Our deposit balances were lower at September 30 compared to June 30, 2023, partially due to the seasonality of public fund deposits. In October our deposits have increased $120 million. Our core deposit base remains stable. Those were the end of our prepared remarks and we’ll now open it up to questions.
Q – Andrew Liesch: Hey, good afternoon everyone. I just want to touch base on margin here. Certainly it’s trending lower, but the pace of compression slowed. Do you think that that slowing will continue here and recognizing that the assets won’t really reprise until 2025, I guess where do you think the margin might look like a year from now?
Jane Funk: Well, that’s the million dollar question I think for everybody. Margin, we will, we are expecting to continue to see some compression because we know across the industry there will continue to be pressure on the cost of deposits. So even if the Fed doesn’t change rates, costs will continue to increase, but at what pace, it has slowed down. So that’s a good sign. At what point it stops and starts to reverse is yet to be seen. So we expect to see margin, the additional pressure in the rest of this year and early next year.
David Nelson: I would also add, Andrew, that I mentioned the $175 million in unfunded commitments on construction draws. The vast majority of those are floating rates and so that actually will help the margin a little bit as those get advanced.
Andrew Liesch: Got it. I guess turning towards loan growth, I mean what’s the timing on those draws? And if we look out maybe a year from now, is mid-single digit growth appropriate? There is some good construction gains this quarter, but how do you think loan growth overall is going to trend for the next year?
David Nelson: Well, I think our — we’re not seeing — certainly we’re not seeing as many deals as we’ve had in the, let’s say in the 2022, 2021 era, but that’s really hard to predict. We’ve seen and we’re aware of five deals that total $22 million that’s probably going to pay off between now and the end of the year, but those construction draws, that’s mostly going to be 12 to 15 months, maybe 18 and that’s probably evenly spread.
Andrew Liesch: Got you. All right, that’s helpful. Then I mean, Harlee, as you mentioned your credit metrics have been excellent. You’ve been looking for where there might be cracks. Are you seeing anything out there and the metrics are very strong?
Harlee Olafson: Well, the areas that we are watching carefully are like senior housing where you have assisted living or more care because the costs of that have gone up so high. But we don’t have very much of that to tell you the truth. We had one deal that we didn’t love in that category that’s actually going to pay off this next month. So that’s an area of concern just because of the labor costs in that area. Our office portfolio we don’t have anything that would be called the metro downtown office, multitenant office that doesn’t have strong long-term tenants in it. So we keep looking and we do the stress on the portfolio and since there isn’t a great deal of new projects coming into the fold, the old ones keep just paying down and the debt service coverage remains strong.
So our C&I portfolio has been good. We’ve done some new business there and have some businesses that have made some acquisitions. So that’s all good business for us because it adds to both sides of the balance sheet. I don’t have, I hate to say that I don’t have a good answer for you, but we keep looking Andrew.
Andrew Liesch: That’s good and encouraging. And then just one question on run rate expenses here. There are like — the operating cost have bounced around the last couple quarters and what what’s a good level to be forecasting out here going forward?
