Paul Taylor: So I think deposits are going to be very challenging in 2023. I’ve read a lot of the earnings announcements from other banks and deposits, liquidity are getting a little stretched in the industry. We’re no different than that. I would €“ we’ve got another couple of rate bumps. I think that the yield on deposits or the rate on deposits are going to remain sort of flat throughout the year. We’re hoping that with mix changes, we can lower the cost. One of the things that our loan committee were requiring that you’ve got to have a deposit in order to get a loan, and we’re challenging all of our lenders this year, and we’re putting it in their incentives where they’ve got to gather deposits and a significant amount of deposits this year. We also have the standard CD specials, which aren’t going to help rate, it will just help the volume of deposits, but that’s sort of as I see deposits for 2023.
Kevin Thompson: And I’ll add to that. We do expect two more Fed rate increases, 25 basis points each. And so we have had a cycle to date, overall deposit beta 34%. So we do anticipate some beta associated with that, some pressure in the first half of the year and then alleviate in the second half of the year. So our net interest margin possibly decreasing slightly first half and then increasing potentially above end of 2022 levels by end of year. So we’re in an unprecedented period where deposit pricing where rates increased so quickly that deposit pricing fall and it takes a little time with our asset-sensitive balance sheet for the loan beta to catch up. So we should see some of that loan beta catching up here in the second half of the year and into next year.
William Black: I think the bigger thing when you look at the P&L, though, Chris, is going to be the interplay between the remix on both sides of the balance sheet from both lower-yielding loans to higher-yielding loans and then on the deposit side. So there’s going to be a lot of movement there. And I think in any particular quarter, you could see that bounce around. But the goal is obviously driving increased profitability, so to see the margin increase over time.
Christopher Marinac: No, that’s all very helpful. And Bill, to your point, you can see that with the loan production yield just on its own this past quarter, to your point. There was once a team of folks at PacWest, several acquisitions ago, who were dedicated on just doing deposits, and we’re incented as such. Is that something that can still work in 2023, 2024 as sort of dedicated teams to sell deposits only?
William Black: I mean, listen, our business has always been deposit focus. So there’s always been teams of people focused on deposits. And I would tell you, if you were on the internal call yesterday, Paul was pretty clear about it, it’s all about deposits, deposits, deposits. So it’s not just one group, Chris. It’s everybody, from the lenders to the top of the house all the way to the front line. It is a reinvigorated core value.
Paul Taylor: I mean that’s the secret sauce of banking is low-cost deposits. And that’s why we bother with a bank charter and deal with regulation is to get those deposits. So I mean, that’s our biggest focus all the time.
Kevin Thompson: And we’re tweaking incentive programs to be more deposit-focused as well as Paul mentioned earlier, that loans €“ any loans that are approved, in general, need to have a deposit relationship.
Christopher Marinac: Great. Thank you for all that reinforcement. Last question for me just goes back to the small uptick we saw in the criticized loans. Is that something that is possible this year? I know you mentioned obviously, recession influences some of that. Just curious if there’s any particular background this quarter.
