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Truist Financial Corp
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Greetings, ladies and gentlemen, and welcome to the BB&T Corporation October 17th Third Quarter 2019 Quarterly Earnings Conference. Currently, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this event is being recorded.
It is now my pleasure to introduce your host, Mr. Rich Baytosh, Director of Investor Relations for BB&T Corporation. Please go ahead.
Thank you, John and good morning everyone. Thanks to all of our listeners for joining us today. On today's call, we have Kelly King, our Chairman and Chief Executive Officer; Chris Henson, our President and Chief Operating Officer; and Daryl Bible, our Chief Financial Officer, who will review the results for the third quarter and provide some thoughts for the fourth quarter of 2019. We also have Clark Starnes, our Chief Risk Officer, participating in the Q&A session.
We will be referencing a slide presentation during the call. A copy of the presentation as well as our earnings release and supplemental financial information are available on the BB&T website.
Before we begin, let me remind you BB&T does not provide public earnings predictions or forecasts. However, there may be statements made during the course of this presentation that express management's intentions, beliefs or expectations. BB&T's actual results may differ materially from those contemplated by these forward-looking statements.
In addition, in connection with the proposed merger with SunTrust, BB&T has filed with the SEC a registration statement on Form S-4 to register the shares of BB&T's capital stock to be issued in connection with the merger, which contains a joint proxy statement prospectus that has been sent to the shareholders of BB&T and SunTrust.
Please refer to the cautionary statements on Page 2, regarding forward-looking information in our presentation, our SEC filings, and the legends on Page 3 that relate to additional information and participants in the solicitation. Please also note that our presentation includes certain non-GAAP disclosures. Please refer to Page 2 and the appendix of our presentation for the appropriate reconciliations to GAAP.
And now, I'll turn it over to Kelly.
Thank you, Rich. Good morning everybody and thanks for joining our call. This is really a very strong quarter for BB&T, especially when you look at the amount of work and effort that is going in to preparing for our MOE with SunTrust which is going very well and I'll talk about in a bit.
It was another quarter that was driven strongly by our non-interest income. Loan growth is very strong, ex the $4.3 billion on a mortgage sale, which we'll talk about a little bit later. We make excellent progress on our MOE with SunTrust and I'll talk more about that in a bit.
Just looking at some of the numbers, our adjusted net income was $832 million, up 3.7% versus common quarter. Diluted EPS on an adjusted basis was $1.07, up 3.9% versus common quarter and very respectable returns on an adjusted basis ROA, ROCE, and ROTCE respectively were 1.5%, 11.36%, and 18.07%. Our taxable equivalent revenue was at $3 billion, up 2.5% versus third quarter.
Our fee income was very good, $1.3 billion, up $64 million or 5.2%, which is significantly better than our earlier guidance. It was driven by mortgage banking which was up 42%. Insurance is really outperforming, up organically 8.7% versus third quarter of 2018, Chris is going to give you more color on that in a bit. And also our investment banking and brokerage were up 12% on a like quarter basis.
So loans held for investments were actually down 4.8%, but again, if you exclude this $4.3 billion on a mortgage sale, we're up 6.5%, which was over our guidance. Daryl can give you more detail if you have questions, but the $4.3 billion mortgage sale was simply purchase loans that we have purchased at a premium, they were paying off at an accelerated rate, it makes sense for us to effectively redeem those or pay – sell those and it improved our rate positioning going forward.
Our reported NIM decreased five basis points to 3.37%; core NIM decreased also five basis points. But if you exclude the loan sale, reported and core NIM only decreased two basis points and again Daryl is going to give you a lot of color with regard to that.
Our adjusted efficiency ratio was 57.1%, down slightly from 57.3% on a common quarter. Expenses reflect high incentives and commissions versus the third quarter 2018 due to the improved performance in insurance mortgage banking and investment banking and brokerage.
Credit quality was really strong. We'll answer questions about that, but across-the-board, credit quality continues to be very, very strong.
We did have some strategic activity during the quarter. We redeemed $1.7 billion of preferred stock and replaced it with a like amount at lower cost which is just an economic transaction.
We did sell the $4.3 billion, I just talked about. We did increase our dividend 11.1% at July meeting, which is a very very healthy three-plus percent dividend yield. We also did receive shareholder approval, which is a nearly unanimous of BB&T and SunTrust on the merger and on the name. And we have talked about -- and we have named 75% of our Truist leaders. I'm going to give a little bit more detail in just a minute about the overall really positive progress that we've made with regard to the upcoming merger.
If you follow along on Page 5, on the selected items, just to call these out. As I said, we had preferred stock redemption where we were covering the expense of the capitalized insurance -- issuance cost that was $46 million pre and after-tax, $0.06 a share, a negative hit. Incremental operating expenses related to the merger was $40 million after-tax, that was $0.05 negative hit. Merger-related and restructuring charges of $26 million after, which is $0.03.
Now on the positive side, we did have a gain on the impact of the mortgage sale; that was the positive $0.02. So, when you net that out, we had a negative impact on EPS of $0.12 for the quarter.
So, if you want to take a look at the next slide, Slide 6 on loan growth. I feel really good about loan growth. If you look at the underlying performance, again ex the mortgage sale, we had 6.5% annualized, which is very strong, I think relative to what's going on in marketplace, what's happening with a lot of our competitors.
Very pleased with C&I, was up 7.6% third quarter to second quarter annualized. We did have a very low performance in CRE, very much by design, as we talked to you last couple of quarters, we've been dialing back because we've seen some fluffiness in some of the CRE categories, and so we're being careful about that.
But if you look on the table, I won't go through all of them. If you look on the table on Page 6, you will see that the C&I performance was really broad based across eight or 10 different categories. So, it's not just a one-off type of loan category performance. It's really, really broad based and that's very, very good. Our mortgage loan by the way did very well; they were up 7.4% versus second quarter once you exclude the sale.
So just talking then about what's going on in the marketplace. As all of you I'm sure know it's difficult to figure out what's going on with all of the conversation, much of the rhetoric, but what I tried to do is just talk to our people, talk to clients and see what's going on.
The fact is today, as I just indicated, our clients are still borrowing. They still feel basically confident. Our production and our pipelines are very strong. But I will tell you that there is more conversation going on today about concerns about the trade wars, it's beginning to create a level of uncertainty.
And even though the economy is still strong today, over time uncertainly will begin to integrate in terms of negative impact in the economy. We saw some negative retail sales yesterday. Is that a one-off? We just don't know. I personally think it's challenging for all of us to be calm right now, not try to draw a huge conclusions of individual anecdotes to pop-up every day or sometimes multiple times during the day.
