Goldman Sachs (GS) Presents at the Bank of America Merrill Lynch Future of Financials 2016 Broker Conference (Transcript)

Goldman Sachs Group, Inc. (NYSE:GS) Bank of America Merrill Lynch Future of Financials 2016 Conference November 15, 2016 10:00 AM ET

Executives

Harvey Schwartz - EVP and CFO

Harit Talwar - Head of Digital Finance

Analysts

Mike Carrier - Bank of America Merrill Lynch

Mike Carrier

I'm Mike Carrier and I am the broker asset manager and exchange analyst here at Bank of America Merrill Lynch. Before we get started with our next session I just wanted to throw up one of the audience polling questions just given the environment over the past week. So based on the backdrop and the election outcome what's your outlook for the capital markets over the next one to two years? So one, little to no change in regulation, flattish revenues and stable returns. Two, little to no change regulation but improving revenues, 5% in returns, 10% plus with GDP growth. Three, modest improvement in regulation, revenues 5% to 10% and returns 10% to 12%. Significant improvement in regulation, revenues 10% plus and returns 12% plus. I will give you five seconds.

All right and the results. So the vast majority 56% modest improvement in regulation with revenues 5% to 10% and returns 10% to 12% and then second is significant improvement in regulation with revenues at 10% plus and returns 12% plus. All right thanks for that. So it's my pleasure to introduce our next company Goldman Sachs and presenting today is Goldman's Chief Financial Officer, Harvey Schwartz and Head of Digital Finance, Harit Talwar. Harvey has been in his current role since 2013 and prior to that he was Global Co-Head of the Securities Division and in addition he sits on the firm wide risk regulatory reform and capital committees among others. Harit joined the firm in 2015, and is leading Goldman's Digital Consumer Banking Initiative which has created a lot of interest in the industry.

Prior to joining Goldman, Harit was President of US Cards Division for Discover as well as a Chief Marketing Officer and Member of Discovers' Executive Committee. Goldman has been able to navigate the revenue and regulatory backdrop by managing its cost structure and capital base relatively well and still generating a double digit return on capital. Based on recent events that can impact the outlook, investments being made in digital banking and the firm's ongoing focus on cost and capital management it will be interesting to get Harvey and Harit state on the outlook. Thanks guys for being here today and alternative for you guys a short video and a demo related to Marcus, the Online Lending Initiative and then we will do some Q&A.

[Video Playing]

All right. Thanks. That is helpful color I think in an area that a lot of people have questions about [indiscernible] and it's a relatively new initiative. So Harit maybe first tell everyone maybe about yourself and what drove you to come to Goldman Sachs launch Marcus?

Harit Talwar

Sure, Mike thanks for having us over. I've been in consumer financial services for more than 30 years. In Asia and Europe and of course in the U.S. and most recently as you said I was President of U.S. Cards at Discover. So now in terms of what drove me to join Goldman Sachs because I was very happy at Discover, it's a great company. Right from the first conversation I had with the firm and trust me I had quite a few conversations. I was really struck by how methodical and thoughtful the firm was in evaluating and pursuing this opportunity and the opportunity is very exciting. Leveraging the leading financial services brand and addressing a real consumer need and the core strengths of the firm in technology, risk management data and client centricity which in our business we call it customer centricity. These are in the DNA of the firm and very highly relevant in the business that we are building. So that's what drove me to the firm.

Mike Carrier

Harvey, can you tell us about how the firm approached getting into the consumer lending idea, how it evolved maybe over time and how you came to the conclusion to hire Harit?

Harvey Schwartz

So really the beginning of it goes back to a management offsite we have several years ago where like many offsites we have discussions about are there potential things we can do to be doing better, how do we think about cost structure, all the things you would think would be on that list of the discussion items and one of the things that we spent time on was the obvious growing trend into digital broadly and then more narrowly what was happening in digital finance and then the question was raised whether or not given the strength of our balance sheet the fact that we're a bank whether or not as essentially the world converged with digital finance and FinTech lenders coming in whether or not we could play a role and a couple things obvious, a couple of things about that were obvious as Harit said we feel very confident about our technology skills.

