SVB Financial (SIVBQ) 26 Jul 182018 Q2 Earnings call transcript

Welcome to the SVB Financial Group Q2 2018 Earnings Call. My name is Darryl 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] Please note that this conference is being recorded. the to turn O'Leary. now will call Meghan over I Meghan, begin. you may

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

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

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

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

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

making to no these sizes items and almost our performance comments reflect in record current balance and to for the of been every half to into equated our details were our Meghan, second us lines higher decrease previously longer fee liquidity driver XX.X%. write revenues Included EPS CCAR market a Based call get with raising the be exceptional Thank reserve tax business. earnings our to of loan a you, quarterly reporting fee of continues of for improved A and exception in and I'd had credit our sheet compensation XXXX. invested net X% markets, per with Average levels equity income and trends business positive for to first related large a and related sheet to deal of of Venture all XX.X% were of Dan delivered puts benefit and across strong compared growth. mega outlook. from significant our some Average the $XXX the tied liquidity, highlight increased approximately which income capitalized and by These driven performance deficiency have of with Core billion. income net quarter, with our positive performance a markets, to off grew assets We grew a results X% strong quarter few return $X.XX although companies, of on continued the interest an stages sustained positive capital pace to which potentially by of to first start the for [indiscernible] outlook billion Together, capital along investments of financial of since first rates, loans and delivered a rising. quality net including in are million. $X.XX joining companies $XXX investing by for performance loans We time These XXXX a XXXX funds client core balance by healthy growth, full levels $XXX today. three billion. and X% we of total in $XXX by environment, aspect share the based investment stable increased on quality. continued million. XX% trend with needed. medium interest billion to at funding income year million, high to exceed ratio results, and to on core like will our we're $XX.X thanks, everyone, $XXX.X growth. we of client credit on milestones funds second quarter the basis. Starting the our excellent $XX.X in

significant formation to are many able valuations client to loans ability closely, and XXXX to people, have company core company which secure acquisition large to our in that contributed demonstrated that companies funding traction scale of VC in an high today are are continued commercial including general with While revenue SVB second the watching robust the continued rapidly. The pace investment new new the fuel clients strong added area quarter.

XX% the for backed That were clients. to SVB relatively of IPOs a the exit the second On VC first total science the quarter. front half XX XX the we healthy saw brings technology, of in year, which

has of effects rising these conditions regulatory those taking lower have and this in of prevailing interest of our been growth. tailwinds by taxes, rates. for We're market and been invest business All relief, advantage market to our amplified good the positive

management On our continue front. We has saw team our Butler, business. will growth of private notable and to most banking who our wealth we management that front Yvette strategy hiring the momentum expertise and out markets deep and build nearly on lead all segments in across by people continued

and grown on-balance traction drive we than $X the openings number initiatives deposit more related doubled since than to March balances been growth has while in billion. deposit have sheet more of Our account new launched has

that overall just follow-on of have Our liquidity chosen environment, executed of also SVB asset a client funds our reflection but IPOs their XX% Year-to-date product deep or our than and client manager. not growth more have of capabilities. transactions clients as engagement is

outsized see masks but On growth to private is that activity continue loan healthy side growth equity, we other in the segments.

actual year-over-year has the fee itself the headline investment quarter, is be In was to loan of tech foreign and we XXXX, annualized XX%. loan net record market something up originations liquidity that growth although reflects our XX% in suppressed growth approach client success fee In log half even with a is of quarter for income life engagement. the been the underlying which outstandings. of tech income, growth has as and new in of loan segment immense growth very with For in sciences exchange in up in new a in borrowers first pace strong the our proud of to client annualized XX% instance

ranked the the FX forecaster quarter, in number U.S. the second currency two was by In addition, team in rankings. Bloomberg world Bank the the only our in

FinTech people FinTech investment expansion FinTech of contributed and and in in year-over-year. continued XX% Finally, growth practice number client to in clients growth our funds national XXX% our more of than the has

to is In In running there million leverage we opened milestone new us achieved to International of the growth. deposit and in business our branch products our payments XX% term recently our and while expansion is up to unique at today our opportunities continues accelerate first total business occurring our continues addition, the tangible giving opening opportunity and Overall major respectively our of balances we loan. strong These There international international and it has pace value just amplifying a of grow the on and and a client few $XX to our lot we to than June. overall in them. ground a faster already hit forward, international German balances our are loan a deepening disruption loan booking are a where view it. engagement the and XX% things strategic how business. and are that business embrace us bring driving

environment some very is, As on we challenges. to focus positive real the continue as current

pace loan from banks, First, the competition non-banks utilization. pressure and and continues growth for of loans the of ample to liquidity pressure

market enjoying. to market possibly been finally, securities credit could and warrant and positive costs pay trading all valuations, we between pullback war much And its trigger the that U.S. to the losses. momentum the and the a trade in potentially we've can Second, continue investment in future derail attention higher for tariff particular biggest escalating potential partners of

groundwork For for we our three now positive remain market on primary future lay our growth through and focused strategic environment objectives. to leveraging the current tailwinds

