Mike Maguire: I think we got after the lowest hanging fruit pretty quickly. Ebrahim, the student portfolio was not a strategic asset for us. It was less profitable. There have been other businesses within even our C&I business, for example, that we didn’t feel like we’re as highly as strategic. We’ve talked a lot about correspondent mortgage and some of our national indirect lending businesses. So, I think that we have a pretty good line of sight to it. I think going forward, it’s just much more around optimization, right? And being more disciplined in how we select opportunities, how we price opportunities. We’re seeing that come through in our results as well. But there’s not, I don’t think a significant shoe to drop on portfolio sales and those types of things.
Bill Rogers: Maybe the only thing to add to that, Mike, is just particularly in the areas that we’ve seen really good growth like Sheffield and Service Finance, we’ll do more securitization. So, we’ll create more velocity around those things on our balance sheet, which I think are great. So, continue the production, continue to acquire new clients but increase velocity. And we’ll look at that with other parts of our portfolio. So, I think Mike said it right, I mean it’s not a major power shift. But this optimization strategy, our team has really embraced, and I think we just continue to have more opportunities, I’m going to say, around the edges but maybe more significant that as we move forward. And you saw that reflected in the NIM this quarter.
Ebrahim Poonawala: That’s helpful. Thank you both.
Operator: Our next question will come from Erika Najarian with UBS. You may now go ahead.
Erika Najarian: Hi, good morning.
Bill Rogers: Good morning.
Erika Najarian: This first question is for you, Bill. I think just taking a step back and thinking about Slide 16, I think a handful of your investors did think that once you struck the deal with Stone Point, that it was a sort of one-way exit. That being said, that deal was struck in February, right? The world didn’t change in until March. And so my question for you is that you have this monetization opportunity for Truist Insurance Holdings. And as you think about the proceeds, again, clearly, the world has changed. So, how do you balance essentially the push that some investors are calling for in terms of restructuring your portfolio very meaningfully? And I can see in that in that middle chart Slide 16 that portfolio is a very, very slow lead versus if you do that, you’re essentially making the same call you did in 4Q 2020, which is assume that rates are going to stay where they are versus maybe doing more on the RWA mitigation side, which will cost you more in NII over the near-term, but won’t trap you into making a rate bet.
Bill Rogers: Erika, I think you’ve been in all our meetings. These are all the things that we’re evaluating. Everything is in a bucket to discuss. And as you noted, I mean, the world changed pretty substantially from March. But it just reaffirmed our desire to have this flexibility. And going back a little bit to the independents question, remember, we sort of got this large capital benefit. But we always have this – part of getting that benefit was the expense of creating the independents over the long term, as you just highlighted that. So, that – to us, that was always a really good trade-off in terms of creating that flexibility. So, I don’t want to speculate today as to we’re going to go left or we’re going to go right, other than to say, I think you’ve encapsulated almost perfectly in your question all the alternatives we would consider and their trade-offs to every single one.
There’s not one perfect path, there are trade-offs to all of them. And we’re going to make the decisions that are in best long-term interest of our shareholders. That’s going to be our North Star and the guiding post as we think through this and factor in all the environment that we exist today, and that will exist tomorrow with everything that you put into your question.
Erika Najarian: Thank you. And my second question is far more boring. On the service charges, Mike, it went down to 150 from like a 240 handle and 249 in the previous quarter – previous March quarter. Was that a onetime reversal? Or is this a new run rate? I know that there was some offset in other income, but just trying to think about the moving pieces for fees from here?
Mike Maguire: Yes. During the quarter, the accrual that we referenced was $87 million, and that’s not something that we would expect to continue.
Erika Najarian: Thank you.
Mike Maguire: Yes.
Operator: Our next question will come from John Pancari with Evercore ISI. You may now go ahead.
John Pancari: Morning.
Mike Maguire: Morning, John.
John Pancari: On the commentary you gave to John McDonald’s question regarding some incremental pressure and margin in NII in fourth quarter and into the first half, can you maybe help quantify that magnitude of the pressure that you would expect based upon your rate outlook and the balance sheet dynamics? And then secondly, could you possibly unpack the deposit growth assumption and deposit beta assumption that’s baked into that? Thanks.
Mike Maguire: John, I’ll just maybe give you a sense for the outlook on NIM for the fourth quarter. I think we’re – again, as I mentioned, with the deposit betas, creeping, we’re at 49%. As you know, as of the third quarter, we were at 44 in the second. We would expect that to continue to worsen a bit. Just as customers continue to reprice a bit, that’s obviously slowing. And for the most part, across three or four of our segments is sort of all the way where we think terminal betas might be, but we’re still seeing some movement on the consumer side of things. So, I think a little bit of pressure from the betas, again, offset perhaps a bit by some of the credit spread widening that we’re seeing. So from a NIM perspective, maybe it’s a few basis points.
As far as our revenue outlook for the quarter, we have a sense that it’s probably worse, 1%, perhaps flat. NII is going to be down a touch and fees will be up a touch. So I’d just sort of maybe leave it at that. As far as the balance sheet sizing, we had a much more significant decline in earning assets during the third quarter, around $18 billion, we would expect that to be much, much smaller in the fourth quarter, so maybe closer to the tune of $5 billion or so. You’ve got the securities portfolio that’s cash flowing at about $3 billion and maybe just a little bit of pressure on loans. So, I think that’s probably the math you need.
John Pancari: Okay. Great. Thank you. That’s helpful. And then secondly, you had a pretty solid remix of the funding base that you discussed a bit on Slide 11, in third quarter, given the, some of the pay down or reduction in the club advances, et cetera. How much more do you think of rationalization of the funding mix do you think there is, in coming quarters as you look at the setup now? Thanks.
Mike Maguire: Yes. I think the third quarter was unique in the amount of remixing that was accomplished. I mean, you saw the student loan portfolio was a big component of that. And that’s a pretty low net interest margin contributor. Same thing, the investment portfolio at $3 billion. We took cash down by close to $5 billion. So if you think about that stuff as sort of right at SOFR, really, really thin spreads, and then at the same time taking off the FHLB advances. That was really the driver, that mixing that saw some of the benefit on the NIM and that sort of aided the NII in the quarter. I think in the fourth quarter you’re going to see a more sort of traditional March of again I’ve hit it deposit costs creeping up a little bit higher.
Hopefully, again will continue to be successful as we have been around. Thinking about rate paid, I mean, I’m really pleased by how the businesses has been performing. I mean, we’ve been testing different rate strategies. We’ve been looking at promo rates. We’ve looked at exception-based pricing and structure and so that will continue. And so we’re going to try to do the best we can to manage that. But I think the mix driver that we saw in Q3 is really a Q3-only opportunity.
