Regions Financial Corporation (RF) Earnings Call Transcript & Summary

If we could take our seats, we'd like get started. Thank you, everyone. Our second presentation is going to be a fireside chat with the senior management of Regions Financial. As many of you know, Regions is about the 18th largest bank in the United States with approximately $156 billion of assets. Market cap is over $22 billion. And the company has put up a return on equity in the most recent quarter of about 15%. And the trade is currently about 1.3x book. But many of you know the management team that's here. To my immediate left and your right is David Turner. He's obviously the Senior Executive Vice President and Chief Financial Officer. David has been with the company since 2005, and prior to that, he was in public accounting and worked on the internal audit for Regions for a number of years. To his left is Deron -- I think I got it right this year, Deron Smithy, the Treasurer for Regions and heads up the liquidity and capital planning area for the company. And he's been with Regions since 2008, and prior to that, he was with Wachovia. And to his left is Ronnie Smith, Senior Executive Vice President and Head of Corporate Banking. He heads up all of the corporate banking efforts for the company and running them with the company since his management trainee days, I'll just say, since the early '80s.

Yes, that's fair.

And we'll leave it at that. We were in the same vintage. And so with that, let me come over with some questions.

Again, thank you, guys, for coming. And everyone here, this is great to have you in person. This is, for many of us, the first time back in the saddle, so to speak. And maybe we should start, David. Obviously, bank [indiscernible] products [indiscernible] economy. Can you share with us what are you guys seeing, and maybe, Ronnie, you, too, on the corporate side, what are you guys seeing in your footprint? Because you guys are located in some of the best markets in this country economically speaking.

Yes. So first off, thanks for having us. Good to see everybody. I like the most of you. That's a joke. [indiscernible]. So where we operate, we were kind of one of the last areas to really close down and the first to reopen from the pandemic. And so our markets are very vibrant. We're seeing migration of people really coming from other parts of the country into states like Texas and Tennessee and Florida, where there's no income tax. And so we want to be the product of receiving that growth opportunity. If you look at our loan growth over the past 10 years compared to our peers, we're one of the lowest -- slowest growing banks. A lot of that was done intentionally to derisk to really focus on risk adjusted returns. And as a result of that, our return on tangible common equity's one of the higher ones in the peer group. Now we've kind of gotten through all that. We have an opportunity to really take advantage of the opportunities that we see in our market to grow with an expansion of people migrating in, business growth. And I think we have opportunities really for loan growth that we have not seen thus far. We have a couple of acquisitions, I'm sure you'll have a question or 2 on that in a minute, that I think also can help us from a growth standpoint. But Ronnie, you may want to add specifically on the business services, what we're seeing.

Sure. So the market is good, as David said, and maybe we do have a bit of a head start, but it really gets back down to the segment and the industry. If I -- for instance, if I were to look at the industrial construction segment, we see a lot of strength there. There's been lots of demand for construction, whether that's aggregate or whether that's lumber, and that's certainly important to the markets that we serve as well. But I would say, overall, we're seeing strength, we're seeing improved demand. But if you get to the right segments where there are pressures around supply chain issues, our labor challenges, we're not seeing as robust opportunities there as we are in the other areas. But generally, overall, I would agree completely with David. It's a great footprint to be in. We see really nice opportunities and see some upside on the balance sheet side for ourselves.

I forgot to mention, if you have questions, please, even though it's a fireside chat, we do want questions from the audience as well. And maybe shifting a little bit to the balance sheet for a moment. The deposit growth for you and your peers has been incredible when you think about it. Can you kind of decipher, and maybe Deron as well can talk about this, how much of it is due to the stimulus plans that have come out of Washington, quantitative easing, which we're going to hear about very soon, thinking that's going to change? Just what are you guys seeing versus core old-fashioned deposit growth versus the elevated growth that we've all seen because of what's happened?

