SVB Financial (SIVBQ) 25 Jan 182017 Q4 Earnings call transcript

Welcome to the SVB Financial Group Fourth Quarter 2017 earnings call. My name is Brandon, and I'll 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]. is conference this note being recorded. Please would I now turn O'Leary. Meghan to over it And begin. may you Meghan,

Thank thank Brandon, you, and today. joining us you, everyone, for

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

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

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

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

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

fourth $XXX solid Our share stable income and net margin, excellent net income, outstanding income an fee healthy $X.XX, of earnings to of We interest finish delivered credit. driven sheet year. growth, per by net balance higher was and core million, quarter an

the management and Our $X.XX to of in and treasury to to these the million securities share. of Job $X our results Tax as Together of tax Act $XX reflect sale impact tax items also related per loss Cuts the part million expense related objectives. and equate a

average to increased to growth by business. aspects to Core first marked we exceeded and funds net income our $X.XX $XXX Net most per $XXX billion, total we of average grew delivered XX% $XX and versus and the to billion period $X.X return client by had by XX% on time of interest in fee prior earnings funds we XXXX loans $XXX XX.X%. for total $XX.X billion. by was across of year the XX% a income grew healthy by million. XX% to XXXX end XX% full-year by billion, share grew client the For million equity strong income $X.XX

indicates performance the our positive. business remains strong Our for that environment

year. private which $XX of best companies, growing client across its billion clients activity level invested innovation in contributed capital market client into highest nearly enjoying the count XXX X,XXX billion net X,XXX new commercial early XXXX expansions to best Dow, activity our growth strong S&P the and added translated performance $XX We our years. just stage core of new largest NASDAQ and our in growth business. since and liquidity in client in than with with in the bank in total equity and net fourth This XX% count balances finished one the bank included ever and in history net XX% XX%. client are We Venture new capital growth private one net This and client four the years the loan private growth raised XX% growth and by for more positive the processed for also was plan It United more $XX a States. in issuer year surpassed nearly billion an business over strong than in for of exceeded ended and FX conditions rate We due record $X.X now market and clients of year-over-year as market and million. the we our finance quarterly corporate and breaking focused fee core XX% XXXX balances. commercial well together XX% and in XX% transactions outreach nearly in engagement. included loan All in a had card largest to We a improve trillion XXXX, outstanding XXXX. that rank increase payments as client the in card a to $XX XXXX, any growth increase volume a annual with of XX% billion $X.X with increase year the We we year. the rate XXth win prior double in middle revenue over volume new

We reflected few outlook our are will XXXX detail minutes. results Dan into in which a our proud in go and for momentum these is of

we For the tailwinds. are enjoying number first a time meaningful in years, of

a The several is confident rate dovish interest first around of the tone rate XXXX, hike rates. the hikes tailwind After in more December's commentary Fed's change. was welcome

rate assumes outlook increase. we high Street sensitivity, increases asset each from likely benefit for rate are SVB's to the our given While no successive

corporate second effect tax The took X. January new rate which tailwind the is

neutralizing We will savings, from The tax our majority tax to expect to CCAR to compliance. on XXXX. to to some and in bottom rate The to remaining go and normalized tax the our lifting final the XX% our and XX% XX% of tailwind go reform of regulatory XX% infrastructure, reform, for XX% these in of the we of impacts growth, employees. specifically XX% enablement, between our is employee threshold potential The negative line. XX% invest plan

many time attention engagement be global this to being regulatory will other of focus continue growth and our believe enable management we subject a more some activities. will of we to While to us on bank, change requirements client and

is a year things positive is While from non-banks we equity. growth the fierce from competition The loan equity in opportunities, for the ahead of continue this headwind and aspects of to environment. A stay. been for we has challenging state challenge more all and believes from particular here to holds monitor believe the availability banks banks of

share market. focused deals our remain win we unique the in but and and most want, deals to making majority we of our smart of growth the of on the continue We advantages

took which markets, large had XXXX. private in rather us with Another companies predicted challenge is infusions advantage including returned than go equity stage public. Later exit of the many, have not strength the

capital it for lack venture companies for exits these a positive the issue availability of could the investors overall, While public story become if continues. capital an is of

hard of to exits credit Despite or driving us. decline see it are of broader lackluster VC that prospects justify. private large valuations last could these to these of private In XXXX. for remain round, significant factors, affect infusions in the we to trend we with universe our exits, for addition, growing companies private were mean If below the funding, combined levels venture-backed equity some costs for pace likely a the positive which about companies, would a higher is

year, we for five We focusing will priorities have areas and be the where top investing.

