And so, what we have said to our relationship bankers is, hey, this is a time for us to focus on existing and new relationships that we think can add more deposits than loans. And so, we’re not doing one-off new loans for people that aren’t going to bring relationships here. And we are going to take a look. We have reporting that we give each office, which we call 1 View reporting, that tells our bankers, who’s got what products with us. And so if you see somebody that said they were going to bring over deposits and hasn’t done it, then we’re calling on them and saying, hey, where’s this deposit account or why do you have a zero balance account with us or, are there some other deposits or other trust and investment management business that we see on your financials that we could help you with.
So, that’s really been the focus and why we’re seeing good results is that, we’ve really refocused these teams in the local offices on more of the deposit and what we call PTIM, the Planning Trust Investment Management side, and less on straight up loan growth which I think is a viable strategy. It’s a great way to lead into new relationships, but for now, , we’re more focused on how can we cross-sell deposits, how we can attract new deposits, how can we build relationships with folks that can bring us more stable, core deposits that help build our balance sheet and strengthen our financial performance.
Adam Butler: Okay, great. That’s good to hear, and it sounds like with the pipeline that the loan to deposit will be trending downward going forward. And then also, it looks like the non-interest-bearing contribution to total deposits trended downward at a similar rate compared to last quarter. I was wondering if you’re seeing that pressure slow and what your outlook is there?
Scott Wylie: Yeah, that’s just hard to know. I think we’ve done a really nice job of holding on to our non-interest-bearing deposits. But again, you have larger, relatively sophisticated depositors here. And I think when everybody’s talking about 5% deposits, they’re talking about it too. And so I would say earlier this year, we were hearing a lot more about, can you build me a Treasury bill ladder? And I think we’re hearing less of that today. And I feel like, , the moves that we’re seeing out of DDAs are more into now accounts and into money market deposit accounts and less into CDs. So that’s all positive. But I hope at some point we’ve seen the early movers on the DDAs move and we’re going to see a slowdown in the remaining DDAs. Haven’t really seen much of that so far, but hopefully that’s where we’re headed.
Certainly we have strength in our Treasury Management team and try to make sure that the clients understand the value that we can provide on the Treasury Management side, which drives them to keep more non-interest-bearing deposits here or move more non-interest-bearing deposits here. That’s a big focus throughout the organization as well.
Adam Butler: Hey, great. I appreciate the commentary there and I’ll step back.
Scott Wylie: Great. Thanks, Adam.
Operator: One moment for our next question. Our next question comes from Bill Dezellem with Tieton Capital Management. Your line is open.
Bill Dezellem: Thank you. First question is, asking — David, would you please repeat what caused the $0.03 earnings per share impact this quarter that you referenced? I just missed what you said in your comments?
David Weber: Yeah, that was in our non-interest expense. It was related to — give me a second. Let me pull it up real quick. So that was related to some compensation that was related to a previous acquisition, and we had to accelerate that compensation expense, and so that impact it is about $400,000 or $0.03 of EPS.
Scott Wylie: It’s an accounting fiction, Bill that the way that we had to account for the whole acquisition when we did it was included this compensation expense and then, like David says, if the person leaves early or gets terminated, then you’ve got to accelerate the remaining tail on that. So it’s a one-time thing. The person’s gone, the expense is gone, what would that be, a deferred asset is gone, and so that’s a one-time thing of $0.03 in the quarter.
Bill Dezellem: Thank you both for that. And then your interest earning asset yield, I believe dropped 3 basis points sequentially, and yet you are increasing rates on the loans, particularly as Fed funds goes up. Would you discuss that difference and what’s leading to the 3 basis point decline?
Scott Wylie: David, that’s loan mix, isn’t it? Yeah. David’s saying that he thinks he knows the answer.
David Weber: Also, yeah there was an impact of the non-accrual loans as well. So those loans are generating now zero of interest income as Scott mentioned through the quarter and the balances are then still in the denominator, so that’s going to have a negative impact on our interest-earning asset yields.
Bill Dezellem: And which asset categories did you see that you had — grew that had lower yield that would have contributed to this in addition to the non-accrual?
Scott Wylie: We’re looking up the answer for you, Bill.
Bill Dezellem: Thank you.
David Weber: Yeah, so we saw — in our loan portfolio, we saw yield reduction in the consumer and other bucket, and in the commercial real estate buckets, as well as C&I. And I’m speaking to spot yields there.
Scott Wylie: Will that data be in the queue, David?
David Weber: Spot yields will not, no.
Scott Wylie: Average yields are?
David Weber: Not at that level.