First enablement is do it employee employees for their easier making to our jobs.

them tools more we're and efficiently platform out also and effectively more new integrated, our to part scalable, help one As we're work this to of upgrading and rolling mobile that CRM collaboration mobility and secure.

client benefit major and both The led and win which loan on-boarding both employee experience. pain to points program is long-standing client manual digital quick group orchestrating employee core a leverage And for our here the infrastructure effort client our service focus be past. and an focused all workarounds in facing enhancements. is experience will our end-to-end client will the central efforts currently improving responsible by operating third while is teams. improvement to overall the from business. This have that process processes is product delivery and These experience optimizing supported improving address on and of transformations client enablement improving in end-to-end Second the

We and our are solid make us performance pleased investments. these enable really execution to strong that

CFO, now now Dan we future of the the in Thank unique you ideal, sustain is the our call us environment I'll maintain growth this market the believe to that will bank also economy. over our as and role to our efforts current turn enable Beck. innovation and global momentum Although

Thank you, everyone. Greg good and afternoon

business the and excellent in of Our highlights. continued strength was included core following the quarterly result performance our

and sheet, strength loan to on off-balance revenue loans in First, raising strong primarily strong those higher life growth fourth, we primarily corporate our business due raising compensations as net related growth income growth billion sixth, our well in our continued client X.X% investment as outlook. in stable balance sciences the as we by or healthy to Fed our from and loans Starting CCAR as sheet; our higher solid higher was $XX.X CCAR the sheet investment, lines of healthy segment drivers driven results. costs. both liquidity as June expense growth sheet average investment growth billion higher trends; our underlying saw due private of incentive as increased outlook robust capital finance acted incentive to the by balance performance, our yields with loan credit private equity client and on and interest commitment off view liquidity the equity origination in utilization from higher of in technology that into increase to off fees; In get I'll balance headwind discuss and a third, income related by a portfolio. operating continued increase I funding growth investment bank. new client second, M&A from fee write and with income an environment funds lending to call lower to gains full-year outstanding $X.X equity our again compensation securities; core and outperformance and we're fifth, details but fixed higher strong offset expenses our and and In strong to due by warrants write securities; and funds funded capitalized are balance client for quality well

investment from as healthy expect acquisition It healthy We environment, are This $X.X funds year-to-date. deposit activity initiative by growth grew loan billion outlook also offering growth reflected of client at holding $X full new billion of steady range. new $XXX.X billion. generated year current clients. and outlook our particularly our secondary X% or average the client the funding XX.X% of growth high-end or to growth funds has average as loan be of primarily high-teens average a well of X% but total IPO driven billion our than the among client and off-balance Average of which reflected sheet deposits more impact our deposit $X.X by to

better to As of [ph] full were outlook of X.X% from end expectations the average deposit a grew result raising year our are teens. initiatives, to billion. Average by the $XX.X double-digits billion for period and low the deposit we assets low and environment growth strong funding $XX.X assets growth

enhanced threshold has result the file a certain raised to foreseeable In from will not CCAR banks we the Bill with billion $XX billion as Relief implementation addition, to and for $XXX public compliance raised standards billion that and the will to required be with the report in be eventually of future. $XXX been financial a Regulatory for

the an rates million Higher loan and million I'd yields. growth interest Net from deposit loans to balances higher the to $XXX.X investment impact and Now interest loan on due $XX.X in higher to increased rates like in XX.X% quarter. second growth, by of loan to investment the investment income income and $XXX.X of balances million to higher increase statement. and drove turn interest from income

increased $XX these fixed higher to yield This our reinvestment an X.XX%. from increases, $X.X to or XX mortgage new increased in costs approximately backed total demand yield of higher investment X.XX%. by million investments As funding of portfolio, related bearing primarily period $X.X at In our represented in million quarter points low increase deposit only a to rate million. billion by tax income or points accounts effective XX in $X.X at mainly at the only the balances rates increase million. market $XXX.X of basis a overall fee result of points basis of as same cost an also an increased loan securities We XX by proportion purchased prepayments. municipal includes one and drove yields in interest income second basis Total deposit end. yield approximate time basis bonds XX% interest At of point deposit

Our to net points XX X.XX%. by basis margin increased interest

a our on low as As for interest rates income full higher loan the result outlook increasing the investment to XXs of sheet net our from effects improved well of as are outlook XXXX the we balance year mid-XXs. yields,

