So, I really think it’s twofold, us being more selective, borrowers being more cautious. In terms of the production yield that we saw, you know, we have done, that our bank division has done a phenomenal job getting strong pricing on our deals. That hasn’t really slowed growth that much. You know, I’m constantly talking to our bank divisions. So, I’m not hearing that we’re losing deals over pricing. It’s generally just overall pipelines, are muted from where they were back in the heyday, although they have been somewhat stable in the last couple of quarters. And the tailwinds we saw at the first half of ’23 with a lot of construction draws, as those deals have moved through to completion and into the perm category, we’re just not replacing the construction volume at the same pace that we were as expected.
And then to answer your last question on our go forward outlook for 2024, we’re thinking low to mid-single-digits for the year.
David Feaster: Perfect. Thanks everybody.
Randy Chesler: All right, thank you.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Kelly Mota with KBW. Your line is now open.
Kelly Motta: Hi, good morning. Thanks for the question.
Randy Chesler: Good morning, Kelly.
Kelly Motta: I wanted to ask about the, about $2.7 billion of BTFP that you guys have. Just wondering what your plans are there with replacing that amount and how we should be thinking about that in context of the balance sheet overall?
Byron Pollan: Sure, Kelly, this is Byron. As we have $2.74 billion of BTFP balances, those mature in March. The rate curve in Q4 allowed us to lock in some forward starting FHLB advances. We locked in $1.8 billion of forward starting advances, at a very similar rate, as we have our BTFP borrowing rate. That’s on a dividend adjusted basis. Those forward starting advances will begin in March, to coincide with the maturity of the BTFP borrowing. And we ladder those maturities from 12 to 24 months. And so, we spread the refinancing of that over five quarters. So, we locked in the $1.8 billion. That leaves us with $940 million left to refinance in March. And we’ve got some flexibility and options there. We’ve got a little bit of extra cash right now.
We could use some of that to paydown that $940 million. We’ll look at what the overnight borrowing environment is then. We’ll look at what the curve looks like, in terms of term FHLB advances. And so, we’ll keep our options open. We’ll evaluate that last $940 million as we get closer to maturity.
Kelly Motta: Got it. That’s super helpful. Thank you. And you alluded to the higher levels of liquidity you have. Can you remind us where you’re comfortable running those cash balances for what more normalized level?
Byron Pollan: Sure. We could bring our cash down to somewhere in the $500 million to $750 million range. Somewhere in that zone, is probably a more comfortable level.
Kelly Motta: Okay. Super helpful. And then just on the margin overall, it’s really encouraging the – future around about the spot rates and what not. It seems like we’ve – somewhat reached the bottom. But I was just wondering what you guys are expecting in terms of the glide path of NII this year and margins really, especially considering potential rate cuts may be given the forward curve?
Byron Pollan: Sure, yes. Q4 margin was down only two basis points. That was a significant improvement over the pace of decline that we have seen in prior quarters. So very encouraged by that. We are seeing signs of stabilization. The biggest driver of that, is the slowing of our deposit cost increase. So in terms of our outlook, I think we do see Q1 continued stabilization. I think from there we’ll see an inflection point, likely somewhere in the second quarter. And then we see growing NIM from there. We are also encouraged by, again, Wheatland and the list that they will help provide on the margin side. That will be helpful to put a range, in terms of our expectations for the full year. I think, we’ll come in on the full year ’24 somewhere in the range of $280 million to $290 million. And so – that’s given our current rate outlook that includes three cuts in ’24. Spread evenly throughout quarters two, three, and four later this year.
Kelly Motta: Got it. That’s super helpful. And if we were to get more rate cuts more in line with the forward curve, just directionally, what would you anticipate? That would, how would you anticipate that, would impact that expectation?
Byron Pollan: I think – it would be helpful. So, I think our margin could improve even above the range that I mentioned previously.
Kelly Motta: Okay. Awesome, that’s really helpful. Last question I wanted to ask was on expenses. I think you had said inclusive of Wheatland’s $144 million to $146 million in Q1. That was a little higher than where I was. Can you remind us, and that’s a partial impact of Wheatland. Can you just remind us the dollar amount of cost that, you anticipate expecting for Wheatland and overall core expenses? It seems like from the release and your commentary, you’re looking to control. I’m just wondering, if what you’re anticipating in terms of kind of core expense outlook there?
Ron Copher: Yes Kelly, Ron. Let me go back. I just want to make sure. The $144 million to $146 million guide that includes Wheatland. So just to go back to the core, ignoring Wheatland, we’re going to go from $132 million in the fourth quarter. We’ll go up to $138 million to $140 million, just on the divisions we already had. And then you add another $6 million so the guide, becomes $144 million to $146 million. And on the expenses, we are – in the model that we built, we assumed a 20% reduction of their non-interest expense. And that would be layered in 50% in ’24 and then 100% in ’25. And we feel that’s very, very achievable. I don’t have the exact dollar amount. I just remember it’s 20% based in 50% ’24, 100% ’25.
