Mike Mayo: Can you give any specifics for the year? I know it’s not always your style, but in terms of expense growth for the year or what the savings are from the elimination of all the tech contracts, or even just if I think of investing along a J-curve, seems like you’re on this tech journey, like a lot of others are, and some are still in the investing phase and some are in the harvesting phase. When do you think you go from investing to harvesting on this broader tech strategy, which seems to be impacting your expenses?
Michael O’Grady: Yes, so I’ll answer both but then let Jason add, too. We are clearly in the investing stage, but I would say–you know, and you’re always investing of course in that, because the needs change over time, etc. But from a cresting perspective, etc., we’re more towards that than we are away from it, if that makes sense. In other words, we have gotten a lot done in the last couple of years on that front, so that’s my view. Then as far as the expenses, we talked about for the year expenses at 9%, so that’s the part where we’re saying that doesn’t work, and so how do we bring that down. Now, there is still going to be growth in expenses for the year because there’s certain aspects that just carry into the year, right?
You do have base pay increases that flow in and you do have some of the technology costs that are amortizations that just come into the year, but outside of that, you’re trying to do everything you can with productivity to offset other increases.
Mike Mayo: All right, thank you. Oh, you said Jason was going to follow up?
Jason Tyler: Well, I can give you a little bit more color on the year, if it’s helpful, and whatever information is helpful, obviously I’m happy to give what we see at this point. But one thing as you’re thinking about the next several quarters, not just the next one, is outside services was elevated and lots of things happening there is fourth quarter. Some of that is episodic, some of that has–I’m sorry, other expense, some of that is episodic agency expense, supplemental pension plan. Some of those have more of a longer term trend, so think travel, marketing – that was actually up $8 million over third quarter, that’s likely going to stay elevated. But some of these were episodic, and so we don’t think we’re going to see other expenses at $107 million.
It should even–that should quickly unless– and some of it’s out of our control because things like the supplemental pension plan are market affected. But that should get to below $100 million and hopefully stay that way going forward. Then you just think about the impact also of compensation. Just to give you some color there, we know base pay is going to come online in second quarter – that’s going to be a $20 million lift, and then to severance activity, we think that’s going to help us help offset that a little bit, probably $5 million to $7 million on a quarterly basis starting in second, third quarter. Then we’ll have some additional hiring, but that’s going to be in line with the growth of the business. That at least gives you a sense of some of the line items.
The last thing, visibility on equipment and software, the depreciation lift that we got coming into first quarter, that levels out a lot. There’s some growth, call it a couple million dollars a quarter after that, but nowhere near this level, so a lot of the–that’s where you get to what’s the impact of that hundreds of contracts coming out. We’re starting to flatten that depreciation and amortization line which sits within equipment and software, which has been the fastest grower. It’s just reflective that we’ve gotten a lot of work done.
Mike Mayo: Okay, thank you.
Operator: Thank you. We’ll take our next question from Gerard Cassidy from RBC. Please go ahead.
