Bill Young: Understood. Thank you for taking my questions.
Nitin Mhatre: Thank you.
Operator: Thank you. Our next question comes from the line of Chris O’Connell from KBW. Please go ahead.
Christopher O’Connell: Hey. Good morning.
Nitin Mhatre: Good morning, Chris.
Christopher O’Connell: I appreciate all the detailed guidance. I was hoping to just start off on the fees. For the tax credit fees and the change in accounting on a year-over-year basis, where do you think that just starts off for kind of averages out for the year on that line item within the fees on the contractor.
David Rosato: I’m not exactly sure what you’re asking, Chris. What I would just say two things. The economic effect, the EPS effect of the change in accounting is zero. It’s just the geography between showing higher fee income, but also showing a higher tax rate. If you look back in the tables in the press release. We actually provide each quarter the details of the expense savings and the fee — contra fee revenue that runs through the fee income line. And you’ll see that, that business timing makes the numbers move around a little bit more, but the core is probably $600,000, $650,000 of positive economic benefit each quarter. So did — have I answered your question?
Christopher O’Connell: Yeah. I’m all set. And then just following up on the expense discussion. I appreciate the full year guide in the comments that you guys made. Talk a little bit about just the cadence of that given the charges that were taken in the fourth quarter, is that an immediate drop to start the year or is there some offsetting factors here in the first quarter?
David Rosato: Well, as you know, the first quarter, usually the comp line runs high just because FDIC expense, 401(k) matches, etc. So that’s just in the comp line. I guess the way I think about it is if you look at our numbers, the quarter-over-quarter, our top line was actually marginally down and occupancy and equipment was down. That’s to Nitin’s comments around at the top where we talked about two office buildings and some branch consolidations. What was up linked quarter and which is where the opportunity lies, but where things take more time is technology and communication expense up $710,000 linked quarter and professional and other services, which was $994,000. So in professional services, we also have regulatory examination fees and FDIC expense.
And everyone knows the pressure banks have been under on FDIC. But what’s also in there is use of consultants outside help. So that’s where we’re highly focused is core operating expenses and professional service expenses, that’s changing the way we do things that’s changing whether we do it internally or externally with partners, etc. That was the comment I was trying to make was there’s opportunity there. It will improve our efficiency rate show to Billy’s question. However, it’s not just a quick fix.
Nitin Mhatre: Hey, Chris. I would also add, David made that point earlier in his comments as well. Our outlook is calling for flat expenses like you pointed out. And I know I think the consensus was about 3% growth. So I think this is certainly better than that. And I think that’s where maybe the industry will be. But for us, the most important is it’s an ongoing focus. And secondly, we also self-fund the investments that we will continue to make that will improve our revenue line as well. So that will cumulatively impact favorably our efficiency ratio.
David Rosato: Yeah. And just last comment, Chris, is I mean you did ask about essentially quarterly expenses and what are they going up or going down, right? I would peg it as very steady, would be our thought. There may be 1 million plus or minus, maybe even a million in a quarter (ph) variation quarter-to-quarter, that’s kind of the way we see it, but nothing significant in that from our perspective.
Christopher O’Connell: Helpful. Thanks, David. And just last one for me, if I could. Can you just remind us of the percentage of loans that are floating would reprice immediately any Fed funds.
David Rosato: Well, the whole book is 57% floating, 43% fixed. A vast majority of that 57% is SOFR and Prime. So almost immediately, right? So for it tends to be one month. There’s a little bit — there’s a few hundred million dollars of one year T-bill based there. But for all intents and purposes, think of it as one month — overnight to one month repricing on that 43 — I’m sorry, 57%.
Christopher O’Connell: Great. That’s all I had. Thank you.
David Rosato: Thanks, David.
Nitin Mhatre: You’re welcome. Thanks.
Operator: Our next question comes from the line of Mark Fitzgibbon from Piper Sandler. Please go ahead.
Mark Fitzgibbon: Hey, guys. Good morning.
Nitin Mhatre: Good morning, Mark.
David Rosato: Good morning, Mark.
