Solidion Technology Inc.
Q3 2013 Earnings Call Transcript

Published: 18 Oct 2013

[Executives:]

Ankur Vyas - Director of Investor Relations William Henry Rogers - Chairman, Chief Executive Officer, President and Chairman of Executive Committee Aleem Gillani - Chief Financial Officer and Corporate Executive Vice President

[Analysts:]

Ryan M. Nash - Goldman Sachs Group Inc., Research Division John G. Pancari - Evercore Partners Inc., Research Division Erika Najarian - BofA Merrill Lynch, Research Division Matthew D. O'Connor - Deutsche Bank AG, Research Division Paul J. Miller - FBR Capital Markets & Co., Research Division Kenneth M. Usdin - Jefferies LLC, Research Division Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division Matthew H. Burnell - Wells Fargo Securities, LLC, Research Division

[Operator:]

Welcome to the SunTrust Third Quarter Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn today's meeting over to Ankur Vyas, Director of Investor Relations. Thank you. You may begin.

[Ankur Vyas:]

Thank you, and good morning. Welcome to SunTrust's Third Quarter Earnings Conference Call, and thanks for joining us. My name is Ankur Vyas, and I'm taking over the Investor Relations role from Kris Dickson. I look forward to meeting many of you over the coming quarters and years. In addition to the press release, we've also provided a presentation that covers the topics we plan to address during the call today. The press release, presentation and detailed financial schedules are available on our website, www.suntrust.com. This information can be accessed by going to the Investor Relations section of the website. With me today, among other members of our executive management team, are Bill Rogers, our Chairman and CEO; Aleem Gillani, our Chief Financial Officer. Before we get started, I need to remind you that our comments today may include forward-looking statements. These statements are subject to risks and uncertainty, and actual results could differ materially. We list the factors that might cause actual results to differ materially in our SEC filings, which are available on our website. During the call today, we will discuss non-GAAP financial measures in talking about the company's performance. You can find the reconciliation of these measures to GAAP financial measures in our press release and our website, www.suntrust.com. Finally, SunTrust is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third party. The only authorized live and archived webcast are located on our website. With that, I'll turn the call over to Bill.

[William Henry Rogers:]

Thanks, Ankur, and welcome to the team. One of the first things you learn as CEO is how important the IR role is, and I want to take this opportunity to publicly and personally thank Kris Dickson for his leadership. As many of you know, he's continuing his great career in SunTrust in our commercial real estate area. So, Kris, thank you. Now as usual, I'll start this morning's call with a quick overview of the quarter. Then I'm going to pass it to Aleem to provide details on the results. I'll return to wrap up with business segment highlights and some of our good core trends. Earnings per share for the quarter were $0.33 on net income of $179 million. As you know, we had some large items that impacted this quarter, particularly related to the resolution of key mortgage matters. Where appropriate, we'll speak about results excluding these items to make the underlying core operating story clear. I set an objective this year to get as many legacy issues behind us as possible on the best terms available. As you know, there have been discussions happening on these legacy mortgage matters for months and, in some cases, years. Dialogue with the respective parties increased this quarter, which enabled us to resolve a number of key items. These included

[Aleem Gillani:]

Thanks, Bill. Good morning, everybody, and thank you for joining us this morning. I'd like to also have my personal thanks to Kris for his time as Head of IR. As many of you will appreciate, Kris is moving on to a revenue-generating role for the company, and that'll be helpful. And while we'll miss him, I'm sure you'll all enjoy working with Ankur in the future. As Bill indicated, there were a number of significant items that impacted this quarter's results. So before we delve into our normal review of operating performance, I'll spend some time providing a bit more detail on these items that we preannounced last week. First, we signed agreements in principle with the government to settle 2 legacy mortgage-related matters

[William Henry Rogers:]