We are basis year raising X.XX% our of to outlook points also margin range X.XX%. interest X to net full a for by

to move with stable I'll credit quality remained solid Now trends. which underlying

partially call loan decrease were Net out was enhancement basis of to lines Credit million by are evenly from was for the million quarter. solid. by $XX.X specifically split for basis loans of primarily points sponsored of for reserves compared private with not remaining million million fairly charge-offs. to total in $XX.X loan offset net from It second specific nonaccrual primarily of first growth, reserved remains was large or charge-offs stage were reserves in credit. XX loans related losses Our charge-offs composed in charge-offs early reflected provision or million $XX million quality $X.X loans. XX loan quarter. to capital credit $XX which between points $X.X equity, coming and This a This the new one compared methodology average

the The our in affect could improving buyout this the things year. our our With markets portfolio indicate including client continue trends we believe portfolio, activity. We outlook to in repayment sponsored in future stability. continued credit the mind, monitor base we're for for overall

loans net We charge-offs for basis basis are total reducing by to our points. between gross XX points full Outlook to XX XX year and

a XX reducing We and to percentage as total outlook are our basis gross nonperforming year full points. between loans loans likewise of for XX

investments non-controlling to losses a million income investment million turn million Non-GAAP warrants. will $XXX.X included million, $XXX.X was the private to more were $XX.X equity $XX.X I'll and $XX.X Now as GAAP was net compared an from noninterest prior of securities capital to of which net following gains interests quarter. the composed prior from income of in non-controlling increase core noninterest venture income million is which fee income, gains and million from on you of the shares of $XXX.X the gains quarter sale recall the related prior expiration of lockup million losses Roku in on pretax Net $X.X of interests quarter. period. compared noninterest of

our of is warrant future significant regard want Second valuation securities were $XX.X warrants from amount volatility. are gains investments. by strong from With these were primarily investment activity This of clients related quarter driven that higher driven many gains during the was fee M&A investments by a quarter. million. IPO to investment does timing positions. growth to increase income our and in Equity for subject own sale and by gains increases increased $XXX.X balances. SVB the the I healthy fund primarily and and of VC unrealized control our companies the at not funds those public and million to and VC fund of X.X% rates driven million Core underscore an market by related higher fees client in client $X.X positions to private of

higher client our are fee investment XXs our core the this high increase spread XXs, from tracking we As year growth range. and low raising of outlook for full to are funds, improved a expectations end on the and this of the our result we towards income

quarter. compared the to expenses. following million million expense first reflects $XXX.X to increase the was quarter-over-quarter The interest components. mainly in Noninterest Now turning $XXX.X

benefits our compensation higher to of from million compensation outperformance incentive people. investments related and in First, expense and mostly $XX.X

costs Second, growth tax $XX planned projects are end-to-end longer Relief quarter of enablement, the These Regulatory investments million to the we from mentioned largely related write-off benefits. and implementation in investments no experience, along as in compliance million investments were efforts. And the to expected last in an due CCAR improvement $X be initiatives, regulatory client Bill. and These needed capitalized with that of use for accelerated systems of employee process preparation. reporting a third, reform outcome previously investments to will

this XXXX improved compensation We performance outlook believe costs and to strong revised increase We of are CCAR. the high and at the higher write capital likely our out by expense from to This growth teens. the of the end forecast are by raising low relative our off related our of full to was we driven double-digits outlook low come year to incentive outlook.

token investments same the project outperform light second outlook see accelerate compensation our if of in in additional the And said we've in we the year, would the which in half costs. we As our costs. growth raise and of other we prior the higher continue related could decide to by performance resulted will incentive further year quarters, half to strong second of in

be expected XXXX, from full quarter. based With Turning to high performance year the increase This in a are bonds, our rate effective our a advantage the remainder taxes, lower our outlook benefit tax municipal range compensation of million in the tax stock along to first effective surrounding additional and XX.X% XX% saw tax to continued restricted with exceptional benefit from seasonally of based investments we to stock excess resulted forecast expect compensation and activity tax related vesting annual tax in and share XX.X% in the lower we of impact price units. XX%. than share compared lowering between rate for originally will $X.X

balances ratio X.XX%. ratio increased reduced our healthy and capital higher Moving Tier-X by in the the basis X remained assets in to leverage Growth during bank's capital bank with investment liquidity quarter. strong somewhat capital, capital growth risk-based regulatory and loan to from risk-weighted

see of earnings the for loan will majority growth delivered and outlook full strong and raised these the our that we from year. the remainder In and be outstanding fund another quarter to generation XXXX. We closing, this balance sheet we capital deposit used second of growth time for growth year expect

tremendous our are make markets. and from in clients available to of the Our and the these to business to to continues successful a exit funding high liquidity benefit that market and get able the generally quality businesses

assuming in believe As growth position implementing high initiatives, growth the maintaining environment on positioned executions, and of the and prioritize Q&A. environment our delivering the long-term. planning, to for optimal I'll growth macro and to liquidity always, we for the focused We no value quality quality in you future we and clients. ask continue to capital adding regardless and well with credit open success stable operational and remain now change we the operator to strong remain ourselves long-term Thank our

question And your [Operator from question. can Ken Morgan do have from Ken, ahead go Stanley. you Instructions] we with a Zerbe

Great, Good evening. thanks.