Yes. So there's no doubt the stimulus programs -- multiple programs have created the surge of deposits, $35 billion, $36 billion for us. It's been in consumer, it's been in business service, it's been in wealth. We've been surprised that we continue to see deposit growth, now albeit slowing, but it's still growing. We have a disproportionate amount in noninterest-bearing, which is good from a funding standpoint. And we've always been very strong there. So we've done a lot of analysis in terms of where we think those deposits are going to go. We get a lot of questions on why do you have $25-plus billion of cash. It's better in 15 basis points. Why not put it to work harder? And if you're not careful, you can get upside down pretty quickly. We do think 30% of those deposits [indiscernible] $10 billion is -- should stay with us. And we put about $5 billion of that to work already in the securities book. We have our EnerBank transaction closed October 1. There's $2.7 billion of high-cost deposits there that are contractually locked in. So we have to let them run its course, but we'll put that to work. And then we're looking for a little better interest rate environment to put the other couple of billion dollars somewhere where the 2% tenure would be a better entry point, we think. The other 70%, I'll let Deron talk about how we think about that. That's in a couple of different buckets. So won't you take it away?

Yes. I'll just start with the bucket that David mentioned that we think is more stable and will perform more similar to our traditional core deposit book. Really, we've analyzed, as David said, the source of those deposits. And in that bucket, it's been primarily driven by -- on the consumer side, driven by new account growth and/or growth in accounts that we think historically have been very stable and very sticky. So we feel very good about that as being a nice foundation that we can lean into. And as David mentioned, we've done some liability management to use some of it. We've put some of it to work in the securities portfolio. But there's still an opportunity as we start to grow loans, certainly, the EnerBank transactions as well as just future loan growth, we'll be able to lean into that to utilize. There's another tranche at the top, so to speak, which is mostly in the corporate world, where we think it's just excess liquidity on the balance sheet that companies are holding. Today, there's not a lot of opportunity costs to keep that in cash. Obviously, as the economy continues to improve and rates rise, we do expect that, that will either get put to work more productively as companies look to expand and grow their business or it'll seek a better rate. And so we think that is very high beta or high cost ultimately. And then there's a tranche in the middle, which is another 20-ish percent of the growth that David mentioned where it's a mixed bag. Some of it is driven by PPP. Some of it's driven by growth in balances in existing accounts. And I think there's an opportunity -- we'll learn more about that population over time, but there's an opportunity for some of that to stay with us longer and, again, be put to work over time as we grow the balance sheet.

Yes. And Steve, hold on one second. We'll get the microphone to you. Thank you, [ Walt ].

Steve [indiscernible] JPMorgan. I'm trying to remember the name of your new product that doesn't have overdraft piece you talked about.

Our Bank On...

Bank On. Yes, yes.

Bank On service side.

When PNC introduced their, I think, similar products, they claimed that they had run a test and that the overdraft fees that they earned from those customers dropped 60%. And I think you've articulated [indiscernible] overdraft fees or service charges are going to be maybe 15% less than they were in '19. So I guess my question is, if you think ahead 2 or 3, 4 years, and you introduced this new product, why wouldn't you expect a bigger drop in the service charge line?

Yes. So all in, we continue to provide transparency to our customers in terms of how they want to bank with us. We have products that meet the needs of different types of customers. Customers that want to use our overdraft services and pay for that. Others that don't want to have an overdraft, they're just product for them. As we've done our testing throughout the summer, it's led us to believe that, that 15% was the right number. Now we've only had the Bank On product in for a very short period of time. So we're going to learn some more. But right now, our best evidence is that the 15% is the best number. So that's where we are today relative to prepandemic. We just -- we're trying to give you guidance that we don't think to get back there because of the things that we knew were in the pipeline, things that we were doing and the customer behavior that we anticipated. We continue to grow customers. Our account growth has been very, very strong. We've made investments in digital. We still have most of our sales coming through the branch channel, but digital transactions are picking up. And so we think they're very complementary. So if we have evidence that says it will be lower than that, then we'll tell you that. But right now, we think our 15% is our best number.