First, way. raising the meaningful bar in people investing systems, client on us that improvements, engagement a clients enable and in connect process will by with more analytics to

employees Second, to to efficiently their and improving jobs our help procedures, and our process, effectively. do more technology

risk by continuing enhancing equity, client fee stage and to product invest the sciences, across private Third, global, acquisition. our growth of leveraging improving across partnering client our to the life needs the teams And of penetration segments ability meet long-term clients. of the to and early organization. fifth, growing enhancing capabilities support our specific income bank, FinTech the with including private management innovative platform, and Fourth,

and very We results proud and for the outlook quarter in are the are year of the for our optimistic XXXX. and pleased

We now to have a that SVB's an dedicated clients I'll Thank ecosystem We live mission call turn innovative, anywhere. are day. with expand. robust fortunate to continues grow most the And amazing the creative employees, and we every Dan and group over work center Beck. of of you, and CFO, our resilient to the at who are

everyone. afternoon, Good

transaction on sheet driving included equity results The strong growth our following volumes strong trend net of due portfolio. executing trends. securities balance growth. overall from fund quarterly to healthy capital higher are and environment economy strategy. seen six, we Two, and quarter liquidity driven client investment highlights. balances. higher effectively Three, foreign and and the balance higher the some and interest expenses higher client in total yields income performance, to strong income core of One, credit slower healthy growth on Four, our solid stable a by somewhat our client funds are a related strong fee the deposits. levels strong exchange robust were tied throughout with and the and balance we've sheet primarily Five, venture year, continuation liquidity Our to growth private underlying excellent incentives capital with and continued

tax tax valuation in from were tax of a by reflect items Greg expense indicated, results tax rate. one-time to a corporate As these assets related including change adjustment enacted recently offset $XX.X federal partially reform, the million the certain to deferred

$X.X the $XXX investment I'll release management for pre-tax on million, for you securities on treasury tax further had we of information X-K objectives. that of our million to impacts. earnings filed December we addition, In the refer sale and and these losses in

companies, in private sheet, and than no equity by stage quarter X% off better options meaning a in Now translated sheet capital higher for options of turn into competition million balance client for activity the by their what among early funds private clients, lines In let's funding in to billion client new that experience in seeing our that results. due $X excess client are lag are total with excess the IPO early average the Starting environment. clients and heightened moving robust liquidity the we $XXX public with stage These more funds X.X%, yielding with call loans rate are by equity despite the awareness secondary primarily now balance our market. we funding driven abundant the $XXX a $X.X and Those Average time increase fourth availability liquidity. grew expect increase to sheet. client into rising proactively they excess fully strong continued billion wide along lending, cycle. move technology or cash but $XX.X operating for would increased early stages balance earlier billion so rate environment environment equity of with of this rate to the see so than acquisition, to we a and activity our less year, off who balances, the the offering doing billion, continued or

This to trend sheet million of off rates reflected continue We X.X%. average or $X.X or average as this billion growth client X.X% expect $XXX an funds deposit growth increase. of balance in trend was

liquidity loan sheet $XX.X $X towards X% continue and were extremely shift with client overall to and billion liquidity and to ratio or this billion. our by end Average assets to expect deposit substantial We XX% believe we assets strong off period support grew the growth have balance billion growth. that $XX.X to

This cross quarter in file $XX be We trailing a and threshold QX public to to XXXX expect the CCAR XXXX. expect to billion in subject four we means SIFI potential to starting the XXXX. enhanced in standard QX

the specifically, on entity for that SIFI While growing as To threshold banks. regulation foreign our remain we regulatory focused the requirement. on level threshold, end, subject a relief some billion threshold regulated will and regulatory continued to active $XX our exposure, we were to expansion inclined the of SIFI and believe anticipate are internationally that the multiple of positively be there monitoring

foreign growth As operations. we see strong continue in to our

are to topic. we have regulators engaged growth in on We legislators and also discussions this without strategies curtailing with optimize our exposure and

as exposure continued foreign December by leaving of in of defined As XXXX, $X we headroom have approximately amount growth. for healthy the XX, rule, billion a

