Mike Mayo: Hey, I’ll ask a question about the quarter, then requeue for bigger picture question. But what you don’t hear too many regionals talking about buybacks like you are right now. So — but you have a lot of numbers you’re tossing out there. You have a 7% CET1 minimum, 7.7%, 10.5% by mid-year. It might be better on the buyback of $300 million to $400 million depending on the rules. So I guess, I just want to be a little more concrete. So — are you sure that you want to be talking about buybacks as much as you are now? And what gives you confidence in doing so? And then the other side of that is you say if the rules get eased, then you might be able to buy back more than the $300 million to $400 million. So just give us the kind of the whole range of options, if you could.
Bryan Preston: Yes, Mike. And what we would tell you on the buybacks and in particular, on the rule, the — there’s a lot — there appears to be momentum associated with some relief on both the ops risk side and the credit risk RWA. As we’ve continued to refine our estimate from an RWA perspective, the rule as proposed is a low single-digit impact from an RWA perspective. And almost seven points of RWA is created by the ops risk rule. So if that is pared back, we could actually see our RWA go down under the new rule, which obviously creates a lot of incremental capacity for us as we think about how much capital we need to help run the company from a long-term perspective. Additionally, we have a lot of confidence in the stability of the capital ratios going forward and the pace at which we’re accreting capital, that in combined with the actions that we’ve taken from a security portfolio perspective to de-risk the portfolio with the HCM election as well as just the continued benefit that we’re going to get from roll-in on the remaining AFS portfolio.
It just puts us in a position where we are going to have a lot of capital generation and a lot of ability to have flexibility to return capital if the organic growth opportunities aren’t there.
Timothy Spence: Yes. And Mike, I think the one thing I would add to what Bryan said we’ve tried to be very clear and transparent that our belief is it’s always better if you have to make a change to adapt to new regulation, it’s better to get there first. We did that as it related to consumer deposit fees, right, and very deliberate about being early there because we just viewed those profit pools as being unsustainable. I think we were clear this past summer and through the fall and winter that our intention on putting ourselves on the RWA diet and focusing as much as we did on building liquidity was that we wanted to get to the rules there first because of the flexibility that it provided. So we ended the year at roughly 10.3 in terms of the CET1.
We said we wanted to get to 10.5. We’ll get there just based on the current run rate in the middle of the second quarter, you had to pick a particular spot. And that gives us then the ability to return to share repurchases subject to the environment not changing, maybe a little bit earlier than others.
Mike Mayo: And a short follow-up. So Basel III gets gutted, I guess, not a high probability, but some have mentioned that recently, then your RWAs, obviously, would be flat. So you might be better off if they change the ops rule — and it passes. Did I get that right?
Timothy Spence: Yes.
Bryan Preston: Other than if it truly gets gutted and the AOCI impact, that would be a better option than even if ops risk rule got gutted, so.
Mike Mayo: Okay. Thank you.
Operator: Your next question comes from the line of Ebrahim Poonawala of Bank of America.
Ebrahim Poonawala: Good morning.
Timothy Spence: Good morning.
Ebrahim Poonawala: I guess two questions. One, first on trying to make sense of the loan-to-deposit ratio at 70% relative to Fifth-Third’s history prior to the pandemic. And even relative to some of your peers — is a 70% loan-to-deposit ratio, the new normal for the bank or trying to understand if there’s anything idiosyncratic about the deposit base that requires you to hold and operate with a lower loan-to-deposit ratio.
Timothy Spence: Great question. I would tell you that 72% is not our long-term target, but I would say that our loan-to-deposit ratio has come down relative to pre-pandemic levels. And a big portion of that is just heightened expectations regarding liquidity. So I would expect us to operate in the mid-70s more than likely from a long-term perspective with loan-to-deposit. We were probably mid-80s pre-pandemic. So that is something that we would expect to continue. But we do think that we can move up from the current levels.
Ebrahim Poonawala: Got it. And I guess a separate question maybe for Tim. I think you tried to sort of draw some distance between you and some of your peers around the Southeast technology investments. If we take those statements and account for how do you think this should reflect into should fiscal become a higher growth bank relative to these banks, a more efficient bank? Like what should we be measuring you against and do we start seeing that this year and next year? Or is this more of a longer-term process?