Okay. Thanks, Aleem, and I'll start on Slide 14, which highlights several core operating trends that continued in our business segments this quarter. In our consumer banking and private wealth management business, net income growth was driven by meaningfully efficiency improvements, ongoing credit improvement, particularly in our home equity book, and higher noninterest income driven by growth in wealth management. In addition, you'll recall that the third quarter of last year had elevated provision levels due to our junior lien policy change, which accelerated the timeframe for charging off these loans. Overall, revenue was relatively stable to the prior year as the decline in net interest income, due to the $2 billion loan sale in 2012, was mostly offset by solid growth in our wealth management business. We've seen growth in fee income due to increased fixed annuity sales, which benefited from higher rates and strong growth in our managed account business. We've steadily improved the tangible efficiency ratio in this segment, driving it on down over 5 percentage points in the last year to 64.4%. We've made meaningful progress in our efforts to better align our branch network and staffing models with evolving client preferences. This is translated into an 8% reduction in our branches from last year. Going forward, we do expect additional net reductions in our branch network, however, the overall rate of decline will slow. Loan balances were down from last year due to the fourth quarter student loan sales, but we continue to see solid organic loan growth. Consumer loan production was up 6% year-over-year. And if you exclude the student lending portfolio, production was up 14%. Overall, deposits were up 1% with a continued favorable mix shift that drove further declines in rate paid. Let's take a little bit closer look on our wholesale business. Wholesale had another strong quarter overall. However, results were affected by the leasing write-down we discussed earlier, which, in addition to weaker trading income, drove our 6% decline in revenue. Net interest income was up $17 million or 4% as the business produced solid loan growth. Investment banking income was up 19% year-over-year, driven incrementally by growth in M&A and equity-related revenue. Loans grew 6% this quarter driven by our not-for-profit and government industry vertical, core CRE and our large corporate lending areas, most notably asset securitization, asset-based lending and our energy vertical. We feel good about our pipeline, which was solid across most of our wholesale businesses. Utilization rates remain stubbornly low at approximately 30%. So that, too, I think represents an opportunity looking ahead. Ongoing improvement in credit quality helped drive a decrease in the provision for credit losses, though provision expense in the third quarter of last year was elevated due to the charge-off associated with the CRE nonperforming loan sales. Wholesale has been and should continue to be a growth engine for SunTrust. We're very well positioned to compete and have a lot more runway in each of our key lines of business. Now let's look at mortgage. The big topic this quarter with respect to the mortgage business was obviously the resolution of key certain mortgage matters. While the resolution is important, these items, along with the servicing allowance increases, contributed $344 million of the $405 million loss. Excluding them, the mortgage business lost $61 million, which was a modest improvement from the previous quarter as lower expenses and improving credit quality offset the decline in mortgage production income. Now with that said, having a lower loss is simply just not the objective. We're beginning to implement aggressive policies and rightsizing our mortgage business, both as a result of continuing resolution of legacy matters and as a response to the current origination environment. We intend to reduce our mortgage staff by 20%, which translates to roughly 800 full-time equivalents. These are tough decisions, given the impact the team makes, but it positions us with a chassis that better reflects our decisions and the current environment. In the fourth quarter, we anticipate overall production volume will continue to decline, given the normal seasonality and the sharp falloff in the third quarter application activity. To put this quarter in perspective, our quarterly mortgage revenues, excluding the mortgage repurchase provision, declined by approximately $300 million year-over-year. Despite this, our adjusted consolidated earnings were up 14%, which I think speaks to our business diversity, efficiency efforts and improving credit profile. So in summary, I think there are plenty of opportunity that exist across our businesses. We've had some tailwinds, and we've certainly had some headwinds, but we put a number of the legacy issues behind us and can now more fully focus on the future. We remain convinced that our strategic priorities to generate profitable growth and become an even more efficient company are the right direction for SunTrust and will continue to augment our positive core operating momentum. So with that, Ankur, let me turn it back over to you, and we can start taking some questions.

