Wally Wallace : Good morning, Brad.
Brad Milsaps: Yes, thanks for taking my question. I appreciate all the color. If I heard you correctly, you expect deposit growth to outpace loan growth. Just wanted to kind of think about the size of your balance sheet. Do you think, one, you could stay under $10 billion again in ’23? And then, second, how should we think about the bond portfolio? I guess would that potentially remain more stable now as you maybe put some of those excess cash flows back to work? Or where might you put the liquidity that you’re going to gain from the better deposit growth might pay down borrowings? Just wanted to kind of get a sense of what your plans are there.
Lance Hall: Yes. This is Lance. I’ll take the first part of that. As we said, we’re kind of projecting mid- to high-single digits on loans and deposits. And so, the net dollars of that would be an increase in deposits over loans, obviously. That being said, staying under $10 billion is not our goal. We are sort of built to grow, and we have a lot of competitive individuals in our markets and a lot of strong economies. At the same time, when we model it up, I think it’s very possible that you see us stay under $10 billion, just the way some of the levers we have to pull, the way that we can use the runoff from our investment portfolio. So, we think that’s a real possibility, although that’s — we’re not going to do anything to slow the growth of building core relationships.
Drake Mills: Yes. And I’m going to add a little color to that, if you don’t mind. If today, we’re sitting at $9.5 billion, and we have $450 million of growth, which in — from a loan/deposit standpoint and very active in making sure that we continue to keep teams engaged. We continue to take care of our clients. We add quality relationships. You add all that up, we have $300 million worth of deposits that we can push off overnight if we need to. There is a very clear path of opportunity for us to stay under $10 billion for ’23 plus, add on that $170 million of securities that will mature and come back — can flow back in that we could pay debt off. So, a lot of levers, as Lance said, it’s a strategy, but we’re not going to jeopardize the momentum and growth of this company just for that reason, but I do have some confidence that we have an opportunity.
Brad Milsaps: Okay. Maybe just a follow-up to ask more specifically, if I was planning — assuming that you reduced the securities book in ’23, that might not necessarily be the case anymore given some of your deposit growth aspirations?
Drake Mills: Yes. And I’m sorry. Okay. I’m trying to understand that question. I’m sorry. I didn’t — so we — with our deposit growth aspirations, and I’m not saying this, but in reality, I believe in our markets, we have more opportunity to grow loans at 6.5%. But as strategically to manage this to where liquidity stays intact, our loan/deposit ratio was below 90%. We think that we should grow deposits to cover up any type of loan growth. So that maturities in the investment portfolio would come back in either to reduce cost, put back in the loans or pay down debt towards the end of the year.
Brad Milsaps: Okay. Great. Thank you. I appreciate it.
Drake Mills: And we won’t be active in building securities at this point.
Brad Milsaps: Got it. Thank you.
Operator: Thank you, Brad. Our next question comes from Woody at KBW. Woody, your line is open.
Wood Lay: Hey, good morning, guys.
Drake Mills: Hey, Woody, how you doing?
Wood Lay: I’m doing good. I just had a follow up on the NIM discussion from earlier. In regards to the expected decline in the first quarter, I’m assuming that was talking about the core margins, so excluding any accretable yield?
Wally Wallace: Yes, that’s correct.
Wood Lay: Okay. And then for the potential for the margin to rebound a little in the second quarter, is that just a function of the fixed loan portfolio repricing higher? Is that sort of the tailwind — the potential tailwind to the margin there?
Wally Wallace: No. We put — we are modeling — in our models, we are assuming that we get a Fed hike next week, and that’s really the primary driver. So, we’ll lap the pressures from the move across our entire deposit base after January. And then, if the Fed hikes next week, that will benefit the 57% of our loans that float.
Drake Mills: And Woody, that’s the only hike that we’re budgeting in at this time for 2030.
Wood Lay: Yes. All right, that’s all from me. Thanks, guys.
Drake Mills: Thank you.
Operator: Thank you, Woody. It appears there are currently no questions. Handing it back to Drake Mills of Origin Bancorp for final remarks.
