And so I think you’re going to be able to price those up reliably 300 basis points on average, that’s going to help really be the tailwind that helps the NIM expansion for the remainder of the year. The wildcard is our ability to manage noninterest-bearing balances. On the interest-bearing side, we have the ability to really manage those deposit costs a little bit more nimbly with slower net growth and the additional payoffs and paydowns that we’re going to have for the remainder of the year; we did see a higher pace of payoffs in Q1. That’s going to give us breathing room to manage those deposit costs down. As I said, earlier in response to an earlier question, at the end of the quarter, we really were able to take some of those deposit costs down.
And so we’ll get the benefit of that in the second quarter, which should help kind of kick start us a little bit as we walk through the next three quarters.
Michael Rose: Okay. That’s helpful. And then I know you guys have talked about kind of a longer-term end of 2025 margin outlook that was even higher than what you end the year kind of in the 355 to 365 range. But how has that changed in kind of a higher or longer rate environment? Does that get pushed out? And I know it’s hard to guess on timing, but you do have a fixed asset repricing story. So just trying to understand if that’s still what you guys are thinking, if we don’t get any rate cuts over time? Thanks.
Paul Langdale: Sure. I mean, obviously, spreads will still be very attractive at higher rates. As we think about repricing risk in the portfolio, we’ve really, firmly established our ability to pass through higher rates to our customers, and we’ve been very disciplined about how we price our loans. So I would expect that even in a higher for longer environment, we’re going to be able to get meaningful uplift on the earning asset yields to help offset some of that lack of rate cuts versus when we gave the last forecast. That said, I think, it’s a little bit of a longer road back to the historical NIM that we’ve had, but it’s not going to push it out so far into the future to where we’re not going to get back there and maybe the end of 2025 being in that historical 350 range, I’d say that gets pushed out to 2026.
Michael Rose: In a higher for longer.
Paul Langdale: In a higher for longer. Yes.
Michael Rose: Yes, helpful. And maybe just last one for me. Just following up on loan growth, I know some of it is just what the market will give you, and you guys have definitely pulled back from kind of the higher growth days, and I think very prudently, and I think that speaks for your asset quality performance. But as we think about the intermediate term, just given that you have San Antonio coming online, David, you mentioned adding some folks in C&I and SBA pipeline is healthy, as you mentioned in the release. What do you think the kind of the intermediate term loan growth for IBTX is as a kind of a $20 billion asset bank, hopefully, once we get past whatever slowdown we’re going to have here? Just how should we think about conceptually the loan growth engine at IBTX moving forward?
David Brooks: Yes, I think, in a healthy economy and a healthy market where rates stabilize wherever they are going to be, Michael, we’re still 8% to 10% growth company organically in the markets we’re in, especially with San Antonio coming on and picking up a new pipeline there. And that’s – we picked up a really strong team from a C&I-focused bank and we’re seeing a lot of traction there early. We had discussed doing an LPO first and just getting going, but the demand is so good, the quality of the customer base they are so good that we felt like getting the branch opened there a full-service branch as quickly as possible, became the strategy and also a very balanced deposit, core deposits and core loan growth possibility there in San Antonio.
So we’re bullish on San Antonio. We’ve always liked that market. We were hoping to acquire into it over the years and just haven’t – there are some really terrific banks there, but we just haven’t found the right timing on that yet. But in the meantime, we had a chance to get a really good team with a good balance of C&I and real estate outlook.
Michael Rose: Great, thanks for taking my questions.
David Brooks: Hey, thanks Michael.
Operator: Thank you. The next question is coming from Catherine Mealor of KBW. Please go ahead.
Catherine Mealor: Thanks, good morning.
David Brooks: Hey, good morning, Catherine.
Paul Langdale: Good morning, Catherine.
Catherine Mealor: Just another question on the margin. Can we just hear on loan yields? You saw a nice increase, I think, about 10 basis points on loan yields this past quarter. How do we just think about the repricing? I know you talked about average earning asset yields moving higher throughout the year, no matter what the rate environment does. But is there any way to quantify; is this kind of 10 basis points a quarter pace, something that’s realistic to model in this kind of static rate environment? And then how does that – and then how does that kind of change with rate cuts as well?
Paul Langdale: Based on what we are seeing in terms of maturities and if payoffs remain at the same level they did in Q1, I would expect that to be a little bit higher, Catherine. We do have some nice tailwind of chunky earning assets repricing that will price up at a slightly higher spread. I think that’s going to position us well for really notching that NIM expansion, that earning asset yield is going to help drive it.