It's better, in my view, to back away and take a long view. And the truth is the long view of the U.S. economy today is very strong. We do have these clouds around the globe in terms of Brexit, although there was some potential positive good news out of that this morning, I personally think we'll have a reasonable trade deal with China by the end of the year. I personally think we'll have the new NAFTA approved and we will head into 2020 with substantially better sense of feeling of confidence than we have today.
But I could be wrong and that's why we've been very cautious in terms of everything we do, in terms of capital liquidity and diversification, because we simply are in an environment where to place a high bet on any one scenario up or down is not a smart bet. So, we've been cautious. We're basically guiding to neutral, with a slight psychological attempt towards the upside which we think will serve us well.
If you look at Page 7, on deposits, I was very pleased with deposits. Obviously, this is kind of the big story today. How we all react to the substantial decline in the long and the potentially inverted yield curve back and forth kind of every day. It's very challenging for everybody. We are doing very well.
Our total deposits third to second are up 5.2%. We are managing the categories, like for example, our non-interest bearing deposits are down 1.4%, that's kind of the normal kind of disintermediation that's going on across the industry today. The 1.4% is really pretty low in that environment. Our money market and savings were up 9.6%. So that's looking very good. So we've seen some movement in the categories, but when you get through that 5.2% is a very, very strong. We see a little movement in our mix, but our non-interest-bearing deposits are holding strong. Our client deposits relative to national market funding actually increased 3.6% annualized versus to second quarter of 2019.
Our cost of interest-bearing deposits was 0.99%, down three basis points versus second quarter. And cost of total deposits was 0.67%, down one basis point. So, really good management there by Daryl and Donna and all of our people in Treasury. So I feel very, very good about that. It will be problematic, as we go forward, if we have some substantial spike down or up, we are not actually expecting that. We're planning to be relatively neutral going forward, but with a psychological little bit up.
And with that, let me pass it over to Daryl.
Thank you, Kelly, and good morning everyone. Today, I'm going to talk about our excellent asset quality, margin dynamics, solid fee income, expenses, and provide guidance for the fourth quarter.
Turning to slide 8. Asset quality remains excellent. Net charge-offs were $153 million, up three basis points as a percentage of average loans. This was largely due to indirect loan seasonality and the resolution of a commercial credit. Our non-performing asset ratio was 22 basis points and is better than the previous we've seen in 2006.
Continuing on slide 9. Our allowance coverage ratios remain strong. The allowance ratio was primarily impacted by the sale of $4.3 billion of residential mortgage loans and the resolution of a commercial credit, which lowered the reserve for unfunded commitments. Including these one-time items, the allowance to loan ratio remained at 1.05%. The provision was $117 million, below net charge-offs of $153 million.
Turning to slide 10. Reported net interest margin decreased two basis points after adjusting for the sale of residential mortgage loans and related reinvestments. You might recall that the timing differences between the settlement of the mortgage sale and the securities reinvestment temporarily increased earning assets by about $2 billion and impacted the margin by three basis points. Excluding these items, core margin was also decreased two basis points.
Net interest margin was impacted by lower rates, which reduced annualized yields by seven basis points on the loan portfolio and two basis points on the securities portfolio. The cost of interest-bearing deposits decreased three basis points, which partially offset the drop in asset yields. We pre-invested $5 billion in securities late in the third quarter to build liquidity for the merger and that reduced our asset sensitivity. This also creates negative pressure on our standalone margins in the fourth quarter. In addition, we are evaluating opportunities to restructure our balance sheet as we wait for the merger close.
Continuing on slide 11. Non-interest income was $1.3 billion, up 5.2% versus like quarter. Our fee income ratio was 43.4%, down seasonally from 44.4%. Insurance income was down $79 million due to seasonality, but increased 8.7% from a year ago on firming market pricing and organic growth. Mortgage banking income was stable as higher production and servicing related revenues of $24 million were offset by a decline of $25 million in net MSR valuation.
Investment banking and brokerage commissions were relatively flat, but up 12% versus last year. This was primarily due to higher managed fee accounts, service charges on deposits increased $7 million, partly reflecting more days in the quarter. Other income increased $35 million, primarily due to a $23 million increase in income related to assets for certain post-employment benefits and $17 million from client derivatives.
Turning to slide 12. Non-interest expense was $1.8 billion, an increase of $89 million. The increase was largely driven by merchs and MOE expenses, which are up a combined $54 million. Merchs totaled $34 million, which included relocation expenses, legal fees, project management costs and professional services. MOE expenses were $52 million, which included $39 million for personnel and $12 million for professional services.
You can see the details on page 16 in our quarterly performance summary. Core expenses were up $35 million, including $9 million increase for professional services, $6 million increase in personnel expense, which includes $23 million increase for certain post-employment benefit expense that was offset by decrease incentives and equity-based comp and a $19 million increase in other expense due to higher advertising and marketing costs and other items.
Expenses increased 1.7% or $30 million from last year, excluding Merchs and MOE expenses. Year-over-year increase in adjusted non-interest expense was primarily driven by $18 million increase in personnel expense due to higher incentives, $34 million increase in expense reflecting higher non-service related pension expense, higher operating charge-offs, higher advertising and marketing costs, which was partially offset by a $17 million decrease in regulatory charges. FTEs were essentially flat versus second quarter, but down approximately $1,500 from year ago.
Turning to slide 13. Capital and liquidity remain strong. The CET ratio was 10.6%, up 20 basis points due to strong earnings in the mortgage loan sale. The dividend payout and total payout ratios were 46.9%. We issued $1.7 billion of preferred stock and redeemed the similar amount of higher cost issuances, which will save $4 million per quarter and have an earned back of 2.8 years.
Our modified average LCR ratio was 139%. To build liquidity for the merger, we pre-invested high quality liquid assets at the end of the third quarter to facilitate compliance with the LCR ratio for Truist. In addition, we issued debt to build parent company cash which now exceeds $10 billion. These actions will provide negative pressure to BB&T's net interest margin, but it's prudent for Truist starting out with very strong liquidity.
