Fulton Financial Corporation (NASDAQ:FULT) Q1 2024 Earnings Call Transcript

Fulton Financial Corporation (NASDAQ:FULT) Q1 2024 Earnings Call Transcript April 17, 2024

Fulton Financial Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and thank you for standing by. Welcome to the Fulton Financials’ First Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Jozwiak, Director of Investor Relations. Please go ahead.

Matt Jozwiak: Good morning, and thanks for joining us for Fulton Financials’ conference call and webcast to discuss our earnings for the first quarter ended March 31, 2024. Your host for today’s conference call is Curt Myers, Chairman and Chief Executive Officer. Joining Curt today is Betsy Chivinski, Interim Chief Financial Officer. Our comments today will refer to the financial information and related slide presentation included with our earnings announcement, which we released yesterday afternoon. These documents can be found on our website at fult.com by clicking on Investor Relations, and then on News. The slides can also be found on the Presentations page under Investor Relations on our website. On this call representatives of Fulton may make forward-looking statements with respect to Fulton’s financial condition, results of operations, and business.

These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, and actual results could differ materially. Please refer to the Safe Harbor statement on forward-looking statements in our earnings release and on Slide 2 of today’s presentation for additional information regarding these risks, uncertainties, and other factors. Fulton undertakes no obligation, other than required by law to update or revise any forward-looking statements. In discussing Fulton’s performance, representatives of Fulton may refer to certain non-GAAP financial measures. Please refer to the supplemental financial information included with Fulton’s earnings announcement released yesterday and Slides 17 through 20 of today’s presentation for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measures.

Now I’d like to turn the call over to your host, Curt Myers.

Curtis Myers: Well, thanks Matt, and good morning, everyone. For today’s call, I’ll be providing high level thoughts on our performance for the quarter and provide a few comments on the company. Then I’ll turn the call over to Betsy Chivinski, Interim Chief Financial Officer to review our financial results in more detail and step through our guidance for 2024. After our prepared remarks, we will be happy to take any questions you may have. We were pleased with our first quarter results. Operating earnings of $0.40 per share were a solid start to the year. We saw both deposit and loan growth. The net interest margin was in line with our expectations. We continue to have stable asset quality metrics and our capital position remains strong.

During the quarter, we also increased our committed liquidity by $1 billion. We repurchased 1.9 million shares of Fulton stock. I’d like to note that with this repurchase, we’ve now repurchased all 6.2 million shares of common stock issued in connection with the Prudential Bancorp Inc., acquisition in 2022. As of March, 31, 95 million remains from our 125 million 2024 repurchase authorization. Turning to growth for the quarter. First quarter deposits outpaced loan growth at $204 million, or 4% annualized. Pricing, growth, and mix remain our focus as we continue to position our product offering to support and grow our customer base. Loan growth as we anticipated moderated to $93 million, or 2% on an annualized basis. Profitable growth and prudent credit decisions remain our focus.

Our loan-to-deposit ratio ended the quarter at 98.6%, a linked quarter decline and well within our long-term operating target of 95% to 105%. Despite ongoing market pricing pressures, net interest margin remained in line with our expectations drifting lower by 4 basis points to 3.32%. Our non-interest expense income was solid at $57.1 million. We delivered record results in wealth management that helped offset a decline in customer interest rate swap income this quarter. Overall, we are pleased with our fee income performance and continue to benefit from the diversification of this revenue stream. Now, let me provide some comments on credit. The provision for credit losses was $10.9 million, up slightly from $9.8 million last quarter and in line with our expectations.

While overall credit metrics remain historically strong, we saw some migration in certain credit metrics during the quarter. Criticized and classified loans drifted modestly higher. This migration is not specific to any particular industry, portfolio or region, and we continue to focus on how higher interest rates and higher costs are impacting our customers. We remain cautious in our outlook for 2024. Now looking forward, as I mentioned last quarter, our Fulton First initiative is an internal process to evaluate and improve how we operate. Three key tenets of this initiative to drive our strategic transformation are simplicity, focus, and productivity. During the quarter, we made good progress on this initiative with more work ahead of us.

We anticipate sharing more details as appropriate in coming quarters. Overall, a solid start to the new year. Now I’ll turn the call over to Betsy to discuss our financial performance and 2024 guidance in more detail.

