Good afternoon, everybody. My name is Jared Shaw. I cover the mid-cap banks here at Barclays. We're excited to start the first mid-cap panel of our fireside chat of our conference, with Chris Del Moral-Niles from East West Bank, the CFO. Thanks a lot for coming.
My pleasure.
Just informed me he's fresh off a transpacific flight. So we appreciate you coming to East Coast time.
Yeah. It's always a great event, one that I've been delighted to participate alongside you Jared here for the last couple of years, and I look forward to many, many more in the years ahead.
Great.
I will make sure everyone addresses Adrienne here in the front row, who I think you all know is Director of IR. And with us today is also Chris Mattern, our Treasurer. We have been having good dialogue with folks all this morning and look forward to good dialogues over the next day or so.
Great.
Thanks for a full lineup up until 5:30 P.M. every day.
We want to keep you busy, for sure.
Thank you.
Great. Thanks. Well, at least kicking it off, East West remains differentiated through its exposure to both U.S. and Asian markets.
Yeah.
As you look across the franchise today, what do you think continues to attract new customers on both the commercial and consumer side, and where are you seeing the strongest client acquisition opportunities?
Sure. We are a cross-border capable bank. It's important to recognize that 94% of our loans are in the U.S., and somewhere between 92% of deposits and 97% of dollar balances are in U.S. dollars. So we're a U.S.-centric bank that helps facilitate cross-border trade and activity for folks that have businesses and transactions due abroad. Focus is American. And within that, what's been very interesting use case is if you'd drawn a business bond map for where to build the perfect bank in the last 50 years in the United States, you probably would've picked a market like California. You probably would've zoned in further on Southern California. You would've zoned in further on a highly educated, entrepreneurial subset of that market, and that would've gotten you to the core East West client base.
That has been a great market to serve over the last 50 years. An even better market to serve, arguably, over the last 30. And it's been complemented, particularly over the last 15, by an incredible flow of activity across the Pacific, which has only become more and more diverse as we've grown. The reality is we are finding pockets to grow in our core Southern California markets, in our San Francisco, Seattle, Houston, Dallas, Boston, Atlanta, New York markets. We are finding pockets to grow in cross-border activity with Hong Kong. We're finding pockets to grow with cross-border activity with Shanghai. We're finding opportunities coming to us through our rep office in Singapore, and all of that is contributing to a better than average level of inherent organic growth than for most regional banks.
In part because they do not have that same exposure or density exposure to California, which continues to be very positive, and they do not have the added transactional flow of activity that we see from our cross-border activities, which is the incremental sort of fuel to the engine that we have. It is a very strong deposit engine. Where we have seen the growth, it is in deposits first and foremost. A derivative of that is in wealth, and both of those are fueled by those same demographic trends. High educational component, high income component, high wealth component, all of which driving higher savings balances and higher wealth activity. It is a very positive trend.
Yeah. Many banks talk about relationship banking, but East West seems to have an unusually sticky customer base. What do you think customers value most today, and how has that changed over time?
I think fundamentally, our customers value the stability and strength of East West Bank as a partner, and that stability strength has only continued to enhance itself here over the last several years. We recognize that the banks that we primarily compete against, and our primary competitors are the big four too big to fail banks. When we think about their presence, all of them have some presence in Asia at different levels for different reasons. But they are all there, and they are all doing things to support a variety of folks, whether it is the Walmarts or the folks that Walmart is buying from. They are all transacting Fortune 1000 level entities on both sides. But below the Fortune 1000, it is still those four banks and then East West Bank. That is where we know that we have a disproportionate opportunity to win share and capture market.
That positive dynamic really is part of the differentiation. But part of that differentiation comes from the fact that people recognize that those banks that are too big to fail, they represent safe options. East West has to position itself, if not too big to fail, then too strong to fail. We have successfully positioned ourselves as that too strong to fail alternative bank, which is why we are able to capture share. That too strong to fail is supported by strong capital levels, strong liquidity levels, and strong profitability. All of which leads to positive reinforcement of that too strong to fail dimension, which allows us to report quarter- after --quarter of record earnings or record growth or record capital levels, reinforcing this message to our customers that we are the strongest alternative for them. That has bred loyalty.
Yeah. I think touching on competition, it remains intense across, I guess, all of your markets. How would you characterize the competitive environment today, and where do you believe East West is winning the most business?
The competitive environment today is a shifting landscape. When we think about in the last couple of years, Adrienne, Mr. Mattern, and I all joined the bank in 2023. 2023 is an interesting watershed moment for regional banks. It maybe-
Did something happen then?