Now let's turn to slide 14 to review segment. Community Bank Retail and Consumer Finance net income increased slightly to $446 million. Fee income decreased $15 million, primarily due to the decline in the net MSR valuation, partially offset by increased production revenue. Average loans and leases decreased $2.5 billion, reflecting the mortgage loan sale. Loan yields increased 12 basis points, while interest-bearing deposit costs were down four basis points. Non-interest-bearing deposits were about flat. And residential mortgage originations were up 11% from second quarter, production mix was 68% purchase and 32% refi. And excluding the mortgage loan sale, a gain on sale margins declined 28 basis points due to a mix change to higher corresponding production.
Continuing on slide 15. Community Bank Commercial net income was $19 million -- increased $19 million to $338 million. Loan production increased 22% as higher C&I and CRE production offset lower dealer floor plan production. Loan yields were down 17 basis points versus interest-bearing cost down only one basis point. Non-interest-bearing deposits were essentially flat.
Turning to slide 16. Financial Services and Commercial Finance net income was $185 million, an increase of $16 million. Total revenue increased $26 million, primarily due to higher Grandbridge income, capital markets and client derivative revenue. Average loan balances grew 7.6% annualized, helped by equipment finance and corporate banking. Loan yields were down 15 basis points and interest-bearing deposit costs were down 13 basis points. Non-interest-bearing deposits were flat from last quarter. Additionally, invested assets increased $2.7 billion versus linked quarter and $5.3 billion versus last year.
Turning to slide 17. Insurance Holdings net income decreased $50 million to $61 million, primarily due to seasonality.
Now I’ll turn it over to Chris to provide more perspective on our performance this quarter.
Thanks, Daryl. So if you turn to page 18, purposely two slides really to reinforce our transformation plan that we call IHOP was Insurance Holdings Operating Plan continues to gain momentum. This is the plan John Howard shared with you last fall at Investor Day and it's really built with assistance from BCG, a little more than a year ago, about 15 months or so. It's built around 32 initiatives that we're working to execute over the next three years. And as I said, we're about a year in. It includes implementation of new operating models, both in retail and wholesale, and a myriad of other revenue growth and expense synergy initiatives.
And if you look at the upper left hand chart there on page 18, you can see revenue for the segments up 9.3% or $44 million like quarter. As I've pointed out overtimes in the past, really three drivers of the strong organic growth. First is good client retention and retail were up about 91%, wholesale about 76%.
New business volume, not renewals, totally new business volume was up 17% like quarter, that's the best number that I ever remember seeing. And what’s more impressive is it has built each quarter throughout the year.
And then the third driver really is pricing. And on the heels of the two largest insurable last years in 2017 and 2018, we're continuing to see price lift, because of the tightening capacity in the market. So, for example, second quarter, it was up about 3.5% this quarter, up about 4%.
So retention in new business and pricing is really driving the result you see in the lower left hand corner of organic growth. So organic growth is up 200 basis points to 8.7% in the quarter, which is about double what we would expect to see in the industry. We expect probably mid-fours in the industry. We believe the backdrop allows for additional tightening of capacity and continued lift in pricing as we go through 2019.
If we flip over page 19. I would say that IHOP was really designed to help us drive be laser focused on enhancing the margin and then using the dollars of EBITDA production to reinvest in the business. So we have, I'd just point out, in almost every business, new technology implementations, which will help both revenue and cost in the future.
If you look at the chart upper left there, EBITDA, you can see absolute EBITDA is up $24 million like quarter to 27.6%. And the strong organic growth that I shared with you on the prior page combined with good solid cost control. And then the third leg was really, you will remember we acquired Regions, July of last year, we're now 15 months into that and we have exceeded all of our expense and revenue synergies and the combination of those three things have really helped us drive the result in the lower left chart on page 19, which is the EBITDA margin. You can see our margin like quarter is up 310 basis points to 21.4%.
Now this is the lowest quarter of the year for us, so if you look at what our year-to-date margin would be, it would be in the 25% range. So a lot of improvement has been made in margin enhancement.
And lastly, I'd just leave you with a lot of focus on use of data and analytics to really help our underwriters better understand the true risk in the client, which helps them long-term, keep their rates down and I'll say that's especially in wholesale.
So in summary, just continue to be very pleased with the progress that we have made in Insurance. I'll turn it back to Daryl.
Thank you, Chris. Continuing on slide 20, you will see our outlook. The following guidance is based on BB&T standalone. However, we continue to expect the merger of equals with SunTrust will close in the fourth quarter.
We expect total loans held for investment to be flat versus third quarter mainly due to seasonality. Excluding this, loans would be up 1% to 3% versus linked quarter. We expect net charge-offs to be in the range of 35 basis points to 45 basis points and the provision is expected to match net charge-offs plus loan growth. We also expect GAAP and core net interest margin to be down 7 basis points to 9 basis points.
As we discussed earlier, we are building liquidity for the merger for LCR, our liquid asset buffer and parent company cash. This will negatively impact net interest margin by approximately three to five basis points in the fourth quarter. Adjusted for the liquidity build, we expect net interest margin to decrease three to five basis points.
We anticipate fee income to be up 2% to 4% versus light quarter driven by insurance and mortgage banking. We expect expenses, excluding merger related expenses to be flat versus light quarter. We expect one-time expenses for the MOE to be about $60 million to $80 million in the fourth quarter, mainly driven by personnel and professional costs. And we anticipate an effective tax rate of 20% to 21%.
Finally, BB&T's full year guidance remains intact. In a challenging rate environment, we will continue to grow our revenues faster than expenses, driving positive operating leverage. We will be more pronounced, which we more pronounced once we close the MOE.
In summary, the quality of our core earnings this quarter was excellent, resulting in strong loan growth, solid fee income versus last year, and excellent asset quality.
Now let me turn it back to Kelly for an update on the merger of equals and closing Q&A.
Thanks, Daryl. So as you can see, it was -- it really was a great quarter. And I particularly highlight the work that has been done in the loan area and the expense area and insurance area, all very, very good.
So let me give you a few comments with regard to the merger update, which is going extremely well. Our executive management team, which is the 14, all the seven things continues to meet weekly. The team is working extremely well together. I cannot be more pleased. If you were claw on the wall, watching us meet, you would have thought we've been working together for years and years and years. Bill and I are working together extremely well. The whole team is working together well, and I must tell you, I really appreciate it. The focus of the team and the focus is working together and we're focused on the goal for making through this number one best financial institution that we possibly can.
Making great progress in terms of naming the key leadership. Recently we've named 8,000 positions, which is about 75% of the leadership roles. We lead about legal day one of close virtually all positions will be named and everybody will be ready to go.
We've been very successful in meeting our diversity goals, which is one of our primary focuses. And we've done a really good job of picking benefits programs going forward for Truist.
