They had a really good quarter. AUM grew by 160 million. The pipeline is super strong. We’re setting up to have a really good wealth year. Returns there are really good. Both those businesses take a long time to build, but they generate really good returns and so we’re focused there. And then the other piece on all that, David, is we’ve made a lot of investment in our TM team. So our treasury management capabilities both in terms of technology, service offerings, people, it’s just gotten remarkably better from where we were 24 months ago. And so we are winning, like I mentioned earlier, we’re winning operating companies. We’re winning TM accounts that’s a whole other line of business that’s early in its innings to fully mature and provide benefits.
So there’s opportunities here, mortgage banking has kind of held back, just given the market where the market is. There’s just still not a lot of inventory, not a lot moving there. But we’ll continue to be really focused on fees, continue to be really focused on growing that line item. And I couldn’t be, again, just I’m excited about what’s going on in wealth, excited about what’s going on in insurance. Those are two really solid businesses for us.
David Pfister: That’s great. Thanks, everybody.
Chuck Shaffer: Thanks, David.
Operator: Your next question comes from the line of Woody Lay with KBW.
Woody Lay: Hi, good morning, guys.
Chuck Shaffer: Morning, Woody.
Woody Lay: It’s great to hear you so upbeat on the customer acquisition front. And I mean, we saw really strong deposit growth in the first quarter. Do you think this is a trend that can sort of carry on throughout the year?
Chuck Shaffer: That’s the goal. You know, we’re in this moment here where we do see tax payments going out. We’ll probably see a little bit of decline in public funds that seasonally happens here in the second quarter. But given the focus across the franchise, I’d like to have another quarter before I tell you for certain. But it’s a really solid quarter. Really pipelines are good. Deposit pipelines are good. So I’m feeling pretty confident about it, Woody.
Woody Lay: Yes. And what do you think on the loan competition side? I mean, there’s a lot of peers that don’t have the balance sheet flexibility that you all have. Are you seeing competitors sort of pull out? Any thoughts there?
Chuck Shaffer: Yes, we did sort of late last year, but in early in this year. But over the last 60, 90 days, we’ve seen competitors really pull back in. I would say the one challenge that’s emerged is some of the regional banks that we’re largely pulling relationships out of have gotten really aggressive on cutting pricing to hold relationships. That wasn’t happening. That’s a little bit of an emergence. And then there seems to be a number of banks re-entering the commercial real estate and construction space. And so it did feel like there was some pullback, but we are seeing the competitiveness sort of return. That being said, I like where we’re at. I like our optionality and I like our ability to continue to win business. And that’s what we’re doing. But it has gotten a little more competitive here recently.
Woody Lay: Yes. And then I know internally, you all are very focused on your overall exposure and concentration to certain loan segments. As you look at the loan portfolio today, are there segments that you feel you’re underweighted to that you could look to grow? And then vice versa, are there segments that are more full and likely won’t see much growth from here?
Chuck Shaffer: Yes, we’re sort of fully open to business for C&I operating companies pretty much across the board. You know, there’s a couple industries in there that obviously we wouldn’t do. But generally, manufacturing, distribution, business services, all the health care, all the things you could sort of name, we’re open and targeting. On the commercial real estate side, there’s plenty of room to do commercial real estate. Obviously, office is something we’re not going to really look at right now. And our hotel exposure is generally at its max. We’ve been working on reducing that and that we worked out. In let a couple of hotel loans get refinanced out from us here to work that down. So, hotel hospitality is kind of on hold at this point.
Office is definitely on hold. But outside of that, we’re looking at pretty much anything else that comes to retail. We’ll look at opportunities, particularly grocery anchored retail. Multifamily, if it’s stabilized and it’s working, we’ll look at that as well. Industrial, we’ll look at those projects as well. But really, the only thing that’s, one of our sort of we’re on max cap on is hospitality and in office.
Woody Lay: Got it. Thanks for taking my questions.
Chuck Shaffer: Thanks, Woody.
Operator: Your next question comes from the line of Stephen Scouten with Piper Sandler.
Stephen Scouten: Hi, good morning, everyone. Chuck, you might have just answered one of my questions here. I think you noted like 30 million in loans that you kind of allowed to leave the bank. Was that indeed in the hospitality portfolio?
Chuck Shaffer: Yes, most of it was. Yeah. There are weaker credits that came due through renewal and there was other banks that were willing to sort of take us out of that and we let that happen. Perfect.
Stephen Scouten: And then what would it take for you guys to get a bit more aggressive around growth? And maybe I’m hearing this a way you’re not intending it to, but my takeaway is kind of, you know, you’re being conservative because you have a great bank and a great franchise and you don’t want to, disrupt that. That being said, it sounds like you’ve got a great team in place and the pipelines have grown significantly. So what would kind of, I don’t know, give you more confidence to be a bit more aggressive in putting that stuff on the balance sheet?
Chuck Shaffer: Clarity of the economic environment, I’d say the biggest thing. I mean, it’s a struggle right now to get your head around, where rates are headed, where growth is headed, GDP underperformed here recently. We talk a lot internally about stagflation and what the impacts of stagflation could be. So, it’s, we’re always, as you know, us pretty wealthy, we’re always going to be cautious, prudent, exercise discipline and but clarity around where we’re headed on all this would be super helpful. The team we build is amazing. I’d love if that clarity emerged because I think we could run incredibly hard, but I think we just got to continue to pick, pick our sponsors carefully and pick our winners and that’s what we’re doing.
Stephen Scouten: Yeah, makes sense. And it was really interesting anecdotally to hear you say that some of your competitors are kind of coming back into the market a bit. Do you think that affects kind of what is out there from a talent acquisition perspective? And has there been any sort of shift in who you might be talking to in terms of large regionals or like-sized competitors or anything like that in terms of the, potentially available talent?
Chuck Shaffer: No, we’re still pulling the same thread and still working down the same angle. We like regional bank talent. It fits well with our credit appetite, fits well with our risk posture and fits well with our cross-sell model. They come equipped to sell wealth and TM and the full gamut, which is what we want to see. And so we’ll continue to recruit from the same places, Steve.
Stephen Scouten: Got it. Very helpful. Thanks for the time.
Chuck Shaffer: Awesome.
Operator: [Operator Instructions]. And your next question comes from the line of David Bishop with Hovde Group.
David Bishop: Yes, good morning.
Chuck Shaffer: Hi, David.
David Bishop: Hi, Chuck. Sound pretty optimistic, especially as we get into 2025 for the direction of spread income and the margin. Any maybe top-level holistic guidance you can give us into 2025 if rates do stabilize, we start to get fed rate cuts, maybe that the impact there on spread income or the margin. Thanks.
Michael Young: Hi, David. It’s Michael. I think just I’ll give you some of the pieces. We’re obviously not going to give any guidance for 2025 at this point in time. But a lot of the trends we’ve seen are still consistent. We’ve got about a billion dollars of kind of lower fixed rate assets that will turn over the next 12 months that will reprice higher. We expect that at some point here, the rate of increase on deposits should decelerate, as we mentioned, some of the proactive stances we’re taking in that area as well near term. So I think as you see those things materialize in the balance sheet return to growth, you’re going to see a more positive revenue trajectory as we head into 2025. And that should be a more stable earnings base, right?
