You may see further announcements from us this year in terms of organic growth moves. And I expect that we will continue to be maybe a bit contrarian, but agile as we continue to advance. We think we have tremendous opportunities already in the business lines that we have. So in terms of scale, I think the regulatory response is in reaction to those three failures, is raising questions about how much [indiscernible] will the industry or banks will benefit from in the industry over time. The expectations have clearly increased, as they should. And we are investing in our risk management platform. I think I shared on the third quarter call, for example, we will have much better intraday visibility of [indiscernible] in the near term as a consequence.
There are a series of things like this that we’re addressing. Now, I don’t know the — we’ve been investing in risk management since I arrived in 2009. So I don’t know how we compare — really compare to other banks. We’ve always viewed the stress test results where we’ve been top quartile or even leading in terms of the portfolio stresses by the regulators as a barometer. And it looks like that was a very good measure, at least at this point. So we’re not anticipating a change in posture at this stage. We don’t feel compelled. We have to do something. And yet, at the same time, should there be opportunities somewhere in the future, we take a look. But it has to be in a risk-adjusted context that makes sense to us. And I don’t see that activity in 2014.
I think we’ve got a tremendous amount of core growth to deliver and we’re excited by that.
John Pancari: Great. Thanks, Steve.
Stephen Steinour: Thanks, John.
Operator: Our next question is from the line of Steven Alexopoulos with JP Morgan. Please proceed with your question.
Steven Alexopoulos: Hey, good morning everybody.
Stephen Steinour: Good morning, Steve.
Steven Alexopoulos: So I want to start — for you, Zach, big picture. So historically, a steep yield curve has been a positive catalyst for bank margins and earnings. But given how you position the balance you write with the use of hedges, have you in essence created a way much of that potential benefit in order to have a more stable NIM today?
Zach Wasserman: Great question, Steve. I think the short answer to your question is no. A steeper yield curve continues to benefit us. Obviously, that environment would be indicative of funding costs, which would represent solid margins against where asset yields are. I think we’re in this really strange environment with inverted yield curves and with the dramatic reduction forecasted pretty quick here. So we’ll see how it all plays out. But I think for us, the puts and takes with respect to NIM outlook in the moderate terms in 2024, one, we’re going to continue to benefit very significantly from fixed asset repricing. I tried to provide some incremental clarity about that in the prepared remarks and the presentation. But see 50 basis point to 100 basis point moves in overall portfolio yield in key categories will continue to see that benefit us, not only to 2024, but to 2025 and beyond.
Another thing is, for us, as the curve becomes less inverted, we’ll see our negative carry from our down rate hedge protection program reduce. The negative carry, in fact, by the way, in Q4, it was around 17 basis points of drag. We’ve talked about likely we’ll see about 10 bips of that come back to us. We believe the scenario will pretty align a forward curve here over the next four quarters. Funding costs, again, in a steeper yield curve environment where [indiscernible] rates have fallen, will really start to benefit us in terms of beginning to pivot toward down beta, and actually executing on down beta, since Erika’s question earlier. And those things in total essentially offset for us in our NIM, the variable yield reduction that we’ll see if and when the short end comes down.
So I still believe that that [indiscernible] scenario of a nice upward slope in yield curve is accretive to margin, sort of supportive of it. And the goal we’ve got is the same, to try to really collar the NIM here, put a floor under it, and really position for upside. And I think the last thing I’d say is, kind of picking up to your question as well. The modeling that we have done about 2025, and we’ve been saying this for a while, really highlights NIM expansion opportunities, which again, is sort of an indication that the upward slope in yield curve is positive.
Steven Alexopoulos: Okay, that’s helpful. Zach, I asked the question because earlier you said if the rates stay higher for longer, your NIM would be about 10 basis points higher in 2024 versus the Fed cutting. But as we move beyond 2025, 2026 there’s a clear benefit to the NIM. Are you able to quantify for us like on a longer term basis assuming the forward curve played out, given what’s on and what’s rolling off. Where the NIM could be long term for Huntington?