Yes. A dividing line perhaps between those that had the right risk management appetites and the right diversification. I think our lesson learned from 2023 is you have to be diversified. You have to be prepared for the fact that there will be shocks to the system. Since we're not too big to fail, we need to have that strength within the four walls of the institution to support what's necessary. What we've been able to create is this balance of activity that's increasingly diversified. That means finding new customers and new markets, new niches, to your question, I think. Finding the ability to service them in new and differentiated ways to create that diversification and create the sort of stability across markets and cycles that is necessary to succeed.
We've been able to do that by entering new verticals and new niches and new channels in a way that I think has positively differentiated ourselves and led to this sort of sustained, continued growth in an environment that maybe hasn't seen all that much growth. We've also been able to do that in this environment post-2023, where we've had several, let's call them name changes. Whether Union Bank used to be called something else or is called something else, Bank of the West has changed names, and more recently, Hanmi Financial has changed names. With each of those conversions and changes, there's been incremental opportunity for East West to step in and capture more share. Not to mention a couple of banks that just went away altogether.
That combination of opportunities created by banks exiting the market because they weren't diversified enough, because they weren't risk-aware enough, or those exiting the market because they couldn't sustain the investor sentiment to keep them going without doing something radical for their balance sheets or their operations. Each of those changes has created incremental business opportunities for East West to both hire people, make inroads into the business, or pick up clients in a way that has sustained our otherwise strong growth trajectory even more so.
You talked about leading with deposit growth. DDA growth continued to be a major differentiator in the past quarter with non-interest-bearing deposits increasing meaningfully again. What do you think is driving that success?
First and foremost, it's our retail bankers. They're doing a phenomenal job of getting out there and pounding the pavement. We call it the shoe leather strategy of just walking up and down Valley Boulevard, walking up and down Rosemead Boulevard, walking up and down and knocking on doors and making sure that that knock is heard, and following through and following up on opportunities. That ability to get out at the grassroots level, literally at the street level, and make connections with folks in our communities has been driving that underlying strength of DDA for the last, it feels like six quarters or so in a way that is far more sustained than I appreciated it could be. But it's creating good opportunities.
It's been complemented by, over that time, we've also struck a partnership with Worldpay that has allowed us to offer those small business customers a variety of new terminals and merchant card equipment that was an improvement from what we were previously offering at a price point that was positive. That combination of us making the inroads, us making the call, us making the outreach, and then being able to offer them something different and new led to an improved penetration of that existing customer base. It was largely an existing customer base. We are already approaching a lion's share of the market in many of the Asian affinity communities we serve. We've been able to take that shoe leather strategy as well as the machinery and go to new markets and also make inroads.
In addition to that, we've been able to take the capabilities online and offer them to a broader cross-section of small business clients around the market. The three of those strategies all working together have really propelled the small business uptick. That's been the driver of that DDA growth and continues to be here. I would be remiss if I didn't point out we've also benefited from tariff refunds. Tariff refunds helped buoy the numbers in the second quarter. They've continued to come in positively in the third quarter. While the flow has been approaching $1 billion or so, the reality is the net residual balances were a couple hundred million at the end of the second quarter. They're probably in the same order of magnitude as they are today.
Those are residual flows that we think at this point in time are likely to stay within the bank. They may move from DDA to money market at some point in time, or have already, but there'll be incremental balances from that activity.
Great. You've highlighted the importance of core relationship deposits and operating accounts. As you look ahead, how much opportunity remains to continue to improve the overall deposit mix?
Well, I think we have done a nice job of finding the floor, first and foremost. At around 24%-25% of our total deposit mix feels like a transactional floor. The good news is we have worked off the bottom of that floor towards the 25%, 26%-plus. In the current rate environment, that feels about the right level. Should rates move lower, which does not seem to be the expectation at this point in time, we would expect that to continue to improve. Should rates remain relatively stable, which is our current expectation, we would assume that mix holds relatively steady at the mid to high 20s. Should rates move higher, they might trend back towards that floor of 24%, 25% over time.
But that feels like a pretty low risk threshold level for our floor at this point in time, and it feels like there is more upside than downside.
Okay. You have roughly $13 billion of CDs repricing this year and continue to discuss deposit remixing.
About $12 or $13 a quarter.
Okay. Sorry.
$12 billion or $13 billion per quarter.
How should investors think about the balance between retention growth and funding cost optimization? And how are you thinking about pricing in this market to grow and retain?
