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First Horizon National Corp (NYSE:FHN)
Q2 2019 Earnings Call
Jul 16, 2019, 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the First Horizon National Corp. Second Quarter 2019 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Aarti Bowman of Investor Relations. Please go ahead.

Aarti Bowman -- Investor Relations

Thank you, Chuck. Please note that the earnings release, financial supplement and slide presentation used in this call are posted in Investor Relations section of our website at www.firsthorizon.com.

In this call, we will mention forward-looking and non-GAAP information. Actual results may differ from the forward-looking information for a number of reasons outlined in our earnings materials and our most recent annual and quarterly reports. Our forward-looking statements reflect our views today and we are not obligated to update them. The non-GAAP information is identified as such in our earnings materials and in the slide presentation for this call and is reconciled to GAAP information in those materials. Also, please remember that this webcast on our website is the only authorized record of this call.

This morning's speakers include our CEO, Bryan Jordan and our CFO, BJ Losch. Additionally, our Chief Credit Officer, Susan Springfield will be available with Bryan and BJ for questions.

I'll now turn it over to Bryan.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Thank you, Aarti. Good morning, everyone. Thank you for joining our call. I'm pleased with our second quarter results. We saw good loan and deposit trends across the franchise, saw a very good expense management and margin management as well.

As we discussed last November, we are transforming this company for changing financial services landscape. We're focused on driving efficiency to reinvest in people, products and technology. The opportunities for us in the expanded capital bank markets were very, very good. Our specialty businesses are capitalizing on those opportunities and they're also taking advantage of growth opportunities more broadly by bringing a deep and broad product set and knowledge to our customer base.

In the second quarter, we also demonstrated the counter-cyclical nature of our fixed income business and we've benefited from a mortgage warehouse finance business that is benefiting from lower rates and the strong housing market. Our outlook on the economy and interest rates is still reasonably constructive. We think that the economy is still doing very, very well and customer loan demand continues to be good. We think as most do that the fair will make a move lower in July, not sure, but later in the year. But in all likelihood this economy, we think continues to be reasonably stable and constructive over the remainder of this year. Borrower sentiment continues to be good. There's a little bit of focus more prevalent today on tariffs and the impact of tariffs and what that may mean in decision making cycles, but overall, borrowers are constructive and still optimistic.

So, our outlook for the remainder of the year is is reasonably optimistic. We see good momentum going into the third quarter. We're encouraged by what we see in our customers and our customer base. We feel good about our ability to continue to on-grow the balance sheet; two, continue to manage our margin and thirdly, continue to drive efficiency. So, as I said earlier, to reinvest in feasible products and technology to transform this business.

So with that, let me stop and turn it over to BJ to walk you through the details and then I'll come back for a few closing comments. BJ?

William C. Losch III -- Executive Vice President and Chief Financial Officer

Great. Thanks Bryan. Good morning everybody. I'll start on slide six with our financial results. Simply put, we had an excellent quarter. Double-digit EPS growth linked-quarter was driven by significant revenue growth and expense control across both the banking and fixed income businesses. Our operating leverage was outstanding with revenues up 6% linked-quarter while total expenses including notable items was up only 1% and adjusted expenses were actually down 2%. This resulted in an adjusted efficiency ratio of 59% in the quarter, an improvement of almost 500 basis points over 1Q '19. The total revenue growth of 6% linked-quarter was driven by net interest income, up 3%, primarily driven by commercial loan growth and fee income up 12% linked-quarter, driven by a 22% increase in fixed income fees and a 12% increase in bank fees.

On slide seven, you can see that we've demonstrated tangible progress to deliver strong EPS and balance sheet growth by executing on the strategic priorities we laid out at our Investor Day last November. Our execution on the growth oriented priorities of dominating Tennessee and profitably growing key markets in specialty businesses are evidenced by the revenue and balance sheet growth that we saw in the quarter and our priority of optimizing the expense base in order to approve our efficiency and ability to reinvest in the business and transform our customer experience was seen in reduction in core expenses net of reinvestment. We remain confident in our ability to maintain the business momentum we are seeing and we'll continue improving profitability and earnings profile of the company.

Turning to total loan growth on slide eight. You can see there year-over-year loan growth of 5% and continuing to strengthen. Post our systems conversion and balance sheet repositioning for the Capital Bank merger throughout 2019, as expected, we've started capturing opportunities in our key markets and seen strong organic growth, particularly in our specialty businesses.

On slide nine, you can see a bit more detail on the broad-based loan growth we delivered in the quarter. Overall, specialty loans grew 14% linked-quarter. Loans to mortgage company had a particularly strong quarter and average balances were up significantly over $1 billion from last quarter. Volume was up from seasonal strength and home purchasing as well as a lower rate environment. The purchase refi mix was roughly 70%-30%. We've retained and grown customers over the year and our balance sheet capacity knowledge and experience in this business have positioned us as a market leader. Outside of loans to mortgage companies, all other specialty areas still delivered great growth, on average 3% linked quarter. And as you can see on the bottom left hand of the slide, as I said, all other lines of business in our specialty areas grew. In addition, our loan growth in Tennessee and key markets continued to remain steady and we expect continued growth over-time, particularly in the newer markets to the Carolinas and South Florida.

Turning to deposits on slide 10, we are incredibly pleased with the continued success we are experiencing in increasing customer deposits to improve our funding profile. Deposits in specialty areas were up 3% linked-quarter and up 2% in key markets such as South Florida, Middle Tennessee and Mid-Atlantic. As you know, we've been executing on a plan to meaningfully improve our deposit funding profile by growing customer deposits, particularly in our newer markets and specialty businesses, which would enable us to decrease the higher cost funding from market index deposits. Our results in the second quarter prove that the execution of that plan with average market index balances down almost $1 billion or 19% from first quarter to second quarter. That mix shift in deposits favorably impacts overall deposit rate paid, net interest income and net interest margin and we are pleased with the results that we are seeing.

