So I’m not surprised. And in fact, I’m very pleased with the performance that I see, given the nature of what’s going on in the underlying economy and the way we structured this loan portfolio, I’m very comfortable that we’re in a pretty good position.
Jon Arfstrom: Okay, good. Fair enough. And then Hope for you on Slide 8, the bottom of Slide 8, you’re highlighting $5 billion in loans and securities that are rolling off. Can you talk about what the repricing uplift is from that? And I think the message here is that you expect the margin to grind higher because of some of this repricing. The deposit repricing opportunities are probably done. So it’s more about this asset repricing that’s going to grind the margin higher over time. Is that the right message?
Hope Dmuchowski: That’s the right message, John. I think, deposit as I think could go a couple basis points lower or a couple basis points higher in quarter to quarter. That may change until we see that first-rate cut. But, we have $4 billion rolling off at 2.25% yield and yes, you’re seeing 6% and 7% yields pretty steadily in the market and some 8% in our specialty businesses. And so, absolutely putting that to work on the client side of the balance sheet versus parking and securities or something else is our intention with that money to be able to increase our spread.
Jon Arfstrom: Okay. All right. Thank you very much.
Bryan Jordan: Thank you.
Operator: Our next question comes from Casey Haire from Jefferies.
Casey Haire: Great, thanks. Good morning, everyone. Hope, a question for you on the NII outlook. The DDA attrition a little bit lower as you guys kind of highlighted in January. Just wondering, what does this guide presume for DDA mix going forward?
Hope Dmuchowski: Yes. The guide is a range — a 4 basis point range there. So it is — assuming today, we’re assuming kind of flat balances with non-interest bearing, if we were to see a larger pickup in that. Again, that could help us get to the higher end of the range. But I don’t see any risk to that taking us below the range if we saw immaterial runoff. We think we’re at the bottom, right? We saw some January outflows. February and March are really stabilized. First quarter does tend to be a little bit more seasonally low and then come back through the year.
Casey Haire: Okay, very good. And then just big picture question on getting ready for the $100 billion and CAT4. When I compare you guys versus the CAT4 group, you guys are in pretty good shape. If there is a weak link, it’s on the liquidity side. And just wondering when do you guys start to — I know you have time, but when do you start address that and build out the securities book and/or drive down that loan-to-deposit ratio?
Bryan Jordan: Yes. The — there’s a lot of work going in all around the industry to understand the impact on potential category for banks. As you know, Casey, we’ve done a lot of work around it. And I think we are in pretty good shape. we have continued to run stress testing. We have some of the infrastructure in place, not all, and we will build that infrastructure out on the compliance side. The balance sheet structure issues really fall into two major categories. One you highlighted, which is liquidity. The other is the potential for TLAC. And we don’t have a lot of total loss-absorbing capital or long-term debt on our balance sheet either. And in some sense, those two can be mutually solving in the sense that if we raise debt, we can use that to fund high-quality liquid assets.
So, as you said, we have time. We don’t feel any particular urgency to start moving the shape of the balance sheet today. We’re mindful of those two balance sheet hurdles that we would have to get over. And as we get greater clarity from the Basel 3 in game, the FDIC’s proposals around TLAC, we’ll have a better sense of the steps that we need to take over the next two years or three years to get prepared for crossing that threshold.
Casey Haire: Great. Thank you. Just last question for Susan. You mentioned or Hope mentioned, a handful of losses within the CRE bucket on updated appraisals. Just wondering if you could provide some color as to what the price decline was on those underlying properties.
Susan Springfield: Yes. I mean, on those specific ones, I’d say, on average, we saw probably about a 20% decline. I did talk to — I’ve kept in close contact with our Chief Appraiser just on a larger perspective, Casey, just on what we’re seeing in terms of reappraisals, both on non-performing properties, but also just office in general. And it really varies a good bit by market. And in strong markets like Florida, you’re seeing small turns of 3% to 5%. 3% to 5%, not 3%. And in some markets or certain office properties that may have had a major tenant that they haven’t yet replaced, you can see it in the 25% range. So it is kind of on an individual basis. As it relates to the credits where we took a partial charge related to new updated appraisals this quarter, it was in three different markets, and one was actually more of a mixed-use facility, just that office had the most space, and so we classify that as office. All three were in our footprint.
Casey Haire: Okay. So there — it sounds like most were office. One was a mixed-use, or are these varied by underlying property type?
Susan Springfield: Of the $12 million that we took in charge offs in commercial real estate, two were pure office, and then one was a mixed-use that had some office, which was the predominant space, but it also had some retail and multifamily.
Casey Haire: Got you. Thank you.
Bryan Jordan: Thanks, Casey.
Operator: Our next question comes from Jared Shaw from Barclays.
Jared Shaw: Hi, good morning.
Bryan Jordan: Good morning, Jared.
Jared Shaw: Maybe sticking with the — with Casey’s question on the CRE, what drove the revaluation? Is that because you saw individual credit migration, or is this part of a broader revaluation of all CRE? And I guess, if it’s not broader, what happens to drive a revaluation?