[Ankur Vyas:]

Okay. Thanks, Bill. Karen, we're now ready to begin the Q&A portion of the call. [Operator Instructions]

[Operator:]

[Operator Instructions] Our first question or comment comes from Ryan Nash from Goldman Sachs.

[Ryan M. Nash - Goldman Sachs Group Inc., Research Division:]

I guess a question relating to expenses. First, from a high level, Bill, you mentioned needing to adjust expenses in both mortgage and across the company. I assume when you guys did PPG, you did a deep dive across the company. So just trying to get a sense of where should we expect to see more costs coming out over the next couple of quarters. And just related to that, the efficiency has been flat over the last 2 quarters. And with mortgage still under pressure and the margin falling, just how should we think about your ability to continue to bring down the efficiency ratio over the next couple of quarters?

[William Henry Rogers:]

Okay, thanks. Good question. Let's sort of start with the mortgage piece and maybe I can sort of put some numbers around that. We talked about the FTE decrease related to, again, not only the decision we made to sell delinquent servicing, but also sort of just recognizing that I think we're in sort of a permanently different environment that's much more production-oriented versus refinance-oriented. If you put some numbers around, I think by the end of the the first quarter or start of the second quarter, all things being equal, which, I guess, things are always not equal, but all things being equal, that would be about a $50 million run rate as it relates to mortgage, specifically on those decisions -- yes, quarterly. We then -- I talked about at the last conference, a review the we're undertaking based on some structural changes we made in our company to really look at about $1.5 billion worth of, let's call them, operations cost, for lack of better description, in all of our segment areas. We have a significant effort underway there. They would be in things like consolidation of lending areas, looking more to our call centers, the kinds of things that we would do to not only make ourselves more efficient and client responsive, but I think just we've got some significant opportunities. Then continuation of more actualizing and annualizing the decisions that we've already made as it relates to our branch network. Remember, we sort of see that come in slowly over time, and we'll continue to see that show up in our numbers. Then it's everything. And I think as Aleem noted, and I think if you ask anyone in SunTrust what their commitment was to efficiency, they'd tell you, and it's everything. It's real estate compression, it's core expense saves, it's increasing productivity of teammates. So it's a pretty wide range of activities supplemented by some specific things, including mortgage and the operations review. As it relates to the long-term efficiency goal, as I said, I mean, I think we have sort of a permanent loss in top line revenue for mortgage, but we also said we're not giving up on our 60% efficiency ratio. So I think that's -- we may have extended the goal a little bit, but we're not backing off that goal. And I would expect to see continued improvement in our efficiency ratio next year.

[Ryan M. Nash - Goldman Sachs Group Inc., Research Division:]

Great. And then I guess just one unrelated question for Aleem. Aleem, charge-offs continue to come down nicely, and yes, I know you're saying flat for next quarter. But resi is obviously still elevated at 82 basis points, and that's probably the biggest area of improvement from here. So can you give us a sense of how you're thinking about the trajectory of that? How low do you think that can eventually go, and what are you thinking in terms of the timing?

[Aleem Gillani:]

All right. When you look at the components of charge-offs overall and consumer overall, you look at sort of the non-resi component of that book and that's already at pretty low levels. The resi component probably has a little bit of a way to go. When you look at wholesale, wholesale charge-offs are, again, already at pretty low levels. So as you noted in the question, the opportunity mostly sits at mortgage. And mortgage charge-offs do still have a way to go, but it's unlikely they're ever going to get to sort of the bottom that we saw in the '05-'06 level. I would expect that charge-offs will continue to trend better over the next little while. At 47 basis points for the company overall, we're sort of within our cyclical operating range that we expect over a cycle of 40 to 70. But as the quality of origination since 2009 has been so strong, it's not unreasonable to assume that charge-offs will continue to come down as the high-quality origination plays out in our book in our next little while. So I would expect charge-offs to continue to trend down and -- over the next little while.

[Operator:]

Our next question or comment is from Betsy Graseck from Morgan Stanley. And we're not getting a response from her. We'll go to our next question. Our next question or comment comes from John Pancari from Evercore.

