We’ve got some projections but those projections run from the Fed to the market. Futures contracts look like the bulk of the rate increases have already happened. So after fully absorbing the December rate increase, the incremental pressure might, in fact, ease as the Fed raises rates by smaller amounts than the 75 basis points that we’ve seen for the bulk of 2022. So we’re kind of looking at the possibility of a declining — maybe some declining pressure, although continued pressure, maybe declining magnitude, let’s say, or declining incrementals — so the market believes that the rate and the magnitude of the Fed rate increase should slow. That should help slow the pressure on our funding costs. And we think after the first quarter, a lot of this will be behind us.
We may see another quarter or so clearly, there’s a lot of speculation about that. But one thing is certain and that’s the structure of our balance sheet. And the Fed increases don’t last forever. And this one looks like it’s coming more to a close than to the beginning. So I think we’re in a very, very good position toward the latter half of the year to see some better movement in the margin, whether it’s stabilization or increase as a matter of what’s happening in the market.
Christopher O’Connell: Yes, got it. Understood. And as far as the current CD offering rates, where are those at right now?
Susan Cullen: So we have 13 months at fourth quarter, $460 million.
Christopher O’Connell: Okay. And that’s the primary product for you guys?
Susan Cullen: No, our primary product is probably the money market.
Christopher O’Connell: Markets — and where are those at? Like 3.25%?
Susan Cullen: $3.35 million .
Christopher O’Connell: Okay, great. And then for the securities move this quarter, what’s the timing of the reinvestments of what was paid off? And I guess like what’s the assumed spread or what’s the assumed rate that those are coming on at and where they’re being funded at?
Susan Cullen: So we have already purchased about $10 million of floaters with a yield of about 5.5%. The SBA floating bonds. So the expectation is that they will continue to come on in that range or even higher. But again, we are ensuring that we are keeping within the 3-year payback period.
Christopher O’Connell: Got it. And what’s the spread or, I guess, the assumed funding for those?
Susan Cullen: Well, we took off securities that had a yield of $17 million. So we’re bumping up the NIM by that differential 430 basis points rough and tough.
Christopher O’Connell: Okay, got it. I mean are you guys locking in, in particular, any type of funding directly tied to those? Or just in general, like the overall new funding costs?
John Buran: We have a variety of funding sources that obviously, we have a good deal of flexibility in matching the assets.
Christopher O’Connell: Go ahead.
Susan Cullen: When we sold these securities, we did pay off any funding, most of the funding or the proceeds are sitting in the Federal Reserve Bank yielded $4.4 million versus the 117 that we were getting on the securities. So…
Christopher O’Connell: Got it. Got it. That’s helpful. And then any update as the progress towards resolution of the larger NPA that came on a couple of quarters ago?
Susan Cullen: So we’re still working through those. I’m glad you asked this question, Chris. We did — even though some cost pie criticized picked up 9 basis points. Approximately $7 million of that has resolved itself subsequent to quarter end. So our NPAs, as we’re sitting here today, are really down 1% quarter-over-quarter.
