Curtis Farmer: Hello, Brody. Good morning.
Brody Preston: Hey, Good morning, everyone. Hey, I just wanted to ask on the tech and life sciences deposits. I noticed that those continue to move down a little bit, but it looks like the rate of change kind of slowed there. I was wondering kind of what drove that decline? Is it kind of back to normal cash burn for those clients, and kind of what the — I guess is there a growth outlook kind of for that business line now that there’s been just a disruption with the largest competitor there no longer wholesaling?
Peter Sefzik: Hey, Brody, this is Peter. Yes, the decline in deposits in TLS, we really started actually seeing that back in the middle of last year. So I think that cash started being consumed in that space with all the things that you’ve kind of seen happening with tech. I think what happened earlier this year probably accelerated that a little bit further. But as far as where we go from here, we’re being very cautious about our relationships. We’re watching what’s going on in the VC community, raising capital, new codes that are being formed. We’ve been in that business a long, long time. We plan to stay in it. We’re looking at. We’re very careful about where we’re adding people, where we’re adding relationships. And so I think that we will be in the business.
I think it’s probably, at some point, you’re going to — you’ll start to see cash build again across the industry and certainly at Comerica. I don’t know that it’s necessarily in the next six months. I think we’ve probably got a little more cash burn going on in this space. That said, we are bringing on new relationships. And as I said, we’re adding people. We feel really good about the industry and the opportunity over the long-term, but we’ve probably got some time to go here of cash burn. And I think a number of these companies are going to need to raise some capital and we’ll see what happens in the industry going forward.
Brody Preston: Got it. And then I was hoping just within the AOCI walk. If you could give us some indication as to what the conditional prepayment rate you’re assuming within your effective duration calculation?
James Herzog: Yes, Brody, it’s Jim. I mean that prepayment rate varies somewhat widely, depending on the type of security. Of course, we have some bullets in there on the commercial side that generally don’t have much in the way of prepayment. And then we have a number of various tranches of MBS securities that have some variance to them. So I don’t think there’s any one number that would like to answer your question, but we certainly have prepayment rates factored into that.
Brody Preston: Got it. Is it reflective of kind of what the market is bearing on a quarter-to-quarter basis, Jim?
James Herzog: Yes, absolutely. That’s something we prudently do every quarter is monitor the market prepayment rate. So very much in line with the market.
Brody Preston: Got it. Great. And then I wanted to ask just on the fixed rate loan portfolio, the portion of the portfolio is fixed rate, more purely fixed rate, not so much the swap portion. I wanted to get a sense for kind of what the quarterly repricing cadence looks like on that? And kind of what the existing yield on that book is?
James Herzog: Yes. That book is a relatively small part of our portfolio, less than 8% of our loans. It does yield well below our current portfolio. We haven’t disclosed the exact rate, but I would say it is materially below, which isn’t surprising given how fast interest rates have gone up. Contractual life on that is about eight years. So remaining life will be about four years. We do see it amortizing along a pretty straight line path amongst that four year remaining life. And we see the, I would say, that fixed rate portfolio price is up probably 15 bps a quarter. You kind of parlay that along, it’s percentage of the overall loan book. You’re looking at maybe a dip a quarter of loan yields going up because of their pricing, the fixed rate book. So that will be a very a small tailwind for us. But it just depends on where the curve goes, where the repriced at and how prepayment patterns kind of follow through there.