One of the great things about an MOE is you really get a chance to look at both companies and take the best of each side, and that's what we've done with regard to benefits. So we're going to have a world standard and benefit program. And remember the word of our clients, communities and shareholders, it really makes worth for our teammates and associates. So, we feel really, really good about that.
So we've had some remarks in terms of activity. July of 30th, SunTrust and BB&T shareholders, both almost unanimously approved the deal and the name. With regard to the regulatory process, it has been approved by North Carolina Commissioner of Banks, which is very important.
The next step is approval of our divestiture plan by the Department of Justice. And then we believe that the remaining regulatory approvals will follow. We feel good about where things stand with the regulators. They are being delivered, given the size and significance of this deal as they should be and as we are been. I mean, so everybody has the same goal of making sure that when we move forward with this, that we've got it all the -- policies. And so, given all of that, we believe that we are still on track for a closing in the fourth quarter, we can't guarantee that, but we believe that we are based on all of the information that we have at this time.
We've made really good progress in the last several months with regard to merging the technology of the two companies. So during September, we finalized the vast majority of the technology ecosystems. And remember what we try to do there is we pick the best of breed. So SunTrust has the best teller program. We've picked our program, we have the best loan system, we picked that system. So the end result is, you get really, really first-class systems across the board, which is fantastic.
We did recently complete a dress rehearsal for legal day one close. There are about 100 merger related work streams that had to be tested and they all passed very, very well. So we are ready for the legal day one close.
Very, very importantly, we have had two offsite several day meetings, working on developing the Truist culture. This has not been a process of throwing out BB&T and throwing out SunTrust, it’s been a process of taking the best of each one. And I've been extremely excited about how this has worked.
The culture, as we define it, is our purpose, our mission and our values and then the various activity approaches kind of the way we do things around here. We've already agreed to our purpose, our mission and our values. And I'll tell you that Bill and I are very passionate about this, the process. We believe it's the most important part of the entire journey and we could not feel better.
The teams had a complete meeting of demands, good discussion but no aggravated interaction, no real divergent views, just really fine tuning of wording in terms of how we present this to the world. So, frankly, it is doing extraordinarily well. We could not feel better. Our teams are 100% aligned. I would tell you, as we roll this out later that our purpose, mission and values are engaging and very, very exciting.
So as we go forward, once we have legal day one, there will be a number of things that will happen, kind of the first thing is we have to affirm for the Board all various committees and policies and practices all of which are being worked on now by various groups. So we're ready to go day one to present all of that to the new company board, Truist board, to be able to approve all of that.
We will share shortly after that our purpose, mission and values with all teammates. We think that our number one job is to get out. We planned kind of roadshow, if you will, to get out and talk to our teams across the entire enterprise about our culture. We are working through our marketing area on our branding plan, closing out on that, making really, really good progress.
So that's very, very exciting. And as that rolls out, there will be more excitement. We remain importantly very confident in achieving our $1.6 billion in net cost saves. And I would say that, well, in our view that we have not included in any of the numbers any revenue opportunities, but we're doing a lot of work on that.
Bill and Chris are leading the effort with regard to focusing on revenue opportunities and they're on around 20 different work streams right now in terms of pretty low fruit. And so, we wanted to be conservative in our projections.
I'll just tell you there are huge opportunities when you combine these two companies, because there's virtually and no overlap. There's just opportunity to take what SunTrust does and bring it over to BB&T and take what BB&T does and take it over to SunTrust, and we know how to do that. And so we are very, very excited about that.
I'll tell you that when we announced this deal back in February, I was very, very excited. Today, I'm even more excited, I'm more confident than before and here is my why. So the deal is basically the same, so the synergies are as good as they were, economic opportunity is good, transformative nature of this in terms of making it a little better is good.
But now a lot much into the process, I feel even better because our executive team is deep, it's strong, it's committed, our teammates are excited, they see that we're all the same, they see opportunities are same. We truly believe that we can help our clients have a brighter financial future. We can create a place where our teammates will enjoy and have a long and fulfilling career.
We believe our communities need help today. The world is changing, really fast. We are having a dramatic increase in the gap in terms of economic inequality, and we don't feel good about that, and we want to do our part. And I can tell you that on legal day one, Truist will be ready to be a leader in finding solutions to making life better.
And, of course, we will, through all of these efforts, optimize the long-term return to our shareholders, which we feel very, very confident about. So I want to thank you Bill and the SunTrust team and all of my fellow BB&T associates and thank you for all the hard work that’s going in to it. Pretty soon, we will be one team. I'll tell you all, we are ready go.
Back to you, Rich.
Thank you, Kelly. John, at this time if you would come back on the line and explain how our listeners can participate in the Q&A session.
Thank you, sir. [Operator Instructions] We will now take our first question from John McDonald of Autonomous Research. Please go ahead, sir. Your line is open.
Hi. Good morning. I wanted to ask, Daryl, just a question on the fourth quarter outlook. When we kind of combined the outlook for loans to be relatively flat and NIM to be down, if we add in then, I guess, the average securities are probably up, given the liquidity build. How does the dollars of NII look, how should we think about that for the fourth quarter?
I would say, John, that if you look at our linked quarter, it probably be down a touch, just because of the drop that we have in margin and flat earnings assets for the most part of linked quarter. A lot of that is just due to seasonality on the loan side, like I said in the prepared remarks.
And then the margin decline, core margin's really down 3 to 5 basis points. The rest of it is just due to building up excess liquidity for a combination with SunTrust, so that we can have strong liquidity, our CR ratios and just strong overall cash on hand and how we're going to run our company.
Got it. That's great. And then, just a bigger picture question in terms of Truist MOE. The environment's changed since February, and you've also had a chance to fine tune your assumptions with the third-party review. Do you have any updates on kind of the financial targets that you set out for the 51% cash efficiency and ROTCE of 22. Obviously, there is a lot to change in the further out, but any updates on that?
John, this is Kelly. The market is substantially different than it was back in February. The most difficult thing to – but our efficiency ratio because the denominator is under a lot of pressure. We believe with regard to efficiency ratio, whether we hit 51 or not, we believe we will be top in class in terms of our efficiency ratio. I would say, I feel more confident in the 22% return on tangible common equity.
So regardless of whether the numbers are exactly what we've said nine months ago, because the world has changed, we think there will be a top performer, but Daryl any comment on that?