Now million X.XX% of million. $XX.X million $XXX drove primarily and the quarter. by interest turn I'd basis interest of fees fourth income yield to X increase yield and and recoveries sheet strong balance reinvestment $XXX like our the in million rates rates higher increased in loan by rate to in the $XX.X previous loan points an to from from In increased higher in Higher to portfolio, to higher $XXX portfolio. $XX.X gross million to to balances fixed growth income and particularly X.X% higher million increase a Average excluding income Net to interest driven due income interest income statement. loan balances investment increases. due loan or interest

interest net yields. by higher X.X% XX and investment loan due points increased to Our primarily to basis margin

to move trends. remains I'll good with stable underlying credit which Now quality,

net basis quarter. growth Net XX million provision specific for $X.X $XX.X QX. early points average consisted non-accrual for loans, $XX.X third the Charge-offs million for new was compared $XX.X Our $XX.X loans, for in total $X.X credit reserves software million million stage in loan million credit This or came XX commitments. compared million charge-offs of points basis unfunded loans. $XX.X of to in to million losses primarily from were and and

for overall across performance portfolio, valuations although and pose early high see credit. markets risk We exit stage continue good soft still the a to

due $X.X income, private and by the prior lower capital the to fees currency net fees client to This primarily equity from to higher lending investment a which related our increased relative non-recurring from $X.X increases M&A by strong exchange by activity. income growth prior foreign non-controlling losses fees in which quarter million client million. gains GAAP primarily investment most $X.X warrants. income $X.X increased in and $X levels income, which of million fund adjustment gains to non-interest were non-interest non-interest warrant managing offset of third of primarily million in gains quarter. to client $X.X of or strong million in fourth investments due million gains non-controlling gains partially and compared These from from offset sale a and which particularly was valuation was million due related primarily earlier. net client of the by of credit. by in were by income on to million unused $X.X fee $X fee from income and was actively activity objectives the million gains was period This from interest turn was is $X.X the $XXX.X Non-GAAP was quarter offset $XXX.X that million, to of portfolio prior included decrease IPO These partially the due $XXX.X exposure and third X.X% quarter of management million the compared were to related available categories. net balances to interest a loss to Core investment lines I'XX from Now treasury from million increases I core noted composed This and our partially core venture quarter. the million, sales our million $X gains to due sales liquidity. quarter. securities across $XXX.X decrease driven tax for on fee fees Net increased prior decrease robust in

that adoption related eliminates financial method XXXX accounting equity standards the to our new for accounting instruments of result cost investments. a As of

We on monetization were unrecognized recognized will a gains of when a value positive adjustment previously on income to $XXX impacted as there equity these event. the fair as approximately million basis investments. In record for reflective was past, pre-tax only gains investments the the

value of January a the mark been gains now to equity. securities a the with reduction million investment this will in previously held $X in X, captured change recognized $X quarter of the Effective aggregate in being gains on we these have result range at fair forward the statement. anticipate to in we value per investments of As income going changes in XXXX cost all the value

fourth gains for $XX.X million quarter. quarter. in compared $X.X in and to gains $XX equity third they gains for million to warrant equity million gains, item Moving our notable were Roku positions is warrant million $XX.X The in for the contributed the third quarter which in the

Given certain provide exercise us some holdings warrants in stock. of to interest and We indirectly common hold of investment through shares color. like the Roku our size directly additional I'd and approximately X.X of the fund million by previously held Roku's through

noted million remaining approximately the its XX, related full-year to for statement approximately of on on $XX on based appreciation the total for earnings with the $XX.XX we our equity income release XXXX our closing recorded which XXXX. $XX was value million of As of December $XX in sheet price recognized million balance in recognized Roku

to to market remains holdings these the of until fluctuations flow subject the that sale earnings of value position. the through However, will continue

non-interest million million our higher the compared related due $XXX.X $XXX performance in their digital expense associated services costs and initiative. to to This was primary quarter. professional third increase to higher expenses strong is with compensation incentive to global Turning banking costs

make As that we trend efficiency to in committed office down we ratio and drive happen. said are to to our expect back previously over our we scalability in efficiency time

Now turning to taxes.

rate the our rate XX.X% write-down tax in in these due quarter. XX.X%, quarter the was earlier. for of fourth tax assets to of the mentioned the XX% Normalized I effective fourth was effective quarter Our revaluation tax third as taxes, for to compared the

liquidity and to on moving healthy. remained capital. Now very Capital

unused and the weighted The ratio lowered capital well loan based risk for commitments range. assets target our and investments leverage X.XX% in Tier-X to was loan and somewhat. at risk bank ratio growth higher due Although within remains

Balance rates XXXX like averages. preliminary I'd discuss for outlook Now full-year provided outlook October. update the XXXX or full-year sheet to on move full-year XXXX. This in the growth versus and based to is the are outlook we

impact but assumes to further funds Our XXXX. the the rate of rate Fed increases increases outlook date, reflects in no

assumptions condition outlook our loan it's current expect average Finally, market at balances our a consistent we with to on percentage subject and rate the in preliminary change. and Starting with is grow outlook, mid-teens. forecast about loans, this to based

lowering remains mid to low outlook For are clients we from among robust. double-digits. average the deposits, the our our single-digits Liquidity

