Mike Mayo: All right. Thank you.
Curt Farmer: Thanks, Mike.
Operator: Thank you. The next question is coming from Chris McGratty of KBW. Please go ahead.
Curt Farmer: Morning Chris.
Chris McGratty: Good morning. Good morning. Jim, want to go back to the securities comments and you have a couple comments in the deck. When should we think the security book trough on a dollar basis, I know you’re starting to reinvest a little bit. But just conceptually, the mix of the balance sheet over the next couple of years, bonds, cash loans, loan-to-deposit. How do we think about this the ultimate troughing of the bond book?
Jim Herzog: Morning Chris. Yes, right now, we still are carrying a little higher level of securities than we typically would. We do think we’re going to get to the point somewhat of a trough, probably call it in the first quarter of next year, give or take where we will start to reinvest in our MBS portfolio. As we imply in the slide, we are doing some very minor amounts of treasury reinvestments starting around now, but those are relatively small amounts. In the past, if you look at our securities as a percentage of the balance sheet, it’s going to vary and it should vary based on the composition of the balance sheet and deposit levels and types of deposits we have. But in the past, we’ve carried securities on the balance sheet anywhere from mid to high teens of total assets.
I would see that probably going up a couple of percentage points going forward, just because we’re hearing and putting ourselves relatively against higher liquidity run offs just to be that much more conservative, given what we saw with regional bank crisis last year, and the higher regulatory bar. And so we probably won’t carry relative to history, a little higher percentage than we have in the past. But we’re still not there quite yet. But I suspect we will be by the first quarter so next year.
Chris McGratty: Great, that’s helpful. And then maybe one quick modeling, you mentioned that the discrete tax benefit, what was the dollar amount of that in the quarter?
Jim Herzog: On a net basis, it was $11 million.
Chris McGratty: Great. Thank you.
Curt Farmer: Thank you, Chris.
Operator: Thank you. The next question is coming from Zach Westerlind of UBS. Please go ahead.
Curt Farmer: Hi Zach.
Zach Westerlind: Hi. Good. Morning. My question is just on the on the NII guide. I think a key piece of that was around the beta assumptions. So, I was wondering if you could provide any color on that? And kind of like, what are your assumptions around the down beta compared to the upcycle beta? Thanks.
Jim Herzog: Hey good morning, Zach. We actually are assuming in the guide that we stick pretty close to that sensitivity — alternate sensitivity that we provide on the asset sensitivity Slide, which is 60%. And we’re at a cumulative beta, of course, right now 62%. So, we would expect initially to go down something close to the current cumulative beta of 60%. We would expect probably up to a one month lag, likely relative to Fed cuts. But I will emphasize that every cycle is a little bit different in terms of how quickly the industry is allowed to cut. And I continue to say that it depends on frankly, the reason for the Fed cuts. If it’s a very orderly takedown and it’s a very soft landing, you might see a little bit more delayed in those cuts.
And if it’s due to some concern in the economy, makes it a lot easier to enforce some of those cuts. So, it’s going to really depend on how the overall landscape of the economy lays out and the reason for those cuts. But we feel pretty confident that we can get some significant reductions from those customers that most recently pushed the beta up. And I continue to say that we’re on a little bit of a LIFO basis last in first out. Some of the bigger increases that we’ve seen came in the last few months from a beta standpoint, and those will probably be the easiest ones to push back down since they were closer to that 100% beta level. So, anyway, the short answer to your question is we are assuming a 60% beta on the way down with about a one month lag.
Zach Westerlind: Understood. Thanks very much.
Curt Farmer: Thank you, Zach.
Operator: Thank you. At this time, I would like to turn the floor back over to Curt Farmer, President, Chairman, and Chief Executive Officer for closing comments.
Curt Farmer: Well, thank you to those of you that participated in our call this morning. As always thank you for your interest in Comerica and we hope you have a good day. Thank you.
Operator: Ladies and gentlemen, thank you for your participation. This concludes today’s event. You may disconnect your lines and log off the webcast at this time and enjoy the rest of your day.