We feel very confident at our core competency and risk management, the obvious piece that we didn't have was a long standing experience with this consumer base and so we established a search and we'd be looking for all the things you think we'd be looking for. We're looking for a long history in this space. Some of it significant credentials kind of live the cycles, understands all the prerequisites but I would say in our discussions with the Harit obviously has all those prerequisites, the one thing that truly stood out to all of us was his focus on the consumer because we wanted to figure out a way to provide the consumer with something that was new and added value to them and he demonstrated for lack of better words the most vision on that and our discussions and so it's quite natural and we've been thrilled to have him as our partner.

Mike Carrier

Okay. And Harit maybe how do you think about the market opportunity the typical new customer that you'd be targeting and how big is the market opportunity?

Harit Talwar

Sure. So the market is very large and it's growing. So that's always a good thing. The unsecured consumer loan market in the U.S. is roughly around $850 billion, now off that market we are focused on millions of consumers who are credit worthy so FICO of 660 plus responsible who have typically $5000 to $25,000 of credit card debt and are paying very high interest rates on that debt. It is that segment that we believe we will add significant value to and we know that 70% of those consumers are unaware of better debt management options. So the opportunity is large and deep.

Now what is very important is that what is our approach to the opportunity. We want to be very deliberate. I've been in the industry a long time and as you know in unsecured consumer lending to deliver attractive risk adjusted returns through the cycle, it's very essential to be very deliberate and that's what we are going to be and right from the first day the senior management in the firm has emphasized exactly that that this is an attractive opportunity but let's be deliberate and let's not be in a rush.

Mike Carrier

Harvey, just in terms of the competitive advantages that you see with Goldman you’re taking this opportunity maybe how to build market share and given that it's competitive maintaining that that you’re?

Harvey Schwartz

Sure, well it goes to back a little bit what I was saying before and what Harit just said I think it's critical it's a very large market. So there's certainly room for incremental value providers. In terms of our competitive advantage in addition to the things we talked about earlier the core competencies in risk and technology and obviously everything Harit and his team were brought on, I think the single most important thing is that we started with a white sheet of paper and that white sheet of paper approach we don't have branches, we don't have legacy infrastructure, we don't have legacy business lines. It really allowed Harit and his team to step back, engage with consumers about what they would really like in a loan product and starting with that information and their feedback in terms of I think in the video we call the pain points allowed Harit and his team to develop something again a white sheet of paper to address their needs and Harit can you walk you through the some of the product aspects.

Harit Talwar

Sure. And I think it's very important the benefit of a startup but with 147 years of expertise and history. So as Harvey said we listen to around 10,000 consumers and what we heard was loud and clear. They want real value, they want it simple, they want it transparent, they want it customizable to their situation and needs and they want a great user experience. So against these sort of things that we heard what are we delivering? Our interest rates will be typically 300 to 400 basis points lower than what customers would be paying typically on their credit card debt. So there's a real savings for them.

Our rates are going to be fixed because customers don't like changing rates particularly in the environment we're heading. Our loans are going to term loans so fully amortizing to use our jargon so that consumers are actually able to pay down debt and best of all no fees whatsoever and no fine print about no fees, there are too many players who claim no fees but then have all kinds of asterisks . We have no fees ever.

We have as you saw in the video a great, very intuitive user experience because we've created it with feedback from customers and when they do call us. The talk to a live loan specialist and not machines. So we are very excited with this package but we went a step ahead and we brought in some innovation, and all based on consumer feedback. So for example we heard from consumers that they like to pick the date of the month when they will make monthly payments. Second, we heard from consumers they think in terms of how much loan they want as you saw in the video and how much they can pay every month and let the term of the loan be the output.

If it is 29 months, if it is 42 months, if it is 33 months they don't like to be straight jacketed into a 3 year loan or a 5 year loan, and credit worthy responsible consumers say I pay you on time all the time and when something happens life happens the banks tend to be so punitive. So we have a feature which actually is very good for credit quality also that if customers pay on time the full payment for 12 months they earn so to say a pass so that in case they need to defer a payment for one month they contact us and they can do that at our cost.

So for example if it was a 34 month loan it becomes a 35 month loan. Now we've been able to build all these features and this experience because as Harvey said we have the core benefit of our balance sheet and building a new non-legacy modern technology platform. So that's what we’re very we have a excited about.

Mike Carrier

Okay. When I think about maybe one of the financial aspect. So how do you think about returns in the business. I mean maybe a timeframe. You know getting you know to maybe a target?

