We’ll give you some more color. Pricing is very low on those deposits.Chris O’Connell Great. Then just in general, how are you guys thinking about overall deposit pricing going forward, and I guess post the crypto exit, do you guys have a sense as to maybe where a NIM range would be following that exit?Greg Sigrist Well you know, working backwards, we’re more focused on NIM and, frankly, more on net interest income, Chris, as you know, and just dropping the economics to the bottom line. I think as we kind of work through the transition with the rest of crypto, I think if we have to go out and borrow funds short term, which I think is 50/50 at best, I think, but if we did, I would see some modest NIM contraction, which means just a slight uptick in cost of funds as we went into the wholesale market short term.
When you look out over a couple–you know, to the end of the year and you look a slightly longer horizon, just quarter on quarter, I think we get back to the same NIM level we’re at, frankly.The question marks are really going to be around short term rates – you know, are we looking at one more increase or not. Obviously that would be a headwind to us, given we are modestly liability sensitive; but again, I think that’d be a modest impact. I’m not really seeing any significant pressure, rate pressure on the rest of the deposit base.We continue to model out at a 70% deposit beta on interest-bearing deposits, which I think through the cycle so far, that’s been a fairly conservative assumption. I think it still is particularly as we get to the tail end here, so hopefully that gives you some context on how we’re thinking about it.Chris O’Connell Yes, that’s helpful.
Then just on the expense run rate going forward, I know the professional or legal fees were a bit elevated here and you had the one-time CECL unfunded commitment within other expenses. I guess just backing that out and looking ahead, how are you guys thinking about the operating expense range on a go-forward basis?Greg Sigrist Yes, two things. The CECL impact for the off-balance sheet commitments, that actually went to retained earnings, not to the other expense, Chris. I know that other expenses were slightly elevated in the quarter, and that’s frankly just a combination of a lot of little stuff. I think there’s just some one-off stuff in the quarter and that settles back down.But you know, we’re always more focused on return on tangible common equity, which again in the quarter at 17.4% was very, very strong.
We’re going to continue to invest in the business – that’s the wild card for us. This is just about a run rate and maintaining what we’ve got. I would tell you that the efficiency ratio would stay in a range in the mid 40s. For us, though, we’re standing up an EB5 team, we’ve got some other initiatives we’re standing up that are going to impact that run rate, but as we always say, they’re going to have some immediate returns to them.To me, the operating expenses, we’re going to try to keep them in that efficiency ratio in that mid-40 range as we kind of work through these things, because we feel like we can continue to self fund the investments as we work through standing up any new programs. Chris O’Connell Got it, and last one from me, given your capital position and kind of overall balance sheet liquidity, as well as where the stock’s trading on valuation, have you guys considered a share repurchase plan, and any color or thoughts around whether that is being considered?Greg Sigrist I’ll start and Mark can fill in the gaps.
We’ve absolutely considered it and had that discussion with the board over the balance of the quarter. If we were a much more mature bank that couldn’t grow loans the way we could and couldn’t grow organically the way we could, I think we would give a lot more consideration to it. The reality is we are at an inflection point, I think across the industry. We really feel confident in our business model and in our ability to continue to organically grow our businesses, so it just seems a bit counterintuitive. We appreciate and understand where the share price is. We think that’s going to right-size itself as we continue to execute on our business plan, but we still feel that the highest and best use of our capital is supporting the growth of our businesses, which will drive more shareholder value as we go through time.Chris O’Connell Great, thanks for taking my questions.Greg Sigrist You’re welcome.
Thank you for asking.Operator We’ll take our next question from Alex Lau with JP Morgan. Alex Lau Hi, good morning. Could you talk about what you saw in terms of deposit flows in the month of March following the closing of SVB and Signature? Were you opening accounts given that you’re in the same market as Signature, or were you seeing clients move funds out to diversify for deposit insurance? Thanks.Mark Defazio We actually–unfortunately, we were opening up accounts starting as early as the Wednesday before the weekend when the announcement happened, so we had opened up hundreds and hundreds of accounts primarily coming from Signature Bank, a little bit coming from First Republic as well. Remember, in many ways, Signature and MCB share a lot of the same clients as it relates to commercial real estate and commercial lending, so we already had a relationship, I would say, with about 80% of the clients that moved accounts over.
Yes, we didn’t see any from the commercial bank. I’m sure we had some, but it doesn’t resonate to me that we had any major outflows from the commercial bank at all.Greg Sigrist Yes, to Mark’s point, we really started opening up the accounts, I think the Wednesday was the March 8, and as we kind of rolled through to Friday and then into Monday the 13th, we saw net deposit growth really every day as we went through that following week. It was really–frankly for us, it was a business as usual footing the entire time. We clearly were sensitive to the potential impacts to liquidity that you can’t predict, but we probably at the margin lost a couple of deposits here and there, two or three, pulled some corporate uninsured deposits out, but that was more than offset by the inflows from what we saw, the new account openings we saw.Again, I kind of embedded it in my comments, but when you think about where we were beginning to middle of March versus where we ended March, and you look at our retail and the deposits with–you know, retail deposits with our loan customers, a lot of that growth really came from March 8 to the end of the month.Mark Defazio One other thing, Alex, you should know that during that period of time, it was an extraordinary effort because the type of accounts that we were opening were real operating accounts that needed a whole suite of financial services, not just a reserve account or a single–you know, one operating account.