Yes. I would say, John, is we still have 100% clarity between both companies. So we have high-level estimates. I would say once we close this quarter, if we give us a little bit of time, a month or so, we'll come out with more clear guidance on a go-forward basis on the timing of our cost saves and how we're going to get the cost saves. So we know you guys need that information and we will provide it for you, but we got to get the deal closed, and we have to make sure we understand where all the savings dollars are coming from first.
Totally understand. Thanks very much guys.
Thanks, John. So we'll now move on to our next question from John Pancari of Evercore. Please go ahead. Your line is open.
John?
Sorry, about that. Yes. Just back to the deal close discussion. I know, Kelly, you mentioned that you're confident in the fourth quarter close of the deal, but you also indicated you can't guarantee it. Is there anything that's leading you to believe that it could be after 4Q, any change in your thinking as you're going through the process where you're thinking it could be into next year?
Well, as I said, John, we're focusing on the fourth quarter. Obviously, we are aware that it possibly could slip through the first quarter and we're giving some thought to that, but most of our focus is on the fourth quarter. We are not aware of any reason to expect to go into the first quarter.
I only say that, today this is beyond our control. This is in the regulatory framework. And they move it at their own pace. And so all we can do is, give you our best information based on what we know. And based on what I now know I still expect a fourth quarter close.
Okay. All right. Got it. Thank you. And then separately, Daryl, I know you mentioned that in your remarks you're evaluating additional opportunities for the restructuring of the balance sheet. I know you've already prefunded the merger, as well as sold some of the residential mortgage portfolio, but just want to get – if you can elaborate possibly on what incremental actions you could evaluate for the balance sheet? Thanks?
So, John, I mean, both companies are looking at their balance sheets very thoroughly right now. Kelly said earlier, one of the things we want to do when we combine is, we want to make sure that our interest rate sensitivity is relatively neutral to slightly biased up a little bit. But try to get it to be more neutral, so we don't have a huge impact to NII as rates continue to change.
We also, as I said earlier, would have strong liquidity. From a credit perspective, if there are certain portfolios or loans that can be sold that Clarke and Ellen Koebler want to get after balance sheet, you know we will take advantage and do that as well.
And lastly, what we will look at, assets not so much a decision on the business, but if there is assets on the books that might be marginally not the best performance from our capital return perspective, we might see us shed some of those as well. So all that's coming together, we'll have more color on that later in the quarter as we close.
Okay, great. Thanks, Daryl.
We will now move onto our next question from Mike Mayo of Wells Fargo Securities. Please go ahead. Your line is open.
Hi. It's another question on the merger. So you say, 75%, the leadership roles name when do you get to 100%. You say you have most of the tech ecosystems identified what do you have left there?
And most importantly, I know you've been asked twice already, but can you put more meat on the bones on the technology related savings. I mean, that was the number one reason for merger so that you can make more tech investment, can get more added tech and so what have you learnt over these last nine months? Thanks.
Yeah. So with regard to the staffing, I fully expect virtually 100% of all the staffing to be agreed to -- by around 1st of November and we're very close. It's -- there won't be many that we'll be hanging out there by 1st of November.
In terms of the ecosystems, we've covered all of them. And so that was 100 net volumes, so we're going through that thoroughly. And so we feel really, really good. And that's the first step by the way in the whole conversion process. You simply have to decide which ecosystems and then all the various systems within those ecosystems. So all of that is going along really, really well. We are completely on-track with regard to that.
In terms of the technology savings, you know it has multiple facets. The first thing is, you have redundant hardware, which of course goes away. You have -- you have redundant programmers with regard to willingly offering to the redundant hardware systems and tuner for software systems.
You know when you pick one system over another system that necessarily frees up expense system -- with regard to that. And then of course, you're thinking in terms of reinvesting for the technology of the future.
And you're right -- when we announced this deal, we said this was really about putting together two companies that of course will become more economically sound, but really leaning into the future by investing in technology that would allow us to be a leader with regard to meeting our clients' needs.
That's a process that’s light as easy and to be honest, as you know, hook in the computers up of the existing systems because we're having to look at what's available today out there that we don't have. And to be honest, it is not a lot out there today that we don't have.
We are in really good shape. If you look at like our digital platform, I mean, we're constantly rated as number one, two and three in the entire system -- including all the big banks, despite what some people say it as, we are extremely well positioned with regard to that. But the world change really fast and so we have to invest a lot to purely stay at the top.
And then, we are already beginning to do work in terms of thinking about what's the next step, what's the new frontier, what is the next investment that we can make that will substantially improve the lives of our clients. And so, that's what this whole innovation center is all about. It is creating a group of teams. So we have 20 to 40 agile teams that will be focusing on improving the existing products and services and approaches, but creating new products and services and small business in retail across the board.
We are canvassing the world in terms of what's out there. We don't believe in recreating at will to something out there around the world that we can bring to our clients, we want to do that. But we also recognize that this world is changing so fast that there is opportunity for us to create a new will. And so innovation is about all this whole process.
So the mechanics of all that is very complicated, but it's really a bifurcated process hooking into existing computers up and then say, people kind of chuckle when I say, but it really is that simple, is hooking the computers out and make sure we operate efficiently from day one and then making sure we're layering on top of that improvements that will make our clients' life better.
And then just one follow-up. So November 1st you have all the leadership identified that would be good. But culturally, you gave a presentation recently talking about the cultural similarities and you gave some data. And I didn't really understand that data, I mean, it seem kind of pie in the sky to me, and look you're close to the situation, you're dealing with the employees, you're saying, hey culturally we're similar.
Many people on the outside who have policy for a decade or two say, you know what you guys really aren't similar BB&T and SunTrust. I guess, where is the disconnect and the perceptions about the difference in cultures and what you're fighting out? And when there are differences, how are those resolved?
Well, I'm not sure which meeting you're talking about, but…
I think the Barclays Conference…
I don't most -- I don't most believe in times, so I would just put that out there, I’ll try to be straightforward and honest about everything I’d say and be always light, I'll tell you truth. And so, what I was referring to is that, we've had a number of statistically valid feedback sessions from 20,000 plus of SunTrust and BB&T clients that have associates -- I'm sorry associates that have validated what I said.
So for example early on when we were doing the name research, we had 20,000 plus responses to our 10,000 from each side, and we gave down a list of 16 words to describe the companies and all groups on both sides picked the exact same four words, which is pretty incredible.
And then, we did a more sophisticated study in terms of, kind of, how we do business around here, kind of the behavioural aspects of culture. And we were shown by the research people, statistically driven graphs that showed BB&T associate responses and SunTrust associate responses and it was a virtual complete overlap, meaning whether the masses of our employees and you asked him how do you feel about this or that or the other, they gave you the exact or same response.