Let's turn to slide 11 to review our net interest income and net interest margin trends, which given the macro rate environment backdrop were quite strong. Linked-quarter NII was up 3% from strong loan growth and a few million dollars of higher accretion. Net interest margin was up 3 basis points in the quarter to 334 basis points, as we optimized our excess cash and took advantage of the favorable mix shift in deposit costs, which offset LIBOR and rate compression as well as trading inventory impacts. As I mentioned, the favorable mix shift in deposits has helped to moderate and in this quarter actually lower our overall deposit rate paid. Our total deposit rate paid declined 4 basis points linked-quarter and in the regional bank, deposit costs remained relatively steady, only up 1 basis point.

We put back in the slides our NII sensitivity chart given the active discussion in the marketplace around rates, specifically rate cuts. As a reminder, this is a shock analysis, meaning it takes our current balance sheet and immediately moves rates up or down and looks at the resulting NII impact. Keep in mind three important things about our business model if rates were to shot down. Number one, we would continue to grow the balance sheet and therefore add incremental revenue. Two, it is likely that our loans to mortgage companies business would be strong with higher refi activity and continued strong purchase volume. And number three, our fixed income business would continue to strengthen. All of these would serve as mitigants through a decline in rates.

Turning to slide 12, I'll take a moment to reintroduce you to our counter-cyclical fixed income business which had an excellent quarter. Our average daily revenues were at $866,000, up 19% linked-quarter and up 85% year-over-year. As a reminder, we're showing the factors that impact fixed income on the bottom right of slide 12 and you can see that the direction and rates and the market volatility contributed mostly to the increase that we saw in the second quarter. Additionally, other product revenues were up significantly, largely driven by fees in our derivatives business with customers in the banking business executing interest rate swaps. Pre-tax income was up 55% linked-quarter and the businesses' EPS contribution in the quarter was $0.04 a share. As we've discussed, as the fixed income opportunity was needed in the last several quarters, the management team at FTN did an excellent job of streamlining the business to be more profitable at moderated levels of volume while maintaining the power to capture profitable revenue and volume when the market opportunity presented itself and we saw exactly that this quarter. As we sit here today, we see no reason why our fixed income business won't remain strong over the next few quarters.

Let's turn to expenses on slide 13. As I talked about before, our total reported expenses were up 1% linked-quarter, which included an incremental $10 million of notable items in the quarter including some remaining acquisition-related expenses in our previously disclosed restructuring and branding expenses. As we've previously discussed, the restructuring actions include items such as branch closures and improved processes that should reduce our total run-rate on expenses going forward. Adjusting for these notable items, our expenses were down 2% linked-quarter despite a $5 million quarter-to-quarter increase in variable compensation related to the higher fixed income revenue as well as reinvestments in the business through strategic hires and customer experience enhancements. For full year 2019, we're targeting $50 million plus in cost saves with total reinvestments of $20 million for the year. And as you can see in the first half of 2019, we took actions to achieve $36 million of efficiency and about $6 million of reinvestment. We will continue to manage our expense base to maximize efficiency, and enable us to reinvest in the business to drive revenue and improved customer experience.

Turning to asset quality on slide 14, we see continued solid asset quality across our portfolios. In the second quarter, net charge-offs were $5 million, stable from last quarter. Roughly $4 million of the $5 million in charge-offs was related to one credit in the loans to mortgage companies portfolio. The linked-quarter provision increase reflected commercial loan growth as well as additional reserves for two non-performing commercial credits, but we continue to see steady credit performance with issues being idiosyncratic or one-off and do not see broad-based deterioration in the book.

Slide 15 is a reminder about how we've reduced credit risk in our portfolio since the last economic downturn. And though we took some heat for how we took actions last year to run down or sell lower quality and/or lower spread portfolios that impacted our loan growth, those actions along with many others over the course of last several years have positioned our credit portfolio quite well from a soundness and profitability perspective. As you can see, our loan portfolio has shifted from a real estate oriented one a decade ago to a much higher quality commercially oriented portfolio and relative to our risk profile and earnings power, our capital levels are strong. We operate on the philosophy of sumptuous profitability and growth in that order which we believe will consistently serve us well in any operating environment.

So to recap the 2Q '19 highlights on slide 16. We're seeing steady profitable long growth in several areas along with strong deposit growth. We have excellent expense discipline and are taking additional efficiency actions to reinvest in the company to drive further earnings improvement. Fixed income at a strong quarter in the current environment seems more favorable for the business that we've seen in a few years. Credit quality is stable and we deployed capital effectively through strong loan growth, share buybacks and an attractive dividend. We're successfully executing on our strategic priorities that we laid out in our Investor Day and seeing good momentum with our differentiated business model. And we're confident in the business momentum and expect continued strong performance in the second half of 2019.

I'll wrap-up with our 2019 outlook on slide 17. Our outlook for net interest margin, net charge-offs in our capital levels remained unchanged. Our net interest margin should benefit from continued loan growth and stabilization of our deposit costs offset by some lower accretion and some rate impacts from the macro environment. These factors should serve as an offset to those macro rate environments and the forecast that we're now using assumes two rate decreases in 2019 with some continued declines in LIBOR. And given the strong results we saw in the second quarter, we have improved the outlook for some of our return and efficiency metrics for the full year. On returns, we now expect higher ROTCE and ROA. ROTCE at 17% plus or minus versus previously 16% and ROA at 1.20% plus or minus versus 1.15% previously. And in addition, we have revised the full year efficiency ratio to 61% plus or minus down from 62% previously, as we see continued benefit from net expense efficiencies and strong revenue opportunities in both the banking and fixed income businesses.

With that, I'll wrap-up and turn it back over to Bryan.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Thank you, BJ. As BJ said, we're optimistic about the second half of the year. We don't know what we don't know about the economy and interest rates. But from our perspective, as evidenced by our retail sales this morning, the consumer is still strong, borrowers are confident and if there is a recession right now, it seems to be isolated to Wall Street. The economy seems to be overall pretty steady and pretty strong. So we're optimistic. We have a great franchise, we're excited about. As BJ mentioned, we're a year beyond the integration of Capital Bank. We see great opportunities in the Carolinas and Florida as well as the existing Tennessee franchise. We are optimistic about the momentum we see in our fixed income business that we think we're very well positioned for the second half of 2019. Want to say -- we'll say thank you to our employees. Thank you for all your hard work, all you're doing to build our business and our customers and serve them. We thank you for that.