Maybe moving over to Ronnie for a moment on the commercial banking side. Can you share with us -- we hear so much about digital on the consumer side. Can you share with us what you're seeing with your customers having access for digital services to -- with Regions Bank and what kind of advantage that might give you over some of your peers that may not have that?

Yes, sure. A couple of advantages. The demand for digital solutions for commercial clients is obviously growing, and we're growing with that. Most of that falls back into our treasury management area. And so we've developed everything from mobile apps to real-time payments. And we think that, that will continue to move forward. And there will be continued demand as technology gets better along the way. The other thing that we're doing is developing the ability to take digital and drive that through our data and analytics. We've developed a platform called [indiscernible], which is simply taking all the information that we have within the commercial bank, being able to analyze the flow of cash through our company and provide potential solutions back out to our RM. So when you think about where we were a few years ago versus where we are today from technology, it's really about data and analytics and anticipating what that next need is. But not only the next need, what the next risk is. And so we'll continue to explode that on the scene across not just commercial but across our entire corporate bank and be able to also gather information from outside sources, not just internal. But that's really proven to be a powerful platform for us. And when you have discussions with clients, you're really talking about conversations they're interested in because they're already feeling the pinch, so to speak, on either cash flows or opportunities that they may have along the way. The last thing I would just mention is products from a virtual standpoint are going to become more and more important as we go forward. And so we are constantly working with our vendors, moving to cloud-based solutions and moving to more of an open banking concept as we go forward. So a lot of work that's going on in that space. And certainly, it's being demanded by the clients that we serve.

Yes. I want to go back and finish your comment because I see [indiscernible] shaking his head a little bit. What I didn't mention earlier was [indiscernible] which might be different for us than others is primacy. So our primacy is among the highest of any of our peers. Our average balance is very granular and lower. So when you have higher primacy and lower balances, you're going to have overdrafts more often. But we wanted to create products and services that people -- if they didn't want to use that service and not have an overdraft, they can do that, too. We've had it with a debit card. We're -- like Visa, the #1 debit card power score user. Our customers use debit more than credit. So when you put primacy in there, that's why we think that, that rate's not going to change, and we think our 15% is better. [indiscernible]

No, no, no. [indiscernible]

[indiscernible]

Ronnie, coming back to you. We hear, again, speaking digital and commercial, all about the competition on the consumer side from the nonbanks. Do you see much of that from the nonbanks? Do you lose -- or not lose, but are your customers going to nonbanks, not so much to the private equity sector or the traditional funding areas, but the start-up fintech and stuff? Or is it more, do you think, on the consumer side?

Well, obviously, I don't think it's more on the consumer side. I think it's making its way onto the commercial side of the platform, too. We haven't seen an overwhelming amount of pressure from the clients that we serve. But we do see the pressure and the competition on the targets that we have in the marketplace. We believe still that it's very important that we build a relationship, not a transaction. So as we think about the solutions that fintechs are providing, it's normally a transaction. It's not normally a broad-based relationship. And where we think we have an advantage is that as we develop our technology solutions, whether it's product or analytics or next best solution, is we have a complete array of products and services to talk with a client about in a much more broad way. Where we do see it flipping in from a direct competitive fee is maybe just on a loan or on a specific solution, but not an across the board where we're competing from a relationship standpoint.

Yes, up front here.

Betsy Graseck, Morgan Stanley. So a couple of questions on that. So first, just maybe if you can remind us what your tech spend is as a percent of total rev or something like that and then where commercial is as a function of that. And the with some work on your B2B solutions because it's all pretty innovative, maybe you can help us understand what you're doing to deliver B2B to your commercial customers. How much of this is in-house? How much of this is using external providers? And how are you thinking about the scale that you need and how you're going to deliver that scale? Is it all cloud? Or is it internal cloud? Or is it third-party provider? [indiscernible] road map for that.

