Gregory Zingone: So depending on how many teams you bring on board to the remainder of the year, could that $214 million to $216 million in expenses kind of trickle up a little higher?
Avinash Reddy: Yes. But Greg, I think the way to look at it is these groups are producing revenue, right? So that was my initial comment that – on a cumulative basis, we expect the group to be breakeven in 2024. So when you’re thinking about your model going forward, it’s really accretive starting in 2025, with no deterioration in 2024 from an EPS perspective. As I said also, we’re not really adding any – we don’t really need to add any additional support staff with them, because we built the company out for growth. So look, we’re always judicious on expenses. We’re telling you where we are right now based on who’s joined the company right now. And in the future, we always look to hire productive people. So, we’ll keep you updated as we go along.
Gregory Zingone: Okay. With all the people you’re bringing on board and your expectation, for accelerated balance sheet growth, do you envision needing additional capital in the near future?
Avinash Reddy: Yes. Look, I mean, the plan right now is really to remix the balance sheet, with what we have. We have around $700 million of FHLB on the balance sheet. Our broker deposits, while a lot lower than a lot of our local peers is probably around $750 million plus or minus. So, we really have a pathway there to remix the balance sheet by paying off some of these items. Obviously, supporting our clients is the most important. We said multiple times on the investor CRE and multifamily side, we expect those to paydown slowly over time. So you’re going to get some cash flows out of that. And we’re going to grow the business portfolio. So I think, with the groups that we have right now, we’re confident that we can remix the balance sheet.
And our capital is very strong. Our common equity Tier 1 ratio is 10%. Like I said, our total capital ratio is 13.8% even with the impact of AOCI is 13%. So, we feel pretty good about the remixing story, and supporting our clients with our existing capital base.
Gregory Zingone: All right. Thank you guys so much.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Manuel Navas of D.A. Davidson & Co. Your line is now open
Manuel Navas: Hi, good morning. Could you guys speak a little bit on your comfort around the reserve level around 71 basis points? Should we kind of expect a methodical build from here?
Avinash Reddy: Manuel we’re comfortable. Otherwise, we won’t be reporting earnings where we are. So, we’re comfortable.
Manuel Navas: Okay. How have repricings gone year-to-date across either multifamily, or any other CRE loan?
Avinash Reddy: Yes. We’ve had no issues. Loans have repriced. I will say our criticized and classified is actually down 9% on a year-to-date basis. We’re probably down around $5 million to $10 million on the CRE and multifamily side and probably down around $30 million to $35 million on the owner-occupied side. So I’d say overall, its business as usual. As we’ve always said in the past, we don’t have a lot of maturities and repricings in 2024 and 2025. And we’re not really seeing anything unusual at this point.
Manuel Navas: Great. As you think about the balance sheet remixing kind of shifting over to the NIM, it seems to be reflected on a monthly basis, can that kind of improved pace continue near term in general?
Avinash Reddy: Yes. I think the way to think about the NIM a little bit is, the month of February and March was probably the first months in the last 15 to 16 months that, the deposit costs actually declined. So the spot deposit cost at the end of March was $2.68. The cost of deposits for the full quarter was $2.70. So, we did see some competition in December and January, and the January NIM was really a bottom in our mind. So on a going-forward basis, especially with these new groups coming on, you should see stability in the cost of deposits. So then, if it’s going to be a function of how quickly originations come on board. And, if you go back to the month of September, the weighted average rate on the loan portfolio was around 5.20% in December that went up to 5.29%.
That was based on around $200 million of originations for Q4. Q1 was a little bit slower in terms of originations, and that’s just seasonal where you closed a lot of loans at the end of the year. But because we did half the originations, the weighted average rate on the loans only increased by five basis points. So, if you go back to Steve’s point about the pipeline, if you’re going to assume around $200 million of originations every quarter, that should lead to an increase in the weighted average rate, by around eight to 10 basis points on the loan side. So on an average basis, you’re probably going to get a four to five basis point benefit on the margin there. So I think overall, we’re thinking about the NIM with an upward bias going forward.
And obviously, the cost of deposits is the biggest piece of that. And we do believe that, that stabilizes to a large extent.
Manuel Navas: That’s great. I really appreciate the color. Thank you guys.
Operator: Thank you. One moment for our next question. [Operator Instructions] Our next question comes from the line of Chris O’Connell of KBW. Your line is now open.
Christopher O’Connell: Hi, good morning.
Stuart Lubow: Hi, Chris.
Avinash Reddy: Hi, Chris.
Christopher O’Connell: Just on the deposit. New deposit team adds and kind of that breakeven point that you’re targeting to hit in Q4. What’s the deposit level for them to hit breakeven?
