Gary Tenner: Okay. No, I appreciate that. Sorry, I may have misunderstood your earlier comments. It was really more about the mix of deposits that impacted the — overall.
Scott Kavanaugh: No, I think based — yeah. As we had to shift from these ECR type balances into interest-bearing deposits, I think what Jamie was trying to convey is actually, our — the cost itself was slightly lower on a blended basis.
James Britton: Right.
Chris Naghibi: And exiting the year, just I know they’re not identical to interest-bearing deposits, but exiting the year because those balances were lower or heading lower through the quarter, the monthly run rate on expenses for December was $3 million. And so I think as you’re thinking about costs going into the first part of ’24, while those will come back up as the customer service deposits return, the cost is going to start at run rate from December as opposed to average rate for the fourth quarter as a whole.
Gary Tenner: Great. And absent of Fed cut and second quarter probably a little more kind of normalized level.
Chris Naghibi: Second quarter for sure. Absolutely.
Gary Tenner: Okay. I appreciate that. And then if I guess one more, just in terms of the expense line excluding the customer service costs, I know there’s some comments, obviously, a lot of heavy lifting this year over this past year with regard to controlling expenses and reducing costs. Where do you anticipate that line again ex the customer service costs in 2024 versus ’23? All these may be versus the fourth quarter run rate is a better way to think about it.
Scott Kavanaugh: Yeah. As I mentioned, you are going to see a little bit of a reset in the compensation and benefits line going here into the first as we hit the annual salary adjustments for our teammates and just the normal tax adjustment period. The other expense lines I think are relatively stable from where they were on the fourth quarter run rate. Let’s see.
Chris Naghibi: Yeah. I think as you get into the year, one thing to keep in mind just in conjunction with some of the more difficult decisions that we made in 2023, and you may recall, one of the line items was reduced incentive and compensation or benefit expense for our teammates as a whole. And so as profitability normalizes, I would expect that to return to more historic levels. And so you may see a slight tick up in the rate outside of just normal growth with business activity in the balance sheet as that right sizes back to more historical levels. But it’s important to note that we are, as we said, remaining laser-focused on that, and that will rise in conjunction with revenue and profitability overall going forward. It’s not something that we’re just baking into our plan. We’ll take a measured approach to bringing that expense back in.
Gary Tenner: Okay. So in other words, you’re not recurring for that out of the jump in the first quarter. You’re going to wait to see the revenue and profitability improve. A – Scott Kavanaugh
Right.: A – Chris Naghibi Correct. Yeah.
Gary Tenner: Okay, all right. Great. Thanks very much.
Scott Kavanaugh: Thank you.
Chris Naghibi: Thank you.
Operator: That is all the time we have for the question-and-answer session. This will conclude today’s conference call. We thank you for joining. You may now disconnect your line That is all the time we have for the question-and-answer session. This will conclude today’s conference call. We thank you for joining. You may now disconnect your line.