At the moment, we're priced exclusively to retain. We're not trying to grow share or capture balances through pricing. In fact, arguably, our pricing today, our CD special for the Lunar New Year back in February of this year was initially set for a six-month CD at 3.68. Our current today CD offering for six months is 3.65. That obviously does not reflect an uptick. Now, we would be the first to remind you all that when we spoke to investors back in January, we told you that the forwards for CDs were already reflecting a more competitive deposit environment. They were already reflecting a shift higher appeared in funding levels and an expectation that loan growth would be stronger in 2026. It turns out those things all came together, and so we're not surprised at where we find ourselves now.
What we do see is at 365, we would probably be losing some deposits. So we've complemented that with a 375 nine-month and a 380 12-month CD rate. That blend is opening some further duration extension of our clients' deposits with us, the deposit tenors, more shifting to the nine and 12-month, holding the overall balances relatively steady, but probably increasing our cost just a smidge. That combination means that we will probably be in a very good circumstances should there be further future rate hikes because we're locking in these funding levels at 375, 380, where others will be paying more in the future. We'll also note that even those levels of 375, 380 feel like they're a good 25 basis points, if not more, under market from what we see in the general marketplace.
The general marketplace feels like that could be a four handle, and where we are at threes feels like a relative healthy level of discount reflecting the relationship value we have with these sustained CD customers, which we've developed over many, many years.
Maybe switching over to the loan growth side. Loan growth guidance was raised again with second quarter. What's giving you the confidence that the current pace of growth remains sustainable with the broader macro uncertainty?
Sure. So let's take sort of the three different portfolios in stride. First, our strongest growth in the second quarter was in our single-family mortgage book, and that business has been sustained. Interestingly, despite the fact that long rates have backed up and that mortgage pricing hasn't come down, the reality is the American dream is alive and well. The desire for owning a home continues to be a driving force for many American households, and the ability to work with a bank like East West, where we'll provide a 50% down payment mortgage solution for you, has two curious side effects. One is for a subset of customers, the fact that they're only putting 50%, they're only borrowing 50%, means they're five-eighths less rate sensitive than the other customer. So on average, you're borrowing less, you're less rate sensitive. That seems to track, and we're seeing that.
The other component is the reality for some of our customers is the reason they are talking to us and engaged in a 50% down mortgage program is because they have uneven earnings or a lack of track record of earnings, and it is difficult for them to qualify for traditional mortgage products, period. In which case, the 50% is the only option, and they are slightly less rate sensitive because there is not a competing marketplace for those loans. What we found over the 50-year history we have been offering this product is it is a very attractive risk-return product because our risk has effectively been zero over 50 years, and our returns have been quite positive.
On the residential mortgage side, what we have seen is continued flow of funds at a level that is sustained and reflects the durability of that business quarter after quarter and will continue into the third quarter. I can say that with confidence because, we are three-quarters of the way through the third quarter on the one hand, and I know what is closing in the next several weeks, so it will be a good quarter for mortgage. On the CRE side, which has not been a focal point for us, the reality is it looks better at 6.25%+ yield than it did at five-something yield. The reality is we are able to sort of lock in some of those pricing points for developers and customers that we have had for decades. We are more than happy to do that for the right borrowers.
We have been able to sort of apply ourselves to execute on some transactions for them and support their interests at what we think is an attractive level as well. That will be an area of growth for us, whereas it has been a more muted level of growth for us in prior quarters. Then finally, on the C&I side, when we think about that, we sort of break that into two pieces. The CDFI loans or the PE loans and other loans that we have done, which were a big driver of the first quarter's outperformance, we told you they would pay down in the second quarter, and they did. We have continued to see pay down in that activity and volume into the third quarter. That will be a soft point on that side.
On the other hand, we have made up for that with some core C&I growth, which will put it back in the positive territory. You will see positive loan growth in all three of our verticals led by single family.
On the commercial, the C&I side, are there any specific industries or customer segments that are producing the most attractive opportunities today?
I think what we've been endeavoring to do on the C&I side is diversify, diversify. We have the North Star of balancing the three portfolios as a third, a third, a third between the single families, the CRE, and the commercial. Then within each set of commercial, we endeavor that no subset of that should exceed more than 5% of the balance sheet. That's not a fixed formal cap. But through our risk management approaches, we're managing essentially caps in that neighborhood. To date, none of the portfolio categories have exceeded 5%. We'll continue to diversify that as we continue to grow. That means we're relatively more capped out in, say, PE and entertainment, which are two big verticals of ours, and less capped out in some other areas.