However, expect we clients deposits continue proactively higher will seek their and as to balance earlier. yields our excess off for described offerings I sheet

is we'd the deposit to grow to rise the We based income on rates If curve, the in rate net forward were at high-teens. a low interest the low of at end interest expect XXs. growth in according expected expect to That our outlook income growth. preliminary percentage net range

the to We we'd X.XX% expect X.XX%. could interest X.XX%. margin expect were be for our with rise net curve, If X.XX% and full-year between interest consistent forward rates the net be to between margin and

We expect XXXX credit to quality and comparable stable to levels. remain

Specifically, we basis loans. charge-offs expect average XX points loan and XX basis of gross total net points between

basis basis the and and comparable XXXX to expect losses We loans to loan performing points total of for between for gross we non-performing expect XX allowance XX be levels. loans points loans, our

in We our core our growth at have with range percentage the end high consistent rate a of of narrowed XXXX. outlook to income fee high-teens the preliminary for

his use to for savings some and tax we As plan employees. comments, of our growth, investments indicated Greg infrastructure in and

tax said, to earnings. we outlook result, non-interest the XX% raising are a XX% expect still As the from reform expense low the translate to our to benefit to for double-digits. That high we single-digits of

effective also year. the XX%. To the tax the with we for quarter up, between wrap and As XXXX and rate are added XX% performance pleased an indicated, for Greg we've for outlook

well general strong a to clients the economy. funding access in reflecting good as robust, as of Our in their health core business liquidity remains our

efficiency ROE by ratios, healthy high underscored quality. We continue asset deliver revenue growth, all to and solid

continue trends positive focused XXXX assuming the the the environment quality we we through to materialize, does upside line expect our ample for capital that and outlook. to delivering And current these ask liquidity support macro rate change open to materially. not Q&A. high would we to In the Should future now I'll Thank expect We increases on remain have you. that meantime, growth. growth, and operator see

sir. you, Thank

begin We we from [Operator have the ahead. question-and-answer go And Ken Please session. Stanley, Instructions] will Zerbe. now Morgan

evening. Good Thanks. Great.

Hey, Ken.

there is I happy billion generating your you are the guess I'm client of the the getting just over funds, like, investment but to impressive, funds? start what that is I'm clients with in and trying stuff is obviously which monetize that that of congrats income way terms better out fee can Like sheet generate is to ask to continue on of revenues - Obviously, off, investment from off, $XXX entirety maybe from any the to. off-balance client a as sheet money any to referring way Thanks. pull on-balance the in sort of higher you're there piece? way you to U.K.

Ken, So would Greg. this add. is Daniel start, I'll

is like that are understand you've over for is, very I time think, instruments cash and investments up first that in to secure. what it cash safe set truly

And that margins the are begin to there with. obviously, tend are so doing when that, you're

So increases, bit per points. able at more points think now, a we little point out cap is additional get maybe for and which at set out we'll probably clear rate on XX right maybe to XX XX and basis right basis basis points, we and we've about been a maybe basis then an X few XX running track, and this the about pretty we're we're

actually their made question more that this a the because move I'm that to get some very I in. factored on that. because those points going is on actually pay way to point important, there opportunities there balance of ability sheet, higher an see to We're clients. what's are increases course or to drive it the and our basis right. to But sheet. off-balance could very up a average, XX which on of increases off-balance were there, but start there, than balances a a forecast. We to to what's balance basis three So don't rate that XX% sheet. to may of maybe reasonable is of on our much sheet of investments is, still those meaning the be you lot the further sheet though, X year, opportunity year what from But return isn't a on-balance going the there more There's during direct into second strong the some being are for go appropriate able to ROE looking at think for deposits. that there's be if

Got your more quarter next And definitely it, you question so helps. over incur becoming SIFI, for okay. were to quarter or as or of that any qualify guidance towards a year? shifted then so. the obvious might in quarter just there other you Is second the the That do first a half expenses be the first little need expense

This is Dan.

the and to that or in related quarters incur going we're expenses were into periodic expected that that baked there's no to outlook So couple expenses our first compliance. the

you'll rate a pretty think even see I burn year. the of expense So that throughout

all right. Great, you. Thank

Ebrahim of Poonawala. we have America Lynch, Bank Merrill Please ahead. go From

Good afternoon, guys.

