Can you just give us some historical dynamics on loss rates through the cycle loss rates and kind of where that reserve level could go? Thanks.Rob Edwards Yes. So this is Rob, Michael, just in terms of — we purchased the portfolio in 2018. And when we did that, we looked all the way back to when the company started. Now they started post 2010, but their loss rates have been up until we bought them and 1% was kind of what we budgeted and expectations that we set when we bought it.So coming in at 93 is kind of where we have thought it would be. We haven’t seen a lot, in fact, we think the portfolio has gotten better since we bought it. They’ve moved upstream a little bit on the credit range. So I feel like this is a reasonable expectation for the portfolio going forward.Jefferson Harralson I just want to add.
It’s a very profitable company at this level of charge-offs.Michael Rose Certainly understand the yields obviously are very sticky. Just maybe one final one from me. So the gain on sale of Navitas loans and the SBA loans. Can you just give some color there and kind of what we might expect going forward? Thanks.Jefferson Harralson Yes. So maybe Rich can jump in on the SBA possible here. I’ll give a shot as well. This is our seasonally weakest quarter for both SBA and Navitas originations. I expect they have a little bit of a different seasonality, but in both cases, they both tend to increase throughout the year. So I would expect those gains to — this is typically the first quarter is the lowest gains we see in both. For Navitas specifically, I think you would see this level or slightly higher as they go through the year, but there might be a bigger ramp in SBA.
I will pass to Rich on that.Rich Bradshaw Two things. One is the gain on sale for SBA right now looks like it will be flat from Q1 to Q2 in terms of what you get in the secondary market. In terms of volume, our volume is up, and our pipelines are as big as they’ve ever been in SBA. And you know that’s a great counter financial environment products. So if the economy struggling a little bit, SBA is going to do better. And we are full up in all positions and really strong pipelines.Operator The next question will come from Kevin Fitzsimmons with D.A. Davidson. Please go ahead.Kevin Fitzsimmons Appreciate the spot levels, Jefferson, on cost of deposits. I was wondering and I apologize if you’ve given this and I missed it. I was wondering if you could fill us in also on the same basis for loan yields.
And for the actual margin, what maybe the margin was for the month of March or at the end of the quarter? Thanks.Jefferson Harralson Yes. So the loan yields on a spot basis and kind of moving up are actually almost up as high as the deposit yield, but it’s part of a phenomenon that I don’t think is going to continue through the whole quarter because what you have is a possible rate hike coming, do you get so far in LIBOR start to move up before that to anticipate that rate hike. And so we’re getting a little bump in our loan yields early in the quarter because of that expectation.So it’s not a great look through for the whole quarter, but so far, the loan yields have almost matched the deposit costs and moving higher. Would you say your second question again or somebody help me out with your second one?Kevin Fitzsimmons Just on the overall margin, but if you can kind of combine and say what your margin was at the end of the quarter.Jefferson Harralson Annualizing a month quarter is really, really hard, and we do it, but it sometimes comes out with these numbers that are just not helpful.
So I felt like the spot in the — as of next, last Friday’s number was the best I could give you because taking some of these numbers with the fees coming through there and multiplying times 12, just gives you crazy numbers from.Kevin Fitzsimmons Okay. One question on the mix shift that’s happening within deposits. And I think you mentioned how you expect it to moderate. But specifically with the percentage of DDA to total deposits where do you see that settling? And where and when do you expect, you have to say? Thanks.Jefferson Harralson That’s a great question. I might pass that. We’re looking around each because it’s hard to say because I do believe that once you see rates peak, you’re going to see that transition slow down a little bit because once you have this rate that’s presented out there to you, we have a 3.5% money market out there, and we presented that to our clients now for a handful of months and we’ve seen some people take us up on it.
And I’ve taken myself up on it actually, too.And so I think what you’re going to see is sort of a peaking of rates here and a slowdown of people taking up on the offer because they’ve had opportunity now for a handful of months. So I think, again, you’re going to see a continued mixed change. I think we’re going to see a mixed change on the asset side, too. But I believe you’re going to see a shrinkage in that DDA number, but I think that’s just going to slow down as we go through the year.Kevin Fitzsimmons Yes. Great. One last one for me. So on the pending South Miami deal, any better sense, I know you said in the back half of the year for that to close, but any tighter frame on third quarter, early late? And then just generally, that whole regulatory merger approval process, have you guys noticed any changes or expect any lengthening of that process post the bank failures.
Thanks.Jefferson Harralson Okay. Yes. Great question. Thank you for it. It’s a relatively opaque process, but I’ll say to you that I think it’s most likely third quarter, it could move into the fourth. But I think I would say most likely, third quarter, and we have not seen anything unusual from the regulators from the things we turn into them or what we’re hearing from them. It seems like a normal transaction and most likely third quarter.Operator The next question will come from David Bishop with Hovde Group. Please go ahead.David Bishop Jefferson and Rob, maybe just in terms of the new loan yields, I think Jefferson, you said they’re approaching 7% or so. Is that having any impact in terms of the quality of the loan pipeline you’re seeing out there?
Is it becoming more difficult in terms of term sheets you’re putting in front of borrowers to find quality credits that meet underwriting with a higher debt service coverage, et cetera, at this higher rate environment?Jefferson Harralson It’s a great question. I’ll just start with the yield we’re seeing is in the high 7s to 7.85 to 7.90 is what our incremental new yields were coming on at this quarter. And I’ll pass to Rich to talk about the color of the pricing and the quality.Rich Bradshaw Good morning, David. Probably, gosh, for the first time in a very long time, we were actually seeing, particularly on the larger stronger deals, we’re seeing pricing increase. So stuff that used to be done at SOFR 2.25 is now being done at SOFR 2.50, SOFR 2.75.