With that Chuck, we will stop and take any questions.

Questions and Answers:

Operator

Okay. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Steven Alexopoulos of JPMorgan. Please go ahead.

Steven Alexopoulos -- JPMorgan & Co. -- Analyst

Hey. Good morning, everybody.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Good morning, Steve.

Steven Alexopoulos -- JPMorgan & Co. -- Analyst

I want to start on the margin, maybe for BJ. So if we assume the forward curve holds and we get two cuts this year, two cuts next year, how do we see the core NIM trending for the rest of the year?

William C. Losch III -- Executive Vice President and Chief Financial Officer

Hey, Steve. Good morning. So what I just talked about a little bit was not changing our outlook for total NIM. So we have it at plus or minus 3.30%. Embedded in that would be less accretion going forward the rest of the year so that would overall be a headwind to the overall margin. But from a core perspective, I think we've got a couple of positives and then certainly a couple things that would be a headwind. So the headwinds clearly would be if we saw cuts, rate cuts. We currently assuming too, I'm not sure that will happen quite honestly, but we're assuming that because that's what the forward curve is implying and so we're trying to align with the forward curve. So that'll definitely be a headwind to us, but we are very encouraged about how steady our spreads are staying on the loan side in aggregate. We are very encouraged about the new volume that we're putting on and the spreads that we're seeing. We are highly encouraged about the average deposit rate paid dynamics that we see in the deposits portfolio as we've reduced our market index deposits, as we've managed our base rates very effectively across the banking franchise and we've been very smart about where we are offering promotional rates to still grow deposits, but maintain very good discipline on the deposit rate paid side. So we see you know some tailwinds with some headwinds and so, sitting here today in the second quarter at 3.34%, we still feel comfortable that we could defend both the total and the core margin around these levels plus or minus few basis points.

Steven Alexopoulos -- JPMorgan & Co. -- Analyst

Okay. BJ, if the Fed continues to cut rates through you know into 2020, I mean they would expect them, you're giving a disclosure that you do have an asset sensitive balance sheet that at some point you would expect NIM pressure to build, correct?

William C. Losch III -- Executive Vice President and Chief Financial Officer

Correct. That's right.

Steven Alexopoulos -- JPMorgan & Co. -- Analyst

Okay. Go ahead.

William C. Losch III -- Executive Vice President and Chief Financial Officer

I was just going to say it depends on when you're assuming the rate cuts, right. So we're already into July. If there is one in July, that's a half a year impact, if there's one at the latter half of the year, then a lot of those tailwinds that I talked about in terms of actions that we're taking would largely offset it this year. You're right, going into next year when there'd be a full year impact, it would be harder. But then again, some of the offsets that aren't necessarily in the NII line would also come through things like our fixed income business being counter-cyclical etc. So clearly there's going to be pressure for us or for anybody on the margin if there's rate cuts, but we're actively trying to plan for it and manage it as best we can.

Steven Alexopoulos -- JPMorgan & Co. -- Analyst

Okay. And then as a follow-up on that. So the ADR was up really, really nicely this quarter and I was a bit surprised, because vol [Phonetic] was still low in the quarter and rates haven't moved down yet. Is it just on an anticipation of rates moving down that you're starting to see more volume there?

William C. Losch III -- Executive Vice President and Chief Financial Officer

Well, I think if you look at where the belly of the curve is, where a lot of the fixed income buying would be, that's continued to move down. And so you know, I think, we've seen a lot of customers trying to get ahead of price increases as yields in the two to five year range in particular have been coming down. And so, you know, we saw strength on the mortgage desk. We saw strength on the agency desk and we saw very good performance from our government guaranteed lending business in the quarter. So it's not necessarily Steve as you well know that the shortest end of the curve is more in the belly of the curve and so, we saw a lot of trading volume in those [Indecipherable].

Steven Alexopoulos -- JPMorgan & Co. -- Analyst

Maybe last one for Bryan. If we do see short-term rates decline and vol increases way it has historically, from a pure structural view, is there any reason ADR could have moved back up to the higher end of that prior $1 million to $1.5 million range? Thanks.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Yeah. Thanks, Steve. I think the fixed income business has the ability to move up from here. Last week was a very strong week, approaching $1 million in average daily revenue. It's going to be a little bit volatile as BJ just answered. [Indecipherable] of number of debt and you would have to say in all likelihood, there was some confidence from borrowers that the Fed had at least shifted from raising rates to reducing rates, so to speak getting out of the way. And I think that's good for the business. I think you can move up from here. I'd be reluctant all the difficulty we had back and away from the $1 million to $1.5 million half guidance for embracing that, but I think it can be stronger in the back half of the year. I think from what we've seen over the last couple quarters it has strengthened and I think it can stay in this range to slightly better throughout the remainder of this year.

William C. Losch III -- Executive Vice President and Chief Financial Officer

I would just add Steve as well that of the 40-ish trading days that we saw, I would say 25% of them had over $1 million a day in trading volume and so it was very, very healthy across the quarter and particularly strengthened in June.

Operator

The next question comes from Brady Gailey of KBW. Please go ahead.

Brady Gailey -- Keefe, Bruyette & Woods, Inc. -- Analyst

Hey, good morning, guys.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Hi, Brady.

Brady Gailey -- Keefe, Bruyette & Woods, Inc. -- Analyst

So [Indecipherable] start with the buyback that you guys have pretty consistently repurchased around 1% of the company per quarter for the last few quarters. If you look at where you guys have been buying the stock back and the stock as of today is probably almost 10% higher than the level you repurchased it last quarter. So just I'm asking basically as you look to buybacks on the back half of the year, do you expect to continue to be this active or with the stock trading where it's trading does the buyback become a little less attractive to you?

