Ken Lovik: That’s on the payment processing side of things. That’s really just a transactional fee on the ACH clearings where the income comes into us, George, is we’re in the lending side of things. Today, we’re getting and obviously, it’s kind of the buyer’s market today as the fintechs are having some issues and concerns out in the marketplace. We’re adjusting pricing on a unit-by-unit basis, both on a fee, on a transactional play as well as base fees for the ongoing monitoring. So, revenue is going to increase, but as we said, we went up 83% fourth quarter over third quarter. And I would tell you, it will be up probably double that by the end of the year. So, we’re looking at this year, we had probably about $1 million, right at $1 million, little over $1 million in revenue out of BaaS. Next year, it will be closer to $2.5 million in total revenue.
David Becker: Yes, the added piece too on payments volume is just more deposit activity because you have higher balances there. So, if you look at the line item that’s the BaaS broker deposits, you saw that go up. I mean, that kind of goes up in line with the volume of payment volume processed.
George Sutton: Perfect. Thanks, guys.
David Becker: Thanks, George. Appreciate it.
Operator: Thank you. Your next question is from John Rodis from Janney. Please ask your question.
John Rodis: Hey, good afternoon, guys.
David Becker: Hey, John.
Ken Lovik: Hey, John.
John Rodis: Ken, David. David, I guess a question for you or maybe I guess Ken really. But David, you mentioned sort of $3-ish for this year in earnings. I guess the question is for you, Ken, what sort of tax rate would that assumes? And then, how should we think about provision expense?
Ken Lovik: Yes, I think obviously our tax rate this year was wonky because of what went on in the first quarter obviously, we had the charges on shutting down mortgage and we had the large charge-offs. So, we kind of started the year in a loss and reaped kind of a tax benefit throughout the year. And fourth quarter had some additional state tax adjustments in it as well. So, I think as we forecast and we’re forecasting obviously quite a significant increase in net income, but net income for the year. So, the way that we’re modeling it right now internally is about a 12% tax rate, effective tax rate. And then, on the provision side, historically, our quarterly provision has kind of been in the $1 million to $1.5 million a quarter.
Back out one unusual events in the first quarter of last year. But we’ve kind of seen that charge-offs creep up a little bit at least relative to what we’ve done historically. So, we’re modeling more like a $2 million to $2.5 million provision a quarter versus which is higher than our historical average. But trying to be kind of in line with what we’ve done over the last few quarters.
John Rodis: Yes, makes sense. So, but probably not as high as you saw in the fourth quarter, Ken, on the provision?
Ken Lovik: No, no.
John Rodis: Okay. Okay. One other question on the balance sheet, just can the size of the securities portfolio, all things equal, continuing to see decent deposit growth. Will those securities portfolio be flattish or maybe trend down some?
Ken Lovik: It would probably — I would look at it as maybe the percentage of the balance sheet that’s in security should remain consistent over the course of the year. I mean, it is the securities portfolio is a source of liquidity. So, I would just view it in terms of being a consistent percentage.
John Rodis: Okay. Thank you, guys.
David Becker: Appreciate it, John.
Ken Lovik: Thanks, John.
Operator: Thank you. Your next question is from Nathan Race from Piper Sandler. Please ask your question.
Nathan Race: Yes. Hi, guys. Good afternoon.
David Becker: Hey, Nate.
Nathan Race: Just a question on kind of the outlook for deposit growth and the sources there and kind of what are you seeing in terms of the blended rate on deposits coming in the door across the various channels that you guys are generating deposit growth across?
David Becker: As I said earlier, right now we’re seeing on the CD side, we’re seeing new volume come in around a 4.8% range. And on the other side too like the fintech deposits that we talked about a little bit earlier, I mean those can range anywhere from say a Fed Funds minus 100 to a Fed Funds minus 50. We are still having success on small business checking, that we can grow that business. That would be fantastic, because we’re paying 50 or I think maybe 80 basis points on that. That’s very low cost funding. In the money market side, we have different tiers and the heaviest side of that. The two-thirds of that is we’re kind of paying a rate anywhere from 3.4% to 3.6%. So, money that’s coming in the door is that kind of yield. So, we prefer the lower cost sources that we can, but the CD side is certainly very consistent.
Nathan Race: Okay, got it. So, it still sounds like if you’re putting new loans on the portfolio around 8% versus those blended rates, I mean it’s definitely margin accretive even if you don’t use some of the cash on hand to fund loan growth going forward?
David Becker: Yes, absolutely. Yes.
Nathan Race: Got you. Okay. Shifting gears a little bit on credit, I’m curious, outside of the handful of loans that you guys called out within the franchise and SBA portfolio, just curious more broadly what you’re seeing in terms of credit migration to criticize classified across those two portfolios in particular lately?
