Timothy Crane: Yes, we think so, Nate. I mean, obviously, this was a big growth quarter and the sale occurred after the quarter-end. So we feel comfortable. And if loan growth normalizes into the range Rich discussed, we should be adding capital.
David Alan Dykstra: Yes. And the other thing that happened, the other capital ratio stayed relatively flat. Total risk based was down a little bit because as you know, we had a sub debt offering out there that sub debt you lose 20% of it each year as it matured and the last 20% of that sub debt capital ran off on June 30. So that impacted the total risk-based capital just a little bit, but clearly, we expect the capital ratios to grow going forward based upon our projected earnings and balance sheet growth.
Nathan Race: Got it. And it sounds like the priorities for excess capital deployment are still organic growth first. Perhaps buybacks are lower down on the spectrum, just given the organic growth opportunities today?
Timothy Crane: Yes. I think that’s fair, Nate. I mean, obviously, we look at all the alternatives, but again, we anticipate good growth. We like where we are in the market.
Nathan Race: Okay, great. I appreciate all the color and taking the questions.
Timothy Crane: You bet. Thank you. Have a good day.
Operator: Our next question comes from the line of Jeff Rulis with D.A. Davidson.
Jeff Rulis: Thanks. Good morning.
Timothy Crane: Good morning, Jeff.
Nathan Race: Just wanted to check back in on the hedging strategy on margin, appreciate the guidance of 3.60%, 3.70% for the back half of the year. I guess what’s the duration of those hedges? I think in early parts of the year you talked about maybe taking the top end off of 4% plus, but also protecting much below 3.50%. I guess does that extend into 2024 basically what you’ve hedged? And I guess, how does that range get affected further out kind of with another hike, no hikes or kind of a cut? I’m just trying to think if that duration of those hedges, does that get into 2024 or any early expectations of how margin behaves into 2024?
David Alan Dykstra: Yes. No, yes. When we did those hedges, they were general longer-term transaction. So on Slide 22 of our earnings deck or you can look in the last 10-Q that we had, the maturity dates range from September of 2025 all the way out into 2028. So they’re longer-term hedges. And if you look at that slide, it’s got the swap rates in them, which are generally from the mid-3s into the low-4% range as far as where the swap rates are at. So the market, given the slope of the curve, just hasn’t been that favorable from our perspective to enter into more. So we haven’t – we didn’t enter into any in the second quarter. We’ll still look at that. But they’re there for downside protection and quite frankly, as I said in my comments, had it not been for this portfolio, our margin.
If we didn’t put the swaps in, our margin would be 15 basis points higher overall because that’s the impact this quarter. Last quarter the impact was 7. So the differential this quarter was 8. In the first quarter, the impact was 7, this quarter was 15. So the differential was 8. But we think that’s a fair price to pay if we can keep the margin relatively stable like we think it is to protect from the downside risk of substantial rate reduction. So just a risk mitigation again in our longer-term.