William C. Losch III -- Executive Vice President and Chief Financial Officer

Hey Brady, it's BJ. So yeah, we bought back stock attractively and we're pleased with that in the quarter. We still see that as the lever going forward to deploy capital. First, we're going to look to loan growth and we had excellent loan growth to support. So you'll see that our CET1 actually floated down below what our intended range was simply on higher risk weighted assets. But we still think that given our earnings profile and given our earnings momentum now, we've still got a runway and still frankly trade at a discount and so we think that there's going to be opportunities for us to continue to selectively buyback stock over the second half of the year.

Brady Gailey -- Keefe, Bruyette & Woods, Inc. -- Analyst

All right. And then BJ, you mentioned in the back half of this year to expect a lower level of yield accretion which is explainable, but you saw a nice ticking up in 2Q versus 1Q. So I guess just to be a little more precise, what level yield accretion do you think you guys will see in the back half of this year?

William C. Losch III -- Executive Vice President and Chief Financial Officer

Brady, I think we were assuming $12 million, $11 million, $10 million, $9 million coming into this year for a first through fourth quarter respectively. I think we're at $12 million this quarter, so a couple of million higher. But in that $10 million, $9 million a quarter range for the back half of the year $10 million, $9 million, $8 million is probably what we expect.

Brady Gailey -- Keefe, Bruyette & Woods, Inc. -- Analyst

All right. Great. Thanks, guys.

William C. Losch III -- Executive Vice President and Chief Financial Officer

Sure.

Operator

The next question comes from Ken Zerbe of Morgan Stanley. Please go ahead.

Kenneth Zerbe -- Morgan Stanley -- Analsyt

Great. Thanks. In terms of the loans to mortgage companies, obviously they had a really strong quarter this quarter. Is it fair to assume that comes back down more to sort of the high ones? Next quarter, is there any reason to think just given the business model has changed that that could remain a little higher aside from the seasonality of course on a go-forward basis?

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Ken, this is Bryan. We think that business can be strong for a while and we've said in the past, we fully understand that there is a cyclical nature to it and you pointed out the seasonality. Fundamentally, we see a couple of things going on today. One is that the housing market, particularly the purchase markets are still reasonably strong. The refi markets are -- there's demand for it. They are not a bigger percentage of the warehouse today, it's still at about 30%. I'd acknowledge that 30% of a bigger number means more retail activity, but there's so much demand for purchase money, refi is really being pushed a little bit out the curve or out of the time spectrum because they're not as time-sensitive. So we think that business structurally can just be stronger particularly in the third quarter, which is seasonally pretty good as well. We have done in our management of the business with Bob Garrett and the team there have done a really nice job, taking some additional market share. They have used our positioning with customers and our balance sheet and our ability to extend credit in ways that we think has improved our share of the market over the long-term. And so while -- we'll have some cyclical nature to it, we think it is a bigger and stronger business today than it has been based on the way they've managed to expand share with our customer base.

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

Specifically, if you look two years ago with the number of clients in that business, we had about 225 clients. Today, we've got about 275 clients. So over a two-year period, a significant increase in market share, which really was very deliberate as Bryan mentioned.

Kenneth Zerbe -- Morgan Stanley -- Analsyt

Okay. And then just going back to NIM just for a second. I get that you guys was 3.30%, it's 3.30% on go-forward basis, but it seems about 10 basis points of the change this quarter related to the lower cash balances, right. And I'm not going to imply that your NIM should have been 3.20%, but that's kind of implication. When you think about the 3.30% and your ability to hold the 3.30% steady on a go-forward basis, are there other factors like I am just going throw additional lower cash balances that you're building in that we don't know of in your guidance? Thanks.

William C. Losch III -- Executive Vice President and Chief Financial Officer

Hey Ken, it's, BJ. So you may recall that in 1Q '19, our margin went to 3.31% from 4Q level of 3.37%, right. And so we had a lot of impact from excess cash that hurt us from fourth quarter to first quarter. Now it's helped us first quarter to second quarter. So that impact is largely I think moderated. Our excess cash levels are much more reasonable now. So I don't think that there's nearly as much movement there. We've been able to take out market index deposits far quicker than we thought and finally got the ability to put that cash to work. So I don't think that'll be as much of a movement. It's really going to be over the next couple quarters us managing deposit rates really, really well. Loans to mortgage companies continuing we believe to be strong given what we think the rate environment and outlook is and then offsetting that any impacts if there are rate cuts in -- excuse me headwinds from that. So if we sit here today at 3.34% and look at the positives I just talked about [Indecipherable] potential rate cuts and what that impacts us and I think 3.30% plus or minus is probably where we are at over the second half of the year.

Kenneth Zerbe -- Morgan Stanley -- Analsyt

All right. Thank you.

Operator

The next question comes from Ebrahim Poonawala of Bank of America. Please go ahead.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Hey guys, Good morning.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Good morning, Ebrahim.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

I'm sorry for falling up again on a question on NIM. Just wanted to make sure BJ at least we're thinking about this correctly. If I look at your slide 11 disclosure, 25 basis point $11 million impact is about 3 basis points of the margin. Is that the simplest way to think about the core NIM if we get July cut the impact is about 3 basis points give or take?

William C. Losch III -- Executive Vice President and Chief Financial Officer

That again is on a static balance sheet. So you know, that wouldn't take into account for instance, the mortgage companies would continue to strengthen in the third quarter, but generally speaking on a static basis Ebrahim, that's correct.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Understood.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Ebrahim, this is Bryan. That is a static balance sheet as BJ said and it is a parallel shift to the entire curve. And so I don't know if LIBOR has been forecasting lower rates and you've already seen some compression with Fed funds or some of that in all likelihood could be already factored in. So it's not a forecast in anyway shape or form. It is just a way to model the balance sheet says if the balance sheet is identical and you move the entire yield curve by 25 basis points up or down, this is the impact on net interest income. So it's a rule of thumb, but it may or may not be useful in modeling. You have to make some assumptions about what parts of the curve we've already moved in anticipation of lower rates.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Understood. And just right to that when you think about the interest bearing deposits at $132 million [Phonetic], appreciating the dynamics of the market index going down, like do you see the $132 million going much higher or do you expect that just the offset of the market index running off should support that around current levels?