We'll be focusing on trying to continue to build out more diversification of the volume and the business mix in the C&I book over time.
When we were here last year, we were looking at the potential for rate cuts. This year, we're looking at the potential for rate hikes. Investors are often focused on the margin, but management continually emphasizes net interest income.
Sure.
How are you thinking about balancing growth, deposit remixing, and margin to maximize earnings in an environment like we're seeing today?
Continue to deliver double-digit ROTCE, continue to deliver bottom-line EPS growth. I will continue to pull the levers along with my friend Mr. Mattern here in the front row on deposit pricing, loan pricing, and balance sheet allocation to create that environment. If that means the margin goes up or down a few basis points, I'm less worried about that as long as I'm driving top quartile ROTCE returns on capital, which we have a good track record of a couple of decades of delivering, and at least under Mr. Mattern and I, three years of sustained and continued expansion of that.
While rates went up, while rates have come back down, while rates may or may not go up again, in this last three-year window at least, with some liquidity questions thrown into the industry, with some tariffs put on the industry, with some oil price hikes and oil price drops and a few other curveballs, we've managed to consistently deliver approaching 17% ROTCEs. That'll be the North Star top quartile returns with a strong level of efficiency. The balance sheet management, I think we have enough levers to pull to make that happen.
Earlier on, you mentioned the importance of revenue diversification. Fee income has consistently grown faster than I think many investors have expected. Which fee businesses are creating the most opportunity today?
Wealth, wealth, and wealth, followed by some FX and deposit-related fees. When we think about where we see the opportunities and where we've seen the most growth, it's been on the wealth front. That continues to be where we're investing incrementally. We have spent the better part of the last year earnestly in dialogue trying to find a wealth partner that perhaps we could bring into the fold that would help accelerate those endeavors. That has proved unfruitful so far. We, I won't say capitulated, but we finally threw in the towel and opened up our own RIA this quarter.
We began the process of pulling people into the RIA from the private bank and other areas. We'll continue to build that up and we continue to hire into that group, and will be a source of further growth and expansion of our fee revenue lines within that capability with that addition. That has proven early returns positively, and we have optimism that'll continue to be a fueling force for fee income growth in the quarters ahead.
When you look at the investments in wealth management, how much more outright investment is there? How would you describe the runway that remains for growth?
The runway is unbelievable. What we are seeing is a combination of in our richest core domestic markets, there's a huge untapped opportunity for us that to date we have allowed to flow out through the likes of Morgan Stanley and Merrill Lynch and Fidelity and Schwab, where we know we can see the outgoing wires and activity from our longstanding customers who have built their wealth over, if not generations, certainly their lifetimes. We're disappointed that they haven't looked to us as that partner for that next leg of their investment because perhaps we didn't have the full breadth of capability. We're making amends here to sort of bridge that gap and offer them more and more solutions, more services, and more compelling support.
But that's an existing base that's been there and is now flowing away from us that we know we can capture, and we are bringing people on to help us retain those funds and then capture that incremental activity. In addition, we recognize there's an additional newer set of funds and flows that are coming from abroad, where people continue to look at the U.S. market as an attractive place to put money to work. Or alternatively, as a place where money has come to them because Walmart paid them, and they decided to leave those funds in the U.S. for further investments and decided that part of that investment strategy would be either fixed income or equity securities. As part of that strategy, we're providing some solutions and support for that.
And that combination of that core consumer market that's really fueling this, some private banking that's additive to that, and some corporate cash management that's additive to that is all driving a very positive dynamic for our wealth business activities.
Not to take anything away from the management wealth, but beyond wealth? Are there other opportunities to grow fee income that are either?
FX and core commercial deposit services. On the FX side, we have a very robust FX business, but the reality is we also recognize we haven't delivered the full suite of solutions that some of our larger bank competitors have, the largest bank competitors. The reality is we're competing in solutions offered by HSBC or Citibank that are at levels that we haven't seamlessly integrated the way they have. We can deliver the outcomes as quickly and efficiently as they can, because we do have licenses in Hong Kong and in mainland China to deliver those solutions and services in real time. We just haven't package delivered it the same way they have, and so we're in that repackaging and delivery mode.
