Greetings, ladies and gentlemen, and welcome to the BB&T Corporation Second Quarter 2019 Earnings Conference. Currently, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Rich Baytosh of Investor Relations for BB&T Corporation.

Thank you, Orlando, 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; all who will review the results for the second quarter and provide some thoughts for the third quarter of 2019. We also have Clarke Starnes, our Chief Risk Officer, to participate 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 the joint proxy statement and prospectus that has been sent to shareholders of BB&T and SunTrust seeking their approval of the proposed transaction. 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 thank you for joining our call. We are really pleased. We had overall a very strong quarter, strong results with record earnings, was really driven by strong loan growth, improved revenues, especially in insurance, but also very strong investment banking revenue and very solid mortgage rebound. Excellent asset quality once again. Clarke will give you detail on that. And we’re making excellent progress with regard to our MOE with SunTrust. So, if you’re on Slide 4, net income was a record $842 million, which was up 8.6% versus second quarter of 2018. Now, that is – if you look at net income excluding merger and restructuring charges, and this quarter we’re also calling out incremental operating expenses related to the merger. It was a record $868 million, up 9.7% versus second quarter. Diluted EPS was a record $1.09, up 10.1% versus second quarter of 2018. Adjusted EPS was a record $1.12, up 10.9% versus second quarter of 2018. Our adjusted ROA and ROCE and ROTCE were very strong at respectively 1.59%, 12.34% and 20%. Our record revenue was $3.1 billion, up 19.8% annualized from the first quarter and up 5.7% versus the second quarter. So, we really have overall strong fee income that really helped offset the negative effects on the curve flattening. We had – fee income was a record $1.4 billion, up $150 million from the first quarter. Really strong revenue performance in every regard in insurance. Chris will give some real detail on that. Investment banking and brokerage also had strong quarters, up 20% like quarter and annualized 72% linked quarter. And interestingly, every fee category grew during the quarter. Now, NIM did decrease 9 basis points to 3.42% and core NIM decreased 10 basis points to 3.34%. There is…

Thank you, Kelly, and good morning, everyone. Today, I’m going to talk about excellent credit quality, margin and fee income dynamics, improved efficiency, and provide guidance for third quarter and full year 2019. Turning to Slide 8. Credit quality remains strong. Net charge-offs of $142 million were down 2 basis points as a percentage of average loans. Our nonperforming asset ratio was 23 basis points that is below our previous low seen in 2006. Continuing on Slide 9, our allowance coverage ratios remained strong at 2.8 times net charge-offs and 3.46 times at nonperforming loans. We recorded a provision of credit losses of $172 million, which exceeded net charge-offs of $142 million. The $30 million allowance build was in line with loan growth, keeping our allowance to loan ratio flat at 1.05%. Turning to Slide 10. The reported net interest margin was 3.42%, down 5 basis points after adjusting for dividends on nonqualified plan assets received in the first quarter. Our core margin was 3.34% was down 6 basis points after adjusting for the first quarter nonqualified plan dividends. Net interest margin was impacted by lower rate that slowed and increased in the loan yield – loan portfolio yields. In addition, faster prepayments are residential mortgage loans increased premium amortization resulting in 2 to 3 basis points negative impact on the second quarter margin. The cost of interest-bearing liabilities increased 8 basis points in the second quarter versus 13 basis points in the first quarter. We are still seeing mixed changes in our core deposit that are offsetting the decreased in interest rates. Note that BB&T plans to sell approximately $4 billion of residential mortgages, which were reduced our asset sensitivity and negative convexity. The proceeds for the mortgage sale will be reinvested in the high quality securities provide improved…

