Rob Holmes: I would say it’s broad-based and also note that the loan-to-value is mid-50s as well. So and the sponsors and client selection, are really great. So, we feel really, really good about that.
Woody Lay: Right, that’s all for me. Thanks for taking my questions.
Rob Holmes: You bet, thanks.
Operator: [Operator Instructions] Our next question comes from Jon Arfstrom from RBC.
Jon Arfstrom: Thanks, good morning.
Rob Holmes: Hi Jon.
Jon Arfstrom: You hear me? Okay, good. Matt, you alluded to the noninterest-bearing balances, excluding mortgage. It seems like the remixing is burning out, and you alluded to the treasury wins, what’s possible there over time in terms of non-mortgage, noninterest-bearing deposit growth?
Matt Scurlock: I think so it’s going to be dependent on the rate environment. Jon, but the momentum to Rob’s point, the treasury business is the strongest ever been. I mean year-to-date, new treasury clients are up 105% of internal expectations. So that we talked a lot in previous quarters, about the lag from when you win the business, ramp the business and then it starts to show up either as a noninterest-bearing deposit or [in fees] and a big pickup this quarter in fees, 19% year-over-year growth is the result of all the business that we won last year. So it’s just now ramping and showing up in that fee line item. Rob will often say that that’s a horizon that you’re always chasing. And I think at this point, we have sort of max resource allocation up against that.
We’ve tripled the number of frontline TS officers, a third of our tech project spend is on new products and services, in the cash management suite and then over 90% of transactions that, come through the balance sheet are going to have a treasury, or deposit relationship attached to it. So said differently, nine out of every 10 times we’re extending capital, you’re going to have the operating deposits that come along with it. So, I think just given our commercial orientation, we’re driving as meaningful growth in that business is probably anyone that we know. I mean the treasury product fees line item for the industry is growing about 4% GDP business, and we grew gross PxV by 14% this quarter. Rob, do you want to add to that?
Rob Holmes: No, I think you said it perfectly well. I do think its evidence of other investments that we’ve made in the platform maturing. I mean, what one has to remember is – we have a new payments platform, purchase card, merchant, lockbox and all of them are state-of-the-art as it relates to technology, because they’re all brand new. And the ease of use with our initial onboarding and client journey has proven to be a big advantage of the market. And I don’t see the focus on treasury doing anything but improving, if that’s possible. We have – it’s a part of our culture now. Bankers understand treasury, They understand P times V. They understand the importance of the platform. It’s not treasury in a line of business on their own, trying to achieve certain goals for the bank.
It’s a holistic effort by the entirety of culture. I don’t know of another sales and trading platform on Wall Street that actually engages about treasury products. So, we’re really excited about the platform, the professionals in it, but also the adoption by the entirety of the bank and focus on it.
Jon Arfstrom: We’re trying to do it around, but it’s not easy. We’re trying to do it. The – on credit, you mentioned the pre-2018 loan book having two of the three issues. What’s the significance of that? And maybe the size of pre-2018 or doesn’t that matter? Just curious kind of why you’ve flagged it and what you mean by that?
Matt Scurlock: Yes. We’ve called out before this legacy loan portfolio that was on the books. When Rob got here that we’re continuing to try to work down. It was $200 million when Rob got here, it’s $60 million today, $30 million of that resides in nonaccrual. So perhaps some different credit decisioning than the current management team would have pursued. So that’s the rationale for calling it out. We’re going to continue to work through, some of those legacy credit items.
Jon Arfstrom: And then last one I have on Slide 4 for you, Rob. I’m sure you think about this a lot, but on the return targets. In your view, what needs to happen to get closer to those return targets, the ROA and the ROTCE targets? What needs to happen to get closer to those?
Rob Holmes: Just the scaling and maturation of the platform. There’s a lot of embedded earnings power in the platform we talked about. The $8.7 million in treasury fees is all-time record. We’re winning business in treasury. We won $1 million a year of fee business in treasury last week and beat two money center banks doing so. That’s not in that number. Like Matt said, 90% of the loans that we commit to come with treasury business. All five components of the Investment Bank are growing. In the fourth quarter of this year, the private wealth platform modernization would have been fully implemented. And we feel great about that. I think number of clients and AUM have more than doubled since we started the journey. So it’s just a maturation of the investments that we put into the platform.