Harit Talwar

Sure. I think from all my experience and as you know in unsecured consumer lending in the U.S. for the prime credit space returns typically are 3% to 4% pretax ROI. Equity requirements are typically 9% to 11% which translates to around high teens ROI. So these are typical industry returns for consumer unsecured lending and we expect to mirror those returns over time. We've built the business, we will ramp it up over time and we'll get to those returns. I think it's important to point out that we're not chasing returns by setting silly targets. We will get to them and we're very confident that ultimately this business is going to be accretive to the firm's earnings and accretive to the firm's reputation.

Mike Carrier

And then maybe Harvey, last one on this topic. This is the first time you are really facing consumers and that comes with different risks you know perfectly regulatory risk. So what are the biggest risk factors that you guys see and how are you managing those?

Harvey Schwartz

Well I think you're right to point that out. This is a new type of engagement with consumers and we do engage consumers everyone knows about our asset management business through GSAM we have through third party distribution millions roughly 5 million of consumers that we deal with. This is new and one of the reasons why we've sort of -- we adopted this mantra very early of we want to crawl before we walk and we want to walk before we run and we didn't set any targets for the business is the best way to ensure that the business is robust sustainable, mitigates risk is to move at a slow pace.

Perhaps equally important is the fact that Harit and his team have designed this in a way with consumer input by all the features he went through, no fine print, no fees, the flexibility if we deliver to the consumer we're clearly aligning ourselves with the right regulatory priorities and again it goes back to the white sheet of paper and so you know we don't if you install them [indiscernible] one of the things we agreed on very early with Harit and the team were things like okay, we're not establishing a launch date. The reason we didn't establish a launch date is because a launch date could force you into making decisions around implementation that you otherwise wouldn't want to make without a launch date. Obviously, the team wanted to get to market as quickly as possible but for example one of the things that we demanded of the team very early on was no manual processes anywhere. In the firm, outside and so all these things really contribute to the business being more robust over time and so that's how we thought about the risk factors. And I demanded -- my only creative contribution to the entire project was the phone number but that's probably because I'm 52 and I can't sign -- you can't call anybody but that was my only contribution I think Harit and the team did everything else.

Mike Carrier

Let's bring it on polling question for the next one and then we'll get into a broader discussion. So what do you think about Goldman's online lending strategy market Marcus by Goldman Sachs. What is positive, you make strategic sense given skillset returns in the business, two, neutral view, a good idea but just more a matter unless there is an inorganic growth and then three, negative view shows the challenges in the core business. And we will give you five seconds.

Okay. And results all right so 51% neutral view a good idea but too small to matter unless there is inorganic growth and coming in second is 26% is the positive view make strategic sense, given the skillset and returns to the business.

Right. So maybe just a little bit broader Harvey, outside of Marcus how are you thinking about growth across the firm? You just given the environment that we’re in.

Harvey Schwartz

Well so obviously all this have seen it's been pretty stop and start for the last couple of years and so if you think about the business across the firm in terms of how we're positioned for growth, we feel quite good whether it's in investment banking and there are performance over the last several years, institutional client services and the global strength of both equities and fixed income where the growth we've seen in asset management, where we hit record at US, his past quarter but we've really been very conscious of the fact that this has been a very uneven environment for the last several years. First quarter, a year plus ago. We have a 14.7% ROE, then we have the first quarter of this year and so probably none of that is surprising given the economic environment around the globe for the last couple of years but what we have done during that time period is ensure that our franchises globally are positioned for an improved environment. But again, we have recognized it.

So we've talked about all the cost initiatives, you heard about the cost initiatives that we put in place this year with the $700 million of run rate savings that we have executed and obviously we have stayed very, very focused on capital and that has all been about finding the balance so that we are very well-positioned with our clients if the environment improves and we have lots of operating leverage.

Look, third-quarter revenue is $8.2 billion. You saw a big uptick in fixed income across the industry, third-quarter not seasonally the strongest. We are able to generate an 11% plus ROE. So I think we feel very well-positioned. The only thing I would add to that too in terms of the positioning is we feel very well-positioned competitively globally.

Mike Carrier

And then maybe just on the environment, you mentioned 3Q pretty decent trends despite typical seasonality. Has that continued into the fourth quarter in terms of the environment?

