Steven Alexopoulos: So if we work through the expected decline of the digital deposits and then the capital call loans, all in, I’m trying to understand when the balance sheet will stabilize. Do you think most of this is front-end loaded? Do we get to the point in the second half where we should expect the balance sheet overall to be fairly flat? Can you just take us through this year when we should expect to see a bottoming in that eventual growth in the total balance sheet?
Stephen Wyremski: Yes. I mean, Steve, we’re working hard to get through these digital outflows in the first quarter, second quarter. We could see some of that bleed into the third and fourth quarter, but we’re really trying to have this done as quickly as we can, right? So we’re going to see decline probably in the first and second quarters in the overall balance sheet. By the time we get to the third, we should see that stabilize. And again, we’re hopeful that we could see deposit growth which we have it thus far this quarter, which is great. And we’re hopeful as we get to the second part of – the half of the year, that we’ll see some growth from there.
Steven Alexopoulos: That’s helpful. And then on the digital asset deposits, Joe, the original appeal of these deposits was it would be a lower cost funding option, right, which is not necessarily proving to be the case. I’m curious, given the extreme volatility, right, the drawdown, will you be able to lend those deposits out? Is your original case to be in the business still stand? And how do you think about this from a long-term view? Thanks.
Joseph DePaolo: Well, long term, I think it helps having time. But in the short term, we clearly don’t have any evidence or any past history that gives us a comfort level that we should do something long term with those deposits. So we’re going to keep them short for now.
Steven Alexopoulos: Okay. But you guys are still committed to the business long term at this stage, just kind of define materially.
Joseph DePaolo: Yes. We’re committed to the business. We think that it’s not going away. Let’s put it this way. It’s not going away. And we have a number of examples that show that it’s not going away. If you think about the government, if we could get the regulators and Congress on the same wavelength, they would give us regulations that we could follow and then others could follow. What this ecosystem needs is regulation. We need to be able to function where the economy is confident. Having this FTX situation clearly put a lot of confidence in that ecosystem. Now what we need to do is to get regulation, get confidence back in the system and we can go from there. It occurs to a lot of people that when you do innovation, you always – in the initial part of the innovation, there’s always looked upon initially down upon.
And that’s what I think is the situation here. There’s new financial innovation is being looked out upon. And we believe that somewhere in the next few years, the banking system as it conducts transactions today will not be the way they conduct transactions tomorrow. So we’re very much in tune to wanting to support this ecosystem.
Steven Alexopoulos: Got it. Okay. And if I could ask one final one, just following up on the inflows of traditional deposits you saw, what you’re calling out in the release, the $2.5 billion. I might have missed this, but what type of deposits was that you saw such strong growth with those low-cost deposits. Can you give us some context around that? Thanks.
Stephen Wyremski: Sure. So we’ve seen some growth in specialized mortgage banking. They’ve continued to build up their balances after the year-end escrow and tax outflows. Our fund banking business is up a couple of hundred million as well. And then our New York private client banking teams, we’re also seeing some growth there as well. To your cost question, we’re seeing the traditional 30% to 35% of noninterest-bearing as we add these deposits back.
Steven Alexopoulos: Okay, perfect. Thanks for all the color.
Joseph DePaolo: Steve…
Steven Alexopoulos: Yeah…
Joseph DePaolo: I want to just follow up on the question that you had asked earlier about being in the system – crypto space. Every major bank – well, maybe not every major bank, but many major banks are in the space, maybe more internationally than domestically, but they’re all there. And what really should be confidence that the market was, I said, FPX, almost Bernie made off-line. And that when Bernie made happened that shook the market, this shook the markets. Again, I’ll say it again, we need regulations, so we need the regulators and Congress to get on the same page.
Steven Alexopoulos: Great. Okay. Thanks for the color, Joe.
Joseph DePaolo: Thank you, Steve.
Operator: Thank you. And we’ll take our next question from Jared Shaw with Wells Fargo Securities.
Jared Shaw: Hey. Good morning, guys. Thanks.
Joseph DePaolo: Hey, Jared.
Jared Shaw: You know, maybe just a couple of follow-up detailed questions. On the borrowings, you said borrowings were down quarter-to-date, but you’re expecting them to go back up. So is that to grow from year-end numbers as we see these deposit outflows? Or just maybe give back some of the flow that we’ve seen year-to-date?
Stephen Wyremski: Certainly, Jared, certainly dependent upon what traditional deposit flows are, but all else being equal, that’s flat, and it would just end up replacing some of what we’ve paid down thus far. So I wouldn’t expect it to be significantly different from where we ended as of year-end. There’s some ebb and floors dependent upon what traditional deposit flows might end up being.
