I would also reiterate, we’ve had really very nice growth in the commercial product side. We’ve had — particularly in 2023. We would expect high-single digits there, given strength we’ve had in foreign exchange, derivatives, the fixed income, capital markets, loan syndication has all been performing very well for us. Our trust investment management fee also should experience growth led by our institutional service businesses and Corporate Trust and Fund Services, and certainly in wealth management, some of the fees associated with that. But one thing I would point out though in terms of service charges, we have exited our ATM cash servicing business and that was a business we decided to exit just given the high level of capital related to it in terms of intensity and investment.
And so, that will impact us by about $30 million to $35 million per quarter, starting in the first quarter.
Ebrahim Poonawala: Thank you so much.
Operator: Your next question comes from the line of John Pancari with Evercore ISI. Your line is open.
John Pancari: Good morning.
John Stern: Good morning.
John Pancari: John, thanks for the colors so far on the guidance. I guess similarly, can you walk through your — within the NII expectations you provided, can you walk through your expectation for loan growth for the year and how you expect that could traject? I know your side of demand weakening. And then the same thing on the deposit front, you can maybe give us your expectation of how you think growth can look like on an overall basis and maybe how the NIB, the noninterest-bearing mix could traject from here? Thanks.
John Stern: Sure. So, a couple of things there. So, I’ll start on the loan growth side. I do believe our expectation is that we will see growth in the commercial side. Of course, that was a little bit weaker this last quarter as we experienced pay downs, particularly as clients were accessing capital markets and things of that nature. But we’ve seen really a good pipeline build in that. We expect utilization to pick up and things of that variety. So, we feel like that, along with credit cards, will be good sources of growth for us, as we think about loan growth going forward. On the deposit side, as a reminder, we’ll probably be lower in the first quarter. We seasonally lose deposits just as we kind of go through the year-end process and just given the mix of our businesses, deposits end up being a little bit lower in the first quarter, but then we see more or less stabilization.
But there might be some headwind there, particularly depending on QT and how the Fed draining of liquidity out of the system will impact the numbers there. And then, going into your NIB comment, we’ve seen, of course, rotation out of NIB into other interest-bearing products. That continues but starts to wane as we go throughout the year. And again, as I mentioned, we’re going to be nine months by the end of this quarter past the last Fed hike, and that gives us some signal that that will begin to abate.
John Pancari: Great. Okay. Thank you for that. And then, I guess, if you could help us just think about how we should think about the magnitude of operating leverage that’s reasonable as you look at next year? I know we do have some color on how you’re thinking about NII and fees and then put that against your efforts to keep expenses stable, but I guess, could you just maybe frame it the range of operating leverage that you think is reasonable as we look at the next year?
Andy Cecere: Good morning, John. This is Andy. So, let me start with this and John can add on. So, as I said in my prepared remarks, we’re going to benefit from the cost efficiencies of the Union deal to total $900 million, and that is fully reflected now and into the run rate starting this quarter. So, we’re achieving those benefits because of the benefits of technology investments we’ve made, digital investments, operational investments, our risk platform. And so that is the benefit of the investments we’ve made, and we would expect to continue to invest in the business, in those capabilities and payments and technology modernization. So, we are also very cognizant in managing expenses very closely. We still have opportunities in terms of efficiencies in personnel and operations and activities around technology that will allow us to more efficiently deliver the services we have.
So, I would expect as we get towards the second half of the year that when we start to see that margin growth that John talked about as well as the fee normalization, that we would have opportunity for positive operating leverage and we’re going to — again, that is our long-term objective as always and we have levers to pull.
John Pancari: Great. Thanks, Andy.
Andy Cecere: You bet.
Operator: Your next question comes from the line of John McDonald with Autonomous Research. Your line is open.
Andy Cecere: Good morning, John.
John McDonald: Hi, good morning. I was wondering if you could give a little color on what you saw this quarter in credit quality, on the NPA movement, particularly in commercial. And then, also, John, maybe just some thoughts on the potential charge-off trajectory as you see things migrate from NPA into charge-offs this year, what we should be thinking about? Thank you.
Terry Dolan: Yeah. Good morning, John. This is Terry Dolan. So, I’m going to take this question related to credit quality. Your first one is really related to non-performing assets and some of the things that we saw in the fourth quarter. If you end up going across the portfolio, generally pretty stable. We did see a couple of idiosyncratic loans that went into non-performing status. Both of those were kind of Union legacy sort of credits, so continue to kind of work through that. But I would also say that both of those are fairly well collateralized. So, we don’t necessarily see a lot of charge-off content related to those idiosyncratic credits. When we look at net charge-offs and the trajectory, I would expect that — we would expect that it will continue to kind of normalize.
Credit card is kind of getting closer to pre-pandemic levels, but that will continue to move up a little bit. Our expectation is that for full year 2024, we’ll probably be in kind of in the mid-50s in terms of the net charge-off rate.