I'll start at the top of the half. So we've been spending somewhere in the 9% to 11% of revenue, call it $625-plus million on technology. 40% of that keeping the lights on, running day-to-day; 40% new stuff that we've invested in; and about 10% on cyber. And that could change a little bit as we go through -- kind of going through our core modernization, we can talk about that, and the fact we need to change over, in particular, deposit system. So that 40% of new will go to something higher, 50% for that. So Ronnie, from a business service standpoint, do you want to take the rest of that?

Yes, I'll be happy to. So we've made key investments in technology platforms. We can talk about those for just a moment. The Ascentium acquisition that we made just a few years ago is something that we've been very pleased with. It was a $2 billion book of business from an asset standpoint, which was important but was -- just equally or maybe more important was the platform that they brought to us from a technology perspective. They are focused on financing, business essential equipment at point of sale. And not only point of sale, but once that client is developed, then that becomes the Ascentium client that we're able to sell deeper in from a cross-sell standpoint. And so the turnaround time for that platform has been just a wonderful surprise. They actually shoot for less than a 3-hour turnaround for document print. Now those are all secured transactions. And with that goal in mind, that has helped us spread that best practice throughout our company and throughout the business services area. So that's number one. Recently, we announced and have not closed yet on Sabal, which is a small ticket agency platform that really stepped in, in several ways for us. Number one, it fills a really broad gap that we had within our capital markets space. We had our Fannie license in place. We were very active with that, had not obtained a traded conventional license up until mid-summer. But Sabal also brings a credit conventional license. But more than that, they're licensed on small ticket agency relationships. And when you think about our geography, it's really based in areas where we need to have that solution for -- especially on the multifamily side. So Sabal brings the technology platform called SNAP and it actually represents a client portal or a prospect portal that they're able to tie in directly to what could be a very repetitive process from an agency standpoint. And so we underwrite those in a dual way and really excited about bringing that on board. Our projected close signing with that is before December -- before the end of this year. And so we think we'll have that on board and be able to deliver that. Today, Sabal delivers through multiple channels, but through broker channels. What we would like to see occur is to have that business delivered through our 200-plus local bankers that are in all of our markets as market leaders looking for the solutions for the development side of that. On the partner side, and it's a great question, it's a long question. I'll try to speed this up just for a bit. But we do work with outside vendors on our treasury management offerings. And we have been moving the cloud-based solutions for the past several years, which will allow us to be more cutting edge with our treasury management offerings across the board. Again, everything from mobile all the way to real-time payments. And so we're excited about being able to compete on a heads-up basis with that.

So let me add just on the consumer side. I know you directed that business services, but one of the reasons we bought EnerBank is because they had a nice technology that could offer a point-of-sale service quickly. And we could have built that technology. That would have been easy enough. It's taken us a little bit of time. But then we'd have to get some 10,000 dealers that were already there. And so when you try to figure out, do I build it or do I buy it, you really -- time is important. The strength of the technology that you can get without having to invest time has been proven. That's what we're looking to do. And we've had these 2 acquisitions. We've got Sabal. That's another technology play, too. These give us capabilities that we didn't have to serve our customer base. And we've got a couple of more that we're working on right now and not closed yet. But we're going to keep looking. So the nonbank's safe. I don't think that's any surprise -- hope it's not any surprise as that's where we want to send our capital. We much rather buy things like that instead of buying our stock back. But we'll buy our stock back so that we can keep our capital as to 9.5% common equity Tier 1. I think we've told you numerous times. So buying technology capabilities is critically important to us.

I'll take 30 more seconds and talk about just the importance of Ascentium, SBA and most recently, franchise. And so as we think about how we go to market, we really want to flex our strength on the small business side from a commercial bank standpoint. That is our market. That's the core. That's who we are. And so when you bring Ascentium on board, we have revamped our SBA group, centralized that, took a lot of learnings out of PPP from a process standpoint, have put that in a central area, have hired some really good talent to head that up for us. And the idea is to take the friction out of that SBA flow. And then an area that we've really not penetrated well is nonrestaurant franchise and those things in the market that really have a national brand, but local ownership. We've recently acquired talent once again that help develop that at one of our competitors. And he's really been able to hit the ground running. And we feel like, again, having those local relationships with national connectivity with the leaders that we brought in for that franchise piece represent 3 areas that we feel like we'll be able to grow meaningful relationships across the board in that small business area. When you put Sabal with that and give them one more tool for the toolkit to be able to refer that business to our real estate group, it really helps round out how we want to approach the small business area.