But the early returns on our most recent integrations have been extremely positive, and we continue to see that lift come through in deposit management fees. And we are beginning to see that lift come through in foreign exchange activities. So up until very recently, if you wanted to trade FX with East West Bank, it required a phone interaction at some point. It was not a fully online-enabled solution. We are now offering that for certain customers in certain segments, the ability to do straight through from multiple currencies back to dollars and back to other currencies in various ways. And that is creating a new pipeline of revenue streams that we had not really tapped into before, that we are able to deliver on directly now. And I think that is an incremental opportunity for us that has been about a year plus in the making.
But we are seeing now beginning the fruit to be born from that activity, and we see tremendous upside from that as we continue to deploy that in a way that is more seamless and visualized to our customer. Because the reality is if it is not on their mobile phone, the capability does not really exist. And the reality is we need to offer that seamless ability to move from euros to dollars or dollars to Hong Kong dollars or Singapore dollars seamlessly on their phone from account to account and offer them a real live exchange rate as they make that transfer in order for this business to really take off. And we have just started to offer that capability, and we can already see there is upside there.
Maybe shifting a little bit, the bank has consistently invested in technology and customer-facing capabilities. Where are you seeing the best returns on those investments today?
The short answer is cyber, cyber, and multifactor, multifactor. Ensuring our clients' safety and stability of access to their funds in a fraud-free environment is job one, and that is where the investment dollars have gone. Sometimes that does not come across as the most client-friendly, but I think clients who understand that safety is job one appreciate it and respect it. And I think that is where the dollars have incrementally been funded. On the secondary part, as I was just saying, this ability to seamlessly look across your accounts. There are 4,000 banks out in the United States. I do not think many of them offer multi-currency accounts in multiple jurisdictions. So we are one of the handful of banks that do that with regularity. But the ability to then offer that on a mobile platform will position us as a small handful of banks.
I think that's an important capability for us to have, and we're building that capability, and it continues to be an emphasis.
Can you share with us how you're currently evaluating AI across the franchise? Where do you see the most promising opportunities internally, and where could AI specifically eventually help with improving that client experience you've been talking about?
Sure. First and foremost, as probably many of us have, AI is now sort of an integrated part of everything, whether it's my email or my Word document. I used to think I had to click on the spell check. It sort of somehow seems to do it for me now automatically, which is great. One of the things I notice is the consistency of language use across the departments and teams has improved. I don't know if that's because we all took remedial English classes or because AI just makes everything come across more consistently. I'll go with the latter at this point in time. The consistency of our PowerPoint decks internally, Dominic's not big on PowerPoint decks, but I can't lose my investment banker background, so I am. It has improved dramatically.
The other dynamic is I had a treasury team before, and Mr. Mattern's here. We had a couple of people that would be the go-to people to get something new or different built, different way of looking at things, and then it would take time. Today we have, it feels like at least a half dozen, if not more, maybe more like a dozen of people that we can say, hey, can you go build this dashboard? In a matter of days, I'll get back a dashboard that shows me something that I'd never seen before from a different perspective. The reality is the combination of having the data, which, as I said, I think to many forums before, East West is the most data-rich bank I've ever had the opportunity to work for.
If there's a question you have about where a transaction happened, who did it, when it happened, what the amount was, what fees were paid, any of those questions, we can get to that answer faster at East West than any place I've ever worked before. Now we can display it, and I can take a new question and give it to someone, and that will come back to me in very short order as an HTML Python webpage and/or as a Power BI dashboard in it feels like a very short timeframe. Telling me exactly what I need to know, as well as perhaps a bunch of things I didn't know I needed to know that jumped out at me from the data.
But the ability to sort of get to the data, scrub the data, present the data, and come to conclusions is remarkable, and it's only accelerating every day. Part of it's AI, part of it's dashboard and technology, part of it's just training your team how to use stuff and think about things differently. The fact that we don't have to go to IT. Three years ago, I wanted to see where all the ACH and wires were coming from which customers to From which senders. How much is Walmart sending to how many of our customers every day, and how much of that Walmart deposit goes to how many different accounts over the course of a month, a quarter, a year? I can see that. But I had to go to IT, have them develop that Power BI. That was three years ago.
Today, there's at least half a dozen people on Chris Mattern's team that could create that dashboard for me, and I would have it within a day or two. So that cycle turn for ask for something, get something back, has just dramatically enhanced our ability to ask questions and get to the right answers sooner.
Maybe shifting to credit. Credit quality remains among the strongest in your peer group. What areas are receiving the most attention internally today, and where are you becoming more comfortable?