Betsy Chivinski: Thank you, Curt, and good morning. Unless I note otherwise, the quarterly comparisons I mentioned are with the fourth quarter of 2024, and loan and deposit numbers, I’ll be referencing are annualized percentage growth on a linked quarter basis. So starting on Slide 8, operating earnings per diluted share this quarter were $0.40 on operating net income available to common shareholders of $65.4 million. This compares to $0.42 of operating EPS in the fourth quarter of 2023. As Curt noted, loan growth was modest during the quarter, increasing $93 million, or 2%. Commercial lending contributed $73 million of this growth, or 2%. The primary contributors included commercial real estate of $124 million or 6% and construction loan growth of $24 million, or 9%, offset by a decline in C&I loans of $78 million, primarily due to slightly lower line utilization.

Our CRE growth was not concentrated in any one category or geography and as shown in our earnings deck, remains well diversified. Consumer lending produced growth of $20 million, or 1% during the quarter, an increase of $70 million in residential mortgages, primarily adjustable rate was offset by decreases in other categories including consumer, direct and indirect loans, residential construction, and home equity. Total deposits increased $204 million during the quarter. Growth in time deposits, primarily with maturities less than one year more than offset the seasonal outflows in our municipal deposits of $137 million. Non-interest-bearing DDA balances ended the quarter at $5.1 billion, or 23.4% of total deposits in line with our expectations.

Our net interest income guidance for 2024 assumes we will continue to see migration from non-interest bearing to interest-bearing products throughout this year, but at a slower pace than we saw last year. Our investment portfolio was up modestly for the quarter closing at $3.8 billion, or 13.7% of assets. During the quarter, we purchased $210 million of MBS and CMO securities. These balance sheet trends are summarized in Slide 10. You can see net interest income was $207 million, a $5 million decline linked quarter, primarily driven by the modest change in the mix of our deposit portfolio. And as a result, net interest margin declined 4 basis points to 3.32% versus 3.36% last quarter. Loan yields increased 7 basis points during the period, increasing to 5.9% versus 5.83% last quarter, and cycle to date, our loan beta has been 50%.

Our cost of total deposits increased 16 basis points to 195 basis points during the quarter and cycle to date, our total deposit beta has been 36%. Turning to asset quality in Slide 11. NPLs increased $2.8 million during the quarter, resulting in a slight increase in the NPL to loans ratio from 72 basis points at 12/31 to 73 basis points at quarter end. Net charge-offs were $8.6 million, or 16 basis points. Gross charge-offs of $11 million were fairly granular, with the largest being $2.5 million on a C&I loan. Our allowance for credit losses as a percentage of loans increased slightly to 1.39% at quarter end. Turning to non-interest income on Slide 12. Wealth management revenues were $20.2 million, up $766,000 compared to the fourth quarter, passing the $20 million mark for the first-time in company history.

Wealth management represents about a third of our fee-based revenues, with over 80% of those revenues recurring. Also, the market value of assets under management and administration increased over $700 million to $15.5 billion at March 31, also a new record for our company. Commercial banking fees declined $2 million to $18.8 million as customer swap revenue, heavily reliant on new originations declined compared to a strong fourth quarter. Consumer banking fees declined approximately $400,000 to $11.7 million. First quarter seasonality played a part in that linked quarter decline. Our consumer banking business continues to deliver a very consistent income stream. Mortgage banking revenues increased $802,000 to $3.1 million and were driven by a seasonal increase in mortgage originations, as well as gain on sales spreads that rebounded from a low last quarter.

We have a number of investments that are accounted for under the equity method on which we recorded a loss of $1.6 million reflected in the other income line. Moving to Slide 13. Non-interest expenses on an operating basis were $170 million in line with the prior quarter and in line with our guidance. The material items we exclude from operating expenses include charges — the following charges, $1 million for special FDIC assessment, $3.6 million related to the closure of some financial centers, $2.5 million of consulting expense, and $200,000 of severance expense. Slide 14 shows a snapshot of our capital base and you can see as of March 31, we maintained solid cushions over the regulatory minimums. Also, both bank and parent company liquidity improved during this quarter.

On Slide 16, we are reiterating our guidance for 2024. Our guidance assumes that a total of 75 basis points of Fed funds decreases will occur in the second half of 2024. So our guidance is as follows. We expect net interest income on a non-FTE basis to be in the range of $790 million to $820 million. We expect the provision for credit losses to be in the range of $45 million to $65 million. We expect non-interest income, excluding security gains to be in the range of $235 million to $250 million. We expect non-interest expenses on an operating basis to be in the range of $670 million to $690 million for the year and to reinforce that estimate excludes potential non-operating charges we may incur as we move through the year. And lastly, we expect our effective tax rate to be in the range of 17% to 18% for the year.

