David Brooks: Also, Catherine, this is David, also the fact that loans were down slightly in the first quarter versus what we expect going forward will also give some tailwind to that overall margin expansion. Yes, we feel like 10 basis points is the floor and that that should accelerate through the year. And that’s how I believe Michael was asking earlier, that’s how that we can get back to a materially higher run rate NIM by the end of the fourth quarter.
Catherine Mealor: Okay. That’s great. And then how much – in a – I know you talked about deposit costs stabilizing and maybe even coming down just because of the broker deposit dynamic and maybe it’s non-interest-bearing deposits remain at higher balances as we move through next quarter. But is there a way to quantify just kind of if rates don’t move? So just kind of hire for longer scenario where you think the deposit cost could stabilize too. For coming down, do we kind of moderate – where would you say your deposit costs kind of moderate before we start to get the impact of cuts?
Paul Langdale: I think we given the deposit pipelines we have as well as some of the growth initiatives we have out in the field, we’ve seen some robust production at lower rates than where our brokered funding is. So I think there’s some meaningful upside, Catherine, on our ability to control deposit costs. Hard to quantify exactly what that looks like just because we need to see that production come in from the field first to have that confidence in our ability to get deposits down – deposit costs down, but I do believe that there’s some upside there.
Catherine Mealor: Okay. And could you – just one more follow-up on that; could you comment on where incremental deposit costs are coming in, what the rate is of that?
Paul Langdale: Sure. We have products; our most popular products are priced between 3.80% [ph] and about 5% [ph]. So all in, that blended rate is much lower than where our brokered funding is.
Catherine Mealor: Great. Okay. That’s helpful. Okay. Thank you for the follow-up.
Operator: Thank you. The next question is coming from Stephen Scouten of Piper Sandler. Please go ahead.
Stephen Scouten: Hey. Good morning everyone. I guess I was curious, first, you’ve talked a little bit about investments to be made, not to be – not so concentrated in CRE, and you talked about the C&I and SBA. I guess as you think about those teams over the next year or two, how do you – how much more do you need to scale those up? And kind of what do you envision that being as a percentage of the balance sheet? Or kind of what are the aspirational goals there for growth?
Paul Langdale: Well, Stephen, to be clear, we’ve already had an SBA vertical. So we are scaled up and we are working in SBA. It’s embedded with our teams across Texas and Colorado. We just see opportunity to continue to grow that. So where we see payback on those investments, it comes very quickly when we hire SBA lenders. With C&I there’s a little bit longer of a ramp. I’d probably say it takes about a year to really get a portfolio fully up to speed in terms of the production that we’d expect to see. That said, we’re investing very opportunistically where we have the opportunity to notch early wins on the C&I space. And I think that I’ll also point you to owner-occupied commercial real estate. If I look at the loan production report over the last quarter, we’ve had a really nice production in owner-occupied commercial real estate, and I would expect that to continue over the course of the second quarter.
So I think we’re being very careful in how we make investments because we don’t want too long of a ramp. We want to be able to see results relatively quickly to have that accountability that we need to really hit that growth target that we’ve set for ourselves.
David Brooks: Stephen, I would add on to that, that we have because of our expense discipline and focus on controlling the things that we can control. We have self-funded, if you will, these – this mix shift as we’ve had some real estate-focused lenders choose different career paths. We’ve taken those dollars and reinvest them on the commercial side. So it’s not been – I don’t want to leave the impression that we’re embarking on a new ramp in our non-interest expense to ramp those up that, that is coming in a mix shift as we move investments around across markets, across teams where we had opportunities to add team members where someone else is departed, we’ve added back on the commercial side.
Paul Langdale: And that’s a great point, David. Just to underscore, we do expect the non-interest expense line to remain flat for the remainder of the year.
Stephen Scouten: Yes. Yes. Good point of clarification. Appreciate that. And I would say, David, in my view, you sounded a little more constructive around the thoughts of M&A over the last couple of quarters. How does this dynamic around the higher for longer environment, maybe a longer path to traditional profitability? How does that impact your view there? Does that become more of like a late 2025 or early 2026 sort of conversation at this point in time?
David Brooks: That’s hard to tell. My broad view hasn’t changed, Stephen, in terms of that I think this industry is going to consolidate and that all of the macro factors point that direction. I think the long-term rates staying higher for longer and the long-term rate shifting up as well over the last quarter was not helpful to the discussions, but I do believe there are a lot of thoughtful discussions going on across our space, whether it’s community banks, regional banks and even the super regional banks, just a lot of discussions around what types of partnerships and what types of pairings makes sense as you look forward. So we’re certainly a part of – always a part of downstream discussions and other types of M&A activity.
