Ken Usdin: Okay, got it. And then just looking out at the longer term guidance you gave just talking about the 3.25%, 3.40% medium term NIM range, it seems like that most of that can be gotten from the three buckets that you show, just getting curing from the fourth quarter level. And I see that you put in a 3.25% end of ‘25 Fed Funds rate. So I’m just wondering how you expect deposit costs and just beta to traject, and I know there’s a lot of moving parts in there too because of the growth that you’re expecting as well, and mix changes, but just can you maybe just start by just talking about if you’re getting to the low 50s on the way up, just how that expects to act and influences that medium-term NIM range? Thanks.
John Woods: Yeah, it’s a big driver. I mean, I think the big puts and takes there. I mean, you’ve got the swap portfolio, which is a big tailwind as we’ve talked about. But if you go over to the deposit side of things, we are looking at deposit migration stabilizing around mid ‘24 after that first cut in May. You see deposit migration stabilizing. And then as cuts continue, we start flipping to down beta type of expectations versus the up beta. And we look at the early 2000s as being instructive for a lot of this, where that tightening — that loosening cycle or rate cutting cycle would imply a 35% to 40% down beta for the first call it 100 to 150 basis points. And so that’s a good, I think, yardstick to think through our expectation that in the early part of the cycle, our down beta will be less than the full up beta, so our full up beta is low 50s, but nevertheless we’re going to get big contributions from down beta and that will grow over time getting close to where the up beta ended up.
Ken Usdin: Got it. Okay. Thank you.
Operator: And your next question will come from the line of Erika Najarian with UBS. Your line is open.
Erika Najarian: Hi. Good morning. I just had one follow-up question. Putting all your answers together, John and Bruce, about the outlook for 2024 and the underlying dynamics of net interest income, it seems to me that if we put together what you just said to Ken about deposit betas in Slide 23, that despite the exit rate of your net interest margin forecasted to be 2.85% in the fourth quarter, based on everything that you’ve told us, it seems like you’ll see a three handle in terms of that underlying NIM that Bruce discussed in 2025. Is that a good bridge to thinking about where you’re exiting in ‘24 and then that medium-term range that you gave us?
John Woods: Well, I would say, well, we’re exiting ‘24 at 2.85%. We’ve indicated that’s where fourth quarter of ‘23 is going to — no, fourth quarter of ‘24 will be. And so that’s headed to the 3.25% to 3.40% range. And so you would see us crossing that 3% level in ‘25 sometime, on the way to 3.25%.
Erika Najarian: Perfect. Thank you.
Operator: Thank you. And your next question comes from the line of Gerard Cassidy with RBC. Your line is open.
Gerard Cassidy: Hi, Bruce.
Bruce Van Saun: Hey, Gerard.
Gerard Cassidy: Bruce, you guys have done a great job from when you went public to where you are today in transforming this company. So I’m curious on your medium term outlook for ROTCE, on the improvement you highlight that the private bank you’re targeting at 20% to 24% ROTCE. Can you share with us the mix of how you get there, meaning what percentage of revenue do you think you need to reach from fees versus net interest income? And then also what kind of pre-tax margin do you think you’ll need to get to that 20% to 24% target?
John Woods: Yeah, maybe I’ll just start off with that, Gerard, it’s John. I mean, I think, our fees to total revenues are in the neighborhood of 25%. And I’d say over the medium term, you’re going to see that migrate closer to 30%. And that would be consistent with a balance sheet optimization efforts where all of the capital we’re putting to work on the front book would have relationship opportunities with attractive deposit and fee-based opportunities associated with it at a much greater rate than what we’re seeing running off in the back book. And so that’s going to drive that fee percentage up closer to 30%. And I think that the returns that we expect from a, call it, the ROTCE return that you’re seeing in the medium term is consistent with a return on tangible assets that’s north of 1%. So you see that getting closer to 125 basis points as a way to think about what the returns are on the asset side.
Bruce Van Saun: John, you’re answering at the comprehensive company on that MTO page. I think, Gerard, is focused more specifically on the private bank mix. But there, I would say, it will build over time, the fee percentage, as we kind of get the wealth cross-sell. But we should at least be at kind of where we are today in 75%-25%, and then I think there’s kind of upside from that over time. And I do think the spread on the private bank assets is very significant today, given the high percentage of low-cost deposits in there. We haven’t really seen the loans come on in size yet, but generally capital call lines tend to be priced with a nice return. And I think some of the other business lending and HELOCs and things that will maintain our price discipline and achieve a good spread there as well. So I think if you looked at kind of mature private banking models to have a 20% to 25% return on equity is realistic. I don’t know, Brendan, if you want to add to that at all?