William C. Losch III -- Executive Vice President and Chief Financial Officer

So Ebrahim, there's still plenty of deposit competition out there. So I think there will continue to be pressure on deposit rates paid. Now we do have the lever of lowering market index deposits, which will certainly help our overall deposit rate paid. But even in the banking business, like I talked about our deposit rates paid in the core customer deposits were only up 1 basis point quarter-to-quarter, which is outstanding performance. Will it continue to have potentially float higher by a couple basis points? Probably, because competition remains high and we're going to compete for deposits and retain customers as needed. But we are maintaining the discipline that we need to maintain around offering fair and competitive pricing while also growing deposits. So again we're very pleased with what we're seeing there. We expect these types of trends to continue.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

It's Bryan again. BJ is right. Deposit competition is still high. But we've seen some moderation in some of the higher rate longer term offers that are in the marketplace and so we're a little bit encouraged that the trend is moving in the right direction and I suspect that has to do anticipation of the Fed potentially cutting rates.

Operator

The next question comes from Jennifer Demba of SunTrust. Please go ahead.

Jennifer Demba -- SunTrust Robinson Humphrey -- Analyst

Thank you. Good morning.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Good morning, Jennifer.

Jennifer Demba -- SunTrust Robinson Humphrey -- Analyst

Question on the mortgage warehouse credit that you charged off and you had a bit higher non-performing loans as well. Can you give us any color on those credits and on the overall book there credit-wise?

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

Sure Jennifer. We took a partial charge-off on a mortgage warehouse to client that was impacted due to a liquidity event. Our particular credit was just the charge down that's based on an impairment analysis that we did in the second quarter, which is not a traditional flow line. It was a different type of facility that was used when company had to repurchase certain loans at certain times due to certain events that may have happened for those notes. So we have really very few lines like that in the mortgage warehouse lending business. The majority of our business is traditional supply lines. And so we believe the asset quality outlook for mortgage warehouse lending remains excellent. This is really a one-off situation.

Jennifer Demba -- SunTrust Robinson Humphrey -- Analyst

Great. Thank you so much.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Thank you.

Operator

The next question comes from Michael Rose of Raymond James. Please go ahead.

Michael Rose -- Raymond James Financial -- Analyst

Hey, just wanted to go back to the question on share repurchases. It looks like your CET1 ratio is currently below your guidance range. Is the expectation that you'll perhaps operate below that range in the near-term? Thanks.

William C. Losch III -- Executive Vice President and Chief Financial Officer

Hey Michael, it's BJ. So we decided not to change the outlook from the 9.5% to 10%. So it very well could be that we operate down at these levels. If you look at our TCE to TA, it actually was still at 7.3%, it was unchanged and so we feel very, very comfortable with our capital levels at this range and so being within 20 basis points to the lower end of this range doesn't particularly bother us. So like I said earlier, we continue to believe we're going to see healthy loan growth as well as be opportunistic on share buybacks in the second half of the year. So whether it's 9.3% or the 9.5% somewhere in this range is where we feel comfortable for the second half of the year.

Michael Rose -- Raymond James Financial -- Analyst

Okay, that's helpful. And then maybe just going back to warehouse, I don't think you'd give us the numbers in a while but can you just give us a cover the state of where the business is in terms of customers, average line size, things like that just as a reminder? Thanks.

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

Sure. We have been steadily adding market share. I mentioned little bit earlier on the call that if you look back over two years, we have client counts going from about 225 to 275. So we've built some good market share over the last couple of years. We have really -- average line size would probably be in the $40 million range for mortgage warehouse. We have during this second quarter as the business really took-off with a combination of it buying season, strong home combining as well as rates lowering, we did take the opportunity to do some expansion lines with some good existing customers. Those are anticipated to come back down at the end of the second quarter when you see the seasonality come back. So that continues to be a very good business for us. It's very well managed and we feel good about the outlook for the mortgage warehouse of business.

Michael Rose -- Raymond James Financial -- Analyst

Okay. And just just a follow up to that. Where do [Indecipherable] stand at this point?

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

Yes. [Indecipherable] actually went up a couple of days from first to second quarter largely driven by the fact there was so much activity in the system just even being able to get one through the system for all of our customers and probably the entire industry. The other thing that we saw in the second quarter at least for our book of business is the average lend size went up, about $15,000 which have been pretty steady at the $250,000 range and it was about to $260,000 to $265,000 for the second quarter.

Michael Rose -- Raymond James Financial -- Analyst

What was the that the average dwell-time and would you expect that to fall as the dynamic of repayments are up, refi was?

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

Yeah. It was from 15 to 17 days.

Michael Rose -- Raymond James Financial -- Analyst

Okay.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

I think we was expecting it. It's always in the 15 to 18 day range.

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

There are different things that can effect, I mean you've got obviously just through the system a few years ago when there was a regulatory change, you saw some things get hung up there. But yeah, I'd say 15 probably a good average dwell time number.

Michael Rose -- Raymond James Financial -- Analyst

Okay, thank you.

Operator

The next question comes from Christopher Marinac of Janney Montgomery Scott. Please go ahead.

Christopher Marinac -- Janney Montgomery Scott LLC -- Analyst

Thanks. Good morning. Susan, could you elaborate on some of the specialty C&I business lines and particularly restaurants in the portfolio that's now a couple of years seasoned? Just curious what you're seeing there and any other relevant C&I trends?

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

No worries. So I will start with franchise finance because you mentioned that. We see good opportunities there. We had no downgrades in that portfolio this quarter. We continue to add business there. We've managed some of the smaller relationships have paid-off on some of the smaller ones when we bought the GE business. The outlook is very good. The team is very knowledgeable in the industry. The one thing I think and I know others are watching this as well, the cost of labor is something we're watching in that franchise finance business, but we have seen some commodity prices come down. So you're still seeing some strong results there. They actually had a good second quarter and added some business there. The healthcare business which is managing our Middle Tennessee market continues to be a good business for us. That's about $900 million portfolio. I failed to mention franchise finance is about $800 million. And we see good opportunities there and obviously we watched the regulatory environment carefully within healthcare.

