Bruce Van Saun: Let me start. And John or Don can add. But we feel quite good about A), the overall nature of what we have, and B) then – so there’s good diversification, good quality characteristics. We have some really good people that are really focused hard on this and they are monitoring this loan-by-loan. They see the upcoming maturities to get way in front of those. So we’re having good dialog with borrowers. And I’d say, we did a good job – relatively good job in the first half of absorbing some of maturities. Probably about 30 loans, I think came up for maturity, which is about the number that we’re going to have in the second half and it’s about the number that we’re going to have in the first half of next year. It’s about the number that we’re going to have in the fourth quarter and next year.
And if you look at the net result of that, while we have an increase in criticized, we have an increase this quarter was a little lumpy in NPAs in this sector and that probably levels off. I’d say, we were able to build our reserve and absorb charge-offs. So we took $56 million in charge-offs. So that’s another kind of 1.5% loss content. If you look at the 8%, it’s effectively higher while what we just absorbed. And so, could we go for another few quarters with absorbing charge-offs on a pay-as-you-go basis with what we’re providing and hold the reserve flat? Yes, possibly, that could happen. And then at some point, does that tip over and then you don’t need as much reserves because you burned some of those losses through your charge-off line.
So anybody, that’s just a little color about how we think about it, John. I don’t know if you want to add anything to go direct to Don.
John Woods: Yes. I’ll just reiterate the fact that, as you mentioned, we took $56 million, that’s a 1.5%. So that – we’ve got 8.5% – we got 8% set-aside, so that implies a 9.5% coverage for the losses through the cycle and we think that’s pretty darn adequate, matter of fact, very strong. And so, I think that – as you also mentioned NPLs flattening out and charge-offs kind of getting in the run-rate rather than step-change from here which I think is important to reemphasize. And maybe just turn it over to Don.
Don McCree: I think you guys have said it was 26 loans, so you’re pretty close to the 30. That’s pretty good that you know that. But I think the thing I’d emphasize is we’ve literally gone through every single loan one by one. Everyone is different. It’s property-specific, it’s MSA-specific, it’s rental-specific, its sponsor-specific. And we’re just seeing – we’re starting to see outcomes. And outcomes are a property gets extended and renegotiated with the sponsor. You might have a little bit of equity injected to improve interest carry, and you might charge it off. So – and I think that we have a pretty good eye to the path of the book as we look forward. And things could always change, but I think we feel pretty comfortable that we’ve been very conservative based on what we see.
And I will emphasize, I mean, we’re not originating anything really of any scale and origination. So our whole origination team, in addition to our credit team, in addition to our work path team, is focused on working with our sponsors to basically –
Bruce Van Saun: In the office sector.
Don McCree: In the office sector, yes. And the rest – by the way, the rest of the real estate, both multifamily and industrial data centers, I think, it looks like it’s holding up extremely well. We’re really not seeing any weakness that concerns us at all in the rest of those slip up.