Thanks Daryl. The purpose of the two slides on 18 and 19 really to show the transformation plan that John Howard and his team implemented and also shared Investor Day last fall really continues to gain momentum. The plan, as a reminder, was developed with the assistance of BCG a little over a year-ago, when it’s really on full swing. It’s built around 31 initiatives, includes implementation and new operating models for both retail and wholesale, as well as numerous revenue growth and expense reduction initiatives. And as a result, I think, you’re seeing business continued to gain significant momentum. And we’re really seeing the results across all lines of business, if you look on Page 18 at the upper left hand graph, you can see revenue of 17.6% or $89 million. If you exclude the $32 million that Daryl mentioned from regions, we now have regions of full year, we still excluding regions had organic revenue improvement of $57 million. And if you look at organic growth really three drivers of organic growth and really, we’re hitting on all three cylinders there. Pricing is one, and recall we are post two of insured loss years in history in 2017 and 2018. So actually, saw our pricing bump in the first quarter to sort of a flattish to up 2%, and in second quarter, we actually saw moved up plus 3.5%, which is very helpful. New business which is producing new units is far and away the largest driver of organic growth, and that’s really abled by a strong economy, we see that continuing. And then, we’ve got really high intention rates – retention rates, which have actually improved since first quarter, retails up to 92.1%, wholesale was 79.6%. So, what that gives you is really in the lower left…

Thank you, Chris. Continuing on Slide 20, you’ll see our outlook. Looking at the third quarter, we expect average total loans held for investment to be down 4% to 6% annualized versus second quarter. Excluding the mortgage sale, loans are expected to be up 4% to 6% annualized. We expect net charge-offs to be in the range of 35 to 45 basis points and the provision is expected to match charge-offs plus loan growth. We also expect both GAAP and core net interest margin to be down 4 to 8 basis points versus second quarter. We have pre-invested the proceeds from the mortgage sale in the high quality security. Since the security is settled before the mortgage sale, there will be a temporary increase and earning assets during the quarter. This will negatively impact net interest margin by approximately 3 basis points in the third quarter. The sale of residential mortgages and the reinvestment into securities will not have a negative impact on the go forward net interest income. Excluding this temporary increase in earning assets, we expect the net interest margin to decline 1 to 5 basis points in the third quarter. We anticipate fee income to be up 2% to 4% versus like quarter, we expect expenses to be flat versus like quarter. Incremental operating expenses related to the merger may increase from second quarter levels, which is why we created this category. And finally, we anticipate an effective tax rate up 20% to 21%. Our previous full year guidance remains unchanged. In the challenging rate environment, we will continue to grow revenue, faster than expenses driving positive operating leverage as we move towards the MOE close with SunTrust. In summary, the quality of our earnings this quarter was excellent, resulting in record earnings, positive operating leverage versus last quarter and last year strong loan growth and excellent credit quality. Now let me turn it back to Kelly for update on the merger of equals with SunTrust, closing thoughts and Q&A.

Thanks, Daryl. So, if you’re following along on Slide 21, we just want to give you a bit of detail with regard to where we are, because obviously it’s the major focus in terms of two company’s going forward. First, let me just say to Bill Rogers and I are very pleased with where we are. He and I are working very, very well together. We’ve known each other long time. We have a complete meeting as a whole team in terms of the industry dynamics that are going on, which led to the merger and causes us to have a consensus view in terms of where we are going forward. The new proposed executive management team is working great, we are meeting weekly as a whole team and have sense we announced the combination. Making really good progress in terms of the regulatory process, we did have the regulatory held hearings on April 24 in Charlotte, May 3 in Atlanta. I’ll tell you that we’ve had our 1,000 public comments and 95% plus of those are positive and very much supportive of the merger, so all of that is going very, very well. We submitted our capital plan, which is going well, and we feel very good about that. As I indicated, we’ve already announced about 1,000 of our key management positions and by the end of August, we think, we’ll have north of 75% of our announcements made. And that get you way down into the organization in terms of people that are be leading the new company. We did announce recently enhanced investments, as we said in beginning in terms of the Great Atlanta area and the Greater Piedmont Triad area in North Carolina. We also announced our headquarter builds. I mentioned we announced our new name,…

Thank you, Kelly. Orlando, at this time, if you would come back on the line and explain how our listeners could participate in the Q&A session.

Absolutely. [Operator Instructions] And we’ll take our first question from John Pancari with Evercore ISI.

Good morning.

Good morning.

Morning, John.