With that, we’ll now turn the call over to Abigail for questions.

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Q&A Session

Operator: Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Our first question comes from Frank Schiraldi with Piper Sandler. Please proceed with your question.

Frank Schiraldi: Good morning.

Curtis Myers: Good morning, Frank.

Frank Schiraldi: Just on the — on the Fulton First initiative, I get that it’s sort of a work in progress and you’re looking for efficiencies kind of across the board, but I assume that includes some expense saves as you close financial centers and so forth. So can you just remind us when we look at the guide, I know there’s — you take out the non-operating stuff, but in terms of run rate expenses, does that include some benefit from Fulton First? Is it sort of your best guess at this point or what you get from Fulton First, or is that something that could as we go through the year move that expense guide lower?

Curtis Myers: Yeah, Frank. We have certain expense saves in the back half of the year, as we begin to implement Fulton First. So we really are in the analysis stage and building our plan. So the overall plan is really driven to accelerate growth in certain areas as we focus even more in certain areas. But we do expect to see benefits from operating efficiencies and doing things a little differently as well. So there are some expense components to the save. I’d just like to remind everybody that the Fulton First initiative is really an 18 month to 24 month journey, and we’re in that four or five months of that work. So what you’re really seeing right now is the investment or spend to develop the plan for implementation. And when we get to the point of implementing, we’ll be able to share more details with you around expected benefits.

Frank Schiraldi: Okay. And then, on the loan growth, just looking at your guide on NII, is it fair to say, does that just assume sort of 1Q like loan growth spread across the year? And then, as a follow-up to that, if you could just remind us what the, on the deposit side, what the muni outflows were this quarter and how the time frame goes to flow back in?

Curtis Myers: Yeah. Let me talk a little bit about loan growth, then I’ll give it to Betsy for the municipal outflows, just the seasonality to that. So on loan growth, we’ve talked about our long-term organic growth targets in the 4% to 6% range. I think in this environment, we’re going to be at the low end or maybe even under the low end of that long-term range. So I think the growth in the first quarter, we may exceed that as we look forward, but it’s going to be in the same ballpark. We are being prudent and disciplined on pricing and credit as we originate loans moving forward.

Betsy Chivinski: And the municipal outflows were $137 million. So with at least in certain of our areas, certain taxes are paid in the second quarter, we should see a blip up, not huge, in the second quarter. And then the third quarter is where we tend to see those spike.

Frank Schiraldi: Got you. Okay. Thanks for the color.

Curtis Myers: Thanks, Frank.

Operator: One moment for our next question. Our next question comes from Daniel Tamayo with Raymond James. Please proceed with your question

Daniel Tamayo: Thanks. Good morning, everyone.

Curtis Myers: Good morning, Danny.

Daniel Tamayo: Maybe first, just on the NII guidance, reiterated from last quarter and you kept the three rate cuts assumed, which I understand given where we were at the end of the quarter. But maybe if you could give us your best guess as to what that guidance might look like without the June cut and if there’s any kind of other details in terms of how you’re thinking about the impact of fewer rate cuts on that guidance, that would be helpful?

Betsy Chivinski: So Dan, this is Betsy. We’ve kind of modeled that out. Really, we can tell on our loans that reprice immediately, it’s $25 million on an annualized basis, but the harder thing to protect is deposits. But we’ve kind of modeled all that out and with no cuts, we’re — we think we’re going to tilt towards the high end of the range, maybe a little bit higher. But again, they’re going to occur later in the year. So the impact on the year is going to be moderated.

Daniel Tamayo: Okay. All right. That’s with no cuts, high end of the range. Okay. All right. And then switching gears here if I can, just to the office portfolio. I appreciate all the detail you guys put in the deck on that. Just wanted to know, if you had within that group of loans what the amount that’s either substandard or criticized or classified or however you think about the early stage for that, I’m just curious how that portfolio is trending relative to the rest of your book.

Curtis Myers: Yeah, Danny. We’ve seen stability in that overall portfolio balances are stable, we’ve done — we’ve moved some out or paid off. We’ve had some originations that we did not much this past quarter, but we did some in the fourth quarter, so that portfolio is really stable. We’re pretty direct in sharing what we have in classified criticized there, and it’s shown stability as of to date.

