SVB Financial (SIVBQ) 28 Oct 172017 Q3 Earnings call transcript

Welcome to the SVB Financial Group Q3 2017 earnings call. My name is Nicole, and I will be your Operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. conference recorded. this that note is being Please I to O'Leary. Head like to call over turn the of would now Investor Relations, Meghan Ms. you may O'Leary, begin.

and joining Nicole, everyone, today. you, Thank thanks, us for

Beck, Becker, quarter third financial of results joined our Greg management about be XXXX CEO, will other and to talk President CFO, Our Dan by are and for here our Q&A. and members the

this website on call, at differ encourage release dealing earnings our applies Relations the Investor statements which current forward-looking may the statements actual equally earnings information, is some and made available in during We'll results materially. svb.com. you call. of the Our be to release making our disclaimer to forward-looking section We with review in

references those be in Information to non-GAAP In some filings our addition, financial measures, measures, may reconciliation include about to found GAAP in earnings release. and SEC of our our may including measures. discussion

Q&A, with Greg turn approximately the last an expect to And Becker. call call, the hour. We will including over I that, to

you, of the We quarter, more per XX% This over had a earnings joining and with quarter over net record and year. an share us today. represents thanks, than last Thank and of $XXX.X XX% outstanding record increase income million. same everyone, a increase the second $X.XX for Meghan, quarter

activity X.X%, assets, growth XX.X%, million, funds, $XXX our of a return of close warrant income core growth Our earning gains levels growth and interest of performance, credit solid of income loan basis by us third XX.X% assets on sheet fee short-term successful primarily the of growth, funds and and quarter Roku's driven to XXX growth X.X%, client $XX IPO, billion a equity strong of core total on healthy rates results bringing of total points. client good clients. of return income X.X%, balance net reflect on our continued impact our of Highlights included growth higher fee among of of

well be earlier investment overall is data and from IPO later outpace Mega later perform many continue smaller, VC-backed to the following in and private stage Capital VC soft advantage stage decade, to are IPOs continue Markets. quarter highest available the in only XXXX improvements, market declined a deals VC-backed remains despite although have quarter. of dollars performance companies. robust quarters third the The a as Venture clients to start-ups faded. X two recovery expectations Our stage track investment in rounds in XXXX in on for longer companies readily in mixed still of liquidity. With taking US third IPO staying both

is run largest we're the quarter, However, in Of their and US on initial all somewhat above X IPO a post-IPO XXXX prices. VC-backed performance IPOs improving. than trading better during rate are the

companies. is and there invested are although in some healthy formation companies seed-stage and sitting for billion available the company $XX early remains capital. to good And billion went $XX on New declined, VCs investments capital of quarter ample the X/X of early companies. during stage stage uninvested

clients commercial the remained healthy added in pleased consecutive we Our nearly core the business. new Overall, for with are we client our acquisition as momentum second X,XXX quarter. continued

liquidity sheet acquisition good and client clients. healthy as business balance strongly for Our conditions access well due growing as ready is overall to to our

growth quarter. been making growth about in competitive quality investments discipline commitment to I to to recent in in asset grow for We the solid, quality results to and directly In Fee volume, spoke credit testament tied a with cases, asset And particular and our despite many driven continue which sensitivity. from expectations environment. transaction consistent seeing remains by to last FX increases healthy today benefit cards. our rate continues the our we're high ongoing income are we've

private years equity of example, For ago. market we investing firms began our X share to grow

has and, as our to part to adopted and a higher coordinate contributor loan among become life the driver private sciences count learned these of help total national of As you to growth major ourselves funds, us we primary increased time, added service know, better a to our approach team to We're valuable a also Since significant hires. applying driver practices that client significantly of and to technology level and provide this, clients, of in our form private our have lessons our the growth, equity new experience drive we equity of there. client income. a and through allow fee expertise

success, have client count where and while is X outcomes doubled expertise of nearly surface we in level from private past loan this than in to high engagement. a more years Our investments continue invest we Notwithstanding we cement area and our also positive key have only that believe scratching service. Likewise, the private people, on bank us relationships potential have foreign helping focused in in and are made the we exchange the in will we investments seen through growth bank client our growth. another doubled balances its

strong with suggest and momentum exchange in and strong a we Thanks million the to foreign performance these had revenue. under footing will our just its Our to well. XXXX team as expect outcomes solid and overall, be just strongest quarter markets ever end XXXX year our $XX on

position and innovation believe long-term we XXXX our our maintaining of would the help will into them. have highlight X as like initiatives think the we about economy, move unique that I growth. building ensure for and bank numerous to we global As

there way. and support targeted improvements. with done in engagements, a opportunity is First meaningful but good client making we client strengthen to engagement is on growth our the raising job with believe significant bar we've by a really connecting and Overall, clients more

accounts high For example, stage up. our early and place efficiency speed a set typically clients their priority of getting on

onboarding at client frictionless are digitized capabilities. experience acquisition We looking through creating a

wealth of On enhance side our clients. we bank our relationships the management client the private other experience, to want with and

position at and offering of alternative will of to with as work tailored in are to expertise or access want us making An our analytics and it time will second global expanding also reducing more and engagement them eliminating more consuming be to information do and we easier capabilities us scale clients. giving our so time in the so continued investments be employees assets access that trust clients our innovation have we enhancing offer our processes to for expansion. aspect economy. our closely by can a to will A enable jobs important initiative they and client insights unique clients their them reflect that by allowing the supporting to spend unique Our them and manual looking result adding

recently its more and year-over-year UK best growth, successful XX% ever We we will our German countries in funds we behind and have in remain Office had loan up XX% be lot putting exchange. And are average pending. more believe by resources and growth, regulatory client both ahead. which applications growing we has just to foreign quarter hope and achieved a Canadian mid-XXXX, growth our priorities and Obviously running approvals average

will support also joint to in SVB's venture efforts. continue and We clients in direct Asia our China through

segments, lives clients, and meeting fee and our of work continuing client the clients to to focus of one expand focus continues growing adding will growing income. to in Our with on long-term the specialty our product of identifying their of We in of teams our take markets business fastest in FinTech to on on A area want our build world. starting the a holistic across specific partner approach, needs the capabilities early innovative in third capitalize to and to penetration be improving with Asia clients.