Sorry if I missed it. But could you tell us, what do you assume for fed cuts in your current outlooks? And then separately, if you could just give us a little bit of color of how you’re thinking about the NIM beyond the third quarter color that you gave, how you view the NIM trajectory through the end of the year? Thanks.

Yeah, John, this Daryl. So, in our forecast, we had one rate decrease in July of this quarter, third quarter, and then another one in the fourth quarter, in October, is what we’re forecasting out. Guidance for fourth quarter, I want to – it all depends on how our deposits react and how they re-price with everything and competition. My guess is since we hit basically 3 basis points back from the third quarter margin, because of the increase in earning assets temporary from the investment, purchase, we’re probably going to be flat to maybe down slightly in the fourth quarter.

Okay. Thank you. And then, longer term, in terms of the NIM, I know you had previously indicated or talked about a core NIM in the ballpark of about 3.30% plus or minus post the deal. Just given the rate backdrop, I got to assume that may have changed. Can you give us your updated thoughts on that? Thanks.

Obviously, with rates potentially going down and the flatter curve, that does put pressure on net interest margin. I would update you once we get the deal approved and closed on what core margin will be and what GAAP margin will be at that point in time. But definitely you’re going to see some tighter margins if the rate scenario stays where it is. And if you see four rate cuts, potentially which we don’t think it’s going to happen, but if you see that that would put pressure on margin. But we’ll have an opportunity at close to reposition the balance sheet. And we can get the balance sheet to be more neutral, to be more insulated from lower rates. But at the end of the day, as rates come down you can’t lower your cost of funds below 0 right now. So, you’ll be limited on the actions you can take.

Right, John, this is Kelly. I will just say one person’s opinion. I think the market is overreacting to what’s going on in the world. I think the world – I mean, the market is overstating the decline in interest rates. Not to say that we won’t have one or two. But the sentiment out there is that things are really collapsing, fed could be cutting rates like crazy, I think they’re completely overblown. And we will see some slight decline in the economy. We will see some slight decline in rates. But what you’re seeing now and is being projected going forward in my mind is overstated.

Got it. All right, thank you. If I could just do one more follow up, on the insurance front you had a really good quarter in the insurance revenue, and I know Chris gave some good color there. What is the outlook? What type of growth rate do you think is sustainable longer term as you focus on the improvements in the profitability of the business?

Yeah, John, I appreciate the question. In the near-term, remember, second quarter is our strongest quarter. Third quarter is our weakest seasonal quarter of the year. So, what you can expect in the near-term is probably down in the 15%, 16% range in the third quarter. But if you look out for the balance of this year, from everything I can read, the industry is really projecting something in the 4% to 5% range. We’re currently probably more in the 5.5% to 6.5% kind of range is our sense. And our current year to date organic growth is at 9.3%. And again, industry expectations is probably in the 4% to 5%. What has happened is, post these – the two largest insured loss years in our history, we’re actually seeing rate begin to bounce. And to Kelly’s point, as long as the economy holds, that’s going to really drive new business growth, which is the largest driver of our situation. We’re going to do a good job in client retention. So, I really think we’re in that kind of 5.5%, 6%, 6.5% range for the year, which is for us will be the best numbers we’ve ever posted in organic growth and I think well ahead of the industry. We’re just very, very pleased with the momentum and the transformations taking place in our business. We couldn’t be more happy.

Got it. All right, thanks, Chris.

You’re welcome.

Next up, we’ll hear from John McDonald with Autonomous Research.

Good morning. Daryl, just want to follow up on John Pancari’s question regarding the NII dynamics. What kind of outlook do you have for net interest income in the back half of the year? And then, if we wanted to isolate the impact of 125 basis points fed cut, what would that be?

So, in the third quarter we only have one rate cut in there, right. Our NII will probably be down slightly on a linked quarter basis. So, we were $1.690 billion this quarter. We’ll probably be a little bit lower than that, maybe $5 million to $10 million, just because of the – what’s the pressure that we’re seeing in our funding side. As you go out into the next fourth quarter, I would say that our net interest income will be relatively flat to down a little bit. It all depends on if we get another rate cut in fourth quarter or not and what happens to the shape of the curve. We do anticipate another cut there, which would put more pressure on margin. But we think overall it will be relatively holding there pretty well.