Daniel Tamayo: Okay. All right. Understood. All right. Appreciate you taking my questions.

Curtis Myers: You bet, Danny.

Operator: One moment for our next question. Our next question comes from Feddie Strickland with Janney Montgomery Scott, Research Division. Your line is open.

Feddie Strickland: Hey. Good morning, everybody.

Curtis Myers: Good morning, Feddie.

Feddie Strickland: Just wanted to continue on that last question on office. I appreciate detail in the deck. But I see that there’s a $146 million located in the central business districts. Is that pretty evenly distributed across geographies or is it more Philly or D.C., or elsewhere? Just trying to get a sense of where — which central business district those might be in?

Curtis Myers: Yeah. Our largest is Philadelphia, and it’s not a lot of loans or, getting handy here, it’s seven loans, and Philly is the biggest portion. And then actually, the next biggest portion as we look at the distribution is spread throughout, and then D.C. and Baltimore would be less than half of what we have in Philadelphia. And again, those numbers overall are pretty granular. Philadelphia is 255 of that total. So none of those are a significant portion. It’s pretty diversified and spread out.

Feddie Strickland: Got it. That’s helpful. And switching gears for a second, it’s great to see credit relatively stable this quarter. Your net charge-offs were actually lower than what I had modeled. Can you talk about what you’re seeing in terms of trends in criticized and classified?

Curtis Myers: Yeah. So criticized and classified is moving up slightly. I think the number is about $77 million linked quarter. So not a significant move, but it is trending up a little. We are adding, so there’s generation there, and then there’s resolution as well. So we’re watching that very closely. When you look at the loans that are moving into criticized and classified, like they’re pretty diversified and granular around C&I, CRE. So we don’t see any specific thing in the migration that gives us concern about an any individual portfolio. It really comes down to the individual borrower being able to navigate or being in a position to handle the current economic environment.

Feddie Strickland: Got it. I appreciate the color. One last quick one. Forgive me if I missed this, but what was the balance of AOCI this quarter?

Curtis Myers: Let me see if we have that handy here quick. Sure, we do. You don’t have handy? We’ll follow up with you, Feddie, to give you that specific number. We don’t have the reconciliation right here in front of us.

Feddie Strickland: No problem. Thanks so much for taking my questions.

Curtis Myers: Sure.

Operator: One moment for our next question. Our next question comes from Chris McGratty with KBW. Please proceed with your question.

Andrew Leischner: Hey. How is it going? This is Andrew Leischner on for Chris McGratty.

Curtis Myers: Good morning, Andrew.

Andrew Leischner: Hi. How is it going? So just on the NII guide, just wondering what assumptions you’re using for deposit mix and down beta on those rate cuts to get to your low and high end of the guide?

Betsy Chivinski: So on the deposit mix, we are assuming some continued decline in the percentage of non-interest-bearing deposits. We feel like we’ve been conservative in those projections relative to the longer-term history. The data on that is probably, I don’t want to quote that, but I think we’re going to see a relatively low beta on that just based on competition.

Curtis Myers: Yeah. We really see a stabilizing on the deposit as we get to CD rolls. As we look forward, the pressure of pricing up on CD rolls begins to — it’s not as significant, begins to stabilize. So I think there’s a lot of stabilizing forces as we kind of look forward. The biggest impact is going to be mix shift non-interest bearing to interest-bearing. And that is moderating but is continuing.

Andrew Leischner: Okay. Great. Thank you. And do you have the amount of CDs that are maturing this year and what those are rolling off that compared to what you’re offering today?

Betsy Chivinski: So through the end of this year, there’s probably about $1.9 billion, and that weighted average rate is — I have it for the next 12 months, I’m doing math in my head here, apologies. The weighted average rate is probably about a — roughly 440 (ph). I will tell you, on average, the rate over the past couple of months, we’re putting on new CDs at a weighted average rate of about 440 (ph). So as we get towards the end of the year, again, absent other changes, which we know they’ll be, those — we’re not going to really see an impact from those renewals or new CDs.

Curtis Myers: Yes. So we feel really good about how we’ve managed the duration in that book. And each month, as we move forward, we get again to that roll being a more stabilizing impact on the overall balance sheet.

Andrew Leischner: Got it. Thank you. I appreciate the quick math there. And then just last one, if I can. With that, you repurchased 1.9 million shares, you have 95 million remaining on the authorization. Are you still comfortable with the operating environment and your current capital levels to contemplate further buybacks? Thanks.