[John G. Pancari - Evercore Partners Inc., Research Division:]

Given your color you gave us on expenses, can you just help us think about how we should think about total expense levels over the next several quarters here? Given we saw some good declines in the environmental costs, and I know you're pushing these programs you mentioned, Bill, but how should we think about where total expense levels can trend over the next couple of quarters?

[Aleem Gillani:]

Well, John, let me start off with that. I think there are sort of several components to total expenses. If you look at comp, you can see this quarter, we made a difference on comp. Bill talked about some of the initiatives that we've got and changes that are going to happen in mortgage, the annualization of previous programs as they kick in. We've also got other programs going on in terms of managing our occupancy costs, manage other operating and back-office costs. And then, of course, we still have opportunity left, I think, in our cyclical costs. And if you remember, 2 years ago, those were $700 million rounded. Last year, they rounded to $600 million. This year, if you annualize our first 3 quarters, that number is down to $360 million, and we've guided to that number coming down on an annualized basis to below $325 million. So I think we've got opportunities still in a lot of expense categories to continue to manage those down. One of the minor hit, ones we're going to face again, that as we go through some of these programs, we'll probably have some one-offs. To cut long-term expenses, there might be some minor charges, one-offs to get those programs in place. But I would be looking for next year's overall expenses to be better than this year's overall expenses.

[John G. Pancari - Evercore Partners Inc., Research Division:]

Okay. And has there been any determination of the potential savings on that $1.5 billion that you're evaluating in the back-office costs?

[William Henry Rogers:]

Yes. John, we're sort of in full diagnosis phase on that right now. So you should assume we -- I wouldn't talk about it unless I thought there were some significant savings as it relates to that, but we really haven't sort of finalized numbers, run rate and timing on that yet.

[John G. Pancari - Evercore Partners Inc., Research Division:]

Okay. And then lastly, I just want to get a little bit of color on your thoughts around the margin. The loan yields pulled back quite a bit this quarter, down about 11 basis points. It seems a bit high. So I just want to get an idea of how you're thinking about where that can trend and what that means for the magnitude of the margin compression that you expect.

[Aleem Gillani:]

Well, I think next quarter, we do expect a little bit more margin compression, John, but overall, smaller than we saw this quarter. As you saw, this quarter, we saw 6. Next quarter, anticipate that to be smaller. Looking out into next year, obviously, we've got some headwinds and tailwinds. We've had 30 years of interest rate declines and interest rate increase since June. This is going to offset that immediately, right? So we've got games being played on both sides here. On the negative side, even with the steepened yield curve, we will see probably a little bit more asset yield compression feeding in as the long-term assets roll off and late next year, as some of the swap book rolls off a little bit also. On the positive side, that starts to make us more asset sensitive in mid-to-late '14 as short-term rates ought to start to go up and we start to take advantage of that. And we continue to be able to manage our non-maturity deposit rates down. Obviously, they're getting down to very low levels. It's difficult to do that from here, but we were able to do -- get another couple of basis points out of that this quarter, and hopefully, we'll be able to continue to manage that further. And then as we get higher short- and long-term rates, that ought to benefit our portfolio as we re-invest our portfolio at higher rates going forward.

[Operator:]

Our next question or comment is from Erik Najarian from Bank of America.

[Erika Najarian - BofA Merrill Lynch, Research Division:]

Just my first question is a follow-up on the expense levels over the next few quarters. If I take the $1.324 billion core that you posted this quarter, add back the $37 million comp accrual but take out the $50 million in quarterly expense, is the message there that, all else being equal, you could enter second quarter of '14 with a run rate of $1.31 billion? Is that a good starting point for us to think about?

[Aleem Gillani:]

I think that's about the right type of starting point, Erika. Obviously, there are going to be lots of puts and takes. And as Bill was careful to say, that's all else being equal. But all else being equal, that's the kind of starting point we'd be looking for.