And then, any changes in your rate sensitivity? The mortgage sale will impact that. But – and maybe is there a way to just quantify what one cut would do if we wanted to isolate that?

So, if you look on the chart on our Page 10 and the table, and if you see the Down 25 and if you look at the number for 6/30, it’s 0.87%. That basically assumes over a year. It’s a $60 million hit to NII. Now, it’s not evenly distributed over the fourth quarter. I would say, it’s a little bit, so maybe call it about $20 million for first quarter, and then it kind of moderates over the second, third, and fourth quarter. We are trying to keep our position to be less assets sensitive and we are moving in that direction with some of the actions that we are taking and we’re trying to minimize that as much as possible. But we don’t anticipate having that’s four moves down that in the forward curve right now, but we have to also protect, which direction could risk managers in that perspective.

And John, keep in mind that, right now is hard to see, as Daryl talked about this disintermediation shift in deposits. But there is a tipping point concept with regard to interest rates in the way clients respond. So, if rates went up over the last several quarter, we had a tipping point and people got more rates. And so, all of a sudden, they had extra money and they’re checking accounts and they said, well, how put it to that. The same thing happens when the rates go down. So, as rates go down all of a sudden, the amount of interest that you give by shifting it becomes less attractive to you, if we see the continued decline in rates, there will be less sensitivity and we’ll see less so that shift in disintermediation.

Got it. And maybe just a broader picture, when we think about the longer-term projections for Truist, obviously, it’s early days. But any changes in terms of the financial goals and a longer-term efficiency of 51%? And how you think about right in the company at 10% capital, Kelly, at least in the early days? Just any broad strokes of how things are changed since the original announcement on the longer-term financial projections?

John, interestingly not much as talked about we still feel good about the 51% efficiency, and obviously that’s the ratio and so revenue change that has some impact, but what we can feel very confident about is the expense reduction. That’s why I highlighted, we’re very confident, we’ll get the $1.6 billion of net, obviously, depending on what happens move that around a little bit, but not materially, so we still feel really good about that. We think, we will be best-in-class in terms of efficiency. In terms of our tangible common equity into 22%, we already 20% are very, very confident about that. In terms of the synergies, we did remember in that model, we didn’t even build in and the revenue synergies in this, but more we talk about, and more we get more about each other and how complementary and synergistic our businesses are. We didn’t want to project, we’re very conservative, but there will be clear revenue synergies out of this. And so, this is going to be a really high-performance company.

The other point I would add to that, John, is that with rates falling, we really don’t know what our capital levels would be at close. But with rates coming down where they are, our capital ratio might actually close of north of 10%, which means assuming the fact gives us a non-objection to our capital loss, which we should hear shortly about that. We could actually be in the buyback business sooner rather than later.

So right to think about that John, is that the – we said, we concerned with regard to capital and particularly going through a major combination like this, and there are uncertainties in the global market, that are actual service et cetera. That’s what we said, we won’t to hang around the 10% common equity Tier 1 level. There is certainly some opportunity down the road with regard to that being lower. But for now, we want to plan on that. But as Daryl said, I mean, what we think to now may look like we could be pretty immediately and buying back and staying at 10%, so that can be – again, we’re not promising, but can be very encouraging.

Got it. Great. Thank you.

And next, we’ll talk a question from Mike Mayo with Wells Fargo Securities.

Hi, could you elaborate a little bit more on the management announcements relation to the merger. So, at the end of August, you’ll have named 75% of the managers. How many in total was that, and what are you concerned about in making these announcements? What are you trying not to do and how is the cultural integration going?

