Walt Phifer: Hi, Brandon, it’s Walt. So from a savings perspective, we expect it essentially to stabilize both on the personal and the business side. In that guidance, that gets us back towards that 3.50%, 3.75% range towards Q4. We still have two expected Fed cuts, which obviously — our savings will respond accordingly. Those cuts I believe, are September and November in our current model. And then from a CD front, like I mentioned in the call, we’ve been able to reduce our CD rates thus far. I don’t — I think it largely will depend on how the market moves. Digital market typically on CD pricing will reprice ahead of Fed expectations. And then the gap between our renewal — our maturing CD rates and our renewal rates, it’s much less as we get further through the year, just given we were pricing our 12 month, which is our largest CD offering in Q3 and Q4 last year at the [5.25%, 5.30% ] mark.
Brandon King: Okay. Okay. So it sounds like interest-bearing checking and savings and money market are kind of least stable from here until Fed rate cuts and then CDs are marching towards that [5.20%] would be the best way to frame it.
Walt Phifer: Yes. I think I would frame it more — yes, they’re marching towards our current rate offerings today.
Brandon King : Okay, got it. Thanks for answering my questions. I’ll hop back in queue.
Walt Phifer: Thank you.
Operator: Thank you. Next question comes from [ Tim Switzer at SIKW ] (ph). Please go ahead.
Unidentified Analyst: Hi, good morning thank you for taking my questions. I had a quick follow-up on your commentary on the NIM and deposits. What’s kind of the deposit beta you guys are assuming on the initial rate cuts, say, we get one or two cuts in the back half of ’24? What’s your initial expectation there? And then how could the beta possibly accelerate as we move through the cycle if we get a series of cuts?
Walt Phifer: Yes. Great question. From a beta perspective, the bank here has been about 15 years old. So we have seen a lot of robust downward cycles. The last time the rates came down, our deposit pricing digital market acted pretty rational. From a beta perspective early on, will probably be somewhere in the 50% to 70% range. It could be a potential lag, whether it’s 1 month or so. On the CD side, that’s a typically 80% beta or so, and that will — we’re pretty confident that will hold given the way CD market typically is very reactive. As you kind of move forward, as you saw kind of with rates between [they own] [ph] or when rates were rising, cumulative betas rose, we think our cumulative betas will also increase on the savings side as well. But largely will depend on how essentially the overall market reacts.
Unidentified Analyst: Okay. Got it. And then I also wanted to ask about your expectations around SBA margins, the secondary market demand kind of a good lift in the premiums this quarter. But now with rate cuts being pushed a little bit further out, interest rates moving higher, has that kind of moderated demand or the premiums for you? And what are your expectations once you get either stabilization or cut in rates?
Walt Phifer: Yes. The secondary market tends to look at the forward curve. So the 105, there’s a 107 improvement that we saw here in Q1. I think we’ll stay in that range especially now given with potentially later Fed cuts, though, I think of the last six quarters or so and say, hey, that’s probably a reasonable expectation for right now. As far as demand, demand is strong. The liquidity is strong in the market. So we’re not having issues as far as selling and executing those sales. I think as the rates come down, we typically will see an improvement. Hard to say right now that improvement is drastic. But I think from a reasonable expectation, sticking that 105 to 107 range, at least through the next few quarters, feels right.
Unidentified Analyst: Okay, great. That’s all for me. Thank you.
Operator: Thank you. [Operator Instructions] Next question comes from David Feaster at Raymond James. Please go ahead.
David Feaster: Hi, good morning everybody.
BJ Losch: Good morning David.
David Feaster: Maybe just — I’d like to touch on the small loan automation. You guys touched a bit about it in your prepared remarks. I’m just curious, where are we in that build out? What’s left there? And then — I mean, are there any other investments or back office build-out that we need? And when do you maybe expect that we could start beta testing that or rolling it out more broadly?
BJ Losch: Hi David, good morning. It’s BJ. So we have already started originating small dollar SBA loans. Right now, it’s mainly through a small team that we put together. So I think we’ve got $12 million or $13 million booked to another pipeline about that size. So a good start. We had not opened it up to all of our lenders yet. We’re getting ready to do that. But we’ve got 2 major technology/credit enhancements that we’re looking at before we really open up the flood gates. One is a digital application, which we are expecting to have later in the second quarter, early third quarter. So that will be a big deal because that will automate the front end, make it very easy for our borrowers, our referral sources or our lenders to put small dollar loans through our pipeline.
