Kelly Motta : I appreciate all the color. Sorry–
Mark Kochvar: A year ago, we did make some change from NSS changes. So the year-over-year comparison on service charges impacted by that, but from fourth quarter first, that’s more seasonality.
Kelly Motta : Got it, that’s helpful. Thanks so much.
Mark Kochvar: Thank you.
Operator: Your next question comes from the line of Manuel Navas of D.A. Davidson Companies. Please go ahead.
Sharanjit Cheema: Hi. This is Sharanjit on for Manuel Navas. Thank you so much for taking my questions. I was wondering — sorry, what would you assume for deposit bases in a rate-down scenario.
Mark Kochvar: Yes. So I mean it gets a little tricky because is in the early stages of that with rates — if the Fed were to move, we would still anticipate our cost of deposits to increase some, but just at a lower pace. So the quantification of that beta gets a little trickier. So the easiest way for me to think about it has been that our margin will be, again, about 2 to 3 basis points lower than it would have been in the absence of the Fed rate cuts. So we are expecting a compression to the kind of mid-30s in the kind of second quarter, third quarter time frame. So if we were to see the Fed move, say, in September, I would expect that margin to go from kind of mid-3.70 to low 3.70s and that experience would continue if the Fed were to keep on going for at least the next several cuts.
Sharanjit Cheema: Okay, thank you. That’s it for me.
Operator: Your next question comes from the line of Daniel Cardenas from Janney Montgomery Scott. Please go ahead.
Daniel Cardenas : Hey, good afternoon, guys.
Mark Kochvar: Hey, Dan.
Daniel Cardenas : Hey, Mark, can you give me the AOCI impact this quarter?
Mark Kochvar: The change was like 8 basis points.
Daniel Cardenas : Okay. And what was the dollar amount in last quarter, you were at $90.9 million. Where did that go to this quarter?
Mark Kochvar: About $98 million.
Daniel Cardenas : Okay. Excellent. Excellent. All right. And then on the credit quality front, can you give us a little bit of color as to the industry that the company that you guys had some issues with. What industry were they operating in and then maybe some thoughts as to just overall watch list trends I mean they sound pretty good, but maybe just a little bit more color on that.
Dave Antolik : Yeah, Dan, with regard to the 1 credit that didn’t work out, it is an active work out. So I don’t want to disclose anything that might disrupt our ability to collect. With regard to the overall rating stack, we have seen some improvement. And as I mentioned in the prepared comments, it is a combination of some strategic exits. And we’ve got some additional execution there to continue to build momentum in reducing the C&C assets because they continue to be higher than where we’d like to have them, as well as making sure that we’re monitoring and actively following the remainder of the ratings stack where we have seen improvement. And then on top of that, making sure that we’re underwriting to the current environment, meaning costs, rates, all of those things, those things combined will help to continue us or allow us to tell a better credit story as we move forward.
Daniel Cardenas : Okay. Got it. And then with that one credit that you’re working out, do you think you’ll have any additional losses associated with that? Or do you think what happened this quarter is pretty much will cover those losses.
Dave Antolik : Yeah. I think we’re in good shape relative to future losses. It’s just really a matter of timing of the final resolution with this customer.
Daniel Cardenas : Okay. All right. And then on the deposit front, what we saw here in Q1, do you think that’s sustainable throughout the rest of the year? I mean, I know — it’s a despite right now for everybody for good core deposit growth, but how do you guys feel about the growth overall for 2024 on deposits.
Chris McComish : Dan, yeah, it’s Chris. I feel — we feel very good about the team and all the work that we’ve done, be it from the commercial side of our business and emphasis on treasury management, the additional channels and avenues through which we’re originating deposits and deepening customer relationships. The focus that we’ve put within our teams either in our branches or contact centers, how we’ve changed incentive plans. We pulled many levers. And none of those things happen overnight, and this has been a couple of year journey that we’re on long before the significant rise in interest rates. And as you said, this hand-to-hand combat started in the industry. So the progress we’ve made as a company, we feel very good about — around this focus on our driver of the deposit franchise.
And so we — this is two quarters in a row of meaningful deposit growth, $100 million last quarter, $70 million this quarter. Our DDA percentages of a total remains solid. So I think the stability of the rate environment actually helps us a little bit, and we’re going to continue to be as proactive as we need to be.
Daniel Cardenas : All right. Good to hear. And then last question for me. How should we be thinking about your tax rate on a go-forward basis? It looks like it was a little bit higher in Q1 versus last year? And is that 20%-ish kind of a good run rate going forward?
Mark Kochvar: Yeah, we expect it right around 20% effective.
Daniel Cardenas : Great. Thank you, guys. I’ll step back.
Operator: [Operator Instructions] Your next question comes from the line of Matthew Breese of Stephens. Please go ahead.
Matthew Breese : Hey, good morning. Sorry, Good afternoon, everybody.
Dave Antolik: Hey, Matt.
Matthew Breese : I wanted to go back to the disclosures on the office book. One quick one is just the average LTVs, could you confirm for us, are those at origination? Or are there any updates? Or how do you kind of go about that process?
