Robert Gorman: Yeah, I don’t have specific numbers of loans and how that’s repricing. But our fixed rate portfolio is about a three-year give or take duration. So you’ve seen that re-price every day with renewing loans, and of course, new loans coming on are being priced higher. But in terms of the — I think the fixed rate portfolio at least on a commercial side is in the 5, 5.25 range from a portfolio perspective. And that’s repricing higher in this yield of 6.5% to 7% range at the moment based on where term rates are currently in the market. So that’s part of our expectation is that even though Fed may reduce rates in the short — and short-term rates will come down, we’ll have some that will drive down the variable rate yields.
But we’ll be repricing these fixed-rate loans and that should help offset at least some of that down — that drag on the short rates coming down. As for American National, yes, you know about 80% of their loan growth is fixed rate. It has an average duration of about three years. So we’re seeing — we fully expect to see that repricing happen fairly quickly, which would, you know, we’re going to have accretion income because we’re marking that book, but that accretion income should flow back into core margin or core yields as repricing happens over that period of time.
Catherine Mealor: You mentioned that fixed rate loan book is going from 5.25% to 6.5% to 7% on new production. What does that look like for the whole portfolio just including some of the C&I higher rate variable loans?
Robert Gorman: Yeah, so as you saw our portfolios reporting is a 5.97 loan yield total portfolio. We’re seeing that. If you look at repricing we’re more in the 7.5 — 7.5 range. 7.25, 7.5 range. The variable rate book is repricing in the high 7s and even the 8s at this point.
Catherine Mealor: Okay. Great. And then talking about your guide for loan growth is a little bit higher than your deposit growth. Can you just talk about just general, I guess kind of strategies in deposit growth for this year. And what you envision in terms of mix change if we look through the year, feels like that’s getting better and kind of moderating. But I assume a lot of the growth is still going to come and you kind of have CDs and higher priced deposit book. So just kind of curious how you think about remix happens as we get closer to kind of the end of —
Robert Gorman: Yeah, so Catherine on that front, we’re really not projecting a big — we’ve seen — we’ve seen pretty large change in the mix this year primarily what is coming out of non-interest bearing going into money market and CDs. We’ve seen a lot of growth in the CD book as well as the money market side. We’re not projecting that there’s going to be a major shift in the current mix we’re seeing. We think non-interest bearing, which we were at 24% this quarter. We’re kind of projecting that’s in the 22% to 24% range as we go forward this year. We also think from a deposit beta perspective as rates come down we’ll be repricing that money market book and then CDs are maturing, as I mentioned, the majority of our CD book is repricing or maturing over the first seven months of this year, $2.2 billion.
So depending on where rates go, we should be able to see some decline there. So, with that, I think, again, not looking for major shifts in deposit mix. But you’re right, I think, that growth will come into more of the interest bearing deposits.
John Asbury: Yeah, and I would add that over the long haul we do think of deposit growth as being a limiting factor for loan growth, but we’re not contemplating excessive loan growth. One thing I am proud of at Atlantic Union Bank is we pretty consistently grow net consumer households which is good, not by very rapid amount, but we tend to end up every quarter with more consumer households than we did the month before. And we are focused on, as always, expanding our business depository and treasury management offerings, we’ve seen good growth there. Don’t forget American National Bank would have a lower loan-to-deposit ratio than we do. We bring a lot of things to the table that are going to augment their efforts to go after commercial and industrial clients including deposit and treasury management intensive clients because we have some things that they don’t currently offer.
And I guess fundamentally, Catherine, we feel pretty good about it. We are off to a good start. Remember, look at the difference between average deposit growth in Q4 and point-to-point, it’s pretty notable because we have consistently seen this big drop at year end. It wasn’t as dramatic as we saw last year, but we’re off to a very good start in Q1. So I think it’s all pretty achievable. A point we’ve made before as well, as we actually don’t — while we would like to, we don’t have to fund loan growth 100% by deposit growth because we do have cash being thrown off the securities portfolio, we’re liquidating the indirect auto portfolio. But to be clear, we would like to match loan growth with deposit growth. So, I think we’ll be okay there.
Catherine Mealor: Great. Very helpful. Thank you.
Bill Cimino: Thanks, Catherine. And Victor, we’re ready for our next caller, please.
Operator: Thank you. One moment for our next question. Our next question will come from the line of Steve Moss from Raymond James. Your line is open.
John Asbury: Hi, Steve.
Steve Moss: Hi. Good morning. Just following up on loan growth here. Just curious where you’re seeing the drivers of underlying C&I growth here and the multifamily growth that we saw this quarter?
John Asbury: Where it’s coming from?
Steve Moss: Yeah.
John Asbury: I’m going to ask David Ring, who leads our commercial banking efforts is with us. So Dave, what’s your perspective on drivers of I guess CRE in commercial loan growth?
David Ring: Yes. So you asked specifically about multifamily, you know, that is one of the categories that we continue to grow. We’ve shrunk the categories, the asset classes we do want to grow in, in real estate. So it’s kind of, as we grow, we’re growing real estate and C&I at similar loan growth numbers. So on the C&I side, we’re seeing growth in every region except we’re slowing down in the Western side of Virginia. And that’s why we’re very excited about the addition of the American National team there because we had a much smaller team on the West side.
