Heath Fountain: Correct. And I guess I want to be clear, like, we may have a little bit, but we’re not seeing any major trends in that direction or any kind of challenges where we’re getting office properties refinancing with major changes in debt service coverage. So it’s just really been a non-event for us.
Christopher Marinac: Great. Thanks for the slide, too. I follow that. That’s very helpful. So on the margin, and Dave kind of asked this already too, but can we take the implied payback and kind of apply that to the next quarter and then build upon that? Would that be kind of fair? Because it sounds like there’s still an evolution on the securities portfolio ahead.
Heath Fountain: Yes. I mean, that’s what we’re doing. And I think our intent really is probably, while rates remain elevated to look at the portfolio and what I would call chip away at it like this, I think we discussed in the range of 10% to 20% of operating net income for the quarter is what we sort of be willing to do in terms of what we’re willing to take loss because we want to continue to build capital, we want to continue to build tangible book value, but we want to start positioning ourselves for improvement on the other side of this, and obviously even now. So we’ll continue to chip away at that. Again, what we’re saying there in the under two years is basically if we were to go buy security or to just pay off some borrowing, if we’re able to get loans in the 7%, 8% range, we’ll be able to even pay those off faster.
So they’re going to be helpful. But just given the dollars we’re talking about relative to the entire portfolio, it’s going to take a few quarters for those to start adding up to something meaningful.
Christopher Marinac: Great. That’s helpful. Thanks for that. And last for me is just new hires, whether it be in Savannah, Augusta, Atlanta, what’s kind of the train on that will you have additional FTEs this year?
Heath Fountain: Yes. So we are really kind of holding our own with our team that we currently have. I think we are having the discussions now of starting to build back up that talent pipeline. And really as a company, what we’re doing is we’re looking at our opportunities and our resources across the bank and developing resource allocation plans so that as we believe the opportunities are getting better and the opportunities to grow that we put those in the places that we believe we can be most effective with growing revenues quickly and then also making sure we can support that. We do think there’s going to be opportunity really probably the two opportunities that we have the most are in this rate environment. We can add treasury folks on the commercial side and they get profitable very quickly versus maybe when we were in a low rate environment, but that differential to get the fee income we can get in and the non-interest bearing deposits.
And we have had good opportunity at hiring some of those folks from larger regional banks. And then secondarily, as we get more comfortable that loan demand is going to go up. Not just we – loan growth has been muted. Some of that is us pulling back, making sure we have good credit quality, and that we’re pricing appropriately in a pretty dislocated market. But some of that’s been customer demand as well. So it might be later in the year or into early next year when I think if I had to guess now, when we’d be looking to add commercial bankers. But we want to do that in conjunction with margin expansion in a way that as we recover, we start to be able to net produce more income and start growing back to first our 1 ROA goal and then our longer-term 120 ROA goal.
Christopher Marinac: Great. That makes sense. Thanks.
Heath Fountain: And Chris, we do have plenty of capacity to get us through growth right now with the bankers we have on Board, we’ve got capacity to grow with what we have.
Christopher Marinac: Right. Yes. I follow. That’s great. Thank you, Heath, and thank you, Derek.
Derek Shelnutt: Thanks, Chris.
Operator: [Operator Instructions] Your next question comes from the line of David Bishop from the Hovde Group.
David Bishop: Hey, just a quick follow-up. Heath, I know maybe it’s – maybe too early in the ballgame, but any green shoots from the additional [indiscernible] in Northern Florida, just if you’re seeing any sort of production or results in the pipeline, either on the loan or deposit side from his edition. Thanks.
Heath Fountain: Yes. We are seeing good activity in the Florida market. I know I’ve – of course, I go throughout our footprint, and I’ve been down there recently. D Copeland, our President’s down there now seeing customers with our team or prospects with our team. So we do expect to have loan and deposit growth down there. And I think in the coming quarters, you’ll start to see that and we’ll be able to lay that out for you as we have success down.
David Bishop: Got it. And then Derek, the OpEx guidance that I hear was a $21 million, $20 million. Just curious if you could go over the operating expense guidance again.
Derek Shelnutt: Yes. So we’re still targeting kind of $20 million a quarter. It could be a little bit higher if we see activity, but if it was higher and we saw more activity, we would anticipate that to be offset with additional non-interest income. So kind of really, when we think about it, we’re looking at a 140 net NIE to assets is kind of what we’re forecasting for the rest of the year.
David Bishop: Remind me how you calculate again. Is that OpEx minus the fee income size?
Derek Shelnutt: Yes. It’s – the non-interest income minus non-interest expense divided by average assets.
David Bishop: Got it.
Derek Shelnutt: And Dave, we just – we believe that’s when we try to compare ourselves to other banks that don’t have some of the revenue generation lines of business like we do. We just think that’s a better measure than efficiency ratio because several of those businesses, they’re inefficient on the efficiency ratio side, but they’re very good ROA and ROE. So we like to break it down to that, compare our peer group based on that net to average assets to kind of level the playing field to those revenue businesses.
David Bishop: Got it. I appreciate the numbers on the Merchant Services. Looks like that break – did I hear that you expect that to approach breakeven or even have pre-tax profit by the second half of the year?
