Operator: Your next question comes from the line of Mike Mayo from Wells Fargo Securities.
MichaelMayo: I guess this goes in the category of no good deed goes unpunished. Your efficiency ratio of 55%, do you think that can improve next year, which is another way of saying is there any shot at getting positive operating leverage? And when I give the positives and negatives, and correct me, it looks like from the negative, the RWA diet certainly helps capital, but has a cost to NII. And I think you mentioned NII not bottoming maybe until first second quarter. You have the cumulative beta going up to 53%. It’s in line, but still going higher. You’re opening 35 new branches a year. On the other hand, your RWA will end and maybe you can lean into the balance sheet more. You mentioned the deposits, the smallest DDA increase since March, the excess cash, which you could choose to put to work, so really part of the tailwind is the asset beta relative to the deposit beta.
So does your efficiency improve next year? Can you get positive operating leverage? Is that too much of a stretch? How do you think about that?
JamesLeonard: I think it will be environment dependent, which I’m sure is not the answer we want. But I think you hit on all the right points, Mike, which is the RWA diet makes positive operating leverage difficult in 2024. With that said, we will do everything in our power to deliver as good a results as we can, but I think it will be a challenge in 2024.
TimothySpence: The old saying is Cincinnati invented hustle, so we’re going to work as hard as we possibly can on that front.
MichaelMayo: And just clarification on the credit side. Did I hear you correctly, you have zero office delinquencies, zero office charge-offs. Commercial, you have the lowest inflows to NPA since 2Q ’22. You reiterated 35 basis points to 45 basis points through the cycle. Is that correct? And I know it’s been asked already, but you’re saying the economy is grinding lower doesn’t look good. So you just say you’re credit is economically insensitive at this point? I mean that’s like — do you think you could maybe be wrong if things don’t go so well.
TimothySpence: Until you got to the last part there, I was going to say in a word, yes. But then you made the question a little more complicated. If you want to…?
JamesLeonard: All of those facts are correct, and we feel very good about all of the work we’ve done on the credit portfolio over the last 15 years. In terms of it being economically insensitive, no, but within any industry, there are going to be winners and losers, and that’s where it comes down to that client selection that Greg referenced. We just believe we are very well positioned, and we’ve been very diligent and part of the benefit that we’re getting right now is the fact that we were not stretching for loan growth over the past several years and we probably had the lowest loan growth guides over the past several years running. And so back to our priorities of stability and profitability ahead of growth.
Operator: Your next question comes from the line of John Pancari from Evercore ISI.
JohnPancari: Just on the credit side. I know you mentioned that the new NPA inflows were the lowest since the second quarter of ’22, excluding the large charged-off items, I guess, could you maybe talk about the sustainability of that? What are you seeing in terms of risk migration and some of your internal risk ratings and everything? Do you think the inflows are likely to remain that low at this point? And what’s the driver of the pressure? Is it the areas everybody suspects in terms of CRE or is it more on the C&I side?