Chris McGratty: Okay. Thanks for that. Just I guess the last question, just trying to square up all the outlook for margin and balance sheet. Would you – is it fair to assume that the trajectory of net interest income probably is €“ is obviously down first half of the year, but stable – is stabilization in the back half, kind of the goal? Or just kind of trying to figure out the trough in net interest income?
Eric Howell: Yeah, 100% accurate on the near term in the first half of the year and second half of the year is stable to potentially up the permier form with the Fed dose.
Chris McGratty: Okay. Thank you.
Eric Howell: Thank you.
Operator: We’ll take our next question from Matthew Breese with Stephens Inc.
Matthew Breese: Good morning.
Joseph DePaolo: Good morning.
Matthew Breese: I wanted to go back, Stephen, to your NIM commentary, you had mentioned in the first quarter, you expect the NIM to be down 10 basis points, but expansion by year-end. Could you just give us some sense for NIM performance in the middle of the year? Are we expecting down 10 bps in the first quarter, stabilizing and then bouncing back? Or is there additional downside in the second and third quarters?
Stephen Wyremski: I mean it is difficult to say given we don’t know what the Fed does. I mean we run various different scenarios. Is there – there likely will be pressure in the first half given borrowings as far as pretty certain on where we’re going to be at for the first quarter, but then depending upon where deposit flows come, where borrowings come, that really makes it challenging just going more beyond one quarter at this point, but would see stabilization to NIM expansion in the second half with borrowings rolling down. It is very difficult to project during one quarter at this point.
Matthew Breese: Okay. And then on the expense ramp that falls into these – to the other category, it’s been up significantly in the last two quarters. I’m assuming that’s related to some of the client costs. Can you give me some examples of what the largest drivers contributing to pretty close to like a $20 million, $25 million quarterly increase?
Stephen Wyremski: Sure, there’s two things. First, it’s just general activity levels are up, which we have expenses that are activity based with some of our vendors in addition to the fact that we have ECRs or earnings credits, that’s the other component to the driver there.
Matthew Breese: Could you clarify those earning credits?
Stephen Wyremski: So credits – that clients get based upon balances and activity that they have with us. They might be – might be – it’s like a rewards program, if you will.
Matthew Breese: Got it. Okay. And then my last one is just you know, I love your thoughts on the crypto regulatory front and implications to you, particularly on the back of the interagency guidance earlier this month. I’m curious in the wake of FTX if there’s been any reassessment on the institutional client book or the BSA, AML, KYC process front to make sure that there aren’t other instances of fraudulent activity. What changes actions have you taken? And what kind of comfort can you give us on the quality of the remaining client book?
Joseph DePaolo: Well, I’ll say this with FTX, it wasn’t a matter of BSA AML. Everyone thought that he was and he ended up being very made offline. So I don’t think anyone could say that they knew that, and we catch it. What we’re talking about regulation is we just want to know which way you go because we had Signet and we try to make enhancements on it, and some were okay by the regulators and some were not. It puts us in a difficult position as to what we do – what do we do next? And not knowing regulation-wise what’s going to happen puts us really at behind everyone else that is in the crypto world. I will tell you this. We’ve had – we’ve had a number of discussions with the regulators, and they seem to be waiting for other regulators.
So I don’t know if the Fed is waiting for the FDIC. The FDIC was waiting for the OCC. But I think they have to get together, meet with Congress because Congress was going to put some before the end of the year. Congress is going to put some of those across to get some loss put on the books for regulation. And they were not things that we thought were good for us or good for the industry. So we need to get them to get on the same level of field and give us some guidance. There’s no – I think what happens is when the regulations come out, that will eliminate a number of players. I don’t know if , but I would say a number of players couldn’t want to look to the regulation, whether it’s capital integrate or just doing AML DSA. But again, FTX was not a BMA AML.
It was a Bernie made of like a situation that no one really thought that Sam was a bad asset.
Matthew Breese: Understood. That’s all I had. Thank you.
Operator: Thank you. We’ll take our next question from Mark Fitzgibbon with Piper Sandler.
Mark Fitzgibbon: Congrats. Can you hear me?
Joseph DePaolo: Yeah, we can hear you now.