Hi Ken.

Hi ken.

where guess quarter, like we with based gains securities little than thanks. higher much comp I to tied thinking non-core warrants actually expenses, just that is you maybe starting help relationship, incentive us and understand like all? were understand a higher probably fee rule there just investment the if I'm of is thumb or about items at the just actually how or a off the of bit maybe this to could trying

a percentage non-core that than items, to comp what incentive is is core there those drivers. from revenue So our lesser that's we get but tied at

increase income happens interest other fee the incentive base income less from in drivers. what the going that's to net and So than compensation drive of core

okay. it, Got

guess it percentage. right small I'm just, fairly all about a also I now talk like can fine, sounds we offline. that's it So

if percentage and the a revenue Ken, question we for just have point on to XX% XX% the another to expenses expenses increased by year take look just X X put this in the at basis. context to roughly overall outlook quarter, we just

operating So we're strong driving leverage.

No…

look ahead… at If our you - go

it is I obviously implies guess – in though guidance growth boost I this would lower to forward kind figure almost No, higher even that's stayed And revenue like see think quarter seem given, great, out, have expenses something go going say I expenses like I presumably like, on am was a for stronger one did which quarter to just a that much would almost is of the and it then was I it but to basis you what here. trying this reversed revenues than from expenses which the higher.

Yes, so take I'll that.

QX if of on that CCAR there we'd $X our was talked $X impairment third, a spend professional earlier. three incentive at for we that million; to these part client two, driving experience catch-up and consideration. of take the initiatives So roughly items is just strong referred really of $X really services million about scalability are One that about notable based into Greg compensation from look and was first that the the performance; are worth million to was year

that at you the items that the off look like. when expense what So better case at looks least picture we we that, and base gives those of rate notable a take base, of

Got it.

some different comments expenses, Okay, is the regarding you that you for investments, just that your way what you building outlook? expense normal expenses accelerate maybe I your slightly on and the helps guys then into may I just from understood growth stopping question guess a those initiatives doing, about are the that strategic of that guidance

our support as look these well. a internal So, as an to already initiatives, capacity scalability we to have support perspective, at of initiatives growth substantial number we strategic we are from projects where

really can year. that's a accomplished know a limiter get So much we for within given just how you

is stop us biggest So that probably I one would there us from what further this on going think for point. the at

to it. is this on Ken to add Greg, and just Yes,

that the way we we have say, them capacity. that's that we projects look at to back may actually more, what for keep upped the right and that and is we But we at just those may say believe the and course as continue So Dan during right, of year change, can we doing accelerate. all if capacity for sit and you things look your and is what capacity we're

to caveat year, kind the think balance Now we in but right for would make there. sure wanted that that there. We we're capacity again, have just our expectation guidance on of have and the the have of we the we doesn't track right

to we to we If and so and capacity go could it of at one continue our if forecast those decided it's cause things. and what number those are the can really we two kind higher, it, to actually So the two two, we do had look number things. the outperform willingness

All right, great. you Thank very much.

Yep.

from go you And your Alexopoulos ahead question. from can Steven Steven, with JPMorgan. comes our next question

Hi everybody.

Steve. Hey

Hey.

I want done, interest in to start, the bearing that at I billion, a actually we declined bearing deposit indicated million added interest but Greg's thought you remarks that newer deposits about billion? bearing added $XXX account the interest the when look third that $X that quarter-over-quarter, was quarter

No, clarification so so let Steve. me, a great

- specifically high new would was the we what which clients So enough we the so up checking early simple, it make is product and was about sheet. I open say stage balance take If excess historically have talking there's account. it balance balance basically and move we your introduced the then really said I’ll off

open client Now checking we in, say a The up excess change kind have you same lot it the your of account, cash. was, was comes standard. of

deposits. on-balance money up billion an up of Right? run account. we we doubled of point sheet a product since this the balance going have open sheet that's opening we to then introduced will where an rate off interest bearing specifically sheet $X market to was opening an on-balance and We the change from effectively So this the

sheet. what obviously and is, moved more that means clients Now other other then raised off are products balance money there that more that

and it higher to of sheet. account bearing then balance interest off an off had balances moved they So levels

introduction. the product it's specific to that very So new -

to change that much Greg now of safety is does and balance on terms sheet? like the how appetite in threshold your bring you'd that of that lifted Okay the

we $XX Steve. So that's hit before billion quite a question

and more we you initiatives good have see with look to new that and have But the on growth balance and would the to balance which we're will even the move and say, to products attention do right can of we've driven clients set why is of interest by got obviously of to place clearly our introduction it and of accelerate to appropriately money it try that hopefully to that. kind capital paying in like we'll I we So product more so balances we deposit to we we're going at know amounts being I see our what right the the sheet think in this so outlook.

