That’s helpful. And then I guess if I could just ask one more on the deposit front. And I’m sorry if somebody else asked this and I missed it. As you think about go forward on deposits and customer concentrations, and I’m thinking particularly as it relates to the TLS deposits, what are the kind of governance that need to be put in place going forward to kind of help navigate any future liquidity events? I’m not really talking near term because I don’t think a lot of us think that’s going to come to pass, but you never know what’s going to happen going forward. And so how should we think about the balance sheet flexibility in a stressed environment going forward?Curtis Farmer Yes. Brody, what I would say is that we’ve been a bank for 174 years, and we’ve managed through lots of different cycles.
And one thing that we’ve always kept central in our approach is our relationship focus.Many of these deposit relationships we’ve had for decades. And while we did see some deposit decline during this period of time, we did not see it as much in our core businesses, retail banking, small business, business banking, middle market, wealth management, et cetera. And so, we’re going to continue to focus on those business lines. We will obviously have an opportunity, I think, to bring back some of the deposits that we lost along the way.But our focus on treasury management services, our focus is on small business, and retail deposits. Those types of things will continue to be sort of key drivers for us. We can’t fully control when there’s an industry issue that unfolded like it did previously.
But what we did control was we had a great liquidity playbook in hand. We were able to execute against that. And again, I think kind of on the back side of this, we do believe — it’s not in our modeling, but we do believe we have a chance to get some of these deposits back.Brody Preston Got it. And then just one more, just on the betas. And again, I’m sorry if somebody else asked this. But have you changed your thinking about your through-cycle beta at all? And have you changed how you think about like what your terminal beta would be just given the deposit volatility? And I guess I’m more trying to narrow down to the interest-bearing deposit beta, if you have any color around that?Jim Herzog Yes, Brody. We do see the betas going up above previous guidance.
I think we had been more in the mid-40s last time we gave an outlook. We now see that likely hitting the 50% point sometime this summer and then kind of hanging out there, and then things get a little convoluted as rates start to go down with the lag that I mentioned earlier. But we will likely get up to around 50% sometime in the early to mid-summer on an accumulated basis.Brody Preston Got it. And that’s interest-bearing, right?Jim Herzog That is pure interest bearing. All in pure interest bearing.Brody Preston Got it. And I think you did say earlier that you do feel like on the way down, it might happen with a lag, but you do feel like you’d be able to pass through the same amount of beta to the downside that you passed through on the upside?Jim Herzog That’s right.Operator And next, we go to a question from Peter Winter with D.A. Davidson.
Please go ahead.Peter Winter Good morning. I’ll switch gears on you and ask about credit. Could you give a little bit more color about the increase in criticized loans? I know you mentioned it’s interest-bearing with the higher rates that’s impacted. But if you could give a little bit more color on that? And then secondly, on net charge-offs, is there much left in terms of recoveries?Melinda Chausse Yes. Peter, this is Melinda. So, I’ll take the first one, the increase that we saw this quarter in criticized. I think Jim mentioned it or talked in his comments that it really was expected. I mean the reality is we’ve been bumping along the bottom here now for four or five quarters in exceptionally kind of non-sustainable levels. So, over the last couple of calls, I said we would expect to see some normalization just given all the inflationary pressures that customers have been dealing with.Certainly, the increase in interest rates.
So those interest rate sensitive portfolios. Certainly, our leverage portfolio kind of core middle market technology and life sciences. And we did see credit migration this quarter in our commercial real estate book, a couple of hundred million. That is all special mention credit.I don’t see that migrating really to any kind of loss content. And that’s really on some projects that have pressure related to the rising interest rate environment and from a multifamily perspective, a little bit of softness in a couple of submarkets in terms of leasing rates and leasing pace. So that softness, coupled with the increased interest burden, caused a couple of those projects to move into that criticized category.But again, I do not see loss content in that commercial real estate book.
