Jeff Rulis: If we’re talking $350 million, $360 million for the full-year, you may shoot to that midyear and then kind of coming up is sort of how you would trend on that?
Ron Farnsworth: If — in that view over the course of the year, you saw a couple of rate cuts in the second half of the year, and we, like most banks expect that, that will perform on our deposit betas to the rate’s down sand side, and yes, that’s a true statement.
Jeff Rulis: Okay. Thank you.
Ron Farnsworth: You bet. Thank you.
Operator: Thank you. One moment, please. Our next question comes from the line of Brody Preston of UBS. Your line is open.
Brody Preston: Hey, good evening, everyone. Ron, I just wondered ask a few questions on NII. The $4.3 billion of loans that you have above floors, do you happen to know where those floor rates are?
Ron Farnsworth: They’re sitting more than three cuts down. We’ll have that detail into the next quarter’s release, but they’re definitely more than 3 cuts down.
Brody Preston: All right. Would they be more than the forward curve down, the five or maybe six depending on the day?
Ron Farnsworth: I don’t have that in front of my hands. But again, recall, going back over the last 1.5 years, 2 years, as rates were increasing, it was easily more than what, six cuts would be 100, 150 bps, is easily more than 150 bps ago that we started to slow down talking about loans going above their floors.
Brody Preston: Yes, okay. I noticed that you shifted some of the borrowing base to BTFP this quarter. I think it was maybe $200 million of utilization. You still got a lot of FHLB lines. And if I’m remembering correctly, those are pretty short from a duration perspective. I think there’s like an 80-something basis point gap between the cost of your borrowings right now and what BTFP is. Would you consider shifting the rest of the borrowings to BTFP to help with the margin? And if so, is that contemplated in your guidance at all?
Ron Farnsworth: We are looking at that. It’s not the full amount of the Home Loan Bank advances, just given the capacity at the BTFP, but we are looking at that here over the course of the first quarter.
Brody Preston: Okay. Great. So if I took — if I look at the NII sensitivity slide that you all provide it looks like in either up 100 to 200 down, 100, 200 kind of scenario, it’s negative for NII and all but a couple of them as of December 31. And then I don’t think you have a lot in fixed asset repricing. So if we got no cuts, maybe that kind of incremental deposit beta creep and lag that you’ve talked about would continue. So I guess I’m just I’m struggling a little bit, Ron, to think about holistically, like what’s the best rate environment that you could proceed just kind of looking at those pieces of the puzzle?
Ron Farnsworth: Yes. I mean, interesting question, I would suggest this that in anyone’s interest rate risk modeling, if they’re looking at the difference between 0.7% and 1.1%, and saying there’s exact precision in that. They’re not in truth with you, right? There’s so many assumptions that go into that over the course of the year, inclusive of customer deposit flows, betas timing lags. So I kind of look at all those as relatively neutral within they’re — if they’re within a point or 2 of each other just because I know that’s generally the grenade range, you’re going to be facing over the course of the year.
Brody Preston: Got it. And what is the NIB mix that’s contemplated within your NII guidance? I’m sorry if I missed that?
Ron Farnsworth: Within the traditional NII guidance or interest rate sensitivity analysis, which is what this is, you generally assume a static balance sheet and then things repricing into themselves. So again, that’s where I got to earlier, talking about within the range of the guide, if we’re better on the deposit side then we’re going to be on the upper end. If we’re not, we’re going to be on the lower end.
Brody Preston: Okay. And then last one for me. Just if I take the pieces of your guidance, $48.5 billion of average earning assets, 3.55% on the margin and then factor in the expenses. If I do something just like last three quarters, average fee income assume that the run rate annualize it and grow it by low to mid-single-digit. It kind of implies like mid-780s on PPNR. Am I far off the mark there?
Ron Farnsworth: Brody, I don’t have the calculator out in front of me to run through that math with you. I’d just ask, we’re not providing inputs in the guidance on EPS. We’re not giving an EPS guide, but there’s other maybe specific questions that might help you on the modeling side, highly suggest contacting Jacque. She’s great and she’ll set you straight.
Brody Preston: Got it, thank you very much for taking my questions everyone.
Ron Farnsworth: You bet. Thank you.
Operator: One moment please. Our next question comes from the line of Matthew Clark of Piper Sandler. Your line is open.
Matthew Clark: Hey, thanks for the questions. And Brody, 780 sounds — that’s kind of where I am right now. First question just on expenses relative to the balance sheet size. If we hit up at the low end of that average earning asset range, the $48 billion, I believe, is it fair to assume that noninterest expenses will be at the low end as well? $1 billion versus $1.1 billion.
Ron Farnsworth: There’s potential for that. Obviously, we have efficiency improvements that we’re working through as well. But there’s also just enough uncertainty when you look into the year inclusive of inflation rates to say our target is going to be somewhere relatively in the middle of that, and there is downside, there’s upside and see which way it plays over the year. But we wanted to just make sure we recognize that there is some level of uncertainty to timing and flow over the course of the year. So not giving a specific guide on that by quarter or the trajectory.
Matthew Clark: I’m just trying to be consistent with the balance sheet size relative to expenses. Is it — should we be consistent or not?
Ron Farnsworth: There is a little bit of movement with the balance sheet size. But again, you also have changes in, say, for example, deferred loan costs, which are influenced by the balance sheet size or we get leverage within deposits per branch, which doesn’t necessarily have an impact on expenses other than incentives. So it’s just difficult to say with precision at this point.
