So I just think that’s — I don’t know. It’s something I think is important to note. A – Chris Naghibi And Scott, let me add some more color — sorry, David. A – Scott Kavanaugh Go ahead. A – Chris Naghibi Yeah. Let me add more color. There’s also other impetus and motivation for the traditionally cash flow focused investor in multifamily to refinance the loan that the market doesn’t always consider. Given in mind they have their fixed portion, they also have their prepay periods. But a lot of times when they convert from interest only to principal and interest, they are very highly motivated to refinance that debt back into an IO [ph] product. So you’ll see a lot more activity I think the market expects because of their cash flow focus. Q – David Feaster That’s a really good point.
And maybe just last one for me. You alluded to it a bit, Chris, but touching on the branch deposit growth initiatives that you guys have been working on, it sounds like you’ve had some success. I’m just curious where we stand there. Could you maybe quantify how that’s going so far, and thinking about the opportunities from that as we look forward, and just other deposits — core deposit growth initiatives?
Chris Naghibi: Yesa. So one of the things I think we all can attest to is that during the contagion period, we spent some time focusing on what the behaviors were of our customers and our clients, and coming out of it we took it as an educational experience. So we knew that our clients really believed in the relationship of the institution and wanted to grow with us. So some of the things we’re doing, I don’t know how detailed you want the answer here. We’re certainly taking treasury management services and diving into the community and smaller business as opposed to larger community businesses. We’re looking at more of a culture — I wouldn’t say driven on sales, but certainly more of an outbound culture. Keep in mind everybody in the banking sector was defensive in the first quarter and second quarter of the year, protecting their core deposits, but now we are on the offensive.
We’re going out and doing those things. And a lot of the infrastructure you hear me talking about the narrative is built around giving people, the ability to have more time back to go out and grow the business. We’re also really kind of tapering down. We can’t be the bank for everyone so we’re trying to focus on the things that we’re very, very experienced at and skilled at. Relationship-based business is growing small community businesses and being within kind of that space, obviously partnering with our First Foundation Advisors team, which has access to a lot of clients who have businesses, who have growth, who have scale, and that partnership combined with us being out more will just grow organically.
David Feaster: Very helpful. I appreciate it. Thanks, everybody.
Scott Kavanaugh: Thank you, David.
James Britton: Thanks, David.
Operator: Your next question comes from the line of Gary Tenner with D.A. Davidson. Your line is open.
Gary Tenner: Thanks. Good morning, everybody.
Scott Kavanaugh: Good morning.
James Britton: Good morning.
Gary Tenner: Hi. A couple of things to ask about it. I missed some of the detail I think on the (inaudible) borrowing. I mean obviously, you hadn’t utilized that at all through the third quarter so maybe talk about the kind of decision there, and what that rate is for the fixture you picked up.
Scott Kavanaugh: Hey, thanks for the question, Gary. I appreciate it. We’re currently at around four eighty-one I believe was the rate at which we locked. And that was relatively late in the fourth quarter so we would expect that to last for another year. The thinking on that as we saw customer service deposit leave and accelerate through the fourth quarter, we are looking for options to basically replace that funding with short cost-effective funds. And we have been I guess encouraged that test our lines, encouraged to use the Fed. And so when putting it all together, (inaudible) made sense for that. It is an option. We do obviously have the ability to keep that and use it to maintain funding as other say broker deposits, and most of which are maturing over the next year come due. But I guess that was the general thinking. Does that answer it?
Gary Tenner: Yeah. No, that’s helpful. I appreciate it. In terms of the customer service deposits or the investor deposits, I mean was the decline this quarter? It seem larger magnitude certainly than if you look at prior years to kind of what that deposit line looks like. So was it a larger magnitude decline? Was there something unusual within that?
James Britton: It was — yeah. Yeah. It was a little bit more than we had anticipated. I believe one client in particular was probably one of our larger depositors, and they did take a — some of their deposits to redeploy equally amongst other banks. Since then, our balances have started to grow back with the seasonality, plus we’ve also seen multiple clients bring additional balances back so far in the first part of this quarter. So I think you’ll see a rebound that’s maybe not fully equal to the run-off, but probably close to it.
Gary Tenner: Okay. And I think as part of that kind of goes into the question about the expense line as well. I think, in addition to just the dollar amount being lower, I think you had mentioned that you were able to reduce the rate paid. So just wondering how you were able to kind of push that through given no change currently to the rate environment.
Scott Kavanaugh: Well, as the MSR portfolio, that’s the higher cost of the overall customer deposit portfolio. And so as those leave, the blended rate does come down. We haven’t made a ton of modifications on a client-by-client basis so the rates will — the overall rate will come back as the higher cost MSR deposits return.
James Britton: Yes. And to be clear, Gary, these relationships and there’s many banks in this country that have these types of deposit balances, It’s all Fed decision, you know, Fed driven. So to the extent that the Fed increases rates or stays flat or goes down, it’s — those deposits will reflect based upon what the Fed does.