[Erika Najarian - BofA Merrill Lynch, Research Division:]

Got it.

[Aleem Gillani:]

I think the overall message and maybe the simple answer is down. I mean, the expenses are going to be down in 2014.

[Erika Najarian - BofA Merrill Lynch, Research Division:]

Got it. And I guess making it simpler, to use your words and taking a step back, how much does your -- does the mortgage headwind delay the long-term efficiency goal of below 60%, if at all? And I guess I'm wondering, it sounds like you're very optimistic about some of the expenses that you could extract outside of credit-related op costs. So as we think about the timing of when you're achieving that below 60% goal, is this something that we could potentially see by 2015? And if so, is the message there that you can get there through expense, mostly expense cuts?

[Aleem Gillani:]

Erika, I think we're going to get part of the way there through expense cuts. I don't actually think that it'll just be expenses alone that get us there. When we set that 60% target, you recall, that was a couple of years ago and our revenue base was higher then, and the 60% then was sort of all being equal. Revenue has fallen since then, given what's happened in the mortgage market. So we're going to work to decrease the size of our chassis. We're going to work hard to become more efficient and bring lower expenses to the table. But at end of the day, I think we'll need some revenue growth to help us get there. Now we are seeing revenue growth and revenue opportunities in many of our businesses. As Bill said earlier, you saw how our performance has improved in consumer and private wealth. You saw the increase in the bottom line in our wholesale business and the opportunities there that we have in the CRE, in core commercial and in CIB. Our challenge on revenue has been mortgage, but we're working to make that up across our other businesses. And if we get any kind of a tailwind at all on rates, that'll make a big difference.

[Operator:]

Our next question or comment is from Matt O'Connor from Deutsche Bank.

[Matthew D. O'Connor - Deutsche Bank AG, Research Division:]

Just on the expenses for next year, you're saying they're going to be down versus this year. You're obviously excluding the big one-offs this quarter, right?

[Aleem Gillani:]

Yes.

[Matthew D. O'Connor - Deutsche Bank AG, Research Division:]

Okay. And then just separately on credit. As we think about the reserve ratio over time, any thoughts on where that might settle out?

[Aleem Gillani:]

Well, I guess, Matt, if charge-offs continue to come down and the quality of the portfolio continues to go up, the ratio may trend down a little bit, but that's true for the ratio. But when you think about it in dollars, remember, we're also expecting loan growth. So as we get loan growth, that might inhibit the decline in dollars of allowance.

[Operator:]

Our next question is from Paul Miller from FBR.

[Paul J. Miller - FBR Capital Markets & Co., Research Division:]

Guys, going back to the charges you took over the quarter, especially the one referring to the loan servicing and advance revaluation, what drove that? Was that driven by the regulators or by just internal concerns that the -- there's a -- about those advances?

[Aleem Gillani:]

That was completely internal. We went through a sort of long and extensive review of our overall servicing advances. And servicing advances are sort of pretty complex topic that depend very much on the type of bank and sort of the type of investors that you have. So after going through the -- that review overall, we've decided that that we needed to increase the size of the allowance we had against all of these advances. And just a little bit of color, the reserves we had previously worked for aged advances, and we changed our methodology to take a look at the percentage of the entire balance of advances. And that's what -- and the change in that is what drove the increase in the allowance.

[Paul J. Miller - FBR Capital Markets & Co., Research Division:]

And then what other -- is there any other -- because a couple of companies have the Department of Justice looking at FHA loans. Is there other issues? It looks like you solved your problems with Fannie and Freddie, but are there other things out there that could pop up with other litigation charges down the road?

