Art Bacci: Yeah, Russell, this is Art. That was really a one-time item. We had moved some accounts to a different billing platform and, in doing so, realized that we had about $1.3 million overstated in deferred revenue. So, that was the impact of this quarter’s revenue was the $1.3 million. That’s really a one-time item. In addition to that, there’s just some seasonality both in the trust company of Delaware activity and in the institutional trust business. There is usually a rush to get trust and securitizations done at year-end. So, that, when you compare it to linked quarter, is definitely going to be down somewhat. But if you compare like our institutional trust business to a year-ago quarter, we’re actually up year-over-year. So, I think the pipeline is still very robust and we continue to still feel comfortable in the outlook we provided in terms of the growth of our fee businesses.
Frank Schiraldi: Okay. So that $1.3 million is a hit to revenues this quarter and will come back out?
Art Bacci: Yeah. So, we’ll earn it back as it was deferred revenue.
Frank Schiraldi: Right. Okay. And then just, wonder if you could give a little more detail or a little more color on NIM. Obviously, you have the guidance out there from the beginning of the year and you’ve mentioned you guys are kind of on track there. Just looked like there was some maybe excess liquidity in the quarter that helped drive NIM lower. And I don’t know if that’s in part an arbitrage opportunity. And just wondering how that kind of fits in with your NIM outlook and any kind of color in NIM moving forward from 1Q.
Art Bacci: Frank, the NIM really was, I would say, the first thing that really impacted most was just an increase in cost of deposits and funding. It went up 17 bps. And just to give you some color, in March, cost of funds only increased 2 basis points. So, as Rodger mentioned in his opening comments, most of that increase was early in the quarter and it was because of the lag in repricing deposits. We still see kind of a plateauing of our NIM in the second quarter. The other contributing factor, little — to some degree, was the ironically as the AOCI or the mark on the investment securities portfolio declined, the yield actually goes down because you have a higher balance. So that was another roughly 9 basis point decline on the mortgage backed securities.
So, short answer is, we continue to believe very confidently that second quarter will see the lower point and that the NIM starts to kind of accrete back up in the second half of the year, namely because of the paydown in the mortgage-backed securities portfolio and redeploying that cash flow into either loans or even if we put into Fed funds, it will be a 300 basis point pickup in yield there.
Frank Schiraldi: Okay. And I’m sorry, just to clarify, Art, you said down — I think you said deposit costs were down 2 basis points in March?
Art Bacci: The deposit costs only increased 2 basis points in March relative to February, yeah. So, like I said, that 17 was mostly — 17 basis point increase in cost of funds for the quarter that were in the first half.
Frank Schiraldi: Okay. Great. Thank you.
Art Bacci: You’re welcome.
Operator: Your next question comes from the line of Feddie Strickland from Janney. Your line is open.
Rodger Levenson: Hi, Feddie.
Feddie Strickland: Hey, good afternoon, everybody. Just wanted to ask, how much repricing opportunity do you see on fixed rate loans in the near term that could potentially move the needle on loan yield? Or do you think yield stays kind of where it is at this point, just given the floating portion of the portfolio?
Steve Clark: Hey, Feddie, Steve Clark here. Really there is no significant repricing opportunity in our fixed rate commercial loan book. I think yield will be fairly consistent throughout the rest of the year unless the Fed increases rates given our variable rate loan book. So, all things being equal, yield should still be in that 7% — low 7% range going forward.
Feddie Strickland: Got it. That’s helpful. And then just wanted to switch back to — I was surprised at the level of asset growth this quarter and earning assets. I know you talked about having a little bit of extra liquidity there. Can you talk through what drove some of that, and what we might see next quarter in terms of asset growth?
Art Bacci: Yeah, Feddie, this is Art. I think really when you look at the earning asset growth, there’s probably a $300 million or $400 million there of excess liquidity above the prior quarter and that’s because in the first quarter, we did take down about $800 million of bank term funding, refinanced some we had and we actually took advantage of the lower rate and the fact that we could borrow at face value of the securities. Going forward, I’d still say that’s probably flat generally to this quarter. I think usually in the second quarter, we’ll see some more significant cash flows coming in and out because of tax payments. So, the tax receipts and the tax payments going out will elevate some of the — keep that cash a little bit more elevated for the quarter.
Feddie Strickland: Thanks, Art. That’s helpful. And then just one last question going back to charge-offs. I know the guidance is 50 basis points to 60 basis points this year and you came in well below that. Is the variance versus guidance just effectively driven by what you’re expecting, or what we should expect from the consumer book over time from NewLane and Upstart? Is that pretty much the delta between what we saw in the first quarter and what we potentially see in future quarters versus the guidance?