This includes Finally, of we'll to our credit all take enterprise our more a we quality, management risk regulatory and investing across BSA wide our management the and continuing higher of investment in including approach and risk to AML. record compliance Enhanced enhancing to the management excellent standards Prudential strong Standards, enhancing areas related credit in holistic risk risk meet so organization. CCAR continue in management

Our these develop the relationships strong plan with and to clients, short combined on the our enable financial us with our and drive results will term our engagement focus deliver term. with deeper both deeper in long strategic long execution of areas employees,

As years, done our like the to upcoming outlook year. I'd have we share for in prior preliminary

strong we what interest noninterest mid consistent subject net the today, holds, curve, basis Average expect XXs.); XX double income growth stress this assumes the the the a rise the the we charge flat I QX and XXXX to outlook low in between to low high good from of and the I'd expect engagement single with clients, with growth both average XXXX consistent rate incredibly like the assumes environment we to (This high long in XX our am Core mid-teens. outlook, we environment. short If the in a is XXs to mid For growth and and our about preliminary Net growth In expect XXXX. in Based is am change. results, offs to low digits. would loan term. Net a on income with macro forward income of the proud growth teens; fee interest our deposit very teens points; high digits; in in growth and I expense rates summary, optimistic quarterly know

the ask of talented world, and have resilient the for, robust the bases economy, incredibly you are most in and the We the could innovation of one client innovative centre employees. most

hit parts month. and word a earlier of thoughts are clients, country and that of families want These and devastated the about recently: this California that affected our many our in northern wild to say prayers of Texas through and disasters that raged Florida and I fires Finally, them. natural September, August, the with friends tragedies all the colleagues, hurricanes the have

call like you and support and Thank I'd those can I are support the local to CFO, accepting they Dan ask affected areas. coordinated aid efforts get, we organizations these the turn For efforts. Beck. all in do the help need recovery many can to relief, like to to recovery, everyone our these now donations they what help so over the of to they to know rebuilding would national excellent who you.

everyone. Good afternoon,

Highlights strong due credit trends. growth, the delivered to expansion balance and deposits both stable And performance levels following. and with as impact capital expenses of growth strong successful outstanding strong balance quarter fee recent six, growth Two, investment income, from rate to as quarter of due and loans warrant Three, interest income underlying good related to gains some Roku's by valuation foreign continued credit and primarily solid, from credit fees, Fifth, One, a gains growth net As primarily gains. included sheet robust core performance and strong incentives fees healthy the warrant in income liquidity. in of in well increases. related with reflecting an our the income higher client Greg to lending increase continued non-recurring somewhat exchange, stable related outlined, Four, fee items. core we net cards. IPO. notable driven sheet

across assuming see and continue We change. through momentum to healthy to environment does into that growth the macro and solid XXXX not XXXX we the continue expect business

strength improved let our me loans period end and across to lending $XX.X to lending. Now with details. equity turn lines billion loans billion, the solid $X.X balance saw call of in and primarily private in sheet, where technology very our growth pace in X.X% new portfolio the we remains increased healthy driven by saw by with growth, businesses technology third capital mortgage or quarter. average the The Starting we

loan pipeline are sciences the growth continues ecosystem abundance liquidity and to now. our remains weigh New in said, loan of strong healthy. for on and technology That the life commitments

year middle clients' M&A full near mid-teens in expect assuming levels. XXXX, QX that outlook, For remain to the our activities the we near of come

continued funds, Turning the or X.X% of client This to average $XX.X growth billion. to deposit reflected our suggest trends for its significant acquisition of to available remain by growth funds funding trends $X.X or driven $XX billion, robust equity and and billion, grew $X.X amounts healthy by of increase on new total strong billion will clients. client These strong dry average trajectory. client powder the deposit for X.X% investment

growth deposit full off-balance end exceptional helped come outlook active high growth by investor-backed our billion, single also of continue. of assuming sheet at or the strong year to in clients high an our offerings XXXX range driven grew the deposit secondary by public we trends digits, expect funds Average larger among client X.X%, equity funding investment in also by $X.X For by current the billion X.X% end of billion. to increased the reach early $X.X at or assets billion the clients. Standards Meaning $XX.X be Enhanced quarter Average $XX.X bank reporting XXXX. ended expect four-quarter or CCAR to companies third and we'd quarter assets Period of the XXXX. and compliance holding we average mid-XXXX, subject the for to billion second $XX $XX Prudential billion for

balances, or the loan to like spread improvements X due by Approximately XX strongly each by yields in equity increased balances loan extra This XX.X%. statement. primarily $XX.X compression Fund's of XX% deposit as translated billion to June third the absorbed costs recoveries remain growth, due million impact of Fed Deposit and turn of million increased the and than interest fees fees, recoveries increase rate or year-over-year X.X% increase. to due grew on or $XXX June Average Now on to income income second basis grew by investment $X.X yields, loan our income consistent less on business. rate quarter a higher the $XX.X to the points, loan I'd from of the in impact Overall net excluding to deposit to to day quarter. in points Loan the X.X% million, basis change Net low higher primarily the betas in remainder private interest which a $XX.X our expectations. yields increase, to interest with XX% basis. interest by with nonperforming was result income loan due a in with increase one lower loans investments and in increased XX% and increased or gross quarter. million X.X% income interest the

