Will Jones: Yeah. That’s helpful, Bob. I know core funding is a huge advantage to you guys. But I guess to that point, it feels like when a company was combined and put together, it was really built to be more higher growth oriented. So, what do you really like — what do you really need to see to get more offensive on the growth front? Do we need to see deposit costs really kind of stabilize and just overall pressure on deposits stabilize, or does there need to be a little more clarity over rates and credit? Or just how do you think about, what would kind of drive a more offensive step for you guys on loan growth?
Bob Franklin: Well, we agree with you. We were built to really drive growth and do things that we wanted to do. Unfortunately, when we closed our deal in November of ’21, the Fed was in the process of raising interest rates at the fastest pace than it ever had. That had to change your trajectory, you can’t just continue to push on with what you wished was going to happen into something that didn’t happen for you. So, you pull back you figure out what’s your next strategy is. But right now, there is not a level-playing field for deposits. So, deposit gains are really coming at a pretty high cost in many ways, unless you’re JPMorgan, I guess, but people are running to safety. But for the rest of us, we’re out here battling for deposits on a relationship basis type approach.
And as long as rates continue to move and people are aggressive around what they’re paying for things, we don’t think that’s the right call. So, we’re trying to take the right approach on the deposit side to make sure we’re still developing relationship type deposits, making sure we’re looking for the funnel account, that’s the approach we’ve taken for years and years, and it’s done well for us. On the loan side, these high interest rates are going to have to move their way through the economy. We have not seen the effects of them yet. I think it’s coming. We happen to be in a really nice place in Houston, Texas that is still pretty strong from an economic standpoint. That doesn’t always mean you drive right through that hole to increase your balance sheet when you know there some dust on the horizon.
So, it’s something we’re just approaching cautiously. We are still continuing to make loans. We still increased our underwriting standards to make sure that we feel comfortable in the things that we do put on. But we’re cautious, we’ll admit it. And we just want to make sure that we preserve a really nice balance sheet and a good nice core earnings profile. And I think we’re doing that. I think our earnings are not exactly where we’d like them to be, but they are still pretty good. And so, we feel good about where we are.
Will Jones: Great. That’s super helpful, Bob. Thanks for that. I just wanted to touch on credit for a bit. We obviously saw a little bit higher tick-up in charge-offs this quarter. There’s really kind of been a theme across the broader Southeast of maybe some of these idiosyncratic noise within the C&I space. Is that kind of really how you would characterize this credit we saw this quarter?
Bob Franklin: I wouldn’t. I think it was really relative to one loan that one company that frankly wasn’t managed really well and we ended up in the position that we did. We worked with it for a long time trying to figure out a better way and it ended up in this position. It’s not indicative of our portfolio. As you could see, non-performers actually went down fairly significantly and we didn’t backfill after we charged the loan-off. So, I think the trend is not that direction. We want to make sure that we head off having a trend in that direction, and I don’t think that’s really indicative of where we are. But we are cautious about what’s out there, because as we see renewals happen and how people are handling higher interest rates, it’s been interesting as we go through that to see how people are going about dealing with the increase in rates at a renewal time.
