John Stern: Hey, Betsy, it’s John. Thanks for that. So, you know, in terms of the behavior, I think what we’re seeing is the trends are slowing, the rotation is going — maybe, first answer your question more from NIB into more IB, and it’s more of the — it’s the trade-off for the client. And what we’re seeing really there is clients are just optimizing and being as just looking at their balance sheet, looking at their balances, especially in this higher-rate environment and now that they know it’s going to be here for a longer period of time. They’re taking a closer, closer eye to it. We’re just seeing that more and more. So the trends have been slowing of that mix-shift is just taking longer than what we would have anticipated.
So, you know, in terms of compensating balances that those are the things that are on a case-by-case basis with the clients. They, you know, we look at the ECR rates that we pay and customers will then make decisions based on that. And so, you know, those are kind of the trade-offs that we see relative to that right now.
Betsy Graseck: Okay. So treasury services potentially could see a little pop-up in growth as how you pay for services changes or is that an overreach?
John Stern: It’s possible. But again, the dynamic is pretty fluid is kind of how I would describe it.
Betsy Graseck: Okay. And also folks are staying on your balance sheet as opposed to going off-balance sheet into MMF.
John Stern: That’s right. Yeah, a lot of this is defending clients and making sure we’re there for them. You know, again, we view this as a temporary phenomenon. This is just a timing thing. It’s really just the churn here is continuing. It’s just being — the pace of it is taking a little bit longer for it to stabilize than what we would have anticipated. And that’s really what’s going on here. We want to make sure we’re here for the long run for our clients and serving them as we kind of transition through this rate environment.
Betsy Graseck: Got it. Okay. That’s super helpful. And then just, you know, kind of 30,000-foot question here. Just — could you help us understand how you are currently thinking about the asset sensitivity of U.S. Bancorp at this stage? How should we think about what higher for longer means for you for the whole organization? Thanks.
John Stern: Yeah, sure. So I think, you know, in terms of asset sensitivity from a risk management perspective, we are as neutral as you can be. We — we’ve taken a lot of different actions to make sure because we just don’t know where the rate environment is. I mean, it was seven cuts at the beginning of the year the market had now it’s closer to zero. So we just want to make sure where we are prepared for different types of rate environments. And, you know, so I think as we think about the asset sensitivity, that is really how we’re positioning ourselves. As we think about, you know, higher for longer and what that means, the drivers there are going to be clearly deposit betas and rates and paid and all that sort of things may creep up.
The offset to that is we’re going to have asset churn on the loan side and — as well as the investment portfolio side. And over time, those things will offset and turn ultimately in our favor. But it’s going to be that timing that’s really going to matter in terms of what are those things move and shift over time.
Andrew Cecere: So Betsy, as John said, this is Andy. We’ve tried to narrow the corridor of volatility given the uncertainty in the outlook. And so, we are about as neutral as we can be given all the puts and takes John talked about.
Betsy Graseck: Super. Thank you so much. Really appreciate it.
Andrew Cecere: Thanks, Betsy.
John Stern: Thank you.
Operator: Your next question comes from the line of Ken Usdin of Jefferies. Your line is open.
Ken Usdin: Hey, thanks. Good morning.
Andrew Cecere: Good morning.
Ken Usdin: If I could ask a couple of questions on the fee side. One, can we just talk a little bit through the payments businesses? It looks like the overall year-over-year growth rate was 4%. I think you’re aspiring for upper-single digits. It looks like corporate was down year-over-year and maybe the rate in merchants slowed a little bit. So can you just talk us through some of those dynamics and then how you’d expect that trajectory going forward?
Andrew Cecere: Sure. Yeah, I think — thanks, Ken. I appreciate that. We can look at — maybe I’ll take them in order. Merchant, you know, was kind of in that 4% area, as you mentioned on the fee side of things. You know, on that side, this quarter, we saw travel being a little bit down, but the other underlying metrics really have strong growth. We saw our tech-led initiatives really continue to propel very nicely. We saw high-single-digit for virtually other — all the other categories in that space. So we think the travel is just kind of a short-term nature thing here and we’re well-positioned and continue to feel good about high-single-digits there. On the corporate side — corporate payment side, as you mentioned, that is — it was negative over this year-over-year basis, but we are lapping the freight weight that has happened over the past year, and that will really churn.
