Rob Edwards: Hey Brandon, this is Rob. Just as it relates to Navitas, if you go back, we purchased Navitas in 2018 and we sort of anticipated at that time a 1% loss rate. Following that, two things happened. One is I think they improved sort of moved upscale in their customer selection. And of course, we had some economic favorability. We continue to believe that the customer selection that they experienced over the last really four and a half years has improved, but they’ve experienced in just one small segment of their transportation portfolio over the last 18 months. When they look back in time they’ve identified about a $35 million book of long haul tractor/trailer loans that — where the values have come down and the revenues have also come down on those business, shipping cost have come down.
And so they’ve identified a pool that they’re going to have higher than normal stress in during the year — during the second half of the year. And so that’s really what’s driving that. It’s a small portfolio that they’ve contained, but it will drive losses up and really the size of it being small is really why we anticipated waning back in the latter half of the year.
Jefferson Harralson: So, I’ll just add in that we like that 90 to 95 basis point range for the year, but it’s just going to be higher in the third quarter and lower in the fourth.
Brandon King: Okay, okay. So, is this kind of come with the small subset of loans and just kind of a normalized rate going into next year?
Jefferson Harralson: Yes.
Brandon King: Okay. And then on expenses, Jefferson, what are your kind of expectations for the run rate with First Miami coming online in third quarter and back half of the year?
Jefferson Harralson: Right. Thanks. Great question. And on the run rate of expenses, so the expenses you saw this quarter are a pretty good run rate for us. I know they were down. We were pleased to be able to offset the natural merit increases that we had this quarter. So, I think this number plus First Miami with a small growth rate on it. We’ve been thinking a lot about expenses and where you have expenses are in the branch network and 60% of our expenses are on people. I mean, over the last three years, we’ve closed 16 branches or about to close, we have five that are set to close at the end of July. We’re going to be reviewing that. We have a management today get together coming up here where I think we’ll talk about these types of things and look at branches again.
60% of the expenses as I mentioned are in people and we think about productivity quite a bit. What we have happening now and it’s a little bit despite of what Rich just mentioned is a hiring what we call a chill. It’s not a hiring freeze because we’re always going to hire great people or great producers, but we’re being a lot more selective there than elsewhere in the bank really trying to successfully complete or successfully enact this hiring chills. You’ll see less new hires coming through. On the mortgage side, we’ve had multiple cuts there as their volumes have come down with higher rates. So, those are the types of things we’re thinking about expenses. But I think kind of flattish with a small growth rate is how we’re how we’re thinking about it.
And then others can jump in there if they like. But I’ll mention one more thing there is that our efficiency — as our margin has come down, our efficiency ratio has gone higher. So, our plants move this down is going to be some of the growth, some of the hires that Rich talked about. Being able to grow loans in this mid-single-digit range, keep expenses as flat as we can and improve the efficiency ratio like that.