Over here. I think that's [ Ken ]. I didn't put my glasses on.

Dave, can you talk a little bit about just capital planning? And talking about Ascentium, EnerBank, the Sabal deal, you gave a little color about the capital uses that's expected and that you're going to get your way to 9.5-ish percent by year-end. But you seem to also be kind of leaving the door open for more deals in that. So can you just talk to us how you're kind of balancing what you're looking for, what the specific capital usage is of the deals that have come in, and then how you're thinking about the buyback as a remainder of that?

Yes. Sure. So 9.5% common equity Tier 1 is the middle of our operating range of 9.25% to 9.75%. We can't hit it perfectly at any quarter end, right, because you have -- you've got a lot of puts and takes. So give us a little bit of leeway on exactly 9.5%. That being said, we used about $1 billion worth of capital in EnerBank transaction. And that will get us down from -- I think we were at 10.7%. We'll be down to 9.7% absent growth through fourth quarter earnings. And so what we want to do is figure out how -- what's our next best use of capital. We need to pay out an appropriate dividend. We're generating capital, growing loans. That's important. And then these nonbank acquisitions are important to give us capabilities we don't have. The things that we're working on, what we're trying to tell you is we're going to use the capital first for those. And when we don't round out our -- get our capital down to that optimal 9.5%, then we'll buy shares to make that happen. Now I realize we have to get out of the market a couple of weeks before earnings, so we're blacked out there. That's why you can't hit it perfectly. But over time, you should expect that average common equity Tier 1 to be the 9.5%. And the things that we're looking for, [ Ken ], would be giving us a capability we don't have, a technology that we don't have. A lot of it is in capital markets. Some of it's in consumer. We've got 2 other deals, one's in each one of those. So they're just -- none of these are going to be grand slams. They're just putting the capital work better. We had been in the acquisition mode in a long, long time. And we started changing that up because we started to see opportunities to really deploy capital better to grow earnings. Not to grow earnings per share because you're buying your stock back, but growing franchise value. We think the shareholder really appreciates that more so than buying stock back. But we'll do that because we want to optimize capital. Does that make sense?

Another question. [ John ]. Over here -- I'm sorry. [indiscernible]

This question's for Deron. Deron, I'm curious how you're thinking about asset liability management at this point. Post the fed this week, it seems like we're on a path to potentially higher short-term interest rates. And I know you guys have done a fantastic job positioning the bank for down rates. You've taken aggressive action to reposition the balance sheet for what could be higher rates. I'm curious, where do we go from here in terms of the positioning of the balance sheet? And second, given all the liquidity that's built up in the system, as you articulated, a lot of it is probably going to be with us for an extended period of time. How do you -- can you maybe compare and contrast your view at this point how you think this rate cycle could evolve from a deposit perspective relative to what we saw the last one?

Yes. So you did a good job of actually answering the question for the first part of it. Now the hedging program served us well in the down rate environment. We've had to really think about those hedges were longer term. We had to think about when is that transition that we would expect from low rates to a normalizing rate environment. And so we've kept that protection in full force out through '22, but we've repositioned out on the horizon a bit for eventual rate increases, we think, starting in '22 and continuing through '23 and '24. So I -- frankly, I like our position as we sit here today. We're thinking about it in the context of growth. Also, EnerBank changes bring some fixed-rate assets and gives us an engine for growth in fixed rate assets over time that we'll have to make some modest adjustments for. But in general, we're positioned to have a nice tailwind when rates rise, and that's driven a lot by the deposit portfolio. As you know, historically, we've had low betas, very sticky deposits and less sensitivity. I do expect that this next go around that core -- no pun intended, but that core component of our deposits will perform similar to last time. In fact, I think it could potentially be even a little better than that, given that some of the growth we've seen on the consumer side has come through growing customer operating accounts, NIB, savings, things that have historically obviously been less rate sensitive. I think there is a -- as I mentioned, there's a large component of this deposit base that is going to be very rate sensitive. And so we've tried to position the balance sheet in such a way that as it finds a better home or requires higher rates, that it doesn't materially change our asset and liability management position, which is why we have it sitting in cash. So we think, though, there is a good opportunity as rates are normalizing and as the economy continues to grow to put additional deposits to work that haven't already been put to work in a way that is enhancing our returns over time. Because I do think there is an opportunity for outperformance versus what our expectations are in terms of where we've seen deposit growth.

