Greg Schroeck: And on the credit side, the solar dividend credit losses are performing right as we model right around 1.3%. We actually think we’ll run a little bit better for the remainder of this year. Early volume within the portfolio is seasoning. So, we saw a little bit of seasonality this quarter, but we feel good about what we’re seeing. And we certainly have more optimistic view for the rest of this year.
Bryan Preston: And then just on the volume front for originations for solar, I know this question came up earlier as well, we’re probably talking closer to $1.7 billion to $2 billion of originations this year, just given the dynamics that Tim mentioned earlier.
Vivek Juneja: Thanks.
Operator: Next question comes from Manan Gosalia from Morgan Stanley. Your line is now open.
Manan Gosalia: Hey, good morning. I wanted to touch on deposit competition. You compete with several of the money center banks in several markets. How are you thinking about deposit competition as QT continues, as RRP balances continue to decline and the focus shifts back to bank deposits? How do you think deposit competition will trend in that environment?
Bryan Preston: We think that is certainly a big question for us and for the industry, and it’s one of the items why we highlighted that our NII guidance at this point is less rate environment dependent and more dependent on just the overall level of deposit competition. As you mentioned, we do compete against the money center banks as well as a lot of regionals across our different markets. In the Midwest, we compete against JPMorgan primarily. They’re the number one bank in most of our markets. We’re the number two bank in those markets. So, we see them and face off against them. And obviously, in the Southeast, we deal with Bank of America, Wells and Truist, so very significant competition. In general, it does feel like the broader liquidity environment has stabilized versus what we saw midyear last year.
So, even with a little bit of weakness from an overall industry deposit perspective at this point unless something really breaks in the liquidity system, we’re not expecting the significant food fight for cash that happened last year as people were just scrambling to show that they had a stable balance sheet. But it does mean that over time that you’re likely to see just a potential increase in competition. The big counter for this is really going to be whether or not loan growth shows up or not. If there’s no loan growth for the industry, there’s not going to be a need for significant competition for deposits. And so, broadly speaking, we think competition probably stays lighter than what we saw last year, especially in a stable environment, also at a time where we think the whole industry is going to be focused on maintaining profitability.
So, we do think that will moderate some of the pressures, but the bottoming of the RRP and potential decreases in bank reserves as QT continues, certainly could create some pressure in the medium term.
Manan Gosalia: Got it. And then maybe a bigger picture question. Tim, in your annual letter, you talked about rationalizing the business model in response to the tougher regulatory environment. You used the RWA data as an example. Bigger picture, what do you think the evolution of the model for Fifth Third and other banks of your size will look like going forward? Maybe there’s more partnerships with private credit or there’s a pivot to more fee-based businesses. But in what ways will Fifth Third look different in five or seven years from now versus today?
Tim Spence: Yeah. So, a few things just on the industry in general and Fifth Third on that front. One, we’ve got to find a way to reignite growth in labor productivity, right? I think that’s true of the economy in total, but you’d see the same thing if you look at the banking sector is despite all the investments that have been made in technology over the course of the past 10, 15 years. Aside from branch rationalizations, you can’t really point to a lot of examples where there were big productivity lifts. So, whether it’s the cloud platforms we’re putting in, where we should be able to drive more straight-through processing, or the use of AI or otherwise, overheads have to come down. That is going to be an important point of focus for us through the value streams and through the tech modernization work that we’re doing.
I think secondarily, there are going to be businesses that regional banks or community banks just don’t compete in, in the future, if there isn’t a rationalization of the way that the non-credit wallet is shared. And large public companies would be a good example of that space, right? We did our diet last year. We walked away from companies where we were an important lender, but we weren’t getting a fair share of the ancillaries because they were being consumed by the money center banks. That’s either going to require the money centers to make larger individual commitments in order to justify the ancillary or it’s going to require that the treasurers that those companies reallocate the wallet proportionally. So, I and — my own view is at least initially you’re going to see a shift there.
I think private credit is going to be an interesting one to watch. Like there isn’t a great track record historically for people growing as fast as private credit is growing and completely avoiding mistakes. I also have a hard time figuring out what the comparative advantage is there that’s defensible if the model works. And I would prefer always, since we are a good deposit gathering institution, that we’d be able, if there’s good money to be made and the valuations that are being placed on these credit fund providers, certainly suggest there is, that we’d be holding those assets on balance sheet. So that is not been an immediate point of focus for us. And then lastly, as we’ve talked about in the past, it’s hard to imagine that whether it’s 1,000 or 2,000 or 3,000, it’s hard to imagine that there are going to be 4,000 banks.