Asset-based lending business which is about a $2 billion business for us continues to be core business. As you know we've been in asset-based lending business for 30 plus years, performed extremely well during the downturn. It's a good discipline business with borrowing base monitoring and we continue to see good opportunities there. We have seen some borrowers use securitizations. So at occasion we get pay-off on good borrowers as they securitize debt in the market, but we've been able to continue to do business with existing customers as well and that others. The commercial real estate business again, kind of what we call as a specialty business but it's really a core business for us. And you've heard us say this on calls, we believe that long-term consistency is very important in lending and commercial real estate and we're very proud of the discipline, but also how we work with clients as they've got opportunities. I think we've got the balance very good there. We watched things like and there is a slide in the appendix about the diversification by product types. That's remained pretty steady over the last several years in terms of limits associated with those product types.

We also are not overexposed in any particular geographies. In fact I was looking at that the other day in terms of commercial real estate business of managing our professional team, we have the largest exposure we have to an MSA is less than $200 million in balances. So we continue to be very diversified and we think that's a good approach there. The energy business which is managed in our Houston office is about a $400 million book today. About 80% of that is reserve base lending. And as a reminder, we also do borrowing base true-ups in that business as well and carefully watch what's going on in the economy. Our correspondent banking business has also got a $400 million business. That's really lending obviously to other financial institutions. And I failed to mention of course just our core corporate banking business is about $1 billion. That's really mostly public companies, larger companies and that business continues to be steady for us. It's a [Indecipherable] effort that we have.

So overall, I feel very good about one that really the array of specialty businesses that we have and the diversification that we have and the way in which we've invested in knowledge within the relationship team as well as the credit team.

Christopher Marinac -- Janney Montgomery Scott LLC -- Analyst

Great. This is really helpful background. Thanks for all the time on this.

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

You're welcome. Thanks, Chris.

Operator

Our next question comes from Brock Vandervliet of UBS. Please go ahead.

Brock Vandervliet -- UBS Group AG -- Analyst

Good morning. Thanks for the question. I wanted to go back to Slide 11. That's very very helpful. I understand the guide on the near-term based on the two cuts. Should we think longer term also about asset and liability datas? Do you think about it in those terms -- longer term should we instead think about a specific NIM sensitivity for each cut? Can you dimension that any further for us?

William C. Losch III -- Executive Vice President and Chief Financial Officer

Well, I think Brock, clearly, we run all different kinds of scenarios around net interest income and net interest margin sensitivity and so I don't have all of it today and probably can talk through it without getting pretty confusing, but yeah, I mean we make sure that we understand the full annualized impacts on our portfolios of different cuts or increases in short-term rates. We have a myriad of assumptions that underlie this around deposit datas on the loan yields. And then correspondingly, we actually run a what we call a dynamic interest rate sensitivity forecast, which takes into account shifting of balance sheet mixes on the deposit and loan side too. So we are constantly thinking about what are margin impacts and our net interest income impacts are in different environments. So we'll continue to disclose what we think is most helpful to all and we can certainly follow-up with any further questions that you've got.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Brock, this is Bryan. All of that modeling goes into the category of all models are wrong and some are useful.

Brock Vandervliet -- UBS Group AG -- Analyst

On that, yeah. To that point, can we extrapolate from that? And sensitivity is a shock test if we were to extend it down to 100 basis points lower with that and move in proportion to the down 50% or not?

William C. Losch III -- Executive Vice President and Chief Financial Officer

Yeah. So certainly as you move down the curve, what's going to happen or you have rate cuts, what's going to happen particularly on the deposit side is you're going to hit floors under which you can't really move rates anymore for deposit rate paid. And so that's why you see a big step change from 25 basis points to 50 basis points is once you get beyond 25 basis points, you start to hit some of the floors on different products and product categories. So 50 basis points, excuse me, going down 100 would probably be more like a proportional step to the 50 basis points.

Operator

Next question comes from Jon Arfstrom of RBC Capital. Please go ahead.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Thanks. Good morning.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Yeah.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Hey. Question on expenses. I don't think we've hit on that yet, but BJ, you talked about $50 million in cross-sales for the full year and $20 million in reinvestment. So you know maybe net of about $30 million, it seems like maybe you're already there in terms of the first half with $36 million and $6 million [Phonetic]. So I'm just curious if you can just give us a little help on the run rate and what kind of expense expectations you have for the rest of 2019?

William C. Losch III -- Executive Vice President and Chief Financial Officer

Yeah. So remember back at Investor Day we talked about target being flat to down in our expense base and we still believe that. We expect it to be more down as opposed to the flat and that's even despite probably $25 million or so of incremental increase in variable compensation to support higher fixed income revenue. So we'll cover that and we'll cover the reinvestments that we're making with additional efficiency.

So now as Bryan said earlier, quick and heartfelt thanks to all the excellent work that our employees have done to put us in this position to reinvest. So yeah, we're probably ahead Jon a little bit on what we have in terms of efficiencies. I would hope that we would not be at the $50 million that we'd be north of the $50 million by the end of the year and I expect us to do that. But our reinvestment was slower as you might imagine. What we wanted to do is make sure that we took out the efficiencies first, so that we had the appropriate run rate on which to reinvest. So that's why you'll see a more significant ramp-up in the reinvestments in the second half of the year and those are things like further strategic hires in some of our key markets, strategic hires in technology that will actually enable us to do some of the systems and applications changes and architecture changes that we want to make to transform our technology environment over-time.

As you know, we're making significant investment in customer experience related efforts that have both the technology component, a marketing component and a people component to them. So those are really starting to just materially ramp-up into the second half of the year and they will continue going forward. We're not going to be able to just stop. We know we're on a -- we're trying to walk up a down escalator if you will in terms of keeping up with all the changes in the industry. And so we're going to be very, very smart about the costs that we don't need anymore but that we reinvested in the places where our customers are demanding that we'll do better. And so we're pleased with how we've done that today. We expect expenses to be flat to down going through the rest of the year and we'll continue to maintain strong expense discipline into 2020.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Okay. That helps. Very big picture. Is there anything wrong with looking at the $0.42 as a new earnings run rate for your company? I know you have some variability, but looking at what everybody else we've picked up about your margin, we've looked at the warehouse and we've looked at fixed income and I know there's some variability, but any reason you'd hold us back from that?

