Kevin Kim: Thank you.
Operator: The next question is from Gary Tenner with D.A. Davidson. Please go ahead.
Gary Tenner: Thanks. A couple of questions on the deposit side. In terms of the nearly $2 billion of growth in time deposits in the quarter, how much if any of that was broker deposits? And what was the timing of the adds of those broker deposits if it is so?
David Malone: Yeah. We added approximately $2 billion of broker deposits during the quarter.
Gary Tenner: And was that weighted in terms of when it occurred?
David Malone: Towards the end of the quarter.
Gary Tenner: And then regarding your guidance on NII stabilization in the back half of the year what is that — what assumptions do you have embedded there in terms of deposit migration? Does it assume that things stabilize from here? Are you modeling to a certain percentage of time deposit versus non-interest-bearing within that guidance?
Julianna Balicka: Gary this is Julianna. When we’re looking at our forward projections and our modeling and our outlook in terms of where we are with the financials. As you well know what happened in March caused a lot of banks to have a shift in their deposit mix quarter-to-date we are seeing positive trends from our core relationship customers and funds coming back. So in our outlook we do expect a replacement of some of the broker deposits that we’ve brought on with relationship-based branch-based deposits. And when we are looking at our projections going forward, we have a couple of things within the concept of the margin assumptions. The big increase in the cost of deposits happened in March, i.e., with the spot rate. So at this point in time the deposit mix between the DDA and interest-bearing is stabilizing.
So our projections still incorporate that and have some conservative assumptions around continued kind of DDA behaviors, but are also informed by trends quarter-to-date from our customers and also informed by some of our branch-based strategies that we will have our retail strategies for strengthening the deposit base.
Gary Tenner: Great. Very helpful. Thank you.
Operator: The next question is from Chris McGratty with KBW. Please go ahead.
Chris McGratty: Hi. Great. Thanks. I wanted to ask about the net interest income guide, the decline in Q2. Can you — I get the back half off there a little bit of growth stability. How should we think about the rate of change Q2 from Q1? Obviously, there’s a decent step down this quarter because of the events we talked about, but how much more pressure on dollars of NII before you start to see the inflection.
Julianna Balicka: Well, I think, if you look at the exit cost of funds that was quoted on this call a minute ago by Mr. Malone. I’ll give you an idea of how to model where the kind of interest-bearing deposit costs will go in the quarter and that should give you a framework to work with for your NII outlook.
Chris McGratty: And then, in terms of the assumptions on rates in your guide, do you guys assume rate cuts, I guess, are you using the forward curve to get to the NII?
Julianna Balicka: We are using the forward rate curve, but in terms of getting any lift or benefit from rate cuts, as you know, deposit pricing at this point in time we are not assuming a lift just from rate counts. I think the first couple of cuts in Fed funds are not going to give banks the pricing power to reduce deposit cost appreciably. So we are not baking that in order to — we’re not giving ourselves a benefit at this point in time.
Chris McGratty: Okay. Thanks, Julianna. And then last one, Kevin on the convert. I think in prior quarters you said, maybe, cash on hand and potentially replacing it. Is it now because of all the cash on the balance sheet, the $200 million just simply goes away in May, without a replacement?
Kevin Kim: Yes. I think we will be okay without raising funds to replace the 2% convertible notes. We have enough liquidity to cover that. And in terms of our capital ratios, senior debt is not capital. It is just borrowing. So our capital ratios at the holding company level will not be affected.
Chris McGratty: Thank you.