So one of the things we wanted to do is we put a slide in our earnings deck. I forgot what -- I think it's Slide 18 in our deck, but tell me if that's wrong, that just shows kind of the growth in NII that we expect over the next 3 years, 4% to 6% on annual -- compound annual growth rate. And it really is showing how we think about the hedge program coming to an end and being handed off to loan growth higher rate environment, EnerBank transaction and things like that. Because we wanted to keep our -- we need to have a growth profile. And I think a lot of people misunderstood how we were thinking about our hedging program [indiscernible] 23, 24, 25, we kept them through 22 because we don't think rates really start to rise until the back end of '22. As a matter of fact, I think we have like 1.5 moves baked into our thought process there. If you look at our sensitivity, at least through the second quarter, all in relative to our peers, we're kind of in the middle of the peer group. And that's with a pretty high beta assumption on these surge deposits that Deron mentioned. And if we're wrong, we're wrong, probably because we're a little conservative. And we actually retain them and they're lower cost. So we've always had a lower beta than everybody else. We don't expect that to change. And so we welcome higher rates if done in an appropriate manner and hopefully has said that get behind and have to move too fast and put the economy at risk. That's what we're watching for.

[indiscernible]

On the surge? Yes, deposit beta on the surge deposits, we're assuming 75% in total. Obviously, that's a mixture of very low and very high, but it's 75% and all the guidance in modeling.

Yes. When you're not here and you're back in the office as a management team huddling around the conference table, what's the topics that are getting the most airtime and the [indiscernible] about the future of the business?

Yes. So I think one of the key things for us is growth. So how do we grow? Regardless of what the environment is, how do we grow, how do we take advantage of the markets that we're in. We're in fabulous markets. Again, if you look at over the past 10 years, we've been one of the slower growing banks and intentionally talking about loans in particular. How do we take advantage of the markets? And how do we grow? And how do we do it responsibly where we're getting paid for the risk that we take? How do we maintain the returns on capital that we want to have, which is top quartile returns? We used to be at the bottom. We're now -- this year, we'll probably be #3 or 4 at that time we get to the end. And so how do we maintain that and how do we grow, what do we need to bolster opportunities through acquisitions and the leveraging of our capital that we're generating without having to buy stock back? What can we put it to work in the nonbank acquisition that would be helpful to us? Those are -- that's kind of the -- probably the biggest one and two that we talk about. Anything else to chime in?

I think -- we've constantly hit on the risk management side. It's critical. We still have to run the right to do what we do every day by being really strong risk managers. And so growth comes and you have growth opportunities, but you have to do it in a way that you earn the right to continue to grow.

Yes. [ Walt ], over here.

Two questions. One, should we make off your stress on nonbank M&A as meaning that you're not interested in bank M&A because as you know, bank investors aren't particularly fond of those. So would love to hear your kind of updated thoughts around bank M&A. And second, just in terms of deposit betas, how do you think this cycle could be different given in 2015, you had 6 years of 0 rates. Here, we're going to be having a rate cycle within 2 years of when the fed went down. Neo banks are very different competitively. So would love to hear your thoughts in terms of could we be negatively surprised on deposit betas because I think the consensus view is it is going to be better than last cycle.