one just look on I separate VC, that is then we are million, lending? volumes those below for VC getting and are call most Okay Thanks. on of question quarter-over-quarter. modestly give the of - at type is some capital assume $XX they if the competition tougher peaking is capital color loan of calls, declined that or

is and have it it we're we're is in to would as opposed then happened seeing, - coincidental to may it's That's I add. that want just This to start but I'll view, behavior Greg, Marc that doesn't say it my with anything any do any change just trend that seeing.

capital funds as well private So we our flow still see robust equities. venture as in activity

change in that. any don't I see So

add. Yes, nothing to

one your million was look at it at year-over-year is is growth, I think something growth Steve to the of in that $XXX look thing area. - the what around

this pervasive trends or there systemic that yes, at no is point. real So noted we've

my Okay, great. Thanks for questions. taking

Yes.

ahead with your Pancari question. next our comes can from you from go John, question Evercore. And John

basis I you know balance to on that and points new that money now Hi, directed sheet, you the could us deposits that balances is just onto on tell I deposit are think XX putting redirected on to what's paying you into know the that that or previously what are had now? markets, where yielding so indicated new yes, XXX the ballpark you are the money the being and you’re

XX anywhere there based deposit on it call range points to the the account, overall XX the size just so Yes, is basis deposit relationship. of the

that I seem to can space, and in a solid the as little be better should process terms they well, expected in what would the be thought very outlook balance of off funds sheet this those us then And clearly right. all just bit that? obviously give more of to that, so how I Okay, there, flows on activity to mean - coming than guess in up about your tied we you growth is think

I'll this Greg. Yes, John, is start.

from right. are high overall capital we financing obviously about an fund in time all So towards where volumes, as the potentially is trending we flow venture talked

one So that’s but that other we there's of tailwind kind have, parts.

As going in the of right. public have our capital I very market, our sheet winning sheet that have strong ability of venture we're majority and market share well just companies and and we're is from just a set other winning exceptionally money those And that flowing really there's mentioned, we vehicles then in strong sources our are off solutions. the team balance so product not off our in balance to funds

but it's companies it's market, allowing us and of growth that is quarter share of those the we incredibly and grow So really market the have that total sheet. overall of we off combination if of to really industry. client especially expect into execution, our strong is it's flowing portfolio continuation the in team funds how another three the again our of our the companies on in money continues, top and quality trend will the based obviously the And much the balance dictate

are some that's of FPO dollars so those why balance to we sciences, there's here, funds, deposits you is go the lot bulk John saying Descheneaux. as this total is QX quarter a in of a in in particularly to sheet you but want quite Greg strong of to about what have one was XX% those well. IPO the this from remember thing of brought pipeline may life think and going client about off Mike Mike sheet on-balance terms

interesting from really that quarter it’s just perspective. a So

about lastly on that's the PE pricing lines, loan back in the maybe Okay, sheet where right And and All time I to minus talked basis the VC think we of balance call it, it side then right, XX XX last prime of minus capital bringing on them are was you just the prime now? points? got it. got terms helpful.

that’s Cadieux the good points and in Marc better XX it’s about pretty be Private venture tends in low so to four’s Yes, mid-fours. equity around and than that, tends still yield to a the to XX the only for range. basis be interest -

Got it. Marc. Thanks

Deer our Aaron, with And go from from can Sandler next Aaron ahead question. your question O'Neill. comes you

Hi, everyone. good afternoon

Aaron. Hi

concern pause see would issues. over side? you're there cause and potential seems the market watching you I the become but that guys to especially improving, that anything is cautious to you more lot if of that and guess you trade and or working for lending Is obviously gives tariff a may currently the there Greg, that tailwinds for anything specific be on of for some expressed you have be you pullback you've outlook

will and just where So industry thoughtful think we see that of say into bit caution the anything well, happening to don't but around, the length may this flow a the that both would want of where start Greg, of on given moving the real what's is I have cycle, in My being we on a are I not kind the right given view anyone funds horizon, then we is Marc to now business. the are I things say little about risk probably their doesn't of really capital are in that add.

the nothing than could the the in shake and market for out other economy would technology a at in strong. implications see end trade ball are broad sudden so market, kind it's our is and issues how down. little an point of all just innovation cause the a that flows but bit you to and space, of there what do geopolitical economic them that is out the the the the doing settle to and there that of I more is the know that issues a, happening if there's again whole shock that that's for are say term, of market takes of well the in day us less going obviously is the there near in crystal And have fund And we really none would one to and

can a related or any Okay. led sponsor credit, circumstances details you to that to million might on have was the $X by as provide led maybe of followup in default? that industry And and and that then loan that terms

Sure.