the XX net X.X%. securities higher investments million quarter prepayments. are purchased per X.X% points by margin loan X.X%, maturities quarter, as billion Six $XXX investment $X.X and yields replacing yields higher at Our yields interest due portfolio in of increased to including the not at of in we new basis roughly to third

our outlook maintaining are We for income full net year growth. XXXX interest

we our However, to are narrowing range. percentage of end it top the

interest year net of range. We growth end at expect XX% the the full income low low

will credit the remained third quality, stable quarter. move Now to which in I

to quarter, increase growth at loan reserves consistent points for $XX.X an of at of XXX basis loans. $XXX end over quarter due of increased allowance the third the for Our prior loan million was million losses the primarily gross total but

to reflects from related the reserves loans. for credit $X.X loan mostly loans, XX basis million, million million, compared provision and second overall or million, $XX.X of million Our points $XXX.X million quality basis total in net loans. growth million Non-accrual new by credit increase million, decreased million, loans for repayments $XX.X losses $XX.X technology to offset nonperforming in of specific consisted total for gross $XX.X portfolio. portfolio. loan to $XX.X $XX.X $XX increased million by our million of was XX performing average points charge-offs charge-offs to quarter. $XX nonaccrual by primarily million loans of This in our improved of or This $X.X and new $XX.X Net

stage markets valuation the We a solid metrics, and are seeing exit underlying for good portfolio trends overall high although across in credit and soft still performance pose early risk credits.

California. Florida last As few some of all and in the Texas, natural communities Northern coastal know, of disasters months for challenges significant created you the have

our we As were that and affected. Greg communities are employees, mentioned, working the to clients support

wild the California Northern of most us. fires business of importance In in exposure, are to recent terms

been in Only material touch affected our clients sell in and property has we affected. not news and client availability a been have areas initial make is the of and to are of We sustained all materially aware wineries wine the whose any of positive. handful with damage

busy this at no term. point is near impact a the issue which the coming bank more affect in private is during areas credit a region drop material businesses for quality on the the what exposure could we minimal months. in affected season anticipated tourism and have in prevalent the We anticipate their normally But

into monitor Taking all provide consideration, necessary. credit the year are full to updates we for as our continue situation will outlook quality this maintaining XXXX. and of We

to unchanged we remains charge net range outlook expect near allowance our XX in low Our to and XX basis off come the points. loan of end of

were of capital million or was non-interest price or driven equity million, was like $X.X an a related to million balances again, to composed securities, $XX.X spreads. as of and prior or quarter. Fees related to holdings exercises would income second income, those million the and from funds, transactions higher investment $X.X increases increase over the due million evenly $XX.X $XX.X of Credit fund X/X the from in investment most XX.X% volumes. of investment the foreign is from in higher by driven that upon an higher I'd turn XX% volumes. million was million interest with warrant I Client private and gains fees, -- by $XX.X quarter. $XXX.X These The Net $X.X improvements. core fee fee interchange across gains there or which quarter. warrant exchange, increase $XX.X like value activity prior unrealized primarily is client warrants the lending fee relatively IPO increase Core income core million venture quarter. million gains by increased gains due categories. net investment credit depending our were M&A by to income, to from to increased were out of activity. Now gains GAAP XX.X% included and typically Approximately $XXX.X period $XX.X income foreign by Equity million fees non-interest fluctuate result XX.X% cards, of XX.X% so the and Roku -- XXX-day to to compared income across $X.X $XX.X to that securities or related higher million and million, warrant a $XX.X of non-interest non-controlling and and non-controlling related funds gains from fees. fee over primarily increased higher were may lockup from revenue by income Non-GAAP of million XX.X% client investments, investments. in of prior million card exchange majority the compared the million These interest point funds. $X.X to associated valuation net of to million strategic on IPO to of rose the fee growth $XXX.X debt valuation million $XX.X stock. or to our $X.X million impact spread due

by by for increased was of adjustment an higher fees XX% to fees or related syndication driven $X.X million $XX.X fees. lending $X.X that Finally, million million the of was result and commitment million. unfunded $X.X

fee core year our raising expect of are high and come to low the We growth mid-teens end high at that teens we the to from full the for XXXX income outlook teens in range. the

Turning the to expense was higher million, of included strong the $X.X partly quarter related write-off Also $X.X Minus revising higher the for performance compensation, the was non-interest the the $XXX.X increase of or an we $X.X outlook. current continued increase performance result these of of expense in of XXXX range a to expenses, This an in X.X%. teens primarily developed within related expected third mid-teens. low would outlook our internally than to our system. our software be the expense overall from million Nevertheless, in we was are included the million increase quarter, million related. and third expenses, as to expense

down to and our We over efficiency happen. making ratio we are will expect that committed trend time

in in on the focused operating leverage looking driving office scalability and back We at certain are coming investments years. that improve our our are help could better and efficiency

decrease our benefits tax dollar change second before was tax compensation increased quarter. a the The notably rate which due the the in of and our to rate taxes, to lowered compared in based tax related second XX.X% in primarily share effective $X.X increases $XX.X due to tax quarter effective first XX.X% income quarters. effective rate million million was higher in while in third to taxes, to to the Turning