So, Mike, the managers is kind of a cost-cutting process kind of going down from the direct reports to executive, and then layer by layer by layer. So, by the time, you get to the end of August, will be down to the lowest level of operating managers think down to branch managers that kind of thing, and so all of that is going really, really well. And in that process, of course, what we’re trying to do is number one make sure, we’re picking the best players. One of the beauties that you know about MOE, you get to pick the best systems, processes and frankly the best people. So, we’ve got an eye on the best performers, because that’s fair, that’s just. At the same time, we got a strong eye on equality in terms of being an MOE, and on diversity and inclusion, and so all of those factors go into these organizational decisions. But so far, I would say that we feel really good about the team that is people on the field, the mix in terms of diversity, the mix in terms of SunTrust, BB&T, it’s going extremely well. In terms of the cultural process, we obviously are learning more about each others’ cultures, as we meet more much as the executive team, but there are lots and lots of meetings going on down through the organization. All keep in mind planning for the future, we have been very careful. We can’t make decisions about the future from a regulatory perspective. We’re still two competing companies, but we can plan. And there is a whole lot of planning meeting going on, so there’s a lot of interaction. And the feedback that Bill and I both get from our teammates and associates is going really well.…

Just one follow-up, a potential roadblock could be the hearing next week. I don’t recall hearing like this every before banking simply a standalone here, I know, Citigroup that was for discussion way back when, but that was in conjunction with the change in the loss. So just – you might be first timer here for hearing like this. What message will you be trying to send? And why are they having this hearing when the Federal Reserve has such a comprehensive process?

You’re asking me that question. I’ll give you my best shot on that Mike. So, I think number one, it’s the first big merger since the recession. It’s the fourth largest bank merger based on what I’ve been told in history. So, it’s a big deal. It’s not big in terms of whole scheme of things. We keep saying that provided with – even though we’ll be $440 billion, we’ll still be about 20% of the size of largest banks. We’ll still have less 3% of total management deposit. So, we’re not a megabank, which is the heading of the hearing. So, they’re concerned that they would think a megabank, and we’re creating another two big to fail. We will be saying, we’re not a megabank, very large regional bank. We focused on meeting our clients’ needs. We will not be increasing systemic risk. In fact, we’ll be reducing systemic risk. So, we’ll share that with them. They’re concerned about will we close a bunch of branches and fire a lot of people. We’ll satisfy them that while there will be over time branch consolidations, we’ve already committed that our performance client-facing associates will not lose their job on either side. So, we will be able to satisfy them. That is nothing negative about this. In fact, it’s net overall really, really good for the economy. It’s good for the communities. It’s good for our associates and it’s good for the shareholders. I view things they view this as an opportunity to talk about the industry. And I think it will be a positive. I kind of view it as four, five hours of free advertising.

All right, thank you.

Next up, we’ll take a question from Betsy Graseck with Morgan Stanley.

Hi, good morning.

Good morning.

Good morning.

Kelly, I wanted to understand a little bit more about the timing of the merger, especially as it relates to the tailoring proposal that’s out there. And so, the question really is does it matter to you if the tailoring proposal is not yet finalized, before your merger is ready to close?

So, this is the – the timing as you know is out of our control, but I personally think that we will close this transaction late 3rd or early 4th. I don’t know of anything that would cause the field differently. Although, I would say again, I cannot control that. The tailoring issue, this is one of the issues that will come up in the hearing, has nothing to do with this. This not really came up when Bill and I were talking about this the multiple times that we talk. There are some financial implications in terms of capital if tailoring does not occur. But it wouldn’t change our view in one form of fashion. If BB&T remain independent, we would have boasted right past 250, independent of tailoring or not. It’s the number out there. But it’s not nearly sufficient because you’re not trying to grow to gain the economies of scale to be able to compete. And this is extremely competitive world we’re living. So, people are blowing that thing out of proposition. Just like – it’s the tail, it’s not the dog.

I mean, I get that.

Yeah, I mean, if you look at the – I mean, the capital impact is only 60 basis points, that’s it, because you’re marking to market, the SunTrust balance sheet, so it’s not a huge capital impact.

Right, so. My question wasn’t if it doesn’t happen would you still do the deal with more about just the timing question here. If you’re ready to close and the tailoring rules not yet finalized, you have, say, Daryl, your point of capital level that shows up a little bit lower for a quarter or two. And then, once tailoring process goes through that gets factored. So, I’m wondering if you would wait until tailoring went through or not. I guess the answer is no.

Absolutely not. We will close this merger at the minute we are approved independent of tailoring.