Curtis Myers: Yeah. Great question. And we continue to evaluate that. Our priority is to support organic growth, first. Second priority would be any corporate initiatives that we have that would require a capital, and then buybacks. So we would evaluate that environment, and we feel that, based on our capital levels, we could be active in our buyback throughout the remainder of the year, but we may not, depending on the situation. We have the authorization remaining for the 95 million. And if you look back over recent history, we’ve used that almost every quarter to some degree based on the environment that we see. But again, it is the last priority in our capital utilization.

Andrew Leischner: All right. Thanks for taking my questions. I’ll step back.

Curtis Myers: Thanks, Andrew.

Operator: One moment for our next question. Our next question comes from David Bishop with Hovde Group. Your line is open.

David Bishop: Yeah. Good morning.

Curtis Myers: Good morning, David.

David Bishop: Hey, Curt. A question circling back to the first, I know you sort of focused on the — maybe the expense side of the things. But are there revenue enhancements that could emanate from this project longer term?

Curtis Myers: Yeah, definitely. The focus part of that initiative is really to accelerate growth in areas where we deliver high value for customers, have more differentiation, and we feel we can — we’re doing well and can do even better with some of the initiatives and strategies that we’re contemplating. So that is the first priority for us, is how to grow the company effectively going forward. So we do think those accelerators exist, but there’s also an efficiency, an operating environment and tech benefit realization, things like that, that will enhance efficiency and productivity too. But that focused part is really on the growth side.

David Bishop: Got it. And I know there was some noise this quarter with some of the branch closures and such. Did that flow through to the — I saw occupancy expense was up as much. I don’t know if that was weather related or related to that initiative. I thought those were in other expenses. But I don’t know if that’s — any guidance in terms of run rate on the occupancy side of the equation?

Curtis Myers: I’ll let Betsy take this one because she loves this expense item.

Betsy Chivinski: I’m sorry, we’re laughing here. Yes, the increase in occupancy was weather related. So snow removal costs. So that should moderate.

Curtis Myers: It’s life in the Northeast.

David Bishop: Yeah. We’ve got to love it up here, you never know what’s going to hit. Also maybe a high level question, Curt, just in terms of capital allocation. Appetite for more M&A, I know the Provident Lakeland deal had some interesting appendages to it. I don’t know if that sobers your outlook for additional M&A. And maybe how comfortable you’d be maybe looking at maybe some distressed bank sales out there, just curious your M&A appetite at this point? Thanks.

Curtis Myers: Yeah. So our M&A strategy remains the same. I’ve talked about looking at it in two buckets, the $1 billion to $5 billion community bank, really additive to our organization, and we’re focused on those. We do think we have opportunity in that category. We also focus on the $5 billion to $15 billion, $15 probably being the largest, we would consider more strategic partnership. There’s a handful of those, but we would consider those as well. So the strategy is the same. The environment is — we feel we have opportunities for M&A. We evaluate those when we have the opportunities. And if we can work on something that positively impacts our shareholders over the long haul, we certainly would be active.

David Bishop: Got it. Appreciate the color.

Curtis Myers: You bet.

Operator: One moment for our next question. Our next question comes from Manuel Navas with D.A. Davidson. Please proceed with your question.

Manuel Navas: Hey. Good morning. Can you just go into a little bit more detail on what’s kind of driving the, I guess, slower end of the guide on loan growth. I understand the pricing side. Does borrow demand at high rates also have an impact? And just is deposit gathering also slowing it at all?

Curtis Myers: So deposit gathering, we’re being — we’re doing a great job, I think, in that. That is not hindering our growth at all. If anything, I think it’s an opportunity to fuel our growth as we’re doing a good job there. The biggest thing on loan growth is our pipeline — commercial loans pipeline is up linked quarter and up year-over-year. But what we’re seeing is what we call the pull-through rate on that pipeline continues to be challenged. Customers are very cautious, and projects are not happening because costs are up, rates are up, things like that. So the biggest impact is not opportunity, it’s either borrowers deciding to move forward on a project or spending, or us making sure we get the right pricing credit terms.

Manuel Navas: I appreciate that. Does that mean that no cuts gets you to the high end of the NII range, but perhaps it would be an increase in loan demand if we did get Fed cut? Is that kind of the right way to think about it? And what would be — where you would be happiest?

