So, again, it’s not an economic loss. And then, we are very likely to get vast majority of it back in 2025. I think of it as maybe north of 80% of that loss accreted back in 2025, and then most of the remaining after that would come in 2026.
Brody Preston: Got it. Thank you. That’s helpful. I guess, if I could just ask one fine point just on the first quarter with the redesignation? Should we see something similar to what we saw this quarter, maybe not in terms of size, but just directionally, where there’s a negative kind of non-operating impact to fee income and maybe a small positive impact to NII?
Jim Herzog: It really depends on the rate curve that’s going to drive it, maybe to a lesser extent, the timing of when we redesignate. Certainly, it’s going to be a small fraction of what you saw in the fourth quarter. And again, whatever you do see will simply accrete back in future quarters. So, I don’t think there’s — I know there won’t be any kind of economic surprise there. But from an accounting and recognition standpoint, there will be a little volatility in the first quarter. And again, we’ll accrete that back in later quarters and likely mostly in 2025. But a little bit of volatility in Q1, but also a large amount, if not complete certainty after Q1 also, and we can lay out that exact guidance and cadence.
Brody Preston: Got it. So, you don’t have the dollar impact for the first quarter — an estimate for the dollar impact to NII for the first quarter yet from this — from the BSBY stuff?
Jim Herzog: We don’t. We need for the dust to settle in terms of just getting the rest of these redesignated and where the rate curves will drive that. And again, we’ll be made whole ultimately over the next couple of years.
Brody Preston: Got it. Okay. If I could ask just another one on the NII guide for the year. I think you said it was a 60% beta that you were running through the guidance. Do you happen to have what the noninterest-bearing deposit mix that’s underlying the guidance is for next year?
Jim Herzog: Yeah, we continue to think that we are going to bottom out in the low-40%s or very near 40%. So, we’ve been pretty consistent on that over the last two to three quarters. Of course, a big driver of that isn’t so much even just noninterest-bearing deposits, but where interest-bearing goes. And we do plan on having great success with interest-bearing deposits. It relates to customers. On the other hand, at some point, we probably will pay down some of these broker deposits that we have, because that’s really a form of wholesale funding that all banks make some degree of use of. So, the overall level of interest-bearing will, of course, play some optical games with that percentage. But our base case is to be in the low-40%s towards nearing that 40% point.
Brody Preston: Okay. And then, I did just want to ask on the liability-sensitive disclosure. Could you maybe help me think about the moving parts that make you liability-sensitive? Just because, like if I just simply looked at you versus a lot of your peers with 40%, 41%, 42%, whatever it is right now, NIB, and still effectively 60%, I think, floating rate loans. Like both of those items, 60% might be closer to what I would call regional bank kind of average for floating rate loans, but the 42% NIB is still above average. So, like I would holistically think about you as being mildly asset-sensitive. But what are the moving parts elsewhere on the balance sheet that push you towards liability-sensitivity?
Jim Herzog: Yeah, that’s a good point. And we do stick out in a very good way with our high level of noninterest-bearing deposits in the mix. Where we also stand out, and because we have that higher level of noninterest-bearing deposits, we did put more swaps and securities on the book to manage to a more interest-neutral position over the last year. And that’s exactly why we added those hedges, and that’s what’s offering us the protection in a down rate environment.
Brody Preston: Okay. So, it’s mostly the hedges then, I guess, combined with securities balances?
Jim Herzog: It is. Yeah. I mean, it’s the — we always look at it holistically between both the hedges we put on in the form of both swaps and securities. But that’s the balancing x-factor to your equation there.
Brody Preston: Got it. And then last one for me is just around the broker deposits. I think the guidance assumes flat broker deposits moving forward. I guess, would you look to use the securities maturities kind of exclusively to pay down borrowings, or is there opportunity to kind of run off broker deposits next year, even though it’s not contemplated in the guide?
Jim Herzog: Yeah. I would say the run-off of securities will be used for a combination of funding loan growth and reducing wholesale funding. And I think of wholesale funding as both being some of the debt borrowings, like FHLB, any security maturities we might have or bond maturities we might have, and broker deposit maturities. So, there’ll be some mixture that goes on there in terms of the overall formula. But I suspect over time, and it’s actually a goal of ours, to reduce broker deposits over time. So, at some point, you will see a reduction there. And securities maturities will be one of the inputs to that equation.
Brody Preston: Got it. Thank you very much for taking my questions, everyone. I appreciate it.
Jim Herzog: Thanks, Brody.
Operator: Thank you. We’ve reached end of our question-and-answer session. I’d like to turn the floor back over to President, Chairman and Chief Executive Officer, Curt Farmer.
Curt Farmer: Let me again thank everyone for joining us today. As always, thank you for your interest in our company, in Comerica. And I hope you have a nice day.
Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.
