But I do think if you look back over time, there’s probably a base structural nature of NII that’s a little bit lower, given the quality of the portfolio. And that’s very intentional. You’ve heard Chris talk about that at length. We have been tight on expenses. We’ve been doing that largely to maintain our ability to invest. And the short answer is hard to predict exactly what we do. I think it’s a function of how much expansion do we see, how much investment capacity does that create? And frankly, how much high-quality investments are there in front of us. Our first investments are always going to be good clients and our people. And then in this world, you’ve got to continue to invest in technology. I actually think on an infrastructure basis, we’ve done a really good job over that — on that over the last decade, and we’ll continue to do that.
But we’re going to continue to make sure that we can invest and build the franchise the way we need to, to be competitive.
Chris Gorman : And from an organic growth perspective, Steve, we obviously weren’t doing our typical level of investment last year. But where you’ll see us lean in, you’ll see us lean into our unique integrated corporate and investment bank, where we’ve got a lot of success recruiting people. I mentioned earlier, our 55 billion of AUM. We think that platform is eminently leverageable. We’ll be investing in that. I mentioned also payments, and then lastly, I also mentioned business banking. Those are the areas where you’ll see us leaning in from an investment perspective.
Steven Alexopoulos: Got it. Okay. If I can ask one other question. So, Chris, it’s interesting to hear you’re so bullish on credit. I say that because if you listen to every other person they have on CNBC, all they point to is all this pressure coming on commercial real estate to a regional bank like you guys. Can you just say to the investors that are on the line right now, what’s happening? I mean you had commercial real estate loans come up for renewal in the fourth quarter. I know you don’t have a large office portfolio, but I’m sure some of them came up for renewal. What’s happening? Are you able to renew because the LTV, like you said, was 60%? You’ve got a higher cap rate, they’re getting renewed. There’s a perception that it’s nothing more than extend and pretend and you’re just — the banks are just kicking the can down the road. So I’d love to hear your view on what’s now happening as these loans are coming up for renewal?
Chris Gorman: Sure. Well, you got to look backwards a bit, and first of all, we had outsized losses in real estate during the financial crisis, and we said we’d never do that again, and we literally rip the business down to the studs and rebuilt it, and rebuild it around an underwrite-to-distribute model. So Fannie, Freddie, FHA, the life companies, the CNBS market. We also said we’re only going to finance the best real estate people in the right sectors in the right geographies. And so we’ve been very, very prescriptive. So we distributed a bunch. 13% of our total loan book is in real estate. What’s happening on the ground is because of the people that we’re financing, when we go through the math and because of the rise in interest rates, because they qualify them as a criticized loan, we go to them and we ask them for an interest reserve and they give it to us.
So what is going on, on the ground with us, I’m not sure it’s representative of the whole market. But it’s been — it’s the work that we did starting 10 years ago that really has put us in the position that we’re in now.
Steven Alexopoulos: Got it. May be unique, but still nonetheless, not the overhang that maybe some are being led to believe.
Chris Gorman : Indeed.
Operator: Next, we go to Ken Usdin with Jefferies.
Ken Usdin : Sorry for the late question here. Congrats to both Vern and Brian. Just one on expenses and efficiency. You guys did a great job last year, taking the actions to continue to head towards stable expenses. I’m just wondering how much more flex you have in there in terms of things you can continue to do to offset the expected investments that you continue to talk about and need to make. And how can you keep that stable trajectory as you look further out?
Chris Gorman : Thanks for the question, Ken. Whenever I’m talking to our team, I tell everybody, we’re all risk managers. We’re all responsible for revenue, and we’re all responsible for managing expenses. We’re spending, as I mentioned, about $1.1 billion a quarter. There are always things that we can do better to create the raw material to continue to invest. And in our business, unfortunately, the real cost is people. And if you look point-to-point, we have 1,369 less people on the team today than we did a year ago. And obviously, that will pull through. There’s also — you also get a big pickup when you exit businesses like we did in vendor finance, where you can take out front, middle and back office. So we did a lot of the heavy lifting, Ken, last year. I don’t see that level of heavy lifting continuing, but it’s something that we just have to stay after every single day. Thanks for the question.
Operator: And next, we go to a question from Bill Carcache.
Bill Carcache : I was hoping you could give some color on the sentiment you’re hearing from your clients for the soft-landing scenario to play out. It seems like we would need to see the disinflation trends, not just continue from here, but there would also need to be a reacceleration in loan growth. And I guess maybe first, do you agree with that? And if so, how likely do you think we are to see loan growth reacceleration from here based on what you’re seeing and hearing from your clients?
Chris Gorman : Well, I think it goes back to inflation, and is inflation really under control? And if it isn’t, what actions will the Fed be required to take or not take, given what the forwards are saying in order to get inflation under control? Right now, our customers are in good shape. As you know, the job market is in good shape. Interesting data point and one of the reasons I think inflation is going to be stickier than people think. Our noninterest-bearing customers today have 33% more dollars in their account than they did pre-pandemic. So I just feel like — so I think that’s a risk. And so if we get a soft landing, I think there’ll be opportunities for loan growth. We, in our planning, we’re assuming a short recession in 2024 for all the reasons I just described.
