RF
#Well, I think that deploying our capital is important to us.
There's no single one thing that would knock it out of the park.
It's doing a lot of things well.
It's executing our business plan.
It's continuing to grow loans and deposits.
It's continuing to deploy our capital, looking at acquisitions for banks and non-banks, making the investments in people.
You can look at wealth management as a prime example of ---+ we've taken the medicine of making investments in people, knowing that it is going to take time to generate revenue.
We believe further investment in those people, in wealth management, as an example, is the right thing to do.
There are other businesses we're looking at doing the same thing to.
Capital markets is an area where we would like to expand and be larger in, as we differentiate or diversify away from spread.
And so, we are like you.
We're not sitting here waiting for rates to bail us out.
We're making a difference by growing these revenue sources, watching our expenses as we go, but needing to make the investments of dollars to generate revenue growth.
<UNK>, it's a great question, and very relevant question ---+ where the industry is right now.
And, quite honestly, we don't see some one thing that we could do that would alter our forward momentum.
What we are committed to is very steady and consistent progress in strengthening our balance sheet, strengthening our Business.
We've had ---+ we had, over the last couple of years, really trying to put in a whole new set of strategies for how we grow our core business.
And we're starting to see the fruits of that labor, in that we're seeing growth more broadly across our markets, and more broadly across our product lines.
We obviously are augmenting our product lines, and we're augmenting the number of people we're partnering with to grow our Business.
But I think to <UNK>'s point, the biggest thing that would help from an earnings standpoint is the rate environment.
But we can't wait on that.
We can't depend on that.
And, plus, our core business is really the long-term, sustainable health of the Company.
And so, I think you're going to continue to see us, very broadly, in a very diversified way, continue to try to grow all aspects of our Business.
And if we can do that in a very steady and consistent manner, I think we've got a very sustainable business model, and one where shareholders benefit long term.
Good morning, <UNK>.
That's a great question.
I think if you looked at our generation, you could almost have a third of that, that would be used up ---+ 30%, 40% of that would be used up for loan growth.
You are going to have 30% to 35%, maybe 40%, in dividends over time.
The other would be return to the shareholders.
That's what the math would lead you to.
But we want to grow.
We do have the excess, so we have to put that to work.
But outside of the excess, I think it's almost a third, a third, a third.
It's in that 4% or 5% range.
Firstly, the majority of our product in energy is syndicated loans.
I believe it's roughly 86% are syndicated.
Secondly, where we're the lead versus the participant, irrespective we are still required even as a participant to make sure we have all of the appropriate information about that customer.
We work with the agent, and we make our own determination as to what that risk rating should be.
And it can be different from the agent.
Often it is not different from the agent, however.
And they are synced up once a year, typically during the shared national credit exam.
Yes, that's a great question.
So, I had mentioned earlier, we deployed our Six Sigma teams throughout the Bank.
Some of them are revenue-producing, and some of them are expense management.
This particular one was revenue-producing.
And what we had found is, they analyzed our process, and noted that in some cases, when an application would come through our center, that it would get kicked out for certain underwriting exceptions that would then force a human being to look at the underwriting, and force that person to make a decision whether or not they were going to approve it.
Now, by the time that happens, that deal has already been done with a dealer because the dealer requires speed of execution.
So, what we did is we found that those cases where an underwriter is approving the deal, we changed our algorithm to build into that the acceptance so that it wouldn't kick out.
And that improved ---+ that one change improved our pull-through rate quite substantially.
And that was a big driver of our increase in revenue over the past couple of quarters.
We've really tried to focus our teams on the larger dealer groups.
And if you look at this business, obviously quality of answer is important.
Quality of answer is important both to the customer, to the dealer, and to us.
But speed of answer is also very critical.
And so, we've worked on both.
We've greatly improved our quality of answer, and we've greatly improved our speed of answer, all through automation.
And also, in terms of targeting who we want to do business with, from a dealer standpoint, and ---+ so, that rationalization of how we do business and who we do it with has made a tremendous difference in our pull-through rates.
First of all, our branch rationalization process is a continuous process.
And we're constantly looking at transaction activities, marginal costs, marginal profitability.
And trying to figure out what the ---+ our branches deliver in terms of a direct contribution, making sure that all of our branches are profitable on a direct basis.
But when you look at the analytics of the branch system, and where we consolidate and where we expand, that process is very comprehensive.
And you have to factor in the relevance of the branch because, still, 80% of our new account sales come from the branch offices.
And so, we're very careful to determine, if we consolidate a branch, how many of those customers do we lose.
That has a lot to do with where they are being consolidated into ---+ how far away that receiving branch is from the consolidated branch.
We also have to factor in the community impact of that.
Even though a lot of our customers bank with us over digital channels, that bank branch is still a community asset.
And it's still an asset that that community values, and we have to think through all of those issues before we consolidate.
We have tried to really still be engaged in all of our communities, and deliver service in all of our communities, but to try to do that in the most efficient way we can.
So, those analytics are comprehensive, and they're done on an ongoing basis.
And we think that while we continue ---+ we will continue to see consolidation opportunities, we also see the need ---+ where some communities need more branches.
And so, on a net-net basis, when we think about it, we're not sure that our number of branches over time diminishes that much.
In fact, we think, over the next few years, we will be relatively stable.
But we're going to let the analytics drive that.
And so, we let the analytics tell us whether we ought to ---+ where we ought to expand and where we ought to contract.
Yes, this is <UNK> <UNK>.
When you speak about construction, I guess you mean overall just generally in the portfolio.
Yes.
So, we're very focused on managing that exposure fairly tightly as a finite resource across all the markets that we do business in.
The majority of the exposure would break down between homebuilder finance, which is a $700-million-plus portfolio, and then our multi-family business.
I think what you are seeing is, as that portfolio grows, its fundings under previously approved construction facilities.
We really have not been originating a lot of additional multi-family credit over the last six-plus months.
And so, primarily the growth is fundings under a portfolio that currently has a duration of about 23 months-plus-or-minus.
So, fairly short duration, a lot of turnover.
Again, we're managing it as a very finite resource, given what we believe is some softness in a few of the markets that we operate in.
I would say, yes, expect it to moderate.
Well, we have focused on our efficiency ratio.
The big driver there is revenue generation.
And we've made the investments.
We've talked about the growth that we've seen in the NIR.
We've seen the loan growth.
As our revenue grows, and it takes a little bit of pressure off the expense side, but we're working on that, too.
If you take all three ---+ two revenue improvements, NII and NIR, and work it on expense, we do expect the efficiency ratio to drift down where our goal is, to get down into the lower-60%s.
We really want to be in the 55% to 59% range, but we'll have to have a rate increase to get there.
So, absent that, we would be in the ---+ we expect to be in the lower-60%s.
So, it's a focus every day.
With a rate increase, yes.
Thank you.
I believe that is the last question.
We appreciate everyone's time and attention today.
Thank you very much.
