Jared Wolff: So I would characterize most of it is — there’s two parts of the runoff. Some is just seasonal movements and balances by customers. And the other is intentional runoff of deposits because we don’t need. The majority was runoff of deposits as we just chose. We don’t need it because the rates too high and it was non-core. It was broker otherwise, we looked at the relationship and they only had one account with us. It was an interest bearing account and they weren’t using any other services of the bank. And so, when we said we’re not going to pay the rate that they wanted and one account rate somewhere else. So, I would say that, some of it was just seasonal movements of customer deposits, but overwhelming majority was the latter type, which was rate-sensitive deposits that we didn’t need any longer.
Brandon King: Okay. And do you think that’s largely over and going forward or are you expecting maybe some more incremental?
Jared Wolff: No I think as we replace – as we build up our momentum in terms of bringing in relationship deposits both NIB and other deposit types that come with those relationships, we will feel good about letting go more expensive deposits that are fundamentally they might be appropriate. They might be core but they’re probably not true relationship deposits that we would like. And so we will see that migration over time but we’ll be – we’re focused on our loan-to-deposit ratio. I want to make sure we stay comfortably within kind of our campus.
Brandon King: Okay. I guess answered my questions. Thank you.
Jared Wolff: Thanks, Brandon.
Operator: The next question comes from David Feaster with Raymond James. Please go ahead
David Feaster: Hi, good morning, everybody.
Jared Wolff: Good morning.
David Feaster: Just kind of circling back to the NIB growth, look like you alluded to. This is in stark contrast to what most other banks are seeing right now in the industry. You highlighted the new account growth and that the pipeline looks good. I’m curious if there’s any segments that you’re seeing more success early on, where you see the most growth opportunity? And maybe just could you walk through what do you think is allowing you to be so successful on the NIB growth side?
Jared Wolff: So we had good traction in HOA in terms of accounts that were opened and we had good traction in in venture and fund finance and warehouse and in most of our segments in the community bank, we saw good inflows of accounts. We have a kind of a deposit contest that we do. And so we track it very carefully and it’s about bringing new relationships to the bank and making sure that people understand why we can provide a better experience than our competitors. And the lead cycle to bring in deposits is longer than loans. And so people have to start early. And that’s why showing good traction in the first quarter is great, because I know it’s going to build up, we should be able to show better traction going forward. Where we find these deposits are generally competing against the larger banks.
A lot of people don’t choose to be at the larger banks. They end up at the larger banks. And some specific examples of that are First Republic customers that end up at JPMorgan and Union Bank customers that ended up at US Bank, and you know, customers that ended up at First Citizens, which is becoming a larger bank. And so I think that we’ve done a good job of being a great option in the market. People know our name. They know who we are. When people say, hey, I need to think about banks, now that Banc of California is definitely on their list because of the marketing that we’ve done and the position that we have. And so we’re trying to optimize that. We still bring in a lot of accounts from Wells Fargo, which is a very good local competitor, but we seem to have really good traction against them.
And there’s a ton of great banks in California and in the other markets where we operate that are very strong banks are very good competitors but we seem to be holding our own. So that’s some color we get in.
David Feaster: That’s great. And how – I’m curious how Deepstack plays into that. You talked about HOA as a venture business. I believe that you had – you were excited about what Deepstack could do on those businesses and then maybe more broadly where we are in the rollout with Deepstack? And when do you think that that can be a more meaningful contributor?
Jared Wolff: Well, we expected it to be a meaningful contributor this year to Banc of California on a standalone basis. But because of the increased fee income that Banc of Pac West brought to the combined company, you know, feedstock won’t have the ability to make a meaningful impact on that this year. And so we said it will have a meaningful impact next year. Nothing would make me happier than to be able to highlight and disclose one of the specific contributions that feedstock is contributing both in terms of card and the other things they’re doing on our payments platform really has three things; it’s feedstock which is merchant acquiring cards; its cards, we’ve started issuing credit cards directly to clients; and then the third side is just sponsorship meaning we’re helping other parties process transactions over our rails.
And all of those things will be contributing on the fee income side and we believe on deposits as well. But David I don’t have any targets to put out there right now on that.
David Feaster: Yes. Okay. That’s helpful. And then last one for me. Just you talked about the hiring initiatives and you’ve had several announcements over the past few months. Curious that how do you think about hiring and the team that you’ve assembled maybe where you’re looking to add additional talent and whether it’s more deepening the bench or expanding into new segments?
Jared Wolff: We’ve had really — first of all, we’ve got an amazing team here. You know, just there is obviously the talent at both companies. And so we’re benefiting from that right now. There are pockets where we felt like it’s prudent to add talent. And we just we just had two great folks come over to our finance team from another bank started this week. We’ve added people in most of our lending areas and we’re offering — we’re adding people in our functional areas as well. I mean there’s — we’re absolutely open to adding the right talent across the bank and are there some key spots that we have opened that we’ll be adding very shortly. But we continue to add talent even though we have a deep bench here.
David Feaster: That’s helpful. Thanks everybody.
Jared Wolff: Thank you.
Operator: This concludes our question-and-answer session and Banc of California’s first quarter earnings conference call. Thank you for attending today’s presentation. You may now disconnect.
