Tony Martino: Yes. So, I don’t have the expected cash flow handy, in terms of expected duration, I mean, we were — we had disclosed approximately four years as an expected duration in third quarter. That’s substantially reduced. It’s closer to 1 — at present 1 to 1.5. And in reference to, again, what Alan was mentioning in terms of risk-based capital ratios, a significant amount of those securities are now at zero risk weight or 20% risk weight. So, significant change between the third and fourth quarter end.
Operator: Our next question today comes from the line of George Sutton from Craig Hallum.
George Sutton: Thank you. Also on the call you did not hear from Signature, they suggested a bit of a de-emphasis of the digital landscape, and you are clearly trying to indicate a continued importance relative to how you are doing your business. I just wanted to think about that in the context of the offboarding of clients that you mentioned. Can you just give us a sense? I assume this is a relatively small number, and can you give us any sense of the additional scrutiny that’s been taken to make this decision?
Alan Lane: Yes. George, I’m going to pass it over to Ben for that first part of your question. But as to additional scrutiny, let’s just dispel that right now. And let’s just frame it in the context of we’ve been doing this business with the full — focused on regulation and risk management for nine years. We went into this business very intentionally in 2014. We engaged with our regulators that year to say this is — and at the time, as I’ve said many times before, it was Bitcoin only. And we were essentially describing to our regulators at the time, this is what Bitcoin is. These are the types of institutional market participants that are coming into this space to invest in Bitcoin. Obviously, that has expanded now to other digital assets such as Ethereum, Stablecoins, et cetera.
But for the entire tenure of this business, we have been operating with a fully regulated offering, and with the requisite regulatory scrutiny, if you will, in terms of looking at our program every single year. And so, any decisions that we’re making to trim products and/or customers are really business decisions and not related to any specific scrutiny, as you said. But Ben, do you — would you like to comment further?
Ben Reynolds: Yes. So, thanks for the question, George. It was a difficult decision to offboard some of our non-core customers. It was our choice though. And I think it’s an example of our focus on operating a profitable business in 2023. As with any business, over time, you end up accumulating customer relationships that simply aren’t profitable because even they end up being smaller than what they had originally expected, or they don’t end up using your core products. Consistent with the comments Alan was just making, it probably isn’t a surprise to anyone that there are significant compliance and operational costs associated with every customer that we serve. So now more than ever, we want to be deliberate in working with clients that are adding value to the platform.
Maybe the last thing I’ll say is that — and I think it is important to highlight that while we expect to offboard some of our non-core customers, we do expect that if there’s a negative impact to deposits fee income and send metrics, that it’ll be less significant than you might expect because these are smaller relationships overall and tend not to use our core products. But thanks for the question.
George Sutton: So, my follow-up is related to the broader market. Obviously, none of us are smart enough to know the future per se, but very quickly Bitcoin and the broader crypto markets have turned higher. I’m just curious if we could talk about your flexibility to grow again potentially aggressively, if that is the environment in front of us. Not saying that it is, just curious if you have the flexibility that you’ve had in the past to move forward.
Alan Lane: Yes. George, it’s a fair question and I might tie the answer to one of the earlier questions that where one of your colleagues was commenting on the composition of our balance sheet at year-end. And clearly, as we work to reduce the wholesale funding, that by definition then makes room for deposits to grow. And again, I know you’re not asking us to predict the future. I agree with your comments. It’s impossible to predict. But, as Ben mentioned, we are focused on making sure that we are providing the critical services to our core customers and that we do in fact have room for them to grow their deposits when this turns around. And I do believe it’s when, not if. But I’m also not predicting when that will happen. If past is prologue, this industry tends to go in four year cycles and 2023 might continue to be a kind of a sideways market for this overall ecosystem.
But that will give us the time we need to retool the business, and we will be leaner and meaner and ready to go.
George Sutton: Perfect. Thanks, guys.
Operator: Thank you. This concludes today’s question-and-answer session, so I’d like to pass the call back over to Alan Lane for any closing remarks. Please go ahead.
Alan Lane: All right. Thank you very much, Bailey. Well, I just want to thank everybody for joining today and just want to again express our appreciation for all of the support that we get from our great customers. And we look forward to providing additional updates as we move through 2023. So, thank you, everybody. Have a great day.
Operator: This concludes today’s conference call. Thank you all for your participation. You may now disconnect your lines.
