But right now, we don’t see that we’re going to have to do any sales, and we get all the optionality going one way as to when we want to launch a deal.Dale Gibbons Yes. We manufacture MSRs. And so you could look at the ending balance, if you’d start with bidding balance, take out $360 million, obviously, that ending balance is higher than that. So, it’s going to be a fairly stable balance on average, but it’s going to move up and down as they manufacture them every day and then as we dispose with them periodically. I will say we’re getting a lot of reverse inquiries, and people want to own them and so we’re a manufacturer.Andrew Terrell Okay, very good. Thanks for taking the questions.Operator The next question comes from Brody Preston with UBS.
Please go ahead Brody.Brody Preston Hey everyone. Thanks for the time. So, I have a few questions. I just wanted to ask maybe on the asset sensitivity just given that the balance sheet sensitivity is down when I layer in the mortgage and then the deposit costs that flow through NIE. Dale, is it fair to say that the earnings stream is liability sensitive in the current rate environment?Dale Gibbons We really think it’s pretty close to zero here. And you do have a pickup potentially on the deposit costs like you’re alluding to. But again, we’re showing that it’s a little bit asset sensitive presently. But like I said, less than 1%. So, we put it all together and with or without deposit cost is margin or non-interest expense, it’s pretty neutral.Brody Preston Got it.
And within the PPNR guidance, could you share what your interest rate outlook is for Fed funds?Dale Gibbons Yes, we’ve got one increase coming up in — at this next meeting, 25, and then we have two later in the year, I think it’s November and December. Two cuts, yes.Ken Vecchione We may not believe that, but that’s what we have in our model.Dale Gibbons That basically tracks the futures were running off of.Brody Preston Okay, great. And then on the deposit rates, I think the interest-bearing deposit rate was 2.82% spot versus the 2.75% at quarter end. The average was up I think it was like 75 to 80 basis points quarter-over-quarter. So, just trying to help think about the step-up in deposit costs going forward? Do you think that the spot rate is indicative of where you would expect the 2Q deposit rate — interest-bearing deposit costs to come in?
Or do you think it will kind of be another 70 to 80 basis point increase?Dale Gibbons No. No, no. I mean your spot rate is as of March 31st. So, what’s going to change it from there. We have one rate increase in early May, 20 to 25 and then what’s the proportion that’s going to follow through. So, it could be up a little bit more than that, but we wouldn’t expect it to be much more.We’re not seeing kind of interest account volatility. We saw some of that earlier, but a lot of these are indexed at various levels to Fed funds. So, I think it’s going to be more — I mean, the big increase you had from Q4 to Q1 was you had significant raises, they were still doing 75 back then in Q4 that didn’t layer in that kind of that for the full year on an average basis.So, going from 1.79% to 2.75% was really because the 1.79% rate was held back from the average rate — from the average rate and how quickly they were still moving Fed funds back in the late 2022.Brody Preston Got it.
And just on the intra-quarter deposit swings. I think it was the March 9th update you gave where you were $8 billion for the quarter. Could you tell us what were the categories that drove that upswing? Which ones kind of flowed out? And how much of that you could expect to maybe get back? And if that’s encompassed within your guidance for deposit growth going forward?Dale Gibbons Sure. So yes, we were up $8 billion — just under $8 billion as you mentioned. We would typically have seen some of those funds to go down a little bit. We were targeting that we’re actually going to be up $4 billion for the quarter instead of $7.8 billion because we thought we’d lose a little bit in mortgage warehouse deposits in particular that would flow out. We also had some other dollars on things that we’re going to be pulling out.
Well, that happened. And in fact, we had some of those dollars a little bit more than we expected.And then we’ve mentioned settlement services, which is another division. I mean they were off to a very strong Q1 in particular. And — but those accounts have just come in. I mean, so we opened accounts that had been here for single-digit weeks and then with all the volatility that took place, and I think it kind of a little bit when they saw our share price on Monday the 13th and so they took it out.Now, for those, we do have commitments for many of them that they were kind of surprised by this, and they think they’re coming back. So, we’re pretty optimistic about what going to reverse there. It was a little bit like LIFO, last in first out, I mean, so a brand-new account wasn’t as sticky as something that had been here with more tenure.Ken Vecchione They hadn’t experienced our service levels and our performance.
It was easy for them to move. But those folks that have been with us that understood service levels and performance and how important it is, those funds didn’t move. And we’ve been on the road last week meeting with just a number of settlement service clients and future clients. And there is a big pipeline that’s building out there. So, we hope to gain our fair share of that — of those settlements.Brody Preston Got it. And if I could sneak one last one, a little bit ticky-tack in, just on the mortgage servicing rights that you sold. Could you maybe ring-fence what the unpaid principal balance was? I mean if I just look at the valuation, it looks like it was like maybe $22-ish billion. I guess maybe if I could back into it, but just help us ring fence that.
And then I just wanted to clarify that there was no gain on that that flowed through the servicing income line item this quarter?Dale Gibbons No, there was no gain on that, that went through. There — yes, I don’t have that number in front of me, but I think your math is about right, basis points per dollar.Brody Preston Okay, great. Thank you for all the time this afternoon for taking my questions guys. Appreciate it.Operator The next question comes from Tim Coffey with Janney. Please go ahead Tim.Tim Coffey Great. Thanks. Morning gentlemen.Dale Gibbons Just before you begin, –Tim Coffey I’m sorry what was that?Dale Gibbons I was going to just — it was about $20 billion of unpaid balances that were on the last question, okay? Sorry.Tim Coffey No, no, no.
Thanks. I was — that’s actually something I needed. So, just given the source of stress in the deposits in March, have you considered strengthening or limiting the concentration limits to deposits from the VC industry are companies funded by VCs?Dale Gibbons Well, I mean our first tie with these deposits is what we have when we have a credit relationship with them. And so — and there was several things that went on there in terms of tweets that people are familiar with that I think accelerated it.What we’ve taken note of is kind of volatility around some of this stuff and we’ll reflect that in how we consider what we need in HQLA and liquidity kind of going forward. But we’re committed to the tech space. And we think that there is value to be created for us and for them in that space, but maybe the duration risk is shorter than others might have thought.Lessons learned there, about a third to 40% of our total deposits were operating accounts tied to loan commitments where we had to be the primary banking relationship.