And I guess that anecdotally when I'm travelling around into field and talking to our people and when I ran into SunTrust people, you know, I just ask, how is it going? This is going great. We work together. We had lunch together, non-competitively, but I think they know each other, they're all friends.
And I talk about each other just very positively and affirmatively. And so, when you put all that together, I'm quite certain there are no material deficit. It is always understood when you guys have big companies. I'm sure you'd find something which is different about the companies.
But where there are, you know what I call manual differences, they will just fade as we come together as Truist and operate under our new purpose, mission and values. So they will just fade away.
If we were to encounter in a material, which we not, we would deal with it straight up and the executive team and we were the richer consensus and move forward. But we've covered a lot of issues. At this point, it has been nine months we have covered a lot of warfront and the teams are working great as I've said, and we've not discovered material issues that I could say you was a real culture crack.
Bill Rogers and I have this working arrangement together where we talk about no light between us and so we've committed to each other very deeply that, if either one of us see any light, we get on the phone immediately, talk about it and we haven't found any light yet. I'm not saying we won't, but I don't think we will. But we have the mechanism and a commitment and the trust between Bill and I and all the way through the teams that, if we do have issues we deal with them promptly, quickly and decisive.
Thank you.
We will now move on to our next question from Betsy Graseck of Morgan Stanley. Please go ahead. Your line is now open.
Hey, good morning.
Good morning.
A couple of questions. First just a clarification, Daryl, on kind of the LCR in the commentary you gave around HQLA and retooling the balance sheet a little bit for -- of post merger. On Page 10, when we look at the change in NII scenarios and you've got this negative sensitivity both down 100 and down, and up 200.
I just want to get how are you thinking about what that looks like post merger, because I don't think you would set yourself up like this on a standalone basis. So just want to understand where this is going and whether or not you had to get ready for LCR even if the tailoring rule didn't go through. In other words, are you carrying a little bit too much HQLA at this stage, post tailoring rule or not? Just if you could speak to that a little bit.
So we are still working on our numbers, at the 85% number. Both companies operated at 70%. So, we will have to have one form or another higher – high quality assets on our balance sheet. We'll take some form. So we started to build that at the end of this past quarter. So that's it. From a interest rate sensitivity, by us purchasing those securities, we also did unwound some pay fixed swaps, put on some receive fixed swaps. It did create us, so that again we improved our sensitivities on the downside, but it hurt on the upside. No, ideally when we close or shortly thereafter, we would want it to be somewhat symmetrical in that. We would so probably lose a little bit on the downside, but benefit on the upside as we work on that.
Donna and her team are working together and they are coming up with strategies post legal day one, such that, we will try to get into that position. You're right. We were kind of, cut in the middle of what we're trying to do right now is what you saw at the end of this quarter, but we will work towards that, and we'll see how that all comes together. But I feel confident we'll get into a position where we need to be post close.
And that's – you know, in parts because STI is a little more asset sensitive than you, I'm guessing is part of that answer?
Yeah. That's true. That is true. That will help some exactly and I think there will be some other adjustments we might make as well.
And then just separately, Daryl, could you speak and Kelly could you speak a little bit too, how you're thinking about the buybacks as you get to close and then beyond close. I think last time we spoke, there was an expectation that the CET1 might be closer to 10%, but then there was some mid-quarter release that talked – that seemed like maybe it would be a little bit below 10% at close. So, if you tell us where the parts are moving there and how it impacts your outlook for the buyback?
So, Betsy, just at a general level, you'll recall that we said that we want to target 10% CET1 at close and we really are not going to consider buybacks until after we hit that level. Now, I recognize that many investors have already asked me, why do you need such a hefty CET1 level, because that's got a lot of cushion and at which it does. But the reason is, because we going through a whopping big merger, which has got a lot of uncertainty, the economic environment has uncertainty, geopolitical events have uncertainty. So, for all those reasons, we are conservative and they still stock on 10%.
So, there I'll give you a little color on just a second about kind of where we are. From my point of view, it's hard to know and it kind of depends on what rates are. These marks are huge impact in terms of capital position, but it's going to be close to 10%, which means it's not going to be too far past legal day one that we'll be back in about their business, but these specific dates, Daryl, can give you a better feel.
Yeah. So, where we stand right now, right now, we'll probably a touch under and – but as Kelly said, we don't really know the exact date we're going to close when interest rates are. We're still working with Deloitte, our third-party on the actual mark for SunTrust all that is coming together nicely. My guess is, we'll be close to 10%, we may not be at 10% right now, but it also depends on depending on what assets we decide to share or whatever could have an RWA left potentially.
So you never know as how you get there right now. It's – we're in the hunt, but there is no guarantee that we will be 10% or close. But this – this company combine generates a lot of capital, a lot of earnings, and we will get to 10% I think in a relatively short amount of time. But it's still a wild card that you don't really know, because rates are so volatile right now where you're going to be. I just know that we have a lot of flexibility and we're working to try to do what we can to maximize and optimize the balance sheet.
Okay. Good. All right. And Kelly your point is that 10s high number anyway?
Right, it does.
All right. Thank you.
Thank you.
We will now move on to our next question from Ken Usdin of Jefferies. Please go ahead. Your line is open.
Thanks guys. Good morning, everyone. A follow-up on just things that are going to be potentially slipping time wise depending on the close date, but Daryl, any understanding at least on the BB&T side of what the expected seasonal day one looks like and then just any considerations in terms of any changes with regards to how you think the credit mark looks and potential breakdown of that credit mark? Thanks.
Yeah. So, I mean for BB&T, our CECL reserves are going to be higher than where we operate – and we incurred right now. We're probably up in the neighborhood of 30% to 50% in that range. All that could be a moot point when we – if we close this quarter, in the fourth quarter. So, Clarke and Ellen Koebler and our teams have been working on the combined choice number. We are at a point now where we can disclose that number. We have to still work on that, but the teams are working together and just coming up with it.
As far as the purchase accounting marks go, I would say when we announced this transaction in February, we were saying the credit mark would be 2%. We believe the marks are coming in close to that level, but that's not final yet. It could be a little give or take, plus or minus on that, but I think we're in the ballpark of that. The other marks on the liquidity and interest rate marks right now, it is at a slight discount, but that's also volatile to what happens in the marketplace. Hopefully, that's helpful.
