Greg Garrabrants: Yes, I mean, I think our C&I verticals broadly are performing well. I think commercial specialty real estate is having good origination quarters. I just think if you look at the payoffs there, they’re quite strong. I think the positive side of that is that we’re continuing to turn that book, getting new credit evaluations, at higher cap rates and all those things. I think it speaks very well to the performance of the book. So, I don’t really see anything other than single family, which is just much more difficult, because just the volume of transactions is just so relatively low and the credit standards are relatively loose. So, we’re selling a lot of those loans through our conduit. And then, in auto we’re just – I think there’s opportunity there. I just would like that market to settle out a little bit, with respect to where auto prices go, before we do a lot more there so.
Edward Hemmelgarn: Okay. Great. Great, thanks. And I for one, do appreciate your asset liability duration.
Greg Garrabrants: Thank you.
Edward Hemmelgarn: Thanks a lot. Bye.
Operator: Thank you. Next question is coming from Gary Tenner from D.A. Davidson. Your line is now live.
Gary Tenner: Hi, thanks. Good afternoon. If I could just follow-up first maybe on that line with regard to CRESL. Greg, as you’re talking about there being opportunities there, albeit potentially at some tighter spreads, I’m wondering if within the markets that you traffic in CRESL, which I think is primarily larger metro areas, is there a particular geography that you’re seeing more opportunity than, others right now in that space?
Greg Garrabrants: I think that there’s been a general shift, because a lot of those loans are with our partners. And I think our partners have de-emphasized certain markets, and increased their activity in other markets. So, I think that would be somewhat reflective of kind of population movement and those sort of things. So more Miami and Nashville and less New York, right that kind of thing. But that doesn’t mean New York still doesn’t have opportunities. If I was going to just baseline it, I think you’re seeing a little bit of movement there, and you’re seeing the funds that we work with kind of change some of what they’re doing as well, sometimes to be a little less concentrated, particularly in New York. So I think, that’s where I would just have it. I think generally that’s what I’m seeing.
Gary Tenner: Got it. Thanks. And then on the fee side, if I look at the line items over the last four or five quarters, broker-dealer and advisory, there’s been some movement broker-dealers a little bit lower, advisories a little bit higher. But on a combined basis, we’re kind of triangulating around $20 million, $21 million per quarter. With the amount of investment you’ve made in the securities business, I’m just wondering, maybe roadblock isn’t the right word, but what are you running up against that, maybe is not allowing for some more accelerated growth in that business?
Greg Garrabrants: Yes, that’s a great question. I agree with that assessment. Really what it is, is if you look underneath the asset growth, what you see is we’re boarding a lot of new firms, getting a lot of new assets, and the existing firms that we have in the AAS business particularly are losing assets. So a lot of them are TAMs, and a lot of what happens with TAMs, is the advisors underlying that TAM structure either outgrow the TAM structure, or they decide to break off and do other things, or they’re being bought. So, we were looking at this, and it was quite significant. There was above 20% of those TAM assets had run off, and we had replaced them and more and generally grew net new assets. But that was a big hole to deal with, right.
So if you had flat existing customers there, you would have had really good growth, but we didn’t. And so, I do think that in general that is a disappointing outcome. I think the positive associated with it, is that at some point I believe there’ll be burnout there. I don’t know when exactly that is. And then I think the other element is, that as that happens, the base of clients that we’re getting are much more diverse, much more stable, and they’re growing. So I think, that that does have a natural movement that, will allow it to stabilize. But that being said, I still think I have not – I would say that that’s an area of our performance that definitely should be improved. We just launched the white label product and test, and so that’s still very early stages.
I think there’s a lot of opportunity there, not only from the cross-sell side, but also from the ability to streamline the processes. Right now the process that exists, pardon me, with respect to the paperwork, and just the manual nature of working with the broker-dealers is very costly and time-consuming. And so, a lot of the work we’ve been doing with respect to the platform that should allow for cross-sell, will also allow for improved operating efficiency. So, look I think that that business, when it’s built, should have very good longevity. But on the AAS side, it really is the attrition of the current customers that’s causing us, to fall below where I would hope we were.
Gary Tenner: Well, I appreciate the thoughts on that. It sounds like, from what you’re saying as well, Greg, that there’s not necessarily a great line of sight into stabilization there, in terms of the churn. Is that fair?
Greg Garrabrants: Yes, I think that we’ll be able to outgrow any churn, but what I really want to be able to do is come out and say, I’m feeling great about growing the asset 25% next year. And I’m not saying that, because I’m not certain about the churn stabilization. And I think, there’s also something else going on here, too, with respect to a lot of those, just the nature of the investment styles that, some of those firms have in a higher-rate environment. Our shop isn’t as well-positioned maybe from a bond perspective as it should be, because of those clients had sort of a different mix of what they were focused on. And I think that that’s still playing through. That’s not true with the newer advisors we’re bringing on, but I think that’s the reaction that some, of those broker-dealers have with some of those TAMs. So I think that’ll play itself through over time, but I don’t think it’s done yet. I think it’s got a little bit to run.
Gary Tenner: Great. Thank you.
Greg Garrabrants: Thank you.
Operator: Thank you. We’ve reached the end of our question-and-answer session. I’d like to turn the floor back over to management for any further closing comments.
Greg Garrabrants: Thank you, everyone, for your time, and we’ll talk to you next quarter.
Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.
