Rich Thomas – Executive Vice President & Chief Financial Officer
That’s correct.
Chris Myers – President & Chief Executive Officer
We’re well over $100 million right now. So as we look at that and feel there’s permanence to that number, we can look at other alternatives such as do we consider prepaying FHLB debt which is an option. We haven’t made that decision yet, but there’s a large coupon on that which is 4.52%. The prepayment has gone down quite a bit and now but now their prepayment penalty is below $14 million and so, and probably going down about at the rate of $700,000 a month just because of the duration it expires in November 2016. So that’s the potential option, but really the best option for those deposits is for us to grow loans. And that’s what we’re hopeful we’re going to be able to do.
Aaron Deer – Sandler O’Neill
Ok, that’s helpful. Thank you, Chris.
Operator
The next question we have comes from Matthew Clark of Sterne Agee. Please go ahead.
Matthew Clark – Sterne Agee
Good morning. Just a follow up to pricing, can you just talk to whether or not you’ve seen any change in competitive pricing or within your own shop based on what the [inaudible] here year to date and I guess can you talk through the implications for your margin going forward?
Chris Myers – President & Chief Executive Officer
We are seeing more competition on pricing. I think it’s interesting because we hadn’t done an interest rate swap in probably well over 20 months. And in December we closed two interest rate swaps, so as rates go down we’ll probably put more, we’ll take some of these 10 year fixed rates that we might have put on our books as a fixed rate whatever that number is in the high 4s maybe 5% on a 10 year basis, now those loans we maybe swapping. And as we do that we will be swapping that and we will be getting a variable rate most likely somewhere in the high 2s on that variable for those same loans. So that will affect our pricing but it’s also going to affect our, positively affect our interest rate sensitivity and we should be able to drive more fee income to the swaps. So, I think the key to us maintaining our margin going forward which is kind of what I think your question relates to is going to be loan growth and making sure that we continue to keep our funding of cost as low as possible.
Matthew Clark – Sterne Agee
Ok. Great. It sounds like the prepaid in your securities portfolio have remained fairly steady but is that true here in the first quarter, just trying to think about the risk of higher premium amortization and the lag effect there?
Chris Myers – President & Chief Executive Officer
Yes, I don’t know what’s going to happen for the first quarter as far as prepayment but loan rates are down. We saw a lot of the prepayments in December because I think when people are really driving the closed real estate deals and any deals in December, it really is busy as we’ve seen it in terms of transactions going on. So a lot of our prepayment fees that we received on loans were achieved in December not necessarily in October or November, so it’s still a little bit of a new phenomenon for us to comment on.
And is that aligned with the 10 year treasury that’s now below 2%, is that the reason or is it just a lot of year end closings that we saw, I am not sure yet. So I do think that in general prepayment fees will be lower in 2015 than they were in 2014 because I think we’ve already refinanced a lot of these loans. But we were surprised by the amount of volume of prepayments in the fourth quarter.
Matthew Clark – Sterne Agee
Ok. And then lastly if I may, just on capital management your priorities there, just an update on the M&A front?
Chris Myers – President & Chief Executive Officer
Yes, absolutely M&A and we want to certainly maintain our dividend and as our profitability goes up we consider increasing that dividend overtime. M&A is I mean, I would say also we are very actively recruiting new banking teams and we’re seeing some movement there, so we’re excited about that. As you guys are well aware we formed a new office in San Diego and we recruited another team into the Downtown Los Angeles area that we just hired here in the last couple of weeks. And we feel confident that we’re going to be hiring a new team or two here very shortly in the first quarter. So that’s another deployment I know it’s not directly capital but usually in your first year that will be a little bit of an expense rain until they can map over some business.
On the other side I think the M&A, I think with the rates coming down like this it puts more and more pressure on these smaller banks, it puts more and more pressure on our margins as well. But I think it’s more impactful for smaller banks if they don’t have the economies of scale that we do.
