Unidentified Participant: Hey, guys. This is Michael on for Alex. I was wondering if we could maybe get an update on cash balances so far in 2Q and maybe how that’s trended on a monthly basis. All else equal, I kind of figure out what the seasonal impact might be on taxes. It sounds like you guys might have seen that in March and April already, but it looks like historically, that might be a 2% to 3% sequential impact. So any update on cash balances that you can give us so far in the quarter?
Walter Berman: I think the best we can give you from that stand, looking at the sweep, it is totally — it is — the is totally slowed from that standpoint. And so — and as I indicated, we have now — for 100,000 and under, its move, if you look at the end of the fourth quarter, it was something like 52% of the percentage of it. Now it’s almost 60% of it. So basically, it’s very stable at that standpoint and we feel very comfortable from that standpoint that it’s performing the way we thought it would. And so on that basis, the and we are growing on certs from that. And certainly, as I mentioned before, we are strongly considering transferring more back into the bank once we finish our analytics on it.
Unidentified Participant: Great. That’s helpful. Go ahead. I’m sorry.
Walter Berman: No. As I just mentioned, it’s a seasonal element when you go from the fourth quarter to the first quarter because of the taxes. I can’t — I don’t — I can’t give you the exact 2% or whatever, but it’s certainly — there’s outflows related to that.
Unidentified Participant: Thanks. And then maybe for the follow-up. Can you help us maybe think through the NIM impact at the bank from the upcoming maturity roll on, roll off yield? Maybe the mix of assets between fixed and variable at the bank and what the duration profile of those might look like?
Walter Berman: Yeah. So that’s an interesting point because as we mentioned, we have somewhere in the area of $2.5 billion rolling off and certainly, that is going to the previous question, increase our base lease spread as it relates to it. And right now, as we assess it and certainly looking at the supply, we continue with that same strategy and mix that we will — we currently have, which is the 3.1 year duration. So we feel very comfortable with that. And — but that redeployment of the maturing will certainly increase the yield.
Unidentified Participant: Thank you.
Operator: Thank you. We go next now to Jeff Schmitt at William Blair.
Jeffrey Schmitt: Hi. Thank you. I may have missed it, but I think you had mentioned the reinvestment rate of the bank was around 6.5% at the end of last year. What was it in the first quarter and do you continue to invest mainly in MBS or is that strategy shifted at all?
Walter Berman: The reinvestment in the bank, yes. So from that standpoint, we are — I’m not sure I understand the question.
Jeffrey Schmitt: The reinvestment rate, I think you’d mentioned was around over 6% at the end of last year, essentially the new money yield?
Walter Berman: I just not getting your question. I’m sorry…
Alicia Charity : You are referencing the first quarter, not the end of last year?
Jeffrey Schmitt: Yeah. What was it in the first quarter?
James Cracchiolo: The reinvestment yield, Walter.
Walter Berman: The reinvestment yield in the quarter was 6%, I believe, in the first quarter, as I indicated and we’re tracking at 6%. Sorry, I didn’t get the question at first.
Jeffrey Schmitt: Okay. And then when you look at client allocations of the certificates, just as interest rates go up, it’s around 25% of the mix now. I think when we look back at — in 2019, it reached a similar level. But just with interest rates higher and for longer in this cycle, do you have any sense on where that could go or what’s your expectation there?
Walter Berman: Yeah. So listen, you are seeing it certainly increase from that stand because it basically gives the clients as you get into the three and six, primarily in the three and six months. It gives them that opportunity to basically meet your objective set. So we see it still increasing there. But as Jim mentioned, we will certainly be offering the brokered products in the bank, which will certainly provide us additional yield. So I would think it will still grow and from that standpoint as — so I think it’s tracking what you see based on the alternatives that we provide to our clients.
James Cracchiolo: Yeah. It’s going to grow because we’re bringing in more client assets, right? And not all of it’s going to be deployed directly in the market. So there’s going to be some that go into cash type of holdings. So some of it that clients will use for transactional activity and holding for emergency expenses will be kept in the type sweep accounts and others that positional cash will be put into things — earning some of the yield that they’re looking for. And a lot of these CDs are not necessarily long-term CDs, right, brokered CDs as well. So that’s where the cash will grow. And some of it has been coming from the regional bank activity, I would imagine. So I feel like the certificate program can grow. That’s why we’re also going to offer our own brokered CD to garner some of that cash that clients want to move into the firm.
Walter Berman: And we’ve clearly seen a pattern from basically what we call the cash reserve, which is the short term. And more cash basically going into the three and six months. So people are taking advantage of that opportunity because of the competitiveness of the rates and .
Jeffrey Schmitt: Okay. Thank you.