Harvey Schwartz

So the client connectivity feels super strong. I think the world is a little bit uneven obviously but I would say that again the client feels quite good coming into the US elections as is the case in a normal election environment, sort of a bit of a decline in activity levels, that is to be expected. And then obviously as you would expect post the election which I think came as a surprise to obviously all the pollsters and everyone, a big uptick right alongside the election. Now we are only talking about several days but I think that institutional clients, corporations, investors are all reassessing what do these things mean in terms of the long-term forward profile for activities. So we are seeing some of that adjustment.

Mike Carrier

And then I know it is early but based on the election and some of the policies whether it is on pro-growth or whether it is some rolling back some regulation, how do you think about that for the business in terms of is it more of a potential revenue opportunity? Is it more of an efficiency meaning less cost, you can focus more on innovation? When you look at the environment that we are entering, how do you kind of pull all that together?

Harvey Schwartz

So why don't I split the question because I think you said how do we think about growth and then how do we think about the regulatory impact and so why don't I just split those two pieces.

I think in terms of the growth, the numbers in some of the data have looked better but yet large parts of the world have been in negative interest rate territory for a while and in very low rate policy. And so as we talked about many times, we don't want to view that policy globally or locally certainly as normal and so to the extent to which we can get back to a more normalized rate environment when we are normalized economic growth globally, that should positively correlate for us. And we root for growth. So I think we will see over the next several months and years the extent to which the policies are supportive of growth, it should translate quite well.

Now in terms of the regulation, we have talked about this a lot, Mike, the US regulators and the US large financial institutions have done an incredible amount of work since the crisis whether it is on capital, liquidity, clearing, reducing systemic risk, focus on derivative notionals, establishing initial margin rules, all that work has been quite an achievement. We will see but I think it is going to take time in terms of how that evolves. But I think a lot of work has been done and again we will see how this all evolves over the next several years.

Mike Carrier

And then maybe just on you guys mentioned on the digital side but when you think about technology and where you are investing, how much is it on the regulatory side versus how much is it on the efficiency side versus the innovation side? And so whether it is something like online lending or big data or any of those areas that could potentially drive growth ahead?

Harvey Schwartz

So when we look at it, we don't really differentiate -- I don't want to put words in your mouth but it almost sounded as though you were saying okay, the regulatory side is about -- almost sounded defensive. And the way we think about deploying the technology really and our skill set, I think most easily described really comes into three ways.

There are ways where we think we can just make the Firm better at what it does. So having the one technology platform and the ability to aggregate data should over the long term make us better at being regulatory compliant. It enables us to develop the capital framework that we utilize which we can get into the system early so we get years of knowledge building in the Firm. I don't view those things as defensive. We don't feel complying with regulations in any way as being a defensive thing. We think it is being very proactive.

But I would just call those internal investments that allow us to run the Firm as best we possibly can. Then there are -- and all these things overlap. They are not as discreet as I am describing them. Then there is a whole plank for lack of better language which is dedicated to how can we make the client experience better? This would be a fantastic example today of what Harit described by truly bringing together from whole cloth in a white sheet of paper a completely new product which we think differentiates ourselves with consumers. We put a lot of energy into that.

And then there are other ways that we utilize technology and as everyone has talked about, we often develop our own technology and then we think it is best developed in the Firm but then we will take it outside of the Firm or we will develop things like Marquis, client interfaces, different than this but along the same plank. And so that is really how the team spends their energy.

Mike Carrier

Then on a global basis, the US firms have been gaining market share over the past few years. When we look at the revenue side and I don't know if it is maybe where Goldman started from, but it seems like the market share shift is maybe even less pronounced. But just wanted to get a sense, is it from a revenue standpoint or maybe the return standpoint like the business that is coming up for grabs, like is it that attractive? And so where do you see your market share particularly in trading but also on the banking side?

Harvey Schwartz

I mean on the banking side, I think our investment banking team has done an extraordinary job I think by any measure if you look at over the last several years. If we were sitting here four or five years ago, likely one of the questions would have been okay, smaller firms are coming, boutique firms are coming into M&A and they are going to take lots of market share from firms like Goldman Sachs and what you've actually seen is our market share grow as M&A came back. And so I think when you think about what our investment banking team is able to achieve in terms of their disproportionate market shares across the whole suite of services that they are engaged with corporate clients with, I think we feel quite good about that.

I think when you go to areas of the Firm like ICS where not all revenues are created equally because you are making capital commitments very often in the business, we are obviously focused on market share but we are certainly not focused on market share at any cost.

