And so, there definitely is some pent up demand out there. With the current interest rate environment, especially on the commercial side, it takes certainly more cash equity to make a deal pencil, to our underwriting standards. So, I think all those things combined or, have the construction production muted a bit.
Matthew Clark: Okay. And then last one from me, bit of a two part question around M&A. Great to see you guys getting the regulatory approvals here. Does this elongated approval process change your appetite in wanting to do deals? And if not, can you speak to kind of the incremental change in conversations you’ve had over the last quarter?
Randy Chesler: Sure. Well, we’re 30 days longer than what we expected. So, I think that we are very, very happy to get all the approvals and get it closed. No, I don’t think this will change our appetite one bit. I think it will change our expectations that we set at the beginning of these and allow more time for the regulatory approval. Terms of activity, yes, the market has picked up. We are getting more inbound calls and a lot of very interesting opportunities. So, I think coming out of ’23, there is just a little more of an increase in inquiries, interest, as well as different types of opportunities, be it whole banks, or branches, or just quite a bit of more activity picking up. We’ll see if it continues, Matthew, but at the start here, market increase.
Matthew Clark: Okay. Thank you.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of David Feaster with Raymond James. Your line is now open.
David Feaster: Hi, good morning, everybody?
Randy Chesler: Good morning, David.
David Feaster: Maybe just starting on the deposit front, I’m curious some of the dynamics that you’re seeing there. And if you could help us think about like – how much of the deposit flows that you saw in the quarter would you attribute to maybe client activation, or perhaps some seasonality? Hoping you could quantify that and just kind of how you think about deposit growth going forward and really, I guess, the overall balance sheet size. Obviously, probably targeting core deposit growth, but would you expect the balance sheet to remain relatively stable and just remix the book?
Byron Pollan: Sure, David, this is Byron. I’ll start with deposits. Our deposit flows in Q4 were primarily driven by our non-interest bearing decline. We also had some decline in our brokered CDs. We just let those mature and run off. In terms of our outlook for total deposits, for ’24, we do think we’ll be reverting back to some typical seasonal patterns. I think, we’ll be down in the first quarter. But on the year, I think we’ll be likely flat versus where we ended in ’23. That’s in terms of total deposits. Digging into the non-interest-bearing a little bit, the majority of our non-interest-bearing decline came from typical seasonal outflows. Another driver that we looked at, though, the bulk of the outflow of non-interest-bearing came from business accounts.
And so, we looked at what type of businesses saw balance decline. The top three categories were all related to the housing market. So title company balances were down. Construction accounts, contractor accounts, those kinds of things. And so, no surprise there, given recent headlines, that housing activity is at a very, very slow pace, a low point. I think I’ve seen a 30-year low in some headlines. I would say, on the other hand, when we’re talking about non-interest-bearing balances. The rate motivated migration is slowing. That trend has been slowing in recent quarters. And in Q4, it was half of what it was in Q3. So, there is still some rate-seeking migration there, but it’s much slower than it has been in previous quarters. And I think that trend will continue to slow.
In terms of the outlook for non-interest bearing, I think we could continue to see some outflow of non-interest-bearing balances, some remix there. I would say this is where Wheatland will give us a real boost. They’re very strong on the non-interest-bearing balances. Their total deposit base is over – 45% non-interest-bearing, which is very strong. Now, there’s some seasonality to that. It is influenced by the Ag cycle and what’s going on there, but very encouraged by the strong deposit base that Wheatland, is bringing to the balance sheet.
David Feaster: Okay. That’s helpful. And then maybe just touching on the securities book, could you first remind us the cash flows that you’re expecting off that book near term? And I know you sold some securities again this quarter. Curious your thoughts on maybe being more active on managing that book, and at what point you’d maybe be interested in restructuring. And then just to your point on Wheatland, whether there’s any – rates have come down since that deal was announced. Just curious if there’s any additional opportunity – for balance sheet optimization, inclusive of that deal?
Randy Chesler: Yes, Byron could comment on the investment portfolio. The gain there, David, was the sale of the Visa B shares. And so, we’ve been holding on to those for quite a while, 1.7 million. We thought this was a good time based on a lot of factors to exit those shares. So that was the gain that you saw this quarter.
David Feaster: Got it, got it.
Byron Pollan: Sure, David, back to cash flow on the securities portfolio. We are expecting about $250 million a quarter in securities cash flow that’s through the end of this year. In terms of restructuring, I don’t think, as Randy mentioned, we didn’t sell anything in the fourth quarter. I don’t think, we’ll be looking to – sell anything out of our portfolio. When Wheatland does come to us, we are looking to sell those securities. And so, the securities currently in their portfolio will be liquidated in February and will just become part of our overall part of liquidity.
David Feaster: Got it. Perfect. And then maybe just touching on the loan growth side. Obviously, loan growth slowed and I know you’re very conservative. You’ve done a great job pushing pricing. I’m curious, how much of that slowdown would you attribute to being strategic on your end, and just less appetite for growth versus maybe weaker market demand, or just a less certain backdrop for the borrowers? And just any thoughts, on how you think about loan growth going forward?
Operator: Please stand by. They just dropped. Ladies and gentlemen, please remain on your line. The call will resume momentarily. Again, ladies and gentlemen, please stand by. Your call will resume momentarily.
Operator: David, you might want to ask your question again.
David Feaster: Yes, sure. The question was just kind of on the loan growth side. Loan growth slowed in the quarter. I know you guys have a pretty conservative posture. You guys have done a great job pushing, improving loan yields. I’m curious how much of the slowdown in loan growth was strategic on your end and you all just having less appetite for growth versus weaker market demand, and maybe a less certain economic backdrop as your clients are looking out, and just how you think about loan growth more broadly going forward?
Tom Dolan: Sure, yes David. This is Tom. I really think it’s twofold. We have been more selective, especially around higher risk areas, especially in uncertain economic times, speculative repayment, cash out refi based on market appreciation. Those are things that we’re even more conservative on now than we have been. I think that’s a portion of it. I think the other side of it is, we do still have a lot of borrowers, a lot of developers waiting on the sidelines until they’re comfortable with kind of the market outlook. And as Byron mentioned, the slowdown in the residential side, we’ve seen our – builder finance and subdivision finance is not a big business line for us. But we do make some very well-heeled multi-recession tested developers and they’ve proactively scaled down as well, just kind of seeing what was coming on the forefront.