XXXX at to the debate are rate optimize tax as to reform and looking Looking XXXX, continue opportunities in our tax we we monitor on to Washington.

other We advantaged municipal expect bonds include, and things, other this among of to investments. strategy tax purchases

bank liquidity and risk to pressured due remain points was risk-weighted dividend our of healthy well this slightly. ratio outstanding credit bank trends wrap although very company, to the the the capital basis performance leverage by investment quarter. in assets to remains sheet The delivered To from We Tier growth Moving at balance but another X pleased the capital also very record with ratios growth quarter declined holding positive and based and solid affected target X.XX% our growth, earnings, X to loan capital, range. are up, strong quality. and within we

among stream capital and healthy see remain our our to and liquidity we pipeline. and in continued Our continued Despite persistent growth. competition our new strong activity support clients clients, of M&A momentum continued a

benefiting are fund Loan rate should would expect clients our be our from access the future to of income and funding recent growth liquidity. as growth, the their there good health and, strong outlook. any are fee and upside increases increases, to client and we We as current well see to reflect general all

expense we revisions business positive And and we momentum well quality. Thank are Operator necessary meeting our I'll and focused for in growth clients, growth Our the you, billion will outlook people, and while the $XX maintain to open than our increase delivering requirements Q&A. while the remain increasing our more year line now among in ask maintaining full being on penetration quality bank. the make expanding and infrastructure, our to enable our a continue offset improving high of regulatory credit strong to that investments offerings We XXXX. product for strong positioned to us the

[Operator question Instructions] comes our And Stanley. Morgan first Zerbe Ken from from

is open. line Your

question put here. want first I the wanted little expenses. about bit just the I on spot ask to you a to

we go your the expense digits. for year high if So, single ago, was year back guidance a

little bit call you're your on at growth expected. same is you than at track least You lower what while came mid-teens for it time, the expense loan a growth, in,

year calling the get how But versus to that what Now single XXXX. depend going or you're this we high see growth do up mid single still digits or creep you're today, that next to year? expense Because to mid-teens in high again on? fast does digit stay for comfortable forward the that in

answer I'll to on. others Dan. and want might jump is This

expenses, continued we growth. and are look overall around support strong our to for have in peers. time, growth second the improvement ROE, across categories as to especially We've at well fee see in as including there continued all paying see to key drivers. historically And One as the our income. at to again, particular, our same performance strong two loans XXXX really is quite relative and investing So is a

we a So, year the performance need that and helps to as think XXXX, basis aspects we support some about, that to expense expense support we strong the year. make incurred levels. start same in investments there, is have for that talked long-term are growth the overall performance At and as the in to as expectation our again about the on there know well time, year we will this next to we

XXXX, to look, fuel good at this to I at but in add the things I opportunistic growth and putting helped performance, look that some would and the to had, infrastructure rates, is say given Dan is, beyond. and to say, to performance what again, XXXX The money some help, thing time that Ken, you said being think there's we performance look done would interest and we only part we've that is we've by the go, about back of Greg. client when deposit probably where funds we XXXX admittedly this as given total given it's growth, look it's at just a more XXXX not loan growth, the the be again, believe going into and

we're the looking that longer term of for well. go investments into does part that fact as So,

question Poonawala Bank next from America comes Lynch. Merrill And from our of Ebrahim

Your line is open.

upon, of about guess number Greg, upside mentioned I that that component $XX last is the want might comp, believe, be I see in there should I safe Ken's improvement going first, to based million unchanged on of that Or additional it follow-up just is to to the next quarter ROE based assume you to year? that that you in to incentive question XXXX. that touch some remain Is XXXX? $XX million just on off on expenses, ROE

start Dan add. I'll Ebrahim, it's Greg. may want to and

our we said, So, One next plays again, to high envision it And comment. can and you kind out there's high X/X and incentive our the outlook relative, X/X out, the as there year. of two components that would you our we of this forecast, would is, as is purposes. end as budgeting tied as And to assuming year other compensation our of go. range that be ROE relates is at at it internal maxed

the very percentage much. see The that we people, change a will not million that won't to a So, delta delta. number, But meaningful going you're going only bit add that's be the grow be to as more. more little $XX

basis. will a the performance be setting slight The years prior like other on because not ROE not X/X there performing based so in well as had and way it is to relative a it's much, but recalibration, we're back we Xx so on a

guidance a about outlook growth base so baked now? in thinking of And next your how have given the million $XX and XXXX that right pretty positive sort single into high you're growth expense you already I for Understood. into that's digit year, assume expenses baked is

Correct.

how the you budget And depending outlook. perform see, upon our so therefore, the is we improvements, our again, against performance and on could X/X areas that

for Understood. very a to second, fees a Switching quarter. strong

very It still you in Is all XQ? momentum I strong. strength by been your that we soft changes stronger end you've any your first XQ. is there the at relatively guidance in feels of think half sort like has see has had activity or this you've very, seen driven a driven and some made

few There's again. Greg things. is This a

with We little and we softer. about talked softer, bit it in FX a was bit were The it bit yeah a also compression a in, little some even we about volumes with talked the actually just first credit but little not QX. had card half had But margins. we in fees, QX also

that created softness. So

will increased the in So, that quarter third expect into fourth those and hold had volumes what we we quarter. the is obviously

on So volumes. one part that's

that we is part on margins the both saw second credit FX stability the The in and cards.

and So the happen that volumes XXXX. into the of the what the that's expect was stability combined we year with lift the the kind balance for margins in to was and major of