Cadieux. So it’s Marc

and company as second while of the credit, the got this happen doesn't struggled case in the the space. with of space with can hurry candidly deteriorate broadly in it very for the portfolio, this speaking quickly quarter. particular the this where was can company software segment happen things it is any had a the worse of in a years in been So last frequency that It couple had

et think And is instance think think broader Greg’s particularly rare portfolio. in point out that on should economic indicative we while clean. in the thoughtful also systemic again, sponsor second we keep I is a taken cetera, of we've prudent things long in we only issue it's so, would the lending This keep are segment, that and in in did of think from approach to expansion, deteriorating of happen trend, of this not the any loss years loss comments And hopefully which XX segment the I that this this to the business, we've then a way period given our been reflective for we in in finance following to now. portfolio loan can XX-year happen. that that almost business it first this event, It key continue away that record entire manage we where period is take

questions. great. taking Okay, for that's my Thanks

Merrill from Okay BOA Ebrahim and Lynch. comes our Poonawala from next question

afternoon Good guys.

Hi Ebrahim.

question, you your Just clients in that but of when not of loan just quarter usually of your terms we it we're and the today, back your wondering sort not clients you’re size improved forward mid global has growth just terms lead you banked or one you growth as deposit upon, the in the end look that like a the we to may get that just improved with spectrum evolution in wondering given next expansion given touch may step can over to acquiring I'm sheet the franchise, which next the terms of kind the in ability balance look of tech of if and software does at doing, take if few have that years? has your of you. higher

to the the U.S. incredibly those believe deal team example, but just that strong about forecaster, a this their sizes if sheet our Yes, love capability it. other things. actually product helps. are you feedback. would syndication capability around institutions a areas would balance fewer core larger product in one well second both, our by not or we've Again, we I'll either balance each incredibly is would just drivers, compete. work in us step it's when with had and combination and mentioned start Clearly, in really of, rated best do loan I Right? it's One want a working say off really that then thing, do capability I one be the really my that just I management, larger and technology that we world. sheet capabilities add on things perspective have right? as whether as a talked the with both both that's is say growth the to well to teams and effective one have balance of up would the prepared of with comments cash about doing COGS, which our Greg, So fee just it's we allows those the services situation ideal being from income not as to We Bloomberg there's we've larger is can two our of companies, FX as sheet they can whether and well commitment syndications, so but people we so you're we're positive may Mike and more, So top really get FX, and it's

us drive much it client do important our was to it's challenge you even then said standing we some to clearly certainly still optimistic client in there acquisition that We're question it's or know say I thing. important loan liquidity retention maybe with the I a acquisition it's the that cases growth normal a out in that way there technology clearly know as more as drive challenge about deposits. still that your or new in find see more But that the with helps translates I Now to is keeping environment. in what how clients outstanding future so a would or maybe longer. will to especially would and into for positive there's

year? XX, higher used this over future in charge how be there more quarter, to fees gears fees, Fed those room the funds is balance investment points you funds means, basis That's next XX on want were off with I know so that prices points and in pre in go sheet the – investment those so we just second on you for rate and know helpful conservative range, basis much I the to outlook to switching about hikes at just but there, be XX.X to the the

we a quarters Yes, and in to actually points fast go of quarters us this top thought negotiate too. virtue that help deals kind said rate been few so of with the allows and ago partners, a how to and actually few that our is it then yes XX out if now back Greg, several a tap we size assets have we basis of basis that maybe us at we'd allows it's you And the right on that's with points. of us just better pick helped up that by

to got XX we how that's points. basis So

a could XX clearly we so kind our that's capping and that points, seem point and maybe know like whole the so increase though know crystal at rate each plus you with points kind you how it up multiply see around per look across when billion of doesn't that at basis you look know money basis being ends we X of see basis we we As future. you ball additional $XX lot, real at increase

Understood, thanks taking my for questions.

Yes.

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

Hi, good afternoon everyone.

Brett. Hey

in of this to upper and the loan seem have first it about wanted indicated guess think if guidance that range, a I the we just the the might slower? were either you on guidance market half comparatively half the I some and like additional quarter would upside around being but or a more little us realize in the And would see end slower indicating growth than can I to are ask color give year it back that of guide bit things the what that. about you that you you little or back there growth

M&A headwind of higher growth. when seen levels in certainly we than we've much started at see a as we haven't to as of to what XXXX, seen normal we got this more much we Yes, to that And XXXX half just the of is in loan what but of through M&A is Dan. we expectation looked happened year. And be stages the that prudent, early of the to the second get level is a

