Matt Olney: We’ll look at that. And then I guess kind of a similar question, Harold, on the securities yields, you had some nice repricing all through 2023. I think you’ve got one of the higher yielding securities books in the peer group. Any more benefits this year if we assume higher for longer or are we kind of topping out here?
Harold Carpenter: Well, I think we’re getting close to kind of the top but we obviously see some accretion in the, call it, the second quarter. It won’t be a lot. But hopefully, we’ll see some — especially on the cash side, we had kind of a larger mix of, call it, cash balances versus the Fed account here in the first quarter than we typically carry. So we’re likely to see more money at the Fed, earning the higher rate on the cash side.
Operator: The next question will be from Samuel Varga from UBS.
Samuel Varga: I just wanted to go back to the fixed rate loan yields for a moment. The current originations are obviously a little bit below the target range of the 7.5% to 8%. And so I wanted to get a sense of especially with the potential rate hike in September, do you expect to hit the low end or the middle of that range for that target range or should we just sort of expect that this is going to stay below 7.50 for 2Q, 3Q?
Harold Carpenter: As far as new accounts go, Samuel, we’re actually pretty pleased with their hidden 7.35. We did have, call it, a handful of larger credits that booked in the first quarter at, call it, in the high 6s that did dilute that target from 7.50 down to 7.35. Am I getting to your question?
Samuel Varga: Yes, that’s perfect. That’s very helpful. And then the other question was just on credit. So you up the NCO guide a little bit. Obviously, you gave some commentary around that [MCA] and the specific reserve. Just wanted to get a sense of like the move to the 20 to 25 basis points. Is that — should we expect that to be a chunky sort of outcome or is this a more broad based sort of expectation of moving up in loss content?
Harold Carpenter: For our planning — I think that’s a great question. I think it will end up being chunky. But right now, we’re saying it’s fairly consistent. So we don’t see a big rise in it in the second quarter versus the third quarter versus the fourth quarter. I think what we’re planning is to be fairly consistent from here on out.
Operator: The next question will be from Jared Shaw from Barclays.
Jared Shaw: Maybe just looking at the — going back to the penetration — market penetration slide. How should we be thinking about maybe longer term loan growth from here, like looking out ‘25, ‘26 as you’re able to take market share in these high growth markets?
Terry Turner: I’m not sure — ask it again. Jared, I’m not — I didn’t quite get to that…
Jared Shaw: Just with all the hiring you’ve been doing with people who are the best in their markets and going into higher growth markets. How should we be thinking about longer-term loan growth if we look out maybe over ’25 and ’26 as you are able to successfully, or hopefully successfully take market share in these markets?
Terry Turner: My expectation is that it will work like it has worked. And when I say that, I think the last few quarters, we’ve had a slide up in the actual call presentation deck that sort of showed what was coming from all the new hiring versus not from the new hiring. And of course, as you know, it’s substantially from the new hiring. I think that slide finds its way to the back of the deck as in the the additional slides in the back, but you’ve seen the percentage is coming from there. And so my expectation is that phenomenon will continue out for ’25 and ’26, both because we’ll continue to hire more people and they’ll continue to move those books. And so what I think — I mean, 6% — loan growth is a pretty good number, at least based on what I expect other people are able to produce, but it is — that is being done with legacy markets that have more tepid growth.
And so once you get to a better economic landscape and you get the growth out of those legacy markets as we’ve talked a lot, Jared, the growth that comes from the new hires is not dependent upon economic conditions, but the growth in the legacy markets is. And so anyway, I don’t mean to go on too much, but I expect that phenomenon to continue, we’ll hire more people, they’ll move their clients, it will produce outsized growth as it has for some time and so forth. And then if you get a tailwind here when economic conditions improve, you ought to produce even more outsized growth.
Jared Shaw: And then just finally for me on BHG. I mean, Harold, maybe where do you see reserves peaking there?
Harold Carpenter: I can’t really — what they’ve told me, Jared, is that they believe the reserves will probably maybe tweak up some from here, but basically flattish from here on out. They feel like they’re in pretty good shape with respect to the absolute levels — well, the percentage levels in relation to loans.
Operator: The next question will be from Brian Martin from Janney Montgomery.
Brian Martin: Most of mine have been answered here. Just a couple minor things, Harold, just on the loan repricing that occurs, the 300 basis points is helpful. Is there a significant amount or a similar amount of net repricing that goes in next year as well just kind of thinking further out on the fixed rate side?
Harold Carpenter: I think that chart would show, Brian, something like — I think the blue bars go down to like $750 million or something a quarter in 2025, in some neighborhood like that. One thing and I hope Matt is still on the phone that I remembered is that the mix of our new loan generation now have gone from a 60-40 floating rate to a 40% — 60% floating to 40% fixed, today, it’s running probably around 75% floating to 20%, 25% fixed. So those floating rate credits are coming on a yield than the 7.35 or the 7.50 for fixed rate. So that’s another kind of tailwind that we’ve had to loan yields, that will happen again in the second quarter.
Brian Martin: So that margin should continue to ramp, if that repricing occurs and the deposits are stabilizing. And then Harold, just housekeeping, on the equity investment line and the other — in the fee income line. Is there anything funky this quarter or was that a pretty clean, pretty normal type of level on those equity investments?
Harold Carpenter: I don’t recall anything going on. We did have a solar gain again this quarter, but we think that’s going to be replicated throughout the year. So we didn’t point out any kind of unusual number for that line item.
Brian Martin: And then just the last one was just on the deposit, the proactive preemptive strikes you talked about. Is that continuing in second quarter? I guess if you kind of backed off that or I guess, is that — do you expect that to kind of continue and also support your kind of your margin commentary?
Terry Turner: What we have done is conduct an initiative where we ask people to go through and review and gave list and try to provide infrastructure and basis for reducing rates and so forth. So that initiative has been done. But I mean, my view of it in this environment is, it’s a war. We will continue to look for ways to provide emphasis and opportunities to drive our cost of funds lower. I can’t recite what they are right this minute. But again, we’ll be continuing to push on it. But I think the specific point we were trying to make is Harold’s expressed some optimism about lower cost, that’s a function of an initiative that has been conducted.
Operator: Thank you. And that does conclude today’s conference. You may disconnect your lines at this time, and have a wonderful day. Thank you all for your participation.