And Steven from our J.P. next question Alexopoulos Morgan. from comes

open. line Your is

appreciated I would income If the played net get which out, impact interest you than adjusted is that for your we forward if curve gave curve the how XXXX forward for Greg, the guidance. right outlook the expense outlook XXXX? different

comp have no and that question. it that We That's little impact next rate thing on our into a again the expenses, this year on about increases comp, build We good or neutralize we'll did year. impact because do we One that. incentive don't very would specifically that program.

really it's So actually, don't going at all. think have I to any impact

the ROE dollars? Wouldn't component of incentive it the impact

at the end and high out. We're we're range, of maxed so already that

So to that any able actually wouldn't be higher. go

though should some expenses At said the you expect mid-XXXX? threshold more be meaningful we guys point which SIFI cross Dan to get ready as ramp a in would

Yeah, answer I'll no. and is start my

one everything this into have would don't into what We digits like, that the and and the single help procedures trajectory baked with meaningful said be right about Here's back I and a come But is may could you here's we've about the are ratio. which it we there, lot growth talked to improvements I in that and believe, put now. processes program and opportunities to that now, and this, investments, say there talked forecast. looks expense is and make right what have comments, high in place. I improve we see, We outlined thing the some and some and Dan of investments long-term would our manual my that would why efficiency the make say is here's

investment into think $XX we've have And the over puts in as place number in something that specific a increase million talked this a investing to past, the to over been in cumulative so the about this we ready good Expect CCAR, be XXXX. small million. us $XX I in We've get to cross time we close to to threshold.

you're see think don't I in So, major a going those costs. spike to

continue We to and point it's monitor it's this come we'll it extent at the think don't back, but that to necessary necessary.

over less because getting getting say would I around time risk arms our it more The we're information, we're and gets less more.

confident it's see that a expect And don't so, think I spike. a to comment more we

average funds. to I shift the want to client

talked you level, is from Greg, high market great, about this? quarter, had guys even know driving sustainable quarter You not is record IPO here? a it the being what this last And better it's a quarter. I

talked And funding number. it's impacted market it billion, by One of Capital aspects by it been incredibly the it's much, the the in that's $XX private hasn't overall only, liquidity Vision the from in down by Fund coming Funds very robust. significant it's impacted we but in, market slightly client it the lot from Venture just even Wealth and invested impacted the being community. two Sovereign there the There's IPO funds. growth it was so as is SoftBank, market, by as is about, still through QX, was And of a was was still a although money

So, one volumes that are overall in. the coming is just

teams The a doing. clients is basis, day bringing well that and client of I they're our to how day on is second so new One it component Again, said new in just was acquisition. strong.

pools a after of going our that quarters The actually larger some and from is money in with bigger back group companies. other we asset calling manager started part larger few on companies

market, just after later and stage of the one the beginning not funnel opening a lot It's new the it's robust things. adding clients, of combination going clients. the it's at thing. So, those and It's it's

we venture could we're where team Now stable to we client decline we the big market a are acquisition change. Obviously still approach client at that is it But at. in the expect good the deposits, we the have, handle year sustainable? it's see if to a occur said being going least we we we and in next feel for outlook which have and market assume on is nice we where our continue capital, the really Clearly where to with and growth as hold. going

comes question Fargo. Wells Jared from from Shaw next our And

open. is line Your

substitution the just robust Should some with it to securities a quarter XQ the on quarter. we or from this like sheet still loan see strong loan see to growth the surprised incremental third funded to I growth balance was the the $XX pipeline? tone expect to the you a out pushed average quarter, Looking or pushing out at cross billion asset given sounds

we we're strong the Not we from at overall overall Still by at to expect look based we balance just Though much perspective. us calculation possible in taking continue taken a over that growth of where see fourth just it's this strong that quarter. and more It the us to threshold to point. deposits, the have growth are there. ending see an to get the cross higher would ended where think in on growth quarter don't averages, for third first or in the

third So, we're is starting play to second see in based just quarter. on expectation again continued will be out, the strong growth, but the way or averages the that the the

what as higher? unchanged. scenario nature? are were in of about continue be could your really It's to be noninterest point given your it deposits could we grow? that be paying continue rates that overall relationship should driven banks deposits this mean matter the I How at amazing a really other costs bearing to where thinking really there Does growth

This different to couple There's things of Greg. remember. is a

bring First like But high at bearing look at I it to cost you holistically billion and $XX low a because there more it level a of rate of you getting very at over of when really think noninterest market at return. of is that's people are to the balance you're client look the looking in sheet than funds. have it and off-balance our deposits, funds feels sheet to all, look that

it's sheet to market as accounts to pick on that So, it still you bearing total our bit then some it may that you and the balance it able fact a deposits, in rates noninterest in total options. combined money bit, with and But mix, we clients up. shift at little at a look provide we're little where markets but change Right we bit. beta Do will say I'd for the expect look shift off-balance probably rates are scenario a right XX, a And goes Yeah, of pick or pretty is a change to XX to more low. under the up than continue going rates it that that. they don't we to up it expect maybe that's now. deposit be from be basically to now, little change we're But still whole and up? to not seeing pick lot sheet, our rates as expect

in additional XX versus XX% points the are today add us slightly to look we let's range we $XX call we with XX%. every that, modelling ahead beta it where are rate to in XX% to deposit giving basis Just million, higher a as increases,

monitor taking So, that still overall less of point little consideration, continue the than on to it, a but deposit bit XX% we are we're at beta. into this we

That X Daniel $XX term million basis per XX basis points A points, rates. the net of that's increase impact, Beck overall short increased that's expense? to No, improvement costs of XX in income - interest

going volumes? blocking margins for then it what said rate, hear the venture really there finally at a in impact tackling just or good you just and looking how Was it's ramped I any said better me, of Great, and And this the you FX overall through thanks. up year. sort was quarter