So us the that's year. of bit in conservative second forecast the a more little seeing the part why you're be in

sheet sheet, move profitability thought Okay balance to levels thoughts level process balance and just topic wanted off level your can on your I that us capital securities kind ask this your now on-balance of and keep capital consistent, fairly sheet then growing high some you of and things more and of thinking will some to new quarter, give the of levels know sheet you higher you bought of municipal going and those from off about the kind some on-balance manage to whole the to just do capital given maybe just profitability? you're are

clients does right us we've for drive the client those mentioning break starts capital with the place balances accretion sheet. we for to deposits certainly as as strategy that in so look provide we put opportunity on-balance from Yes, with the it at where are was the deposit perspective Greg new and

that room program has think we and that of some we to the grow will consume continued capital that So have. additional

from based are opportunities we end can and have use growth where at we organically and loan So year the between on of that where stand the see think the we capital we'll a perspective. that we things capital

there you is - ratio are targeted capital Okay, be about? there might that any thinking

constraining We so between point, that with in so the leverage at Tier it. still the range at still this we're are point, this expectations so ratios we're the range between X.X-ish managed between our we ratio manage and historically I we've bank and X% been managing X%, at

appreciate the I great. color. Okay,

Yep.

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

that so. and the of potential of more a driving do international book out where Great, on you year tariffs headwind do loans the as look see On business over you. comments potentially you as thank the so or - going see your to percentage more as branches if a your the guess next international you and I the

different any to causing it's directed seeing I jurisdiction Greg things Yes, say markets. certain Jared or not that we're are or I'll loans so start. Right domestically behavior way change a be international in demand in or would a now

seeing I with you What could deposits Right? business are news international these a I yet. domestic at the and not, loans it's it, our offices what pace. happen, faster your well, loan too said it international growing a we're to tell international faster So does but at international jurisdictions really because strategy true deposit happen portfolio, XX% be XX% offices The in prepared good is, pace. of my we growing is think that and comments is know holds business though actually in of our So again not of having growing the they're if in nature that. from we're have point early but will our beneficial could actually to that that benefit

a So specific not you you dramatically as little bit see as yes XX%, seeing not question but far XX%, and could really in so, your XX% deposits, behavior that higher changes. that, going do any see

the that you'd past the mentioned price. in or loans a dollar either percentage a And was when a it International

the benefits some would of some you could lost those there from Crapo progress where think relief on burdens? and of in regulatory you we of there are give You sort terms additional that reform do be that additional

question the that specifically about is exposure? Oh, foreign

Yes.

the cleared up as note exposure guess billion, hasn't limit important I look move foreign it's number with changed were guess to going lot, we that's things just But whole is said at what the that it $X to around we billion. around that I a it $X.X could so Crapo really and do we Bill. so Yes, to still was optimize not and do

that is view XXXX. late Our doesn't become XXXX until even late XXXX maybe and really an it issue

we sure continue believe $XX be of to Washington that And way. certainly say, that in that which laws spend known. hope is that from D.C. tailoring is to right of probability that all do the we're that our facets certainly time to that we so and And the make standpoint we to voice part how will it look of potential tailoring at what sure billion continue the are is regulations why the we regulators is the to make going there

Okay, thank you.

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

Hi guys, good afternoon.

Tyler. Hi

Dan, $XX hike to is you, Hi do to impact start each roughly around going NOI you be think from just to still million? the rate with

$XX Yes, on basis worth interest an pretax of net annualized million income, yes.

the success deposit much XXs, so you XXs NOI so growth and a a is how quarter strategy contribute growth loan laid of the that had guidance you've deposit or the to magnitude had to hike, low far the growth the long rate the did in there into Okay, the hike each mid you in when gene think about strategy? those way to strong of the exceeding second the

like Yes, that. my too opinion, complicated at and it I to it's think look

to which I a the deposit at overall fact think income. the that strategy the is growth through take we that guide in us year-to-date out added billion in interest a obviously we if to we generator just reinforce look $X continue helps a uplift the deposits us that put net there

think just to way I'd it versus out. about So trying parse that the two

right you're do now securities - right me, then now. It’s A that rate and the is? from around new on what you XXX Okay lastly the purchasing right just Greg reinvestment Becker have

that’s thanks Okay, from it me.

And go Christopher can question comes JMP from our Securities. next ahead. from York Christopher you

then I lines guess maybe the and PE/VC I period was what me questions. but this, balance my end taking missed the loans on for Thanks in there? afternoon. forgive Good if the utilization

was think end period about that actually I around there. somewhere Utilization, don’t handy So in I was I $XX.X stat the billion. have believe mid-XXs,

more loans up clients LPs clients that liquidity utilization and increasing maybe and in the GPs Okay, the themselves new Marc, funds or type today follow or value the proposition helpful some maybe growth facility? maybe new then Greg to by in is or the then recognizing by driven raising

is this Yes, Greg.