So I'll take the bank M&A. We've said pretty consistently that we really want to use our capital to focus on nonbank opportunities, things that really can give us capabilities we don't have that our customers need or technology that we'd like to have that can make things better for our customers. And that's still the case. From a bank standpoint, it's not our focus. We do a lot of analysis on banks constantly. But you hit the nail on the head, investors have been too keen on that, in particular, for a right-way transaction where you're having premiums that used to be 20%, 30%. I think when you get over 10% premiums, the market has not taken kindly to those type transactions. There have been a couple of MOEs that have been received okay, but trying to do an acquisition with a bigger premium than 10% has been problematic. As a result, you don't have a lot of sellers that want to sell without getting a reasonable premium. And so we just haven't won. They're hard. Bank acquisition is very hard. You got to put 2 cultures together. The larger the transaction, that's really difficult. And it's distracting, and it takes us away from what we really need to do to serve our customers. And when we can grow our company and grow our return, the way we've been able to demonstrate and we can continue to do that, then there's no reason to get distracted. And so that being said, things can change over time, and we can modify what we're going to do. But right now, that's not our focus. Do you want to talk...

Yes. On the deposit side, I would just say the nature of our deposit book really drives that performance and gives us confidence in how we think it will perform in this next cycle. Over 40% of our portfolio is noninterest-bearing. And our strategy, our relationship strategy is focused on getting operating accounts on the commercial side as well as good just core checking accounts. On the consumer side, we have a very granular portfolio. And as David mentioned, high primacy on the consumer as -- and it is dominated by noninterest-bearing. So when you think about -- that's going to drive half of our beta experience, and we've never tried to grow deposit dollars by being aggressive with pricing. And so the -- I believe that leads to a longer term, sticky, more stable and more predictable deposit base through the cycle. And I think, again, I think our experience over the last 2 cycles has been similar. I do think that just liquidity in the system might hang around longer. And that could lead to a portion of the deposit base seeking a better rate. But I still think the core position is going to perform similar to last time.

I think that really asked about the neo banks and the competition and those kind of things. I think the relationship model that we have makes a difference. So in our markets, we're a dominant player. In 70% of our markets, people bank with us for a host of different reasons. We have a lot of services inside of a customer. As long as we're continuing to provide the technology, the service that they expect, we don't have to worry about anybody else, neo banks or anybody else. So we're very, very good at customer service. It's critically important that we maintain that. It's critically important we continue to make investments in technology to ensure we stay at the top of that. So our ratings on mobile, digital customer service scores are all high, so we think we're in pretty good shape there.

We have time for 1 more question. [ John ]?

So thanks to Zillow, we've got a focus on the housing market again. So can you talk about the iBuyer's impact perhaps into your Southeast market and how you're insulated against the potential slide in home values as a result of the impact of the -- from the iBuyers?

Sure. So if you go and look at the housing price index, housing prices were up pretty dramatically. Especially if you go to places like the beach, you can see that housing prices have now surpassed where they were in 2005 and '06. And so you go, how do you protect yourself there? We put in -- through the last crisis, we learned a lot on, one, we don't do 80-20 loans and have no real equity in the deal. We also -- when we see housing price increases move too fast, we have restrictions on LTV. So the faster they move, the lower we make the LTV. The idea is to always have real equity in the deal because we do know things are going to settle down in certain places in the country where the prices just got inflated. And they're going to settle back down. We want to have equity still in the deal when that happens. And so being more proactive, we do this by MSA. And so we can tell you exactly what's happened in real time. And it's a learning that we got from the destruction of the great financial crisis. So we think we're better for it. That's one good thing that came out. Pardon me?

[indiscernible]

Well, it just depends on how fast the particular housing price index may have moved. So you may start out at 80%. And if it moves too fast, you go down to 70% and you go to 60%. So you're going to adjust so that you get to where you think that real equity is. And so none of us know exactly where it's going to settle.

[indiscernible]

At least. At least.

And with that, we've run out of time. So David, Deron and Ronnie, thank you very much.