BBT
#<UNK>, this is <UNK>.
I'll answer that.
We really aren't giving a whole lot of guidance for 2017 right now.
We'll give much more or better clarity as we get into January and finish our planning process.
With <UNK>'s question, our base right now is $1.691 billion.
We expect that to be down a little bit this next quarter, call it around 1%.
What <UNK> said in 2017 is we're going to try to hold that expense rate flat to maybe down a little bit.
We're going to do our best with all the competing priorities to keep our expenses relatively flat for 2017.
But we will give you more color as things get finalized from our operating plan.
Good question, <UNK>.
We had $33 million in MSR valuation income.
$18 million was that valuation adjustment to the MSR.
Every now and then you have to update and tune your prepayment models.
Basically our asset valuation was lagging peers that we index and look against.
So we had to adjust our prepayment models, which allowed us to take that $18 million in as a valuation adjustment.
If you take that out, we had good hedge performance of $15 million.
And that was just good performance in the TBAs that we had that we're hedging.
Well, we had benefit in the basis impact.
Yes.
When we go through a planning process, we always have our business lines plan positive operating leverage.
We want them to stay within the risk appetite of what they're trying to accomplish.
So we're going to have a plan that puts together positive operating leverage.
So, hopefully we will be able to generate and get improvement on efficiency, but we really aren't guiding to any specific number.
It's really going to depend on the execution and what the market will allow us and what we can grow from a revenue perspective.
We can control expenses, as <UNK> said.
We will be very tough on expenses and do what we think is right for the long-term benefit of our Company and our shareholders.
<UNK>, I think Tarullo's speech was very consistent with what he's been saying, really, for the last two or three years.
He has been, I think, appropriately moving to adjust some of the initial Fed criteria around CCAR.
He clearly, I think, believes that the CCAR process needs to be much tougher on the large [G50s] versus the large regionals like BB&T.
So I think his speech simply to some degree codified his movement in that direction.
But from our point of view, frankly, it does not change a lot because we have a robust CCAR process.
We're not going to dismantle it just because we're under $250 billion today.
It wouldn't make any sense.
Number one, the way we are doing CCAR today, we actually benefit from it.
We think it's a healthy process.
So we would continue to base that as it is anyway, even if they had dropped the whole requirements.
Certainly we would not drop it and then have to pick it back up if we did a strategic deal to put us over $250 billion.
It was encouraging in that I think it signals that the intensity of change with regard to, really, banks under I think $500 billion is just not going to increase.
In fact, it's kind of stable.
As he said, the intensity of additional or increased scrutiny is on the [G50].
That relatively is good news for us.
<UNK>, we constantly look at our balance sheet and always try to optimize our balance sheet.
We are aware of what we have on our balance sheet on the long-term debt side.
Potentially it could be something that we would evaluate as we enter into 2017.
No decision has been made; nothing is final.
Obviously there is potential opportunity there to maybe improve run rate, and improve efficiency and returns.
Yes, <UNK>.
This is <UNK>.
I would say they'll continue to run down.
We will probably average our securities down another $2 billion, give or take, from where they were.
So they were down about $1 billion linked quarter second to third, and maybe down about $2 billion linked quarter from third to fourth.
The rate hike is so late in December, it's not going to have a big material impact.
You're getting the LIBOR benefit just crossing over at year end.
So I wouldn't view that as material.
We might be off 1 basis point, but you could be up 1 basis point in core margin.
So it's pretty much a non-issue for fourth quarter.
So, the energy portfolio is really just a very small portion of our strategy in Texas.
We view the energy portfolio as more of a national kind of a strategy.
I would expect it to continue to grow modestly as the overall industry continues to recover from the lower rates.
With regard to Texas in general, our acquisitions on the city branches, our de novo branches are going extremely well.
The Texas market overall is doing well.
We're beginning to see a little bit of softness in Houston around some multifamily and others, which you might expect.
Nothing dramatic, but you're beginning to see the effect of that a bit.
Nowhere else, really, across Texas.
So we're gaining momentum substantially.
We have about a $7 billion or $8 billion operation in Texas at this point, which is strong.
We're 14th in market share, up from 53rd in market share when we started in 2009.
So Texas is still growing about 1,000 people a day.
So we will continue to grow faster than market in Texas.
And continue to build out our franchise with de novo types of branch expansions.
We will certainly in the long term be in some acquisition, but that's not a part of our strategy today.
Our organic strategy is playing very well.
We love Texas, and Texas loves us.
So we're having a lot of fun in Texas.
Yes.
I would say our merger-related costs will probably be in the $20 million to $30 million.
It's pretty much phasing down.
This might be the last quarter of any substance.
You have some little dribbles and drabs in maybe the first part of 2017.
But I would say $20 million to $30 million, fourth quarter.
At least double.
Okay.
Thank you, Leann.
And thanks to everyone for joining us.
If you have further questions today, please don't hesitate to call Investor Relations.
This concludes our call.
We hope you have a good day.
