Terry McEvoy: Maybe start with slide 17. Could you just expand on the comments, manageable volume of loans subject to refinance risk? I’m guessing a part of it is multifamily. And maybe while you’re at it, if you could comment on multifamily trends that you’re seeing in your markets.
Mark Sander: So I’ll start. Terry, it’s Mark. As we say, a manageable level, that it’s based on the data that we provided there. We have $2.8 billion come into in the next 18 months. When we underwrite, we stress everything at a 300 basis point cushion. So that’s why we show above 4% and less than 4%. So, we have $400 million of loans maturing in the next 18 months that would bump up against our underwriting parameters. I would say of that $400 million, less than half of it is what we really have a keen eye on that might have some stress. So that’s why less than $200 million on our portfolio we think is very manageable, I guess, is the comment there. To your question on multifamily, the multifamily in our markets is holding up really well.
I don’t know how to describe it better than that. We didn’t have the highs that some of the coasts perhaps had. And so you’re still seeing rent growth. It’s modest rent growth, but it’s after many years of really strong rent growth that has more than accounted for the increase in expenses that has happened over those years. So we feel really good about our multifamily portfolio.
Terry McEvoy: Thanks. And then as a follow-up, a question on security yields. They were up a basis point quarter-over-quarter. The portfolio was up and new money yields were 561. So I guess what’s behind just the slight increase in security yields?
JohnMoran: Yeah. The more modest increase was really a chunk of very short-term U.S. Treasuries that matured in the quarter.
Terry McEvoy: And just last, a quick one, the NII bottoming out in the first quarter, John, is that with and without CapStar? I just want to make sure I understand that statement.
JohnMoran: Yes.
Terry McEvoy: Perfect. Thanks for taking my question.
Operator: Our next question comes from Jon Arfstrom from RBC Capital Markets. Your line is now open.
Jon Arfstrom: Hey, thanks. Good morning.
Jim Ryan: Good morning, Jon.
Jon Arfstrom: Hey, good morning. Where are you guys finding opportunities to grow deposit balances and relationships? Can you touch on that?
Jim Ryan: In every one of our lines of business. So in our consumer business, their primary objectives and goals is active checking accounts. And so it is literally gaining market share one by one on a daily basis and seeing that new accounts opened, exceeding what runs out the door. In commercial, as we said earlier, just we’re still very much open for business. So that’s when your whole focus is on long-term relationships that require the deposit balances to come with it, it partially self-funds itself. And then our private banking team in wealth has done a really nice job with our money market promotions, getting out there — getting after it, I guess. Nothing more than good old-fashioned blocking and tackling with a really good team.
JohnMoran: Jon, I would just add, starting in the fall of ’22, I personally was around the entire company pounding the table saying we are all deposit gatherers. And I don’t care whether you’re faced off with clients or you’re in treasury or you’re in marketing, we are all deposit gatherers. And that’s been the mantra, which has, I think, helped drive our success.
Jon Arfstrom: Okay, good. Fair enough. On non-interest bearing, I know there’s some seasonal factors in there, but does it feel like that has bottomed or is close to a bottom, that $9 billion and change?
Jim Ryan: Yeah. Jon, I feel like we’re getting close. It’s probably a little early to call the bottom. But what we saw this quarter was January was saw outflows, some of that is seasonal. February, we saw stability and we actually started to grow in March. So we feel good about the guidance that we’ve got out there. We do think it’ll continue to kind of come down a little bit, but not much from here.
Jon Arfstrom: Okay, good. And just one more on credit. Thank you for the provision guide. I think that helps. But how do you guys expect the NPL balances to progress throughout the year? Is it safe to assume they’re going to continue to go up or is that the wrong read on that?
Jim Ryan: I wouldn’t assume that, Jon, as we work things through the pipe. We’re certainly looking to move things out of NPAs as well and will, I think. So it’s hard always to predict when someone isn’t going to pay you. But I think we’re well ahead of that view, if you can, as much as you can with our quarterly problem asset reviews. So yeah, I wouldn’t necessarily assume it’s going to go up from here. But certainly, some of the criticized and classifieds will work their way through the pipe over these next 12 to 18 months.
Jon Arfstrom: Okay. All right. Thank you, everyone. Appreciate it.
Jim Ryan: Thanks, Jon.
Operator: Our next question comes from Chris McGratty from KBW. Your line is now open.
Chris McGratty: All right. Good morning.
Jim Ryan: Good morning, Chris.
Chris McGratty: Jim or John, we have a question just on slide 15, the outlook. If you kind of zoom out and look at the different line item guides, where do you think that either the biggest opportunity or risk is relative to what you’ve laid out for us?
JohnMoran: Yeah. Chris, I’d say the biggest risk is probably just what happens in terms of non-interest bearing. And again, we feel pretty good that we’re bottoming out there based on the trends that we saw in the quarter. But that would be the biggest downside risk. I think the biggest upside risk might be for us on the fee line. I think capital markets was a touch soft this quarter. A few swaps one way or another can make a difference there. And it’s hard to kind of get really too excited about mortgage, but pipelines there are up pretty solidly. So maybe we’ll have a nice spring selling season here.
