Chris McGratty: Okay. Great. Thank you.
Operator: Thank you. The next question comes from the line of Bernard Von Gizycki with Deutsche Bank. Your line is now open.
Bernard Von Gizycki: Hi, good morning. So you guys had a nice quarter with fees, but you didn’t change the full year non-interest income guide outlook. You noted mortgage will be dependent on rates, but you were encouraged by the resilient results. How should we think about maybe the seasonality after 1Q for the different fee lines for the rest of the year. Additionally, equity investments have picked up the past two quarters. Wondering if you could provide any color there and how you think it should trend for the rest of the year?
Kenneth Vecchione: So there are a couple of questions inside of that, and I’ll take a shot at it and Dale will fill in if I miss anything. But a good portion of the fee income comes from mortgage, I would say that mortgage hangs around the hoop for the next couple of quarters, similar to that of Q1. And of course, Q4 for mortgage is always liner because of seasonal reasons. The gains you mentioned on the warrants, that’s very consistent with the prior quarter. It consists of valuing over 500 physicians every quarter. And as the tech business grows, we expect there to be more positioned to be valued. And right now, we don’t see a retracement in value at this time, and we think the way we’re valuing it based on where the tech industry is — we’re valuing it at the lower point of the cycle. Dale, would you add anything?
Dale Gibbons: Yeah. Just a couple of things. So other seasonality implications. So HOA, their best quarter is Q1 and that helped contributed to our nearly $7 billion increase there as well as the recovery in kind of mortgage warehouse deposits. So I would expect that future quarters are going to be lower than what we put out in the first quarter. And in terms of our guidance, we are tracking towards the upper end of our guide, that’s in the book regarding net interest income. But frankly, we’re a little above the midpoint for noninterest income as well.
Bernard Von Gizycki: Okay. Got it. And Dale, I think you noted earlier that you don’t expect much deposit mix shift from here. Obviously, the quarter was great with the amount of deposits you brought in, but mix shift was obviously favorable mostly the non-interest-bearing. And then obviously, in the interest-bearing, there is less focus on the higher cost CDs. When you think about rest of the year, you kind of said the minimal mix. Where are you kind of thinking for the additional $4 billion, would be kind of similar as we kind of look out to the outside quarters?
Dale Gibbons: Well, if I put on my optimistic hat, I mean we’re really doing some creative things in the regions, which would be a primary source of where we might get non-interest-bearing deposits. And I would hope that we could actually show growth there. We certainly saw growth in the first quarter, and we’re looking for that to continue. As you — maybe the trends you alluded to in terms of CDs, I think that, that is going to continue to taper off as we run through 2024. And of course, the preponderance of the growth is going to come in money market.
Operator: Thank you. The next question comes from the line of Ben Gerlinger with Citi. Your line is now open.
Ben Gerlinger: Hey. Good morning, guys. Sorry about any background noise, I had to step out. I just had a question in terms of the ECR. I know you guys lowered the cut expectations to kind of two in the latter half of this year. But just kind of thinking philosophically, if we have two more in the early part of next year, so a total of four just kind of pushed it out six months. Do you think next year’s expenses could actually be flat, if not down?
Dale Gibbons: Yeah. I think that could certainly be the case. Also would probably help with revenue significantly on AmeriHome as we discussed as well.
Kenneth Vecchione: Another way, we were talking about it earlier — I was going to say any future rate cuts into 2025 will help fund any inflation we have in the base. And I think that’s what you’re suggesting.
Dale Gibbons: Just one more point, getting to Ken’s comment earlier about optionality, one thing that this pool of liquidity gives us to enable us to do is to really one off some of our higher cost ECRs now which we are undertaking to push them down. And so we can get in front of FOMC action with lower funding costs. You saw that a little bit in Q4 to Q3 where the average ECR actually declined slightly. We’d like to see more of that, of course.
Ben Gerlinger: Got you. That’s great. And it’s nice to see WAL get back to the kind of the powerhouse that used to be in terms of growth potential. Kind of with that though, have you guys thought about any sort of potential M&A? Not necessarily over 100, but just bolt-on technology or any kind of FinTechs, just any sort of capital deployment outside of the share repurchase?
Kenneth Vecchione: So it’s still for us a little premature to think about M&A. And I would say, given the prospects that we see in front of us, we’d like to take any excess capital that we have and put it into organic growth, we think that would serve us best.
Operator: Thank you. The next question comes from the line of Matthew Clark with Piper Sandler. Matthew, please go ahead.
Matthew Clark: Hey, thanks. Good morning, everyone. On your interest-bearing deposit costs, I think you’re up 11 bps this quarter. I think the prior quarter up 7 bps. Can you give us a spot rate on interest-bearing deposits and what’s your outlook there? Is it fair to assume that, that rate of change will start to slow here and maybe stabilize next quarter or two?
