I had mentioned in the last call that we do plan on reinvesting many of that savings and some of that investment, a fair amount of it, will be in risk management profile and the risk framework. And some of that will entail hiring colleagues in that space. So, you won’t necessarily see the same drop on a net basis that we talked about on a gross basis in the last call. But I would just summarize it to say that we are very much on track with that $45 million that we talked about.
Bernard Von Gizycki: Okay, great. And then just you’ve highlighted the nice progress, obviously, on reducing that FHLB advances and brokered deposits. How should we think about the opportunity to further reduce wholesale funding throughout the rest of the year?
Jim Herzog: Well, we — at this point, we’ve done a large portion of what we plan to do. We don’t have any near term FHLB maturities. We finished a lot of that up this quarter. And so we don’t necessarily want to prepay that and incur the penalty. So, I think we’re going to be for a large part of FHLB borrowings for right now. We do have a lot of brokered deposits. Most of our brokered deposits on the books do mature this year. And we will let some of those roll off the books permanently and some of those we will roll over. So, it depends on the shape of the balance sheet at that point. We do have a senior debt issuance that matures later this summer. And depending on the state of the capital markets, we would love to go out and term out more of our funding.
So, that’s going to depend on market receptiveness and overall credit spreads. But you’re not going to see as significant of a change in summary in the remaining nine months is what you’ve seen in recent months and what you saw in the first quarter.
Bernard Von Gizycki: Okay, got it. Thanks for taking my questions.
Jim Herzog: Thank you.
Curt Farmer: Thank you.
Operator: Thank you. The next question is coming from the Manan Gosalia of Morgan Stanley. Please go ahead.
Curt Farmer: Good morning Manan.
Manan Gosalia: Hey, good morning. So, I wanted to ask on deposits, I can see that they’re dragging relatively flat across the commercial bank. But I think rate expectations move more meaningfully in the back half of the quarter and again more recently after the quarter ended. Is there much of a headwind from commercial clients maybe taking a look — like taking another look at their NIB balances in a higher for longer rate environment? Maybe if we can talk about what are you hearing from them? Is that something they could do? Or do you think that’s pretty much that move from NIB to IB is pretty much done at this stage?
Peter Sefzik: Manan, that’s a good question. This is Peter. I would say overall, we believe that that move from NIB to IB is over. But I think probably still have some moving parts to Jim’s point. If interest rates stay higher for longer that conversation probably continues throughout the year. But I don’t think it’s at the pace that what we saw the last 18 months. So, what we continue to hear is that our customers are really confident in Comerica, they’re really happy with what we’re providing them products and services for their liquidity. And we feel like the rates that we’re putting out are very competitive. So, overall, the feedback that we’re getting from our managers and our customers is I would tell you, it feels like the answer to that is yes, that we think it’s over.
But I think particularly in our larger businesses, that’s going to be a regular dialogue throughout the year, as we kind of see what the interest rate outlook is. I would remind you, though, when you look at the — you talked about the commercial bank deposits, we’ve got a very healthy retail bank deposit base, very healthy wealth management deposit base, both of which have really performed really well lately. And so, I think that when you look at the balance sheet for us, again, the diversity of our deposit base is terribly powerful on a go-forward basis. So, there’s a lot of levers that we can move when it comes to interest rates and how we go out and attract deposits.
Manan Gosalia: Appreciate that. Yes, that didn’t go unnoticed. Maybe just shifting over to credit. The NPLs and criticized assets both increased Q-on-Q. I mean I know you mentioned that the migration should be manageable, but how much of this is just a normalization and level of NPLs and criticized assets versus the impact of higher for longer rates on your borrowers? And also if you can throw any more light on what you’re seeing in specific industries?
Melinda Chausse: Sure, this Melinda. Thanks Manan. Appreciate the question. Yes, what I would characterize credit overall as being in really good shape. And I know the term normalization has been used a lot over the last couple of quarters. But I would characterize our movement as definitely in that normalization phase. All of our metrics still are meaningfully below kind of our long-term average, particularly the non-performing assets are less than half of what our normal range would be. So, those are very, very well controlled. The increase in the criticized category, this quarter came almost exclusively from a portion of our large corporate portfolio in that services being your housing space. And so we’ve been watching this portfolio for a couple of quarters.
As Jim mentioned in his comments, we tend to focus on newer construction-type projects. These are progressive living type facilities that are very, very appealing to an aging population. But they have an element that is more real estate oriented, so very sensitive to high interest rates, but it’s also an operating business in the healthcare space. So, they’ve had a lot of labor challenges coming out of COVID. They’ve also had a lot of challenges just in getting back to a occupancy level that would allow them to get to stabilization — impacted again by some of the inflationary pressures. So, we — this quarter — over the last couple of quarters, we’ve been diving deep into this portfolio. We did 100% portfolio review and felt like we did a very appropriately conservative posture around risk rating.