Yeah. Thank you. And I'll follow-up just on the insurance side, you talked a lot about the color, how that current business trends are going from a growth perspective. Can you talk about how insurance is expected to grow within the outlook you had given for total fees, just in terms of a ballpark of the type of growth rate that you think it could be sustained in the insurance business? Thank you.
Sure. For fourth quarter, we – this is our lowest quarter of the year seasonally. Fourth quarter will be our second lowest. So we would expect from here, commissions to step-up in the 3% range. But – so we're looking out further in fourth and maybe the first half of 2020. What you have really is post the two years, large years of insurable loss of 2017, 2018 as I had mentioned earlier, you have tightening of capacity in the market such that there is still upward pressure on pricing. It is hard to know exactly sort of how long that last. But certainly, fourth quarter, we expect it to hold possibly, even push-up a bit depending on how the reinsurance renewals go in January and I think you also could see some further commitment to that pressure. So when we look at the balance of the year, we're expecting sort of full year organic growth to come in at least for us in the 6% to 7% kind of range. We're – year-to-date, we're at 9.1% right now. Possibly, we could beat those numbers and we expect the industry probably be in the mid-4s. So I think building very, very strong about the backdrop of the market as a result of that, but also I would say, because of the half approach we started over a year ago, we feel really good about our team.
As I said, our new business growth has built upon itself every quarter throughout this year, and we've got a technology going in, in just about every business which has helped us be more efficient, more effective. So I think the prospects for us to outperform the market as we look forward are very, very solid, both in margin and in overall growth.
Thank you.
We'll move on to our next question from Matt O'Connor of Deutsche Bank. Please go ahead. Your line is open.
Good morning.
Good morning.
Good morning.
First, I just wanted to follow-up on the capital discussion. I can appreciate you want to keep little more capital as integrations going on. But as you think kind of post-integration or once you're confident in the execution of the integration, we see the 10% CET1, is really kind of well above where some of your direct peers are pointing to. You might have seen yesterday, a very similar bank to you in size, talked about bringing it down to 9%, another one is in the 8.5% to 9% range. So I'm just wondering, if you can give some thoughts on kind of medium-term post some of the deal integration. What do you think that ongoing CET1 target might be?
So I think, predicting what your capital level needs to be out in the future here is a bit of guessing game because you really can't predetermine what your capital levels are going to unless you predetermine what then existing circumstances are going to be.
So it always has to be a hedge. The best way to think about us is relative to the environment. So if the environment is relatively risky, you will see us being relatively more conservative in terms of capital, liquidity, and we will always have strong diversification. Capital and liquidity vary depending on the circumstances that we see at the time and the forecast that we made.
As I said earlier, today from a conservative point of view, you just have to recognize that doing a large deal there are just lots of issues while we feel extraordinary confident about the conversion and all of that, but still think that I can't guarantee.
And you know, and my prediction is by the end of the year we will have a carried over reconciliation and a NAFTA approval – new NAFTA approval, et cetera, but I can't guarantee that. So when you threw all that, that anchors you back to the 10.
Now to your point about, all those moving to 9% or so, I certainly don't think -- I mean, when we get to a more tranquil or predictable environment, I don't think 9% is going to inappropriate at all. I think cushioned down to 8.5%, which still gives you 150 basis points over the minimum kind of 7. But remember 7 is really hard. So you don't ever want to be here close to 7 because some pretty bad stuff that happens when you get there.
So the debate is really between 8.5% and 9% ongoing more stable environment position in my view. And so as things stabilize, I will be recommending to the Board, if we consider a lower target capital level and based on the work that Daryl and his team does we'll come up with whatever the number looks like, but we are not going to be rushed and I want to be fair to our shareholders, there is opportunity here, but we're going to be conservative and I won’t – mark to understand that and mark over-promise and well over deliver
That's helpful. And then just separately any early signs of, call it, either client attrition or clients taking a wait-and-see approach from doing business with you, and I know you can't talk to SunTrust. But is there any kind of wait-and-see or on the flipside, are there discussions with clients saying, Hey, now that you're going to be a lot bigger, can you do more for us, whether it's, say, taking bigger positions in lending or you've got a broader product set so as more we can do with you there. Talk about those kind of puts and takes if you're seeing any so far? Thank you.
Yes, so it's a very good question, and you're right. We have limited insight into that because we've been very, very clear to our people. We are ROA competitors today as we have since day one. And we're not going to walk anywhere close to that line item of not being competitive, and so, therefore, we have very limited information.
We do pickup little bits of anecdotal feedback. And certainly, there are clients that are out there talking about, hey, it's going to be great when you guys get together, you will have more expanded lending capacity, you have more products and services, if they were BB&T or SunTrust Advisory, they would both say the same thing, which is true. And so I think everybody recognizes the opportunity out there by us combining
In terms of any attrition materially, but I've heard when you go to BB&T side, there is – has not been. I notice there's been lot of conversation out in the market about everybody's saying they're taking all of our business, that's not true, you just saw our growth numbers, we grew alone 6.5% and our deposits grew 5%.
So – I don't know how to be clear than that. There is a not any immaterial attrition. Our turnover rate is about the same or lower than it has been. So I would say to you that this is extraordinarily successful to this point. There is no indication of any decay and there's no expectation of any decay rather the expectation is a rather positive optimistic opportunity as we come together.
Hey, John, could you take our next caller please.
Yes, Sir. We will now move on to our next question from Michael Rose of Raymond James. Please go ahead. Your line is now open.
Hey, thanks for taking my questions. Just going back to the merger, I think when you guys announced this you talked about $2 billion in one-time charges, just wanted to see if there are any adjustments to that and any adjustments to the time line. I think you talked about a conversion somewhere 12 to 18 months after close. And should we expect the majority of the one-time cost to come around at that timeframe? Thanks.
So, Michael it's Daryl. So the numbers are still coming together. So year-to-date between BB&T and SunTrust, if you look at our charges today, we're about $250 million between marks and MOE-related expenses. We got some more information on the IT convergence, that's getting finalized, that's going to be a very large number.
So I don't have all the number in yet, but I'm pretty sure that we are going to probably utilize the bulk of the $2 billion. We'll give you more color as we close because we still don't have all the information that we really need between each of ourselves until we close the transaction. But what I'm seeing right now and there is a very complicated integration, as Kelly talked about, hooking these computers together is going to take some a lot of need for outside assistance to help with that all come together.
So I would say, it's going to be the bulk of the $2 billion from what we are seeing right now, but we'll give a better information. First, our timing goes, we're trying to get majority of all the systems put together by the end of 2021, if that's possible.