what if of Dan, to it off the to make can it guidance drivers has of the investments the expense you it you higher? relative can increase feel entirely not so moved is of or why - reform, the guide because sort more like other and tax all do the of go you - and October, driven Just why

it's infrastructure great a opportunity to That's those invest the tax enablement. reform. employees see definitely for in to all We employee And related overall in question. and

time. it's opportunity from. great a that's a It's think So where that's great and we coming

because of handicap for I you push point to growth if about higher tends moving curve of clearly expense just low growth, risk guide of through And be guess the as the higher rate. in we revenue even be of up expense the forward talk sort growth of XX% I we uncertainty as to want I Can guys. XXXX? more to that that move to picks what plays think should and about would going you out the mid sort drivers it means

I'll to yes, might want and it. add take to that So Greg

incentive baseline for costs at we look and already compliance that regulatory have for compensation growth. business investments good our XXXX, ROE expense higher we in infrastructure continued to for as embedded performance, related the So and

a that's us, able support expense very to then building a we're to top franchise. the good growth that growth in of baseline on continue So that to for low-teens be the

So to we we XXXX outlook what do and with very plan supports the with in feel in the pretty of guidance the ROE that the growth performance. franchise, high strong strongly a

So we feel good guide. really expense about the

thing only client employee dollars that add the not Yes, would just projects it and built-in or I we only have to is on board in across experience the enablement.

headcount We built as also globally. in have well with comfortable both some and very we there that growth domestically feel

think I number. about so And into we are broad good factored that expenses feel already the the base

be means so because dramatically it feel should that forecast that good happy surprises are number to surprises if there everybody the we And we're should very there and giving. the I saying are be outperforming

curve. extended Very moved on sort Dan, Could strategy clear, the we've maybe an now into you yield moving seen us the what you just give got update steeping separately and as that to portfolio, some looking are and we actively investing the the duration of clarity tax we've through in bond year? on we're reform, on

Yes, a question. that's great

we're saw the portfolio of bit last in a as over duration, in quarter. you looking at our the So extension

So X to years years. move up from X.X

billion say out about it As call year six a off roughly purchase the runs $X let's let's in quarter. we range. buying the continue portfolio, four We're to bond to

also as the of purchases call part well to in move benefit. let's the bonds tendency on yields of those On XXXX. as obviously up creep has million we extend marketplace. That $XXX that and the provide to buying, million improve $XXX we're a based duration tax of see duration of availability it to into a in you'll as a general municipal a top in range bit So

what that's should see portfolio expect in investment to you So the from XXXX.

some versus sort us gets reinvestment? just billion $X the you incrementally in so the of get how of get we every as much the new off - sense are for a yields frame terms that what's rolling what's adding we quarter can of And in

think I about quarter. best it every to call points on think roughly Yes, to billion is basis points way XXX the XX that about basis it XXX improvement let's

questions. Understood. That's all my

Please JPMorgan Steven have Alexopoulos. we From go ahead.

everybody. Hi,

Hi, Steven.

I business changes the the accounting bank the in all? didn't XXX valuation cited receives? start the to that in funds and regarding like is And understand make that, I impacted I That want adjustment, warrants wanted sure the portion sound to that at million

warrants and it impact doesn't impacts fund the investment. it No

you did to say to you go expect that And $X Okay. $X per down said to million you quarter?

we're recognizing cost. held that Yes, these were previously

So recognizing as of of the those on $XXX worth beginning of value million January investments. based

seen it pace of have statement to with million income distribution general flow let's a through would You point the the at of quarter. $X call that $X a

So we're likely January. that to value see because are in book to we going of that

You're in likely to that. see a income little bit from degradation of non-interest

of $X it's quarter $X clarify that So from it because a per just where to to big want make is Steve, this asked $X $X and quarter okay difference. per million we to is is I Greg, which to sure it's what million you was not decline right expect the

yes, Okay, difference. is that a big

think at do and $X.X for such client three last you $X billion pace look in in What's fund Greg, row? I it at you've billion over a driving that elevated it two because quarters, I've the Okay. asked which think almost should been it's quarters sustainable? an inflows

there so couple a it Yes, flow obviously capital things year look you $XX billion. again at last overall was venture for when fund the

going back you on XXXX record had again start second to there. highest so So a

of story of is right. you that number venture part that's just a story the big the still the of available is a get is money just Because part is pool corporate substantial piece. very in have from that's amount breath The sovereign angels is wealth that more bigger coming the one and of funds. have have availability coming are you of in bigger you and So capital

