Back to — so in terms of our [indiscernible] management posture, incrementally from here I see the opportunity to add downside rate reduction hedges. Our hedging strategy is incrementally shifting from a focus on capital protection to a focus on down rate protection, as we discussed in the prepared remarks. And we added some of that in Q4. I suspect we’ll continue to be incrementally adding into those down rate protection strategies over time, which would gradually reduce downside asset sensitivity. In terms of deposit beta and what we would be expecting for the first x basis points, to give you a sense, in the scenario that I’m looking at where rates in fact begin to fall in March and then have five cuts in, even though it’s little more than your scenario, we would expect to see about a 20% roughly down data over a three quarter period by the end of 2024.
We would, of course, be less than that if there was an extended pause through the late summertime period, but just to give you a sense of the sensitivity to your question.
Erika Najarian: So clear. Thanks so much.
Zach Wasserman: Thanks, Erika.
Operator: Our next question is from the line of John Pancari with Evercore ISI. Please proceed with your question.
John Pancari: Good morning.
Stephen Steinour: Good morning, John. On the capital front, I know your CET1 increased nicely, about 15 basis points to 10.25 basis points in the fourth quarter. Just as you look at their trajectory here and your outlook for earnings and capital, organic capital generation, how are you thinking about potentially ramping up buybacks and capital return overall? Thank you.
Zach Wasserman: Great question, John. Thanks. This is Zach. I’ll take that one. We’re very pleased with the outcomes around the overall action plan we’ve had with respect to managing capital and capital priorities throughout the course of 2023, as we’ve talked about, actively modulating the pace of loan growth to balance additional loan growth and revenue, but also accreting capital and balance sheet equally in the fourth quarter benefiting significantly from a recapture of AOCI, which allows us now to even yet again accelerate the pace of loan growth, as we discussed earlier. And for the foreseeable future, I see us continuing on with that posture, driving the most important capital priority we have is to fund higher-term loan growth.
And there is a significant opportunity for us to do that, which is the most value-creating decision that’s in front of us. And importantly, at 8.6%, our adjusted CET1 is — it has been rising a lot. And we want to drive that into the 9% to 10% operating rate that we’ve discussed over time. So I think for the foreseeable future, we’ll continue on with that plan. Once we get into the 9% to 10% range with adjusted CET1, we’ll reassess our posture with respect to share repurchases. Over time, share repurchases are a really important part of the value creation model for the company. And I absolutely expect us to get back to them. And we’re going to drive to those outcomes as soon as we possibly can.
Stephen Steinour: And John, as Zach shared with you in the third quarter call, we are advancing as if the pending capital requirements are in place. So we’re building capital now that will meet those requirements should they be adopted.
John Pancari: Great. All right. Thank you. And then also for you, Steve, I guess related to that, maybe if you could just talk about the whole debate around the need for scale as you look longer term at the evolution that’s going on right now within the regional bank, both the last year’s failures and so the regulatory requirements and the need for scale to compete. How do you view the potential for whole bank M&A as a role in Huntington’s outlook and what’s the earliest do you think from an industry perspective, not necessarily for Huntington, that you think we can actually see a pickup in whole bank M&A given the backdrop and regulators.
Stephen Steinour: Well, that’s a series of questions, John. I’ll try to answer them, but I may miss on one aspect. Let’s just back up for a moment. We had three idiosyncratic banks fail. And you’ve seen the rest of the industry sort of adjust and adapt and respond very quickly. And the core strength of the industry, I don’t think, is in question now. For us, we believe in having a very focused, disciplined, and broadly diversified set of businesses. And we’ve been able to build those and achieve that posture, and it has served us very, very well as we’ve seen in the second half of last year and continuing to this year. So we’re very bullish on our ability to organically grow and expect — and that’s our focus. We’ll continue to do that.