We will do the – the teams are working really hard to work out those plans and feel very comfortable that, that can be done in the timeframe, but we'll give you more specifics as we get more clarity, probably over the next couple of months but things are coming in as expected. And I think you're going to have a really robust combination of IT systems when it's all set and done.
Okay, that's a great color. And maybe just as a follow-up, now you've had some time to the kind of dig into their side, can you just explain where you think the greatest opportunities could be for revenue synergies and maybe what areas you're working on as you prepare for the close? Thanks.
Yes. Mike, this is Chris. Bill and I have been working together, as Kelly alluded to earlier, on a number of fronts. I would just maybe hit the highlights, certainly they have a much more build-out capital markets business to bring strategic advice sort of down segment, if you will.
We have a very strong Community Bank that from, I'll call it, revenue companies down to $25 million that need those types of services, many of which we did not offer prior. So we see a great opportunity to bring strategic value to those commercial clients on many, many fronts from a paid perspective to really build out there their overall needs and planning for their future.
The flip of that would be, so that's a big one, the flip of that would be, we have a substantial insurance business, I think, of the best-in-class insurance business. There is really not much we don't offer that we can take to their entire commercial business, up and down, small business, all the way up to the largest corporate clients they handle.
We also have the largest life insurance distributor in the country with Crump Life, that we have built a business within our Company of offering to our clients. We will extend that naturally to the SunTrust clients on both the commercial and the individual side.
As you think about the connectivity with wealth and the broker-dealer and the strong wealth business they have, the state planning need to fund their sales plans, plus their agreements that kind of thing, we have a tremendous opportunity to offer life into the wealth business and also into key man insurance on the commercial side, so tremendous opportunity there.
Third, that's kind of common sense is, we have a very strong business. We call it BB&T work. We provide sort of turnkey deposit programs to our commercial clients for their employees.
SunTrust has a plan. It has not been as effective and its one thing that we think we can turn on day one to help grow deposits in that sector, that's just a handful of three that I think have potential, but we have got another 15 to 18 behind that, that maybe begin of kind of all sizes and shapes that were not modeled as MOE. We're very very excited about.
That's great color. Thanks for, taking my questions.
Sure.
We will now move on to our final question from Stephen Scouten of Sandler O'Neill. Please go ahead, your line is open.
Hey, good morning everyone.
Good morning.
I was curious, how you guys are thinking about the move to Charlotte and kind of protecting the legacy brands in the standings, that you guys haven't Winston-Salem, for BB&T. And obviously, Atlanta for SunTrust and particularly as that pertains to Atlanta and continues to grow and look like kind of capital. The Southeast and how you think about protecting that as you moved the headquarters to Charlotte and not letting somebody else kind of take that position over time.
So Stephen, we are very excited about the move for all three markets, Charlotte Atlanta and Winston-Salem. Charlotte is a super dynamic market. I mean it's going extremely fast. Its got to be real kind of a major focus for young professionals to be attract and a lot of technology people there, a lot of technology companies there, auto companies moving their technology operations there.
When this merger is done, Charlotte is the second largest financial district in the country. And so, Charlotte is going to be a mega place for us to do business. But Atlanta is fantastic as well. Atlanta you could say is clearly the dominant city in the Southeast. It's a fantastic place. We love Atlanta and we will continue to love Atlanta. This is not -- we're not moving out of Atlanta.
We will have a superstar later in Atlanta from SunTrust, who is one of the most accomplished bankers in the country today and she is extraordinarily plugged in. We won't miss a beat in Atlanta. Our commitment will be increased in terms of our community support, our commitment in terms of marketing and execution will be increased.
We would expect our execution of business attraction in Atlanta to be greater going forward then has been in the past and keep in mind that you know our commitment was and is that we will have domiciled our headquarters for capital markets, investment banking, wealth management and Atlanta. Likewise in Winston-Salem, our Retail Community Bank will be headquartered in Winston-Salem Triad area.
And so, neither market loses. It's just that we happen to be blessed by having three fantastic markets that are now, they're kind of the foundational anchor geographical locations are Truist. So don't think about it as Truist being anchored to Charlotte, think about the Truist being anchor two to three. And we still have a toehold end markets that we generated from in Wilson, North Carolina and Orlando. So we are a community bank. We don't think in terms of one market driving everything. We think of it being a coalition of a group of community banks coming together under the advantages of holding company. So, nobody loses, everybody wins.
Perfect. Helpful. And then maybe just one follow-up, you spoke to kind of seeing long-term strength in the economy and obviously your growth remains solid, ex the mortgage sale, but we've seen some mixed economic numbers manufacturing, et cetera. Can you talk a little bit about, what you're seeing from your customer base in terms of incremental investment in overall market demand? Thanks.
Yes, I'll make a comment. Then I'll let Clarke to make a comment. The feedback that I get primarily from our Regional Presidents, but also talking directly to class when I'm traveling around, you know for 10 years of MainStreet America really kind of suffered as the biggest companies were doing more robust international business and MainStreet were still recovering from the recession. But MainStreet has recovered from the recession and after 10 years now at investing MainStreet is now needing to invest, learning to invest and they are investing. So MainStreet is kind of a broad-based business activity that we see across to the right of our business activities and of course, we don't participate as much and a larger global international businesses, so as they are seeing more of the impact of the trade war is not, that's not impacting us as much as we, some of the mega banks.
So I'll say, earlier it was if we are still here, we are beginning to hear some conversation from our local MainStreet clients, around uncertainties, around trade wars because after while it drift down MainStreet and everybody talks about it, if that persist for a long time, it will affect MainStreet, but it's not having a material impact today. Clarke, any color on that.
Yes, I would just echo what Kelly is saying that while there is more conversation about the headline news and you might be some more cautious tone in some conversations are, our opportunities continue to be very robust across the Board. We have good pipelines. Really I think one of the benefits that Kelly brought out earlier is just the diversification in the various platforms we have.
So while there is more conversation, I'd say it's more on the higher end than it is at this point on Main Street or the retail side, but people are conscious and thinking about it and we're trying to respond appropriately, but we still think there's plenty of opportunities with all the different levers that we have to pull.
Great, thank you guys so much.
That concludes today's question-and-answer session. At this time, I will turn the conference back to Mr. Rich Baytosh for any additional or closing…
Okay. Thank you, John and thank you everyone for joining us. I apologize to those we have time to get through today and we will call you later. And I hope everyone has a good day. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.