Katie Bailey: Good morning.
Manuel Navas: How should we think of deposit growth was on a core basis for the year? What are kind of some of the puts and takes there?
Chuck Sulerzyski: I think there’s some seasonality in our deposits, some flows with public funds. I think at 82% loan-to-deposit ratio, I think that we have a fair amount of room. We don’t need to price more aggressively than we’re pricing. So I expect minimal deposit growth outside of the Limestone acquisition and I think that’s, that will help us from a margin perspective.
Katie Bailey: And I would say there will likely continue to be a mix shift within the portfolio as you’ve seen the last few quarters, out of kind of the lower cost deposits into more of the CDs. When I say CDs, I’m thinking retail kind of CDs, customer CDs. We’ll continue to look at the brokered market as a funding source and I know that rolls up into deposits, but that’s viewed more as funding than kind of customer deposits per se.
Manuel Navas: I appreciate that. Kind of a bigger picture, what kind of shifts in your thinking if a recession hits, like second half of the year in terms of some of your guidances? And not to be so negative, where are some of the opportunities where your guidance can be almost conservative?
Chuck Sulerzyski: So which knife do you want us to slit our throat with? Okay, I don’t see a recession. We don’t have a great deal of optimism on the economy baked into those numbers. You know, we’re in markets that don’t grow. Our proposition is very simple. The only way we can grow is to take business away from the competition. That doesn’t change in good times or bad times. So in some ways it’s a little recession. It’s independent of any recession. What I would say is that the leasing businesses that we have may do a little better in harder times than the core business. So that’ll help offset any flows. But we don’t have a lot of great growth in there in terms of based off of the economy. Does that help you?
Manuel Navas: Yes, that helps. I feel like – I think we’ve kind of covered most other things, so I really appreciate the color.
Chuck Sulerzyski: No, thank you. Thank you.
Operator: The next question is a follow up from Brendan Nosal of Piper Sandler. Please go ahead.
Brendan Nosal: Hi! Just one more for me. Thank you for the commentary on the margin, just in terms of kind of where the 2Q lands versus the full year guide. I guess looking beyond that, does the margin move back up in the third quarter given that 2Q pressure is on kind of purchase accounting noise or is that just a reset lower that kind of carries through the rest of the year?
Katie Bailey: No, it resets higher. And what we’re just giving heads up to in the second quarter is, as you’re well aware, we go through day one valuation and they’ll be preliminary. It’s 630 that we’re using to record off of and there’ll be likely true ups that happen in the third quarter. So there will be some noise in mostly the accretion income that is recorded in each of those periods. So that’s why there’s a potential that Q2 might be lower than the guidance, and then it’ll bounce back in that range in the third and fourth quarter.
Brendan Nosal: Got it, but it sounds like all of that noise will be purchase accounting and not the core margin, correct?
Chuck Sulerzyski: Correct. And we’ll disclose it as we always do.
Brendan Nosal: Perfect. Thank you for taking the follow-up.
Operator: At this time, there are no further questions. Sir, do you have any closing remarks?
Chuck Sulerzyski : Yes, I’d like to thank everyone for joining our call this morning. Please remember that our earnings release and a webcast of this call will be archived at www.peoplesbancorp.com under the Investor Relations section. Thank you for your time, and have a great day!
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
