Jeffrey Yeh: This is Jeffrey. This is a long that we are — that is in forbearance. We have already have a forbearance agreement with the power and the issue with this power is that they are working with their tenants and their tenants are government entity and that we are not concerned about the source of the ability to pay the rent. They just have to work with their tenant. So then we are kind of optimistic that at the end of the forbearance agreement. This — the issue could be resolved.
Operator: Your next question is coming from Andrew Terrell from Stephens.
Andrew Terrell: If I could just follow-up on some of the last question there around the office loan. Does that sit anywhere on the balance sheet from — or can you just talk about where it sits from like a risk rating standpoint? Is it in criticized or classified today? And then is there a specific reserve against that loan today?
Johnny Lee: In terms of the specific reserve, there is no specific reserve because that they should be able to cash flow based on the source of the rent. And besides them based on the value of the [Indiscernible] and then we have done the impairment analysis and indicated no impairment.
David Morris: And it is certainly classified though.
Johnny Lee: No, no classified loan, yes.
Andrew Terrell: Okay. Got it. Very good. Thank you. If I could go back to David, just you mentioned in the prepared remarks kind of taking steps in 2024 to optimize the cost of funding or maybe the cost of deposits? And then I heard some of the commentary around just the expectation to lean a little more heavily into the C&I oriented business, which would obviously carry a greater mix of DDAs and some core funding there. Is that really the kind of strategy? Or is there anything else that you’re looking at that you could kind of elaborate on that, that you could leverage you could pull in kind of 2024 to optimize the cost of funding?
David Morris: Well, there’s all — we have multiple options out there, Andrew. And without getting any real specifics, it’s not just the loans and deposit ratios. It’s also other investments, other items out there to help us with the cost of funding and so forth. I said loans, I’m sorry, there’s other types of vehicles, precise just deposits that can help us. Also, we do promotions like every bank does and we can guide those promotions into something that is lower yielding than the highest rate CD and something that would give us flexibility to go down the curve quicker, okay? Also, so it won’t be locked in.
Andrew Terrell: Okay. Understood. And maybe just following up on that point specifically. Can you refresh us on any time deposit, specials you’re offering right now and kind of what the term or duration and the rate is on the specialty you’re offering? And then, if you could also just remind us on the repricing dynamics for the first quarter, how much you’ve got rolling off and at what cost?
David Morris: Right now, we do not have a special out there in the market for time deposits. We do have a special out for, I believe, it’s DDA right at the moment. Okay, personal checking and business checking. Now also, I’ll have Lynn answer the rest of the question.
Lynn Hopkins: Andrew can you ask your question again?
Andrew Terrell: Yes, I think David answered the first part, the other part was just the time deposit repricing dynamics in the first quarter. Just how much is they’re scheduled to roll-off and at what cost is rolling off at?
Lynn Hopkins: Sure. So — so we — like I said, we ended the quarter with our cost of deposits for the fourth quarter were about 4%, 4.08%. And within the numbers at the end of the year, we have about $275 million as a wholesale funds that are maturing in the first quarter. Those are pretty fully priced in, in the current interest rate environment. So to the extent that we need to roll those, I think they would have limited impact on our net interest margin. There is a portion of our retail deposits that will reprice in the first quarter. And again, I think that we’re seeing some inversion in the yield curve related to funding costs. So, to the extent that they’re very short-term, they might reprice up a bit. To the extent that we look out 12-months, we’re probably pretty close to, I think, current carrying rates.
So I think it’s going to have a bit of a muted impact as we look forward and as our funding base continues to reprice in the current environment. So hopefully, that’s helpful. The – I think the time deposits that are coming off are — I think, between $450 million and $500 million, and then we’ll work to retain those in the current marketplace.
Andrew Terrell: Okay. Perfect. No, that’s very helpful. I appreciate it. And lastly, if I could sneak it in. Can you just remind me, the $150 million of FHLB that’s termed out at – I think low 1% cost right now. I think the maturity of that was in 2025, if memory serves. Can you just remind me the specific kind of data maturity for the FHLB borrowings?
David Morris: It would be the first quarter of 2025, late first quarter 2025. There’s multiple maturity dates. So — but it’s all first quarter, 2025.
Operator: [Operator Instructions] Your next question is coming from Tim Coffey from Janney.
Timothy Coffey: Dave — David, I wonder if you can kind of talk me to you — would you — when it comes to loans in the near-term, are you opening to originating for sale?
David Morris: On the mortgage side, yes. And SBA also mortgage and SBA, yes.
Timothy Coffey: How do you see that market evolving over the course of this year? Do we need the rate cuts in the back half of the year to really start to engage that customer base?
David Morris: I think SBA is a — not on the SBA side, no. Okay. On the mortgage side, I don’t know, if you need rate cuts per se. You need a change in maybe a lowering of the long end of the yield curve because that’s what prices mortgages. So we need the 10-year treasury to get back down to where it was before it went back up above 4%. We need to be down around 3% for that to happen.
