Michael Perito: Great. Very helpful. Thank you, guys. And for all the other color this morning. Appreciate it.
Gary Guerrieri: Okay. Thank you.
Vince Delie: Thank you. Take care.
Operator: Our next question comes from Russell Gunther from Stephens. Please go ahead with your question.
Russell Gunther: Hey, good morning, guys. I just wanted to follow up on the balance sheet repositioning and around the tangible book value earned back math. So I get the securities repositioning. I just wanted to confirm that the preferred stock dividend saving is included in that calculation. And then just ask for some additional color on the indirect auto piece. What rate borrowings would be paid down, whether there’s any reserve release associated with those loans included in that map? Just trying to get the puts and takes.
Vince Calabrese: Yes. So, Russell, so, as you know, the securities repositioning was done on the available-for-sale portfolio. So that was already baked into the tangible book value. So there’s no incremental hit from that. There’s very slight hit from the loan sale. But just given the overall strong earnings accretion from the combined transaction, that earn back is less than a year. When you add in the preferred dividend, it still stays, obviously, because that’s accretive for that would be less than a year. So pretty strong earn-back metric. Anything — sorry, did I address all your questions there?
Russell Gunther: The auto piece, and what just kind of puts and takes of the savings were there, just the rate of borrowings you’d expect to pay down and whether there’s any reserve release associated with those loans that’s included in that calculation?
Vince Calabrese: Got you. Yes. No, so the borrowings we talked about paying off at a similar rate as the yield on the loans. So we’re talking roughly 5% to 5.5% type yield on those loans. So it’ll pay down borrowings at a similar rate. And just as a reminder, that loan sale hasn’t closed yet, so we actually haven’t seen the capital benefits from that full transaction. So just on a pro forma basis, when the loans do go off the balance sheet, we’d expect CET1 to increase an estimated 10 basis points and TCE to increase roughly 6 basis points as well on top of that.
Russell Gunther: Okay. Okay, great.
Vince Calabrese: There’s no additional income statement impacts, Russell, in the first quarter because with us marking it to the market, that captures everything in the fourth quarter. So really it’s just actually executing the sale itself.
Russell Gunther: Thank you, guys. And then I guess just the last follow up then would be back to the CET1 discussion, pro forma, still north of that 10%. You guys addressed repurchases, but also sensitivity around earn back. So not willing to let capital accrete. Are additional securities repositionings on the table, or how are you thinking about that?
Vince Calabrese: No, I think we spent a lot of time in the fourth quarter sizing what we did. So we don’t have any plans to do any additional security sales just to sit here. Remember, during the last few years, I mean, we stayed short del more investment portfolio. We stayed conservative in how we managed that. So the total dollar amount that we did there was kind of the total we’re looking to do. We don’t have any plans to do anything additionally. And then, you know, from a capital ratio perspective, within our guidance, and in our capital ratios will drift up as you go through the year, which is important. And then to Vince’s point earlier, opportunistically that will create an ability to do share buybacks if it makes sense.
Vince Delie: Yes. And I like to see tangible book value above $10, right? I mean, that would be something that we could all celebrate because I think ultimately that translates into a higher valuation for us given our profitability. But — so we’re going to be managing all of that. We’re going to be watching all of that and making smart decision based upon return pressure.
Russell Gunther: Understood. Thank you, guys. I appreciate you all taking my question.
Vince Delie: Yes. Thank you.
Operator: Our next question comes from Manuel Navas from D.A. Davidson and Company. Please go ahead with your question.
Manuel Navas: Hey, good morning. Just wanted to get a bit of your economic backdrop behind your loan growth guidance and then behind the provisioning guidance.
Vince Calabrese: The economic environment is kind of what the consensus economists would be saying. I mean, it’s slowing growth in the second half of the year. We’re not making kind of calls on our own. We’re kind of looking at what the expectations are from economists throughout the country. And that’s kind of what’s baked in, I think the GDP, and our plan goes down to like a zero point, but it’s still growth, still two on average for the year.
Manuel Navas: Right. Okay. So if the expectation got…
Vince Delie: Sorry. Go ahead.
Manuel Navas: So that expectation, if it was to worsen, would the provision be above the range?
Vince Delie: I think we’re very comfortable with the range we have.
Gary Guerrieri: Yes, no, we feel very comfortable with the range at this point based on where the economy is today and how the portfolio is positioned.
Manuel Navas: And then loan growth, the pace has been really strong here to close the year. Is that kind of more front-end loaded as it kind of slows across the back half of the year or is it, you feel pretty good about that mid-single digits kind of staying consistent across the year?
