What we’ve done with our real estate business is we’ve completely rebuilt it around a business that not — we not only put real estate loans on our books, but we also distribute a lot of paper. So, it’s a little bit of a different business than a lot of our competitors have, Fannie, Freddie, FHA, the life companies, the CMBS market, et cetera. So, we distribute a lot of risk. We’re also focused on — very specifically on certain asset classes. And the certain asset classes that we’re focused on, first and foremost, multifamily in its broadest sense but within multifamily on affordable housing. We’re watching those closely. So far, the rent uptakes are good. Rent — the rents are still holding firm. So we feel really good about that portfolio.
The portfolio that we look at very closely, and fortunately, we have very little of it. There’s actually two portfolios. The first is B and C class office space in central business districts. Right now, we’re down to $250 million, but we’re watching that very closely because those buildings are multi-tenant buildings. And the reality is whether it’s Key cutting expenses and getting rid of occupancy costs or any other business, I think that’s a real risk going forward. So, we’re watching that closely. The other area where we only have about $1 billion of exposure is in retail. And retail is an area where we keep a close eye. So, that’s kind of how we’re thinking about it. And as you can imagine, we are continually modeling this portfolio as we look at the delta between where they’re borrowing and where their debt rolls over.
Ebrahim Poonawala: Got it. And I think in there you mentioned that you’re actively derisking some of these loans. What’s the market for that in terms of being able to get out of some of these credits without having to take a big mark-to-market or credit charge?
Chris Gorman: There hasn’t been — there really hasn’t been a lot of movement yet. I think people are still just like in the M&A environment, I think people are in price discovery. Obviously, if you take my example of B and C class office, there’s a lot of people that have impaired equity, but I think people are going to have to, frankly, endure some more pain before there’s a meeting of the minds on kind of how to restructure, how to bring in fresh equity, et cetera.
Ebrahim Poonawala: Got it. And just one question, Don, on NII. Do you think the mid to high-20s beta is conservative enough? I’m just wondering, in a world of 5% plus Fed fund’s QT, like a lot of banks are kind of nudging their expectations a bit higher. Like, do you think that sets you up for more downside risk over the next few quarters? Just give us a sense of your comfort level with that beta guidance.
Don Kimble: I’ll go ahead and offer up some thoughts and I ask Clark to go ahead and chime in as well. But I would say that keep in mind that, as Chris mentioned earlier on, we really were kind of best-in-class for the first few quarters of this rate increase cycle that our cumulative deposit beta is at 19%. Most of the peers I’m seeing are closer to 30% already. We did do a thorough scrub as to where we see rates going. And I think what you’re seeing and why we have confidence in our deposit beta assumptions is the fact that we have shifted our priority and focus over to more primacy, both on the commercial and consumer side. And we think that will continue to pay dividends for us as far as keeping our overall deposit cost down. Clark, anything you would add there?
