John Woods: Yes. I think this capital position that we’ve generated and have maintained is really creating a lot of flexibility. And when you think about our capital waterfall, I mean our top priority is to put capital to work that is to support customers and clients that is accretive to our cost of capital over time. And that’s really what we want to do and that we’re expecting to do. And that’s what capital allows us that flexibility. It also cushions against uncertainties. And so there have been a number – we look at the macro and being at a very strong capital level to be there for our clients, but also to cushion the downside to the extent uncertainties manifest is another use of a strong capital position. When you get down into kind of other potential uses of the capital, we support our dividend, of course, at top of the list.
And then if we’re left with elevated capital levels, then we’re able to give it back to shareholders, which we did in the first quarter, we’re planning to do that here in the second quarter. And that flexibility will continue into the second half. So as we monitor loan demand and the macro, that will play into the trajectory of buybacks in the second half.
Bruce Van Saun: Yes. And I would also just go back to an earlier comment that we have I’d say, a front-loaded plan this year because there’s less loan growth. In fact, there’s loan contraction earlier in the year that then turns around and we start to see loan growth in the second half of the year, that would, by definition, mean we need capital to support the loan growth and there’ll be less capacity for share repurchases. But anyway, we gave the – you saw the 300 number in the first quarter, John mentioned 200 in the second quarter. And then we’ll see where we get to in the second half. If the loan growth fully doesn’t materialize, we can actually just turn around and keep repurchasing the stock.
John Pancari: Alright. Thanks, Bruce. Appreciate it.
Bruce Van Saun: Okay, thanks.
Operator: Your next question will come from the line of Peter Winter with D.A. Davidson. Your line is now open.
Peter Winter: Thanks. Good morning. You guys have maintained the net charge-off guidance for the year, but if we assume no rate cuts this year, could it lead to higher net charge-offs than forecasting just given kind of no relief on debt service coverage ratios or loans coming up for renewal at higher rates?
Bruce Van Saun: Well, what I would say on that is the broad credit quality is still very good. So if you look at our C&I book, that’s in really good shape. Companies weathered the pandemic and leaned our business models, locked in lower cost financing. They’re doing more of that now early in the year. So we don’t really see hotspots even with kind of a higher for longer scenario in C&I. Similarly, in consumer, we’re still in very good shape. The consumer is benefiting from still strong liquidity levels, a strong labor market. And so we haven’t seen any adverse migrations in delinquencies or NPAs or anything like that. So that’s the bulk of the loan portfolio. If you then kind of look at the commercial real estate and the general office in particular, that’s relatively small as a percentage of the overall loan book.
And I think there’s potentially some trends. We’re watching the reports that return to office is picking up. And so maybe there’s a little counter trend in office that offsets the kind of additional burden of hire for longer. But I think at the margin, it’s not going to change that charge-off number materially.
Peter Winter: Got it. And then…
Don McCree: Peter, I’ll just that from my side. We made no assumptions in our forecast that we’re going to benefit from lower rates. Because we just didn’t know and that’s our credit policy. We don’t go out on the future curve. We run all our scenarios based on where rates are today. So I think you’ve got a peak-ish kind of rate environment. If it lasts another couple of quarters or even another year, I don’t think it’s going to make a material difference to the way we forecast charge-offs.
Brendan Coughlin: The only point I would add on consumer is that our delinquency levels are actually net down year-over-year. Q1 over Q1, led mostly by resi, but we’re seeing really no signs of stress on the book. As Bruce pointed out, so I feel really good and even in a higher for longer that unless there’s a big economic shock that we’re in really good shape.
Peter Winter: And then just quickly, just a follow-up on office. I guess, I believe that more than half of the maturities on office happened this year. So do you think net charge-offs could peak towards the end of this year, maybe early next year and then start to trend lower?
Don McCree: I – it’s really hard to forecast that. I think they will be early next year or late this year probably, but it depends how much we extend, how the negotiations go, how much capital is put into some of these transactions and working through the book loan by loan. It’s – I don’t have the crystal ball, I say exactly when the peak is. But I’ll go back to what I said before is we’re comfortable how it’s kind of progressing is progressing according to our expectations.
Peter Winter: Got it. Thank you.
Operator: Your next question will come from the line of Ken Usdin with Jefferies. Your line is now open.
Ken Usdin: Hi. Good morning guys. Just a question on the fee side, it’s really nice to see the capital markets improvement as you would have been thinking as we are seeing more broadly. I am just wondering a couple of line items went well, a couple of items kind of went backward. Just wondering just how you are thinking about the fee progression, the drivers and what’s your pipeline look like relative to the better start point here for the first quarter capital markets. Thanks.
