Stephen Clark: Manuel, Steve Clark. Looking back over the past year, so into early 2022, when we approve construction financing for multifamily or for residential subdivision, equity from the borrower goes in first. And again, we’re underwriting in the range of a 65% to 75% loan to cost. So that equity is significant, goes in first. And now, those unfunded commitments that we settled on, closed on last year are funding this year. So that is a tailwind in our loan growth. And again, those loans were underwritten in a higher rate environment and sensitized to an even higher rate environment to make sure the appropriate coverage would be there at completion of the multifamily project or interest reserve on a residential lot subdivision project.
Manuel Navas: I’m sure that tailwind is captured in the guidance. Can you quantify the benefit to 2024 from some of that?
Stephen Clark: Yeah, I can’t quantify at this point.
Manuel Navas: I’ll shift the questions. I understand we’ll get an update next quarter. Thinking about that NIM bottom in the second quarter of 2024, is the expectation there that you’ll see stability in the NIM? Or could even start to rise? And this is assuming no more hikes and kind of a flat Fed Funds environment?
Rodger Levenson: Yeah, I think it would stabilize and we’d see some leveling for a period of time. But again, as the portfolio makes changes from the MBS over to the loan, we’d be picking up 450 to 500 basis points on that mix shift. So that would start to bring the yields up over some period of time. Obviously, it’s not going to be immediate. But, yeah, assuming all else equal, I would say, second half of the year, we’d start to see some lift in the NIM.
Manuel Navas: Kind of building on that, are we getting close to the peak of the loan yields? Could that still mix a little bit higher? Just looking at loan yields alone at around 6.80%, what are kind of thought of that progression, if rates stay the same, stay flat from here?
Rodger Levenson: At this point, we have some originations that are coming in over 6.90%, into the low 7s. I think it really depends on the mix of loans we’re bringing in. But the pricing, which is probably – assuming no change in rates, I look at Steve, I think we’re pretty much – we’re comfortable where our pricing on the loan side is.
Stephen Clark: I would not expect a significant increase in yield unless the Fed raises interest rates. Our book is 55% variable, so we would benefit from a Fed increase, but I would not predict higher yields – significantly higher yields going forward after that.
Manuel Navas: But you’re still going to benefit from the securities yields of 2.30% going to the loan yields over time?
Stephen Clark: Correct.
Manuel Navas: You made a comment about the – some room on deposit beta versus kind of your target. Seems like you’re kind of outperforming in recent quarters. How are you thinking about using some of that leftover, higher beta target to kind of maybe protect your deposit flows. Just talk about that strategically? And I’ll leave it there.
Rodger Levenson: Our outlook committee looks at what the competitive pricing is, and we talk about it every month. We do see some competitors that have some higher rates. And again, to protect relationships, we will do exception pricing where it’s necessary, and that’s really left up to line of business leaders to determine that exception pricing. So we do believe we have the ability to, where necessary, increase some rates to manage a relationship. We’re not doing it across the board to just go raise deposits. We’re not in the position of needing to get additional liquidity. But, certainly, we’ve acquired some very strong relationships and those we want to protect.