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Jon, this is Bryan. I think I wouldn't affirm any specific number. I think we can be in that 40 area and we're optimistic. You touched on expenses and we've had a lot of conversation about margin. I think it's important to step back from it and look at the entire organization. And when you look at the impact of declining rates of your assets sensitive, it's going to hurt you but you've got other levers in our business. You have a strong mortgage warehouse lending business which we think will continue strong as long as the consumer is strong. We have the fixed income business with average daily revenue. So our business is a balanced one. We think we perform well in a number of different environment. We think we've got very, very good credit quality and that will hold up. So we're optimistic about the back half of the year. We don't know what the Fed is going to do or how they're going to do it. But as I said in my opening comment, we're still pretty optimistic about the overall economy to strengthen the economy momentum in our business and the momentum that we see underlying our businesses. So if it were in the 40 area, I would be reasonably confident in that.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Okay. All right. It seems pretty healthy. Okay. Thanks a lot for the help. I appreciate it.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

All right. Thank you.

Operator

Our next question comes from Brett Rabatin of Piper Jaffray. Please go ahead.

Brett Rabatin -- Piper Jaffray Companies -- Anlayst

Hey, good morning. Wanted to go back if we could to expenses and just thinking about the saves versus the reinvestment and if the fixed income piece continues to improve or drive results, would that change how you guys think about reinvestment into 2020 and then maybe can you just talk overall about the efficiency ratio and how you want to see that trend over the next year versus the investment rate? Thanks.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Brett, this is Bryan. Let me start. So what we're doing on the cost side of our business is really not heavily influenced by what's going on in the fixed income business other than as BJ mentioned earlier, they're working really hard to make that business more effective and more efficient. What we're doing only on the expense side is really what we've talked about in the first quarter call which is we're trying to drive efficiency to separate out the good calls and the bad calls and take that efficiency and invest it back into people and products and technology to really deal with the changing nature or the landscape of financial services. We think we have the ability to do that and manage through that in the remainder of this year and into 2020. And so while fixed income may earn more or less than they are today, we're optimistic about ADR, it really doesn't have much impact on our outlook on how we manage expenses.

I'll let BJ sort of talk about his expectations on the overhead efficiency ratio. But as you saw this quarter, it moved down significantly. We think over-time, we will continue to move that overhead efficiency ratio down, not necessarily from this given point, but over-time, we expect to get more efficient as an organization.

William C. Losch III -- Executive Vice President and Chief Financial Officer

Yes. And I would just said to Bryan's point on longer term the efficiency ratio. The adjusted ratio is as you know, was at 59% this quarter. We had said back at Investor Day back then, we were sitting at 64% on an adjusted basis. This quarter we're at 59%. We believe that that might float up a little bit over the next couple of quarters, not because of lack of discipline, but because of reinvestment and so on. But our expectation, as we said back in Investor Day is to consistently have that efficiency ratio below 59% and that wouldn't be the stopping point. That wouldn't be the floor we would continue to try to manage that down with the idea that we've got to reinvest some more material amount of our expense efficiency in the future of the business. So we'll try to be very smart about it, but we expect to continue to drive it 59% every time.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

I would just add one other thought, which is over the long arc of time, our bankers, our people have demonstrated the ability to control costs and take cost out of the organization and we think that's a key competency of the organization and we continue to focus on that and will.

Operator

The next question comes from Tyler Stafford of Stephens Inc. Please go ahead.

Tyler Stafford -- Stephens Inc. -- Analyst

Hey, good morning, guys. Nice quarter.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Thanks, Tyler.

Tyler Stafford -- Stephens Inc. -- Analyst

Just given the expectations around the mortgage warehouse strength continuing and where that was on end of period basis in the second quarter. Just can you frame up just total consolidated growth that you'd expect to see for 2019 for us?

William C. Losch III -- Executive Vice President and Chief Financial Officer

For total loan growth?

Tyler Stafford -- Stephens Inc. -- Analyst

Yeah, total consolidated loan growth for the year, just given the tailwind of the mortgage warehouse.

William C. Losch III -- Executive Vice President and Chief Financial Officer

Yeah. So total loan growth year-over-year second quarter of '19 versus '18 was 5%. We did not change the outlook that we had laid out at Investor Day in terms of loan growth between 3% and 6%. So I think our expectation would be hopefully it's at the higher end of that range and I don't think that anybody would be disappointed if we broke through the higher end of that range. So as Bryan talked about earlier, Susan did, I did. Our pipelines continue to remain strong. We think loans to mortgage companies will continue to remain strong. Our core commercial lending across specialty is strong and even though our key markets of Carolinas and South Florida had just modest growth this quarter, as we've talked about, we think that there is very positive strength going forward there. So we feel very good about that the outlook that we laid out and maybe we can even beat it.

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

One data point to add there. When we look at new production in the second quarter compared to the same quarter last year, which was that we went through the conversion in May of last year, just of course, I mean C&I without mortgage warehouse and without commercial real estate, we saw new production increase about 33% from second quarter of last year to second quarter of this year. So our bankers are really doing a good job of getting out and and working with those new customers as well as existing customers to expand relationships which should serve us well as we continue to do, as I said, in a very consistent way to look at that loan growth and relationship growth.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

It's clearly a point about moving from an integration focus to calling effort growing the business, not to put too many fine points on it to, the growth year-over-year that BJ mentioned, you also have about a 0.5 of runoff in the non-strategic portfolio, about $400 million. So there's a lot of complexity to it. But as BJ said, we're pretty optimistic about our ability in this economic backdrop to grow loans.

Operator

Our next question comes from Jared Shaw of Wells Fargo Securities. Please go ahead.