of big client look population so relates and at the excellent side we right driver fund's to on get the teams growth. coming our used job doing money incredible can in good piece think balances companies very the both execution right calling of to with I higher of team and been Second just you a you on the really are our know an that's

look outlook billion healthy the like? than We it's lower is us comfortable another really higher it would year. be than XXXX to the obviously believe for good I just going for be is what outlook it's be is going going that $XX question hard second The or to to predict billion a is pretty feel $XX we to still say certainly

the that So it's give of you. context I'd kind

that Maybe as back, significant amounts going as well. it's ecosystem is whether is well those our to recent tax corporates talk this come to out are Descheneaux Steve, money about and to Mike about repatriation into one and here deploy the -- reforms other as are the think with of the thing overseas well corporates it the of that

that's something that potentially eye support to keep on funds the help well. of flow could So as as an well

hear to Mike. you Nice from

tax fully Just regarding this could cake down know on I been range tax on you've rate taxes, XX% strategies XX%. or working Dan is different move baked in going that even to Thanks. one lower? to the that the

and what is the bakes municipal will that, But what a the next year That expect in bakes year. be the in other bonds in that of terms grow our for in into and of XXXX the could with of that the the plan throughout full-year we better. municipal implementation terms bonds of impact little strategies. bit Obviously strategies cake the impact of year for next the purchases

Okay. Terrific. Thanks for all color. the

you, Steven. Thank

Shaw. Wells Jared From Please ahead. Fargo we have Securities go

good Hi, evening.

Jared. Hi,

tax this then, the some the about was the reinvested - sticking taking we securities opportunity losses security are that, the when is similar or a Maybe with side, you of just that in was loss restructuring, was think restructured look way be basically that quarter just to And that securities? at now? that

rate, in what an lower securities the before exactly to while We That's time opportunities. purchased the at We some tax it improvements Dan. same had the is opportunity. had having This Yes. rate was.

of the So was things, a we to time it thought in the execute two the sales combination unique portfolio.

then grow? of the And planning a attractive on muni's expect see the a Okay. from the that muni to could given percentage How in rates tax change side, book incrementally we pure tax make big as less strategy. securities

portion a It will remain portfolio. small securities the investment of

the mentioned I opportunities there to $XXX let's we going before moving million forward get supply million - and are. attention far in but we're dictate call what the paying rates that We're growing there we how with we're obviously, range, As as that. the what obviously to with time, volume the and tax it $XXX can are

finally of SIFI a - for much preparing for component how growth, opportunities? look when much based the global growth that that services year-over-year And the you just is there's SIFI threshold? then at due Great. how on me, the the at to large professional that the is of So

And that at give is in that on quarter and the million which CCAR let's you to least $XX of XXXX fourth amount $XX the standards the of SIFI I'll spending it call components amount the range. largest prudential enhanced we're implementation. one total implementation million

XX% let's So we it as look say would which we we ahead, really million $XX are of to be that going - as service in call to is million the XX% to spend. anticipation $XX range professional

Great. Thank you.

we From Evercore ISI, have Pancari. ahead. John go Please

Patil of on This Quick outlook. on NII John. Rahul is question Yes. behalf growth

about and December today assume December outlook You with a over the where growth adding recently in bring the securities couple from? rate wondering just low-XXs, coming your downside of numbers. provided hike the to cost? look the forward, It did hike, yielding high-teens months changed I'm like NII to you lowered what past differential growth going this it like rate so to high-teens is not you're you of outlook in assumptions high

deposit coming of range move. that digits deposit to movement forecast, so Yes. The the in from the there downside mid-single driver the offsets December the the really the benefit the is is

- have deposit following next costs over of then the couple beta your any hike, up talk deposit on the about expectation you already maybe December or relatively hikes? in place And held your rate put the planned rate changes about then and talk Okay. Could I have mean pricing well. side, been

Greg. This is Yes.

any We a kind from - QX change the well haven't really with very seen to deposit costs QX to QX. of

points, funds from or about at X interest a and Our what of on an it's increase points, that maybe very relatively still modeling impacts we're X or that, basis XX% a but another basis maybe X rate points your it's top basis beta on low. but talking bearing going additional up with cost XX points, about a low of but basis point you'd interest it's you're bearing of account, obviously basis that kind still even deposit looking have XX

direct can future outlook, right how it's to going pay we're obviously thing plan the one we and quarters on, the factored both That's it sheet for make in of thing appropriately but we in at off-balance where that we how are questions, for and right mentioned, now. - the starts come a not the I take right That's what that client more as incentivize some As to those to to materialize. to ROE would into us and in looking through our sure earlier move of clients on it do perspective.

