Aparna Ramesh: Yes. I think a couple of points, Bill, let me just unpack your question into two places. One, the modernization effort that we’re referring to that’ begun, has to do with our treasury platforms. And what we’re looking at and the good news here is that we expect to see an acceleration in the time line. It will run through 2024, but we’ll probably see some modest acceleration into this year. And that is likely to put a little bit of upward pressure on operating expenses, but we expect to see that fully be completed by the end of 2024 at the latest. If anything, maybe by the middle of 2024, it should all be completed. So that’s probably going to create a little bit of lumpiness just in our operating expenses as we start to move forward some of that into this year.
And then we’re also embarking on some other types of innovation that are a little bit more offensive in nature, some modernization, but things that we’ve done on our loan platform origination front. So that will probably get laddered in and staggered and some of those efforts are likely to spill well into 2024 and into 2025. But it’s too early to really ascertain what the magnitude of it is. But most of the modernization efforts are related to the treasury platform that we have a pretty good handle on. So given all of that and thinking through just how the rate environment might shift, we think that we’ll still be able to maintain that efficiency ratio of 30%. But certainly, this quarter, you saw us at about 27%. So we expect to see a little bit of an uptick trending up towards that 30%, but still staying comfortably in that range.
Bill Ryan: Okay. Thanks for taking my questions. I’ll hop back in the queue.
Operator: Thank you. And our next question today comes from Gary Gordon, a private investor. Please go ahead.
Unidentified Analyst: Thanks for taking my call. First, a few questions, if you don’t mind. First, my favorite one, what were your charge-offs for the quarter?
Brad Nordholm: Zero.
Unidentified Analyst: Zero, once again. Two, I was looking at the interest margin, which was pretty remarkable at 120 basis points. I noticed there’s something called fair value hedges on fair value hedge relationships, I have no idea what that is, that added about 7 basis points, and it looks volatile. This was an unusually good quarter. What is that? And is it basically nonrecurring or just volatile over time?
Aparna Ramesh: Yes. So Gary, this is just very fundamental to our business model because when we talk to you about core earnings and net effective spread, we really take out the effect of derivatives that we engage in purely for risk management reasons. So no volatility there. We’re not running a prop trading work or anything like that. But what it does – do is as interest rates continue to fluctuate, there’s an inverse proportion to those derivatives. And so you’re naturally going to see some noise that really results from that. So anything that’s really a fair value hedge has the effect of impacting our P&L, but – and that’s really why we have this metric of core earnings and net effective spread because that gives you a little bit more of a pure look at what our true margins are.
So essentially, that’s – again, since we’re not really doing this for trading purposes or to make – do anything other than really manage our interest rate risk. All of this will really revert to the mean over time if we hold these assets to maturity, which is really how we look at it. So that’s really what I would say about that number that you’re looking at. There is some volatility, but it’s not really meaningful to us from a profitability side.
Unidentified Analyst: Okay. But as a run rate, maybe the 115 basis points might be a little more practical?
