Edward Wehmer: J.D. Power award we won last three won, three of those, I guess, the last five — four years or five years and people like what they hear. We are the mouth of suites . So we think that the play they keep opening the door for us, we are going to take advantage of it.
Ben Gerlinger: Got you. Appreciate the color, guys. Thank you.
Operator: Thank you. Our next question comes from the line of Brandon King of Truist. Your line is open, Brandon.
Brandon King: Hey. Good morning.
Edward Wehmer: Good morning.
David Dykstra: Good morning.
Edward Wehmer: How are you?
Brandon King: Good. Good. I had a question on mortgage. I was curious, what was the production margin in the fourth quarter and has that bottomed in your view and outlook?
David Dykstra: Yeah. The production margin was hovering down closer to 1% in the fourth quarter. We expect in the first quarter here it 15% is sort of a reasonable range, which is clearly lower than normal. But you also have to understand the production is very low right now. As we showed in the slide deck, the originations for sale were just a little over $400 million, so actually, the majority of our revenue in the mortgage business now as the servicing income of roughly $11 million. So first quarter, we expect to be slow again, although applications are still coming in. There’s still purchase activity out there and a little bit of refinance activity, but over 80% of our — of that $400 million is really purchase volume. But it’s competitive out there as people are just trying to get the volumes in, so it’s squeezing the production margins.
So very small, but it has become such a small piece of the revenue stream given these higher rates and seasonality in the last couple of quarters. I think we are about as low as we are going to go as far as the production revenue. I think we will continue to at least have what we have now and as I said on my comments, I think, as we get into the second quarter and the buying season picks up and people get a little bit more used to the new level of mortgage rates and digest them, I think, we will start to see pickup in the second and the third quarters.
Brandon King: Okay.
Edward Wehmer: And it’s been gravy for us too. That’s just gravy with a higher rate environment. That is just gravy.
Brandon King: Yeah. Yeah. I agree. I agree. Okay. And then on the deposit strategy, I saw a lot of deposits came out of saving came — deposit growth came from savings in CDs. I was curious if you could provide details on your CD strategy as far as what prices you booked demand in the fourth quarter, and as far as terms, six months, three months, et cetera?
Tim Crane: Yeah. Rates are trending up particularly promotional rates toward 4%. Most clients are still not willing to go along. So you are seeing terms from nine months through, call it, two years, but most of it kind of around a year. And the alternative is there are, obviously, promotional money market and savings rates that are also available for people that don’t want to lock into a term product.
David Dykstra: Yeah. And the other thing I think I’d point you to is on table two of our earnings release, we do show the CD rates by maturity. So you can kind of see how they roll off. Most of them right now are plus or minus 2% on average and so, but the promotional rates are
Brandon King: Okay.
David Dykstra: as Tim talked about.
Brandon King: Okay. And then for 2023, how confident are you in your ability to generate operating deposits and DDAs for this year? Do you think you are expecting very low growth from those categories and those interest-bearing accounts?
Tim Crane: Well, no, we are working awfully hard to continue to add clients and as we bring new clients on, they bring deposits that include their operating business. We have talked on prior calls about how nicely our treasury management business is performing, and so again, it’s lumpy as there’s kind of large inflows and outflows, but we plan to continue to add clients and deposits.
Brandon King: Okay. That’s all I had. Thank you.
Edward Wehmer: Thank you.
David Dykstra: Thank you.
Operator: Thank you. Our next question comes from Jeff Rulis of D.A. Davidson. Your question please, Jeff.
