Clark Khayat: Yes. I think we’ll have to come back a little bit on office just to make sure we have those numbers right. It’s not a huge portfolio, and while we’re watching it, I just don’t have those details in front of me.
Janet Lee: Got it. Thanks for taking my questions.
Clark Khayat: Sure.
Operator: We do have a question from Gerard Cassidy from RBC Capital Markets. Please go ahead.
Gerard Cassidy: Thank you. I have a quick follow-up for you guys. Clark, can you show – you talked about the Blackstone relationship. And I think you mentioned that they’ll participate in the specialty finance originations. How does this relationship differ from the other relationships you guys have had? Chris, obviously you’ve always pointed out the originate-to-distribute model is more of your key metrics here. And I was just curious how this one with Blackstone is going to differ from what you’ve already had in place for years?
Chris Gorman: Yes. So this is just a lot more formalized in that we actually work together, and we actually service it and we’re together focused on this certain asset class. But to your point, we’ve been distributing the preponderance of everything we originate forever, including to a lot of the credit funds. So it’s just – it’s a formalization and most importantly it’s a forward flow agreement. So whereas we’ve always participated on a deal-by-deal basis, this is an arrangement as we go forward.
Clark Khayat: And Gerard, just on the concentration point because it is a concentration management tool, this allows us to do it kind of at origination and not in this book historically. We didn’t do a lot of syndications. We would do securitizations on a client-by-client basis, but that takes time as you know. So this allows us to do it kind of on the fly as we’re going and manage that concentration.
Gerard Cassidy: I got it. And then just a quick follow-up on it. Have you guys just worked with Blackstone in the past before this agreement? Or is this your first initial foray with them?
Chris Gorman: No, we’ve worked on a transactional basis with Blackstone in the past for certain.
Gerard Cassidy: Got it. Okay. Thank you.
Chris Gorman: Thank you, Gerard.
Operator: Thank you. And we have a question from John Pancari from Evercore. Please go ahead.
John Pancari: Sorry for the follow-up. Just one quick follow-up. Chris, you – I believe you just mentioned in discussing your criticized assets that you delink secondary source of repayment when you’re considering the credit ability to repay in your criticized status. So does that mean you exclude and don’t consider any recourse agreement that you have with either financial sponsors or the underlying borrower?
Chris Gorman: That’s correct. So we’re looking at straight up cash-on-cash. What’s the cash flow? What’s the ability to service the debt based on the cash flow?
John Pancari: Okay, so we got recourse.
Chris Gorman: That’s right.
John Pancari: Sorry. Go ahead.
Chris Gorman: Yes. So it’s a conservative perspective for sure. I’ll give you an example. We have – because I just looked through all these. We have a company that has a market cap of, say, $24 billion, but they’re having some near-term operational challenges. They, for example, would be on the list of criticized assets, just to give you an idea.
Clark Khayat: Yes. And just to be clear, as Chris said it’s the primary repayment for the risk rating, which is what gets the classified. We then take into account the secondary pieces when we think about ultimate loss content.
John Pancari: Right. Okay. Got it. Thanks Clark. All right. Appreciate it.
Operator: And we have a question from Mike Mayo from Wells Fargo Securities. Please go ahead.
Mike Mayo: Just a big picture question. You stressed weak loan growth and I’m just wondering is that a sign the economy is not as strong as people think it is? I mean you’re in a lot of different states in the U.S. Or is it simply your commercial clients saying, “Hey, we want the borrowers going to wait for rates to drop”?
Chris Gorman: I think it’s both, Mike. I think I have not seen a lot of people making significant investments in property, plant and equipment and I’m not seeing people make significant investments in inventory, in technology and in people. So I think it’s a combination of both. I think rates clearly have an impact, but I think uncertainty as to the path and direction of the economy is also a factor.