It Yeah, consistent say and say I And margins. was I would margins. it would better blocking tackling. wasn't

and We in it invest continue to invest in continue will forward a on to basis. that go area

both think to have on still basis, foreign utilizes up We quarter market we and and and And options. obviously it's to the variations forwards the solid domestically right our team. but be client see quarter currency our you that although to and we based internationally be volumes spot could exchange a base and expect the going on to

next our from Rabatin question from Jaffray. comes Piper Brett And

open. is line Your

you the quarter. Wanted to growth had but substantial credit did ask, of capital have this lines better business, call in you software in growth

of equity to debt percentage are dynamic lines? increase very you the of year, the book? there can change where curious, that as in overall is terms out, be anticipate your the I'm you you growth about anything do the capital And of for more but might in I know continuing So, thinking that fruitful look just loan business in and next your pipeline competitive, core other the markets business call line the

the Ducheneaux going equity just our I'm on briefly lines. sciences. commentary I'll to the add of start, part me and business, ask Mike tech to private call Let capital talk about Then the life

continue market. in for equity that have years we one remember that and venture believe still than a to the market we the grow larger see So, call to capital growth is the just has the to there come. private lines such opportunities upside capital market share that to point is We

strong We have and team, good incredibly an feel about service that. differentiated really

clients you resources. think going it's diversified firms when buyout are are part after in is, fund they have very and funds, natural the doing oil target other that -- about they stuff, are small to we they're firms to gas, midmarket These The other that. they're

but about with software QX of the feel our Mike very let growth talk diversified it's in share a I'll we And growing market. again low saw kind market very the So, healthy upside, and we and have where still technology outlook. we

Greg. thanks, Sure,

a XXXX our we've essentially where amongst recalibration going It's So, as has challenging Brett, come, with the challenged. remember about flat you've when year-over-year. of been portfolio you somewhat Growth think seen if we been was year on. technology

fact about some bit as in and tech our So, really transactions into held we go that what's And the back has lately quite our happening. we've feel of XXXX, well growth we M&A which hit as a portfolio. good coupled been the pipeline with with

coming into go these turning XXXX, see we As pipelines think you some there of into definitely into can well. I some as loans

to as and to year, looks loan same the do or essentially Canada in It question this when next grow. which year robust first you as add in doing quite continue continue And back of in Germany is so much areas portfolio operations won't and strong to as well. was it for because be you're to the portfolio come The also into percentage online have a total and as growth from your in the will grow? to the that tech. to grow then expect or the we keep think well other plans well, as mind percentage is in the global necessarily really start the terms UK of loan The thing of going so potentially as continue such will other coming proportion to the which the we private PES, like well bank entire rest XXXX,

think year-over-year pace But certainly the into continue I areas the move again, strong. PES pick think be So, annual an as up growth to other of to as I will we continue XXXX. will

high income. sounded correctly, It fee want and understood make income. if fees want come in around the wasn't would were be in lending even quarter the pressure I to XQ flattish XQ of to Then the lower like, are sure teens I more fourth and to guidance on Okay, I I to year of slightly so any end a on that's of fee for make or great in lower maybe going number. colour the growth you overall sort kind that that would strong mean on sure colour really that maybe case, the the there little on that. guess the I heard

On an to overall the things overall we were where in you basis, for things based quarter. up correct right it slightly terms least and be where of guidance expect we QX now. is see the on And At QX. to

SunTrust next comes question our from And Jennifer Demba Robinson. from

is Your line open.

Question on efforts. the private banking

your Sounds are like area? percentage you're still customers banking in of in the there. What with you this innings early

area, head, market in equity if partners. our technology in the whether but is XX% commercial share market rest Mike my this private is life Greg. do small venture or But off companies, see may it smaller I actually and share is It probably have the percentage guess percentage it's companies say the still. capital base, of top you there. have that I of client that's to science side. and something. would don't XX%, in start we So, a the on probably I'll area want add The higher is right the would one the I the

the build lot of platform. those believe things of to our we And say with think I that's that our that's we there's docket so surface. out the in the to only we why to growth scratching I need back our on all just bank, team, our from kind business. part We're approach why digital to a build need that them getting need made point go a to we do I when happen, my out positive build private we're capabilities, of about comments, As and we potential really believe clients feedback with the

technology suites have add, know, we just lot would private about say we see Which Greg the somewhere C-level portfolio. as terms of venture that community the opportunity X,XXX have grow is well as as I'd to Jennifer, you Where as private the there. to, exceptionally we've connect with bank. connecting we even as I bank, alluded And capital with can in our technology companies of around done much a we that so well our companies. far the clients more in more

So those that focus on go are continue XXXX. onto we to some we'll of the areas as

get be you'd these How to long do out too can think you to will where before built capabilities it them like be?

is from coming of for between and what private our pipeline into get with just about the referral to core the the bank side, example too. well So, Just banking we private relationships mortgages, currently as do bank that a our commercial so is it right? bankers enhancing really order private in

we the equation. that believe we of have the sales on to basic So, executing product more the side set just we on need it's do,

McGratty And from Chris our from comes next question KBW.

open. is line Your

ago thinking we maybe like the to quarters But it tax potential capital of good the for obviously momentum are with couple to earnings market capital returning about for a coming over the shareholders asking capital. seems a reform, time? you -- or about were question and underlying potentially obviously Greg, you needing how

things how interesting people capital Chris, were at is It ago fast it where high not when that start, change us was I'll a asking about long level. raise. questions

ever maybe at look position better a have we So, I are starting now say in in Or position we a think that we that we it at and are least trend. obviously than been.