Curtis Myers: We like stability, that’s the easiest thing to navigate. So just some level of stability would be good. We really positioned the company to effectively perform no matter what happens. We have puts and takes on rates up or rates down, rates up, we benefit in some ways and have more pressure in some ways. Rates down, we benefit in certain ways and have more pressure in certain ways. So there are a lot of different variables and what we really focus on is having the company in a position that we perform effectively no matter what happens to rates.

Manuel Navas: I have one last kind of like more specific modeling question. I had that you expected the non-interest-bearing mix getting around 22% by year-end. Has that changed at all with a little bit more outflows this quarter, is that still right around the same mix that you end the year at?

Betsy Chivinski: So we ended the quarter at 23.4%. I think for your modeling, 22%, certainly a reasonable. If you look back over the past 15 years, that’s a good range. You have to go way back to get much slower than that.

Manuel Navas: Okay. I appreciate that. Thank you very much.

Curtis Myers: Thank you, Manuel.

Operator: One moment for our next question. [Operator Instructions] Our next question comes from Matthew Breese with Stephens. Your line is open.

Matthew Breese: Good morning, everybody.

Curtis Myers: Good morning, Matt.

Matthew Breese: Hey. I wanted to go back to Fulton First. How much more one-time costs do you expect and over what time frame do you think the majority of those one-time costs are going to occur?

Curtis Myers: Yeah. So we do expect increased one-time costs as we get into implementing the changes that we’re designing and working on right now. So right now, we just have the spend to develop the plan. And then, as we implement that plan, there certainly would be one-time costs from contracts and other things that we would consider efficiencies overall. So we do have those planned and we would be disclosing those as we move forward. Our real goal is to get to showing everyone the plan, what costs we have and what benefits we’re going to drive. We’re just not there yet. But we wanted to be transparent with — that we’re spending money and investing money to figure that plan out.

Matthew Breese: Okay. But should we expect kind of this quarter’s $6.4 million in one-time costs to recur for at least the near term or is that an elevated figure in your view?

Curtis Myers: Yeah. We really have those planned out. Again, it’s an 18 month to 24 month project overall, the one-time cost would be concentrated more at the front end of that. So thinking over the next couple of quarters, we would have more of the one-time costs and then we would be getting the benefits then over the full 24 months. So that — I think you’re thinking about it the right way, Matt.

Matthew Breese: Okay. I want to go back to the office portfolio. You have eight office relationships over $20 million. You discussed kind of the three in the central business districts. But I was hoping within the eight you could talk about maybe the three or four largest relationships? What are the sizes there? How are they performing maturity schedules and any sort of details on kind of LTV, debt-service coverage ratios for just overall color on the biggest stuff?

Curtis Myers: Yeah. So the top five borrowers there are in the $25 million to $30 million range in balance. Our largest deal is about $30 million in balances. We don’t have any maturities that are coming up that we either aren’t comfortable with or don’t have a resolution for. So we feel good about the position of those largest borrowers at this point. And we are paying close attention to every office loan we have from the $400,000 one we originated in the first quarter to our largest one of $30 million.

Matthew Breese: Are they…

Curtis Myers: Yes.

Matthew Breese: Okay. And then, you had a $3.1 million loss on asset disposals this quarter. What was in there?

Betsy Chivinski: Those were five branches that we have committed to close, I believe they’re closing the end of this month.

Curtis Myers: Yeah. Next week, they would close.

Matthew Breese: Okay. And then, the last one is just on commercial swap activity. My gut here is with slower growth that will remain kind of at a depressed level. But I wanted your thoughts on whether we can get back to kind of a north of $3 million run rate there.

Curtis Myers: Yeah. It really comes down to mix of origination versus overall growth. So obviously, when you have higher overall growth, your mix is better too. You have volume in every category. So it really — what drives those numbers is the larger originations, so large C&I and large CRE originations are what really drive the number. We have a good core kind of recurring business. So that’s why you see there’s kind of a floor on that fee income each quarter. But to get to the $3 million and $4 million quarters that we’ve seen historically, you really have to have a few larger originations that are derivative or a swap done on those.

Matthew Breese: Got it. Okay. That’s all I had. I appreciate taking my questions. Thank you.

Curtis Myers: Thanks, Matt.

Operator: That concludes the question-and-answer session. At this time, I would like to turn the call back to Curt Myers for closing remarks.

Curtis Myers: Well, thank you again for joining us today. We hope you’ll be able to be with us when we discuss second quarter results in July. Thanks, everyone.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.