All right. Thank you.

have ahead. Please KBW, From go Chris we McGratty.

Hey, good taking the afternoon. Thanks questions. for

Chris. Hi,

rates Greg. sheet occurring? got you've up. quarter, capital thinking I coming Hey, accumulation about are down asked the about Thanks. you've is this given capital return return, shifting benefit, got Last going balance you capital How and taxes capital the and you

you if great at how from look a Yes, it's think right. a here's perspective, prioritization question. I And about it, would

perspective, an you've obviously of making sure did into factor that to part, balance capital is a And that the off, from ways better be return best if optimize to use it. there we highest that reserve to more were comment, back got do the to we move to last go first appropriate So as certainly deposit it has But sheet We get balance that. be, shareholder on a the you my the how capital. I would we believe against to on sheet? from said and

capital look decided this growth are it. been alternatives. happen and that later about Now taking care already some then probably beyond sure. that once all at opportunities you other for we do year, Nothing at Those discussions will look go has talking of point we're the of you

driving my the sheet. balance on we side our pulling the more closer next guess it QX, to hear You'll to to it QX. about probably start price and the It's start get and down we'll time is or time game And that what say onto really with is. we're would only if of ahead plan the more deposit forward I not that's articulate

Thanks for that.

when have buying back do book and are to could but about you - pretty Do do you terms that how buybacks. preference or a have In you there's accretive also there's is stock, obviously have neither those I potentially be obviously place high, today, earnings? conversations in thinking dividends - multiple but know two on of you're there's

all it. I going is at we're Dan. we considering This point, and options mean into preference as this really don't we're have a

Thanks a lot.

Yes, you're Chris. welcome

Sandler Deer. have From Please Aaron O'Neill, line go ahead. Aaron, we is open. your

Hi, everyone. afternoon good

Aaron. Hi,

the those that surprised if you're on balance only of forward, you all gains then suggesting sheet. million $X realize, If guess gains pretty could - million kind follow-up good a you're continue like change, it some I anticipating the actually of recapturing still X drop to that going little that on sounds right? of accounting sounds I'm to type in still I like you're investments unrealized you're the the It if quarterly is gains

so Those the investments really at those anyway. have held sitting been investments value in those -- cost, are was

brought fair So now change through is what value the we've done with in adjustment equity. the them in accounting to a

return cycle. at that to capital, was because point a it value which that time value these the So funds only distributing is long that were

cycle funds, these the to and So their contribute to end our we're non-interest. starting nearing of

of in just that is already to sitting it. equity. and because expectation $X going equity to non-interest we're on It's sitting the quarterly it's not income basis, million that So we million in see $X marked a

would were cost of talking they back of while our what not business and were driver I'll That's type what at that's gains. intact. in But call been so core, I impacted SVB because and balance a to sheet add it thing is, investments it by we're we're is the and securities of what about. the that's more talking That still these capital only about. significant on made The that they held are were, investments the

two sure dissect clarity or those that trying two those what's those investments make to we happening to much separate give and cost. want on held - that were as with possible we're as at So

about on is be impact non-controlling then the then it adjustment, And how Okay. will magnitude the a corresponding similar there? impact there

these hold are one isn't is there because no kind non-controlling Therefore ours. we would Yes, [indiscernible] there XXX%. It's interest. of again that investments

one, you're for at below looking keep to I And just understood Okay. I time mentioned past then billion year? over billion the the the $X like make that to now. Greg, sounds that. that and being, just $XX foreign exposure much is about want increased sure. last you'd How one it

it's we've billion so Yes, up, roughly dollars. a couple a gone

optimize we we and we So believe opportunities have do. again if to

$X next billion in You billion can that we $X effectively take roughly could I would optimize to say months. the XX

negates kind path growth of that We somewhat continue on that that.

it sense his really of horizon, kind the at at or look around the billion looking dollars This they're remarks, intent on into really based the all year you time $XX it based to to you're Dan that trajectory, it and it. the than move it in the was two one other others even said And of makes current if right. again changes regulatory exceptions being what changes you my discussed. So to on give a dig opinion - more three

have going So it as informed keep more everyone certainly we're we'll about be we're hopeful to we that's talking about information. and

Understood. Appreciate the clarification.