Unfortunately, CRE continues to be sort of the focal asset class, CRE office specifically. It is where we will continue to expect to see some things go bump in the night. The reality is, we literally only have 10 credits that are CRE office credits over $30 million. That totals $387 million. As an order of magnitude of exposure to the entire bank, no single CRE credit is going to be much of a challenge. It is not going to pose much of a challenge to East West Bank. The reality is much of the other portfolios are doing just fine, and so it is not a particular moment in time of concern the way it has been in other moments outside of CRE office. It just has not manifested itself. We had some warbles in technology. Go back a couple of years, we had some warbles in energy.
Going back more years. Today, those industry-specific cycles do not seem to be channeling any particular concerns.
Anything that is a new opportunity coming out of some of that evaluation where you feel like you could get more active?
We have seen a lot of data center-related activity, and we just have not found the right way to approach those credits to be a more active participant, so we have not been. I think we have seen a lot of newer PE-related activity come our way, and in part because of our concentration already in that asset class, and in part because I do not think we feel like we need to stretch at this point in the cycle. We have not pursued a lot of those, but there is more out there. Where we have seen opportunity is, in fact, as there has been competitive disruption in the landscape of other banks, we have seen the opportunity to pick up specific individuals and specific even teams in some cases.
We have been actively picking up additional expertise, whether that was in charter schools or aerospace or some specific verticals within say the entertainment industry. We've added selectively to the teams and are looking at some team itself to further bolster our capabilities. We've also added on the credit side and the syndication side. I think those adds on the personnel side will give us the opportunity to tap into some new opportunities, specifically, I'd say, in Southern California.
Great. East West continues to hold one of the strongest capital positions in the regional banking group while still producing approximately 17% ROTCE. How do you think about the balance between maintaining strategic flexibility and optimizing capital?
Sure. I think the core strategic and financial outcome for us is to continuously drive towards top quartile returns. I think as long as we keep that as sort of the North Star for our activities and we continue to deliver against that, I think we'll find ourselves erring on the balance of maintaining our position as the strongest bank amongst the regional peers with the strongest levels of capital, as long as we're delivering a top quartile level of returns. If that balance changes, we'll certainly be quick to reevaluate that. But so far it's been a pretty good track record. At the margin, the reality is we have more than ample capital to meet all of the customer loan demand that we're seeing, which is great. We're also funding that from core deposit demand, which is even better.
Which means that's very attractive organic core business that sustains that high teens ROTCE level. We are very engaged and interested in continuing to driving that momentum. What we have found is it's important to have a competitive dividend over time. We raised the dividend by 33% earlier this year. I think we'll be happy to revisit the dividend at the end of this year again, and probably if the economy continues to be fairly robust and our trends are as they are, we'll probably be looking to increase the dividend again as we have in prior years. Beyond that, we've looked at M&A, and I think the phrase I used in one of the meetings earlier today is we found the opportunities sparse. With that in mind, that will leave us probably with some capital.
What we've done in most recent quarters, we've applied some of that incremental capital and funding from deposits to help bolster the liquidity profile of the bank. We'll probably do that some more. Beyond that, we've also proven our chops to buy back stock sometimes in size, and that will always be a lever for us.
On the M&A front, it's been a little while since you've done a deal but-
12 years.
Yeah. When you look at the environment being sparse, what would you look for in a bank? What would be attractive to get you off that 12-year hiatus?
Yeah. I think some of the acquisition history of the bank was in rolling up smaller community banks. At this point in time, Dominic has given us a direction that a $1 billion or $2 billion banking addition maybe isn't the right way to spend our energy, that's a quarter or two of growth, and we'll take a couple of quarters to close. It might just be more of a distraction than a value-added opportunity. That has taken our attention away from those small opportunities on the core banking side. If it's 5% or 10% of the balance sheet, it's probably enough of a level to get our interest. There are fewer of those opportunities out there. The reality is they tend to either be priced relatively inexpensively because they have hair on them or growth challenges or both.
Or they're doing very well and they're priced exceptionally well, which is not really of interest to Dominic either. I think he's looking for something that he can bring value to as a franchise, that we can add value to through our customer relationships in a way to some capability that they have, and we just haven't found that combination yet that makes sense for us. We've also spent the last year, as I mentioned earlier, focused on wealth management-oriented M&A, and just hasn't proved to be fruitful the way we thought it would be. We'll continue to keep that door open and continue to look for opportunities while we continue to build out now our own RIA and our own capabilities along quite that.
Great. Well, thank you very much. We're at the end of our time, but thanks for joining us, and looking forward to seeing you next year.
Great. Thank you. Bye now.