Thomas Cornish : I say we have a very well disciplined and thought process around risk rating and we risk rate loans, what they are at this exact moment, not what we think they will be six months from now. And if you have a building that loses a tenant, and you have a new lease in place from an investment-grade company, but the cash flow does not start to kick in. For six months, we created based upon the cash flow today, not the cash flow six months from now. So that will change. We’ll see some of that happen, but we risk rate, I think, very conservative and appropriately.
Operator: Our next question comes from Ben Gerlinger with Citi.
Ben Gerlinger: Just wanted to circle back. I know we’ve thrown out a lot of guidance and ranges. I just wanted to confirm I had everything correct. So kind of mid-single digits on NII expenses, mid-single-digit growth off of the core numbers, let’s call it, just around $600 million, give or take on the full year ’23. As I think you said lease finance should be around $9 million a quarter roughly.
Leslie Lunak: [indiscernible]
Ben Gerlinger: Okay. So rough is it fair to call it around 20%, 21-ish on a normalized basis?
Leslie Lunak: 20, 21, what, I’m sorry?
Ben Gerlinger: Million — I’m sorry, for total non-interest income.
Leslie Lunak: I don’t know. I think you’ll see a slight trend up in deposit service charges and fees on the back of NIDDA growth, they gave you the number for lease income. Probably the other will trend up a little bit, too. I don’t have that number right in my head that total.
Ben Gerlinger: Sure. Okay, sounds good. I felt like I got most of the guidance right. So when you guys just think from the kind of lending and philosophical perspective. You said you guys are getting a little bit better rate, especially on even floating rate. Are you — are you potentially introducing credit risk? Or is it just other lenders backing out that gives you a better yield? And if they come back in, the odd probably will start with raise, which is kind of annoying from a competitive perspective, but like is that embedded in some of your guidance that rates probably will come down if the economy is better than expected?
Raj Singh: I think it has everything to do with the fact that the Fed is shrinking the amount of money in the system. So there is — the cost of money has gone up, spreads are wider for that reason. By the way, they’re wider on the deposit side too. So we’re just kind of the conduit to pass that on to the borrowers. The same credit, same risk rating, same names something that is coming up for a little spread in this market that’s 18 months ago. So it is not about that we’re going down the credit spectrum, it is that the market is in a different place than it was competitively or for borrowing than a year ago. That’s what is driving wider spreads. But like I said, we’re also paying up on deposit side. That’s why if it’s only on the lending side that we’re getting wider spreads in deposits was in the happy place like 1.5 years ago, my will be way wider.
That’s not the case. So now it’s not about price selection. It’s all about the market dynamics. There’s less competition.
Ben Gerlinger: Got you. Okay. That’s fair. And then when you think about kind of a holistic approach to expenses. I know there’s some — there’s a cadence kind of with the seasonality of some are just more pronounced than others. I was just curious if you can just quarter-to-quarter, like where might the high point be? Or how should we think about the back half of the year?
Leslie Lunak: We don’t really try to provide quarter-by-quarter guidance. I don’t know when certain things are going to hit the P&L. You typically have a little bit higher payroll expense in the first quarter, everybody does because of the front-loading of payroll taxes and 401(k) contributions and HAS seating and all of those things. But beyond that, we don’t spend a lot of time trying to figure out which quarter expenses are going to hit the P&L.
Operator: Our next question comes from Steven Alexopoulos with J.P. Morgan.
Alex Lau: This is Alex Lau on for Steve. Starting off with the margin, how much was the impact of CD repricing to the NIM in the fourth quarter? And what can we expect for the first quarter? Also, what were the rates of the old CDs running off and the new rates that CDs were coming on at?
Leslie Lunak: I don’t have all of those details in front of me for the fourth quarter. I know there’s a little bit shy of $1 billion coming due in the first quarter that’s probably going to reprice up on average by about 50 basis points.
Raj Singh: In terms of new money coming in. And I don’t recall exactly where the pricing is right now, but I do know that we backed off on the deposit pricing, on CD pricing, right around Thanksgiving. So we may have done it actually right after Thanksgiving and then once again in December. So we did get — we did lower meaningfully what our promotional rates were for 12-month money, which is sort of our lead product. But I don’t have the exact numbers internally. But I do remember making those decisions [indiscernible]. Yes, high 4s I think, is where we are.
Alex Lau: Got it. Moving on to deposits. Which business segments or industry did you see the growth of the $600 million in non-brokered deposits in the quarter? And what level of rate are you paying on these new deposits? And how much of this is new DDA?
Thomas Cornish: Yes. I would say if you look at the deposit growth, it was pretty much across every business line. So it’s across all segments. It would be — I wouldn’t have the detail in front of me to give you like a code-by-code breakdown of what industry segments it was, but it was pretty broadly based across kind of all lines of business, which is what we’re seeing from what’s in the pipeline when we look at it. I mean, it’s hundreds of opportunities across all of our business units.
Alex Lau: Great. And can you also comment on your ability to convert those treasury deposit pipelines in the fourth quarter? And has this ability to convert and improving with customers were willing to move balances now that March Madness close to a year ago now?