[Operator Instructions] And from go Brett Piper ahead. Jaffrey we Rabatin. Please have

afternoon. Good Hi,

Brett. Hi,

elevated how quality? markets self-correction ask impact move on really and was you and to that are see how about those somewhat obviously what there valued some numbers? you credit that commentary, this or in an of we you your to the Are wanted your companies year Greg sort I year through some happening valuations could actually early talk that these some and private as of private high of expecting do of companies

Yes, comment well. I'll let start Mark some and then as

speaking don't price this valuations and my then comment would could that impact commentary money And what a to my really impact you down to more downside raising become likely seeing What it, see anytime in the I'll credit XXXX words healthy said comment in you were a in it. turn to would quality of to you. extent. is not that are things saying and right. we We're paying you only amount things So It's would companies. coming liquidity in see that around dialogue those we were some typically that more raise the there difficult perfection we and the - predict I on what are on to area using quality, for are perfection that significant to an in We the extent, same amounts if and over Marc certainly this when our saw really see to few are priced about upside more which call is - that are clearly future to money it. calls. this some just - we're it there attention in were minutes all you than is obviously there on we're seeing the for it is that if companies credit around

at and really of your like well investor in likely there's captured would think signs It what this seeing that venture so. terms to stated, I in no sentiment potentially those hour. happen not exits it opening But the that is as valuations imminent cause remarks returns. as Greg is you in

For the what moment, is. outlook it the is

that XXXX industries. color balance lead Appreciate there And I've make Okay. Is terms there. might the and of about some in of to on growth comments Greg then loan expect outside a portfolio? you other sheet biopharma seen TCP group some Twitter, in the on you

tweet, so wouldn't it what you saw, but know don't have… I Well, tweets don't I

email, I'm an sorry. Through

Okay.

the comments you higher say, is my certain industry any broad-based, look higher valuations, those software that for again to industries or et cetera. profile almost that going higher of are in There outwards you at and i.e. companies perfection. biopharma some valuations pretty priced look You about be is

to broad-based. are, are predicting, comments my outlook anything but companies don't our expect what certainly that's pretty valuations. would healthy I any higher We say happen So the not profile getting is

to the in that. terms I TCP. credit as of No, mean in meant outside sorry terms relate growth in the of the just it didn't I'm I portfolio of

comment. your I heard

more life come from last equity upside, this expect we've the So more private we in certainly said to expect had as years, is is than although year than technology, base growth actually services. few sciences, there we've likely broad do it we certainly if in

the teams, could nice pretty that even saw is faster that Now about How We did be we if clearly you part growth. happen, to But headwinds. quarter, tech it. equity massive but some have the the see optimistic I in if banking only, the again think grow would create it only market is, was we're approaching some pace, at XXXX. market, M&A a our is why which of fourth see caution and of are amount partially the you

that I thing add on would healthy other the again last only private the experiencing growth or been bank, quite couple put - over the years. we've considers Correct of

that in definitely growth XXXX. So like some you'll see

great. color. Okay, the Appreciate

From have Stafford. go Tyler Please Stephens, we ahead.

Hey, good afternoon guys.

Tyler. Hi,

one guide, guide? year? I I with to you better X.XX] margin. that's Does the guess I'm just embedded outlook portfolio the throughout of just to triangulate NII to the Hey, balances last [X.XX and for the one assume Can securities trying more the help me loan me, less the or and with then deposit guess that size in down the that securities

and flat to amount the deposit of to that's overall assumes degree of of we but speaking, securities, investment have. that more it tied the a generally So liquidity some level

Okay, so that flat? balance roughly should be security

That's roughly.

Okay.

to can balance you mid-teens outlook had, see deposit there you to balance single-digits outlets that I of and other a if for right each of see to loans there growth the apply compare words within kind deposit can outlook the you it the you mid we kind took then when the vicinity ballpark of that through that other. that mean the

going is the that So that security that significantly not other. imply or move to way investment would right one

and as kind Thanks a was at I'll of guide, Yes, I to through kind go throughout lower guess of that's where implying NII I the balances hit going walked that security declining that. to guys. pass it it year, was back but first

further it back We'll Becker now to closing At no Greg for turn remarks. we have questions. point, CEO, this

for at to very great and just everyone to year us great, always tailwinds, growth We're nice thank forward I a have Great, time a XXXX. joining it's and expansion to like in want looking feels closing today. been It's some continued long performance you having That's tailwinds reforms and couple outlook and and XXXX. nice when these with headwinds regulatory going on. clearly what calls us with confidence and rates more that gives that's taxes in that the our we're great talking hopefully about three

do just of just clients the employees question. their have a great our job amazing we do great want - everyone each our to call. for such us for in without best doing all want best all So every bring thank us thank support in as every they to clients I I for clients, and taking of day our night. thank joining care a Have the call their

Thank gentlemen, conference. this you. you joining. today's for and Thank Ladies concludes

You may now disconnect.