We’ve now expanded and deepened the relationships substantially with a lot of clients within their franchise from a commercial perspective.Greg Sigrist Yes, and when you go through a dislocation, a liquidity issue across the industry that we have, you really figure out whether or not you’ve got a quality deposit franchise, especially as a commercial bank, and we feel really, really comfortable with the relationships we’ve got. I think as you kind of see what happened to our deposit base during the quarter and then particularly in March, to me it just signifies the strength of our deposit franchise, which is fantastic.Alex Lau Thanks, that’s great color. As a follow-up on the EB5 team news, are you active in adding any more talent that may be available from market disruption?Mark Defazio I mean, we’re a growth company so we’re always looking for talent.
We historically have–we haven’t really benefited from something like this before, but we’re always out there, people are reaching out to us, and of course we would keep an open mind to it, but you know, it’s not a focus of ours. We don’t believe in poaching, but if there’s a disruption or if there’s an opportunity, we’d surely consider it.Alex Lau Got it. Then on the fintech-related deposits being down in the quarter after growing in 3Q and 4Q, you mentioned some outflows at the end of the quarter. How confident are you in growing this segment in 2023 on a year-over-year basis?Mark Defazio Yes, I’m very confident, and I think as Greg mentioned, a good part of that is normal outflows because, remember, those companies are in the payment space, so there’s that fund flow that we’re very used to and we understand the behaviors of those deposits.
We expect those deposits to come back and I think you’ll see–I know you’ll see net growth out of the GPG deposits year-over-year.Alex Lau Thanks, and do you think you can grow non-interest bearing deposits excluding crypto in the year, or is there still some balances that are at risk of moving to higher cost alternatives?Mark Defazio Yes to all of the above. We will continue to address some clients that want to go into treasuries, and there’s nothing we can do with that; but I think that conversation is abating quite a bit. We’re not having as much discussions about interest rates with clients of late, so that’s a good thing. Non-interest bearing accounts, we will definitely continue to grow because we’re a commercial bank, and as we grow the loan portfolio, you will be bringing on non-interest bearing operating accounts, so there’s no doubt.Again, as you know, we’re obsessed with net interest margin, so it’s not necessarily the cost of funds but it’s about NIM to drive top line net interest income.
I think you’re going to see, starting in the second quarter and throughout the rest of the year, and of course we’re looking well beyond ’23 right now – ’23 is sort of baked into the cake. We’re really working on ’24 and ’25 right now in many different ways, so the answer is yes to all of the above.Alex Lau Thank you.On the interest-bearing deposit cost for 1Q being above 3% now, what are the spot rates that you’re seeing for interest-bearing deposits?Greg Sigrist Well, we typically don’t publish rate sheets, Alex. I’d rather not get into it. I think a lot of what we’ve done, though, is we are willing to pay up for incremental new deposits coming in from either existing customers or new relationships, which again we’re trying to stay well inside of effective Fed funds when we price anything of that nature.
I think that’s also been influenced–actually, strike that last part. I’ll put a period after what I’d said previously.Mark Defazio Yes, so I’ll just expand a little bit. Similar to the loan pricing, we don’t have a history of putting out, like Greg suggested, like a rate sheet. Same thing on the liability side. We’re relationship oriented, we’re talking to clients all the time, and I guess you can say we negotiate rates on a client-by-client basis or on a transaction-by-transaction basis, actually on an account-by-account basis. It’s hard to say. There is no absolute rate that is set for money market, if that’s what you’re looking for.Alex Lau Thanks. Then on expenses, the last quarter you mentioned there were about $2 million in legal fees, expected to moderate in 1Q levels; but you also mentioned that it’s still a little bit elevated.
What is a good run rate for the professional fees line for 2Q? Thanks.Greg Sigrist Yes, my crystal ball is a little broken just because as we stand up some of these new programs, it is going to add to those lines. I think with the legacy, both the Voyager bankruptcy as well as the work on the settlement, that’s really winding down. In the quarter, that was probably elevated by about a million dollars, Alex, so I think that as we kind of find that new normal in the second quarter, which is going to again include a bit of some new spin which I think going to be modest, if I was going to reduce or assume there was a million of just elevation in the quarter, that’s probably not far off.Mark Defazio But we do have some legal expense associated with setting up EB5 and so on.Greg Sigrist Exactly.Mark Defazio Again, look well beyond–look at results and look at operating leverage and where we end at the end of the quarter as far as earnings and return on tangible common equity, is really at the end of the day what we strive for.Alex Lau Thank you, and then on GPG fee income, saw some strong growth in the quarter to $4.9 million.