[William Henry Rogers:]

Well, remember, in this settlement of national service standards, it was -- it was combined with the FHA origination settlement with DOJ. So those actually, for us, were put together, which is actually sort of a key component of what we were -- of what we're wanting to accomplish because they are, at the end of the day, fairly interrelated, and we didn't want to get in a situation where we were bifurcating those 2 potential settlements. As we disclosed in the second quarter, we do have an investigation into the administration of our HAMP program. We don't really have anything new to report on that. As you can imagine, we're cooperating fully, and we'll see where that one progresses. But as far as the big ones that we -- that are more common and that we know about, we're comfortable that we've reached the right conclusions on those.

[Paul J. Miller - FBR Capital Markets & Co., Research Division:]

And what about the FHFA suit on securities? Are you included in that lawsuit?

[Aleem Gillani:]

No, we're not.

[Operator:]

Our next question or comment is from Ken Usdin from Jefferies.

[Kenneth M. Usdin - Jefferies LLC, Research Division:]

I want to just come back up to the top line, where we were talking about the outlook for efficiency and understanding that you're very compelled to 60% and that it may take a little bit longer. But obviously, there's some top line challenges you need to overcome as well with NII and mortgage, et cetera. So can you talk about the outlook for revenue growth next year? What pockets might you have to help fill the gaps from some of those more overt top line challenges?

[William Henry Rogers:]

Yes. Let me sort of just maybe start us. And I'm actually glad you asked the question because we've been so focused on the expense side of the efficiency ratio, recognizing that the real juice is on the revenue side. And although we have the mortgage headwinds, we also have a lot of tailwinds, which we talked about in our core businesses. And maybe just -- let me just sort of hit on a few of those without giving sort of specific revenue guidance. But if you go down sort of our consumer and private wealth side, we're really seeing good momentum on the private wealth side. That is a result of both market conditions, but more importantly, sort of meeting more client needs. Our penetration there is up. Our referrals from our branch network, through our retail investment income side, is really on a really solid trend. So we're starting to see sort of good momentum in all those areas. And the core productivity in our branch network, it's up about 40%. If you translate that into however you'd want to measure that, that's sort of sales per FTE per day kind of thing. Productivity is up, up significantly. As you know, that's a battleship, so that takes a long time for that to manifest itself in terms of revenue, but we're really seeing the sort of the core productivity. Wholesale side, you've seen the good growth we've had on CIB. I mean, we've been at sort of a 15% CAGR for the last few years. While I'm not projecting that necessarily, we do have a lot of really good momentum continuing in that business. CRE has officially made the turn. That business now is in sort of full growth mode and, albeit, over a smaller base. As an increment of growth, we see significant opportunities on that side. And then on our sort of core commercial and business banking side, again, we're seeing the same kind of things in terms of productivity improvements and pipelines and those kind of activities. So I'm actually pretty confident in a lot of our sort of core businesses and the measures that I look at, sort of the day-to-day dashboard of what we're doing from a productivity and production capability.

[Kenneth M. Usdin - Jefferies LLC, Research Division:]

Great, Bill. And then second question on just on NII and your balance sheet, your balance sheet mix. Obviously, we know there's a little bit of NIM pressure still out there and then the eventual swap rundowns, but you had good loan growth. It seems like you're remixing a little bit on the -- from the CDs into lower costs and then securities into loans. Can you talk about earning asset mix and whether you think earning assets growth can offset the lingering NIM compression next year?

[Aleem Gillani:]

That's what we're working toward. We're -- I think we had a pretty good succes in that, as you saw this quarter, with the balance sheet increase helping to substantially offset most of the NIM decline. And next year, as the economy recovers and as general conditions get better, we are actually targeting more loan growth.

[Kenneth M. Usdin - Jefferies LLC, Research Division:]

And what about securities reinvestments? Do you guys have any capacity to also build on that side, or would you rather just see it remix into loans?

[Aleem Gillani:]

Well, our first priority would be to do more business with clients. So to the extent that we've got excess liquidity, we're able to put that to work with -- into sort of real client business. That would be the first priority. To the extent that we don't get that, I like the overall mix of securities in our book today. And we'll generally keep the securities book at the kind of mix that you see today, albeit with a steeper curve now starting to provide some opportunities to invest at higher rates than we saw a few months ago.