You have to think about market share over long periods of time and so we measure it very carefully in the new regulatory world there is more data, you can get more transparency into what your market shares look like. Obviously we engage our clients in live dialogue. I would say we feel quite good about our market shares but we are very focused on the returns over the long run and I think that is why you've been able to see us produce roughly an 11% ROE for four years running which has been at the top under the top of the industry.

Mike Carrier

Let's throw up one more polling question and then we can open it up for some questions. So what would get you more interested in investing in Goldman's stock? One, a strong revenue backdrop; two, normalizing regulations and ability to return more capital; three, investing to drive improving returns; and four, additional expense reductions? So give you about five seconds here.

Okay. The results. So one, 51% of you say a strong revenue backdrop and a close second is to normalizing regulations and an ability to return more capital. So seems to make sense.

So let's open it up for some questions from the audience and then we can continue.

Question-and-Answer Session

Q - Unidentified Analyst

So I have a question. So just make sure I understand this. So the loans are fixed-rate, correct?

Harvey Schwartz

Yes.

Unidentified Analyst

So having covered financials for 20 years and consumer financials particularly, we have seen debt consolidation schemes in the past where people try to take high revolving debt and consolidate it at a low rate and pick off essentially the best creditworthy customers. And then when we go through a cycle because of the lower rate, you have less cushion from an NIM perspective to absorb higher losses.

So I guess my question is what gives you confidence that we are late in the cycle probably that as you go through this and build up these balances that you are going to be able to cherry pick the best credits without running the risk that you are not allowing yourself enough margin expansion when credit starts to inevitably go through a cycle?

Harit Talwar

So I think that is a great question and you have been covering consumer financial services for 20 years I have been in it for 30 years. I have got enough scars on my back so I agree with you. I think we are very eyes wide-open that we know that we are currently in a relatively benign environment both from a credit and interest perspective for consumer lending and the environment won't continue to be that.

And our credit policy, our pricing, our models, we have made sure will deliver sustainable returns through the cycle. We are very particular about that. We are deliberate about that, we are very conscious about that. So yes, there will be cycles. Yes, there will be pressure on net credit margin but we are confident in how we are targeting and how we are underwriting and building the portfolio.

The second thing I would say you talked about net interest margin of cards versus loans. Actually at a portfolio level, the net interest margin of cards and the net interest margin of personal loans is remarkably similar. It is at the individual customer level that a customer who is borrowing on cards pays a much higher interest rate because in a card portfolio as you know there are lots of transactors who don't pay any interest and there are lots of introductory balances which don't pay any the interest. Whereas for us in a loan portfolio, we can offer a great deal to the consumer because we don't have to balance off against those parts of the portfolio.

Mike Carrier

Any other audience questions? Okay. One right here.

Unidentified Analyst

I guess it is maybe a little of an extension of that previous question. But we have had some of your competitors, Discover as well as obviously OneMain out there with management commentary talking about how there is just way too much access to unsecured credit in the market generally speaking. Obviously it had a significant impact on OneMain. How do you think about that and how are you absolutely sure you are getting the right customers in?

Harit Talwar

I think it goes back to what Harvey said and I've been saying that we are going to be very deliberate in how we ramp up. I don't want to comment on others but in unsecured consumer lending, sometimes people make mistakes because they are chasing growth to replenish existing runoff and things like that. We are in a great situation where anything we do is incremental building. So that is one.

Second, we have already strong differentiated product which differentiates from the two segments Harvey talked about what is sort of called the fintech lenders and the large banks because we can use our balance sheet and our technology. And we do think our brand will help us in selecting a better quality credit quality customer because of the value that we are going to deliver to them.

Yes, there is competition, there is commentary. We are very cognizant but we are building it in a very prudent way.

Unidentified Analyst

You guys invested a lot of time and technology and branding in this effort so presumably it expands beyond just unsecured loans into cars and who knows what else. And I guess at some point the liquidity becomes a bottleneck. So as you think longer-term about expanding this into more and more things, how do you fund that?

Harvey Schwartz

I'm happy to take that. As of the last quarter we had $214 billion of liquidity on the balance sheet and so from a funding perspective we certainly have the ability to fund the business and grow the business. It is unrelated, doesn't link specifically to this but we acquired the Deposit Platform earlier this year which we would have done regardless of whether or not we were deploying Marcus because we continually focus on just diversifying all the funding sources at the Firm and it just seemed like a perfect way to continue that strategy of diversification.