Timur Braziler -- Wells Fargo Securities -- Analyst

Hi. Good morning. This is actually Timur Braziler filling in for Jared. Maybe just follow-up on that last comment. As you look at some of the momentum growth you've seen out of the new Carolina Florida markets on the deposit side, how much of that is being driven by this increased commercial penetration on the loan side, on the relationship side or is that more so a deposit effort to try and grow those balances?

William C. Losch III -- Executive Vice President and Chief Financial Officer

I think it's a bit of both of course. On the consumer side, in those markets, we're predominantly focused on deposit gathering and specifically building what we call primacy of relationships is getting deposits where the checking accounts in particular and really doing the hard work to build those relationships. On the commercial side, it has always been our practice for our relationship managers to build full relationships whenever they possibly can. So our course, the entire business, particularly on the legacy first Tennessee side has 90% plus full [Indecipherable] [1:03:24]. We are working to build that exact type of model in the Carolinas and Florida as well. We had a great head start with what Capital Bank was already doing with clients and customer relationships, but we're strengthening our treasury services, platform, introducing that into those newer markets, which has enhanced capabilities relative to what they would have seen before from Legacy Capital Bank side. And so it's an emphasis to grow both loans and deposits on the commercial side.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

I would pick up too on the mid-Atlantic portfolio. That's a portfolio that we're still a little bit in transition and in terms of reducing aggregate exposure to commercial real estate that is not in our traditional commercial real estate business. And so that has had the effect of muting some of the growth there. So we think that's take mid-Atlantic for example. That's a market where we have the opportunity to see a significant acceleration. We're seeing that in our South Florida or Florida franchise. So with those businesses, we think still hold great potential for us.

Timur Braziler -- Wells Fargo Securities -- Analyst

Okay, that's good color. And one last one from me, if I can just follow up on the warehouse business, that's now 13% of the total loan book. Seems like there's still good opportunity within that business. I guess just broadly speaking, how large can that business get from a concentration standpoint and then also the yield that you've got on that portfolio in the second quarter?

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

As I've mentioned before, we do have a robust portfolio limits process in our company that includes limits for different industries and different businesses and we reevaluate that at least annually. Right now, we're within the limits that we've set for a mortgage warehouse lending. I think we feel so good about where we are today. It's a business that we know is going to be both cyclical and seasonal. So we're comfortable with that fluctuating up and down as it relates to limit. So for now, we've got room and our limits to continue to grow that business, but we clearly don't want it to come outsize either.

Timur Braziler -- Wells Fargo Securities -- Analyst

And the second quarter yield on our business?

William C. Losch III -- Executive Vice President and Chief Financial Officer

About 5.50%.

Timur Braziler -- Wells Fargo Securities -- Analyst

Great. Thank you.

Operator

Our next question comes from Garrett Holland of Baird. Please go ahead.

Garrett Holland -- Robert W. Baird & Co. -- Analyst

Thanks for taking the questions. You covered most of the topics, but I think it's impressive you continue to find the incremental expense savings, so that $30 million for 2019. Just curious, are there any similar sized expense levers remaining or are the efficiencies likely to be more incremental moving forward?

William C. Losch III -- Executive Vice President and Chief Financial Officer

They'll likely be both. As Bryan said, we're not going to stop finding efficiencies, though clearly what we wanted to do in the first half of this year is get a significant jump start on those efficiencies, so we could start the reinvestment process. We have taken a significant amount of cost out of the organization this year. So it's going to be hard to replicate $50 million plus of cost savings every year clearly. So our efficiency incrementals will probably be slower year-over-year and reinvestments will ramp-up. But remind you that there's reinvestments, as Bryan talked about, will be good costs, if you will that will be revenue generating, that will be improving the customer experience, that will be making our technology and operations environment much more efficient over-time, such that our efficiency ratio continues to improve and our earnings power continues to get better.

Garrett Holland -- Robert W. Baird & Co. -- Analyst

That's helpful. And just one more on fixed income business performance. Obviously, very good this quarter. So you said you're now taking market share in that business?

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

This is Bryan. It's hard to tell in a short period of time like this. We have a unique positioning in the sales force and the coverage that we have. We call alone thousands of accounts. There are some areas where I think in all likelihood we probably are taking some market share, but I think over-time, we will know better.

Garrett Holland -- Robert W. Baird & Co. -- Analyst

Fair enough. Thanks for taking the questions.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Sure. Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Bryan Jordan for any closing remarks.

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

Thank you, Chuck. Thank you all for taking time to join us this morning. We feel very, very good about the momentum we see across all of our businesses, good loan and deposit, transaction and activity. We are encouraged about our ability to control costs and control our margin and we're pleased with the momentum we see in our fixed income business. Thank you again to all of our colleagues for the great hard work that they're doing to serve our customers and build our business. If you have any further questions, please feel free to reach out to any of us or to Aarti and her team today. Thank you again for joining us. Have a great afternoon. Great day.

Operator

[Operator Closing Remarks]

Duration: 70 minutes

Call participants:

Aarti Bowman -- Investor Relations

D. Bryan Jordan -- Chairman, President and Chief Executive Officer

William C. Losch III -- Executive Vice President and Chief Financial Officer

Susan L. Springfield -- Executive Vice President and Chief Credit Officer

Steven Alexopoulos -- JPMorgan & Co. -- Analyst

Brady Gailey -- Keefe, Bruyette & Woods, Inc. -- Analyst

Kenneth Zerbe -- Morgan Stanley -- Analsyt

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Jennifer Demba -- SunTrust Robinson Humphrey -- Analyst

Michael Rose -- Raymond James Financial -- Analyst

Christopher Marinac -- Janney Montgomery Scott LLC -- Analyst

Brock Vandervliet -- UBS Group AG -- Analyst

Jon Arfstrom -- RBC Capital Markets -- Analyst

Brett Rabatin -- Piper Jaffray Companies -- Anlayst

Tyler Stafford -- Stephens Inc. -- Analyst

Timur Braziler -- Wells Fargo Securities -- Analyst

Garrett Holland -- Robert W. Baird & Co. -- Analyst

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