Daryl Bible: Yes. I mean if you look at that business, and I think our disclosures are a lot easier to understand now as we move forward with our change in segments that come out on quarter end. You’ll be able to track our business performances there. But the ICS business, specifically, they have a little over 20 different product services that they offer. Some of them are fee based, some of them are fees and funding-based oriented. Examples would be escrow, M&A activity from that. Some of it can be lumpy at times, it can go back and forth. But just getting in the flow in that business and just doing a good job and good reputation. Jen, who runs this business, her and her team, they’ve built a really great reputation and really have done a good job growing this space nicely over the last couple of years, and we’re investing in this space.
We think it’s a good business, core business for us, and we’re really happy to have it, and we’ll continue to focus on it. And I think we’ll see some of the benefits that you saw in the first quarter hopefully play out throughout future quarters for us.
Matt O’Connor: Okay. Thank you.
Daryl Bible: Yes.
Operator: Thank you. Our next question comes from Brian Foran with Autonomous. Please go ahead.
Brian Foran: Hi. I just wanted to follow-up on the 11%, likely staying at or above that even if you restart buybacks this year. Is there any thoughts you can give on framing it? Is that a moment in time given the five factors you cited versus is that maybe where the new normal is trending? Just kind of any thought on when we look at this 11.1%, I guess, ultimately how much of it is excess capital and how much is the new normal to running the business?
Daryl Bible: Yes. Brian, I think we need to kind of see where our stress capital buffer comes out. But I mean, at the end of the day, we’re going to be really conservative. We are in uncertain times, risky times. So we are just going to be a little bit more cautious typically. I would say, long term, our average might be lower than that. But just starting this year repurchase, I think, it would be a significant change, to be honest with you, as we move forward. So not saying that’s going to happen. But if it does happen, we’re going to be very modest as we started out.
Brian Foran: And then maybe I could ask the same question. I think you noted on cash, $26 billion at the end of the year as a potential landing spot. Again, is that still an excess cash position in your mind or is that kind of more of a normal cash position you see going forward? Any thoughts on the level of excess liquidity right now?
Daryl Bible: So there’s a new liquidity proposal that’s supposed to come out from the regulators probably in the next quarter or so. So we’ll see what’s in there. We’ve done some of our own modeling. The treasury team has. And when you look at what we need from an operating basis, what’s the fluctuations that we have within our businesses, our minimum is probably $15 billion, so we would operate with a cushion over that. But we are in no way going to come near that in the near future. We’re going to be much more conservative than that as we move forward.
Brian Foran: Thank you. Thank you for taking both.
Daryl Bible: Yes.
Operator: Thank you. Our next question comes from Peter Winter with D.A. Davidson. Please go ahead.
Peter Winter: Good morning. I was wondering — there’s been so much focus on commercial real estate. So I guess I was a little bit surprised by the increase in criticized loans on the C&I side. I’m just wondering, do you feel like we’re in — this is in an early stages of more C&I, just given that we’re in a higher for longer rate environment?
Daryl Bible: Yes. So for us, it’s really three primary industries are kind of at the bigger things that we see within our book right now. The non-auto dealer, so like RV and Marine, that has some specific items where some of those dealers built up inventory post-COVID in 2022 and had to flush that inventory at losses. So that hurt their operating performance, coupled with higher rates. They have lower discretionary spend in those spaces as well. So they had some issues there. Healthcare, we talked about. As far as healthcare goes, I think it’s getting a little bit better from an occupancy perspective, I think — and product, but still reimbursement rates are lumpy. Staffing might be getting a little bit better there, but that’s still a stressful place from that perspective.
And the other theme that we would have is more in trucking and freight. During COVID, we increased — a lot of our clients increased capacity because there were a lot of things that needed to be shipped. Now they’re stuck with that excess capacity, they’re just moving a lot less freight. So their operating performance is just a little bit lower. So those — besides the one-offs that I talked about earlier, those are probably the three underlying themes I would say within the C&I book that I would be willing to discuss.
Peter Winter: Okay. And then just separately, Daryl, you had said at the conference, you’re looking to lower the CRE as a percent of capital reserves to about 160%. How long do you think it will take to get there? And is that one of the — I know you listed five things about starting up the buyback, but how important is that in terms of the overall theme of starting buybacks?
Daryl Bible: It’s one of the five themes. It’s important, but we — I mean you have to remember, we started when we were, what, in the 220 — 260? Yes. Four years ago, we started — we were at 260. So I mean the tremendous progress we’ve made over the last three to last four years. I pretty much expect that we’re going to be in the mid to low 160s by the end of the year on the pace that we’re going now.
Peter Winter: Okay. Thanks, Daryl.
Operator: Thank you. Our next question will come from Frank Schiraldi with Piper Sandler. Please go ahead.
Frank Schiraldi: Good morning.
Daryl Bible: Good morning.
