Jim Herzog: Hey, good morning, Steve. Yes, I do. We never give a precise NIM percentage for the reasons I’ve talked about in the past. But I will clarify, even though we see the dollars of net interest income dropping within the second quarter, I do think NIM percentage has troughed in the first quarter that we just saw and that’s because the balance sheet will continue to shrink a little bit as we on average, have repaid some debt maturities and seeing cash come down. And, again, that’s one of the reasons I never offer a precise percentage — a NIM percentage, because the two of them have two different answers. But we do see NIM percentage is continuing to rise up as we move through the year. I think we’ll be closer to that 2.90%, quite frankly, in the second quarter if you exclude the BSBY impact, you’ll see that we’re going to have a $3 million BSBY negative impact in the second quarter compared to the positive $3 million we saw in the first quarter, you’ll see that in the BSBY amortization slide.
But excluding that we do expect to be approaching the 2.90% in the second quarter. And at this point, I would expect to be near or slightly above 3% by the end of the year. So, we are on a very positive trajectory as it relates to both net interest income dollars and NIM percentage.
Steve Alexopoulos: That’s helpful. It’s interesting, the key to all of this seems to be this hockey stick you’re talking about of loan growth coming back in the back half of the year. It’s interesting, you look like current GDP is fairly strong. Your markets in particular, it’s fairly strong. You have general middle market balance is still declining. And I feel like we’ve been down this road before, not only with Comerica with the industry where pipelines improve, but then we don’t see it translate into actual loan growth. What gives you that confidence? Like what is going to change with the economic picture right now versus the second half where you will suddenly see so much more commercial loan growth in the second half?
Peter Sefzik: Steve, it’s Peter. I mean I guess that I would say prior to the banking crisis, we weren’t seeing pretty good loan growth across all of our portfolio, particularly in middle market. And you’re right, our geographies — I mean, I think the diversity of our portfolio continues to show really, really well. And in middle market in our geographies, we’re having really good results, believe it or not, in Michigan, in Texas. California is probably the most challenged, but a lot of our national businesses are not necessarily geographic-specific. And so I think that that sort of broad based regular growth is what we would expect to see across a lot of our businesses. And we’ve got different levers there that we can pull on how much we want to do in one business at any one time.
And I think we feel really good about the overall trajectory in the second half of the year. So, you’re right, I mean, the first quarter came in a little lower than we maybe had expected. But I think what we’re seeing in the pipeline growth and our customer sentiment continues to improve quarter-over-quarter. And so that’s what gives us the confidence that we expect to see that in the second half of the year.
Steve Alexopoulos: Got it. And Peter, do we need to see the Fed cutting rates to get this loan growth story moving? Like if we don’t get rate cuts this year, are you guys still confident? We’ll see that improvement in the second half?
Peter Sefzik: That’s a really good question. I would say that the last 45 days, that’s probably a little bit of our factor into going from 4% to 4% to 5%, I would say a little bit. In some markets, that interest rate issue is bigger than others than in some businesses. As I said a little while ago, I think you see that in business banking, I think you see that in small business. I would say California middle market is a little more interest rate sensitive it seems like than our other markets. But when you look at kind of our broader specialty businesses, I don’t know that the interest rate outlook is per se, a headwind or tailwind really for that space. So, again, I think the diversity of the portfolio gives us some good tailwinds into whatever kind of interest rate environment we’re going to see.
But I guess I would say the smaller and more consumer-oriented businesses, smaller businesses probably have a little bit of an interest rate headwind to them, but that’s not a large, large percentage of our book overall.
Steve Alexopoulos: Got it. Great. Thanks for taking my questions.
Curt Farmer: Yes.
Operator: Thank you. The next question is coming from Bernard Von Gizycki of Deutsche Bank. Please go ahead.
Curt Farmer: Good morning Bernard.
Bernard Von Gizycki: Hey, guys. Good morning. So, you introduced the expense recalibration last quarter and just want to get an update on the optimization of the real estate footprint and headcount reductions. I think headcount declined about 82 versus last quarter. And you noted the remaining will get done in 2Q. So, how do we think about that $45 million cost savings being realized throughout the year?
Jim Herzog: Good morning, Bernard, it’s Jim. We still feel very good about that $45 million. We’re very much on track what we had expected. Relative to headcount, we did recognize some of that change in headcount in the first quarter. Some of the colleagues have been notified, but actually hadn’t moved off the payroll yet. So, we haven’t seen all that headcount reduction yet, for we have seen a piece of it. There is a much smaller portion of that headcount that has been redeployed into other open positions. But we would have expected to fill those positions anyway. And so we will continue to see some attrition of talent just as we continue to implement the savings ideas, but virtually all colleagues have been notified at this point and we’re very much on track.