[Operator:]

Our next question comes from Gerard Cassidy from RBC.

[Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division:]

Regarding your Tier 1 common levels under Basel III, I recognize you haven't been told nor have the other regional banks been told what your final Tier 1 common ratio has to be, like our large-money center banks, Citi and JPMorgan, which, of course, are 9.5%. They have given us -- they expect to carry their Tier 1 common between 10% and 10.5%, so about 100 basis points above what they're required. What kind of buffer do you expect to carry above your requirement once you get that requirement?

[Aleem Gillani:]

That's a great question, Gerard, and as you say, we don't exactly know yet. But what we do know in Basel III terms, of course, is that we're going to have to be at a minimum of 7%. On top of the 7%, there may or may not be some type of a SIFI buffer. And on top of that, we'll have to carry our own buffer just to make sure we don't go through their buffer. So when you put all of those things together, if you look out sort of long term, where would I expect the company to be running in terms of overall capital levels, when we're actually managing our capital ratios ourselves, I'd probably put a number on that, that starts with an 8%, but that'd be long term. And I wouldn't expect that when you look at us today at 9.7%, that we'd be able to reduce that number much in the near term.

[Gerard S. Cassidy - RBC Capital Markets, LLC, Research Division:]

Speaking of that, should we expect -- obviously, last year, you had a low combined return of capital number as percentage of your earnings relative to some of your peers that went through CCAR with you. Should we expect this year's number in 2014 to be greater than what you guys asked for last year?

[William Henry Rogers:]

The way that I've tried to address that, clearly, we don't know what the inputs are yet, so you're always hesitant about giving an answer to output until you know what the input is. But the way that I've tried to address that is to say, last year, we were very clear upfront that we were going to have a conservative bias to how we approach the CCAR process. And I think everyone sort of understood why and we did and we did that successfully. We won't have the same conservative bias as we enter into this year's CCAR process. And beyond that, I don't want to sort of get into any specifics until we just have more inputs.

[Aleem Gillani:]

And, Gerard, we're expecting those inputs to arrive within the next 4 weeks.

[Operator:]

Our last question or comment comes from Matt Burnell from Wells Fargo Securities.

[Matthew H. Burnell - Wells Fargo Securities, LLC, Research Division:]

I guess a question about commercial real estate and the growth there. Jim, you were clearly pretty enthusiastic about the deal you signed recently with the Met. I guess I'm curious as to -- if there were any effects of that deal included in the above-average growth in CRE portfolio this quarter. And what should we expect to see over the next couple of quarters from that transaction possibly hitting the balance sheet?

[William Henry Rogers:]

Yes, I think it was a part of our growth and sort of incremental part of our growth. But that's a relatively new relationship, and we're building it out as we go. But it wouldn't sort of be the driver necessarily of our growth. The good news is we're sort of hitting on all cylinders, and that's one cylinder. So our REIT business, our institutional sort of what's going on in sort of our markets in terms of multi-family, office, and thus, we're sort of starting from a low base. And so we're sort of seeing all cylinders hitting at this particular point. We're up 35% since the end of last year, 10.5% this quarter at around $5.5 billion. So I just think you're going to continue to see good growth in the CRE portfolio, and a lot of that also has to do with -- that the run-off's effectively over. I mean, keep in mind, we were running that 35% growth was against $1.2 billion, $1.3 billion or so in paydowns. So we're sort of -- we're starting to see that abate, and we'll see real growth. On the -- again, on the MetLife thing, it's been a positive driver to date, but it will not be the exclusive driver. It is just one of many cylinders.

[Ankur Vyas:]

All right, great. This concludes our call. Thank you for -- to everyone for joining us today. If you have any further questions, please feel free to contact the Investor Relations department.

[Operator:]

That concludes today's conference call. Thank you for your participation. You may disconnect at this time.