And so, all those dynamics have a downward impact on average deposits. And we just want to make sure we’re prepared for that as we think about the scenarios. We’re trying to give you guys a reasonable estimate of the upside downside that we feel. And — but that — having deposits down meaningfully in the quarter, that’s inside our expectation of what could happen.
Mike O’Grady: And, Brennan, it’s Mike. Just to add at a very macro level, if you just look at deposits starting back pre-pandemic and then quantitative easing obviously had a very meaningful impact on those deposit levels going up. And then we saw the reverse with quantitative tightening. And so some of this will depend on just the broader macro impact of tightening and when the Fed and other central banks decide to stop bringing down the size of their balance sheet. And I think then we’ll reach a new level of normalization of deposit levels. And right now, we’re, I would say, well above the pre-pandemic quantitative easing levels. So to the extent that we’re closer to the end of quantitative tightening, the expectation would be that we start to settle out somewhere in this neighborhood.
Operator: We will take our next question from Brian Bedell with Deutsche Bank.
Jason Tyler: Good morning, Brian.
Brian Bedell: Great. Thanks. Good morning, good morning. If I can ask my first question on NII. So just looking at the second half and of course, everything is difficult to predict with deposits and everything. But if you can just talk about how Visa might work its way, I think there’s a couple of stages of deployment, so it’s more of a 3Q and 4Q lift versus 2Q. I think you said it was pretty minimal for the 2Q guide. Maybe just talk about the timing of that? And then I guess, do you see a scenario in which you might actually have positive net interest revenue growth in ’24 versus ’23 given the really strong start to the year?
Jason Tyler: Sure. So just on timing of Visa, you’re right. We’ll be able to get a portion of it done here in the second quarter, but some of it will bleed over into third quarter. And if you’re just correlating to what’s the impact on NII, obviously, that — it doesn’t have that much lift just because we’re not getting as much timing from it. But you’re right, there will be some lift. But I’ll come back to the — the biggest benefit of Visa is more on its capital and our liquidity. If you think about the most simplest component of putting those dollars at the Fed at IOER or IORB, then you don’t get a dramatic lift beyond what would happen with a $0.5 billion or $700 million deposit coming in. And so at no cost, but it’s not that dramatic of an impact.
And so the real help is a little bit longer term and us being able to think about strategic ways to deploy that and ensuring that we get a good return on it. So we’re trying to keep a lot of different paths open. But — and again, this is also half of the position that we’re talking about this year. there’s still another half to come, hopefully, next year and some of that may bleed further.
Brian Bedell: And then on the possibility for NII growth in ’24, given the start?
Jason Tyler: Yeah. I think it’s — you started with it. It’s so early in the year to predict that and to predict where things go. We’re still getting some lift from different components of maturities coming in and other elements. And so there are some tailwinds that we have, but it’s very difficult to predict that far out.
Brian Bedell: Yep. And then just on expenses, the second quarter, the numbers you gave, obviously, there was just the biggest categories that looks to me like that [Technical Difficulty] guidance that you gave, not including other things. Just I guess if you can confirm if that’s accurate. And then based on your comments of working harder on expenses and getting some of this — looks to be some of that seasonal lift in the second half, kind of getting pulled forward, should we maybe less expense build in the second half versus the second quarter that we typically see on the seasonal lift? And then putting that all together is — I know you’re targeting obviously positive operating leverage on fees. But if you actually have a good NII backdrop, maybe we actually potentially see positive operating leverage inclusive of NII, so on total revenue.
Jason Tyler: Yeah. So I’m going to hit the second and third parts of that. You broke up on the first. I’m going to ask you to repeat it when I go through part of it. On the second half lift in expenses, absolutely right. Second quarter is a big step-up. It’s a big step-up in both outside services and equipment and software, not seeing those types of increases in the second half at all. Not saying they’re going to be flat, but definitely not — that’s not the trajectory that we will be on. And we’re working very hard to find productivity and a lot of that can be inside this year. And so still work to be done there. And then as we think about fee operating leverage, that’s what we focus a lot on. I mean the NII is unpredictable, and it’s less correlated from a management perspective to expenses.
And so the real focus is on fee operating leverage. And so — and that’s how we think about the financial model and ensuring that we’re being disciplined about the expenses relative to what we’re bringing on. Mike talked about bringing on more scalable business that has — that improves our chances of getting good fee operating leverage, but I wouldn’t comment on overall operating leverage given the volatility and lack of controllability in NII. But tell me what we missed on the first part of your question.
Brian Bedell: It was just a technical on the guidance you gave for 2Q. I think it implies expenses down like $10 million to $15 million versus 1Q, just on at least the categories that you talked about and the three different ranges that you put out there. I just want to make sure that was — I want to confirm that was accurate.
