But it feels like that swap maturity is part of why that Nike Swoosh could be steeper. Am I thinking about it the right way?
Bill Demchak: I don’t know that we expect it to be deeper. We purposely drew the line to be a little bit thick because we don’t know exactly when that trough might occur. I think all of the commentary on ’25 is in some ways, mechanical. We’re simply taking our fixed rate assets and replacing them at market and we know what the maturities of those assets are. So in short form, one of the reasons we highlight that and also show the steepness of the curve is our balance sheet, the fixed rate assets on our balance sheet are shorter than virtually all of our peers and at a yield level that is somewhat lower. So we have a big pickup in fixed rate earning yields sooner than I think the market expects, which is in turn what gives rise to the slope of that curve, whether it troughs in the second quarter or the first week in the third quarter or the fourth week and — who knows…
Erika Najarian: I don’t think it’s the perfect timing though that investors are worried about in terms of second quarter and third quarter. It’s just that your new guidance would imply sort of after the first quarter that your average NII would be like 3%, 3.7% or something like that, right? So to get to a record net interest income, it would have to be a pretty significant progression from there. So that’s sort of — I’m trying to set the stage for you guys to build that bridge, because I think that investors really believe that you can reach that?
Bill Demchak: I think that, that if you want to call it the Swoosh, I think the Swoosh is still accurate, I think. So I’d say — what else to say, it’s consistent with our guidance and it’s still accurate.
Operator: Our next question comes from Ken Usdin with Jefferies.
Ken Usdin: Just a follow-up on that swaps book on Page 6 of the deck, couple of billion dollar decline in the receive fixed. Any changes this quarter, whether terminations or new adds? And any thoughts in terms of like how you change and utilize that in terms of last answer of trying to move that forward?
Bill Demchak: I don’t know that we had changes this quarter…
Rob Reilly: Going into Q1 ’24. Is that the question, Ken?
Ken Usdin: No, just did you terminate any swaps this quarter and add any new, and just kind of to remind us of the understanding of what’s still yet to go after with the…
Rob Reilly: Yes, we terminated some, we added some net down. But that’s all in the normal course.
Bill Demchak: I mean I think we’re missing your question. What are you trying to get at?
Ken Usdin: Yes, I was just trying to get at just what changes you’ve made inside of the portfolio outside of the normal maturity schedule, which I think we see in disclosures quarterly. Just wondering did you terminate swaps, did you add some new ones and then just remind us about the way forward…
Bill Demchak: We terminated 3.6 and added some. And just to remind you, when you terminate you basically lock in a loss to the life of the original contract and we’ll do that at times simply to reposition where we have exposure.
Ken Usdin: Second question, just on the fee outlook. Good to see, first of all, in the fourth quarter, the capital markets improvement that you saw. Just wondering how much of a driver is that of your expected fee growth next year, your pipelines in Harris Williams, et cetera? And what other pieces do you expect to see growth in this year?
Rob Reilly: Ken, just as I said earlier, on the capital markets, a nice rebound in our Harris Williams activity. Pipelines are good, they support year-over-year growth of close to 20%, which is what I mentioned earlier. In terms of the other fee categories, asset management flattish up a bit, that will be market dependent. Card and cash management up low to mid-single digits. Lending and deposit services that will be down mid-single digits, and that’s reflective of anticipated lower service charges on deposits. There was a number of items that we did in ’23 to reduce overdraft charges for our clients, so that’s good for our clients, but that will be some lower fees, about mid-single digit down. And then mortgage outside of hedge gains, flattish, down if you include the hedge gains.
Operator: Our next question comes from Mike Mayo with Wells Fargo.
Mike Mayo: Bill, December 5th, your [earnings] words. I quote skill matters today more than it ever has prior to March and the mini crisis. We knew the technology mattered. We knew scale and brand mattered. We just eliminated tailoring and regulation for all intents and purposes, et cetera, et cetera. You just go on to say that this will never be reversed. Scale is more important than ever. I could give the whole speech, but it was — it seemed like a passioned speech, more than I’ve ever heard you say before. So why now? And along those lines, I mean, if you had better scale when you get positive operating leverage in 2024 with a chance you could do that, but I think you’re talking further out. I think you’re talking about organic and maybe inorganic expansion, but help me out there, if you could.
