Scott Kavanaugh: The one thing I would tell you Gary, sorry, is that just of the few relationships that I have happened to reach out to they are coming in at substantially lower pricing than wholesale funding. So we’re hopeful that we can continue that trend and get better more granular deposits at lower deposit costs.
Gary Tenner: And Jamie I apologize if I missed this through your prepared remarks. But did you say what the average deposits were that were customer service cost-oriented deposits in the quarter.
Jamie Britton: I’m sorry Gary I’m not sure I understand. Can you just–?
Gary Tenner: The amount of deposits that were — that you had those customer service costs on in the quarter the average deposit balance there?
Jamie Britton: No, you didn’t miss it. I didn’t mention that. I’d say it was probably in the $500 million or $600 million range on average for the quarter. Sorry that’s for MSR deposits. There’s probably another $300 million or $400 million on average for the remaining customer service. Yes, you got 1031 exchange title escrow stuff like that.
Gary Tenner: Okay. So, then a little bit versus the quarter prior but obviously the dollar amount of expense came down. So, I’m curious just kind of as you’ve been negotiating with those depositors and the ability to reduce those costs. I mean how has that gone? And how much more pressure — or not pressure, but how much more downward push can you make on the customer service costs ahead of rate cuts?
Jamie Britton: Well, unfortunately there’s not a ton of opportunity there and we’re investing in that business. I mean some of the best relationships we have are from MSR clients who we provide loans to add attractive spreads even to the deposit that they bring in and at the cost where they are. And so the customer service costs will increase as deposits return deposits were on average lower in the first quarter than they were in the fourth because they didn’t start returning until later in the first and we do have some of those already in the pipeline returning here in the second. So, the rate “on those deposits” isn’t likely to come down, but we are still pleased with the benefits their core deposits they’re insured. And oftentimes they bring more products like loans at attractive spreads.
Gary Tenner: Thanks very much,
Jamie Britton: You bet.
Operator: The next question comes from the line of Andrew Terrell from Stephens. Please go ahead.
Andrew Terrell: Hey. Good morning.
Jamie Britton: Hey Andrew.
Scott Kavanaugh: Hi Andrew.
Andrew Terrell: Hey guys. Maybe just a quick question, you guys provide a lot of color around some of the moving pieces around deposits and kind of the loan repricing and margin. But maybe just simply put would you expect that the first quarter is the trough on net interest income? And then, as it relates to margins specifically how much margin expansion would you expect over the next 12 months?
Jamie Britton: Well, the first question is a little easier. I think as the customer service deposits return that will provide some relief to interest expense and improved net interest income, the recurring revenue that we mentioned a few times will also continue to help. We’ll also look to opportunistically pull some more of our liability sensitivity forward, here and there. So I would be comfortable saying that net interest income barring a rate increase from here is troughing here in the first. On the NIM expansion that’s a much tougher question to answer. I think it depends on the rate environment. And just how much success we have on the customer service deposits and continuing to build relationships there. So I don’t know that we’re prepared to provide any guidance on NIM at this point.
Andrew Terrell: Okay. Understood, I appreciate it. And then, maybe just a similar question on the customer service cost kind of line items specifically, just given kind of the seasonality there, can you help us understand maybe in terms of dollars of magnitude just how much this line item kind of builds going from 1Q into 2Q and beyond?
Jamie Britton: Yeah. I’d say it’s anecdotally given some of the wins that are back on into the second quarter here coupled with just the normal seasonal flows. I would expect us to have a good build in the second. I don’t know that we get back to 4Q levels of expense here in the second quarter. But I’d say they’d be several million off the Q1 number. Is that helpful?
Andrew Terrell: Yeah. Okay. So maybe fair to just think about split in the middle of 1Q and 4Q somewhere in that neighborhood.
Jamie Britton: Yeah. Probably, I’d probably err on the side of higher, but I think that’s a good starting point.
Andrew Terrell: Okay. Thanks for the questions. Chris, I appreciate all the comments in more detail and that’s helpful.
Chris Naghibi: Yeah. Thanks Andrew.
Jamie Britton: Thanks Andrew.
Operator: There are no further questions at this time. I would like to turn the call over back to Scott, for closing remarks.
Scott Kavanaugh: Thank you everyone for participating in today’s call. We look forward to speaking again at the end of the second quarter. Thank you.
Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
