And then we think the consumer portfolio slows down a little bit, again, just because of the interest rates and the pace of activity in terms of car buying as well as recreational vehicle purchases. The one offset there, which is also a People’s related thing. But unfortunately, it doesn’t grow the balances that much as we expect to launch our credit card into the People’s United markets, which will help grow credit card balances. But as I mentioned, they are still relatively small, and so hard to see in the bond growth but nice from a margin perspective. One of the other things that is in the People’s franchise, which we like is, we’ve talked about it before, the mortgage warehouse lending business, but it’s a tough part of the cycle for the mortgage warehouse lending business that — with refinance activity almost not exist and purchase a little bit low, but the balance is there, are likely to still be a headwind.
We don’t think that they go down materially from here, but they won’t go back to where they were in 2020 and 2021 without a decrease in the long-term mortgage rates.
Manan Gosalia: That’s really helpful. And I think you’ve also mentioned in the past that C&I is benefiting now because of less capital markets activity. Are you assuming some sort of reversal in your ’23 guide?
Darren King : We’re just — we’re cautious about the level of economic activity and seeing some slowdown in inflation, in GDP and what that translates into in terms of demand from our clients. It’s really not much more than that. There isn’t any sign that we see that we’re seeing a material slowdown — or we’re not seeing credit concerns, we’re just seeing cautiousness while people wait to see how the economy plays out in 2023. And so we’re cautious on it as well.
Manan Gosalia : Got it. And then just a follow-up on one of the prior questions. On the stress test, you’ve spoken about the adverse effects of the excess cash balances and of course, the Fed has been stressing CRE more than the other asset classes. Just given that December 31 will be used as a starting point for the next stress test, do you think you’ve done it now for how well do you think you’re positioned going into that?
Darren King: We’ve certainly made a meaningful shift in the balance sheet this year. Cash balances, we mentioned, are down the better part of $17 billion from where they were at the end of last year. The mix of C&I and CRE when we focus just on commercial balances is almost 50-50, where it was 60-40 before CRE. And when we look at the — or the construction balances, they’re down a couple of billion dollars. And so — and not to mention the margin is up and so the PPNR start point is higher. Things that we’ve got our eye on, and we’re not — we’re uncertain a little bit is how the merger expenses will be treated in the stress test this year. But once we get through 2023, it should be clean. And so that will be helpful. And then the other question is, what’s the Fed scenario, right?
We haven’t seen it yet. It’s very likely that it will continue to focus in the real estate sector. Previously it focused on hotel and retail. Those seem to be doing a little bit better. So it wouldn’t surprise us if the new focus is office and healthcare. And so it just depends on where the emphasis is from that perspective as well. But we start from a really strong capital position. We’ve got the current SCB covered, which is pretty high. And we continue to move the balance sheet in a positive direction, which if it doesn’t get us all the way where we want to be in 2023, it should carry us a long ways towards where we want to be in 2024.
