduce headcount in one place, that’s coming back in, in another place.
