Ken Usdin: Thank you. Good morning. Just want to follow-up with Bryan. Bryan, you mentioned the annualized dollar impact from those fixed rate securities and loans. I think you said previously that was $12 billion. I’m just wondering if you have an understanding of what you know will be also repricing in ’25, and is that — I would assume that would also then be incremental to that annualized benefit you referred to earlier?
Bryan Preston: That’s right. We do have a similar amount that will happen in ’25. And actually, we’ve been in the range of $4 billion to $5 billion a quarter repricing overall on the portfolio between loans and investment portfolio. The investment portfolio has actually been, say, $600 million to $800 million a quarter range. That number is actually going to start accelerating later this year as we start to get some maturities on the bullet/locked-out structures. We’re expecting over $1 billion in the fourth quarter and a pace similar to that in 2025. So, this benefit and the repricing is going to continue and actually pick up a little bit and that’s where the higher for longer environment, as long as the frontend stays relatively stable, because that will help keep deposit costs stable, the higher long end will actually help and contribute to higher income over time.
Ken Usdin: Okay. And then also you mentioned keeping the cash and securities at around the same level. Can you talk about just how you’re preparing for liquidity rules and what that will mean in terms of that — how you think about the mix of — across portfolios and the amount of cash you want to keep?
Bryan Preston: Yeah. We are there today for whatever comes out from a liquidity rule perspective. So, we will not have to make any material changes to the balance sheet compared to what we have today. What will happen over time as the loss position on the investment portfolio burns off, that will actually increase the liquidity contribution from the investment portfolio, so we can take the cash — start to take the cash position down. Also we will start to remix the composition of our investment portfolio to continue to shift more into level one securities which will also help us take the cash position down over time. So, it will be just a natural transition where the balance sheet will get a little bit lighter from a cash and securities perspective as time passes. But we’re very well positioned for any pending liquidity rules.
Ken Usdin: Okay. Thank you, Bryan.
Operator: Next question comes from Vivek Juneja from JPMorgan. Your line is now open.
Vivek Juneja: Thanks. Tim and Bryan, a question for you on the Southeast. How much do you have in deposits there now? And what are you doing in terms of consumer side loans? Where do those stand relative to deposits?
Tim Spence: Sure. Let me start on the consumer loan side and then Bryan will fill in on the detail on deposits. So, the balance sheet in the Southeast on the consumer side for the core banking relationships is a net funding provider for us. Vivek, the sort of general development of a customer relationship is acquire the primary DDA via direct marketing and the work that we do around the new branches as we build them. The payments products are an important part of primacy. So, credit card would come after that. And then, from there, you have the episodic opportunities whether that’s home equity, because there is some improvement going on or mortgage, although there obviously hasn’t been a lot of that in the environment over the course of the past few years.
The auto business, the dividend solar finance business in particular do have strong production in Florida, just because of the size of the population relative to the other states where we do business. But they’re really unconnected to deposits. Bryan, you want to talk about the individual markets and deposit balances?
Bryan Preston: Yeah, absolutely. We’ve got about overall about $31 billion in deposits in the Southeast now. About — over half of that relates to the consumer franchise. So, we’re doing very strong in consumer on that front. And as Tim mentioned, we are — it is a net provider of funding. We only have about $18 billion worth of loans in the Southeast.
Vivek Juneja: And I would imagine most of those are on the commercial side, as Tim said, at this point?
Bryan Preston: Yes.
Tim Spence: Yeah, absolutely.
Vivek Juneja: Separate question. Solar, I noticed your growth has slowed as you’ve been indicating. Any update on what you’re thinking in terms of originations, loan growth as well as credit?
Tim Spence: Yeah. Well, I’ll start and we’ll get Greg to answer on credit. We are still number two, right? We are the number two largest financer in the residential solar market. And the byproduct of that is our growth opportunity has as much to do with the market size as it does anything else at this stage. And right now with rates being high and with net metering having been rolled back in a couple of places, you just have an affordability issue where the cost of purchasing energy off the grid is cheaper than it would be to finance solar installations. I think the other dynamic is that as rates rise, and this is I think ironically it’s the same phenomenon in auto is as rates rise, the mix of leased financed installation shifts toward leases, which means as a lender, the solar is going to be down.
I think the estimate from the industry is like 13%, 14% this year, Vivek, in terms of total installations. You’re going to see a more significant decline in the financing volumes. So, we built our plan around being down 30% year-over-year. And I think in a higher for longer environment, that’s probably right. If it’s any softer than that, it’s just going to be a byproduct of this continued dynamic on the lease versus finance, and does it make sense to — can you offset energy costs on a zero basis with the cost of the equipment that’s being installed. Greg?
