Carl Carlson: inflation and merit increases and things of that nature. But nothing — as far as the cost savings, using the — what you framed out the $9 million down to $6 million, yes.
Laurie Hunsicker: Okay. Okay. Great. And then looking at PCSB, their margin was substantially lighter than yours was, and obviously, you just said, hey, we are probably going to restructure. Can you help us think about that a little bit more, I mean, I think, we are obviously very cognizant across the industry of watching funding pressure and everything else and you guys did a nice job holding the line that far. But as we look further out, we put your two banks together, there’s going to be accretion income, PCSB would otherwise drag you down. I mean, can you help us think about it directionally, if we were just to look out even into the June quarter, what that might look like?
Carl Carlson: Sure. So as Mark asked, are we planning on doing anything on the investment portfolio? So the investment portfolio gets mark-to-market when we buy the company and so you own it at market yields. So it’s actually better for us to sell those securities in the market and pay down borrowings, because the yields on the securities isn’t even — isn’t as high as the cost of borrowing, particularly when you look at the inversion of the yield curve. So we can pay down shorter term borrowings and higher yields, it costs us more money than what holding these securities that have longer duration. So I think you are following that part of it. So at the end of the day, it makes sense for us to pay down some of those. Now we certainly need securities for collateral purpose, for liquidity purposes and so we are not — you don’t liquidate the entire portfolio, but we will be reducing that portfolio and then paying down borrowings throughout the organization.
So that gives you a sense of how we will be structuring that. As far as the purchase accounting around loans, that we are still working on. So I really can’t give you a good insight on that and what that means to yields. But that will be something we will factor in. We will provide that information in an 8-K, probably in early March, you will get a sense of what that looks like and so hopefully that’s helpful. Their margin actually was doing better than what we had originally projected when we were first doing the analysis back in May. They did a really nice job of growing loans. Deposits, they have done actually did a fantastic job on deposits. In the interim, I think, the — it just shows the strength of having this yet another excellent market in the Lower Hudson Valley for us to be able to attract deposits and grow loans in that market.
I think that’s something that — it doesn’t happen in 45 days, but it’s definitely a wonderful long-term perspective for this. And as we bring additional services, particularly on the commercial side. But we have a lot of benefits on the consumer side as well, but particularly on the commercial side, whether it’s cash management enhancements, foreign exchange, we have our own swap steps that we can help out on the loan side. There’s a lot that we can bring to the table here and we are very excited about this.
Paul Perrault: Yeah. And they are, too.
Laurie Hunsicker: Good. Good. Okay. And just one, Carl, initially, you were closing at the end of the year, obviously, since you closed at the beginning that pushes off the Durbin, right, since the cross happened this year. So does that put us then in July 2024 instead of July 2023, just making sure I got that right?
Carl Carlson: You are absolutely right. That was one of the benefits.
Paul Perrault: One of Carl’s fancy moves.
Carl Carlson: It wasn’t a fancy move. It was not intended that way, but it worked out nicely.
Laurie Hunsicker: Okay.
Carl Carlson: You are absolutely right.
Laurie Hunsicker: It does save the $1 million, is that.
Carl Carlson: It does save us a little less than $1 million in over 12 months of revenue. And closing it a little bit later, the retention bonuses that we are going to have to pay for folks and things like that, a little bit less. Some of the contract payouts were a little bit more, because it was a year-end type of thing. But, so there’s movement in multiple directions on some of the merger charges, but largely in line with what we expected.
Laurie Hunsicker: Got it. Got it. Okay. And then maybe just with respect to pro forma intangibles, and I guess, it sounds like you are still marking everything. But can you give us just a rough estimation of what that’s going to look like?
Carl Carlson: Yeah. So what’s interesting is, just from where the yield curve was at the end of the year, they are in the process of doing that. It was worse than the marks — the interest rate marks in particular, that I will stay with that. The interest rate marks on the loan portfolio and the securities portfolio were worse than we originally expected. I don’t have the loan marks yet, but that’s still being worked on by folks and as well as the CECL adjustment is still being worked on. But the securities portfolio, I think it came in around $66 million or something like that underwater at the end of the year. And if you remember, I — we estimated to be — it was $50 million when we announced the transaction back in. So it was materially different and so that is a factor.
So you mark it as of 12/31. So don’t be surprised to see security gains in Q1 as we liquidate this because actually the curve has inverted further and so these securities are slight gains at this moment. So it’s one of those things that you have to work through in the accounting, a little funny on that. But on the loan portfolio, I would expect it to be a little bit worse than what we expect or worse, I don’t know how much than what we originally estimated to be when we first announced the transaction. CDI may actually be higher. So we estimate around 2% CDI and deposits naturally worth more than ever as rates have moved up 425 basis points this year. So those deposits become worth more, which actually — it’s not necessarily helpful, because that you have to amortize that as an expense going forward.
But it is a non-cash expense. Your tangible book value goes up as that amortizes down. So that’s just another thing for your models. But I don’t have those numbers yet. That’s still being worked on. It’s a little early after that.
Laurie Hunsicker: Okay. Great. And then just tax rate, how should we be thinking about that going forward?
