Scott McLean: Steve, thank you for that question. This is Scott. The events in March, starting on about March 9 or 10, that was a really quick change in jolt to the marketplace. And I think what we tried to demonstrate through March and into the second quarter was the ability to utilize broker deposits, which we did over the short-term period, March, April, that time period. But then, we were also pulling on the lever of our higher priced commercial suite products and reciprocal deposits. Really all three are important levers for any bank, and I think investors should draw comfort when a bank can demonstrate it can utilize all three. We’re seeing, as you noted and as Paul noted, good progress in building customer deposits, both sweep deposits, particularly, and CDs. And I think what you’ll see is that we’ll continue to have success with that.
And our brokered CDs will go down, absent some other big shock to the system, I think pretty confident that’s what you’ll see over the next six months.
Paul Burdiss: Yes. The other thing I’ll note is those brokered CDs are in a sort of a laddered format. So they’ve got kind of an average maturity of about six months. So there’s an opportunity, as Scott said, to replace them as we’re able to grow customer deposits.
Scott McLean: I think another important point, Steven, is the growth in interest-bearing deposits for us, we didn’t just start talking to our customers about their liquidity and the rates we pay for that. If you go back to 2021, zero interest rate environment, we were pushing clients, we were recommending to them that they move their deposits off our balance sheet. We entered the quarter with about $12 billion in off-balance sheet deposits, customer deposits. And we’d recommended that they do that because money market funds, we’re going to pay more than the banking industry. So, when we started more actively in February and March and into the second quarter talking to our clients about our on-balance sheet rates, it wasn’t like that.
For the first time we talked to our customers about their liquidity, they were, generally speaking, happy to bring them back on-balance sheet and that — we think that trend will continue as we have become more aggressive about our pricing and short-term deposits.
Steven Alexopoulos: So, if I could follow-up on that, interest-bearing deposit costs increased materially this quarter, right, 130 bps, the brokered were key part of that. And if we think about the ability maybe to start replacing some of those, and I’m staring at your loan yields, that’s only 5.65%, so some repricing opportunity there, how far away are we from your NIM troughing?
Paul Burdiss: Sorry, I just want to clarify the question.
Scott McLean: From a troughing.
Paul Burdiss: Thank you. Troughing, that was the word I missed. So, when you consider our outlook, which is kind of flat to slightly decreasing net interest income. And you consider that in the context of what I might describe as somewhat tepid loan growth. Combined with an investment portfolio, which is going to continue to pay down, again, we had nearly $1 billion of paydowns this quarter, my expectation is earning assets, generally speaking, are going to be kind of flat to down. And so, when you put those two things together, the revenue as a numerator and earning assets as a denominator, I actually think we’re getting — my point of view, I think, we’re getting pretty close to — again, barring some unforeseen event, I think we’re getting pretty close to the lower edge of the net interest margin in the current environment. In fact, the spot net interest margin at the end of the quarter was very close to the quarterly average.
Steven Alexopoulos: Okay.
