Mike Mayo: Look, Chris, I know Capital Markets is your baby from times past. I guess when I look at 17% year-over-year growth, that was still lagging the big five U.S. players. So I’m just – good time to reminder of who is KeyBanc Capital Markets? What’s your mix among advisory, underwriting, equity underwriting? What’s your typical size of the client? What are your key metrics for KeyBanc Capital Markets? And where do you stand with regard to those metrics?
Chris Gorman: Sure. That’s a great question. Obviously, we, on a percentage basis, are more canted towards advisory. These are middle market companies, a lot of them aren’t going to the equity markets very often. And if there are huge equity deals, those are always led by both bracket firms. So ours is heavily canted towards M&A. The good news there, Mike, is that we’ve talked before, M&A pulls through a lot of the other things that we do, financing, hedging, et cetera. So we feel good about where we’re positioned. But the difference probably as you go – if you went through all the numbers, the difference would be that some of the largest banks, obviously, are the players in investment-grade issuance and the players in large equity issuance.
Clark Khayat: Yes. And on – Mike, it’s Clark. The only other point I’d add there is that a lot of the volume in the first quarter was $10 million plus deals or very, very large cap. And while we do some work with them, we are a middle market-focused bank. So I think that’s some of the delta and things like M&A.
Mike Mayo: And then when you talk about the multiplier effect from mergers because you said backlogs are up quarter-over-quarter, backlogs are up year-over-year. I guess you expect some good growth this year after the second quarter. How can you quantify that multiplier effect? Is that like 1.2x, 1.5x, 2x, does it vary?
Chris Gorman: It would be the latter. It varies, Mike. But I did say that – our M&A backlog is at record highs. And for us, that is the most important. Because if you think about it, if you have the relationship, the M&A relationship by definition, you’re talking to in these middle market businesses, the decision maker. So, I feel good about how we’re positioned. But keep in mind, these markets things are not yet normalized. They’re getting back to normal, but they’re not yet normalized. And as I mentioned earlier, it isn’t the absolute level of interest rates that I think is – has a dampening effect. I think the volatility in interest rates forces people to the sideline and to wait things out. And so we need some settling in of rates. It doesn’t much matter, frankly, where that is. As I said, a four, six tenure would be just fine to transact. But what we can’t have is just extreme volatility.
Mike Mayo: And then last one on that. Where is KeyBanc Capital Markets revenue when you look out over, say, a 10-year horizon? Because I know the whole industry was down by almost half last year and you’re kind of bouncing off low levels. But specifically for you guys, where are you?
Chris Gorman: Well, I mean I think if you look at our normalized investment banking, if you figure $600 million to $650 million in sort of normalized kind of times. And as you know, because you’ve followed us for some time, that’s been a double-digit CAGR. And there’s no reason why we can’t get back to that level of growth if you think about 10 years and you look at the 10 years prior.
Mike Mayo: All right. Thank you.
Chris Gorman: Hey, thank you Mike.
Operator: Thank you. Our next question is from Gerard Cassidy from RBC Capital Markets. Please go ahead.
Gerard Cassidy: Hi, Chris. Hi, Clark.
Chris Gorman: Good morning.
Clark Khayat: Hey, Gerard.
Gerard Cassidy: Clark, you mentioned about the loan portfolio, how you purposely exited single credit relationships and Chris, you talked about building the business bank deposit base better. Can you guys give us some more color on these types of credits that you’ve pushed out, were they syndicated loans since it was only a loan relationship? And then the second, getting back to that business bank. Chris, how does that differ from the commercial banks? I think you said it’s two different business lines.
Chris Gorman: Yes. So let me take the first one first, Gerard. So in a lot of cases, well, we have a relationship strategy, and we had these relationship review sessions where we see what kind of penetration we get. And often, we let bankers many times, it starts by sort of lagging into being a participant in a sector that we’re really, really good, and we think we can do a lot of things and have a lot of capabilities. And it’s just a matter of being really disciplined. And if we actually provide a loan, and I’ve often said a properly graded loan can’t return its cost of capital. And so it actually is destroying value unless you can cross-sell. We’re really proud of what we can do. But if we can’t penetrate that client, we need to exit that client to free up the capital to put it someplace where we can make the kind of returns.
And so that was just the exercise. Obviously, it had a huge amount of attention and our time frame of acceptance contracted a bit last year when we were going through the exercise. As it relates to business banking, it is the same business as middle market, except that you need to be really focused on the payments piece because, as I said, they’re mostly deposit-centric businesses. And that’s the reason that we restructured in November of last year and put our payments business together with our middle market business. And we think that’s going to be critical to being able to go down market and really serve these smaller commercial businesses that we think we have a differentiated product offering.
Gerard Cassidy: And Chris, when you talk about the deepening of the relationship with these customers, that may only have a loan or deposit relationship. Aside from payments, what are those other products that you can use to deepen that relationship to make it more profitable?
