Mike Mayo: When you say into the 50%s, I mean, is it something — can you get back to 55%? Is that in your planning horizon, even going out a few more years? And it looks like the payments business is recatching its stride here. And along those lines, I didn’t see the slide anymore on the payments business combined with small business banking. You’re going to grow small business relationship like 15% to 20% and the revenues by 25% to 30%. I don’t see any slide for that. And I know you got — look, you got Union Bank deal, you had the issues of last March and April, and it’s okay. Your capital is back, the deal is done, and now we’re back to kind of U.S. Bancorp business as usual. So, I’m just trying to look for some color on that if you’re going to become the square of banking or if that’s still a goal, and how those revenues might help you improve that efficiency?
Andy Cecere: Sure, Mike. And it is still a goal. We do think this combination of payments and business banking and providing that comprehensive product set and capabilities to help people run their business is a key strategic priority, it continues to be. And I think the B categories that John mentioned are also a key driver of revenue, including payments, commercial products, trust and investment, and those are all areas that we expect continued growth on. The immediate pressure on net interest income is what’s causing us not to get positive operating leverage in the short term. But it is something that I believe, and as John mentioned, will abate and start to grow into the second half of 2024. And so, I think we’re going to get to the positive operating leverage.
We are planning on it. And we will continue to drive that efficiency ratio down certainly into the 50% — high 50%s at the beginning and continue to deliver positive operating leverage to get it even lower. That’s our objective.
Mike Mayo: All right. Thank you.
Operator: Your next question comes from the line of Matt O’Connor with Deutsche Bank. Your line is open.
Andy Cecere: Good morning, Matt.
Matt O’Connor: Hi, good morning. Just to clarify, the flat expense guidance for ’24 is also the adjusted level of ’23 of 17.0?
Andy Cecere: That’s correct.
Matt O’Connor: Okay. And I assume that includes any expense benefit from the exit of the ATM cash business that you referenced earlier?
Andy Cecere: Correct.
John Stern: Yes.
Matt O’Connor: Okay. And then just stepping back, like any other kind of small businesses or segments that you’re kind of reevaluating for, not so much kind of the regulatory proposals, which we’ll see how they may finalize, but just other areas that you’re stepping back and whether it’s in mortgage, given the smaller market there, or other parts of the business portfolio that you’re looking either to exit or to potentially lean into, that’s a bit different than you were thinking, say, six months ago?
John Stern: Well, I can start and Andy can chime in. I think we commented on the ATM business. I mean, you’re constantly evaluating certain things, particularly in the light of regulatory change. Clearly, a lot of common letters have been submitted in terms of the Basel III endgame. At the end of the day, it’s not going to materially drive whether we exit businesses or enter new businesses, that sort of thing. It’s just going to be a combination of a continual investment, as Andy mentioned, in terms of what we need to do toward achieving positive operating leverage and managing around regulatory actions. Those are some of the comments I’d throw out there.
Andy Cecere: I think I agree, John. And the only thing I’d add is that the environment and the competitive dynamic is something that causes us to be more aggressive or less aggressive in certain categories. And maybe the example I’ll give you is auto lending, which is, for us is not growing right now. And that’s because of the spreads and the returns are just not at our levels that we want to put on the books. So, those are areas that we’re going to not get out of or close down, but just not emphasize in terms of growth at the levels of returns that we’re seeing right now.
Matt O’Connor: Okay. And then, specifically in credit card, we’re obviously seeing a normalization of losses with you guys and throughout the industry and also very strong growth. So, if we adjust losses kind of on a lag basis, they are above a few years ago. At what point do you tighten up credit card and say we should slow growth at this point in the cycle, or do you think there’s still quite a bit of runway of, call it, good growth or healthy growth?
Terry Dolan: Yeah. Well, I mean, it is an area, Matt, that we think that there continues to be a nice growth in that particular space. It is an area, though, that certainly as we have looked at the economic uncertainties and all sorts of things, the pressure on consumers, especially given the inflationary sort of pressure. We — on the margin around the edges, we do make adjustments to underwriting and tighten that up where we need to. But when you end up kind of thinking about the overall credit performance of credit card business, we still think it’s a very nice business. We focus on prime, super prime sort of customers. And even through this cycle, I think it’s going to perform very well.
Matt O’Connor: Okay. Thank you.
Operator: Your next question comes from the line of Gerard Cassidy with RBC Capital Markets. Your line is open.
Gerard Cassidy: Good morning, Andy, and good morning, John.
Andy Cecere: Good morning, Gerard.