But I think we would be talking about a pretty high-class problem if we were so successful in this space that we were feeling funding constrained. And I think most importantly because of the dynamic nature of the way we manage capital and liquidity in the Firm, if we felt like the greatest need from a client perspective was to fund this business, then we would figure out how to deploy those resources to this business. But I think where we stand today that would be a pretty high-class outcome.

Unidentified Analyst

I guess the essence of the question was [indiscernible] long term how comfortably funding [indiscernible]?

Harvey Schwartz

Well, this business sits in the bank so currently funded with deposits but it could be funded with wholesale funding also. The economic works. That is why I was trying to draw the distinction between the acquisition of the Deposit Platform in this. But we could fund this with -- certainly we could fund this with wholesale funding three, four, five, 10 year funding. The economics work.

Mike Carrier

Any others in the audience?

Unidentified Analyst

Just with respect to your commentary about some of the smaller firms and boutiques, there was a proposed merger of a couple of them yesterday out there. Is that something that you see going on a going forward basis given the new environment and at some point do merged boutiques start to take on enough critical mass that you have to rethink how you think about them competitively?

Harvey Schwartz

I don't want to say -- look, in all of our businesses regardless of what part of the Firm, we are always looking at the competitors, thinking about the competitors but really get the end of the day the most valuable thing you gain from looking at the competitors are looking at where do you think they are doing things strategically that you could learn from and where are they making mistakes that you could learn from and hopefully avoid? And I am assuming that everybody looks at Goldman Sachs that way in terms of the competitive basket.

We have 100+ years in the investment banking business and I think what gives us the performance that we have in these kinds of cycles is that commitment to the clients.

I told this story before, I have never told it in a large group but I worked in banking over a decade ago for a period of time and there was a large merger announced and I went up to the banker working on the transaction and I said just out of curiosity, how long were you working on that transaction? And he said, I think I had my first conversation with the Board seven years ago.

So staying committed to the client, being in the Board room, working with the client over long evolution, that is what really differentiates you in the business. I think if firms feel like they can have a better presence by consolidating, they will consolidate. We will be successful if we stick to our strategy of being the most valued advisor in terms of the guidance we give those clients when they are making the most important decisions. I think that will ultimately drive what differentiates firms and I think that is what has driven our differentiation.

Mike Carrier

Any others? I have one or two more. So first on Brexit, that kind of came and went. Just wanted to get your sense when you think about it from like either a competitive standpoint or a cost standpoint if it is a hard or a soft Brexit, how are you looking at the options for Goldman?

Harvey Schwartz

Look, you have heard us say a number of times we are contingency planners so this falls into the contingency planning bucket. It is very difficult at this stage given we are so early in the process how it will evolve. The most important thing about all of our contingency planning is that we ensure that we are maintaining our presence in Europe and we are able to be completely as committed in the future as we are today to all of those clients across Europe. Obviously it is an incredibly important geography for us and so we are very, very focused on it.

We have made no decisions. Periodically you will see things in the press, that is not accurate. We have made no decisions with respect to Brexit, we are not moving any people. We are focused with everyone involved in terms of the process that we can aid as constructively as possible in ensuring that the process has a smooth transition and that is on the one thing we think is obviously critical. But I don't think that is a unique thought.

Mike Carrier

And maybe last one. The industry has gone through a ton of change the past seven, eight years and everybody has been managing cost, headcount, technology, but culture and particularly for Goldman just given what the business is and where a lot of the changes have taken place, it is always a question, tough to gauge. But how are you managing that? Has it changed significantly at the Firm?

Harvey Schwartz

No. I think one of the things that we spend the most time talking about with our partners really and the leadership of the Firm is how do we protect those things that are best about the Firm and best about the culture.

We just announced partners last week and I can tell you that that partner process was as disciplined, teeth gnashing, people were passionate as they ever have been. And so I think it starts there but it extends very far down in terms of we have to stay investing in our people, we have to be a leader in how we do that and if that is the case, we will continue to attract the best and the brightest that want to come to our industry. And so far look, touch wood, we are never complacent about it but so far we have been able to do that. So we feel good about it. But it is a relentless commitment.

Mike Carrier

Any final questions in the audience? Okay. We will wrap it there. We will have a breakout session in Alcove on this floor. I just want to thank Harvey and Harit for their time.

Harvey Schwartz

Thank you, Mike.