that, think and to As think that starting what we're starting look would discussion through and the far we like. about that as how just

us happen You things my talking it will you again, perform, But probably quarters. going you'll or to that that something QX to QX. few describe say see happen that standpoint these to would like. to of when is towards, about the next it continue probably Not in starting hear we're get more what in then, I but going is look some from wouldn't anything

when would say of to we outlook be quarters for there. few and we'll hold a I just get able tight our share kind So,

also, for strategy for until Washington? clarity if changes tax be on taxes, some any expecting out the imagine you should about on would what Maybe the rate portfolio. investment you talked get I to notwithstanding we That's And of you taxes. could, in muni helpful, the thanks. a wait potential you're going

is Dan. This

what's So a a Washington happening and obviously strategy to on paying until have there. to we attention in going not large view execute

municipal already happening well get Washington. are in tax in those We low have things so focus be bonds a as will clarity on income And of credits, been should there. we housing thing as would we investing what's that that obviously

of tax in we're the run effective terms on of third like. In what quarter, least the at that basis, rate level rate a somewhat our representative go looks overall is tax forward at, rate

the overall we second of of quarter, down and drove As change the accounting in that had course impacts equity rate. the first compensation,

of probably effective pretty see in but next bit QX. the run right tax more strategy, is that now, and have tax the a rate little So, similar in rate you'll year, quarter absent to what of second that first we

point, sure And interest Great. net each heard income make just $XX million, net a to I or you, on was that income the pre-tax... about Dan, that question XX-basis a

pre-tax is number. net income That

growth That rate, any into the of kind right? is That's to right? that seeing momentum in addition CIF doesn't in that, factor that you're

static sheet. balance of a That is view the

our comes from question from Geoffrey And Research. next Autonomous Elliott

Your open. line is

call there you lending capital behaviour? by to changes any how call have for few in and the used articles long IRR. and thoughts about capital concern clients give of drawn lines risk talking or you some borrower is around and Can been typically regulatory There's some you are private specifically lines enhance equity risk there a us that think some those whether funds

Marc I'll take is that. Cadieux, This

up questions couple a there's of So, there. wrapped

commentary about their First the funds. community lines This LP the been is about that's phenomena. that improve of we are aware using of talked funds call before. capital representatives something from of return equity that It's new to isn't private

we can that's a in in commentary a getting a traction tell, or As first change thing. of concern far behaviour. the That's any it's as not terms

relatively to equity borrow, days. out Advances venture on on average, guidance while some still and our and be borrowing. do meaningful noticeable and private we change short-term than equity among capital comments, anticipate tend borrowings The is capitalists how earlier funds last private XXX the XXX funds they from lines average Second, short. this longer remain relatively behaviour not what in it's call still credit. between think reflected I utilize of is of any question, And

growth, within gain expecting faster than still still the capital questions the Thanks. within of expect to Then share private overall just to venture earlier, but on it equity total are you one grow rest of loans? portfolio and clarify loan to the

Greg. is This

in with growth private private the several being said, seen years we're may in that services, the continue line. the That part of comfortable stay as we the business, that. little from know, bit the As business of Mike described, the we tech that core be do the global, life parts banking, so science where believe been could it's side, balance have other of tech it especially private you percentage for slower, last business. equity And that stronger a portfolio, of in it and in the the in equity pick will with and part the could up

we'd the if comfortable very a that we're it it higher, plans be because higher been, up but if goes that. if So, out playing we don't to number. has it be goes does, way, with XX% as have could comfortable In our it robust it

Stafford Stephens question And from next comes Tyler our from Incorporate.

line is Your open.

production do yields of Just capital sticking you of PE VC of book? the which with percentage lines, average And and the capital are? out between call the those call new have the what breakdown

it's Marc Sure, again.

from, equity the balances, think relative we the to XX% your to private so it's more towards equity in And With capital. portfolio tends growth funded So, basis is range XX to with low about an venture overall, speared continue regard capital the venture in capital. tilt venture to where on terms between equity interest on private equity XX% private that on funds, point rate it X just we'll question venture the the or of than coming XX/XX, about see a XX to the for those, funds. lower than to roughly average mid private basis points be it's i.e., X% and the XX capital,

Marc. that, for Thanks

performing had of decade, of given out just now profile with begin allowance that portfolio the then loans, what could loans? the loan guess seen fact the you've total, to losses for lower bank your that growth where XX% to see virtually that out I the and credit growth the portfolio and last loosen on private overall overall you've reserve of a so methodology or of it's the that book, actually With no the you to losses should

our you've of from the from a but respects coming growth some primarily of in risk from standpoint, So, in in methodology improvement lower already seen, the not composition, portfolio. the segments terms continued

now in the loss reflected continue it of at present. out loan credit basis that can't if reserve to composition improve, there pretty the were said is at could I in Certainly, XXX seen You've that, possibility have think to it that strong rule having points. terms where go we that as quality are, but recognized, lower

an meaningfully expectation while we So, it's that drift would possible, it certainly not lower. see

Marc it's respect But just side improvement one well on too. caution, equal, I portfolio only well. all comments described. Whether our to as grow to the to obviously start should we as the with The thing as and you on growth economic being the it equity things depends to private continue credit similar would if see some environment quality

Okay, thinking about And for XQ for levels Am using sequentially correctly? I $XXX the me, last that, just the are expense then XQ XXXX. XXXX for that math that Mike. implies from doing base guide one thanks correctly, for mid-teens down if million expenses I'm

expense one-time the we As rate guidance, $XXX overall of that would to back in the range. we that items, said some million thought levels, we quarter, excluding $XXX at million in as the look run be second

in back nonrecurring a the of spot. items we'd If similar the some out in third quarter, you be

run as the lower business remain assuming the market little the same rate conditions expect usual fourth to that a we'd bit quarter. in be So,

XXXX, And correct? just the using for clear, be million to $XXX are you base

the base roughly. is That

our And John question from comes Evercore. next from Pancari

Your open. line is

or VC the yields, the the money new call capital the that for that portfolio, to that mid the Xs? yield, you average is gave On PE just yield yield low and

of I only yield it's an the interest was fees. That and inclusive average not out yield, point should

it is rate? yield, money new the that And near Okay.

