Ty Abston: I mean, the appraisal we have, we feel like is good. We’ll talk to the examiners about it. But just given where we’re carrying the property and the appraised value we have in the time period in it and the return on the property itself, that’s a performing property, I don’t anticipate they’re going to ask us to update it, but we certainly can.
Matt Olney: Okay. That’s helpful, Ty. Thanks for that. And then I guess sticking with credit but moving beyond, this credit — this single Austin credit I think you mentioned there were some inflows into substandard list this quarter. Any color on some of the larger additions into that list?
Ty Abston: So, we have a $7 million credit in the Dallas market that has a 40% SBA, a junior lien in front of us. So, it has a very low LTV. Just they’re stressed and the cash flows, we went ahead and substandard the loan. We have a couple of loans around $1 million — between $1 million and $1.4 million that have low LTVs. The remaining loans are below $1 million. So, those three credits represent the significant portion of the substandard loans we have. And again, we’re comfortable where we are with those, with our position in them, and we think they’ll actually work themselves out. We did foreclose on a single-family residence that did not — I don’t think is in the Q3, actually it was in April. It’s $1 million single-family residence, $1.8 million appraisal.
We’ll get the house sold, I anticipate, probably before end of this quarter. And that’s pretty much the larger credits that we have. Like I mentioned probably a year ago, I mean I anticipate one-off credits with the rate increases we’ve seen. I don’t see anything systemic in the portfolio, but I do continue to expect to see one-off credits that come up for various reasons. And we’ll deal with those one at a time and clear them out and just address them as they come up.
Matt Olney: Okay. Perfect. And then, on the loan growth this year, I think the goal for the beginning of the year was to keep loan balances flat for the year. And obviously, there was some shrinkage here in the first quarter. What’s the updated view on loan balances? Should we hold those flat next few quarters, or could there be additional contraction?
Ty Abston: There could be additional contraction. I mean, obviously, we’re continuing to lend, but the reality is with current rates, I mean, the demand is softer and opportunities just don’t make sense at current rates that like they did it with lower rates. And so, there could be — we could continue to shrink the portfolio. We could see a 5% shrinkage in the portfolio. It’s just not something that — we’re not focused on growing a portfolio, but we certainly will as we see opportunities that make sense to us.
Matt Olney: Okay, guys, thanks for taking my questions. I’ll hop back in the queue.
Ty Abston: All right, thanks, Matt.
Shalene Jacobson: Thanks, Matt.
Operator: Our next question is from Michael Rose with Raymond James.
Michael Rose: Hey, everyone. Can you hear me?
Ty Abston: Sure, yeah. Good morning, Michael.
Michael Rose: All right. Great. Good morning. Hope everything’s going well. Just following up on Matt’s last question there, just on the size of the balance sheet. Certainly understand that loans could be under some pressure, but as we think about maybe the liability side, I know you guys have paid down some of the borrowings. You’ve paid down essentially all the brokered deposits. How much more is there on the FHLB side that you’d want to kind of bring down and not renew? And could we see a balance sheet inflection hopefully in the back half of the year? Is that the way we should be thinking about it?
Ty Abston: Michael, I think that’s fair. I mean, we have the Federal Home Loan Bank balance pretty low now. Obviously, we have excess funds and we’re not deploying them in the bond portfolio or the loan book, then we’ll pay that down further. We continue and always have and today and every cycle and every part of our history focused on core deposit relationships and retail banking and commercial banking, treasury management. So, our team remains focused on building core relationships, and that focus has not been more intense than this year or last year versus five years ago, I’ll put it that way. I mean, we’ve always felt like core deposits were the key to franchise value in a bank, and we’re continuing to focus on that.
Michael Rose: Very helpful. And then, maybe just going back to the margin question at the beginning of Q&A. Just, I know you guys are liability sensitive. You have pulled some levers and reduced some costs as — it was kind of discussed, but the new loan production yield was lower, Q-on-Q growth is — the balance is probably going to kind of shrink here. So, maybe you can certainly — I’m just kind of looking for what are the puts and the takes to that kind of 2 basis points to 3 basis point a month in NII upward progression if we are in a higher-for-longer-type environment? And then, how does it kind of reconcile with the thought process that noninterest-bearing deposits could continue to decline? I think you guys have talked about a more normalized range somewhere in the mid- to high-20%. Just trying to get a sense of what the puts and takes are, where you could do better and maybe where you could do a bit worse. Thanks.