Yeah, if you look at LCR, I mean, we could close – I mean, it’s depending on how tailoring comes in. If it’s just 70%, we can close and really not have to change our balance sheet much at all. If it goes to 85%, we might have to add 2% or 3% more earning assets into high quality liquid assets. But that’s not material. So, we could easily do it with or without the tailoring impact. I mean, even if we didn’t have tailoring, we would rather than 2% or 3% we just add 5% of earning assets of high quality.

Yeah, okay, so not a big deal for you. Okay, that’s helpful. And then, Kelly, just separately, we hear from other folks about how there is – your merger is going to be an opportunity for them to pick up share either of strong folks in the organization or of clients. And just wanted to hear from you how you are working to ensure that you’re not losing market share during this time when you got the transition going on.

Yeah, Betsy, that’s a really good question. I’ve been involved in about 100 acquisitions over my career. And everyone, every local competitor, particularly the smaller competitors say they’re going to just kill us. It just doesn’t happen. It doesn’t happen for several reasons. One is clients are very resilient. They care about their banker. They’ve taken care of them. And they care about the services that we’re providing. So, the fact that the name change is inherently not a reason to cause these clients to come in and change their business. The clients are resistant to change. If you make a really big mistake, you may have a big snafu that affects it. But the fact that competitors say we’re going to come get the business and all that is not a material issue. Occasionally, we will have somebody that will go kind of way off and start raising rates and all these kind of things and we just counter. And so, we’re not going to sit back and let local competition take our business. So, most important part to answer to your question is keeping our people, because the relationships are between our people and the clients. It’s not between names. And so, we work really, really hard. That’s why we guaranteed upfront our performing client-facing associates on both sides. We’re not seeing any material turnover – in fact last quarter I got where the turnover is down. So that’s not our concern. But we are ramping up on market again. We’re not taking anything for granted. But first of all, we’re going to talk more to our clients, so they know what’s going on, answer their questions. They like us coming out and talking to them about that. So, on our business side, we’re calling a lot more and on the consumer side we’re interacting with them, answering any questions that they have. But I’ve been on two regional business in the last five or six days. And our people are saying to me that it’s pretty calm out there. The clients are excited about the company. They’re excited about the name. Our associates are really on a high. I mean, they’re actually more pumped than I might have guess at this time. So, I hear all the competitors saying what they’re going to do. But that’s just rhetoric that is irrelevant.

Kelly, I would even add, we’re being very focused and be transparent to our people internally so that they know everything we know every step along the way.

Yeah.

Okay. Thank you. Thanks for that. I appreciate it.

Sure.

And next up, we’ll take a question from Matt O’Connor with Deutsche Bank. Matt O’Connor: Good morning.

Good morning. Matt O’Connor: Daryl, I was wondering if you could – Daryl, I was wondering if you could talk about some of the things that you’ll be looking at within the balance sheet. Have you closed the deal and think about repositioning it for kind of whatever the rate environment is when the deal closes? I mean, obviously, the SunTrust balance sheet gets marked. But you’ll have all those excess capital that you can kind of pick and choose what you want to do with. Call it BBT legacy balance. So maybe just talk about some of the things that you would consider and how that might impact net interest income going forward.

Yeah, I mean, given the rate environment where we are right now, Matt. The way that you would probably try to enhance run rate is to focus on the liability side of the balance sheet. So, we would have to look at what borrowings we could have changed to maybe improve run rate perspective from that side. Obviously, their derivative position gets marked, so you can adjust what their derivative position is and position the company however you want to do that, without having anything flow through earnings. On the asset side, depending on what – how management and the board wants, how much negative convexity people want to have on the balance sheet. We do have a large mortgage portfolio. That’s something we will look at and see if we want to shrink that or not. But the easy things would be securities, derivatives and funding, maybe mortgages. I don’t know if we get anything more than that. The auto – we have a large auto portfolio. But it’s a short portfolio. That’s probably a good portfolio to have with rates so low. But we’ll go through a lot of things. I want to figure out over the next couple of months as we get this deal approved and closed. Matt O’Connor: And then, I guess, just conceptually like is the goal to enhance the NIM as much as you can kind of coming out the deal or is it more about maybe setting the bar to a more appropriate level and kind of protecting the NIM going forward, right? Because conceptually you can – I don’t want to say plug it for what you want, but if you’re trying to prop the NIM up as much as you can day one, you got to do certain things. On the other hand, if you’re trying to provide for NIM stability beyond day one, you might approach it differently.