Yeah, it's pretty close, yeah.

early example? large buyout Okay, and you around for portfolios stage the then then particularly could, if the same question and for stage other maybe later the portfolios

Sure.

as They still there So and that X% or from X% to that broaden then raising territory on yields in some portfolio occasion. are to into to I'll tend and can dependent, X% stage, high low be range can double-digit of capital. but higher. as segments and our get investor cash, here burning dependent early bit later companies The early only a stage interest on be still just

larger see of be reflective say XXX about deal And end, their Moving then give tend larger to sponsor And LIBOR sort and depending finally are take little there or of the yields the you rates under on profile. average be the interest then asked yields that. I'll to plus you that corporate, on bit prime. to more a buy-out,

the Then bond Great, the secondly, book. to again get portfolio, just on want plans bond thanks. your for

book? longer-term looking for put to of more XX% target at, at your work -- the liquidity You're overall are that what to and XX%, now, looking size XX you of assets what's

overall investment portfolio tax going it's more primary of we've past, and major The generally the same we only liquidity future. of a and advantaged reallocating purpose be, tax it is purposes in about liquidity any at But but size changes portion we portfolio. strategy, speaking, the position, the investments. to composition the overall look It's could potentially obviously that the look we to as the securities expect don't that the generally of to dependent upon portfolio investment thing think for talked the in

what's what's Okay. on that off cash monthly Then for and the it? updated topic, book duration coming flow updated that the

coming and flow The off overall about overall is $X.X of duration a quarter. billion cash is the X.X that

from Securities. question JMP comes York And Chris from our next

open. is line Your

Group Rightside you Donuts in $XXX that credit facility acquire reported to third to million LCD the a quarter. let

So, my question is twofold.

those give pipeline the transactions? us the can two, some like for increase quarter? And type on maybe you how think large the does in given colour trajectory of what to look the big fees for then First, lending about

I'll start and in. others may want to weigh

syndications several-year appreciate, of reflected hang lenders serve journey onto First, our ability and in terms to clients of clients do intending as Generally thinking comment speaking see our specific would regard. longer. capabilities, you last and and though we've I in is the way feel other that And do into to of agent on improve not that able and to on of course, that being a the that in several it. you the been one to specific transactions. come you bring And ways credible deals years by the market, syndications that quite long over we've

had at commitments. the least was I'll size the well was lending on won't piggyback in mentioned in third quarter. on And that as which that line go-forward comments fees. earnings in for there, fee overall adjustment we lending it in the the terms as release item of the basis least be at unfunded That, the a We an in

that So for million. $X about was

it, for me. That's Thank helpful. is it very you. Got colour that

from from David And our Chiaverini last question Wedbush Securities. comes

open. is line Your

XXXX the the mixed was mentioned environment that quarter your of in What with in assuming investment you and dollar third VC guidance? You are quarter. type in deals the underpins VC the investment declining environment fundraising

Greg. This is

it to down were slightly. were of the number The true down Just modestly. clarify, dollars companies that is

QX billion say to think healthy I was markets so $XX $XX would I billion, QX. in down very and it

that you rate if at consistent a things as would we outlook. that with think look that an I remain basis, as run expect

maybe level, based That's is that improvement. outlook on. at remains slight what our a it So,

of is How bank the balance deposits your that Then on market the that about gears, billion management from roughly and $X sheet. of clients? much wealth you money shifting curious private Thanks. have

look think that have Very money small about billion funds you $XXX it, we clients it's is a total overall total market deposits client would of things, the from When small in This roughly, is that. little. obviously when you full be subset And of Greg. of private bank the at the the overall. scheme

very much. sense. makes low. why That's is beta probably so That Thanks staying the

closing like Becker and I would call for That the answer to turn now question our Greg some back session. comments. to concludes over CEO brief

not to you you do it's record share describe we easy the to X,XXX Great. country all to us It's Thanks. I amazing were just proud want share numbers for with world we an the and and our to of for such but thank that you, us everyone of the this days, the the at in with have end today. today. incredibly every to employees for job joining results I'm room around around able day and It's the us. who our clients. of sit

efforts. about truly results few the their job, calls, an prior I I last I thank also, just they thank of You think our want for all to want just years, incredible them clients. have so to have in over as the done

lightly. the I because I role, get in the to the CEO job said the spend got Bank it and the out and believe world outlook. with we best that's truly trust but don't truly Mike employees As really We appreciate more got this I've the over taking fuelled success do the clients. only time thrilling us best several I've years, the have and our have President market, that we're in time, about why We what not great we've optimistic they it's last in on our has all is take

Thank results, everyone want you. and great great just to joining So I deliver the for us, again, day. have thank to a great,

gentlemen. you, participating. you for This ladies conference. Thank and Thank today's concludes

may disconnect. now You