But the uncertainty is really the key factor there. I will note that even without share repurchase, we do have one of the stronger common dividends in the industry. So, we do feel like we’re returning capital to shareholders. But I would love to buy at these prices also. We think the share price is a fantastic buy and very attractive. The idea of buying back those shares is very attractive. But certainly for this year, we are on pause and then we’ll assess the uncertainty factors as we get into 2024.
Curt Farmer: Jim, I would add that while we have been cautious on RWA and managing down some aspects of our loan portfolio, that’s not sort of our long-term perspective — our long-term objective. We do want to grow, again, as a company. We see opportunities to grow really based on sort of how the economy plays out as we get into 2024. And that’s always the first place we want to use our capital is around the loan growth equation. And then, secondly, John, I think you are aware that we’ve done a good job over the course of the last three or four years of leveraging buybacks. And so, we do think it’s an important tool, but again, sort of balancing between the two will be really important.
John Pancari: Makes sense. Thanks so much, Curt.
Operator: Thank you. Next question is coming from Steven Alexopoulos from JPMorgan. Your line is now live.
Curt Farmer: Good morning, Steve.
Steven Alexopoulos: Hey, good morning, everyone. So, I want to go back to your response to Jon Arfstrom, his question where you said NII would likely bottom in the first quarter. Maybe Jim, from a NIM view, do you see NIM following the same trajectory maybe stepping down in 4Q then 1Q and then we bottom there?
Jim Herzog: Good morning, Steve. Thanks for the question. I mean, as always, I’ll put my disclaimer out there that we’re not a big NIM percentage shop. The lumpiness of our commercial business model offer results in a NIM percentage that doesn’t necessarily correlate with income. So, one that I am always hesitant to comment on. I’ll just say in general that I do expect NIM percentage to improve as we bring down cash and purchase funds over the next quarter. So, I do think we’ll see some positive traction there. And I do think it’s fair to — in a very general way, to say if we see net interest income troughing in Q1, that’s likely the trough for NIM also. So, we’ll continue to keep an eye on that. But that’s what I would say big picture.
Steven Alexopoulos: Okay. And then Jim, given the comments that you’re fairly neutral now in terms of ALCO positioning, if rates stay higher for longer, I know you don’t like commenting on this, but I’m going to ask you anyway, directionally speaking, if we bottom in the first quarter, how do you think we trend through the year? Assuming no cuts, assuming that the Fed just stays really on hold, do you think directionally NIM trends favorably through the year?
Jim Herzog: That’s going to depend on some of those variables that I mentioned early on. Loan growth, loan spread, pricing, those are all big factors. But I do think that if we do stay higher for longer and QT continues, that does have the potential to put pressure on NIM. It’s not our base case. It’s not what the forward curve is saying, higher for longer. But we haven’t been in this situation in a long time as an economy and an industry, so it’s really hard to say. But we will see some of the continued deposit pressures if we do stay higher for longer, I believe.
Curt Farmer: Jim, I do think that we have been very successful on the overall pricing side, on the lending side, obviously, taking into account sort of full relationships and doing the right thing by our customers. And so, I think there’s a chance for us to offset some of that just by pricing discipline and potentially loan growth in 2024.
Jim Herzog: Yeah. As I mentioned earlier — thanks, Curt. I mean, we do feel like we have the right to ask for the proper pricing relative to our cost of funds. And to the extent there is less liquidity in the economy, the deposit pricing cost of funding goes up. And I would expect to recover a piece of that or perhaps all of it in our pricing equation. But again, we’ll see what the market allows and what we can demand from it.
Steven Alexopoulos: I know one of the factors is noninterest-bearing levels, right, which were down again this quarter. But I’m curious, are you seeing customers still optimize and move balances out in search for higher yield, or is it just back to spending cash?
Jim Herzog: Steven, that’s actually one of the areas of encouragement to me. I mentioned the deposit betas had really moderated in recent weeks. I would also say the same is true of noninterest-bearing deposits. If I looked month by month since the disruption in the spring, the decline in noninterest-bearing deposits has slowed up every month and it was essentially flat from August to September. I’m not saying it will always continue to be flat, but I do think that these corporate treasurers manage their own cash levels. They’re starting to hit that floor where they need a certain amount of cash to run their businesses and we’re really seeing a slow up as a result. We think they’ve squeezed that orange about as much as they can.
Now, could there be a little bit more to go? Yes, it’s possible. But we do think that the trend is our friend in this case, and we’re really seeing a flattening out of the noninterest-bearing decline. So, I don’t see a lot of decline occurring at this point in time, probably a little bit more, but I’ve seen — I think we’re well past the worst of it.
Steven Alexopoulos: If I could squeeze one final one in. I hear all the comments around moderating expense growth in 2024. But if we step out, if we look at this quarter, revenues down 9% year-over-year, expenses were up 11% year-over-year. We know why. But earnings are down 30%. As you guys think about the next year, are there levers to pull to start generating more meaningful operating leverage? Or is it just a tough environment and you have to just wait for the yield curve to improve and other things? Or do you sense we need to do more here and there’s other levers we could pull to get at least earnings heading into a more favorable direction? Thanks.
Curt Farmer: Well, Steven, I would just say in general, as a company, we are always committed to delivering positive operating leverage. Short term, that’s a bit more challenging as you just outlined for us for all the reasons that we know. But two things there. One, first and foremost, we are focused on top-line revenue growth, and we believe we’ve got great momentum there with the things I outlined to you previously, whether it’s product expansion and capabilities, treasury management, capital markets, et cetera. We continue to add talent in many other areas. We just had a very successful list out of a wealth management team in Southern California and the expansion into the Southeast, but also just adding depth in the existing markets that we operate in.
