We’ve also increased our capabilities with a lot of different things, including AI. As I think we’ve talked about before, we’ve already incorporated AI into our consumer lending, and that’s been very positive for us. But we’re also making strides in our digital offerings. We did the conversion of our online consumer banking last summer, it went very well. We are going to open or put in place a new digital account opening platform in probably mid-year of this year. And we’ve built out our in-house engineering capabilities, which is really based on open AI architecture. And then finally, we’re putting in a new CRM. So all of that has been done. We feel most of those investments are in place. As that kind of comes into the income statement, it rises our costs a little bit more than we thought.
You can see our employment numbers are basically flat. So we are adding more people, but we are investing in our people because we have put in place a pretty sophisticated engineering team to be able to do things in-house. And so why are we doing all that? We think that’s really going to position us well for the future. To be competitive in our market and our unique deposit market to give our customers a lot more options going forward than we have done in the past, and I think really be a first mover in the market. So that’s driving a lot of the same number of people, a number of investments in platforms and technology that is really at the end of that and then some inflation, etc., in there as well. But Jamie, anything you would add to that?
James Moses: I think that’s a really good summary, Bob. The only other thing to add, Andrew, is we recognize the number is probably a little bit higher than what you were expecting and others have been expecting. But we think it’s important that we do invest in those things. And as Bob kind of alluded to in his comments — commentary, over time, this rate of growth should come down because these investments ought to be able to create scale and efficiencies for us. So that’s part of the investment that we’ve been making and we’ll continue this year.
Robert Harrison: And just to add to that, good point, Jamie. As we finish up the new stuff, we will be sunsetting the outdated systems and improving our operating methods and everything else to bring down our costs and optimize our expenses. So we are kind of the transition between having invested in new platforms and as those mature and rolling off old stuff. So there’s a little bit of that going on in 2024 as well, which builds into that number.
Andrew Liesch: Got it. So I guess once you move past, what would be — do you think is like a natural level of expense growth for the company then?
James Moses: Yeah. I mean I think that’s probably natural level 2%, 3%, something like that would be the natural level, inflationary sort of expectations. That’s in the future like when we get past this in 2024.
Andrew Liesch: Great. That’s very helpful. I’ll step back. Thanks.
Operator: Thank you. One moment for questions. Our next question comes from Timur Braziler with Wells Fargo. You may proceed.
Timur Braziler: Hi. Good morning. Looking at the expectations for cash flows off of the bond book at $600 million, how much of that is going to be used to continue working down some of the higher cost funding? And I guess at what point does that stop and you actually start reinvesting some of those proceeds back into the bond book?
James Moses: I think the cash flow is coming off, we’re going to do two things, right? So number one is immediately to pay off higher cost deposits to the extent we can. And then the other side of that is fund loan growth as well. So to the extent that — we love to have a higher rate of loan growth, to the extent that, that happens, we could — that could be part of the story as well. But I think for us, at the moment, it’s really kind of paying off those public time deposits that we have. So those tend to be — those are in sort of the 5% range right now. And even if you take — I don’t know, if take a little bit of credit risk in the bond book, the yields are something like 530, 540 (ph), if you want. So you have the spread there between the funding cost and the yield is not very high. And so we’re not really excited in reinvesting in the bond book right now when we’ll be funding that on the margins of 5%. So for now, it’s kind of just kind of run off mode.
Timur Braziler: Okay. That’s helpful. And then maybe looking at the linked quarter reduction in non-interest bearing, I’m just wondering if there’s any visibility to how much excess liquidity you think is within that line item and how much additional mix shift we may get out of non-interest-bearing into some of the interest-bearing accounts over the next two quarters or so?
James Moses: Yeah. We don’t know, Timur. We started pre-pandemic. We were at about 36% non-interest-bearing to total deposits, and that’s where we’re at right now. So I wouldn’t say that it can’t go lower from here. Anything is — obviously, anything is possible. We would expect to see in an elevated rate environment, we would expect to see some continued migration. We’re monitoring that. We’re looking through that, and that’s obviously part of asset liability management decisions that we’ll make throughout this year and on a go-forward basis. We could see some migration — continued migration on that, but we think it’s — we think that the sort of rate of deceleration has changed and should be less rapid on a go forward.
