Betsy Graseck: Hi, good morning. I heard all the commentary around the expenses and the efforts to slow the growth rate as we go forward here, but maybe you could help us understand maybe the pace at which you think you can do that, because when I strip out the one-timers from the expense ratio, it still looks like the expense ratio moved up a bit, around 400 basis points Q-on-Q. How should I think about the trajectory from here? Does it stabilize where it is, is there still some push up from here, or should we expect that the arc begins to come down in 1Q? How should we think through that?
Jason Tyler: Well, it doesn’t stay where it is, and it certainly doesn’t increase over time. That expense ratio needs to come down. You’re talking about, I assume, expense to trust fees, and so a few–
Betsy Graseck: Yes.
Jason Tyler: Yes, a few things to think about. One, and we can get into more detail on it, but in the short run at least from an expense perspective as we think about what first quarter is going to look like, I can give you some thoughts there, just as you start to model out what does it look like. Compensation is obviously our biggest line, and so we’ve got to start there. We’ve got the $30 million, which you indicated even pulling that out, so what does that look like going forward, we actually think that in general, that line item should start to flatten out in the near term as some of those severance-related activities come online, and we should get a benefit from that. To your question on timing, we should get a benefit on it this year.
We’re not going to get the benefit of it right away, but a significant portion, more than half of the actions we’re going to take with severance, we’re anticipating to take place by the end of the first quarter, so we’re going to start to see benefit of that. We’re going to backfill some of those roles, but they’re not going to be in expensive locations. This is very–this is less about us addressing FTE or headcount and it’s getting at what the economics are, which is the salary run rate line for the business showing up in comp. We’re going to get a benefit of that this year, and so as you think about first quarter, don’t forget that we’ve also got retirement-eligible incentives coming online. That hits $50 million in that quarter, but that’s very predictable and seasonal.
The other dynamics for compensation, I’d call it a wash as we think about going into first quarter. Then equipment and software is where we’ve seen a big uplift over the last couple years, and we talked a few weeks ago externally about the fact that we thought that line would be at about $225 million. It came in higher at that at $229 million, but that difference–100% of that is the $3.8 million contract termination we decided to do very late in the quarter. Otherwise, we feel like that line item is starting to flatten out as well. We’re going to have–we will have a step-up as we come into first quarter, but we think beyond that, that line item is going to flatten out. That’s obviously where all of our depreciation is, but we’re going to see an uplift of about $12 million in first quarter in equipment and software.
One hundred percent of that is coming from depreciation and amortization, but other than that, we’re anticipating that line item to start to flatten out. We’re not going to see this kind of growth going forward. Then the other side of it is, as we think about trust fees and growth in the business, that’s going to help the ratio that you started with as well. Mike, I don’t know if you want to talk more strategically about how you’re thinking about this?
