Operator: And your next question comes from the line of John Panc from Evercore.
John Panc: On the — back to the loss reserve, just to clarify, the $25 million to $75 million build in — per quarter in the back half for dividends and is that again, is for growth expected in dividend stance, but it’s no change in the reserve ratio that you’re assigning to that business?
James Leonard: Yes. And let me clarify one thing from what you said that just to make sure we’re on the same page. Our guide for the ACL is for the total Bancorp balance sheet. However, the primary driver of that ACL build is dividend. Dividend, we expect to do $750 million a quarter of production, that reserve rate ballpark it in the 9% range. But the rest of the balance sheet, as we discussed in the guide is actually going — from a loan standpoint is actually going to be down a bit. And so the net of those growing dividend, shrinking other parts of the balance sheet, inclusive of auto where we exited the states west of the Mississippi, but for Texas, combined with our efforts in shrinking the corporate banking book will result in a lower ACL build than what we’ve been running at this year because those other businesses will essentially be reducing the ACL coverage due to lower volumes, whereas dividend call it, in that same area, but the net effect is, let’s call it, a build of $25 million to $75 million a quarter going forward.
John Panc: Okay. No, that helps a lot. And then separately, on the credit front, can you just talk a little bit about your C&I portfolio and how that’s performing just as we’ve started to see some larger bankruptcies develop. But curious how the book is performing on the C&I side. And I know you mentioned that commercial book has been re-underwritten. How does that typically work with shared national credits? I know they’re about 30% of your book. So how does the reunderwriting work for that portfolio?
James Leonard: Yes. Let me start, and then I’ll turn it over to Greg Schroeck to add a little bit more color. But in terms of — as we discussed in the outlook, we continue to have a total Bancorp charge-off guide in the 25 to 35 basis point range. Within commercial over the past couple of years, it’s obviously bounced around from 36 bps in 2020 down to 10 bps in ’21 and 13 bps last year. And this year on commercial, we continue to be in that 20 to 30 basis point range. And then within total commercial, C&I is expected to be at the high end of that range given some of the lumpiness that we’re seeing with a few credits that resulted in a little bit of that uptick in the NPA ratio at the end of the quarter. But with that, I’ll turn it over to Greg for thoughts on C&I underwriting and other views.
Greg Schroeck: Yes. I agree with Jamie. First of all, the portfolio monitoring really doesn’t change, whether it’s a SNC, middle C&I loan regardless. We have a robust portfolio management structure and discipline in place that keeps us out ahead of these emerging trends. We’re really not seeing a significant trends in that C&I book. We’re not seeing it certainly in the shared national credit book. So I still feel really good about the middle market. As Jamie said, we’re going to have some lumpiness. You’ve probably seen our guidance into the third quarter from a charge-off perspective. the headline there, I think, is twofold. And we’re starting from a very low base. And so because of that low base, one or two loans can move the needle, and that’s exactly what happened, right?
We’ve got two credits, one in the professional services industry and the other in the manufacturing that are going to move the needle in the third quarter. But overall, I feel really good about portfolio, and I would expect fourth quarter charge-offs to be back in line with what we saw in the first and second quarter. .