Yeah, I mean, first and foremost, we’re going to make sure that our risk appetite and our capital and liquidity are aligned where we want it to be. At the end of the day, our – we firmly believe that you want to be paid and have consistent repeatable earnings. So, we want to position the balance sheet to basically produce consistent repeatable earnings quarter after quarter, year after year, and not really try to take the gamble on interest rates or anything else. It’s all about consistency. And that’s how we get the higher P/E level within the industry. So, it’s all trying to do the right things with risk and trying to produce a steady return that we can give to our shareholders and be able to grow it consistently. Matt O’Connor: And then just lastly, the 2% mark taken on SunTrust loans, if credit comes in better than expected, remind me, does that flow through the net interest income if it’s less than the 2% mark that you take?

Hey, Matt, this is Clarke. That’s exactly correct. So, we certainly not assume that we would increase that mark. But if our performance is better, we’re going to work really hard really hard to achieve that. We will get a benefit.

The one nuance is when we adopt CECL first quarter of next quarter, the PCI gets refreshed in the PCD, and that accounting benefit unwinds on that portion of it. But on the non-mark portfolio, the non-PCD portfolio Clarke is correct and that will be the run rate going through the margin. Matt O’Connor: Okay. Thank you.

And our last question will come from Erika Najarian with Bank of America.

Hi, good morning. Just one more question on the merger. Could you remind us on how the systems integration is going, whether it’s wholesale and mortgage, and also on the retail side as we contemplate the timing of the cost savings over the next two years?

So, Erika, the systems integration planning is going really well. As you know, it’s a large complex organization. And the way we’re approaching it is the best in class. So, we’re looking at all of the systems. They’re all under thorough evaluation as we speak. We’ll be picking the best systems from either side and we are moving along to where we think that will be pretty well decided as we get close to legal day one, and then we’ll go into the process of execution. The actual operational conversion will be multi-faceted. Historically, when we’ve done small acquisitions, it’s kind of like a one weekend big thing. You convert everything. This likely won’t be that. This will likely either be a rolling state by state, where you do all the systems in one state, then another state a month later, et cetera. Or it may be that you do like deposits across all states and you come back a month later and do loans across. So, we haven’t decided that yet, but we’re going to be measured about how we roll that out, just to mitigate and minimize the risk. The wholesale part of the business will be able to integrate faster, just because it’s just not as many pieces. So, wholesale will integrate faster and cost saves will come faster, revenue enhancements will come faster. The retail, the branches take a little longer, just because you just got so many branches and we want to be really careful about that. But even so, we think we’re heading towards a full conversion in the 12 to 18 month kind of timeframe. And as you think about kind of getting to the final run-rate of expenses, that’s kind of timeframe that you ought to be thinking about.

Got it. Thank you. And just as a follow-up to Matt’s question, Clarke, as we think about the SunTrust portfolio in a CECL world, I fully understand the conversion of treatment from – as the loans go from purchase credit impaired to purchase credit deteriorated. But the non-deteriorated portfolio, is there an additional mark that you would have to take if you close the deal in 2019?

Yeah, I’ll take that one. So, if we close in 2019, we’ll take the normal marks that you would normally do. If we closed in 2020, which we don’t anticipate, basically you take the marks, what we use is the transition benefit of adopting CECL on the SunTrust side of that portion. Does that help?

Yes, thank you.

All right.

And that completes today’s Q&A session. I will now turn the call back over to Rich Baytosh for closing remarks.

Okay. Thank you, Orlando. And thank you for everyone for joining us. I recognize that there were some people still in the queue. And we will get back to you later today. And I hope everybody has a great day. Thank you.

And this concludes today’s call. We thank you for your participation. You may now disconnect.