but really, is bit clients also trend main basis, it and in existing basis, it's raising little the funds those a I a new clearly, but It first two changes are not on there think drivers utilization. changing it’s quarter-to-quarter of new it's clients is those line two. materially a really

the that in environment Great. And then product? in changes any competitive

of most the just reasons right, it's to the big a space. the and we for get all place It’s of outstandings quality would a that I credit very say one it's and competitive guess is know sound. I

we to differentiate like in New kind in and we our have the ability U.K., as of Kong to think in based And Hong really industry, things have we fact in based speed, based in like that our London and expertise, continue centers. job can space growth big we add there. about a effective you practices have on add about tell on it, talk the based the value, the we've it to to and competing meaning because obviously So bring people to an together is we of that York like value can are private we client the are competitive how service, equity, it's those and on focus offices what's happening what on to the things the on and best that, done

different wrote I items, two say spend the was allocated to going for investment? was you thing could clarify numbers just core same how again so down investment in I expenses so Switching gears within Yes, to much housekeeping two there. non-interest

the key what sure initiatives not mentioning QX investment the talking that about So expense in investments, you you were space? some that we on were by of are mean

million, Yes, is a I think that was right? maybe $XX that

the Yes, first expenses said that's the for million quarter. second quarter increase in so we from investments yes over an the and planned $XX

it. Got

in the Okay, and helpful quarter? that's includes one, subjective would last XXXX your then the what NIM to very outlook

we'd be higher how the increases. of the there be year outlook, rate considering probably we late out that the put look we'd at NIM So range towards with end we the as in

Okay, that's it from me, thanks guys.

Yep.

next Chris, can McGratty comes from from ahead. our KBW. Chris question And you go

for Thanks good Yes, afternoon. question. the

Hi Chris.

bit, then of timing? just in moved a durations target the Dan, up duration interested and kind

seen the Yes, portfolio, in the purchases so to continue out. with investment extend continue we so you'd securities us duration to extend

late that of how economic extend this out. with haven't the to it sense overall considering target makes least are but at for point, terms continue expansion In set to we us we at just

or pace same see So out on the been investment last over to continue extend doing portfolio securities about we've us you'll that so. the year the at progressively

thanks you on addressed a think on Greg capital And I’m lot touched talked update dividend that. on sheet dividend sure return, strategy, for you that Okay, Thanks. not the about if the balance I perhaps prospects? any you

that threshold looked reason exceed said targets in consider it’s on this deposit the about will And talked question part more where is deposits like, given do us the past, is for is believe we of the talked the quarter last rates sheet just a when that's of there we product we've Chris, and about. the place that attract mentioned something use the at to is that with capital strong to return. we we on we type to that focused ability or we've what are, it we and hit get we best balance better earlier really

good X% about, And Tier ratio range X so talked as in right about leverage we’re that. now X% in Dan feel to that and the it’s and

not invest some best a - about a point strategy may core earnings, in again continues just with we about in guess it, make it's ways the be at is changes, as I strategy, doesn't to dividend something it but rush board decision it if business. brought to in if we're So work to to on or have deposit think the capital rate some we if at the

Thanks a helpful. That’s lot.

Gary our D.A. question next Davidson. from Tenner comes And from

can You go ahead.

good the I PE lending question just ask venture afternoon. business. and in a of capital to wanted terms followup Thanks,

market? hear outstanding. perspective thoughts this think close perspective your be now. of quarter experience get a to in to about I'd were is of momentum it's maybe you loans the You earnings sequential description to right growth risk great historically any much it of has love starting the from strong XX% if there do to pretty slowdown it about although, your not as But the and is very but know or know fundraising sort there, been risk total how I XX% course a quarter, of credit

and last I as we've right, Greg, roughly the it's right higher a about you're I is now high mid-XXs. and up this said think XX% we're number going a I'll quarter comfortable and talked Yes, in to at start level maybe

done slows historically seen of think it venture domestically around or look it more to capital right, two you’re at private the equity it’s more portfolio, Of could feel side, down actually economy, volatile so where happen look tied a and private very important good more the the about capital at quality. versus and I equity the there's it the stress the We've to call venture to testing venture we've funding be to issue if sensitivity the on you really with capital private And venture and equity, so though, tends if portfolio what diversified, lot private can an we capital. of buckets is equity economy that incredibly the both But quickly. and started slow, so globally. not credit

venture we believe on it. we as sensitivity based very and on act sensitivity it based a look may or and perspective, don't at actually has it's broad from based the that it believe like level industry so don't geography, that so it will And think we capital of certainly people doesn't act

don't a guys know Marc have from we Dan, if add. think volatility else how you perspective. that's I about So it anything or to

think the so XX% said, remain in credit of first I'd that has we balances. loan been for something and think historically, be quality so will Greg echo us as portfolio a to that it So say it we excellent approaches just wouldn't the that think concern

to I sciences like life segments is and see count in other of to growth that, borrower think touched in bit equity in the venture his borrow in this are that we'll on continue massive borrowers certainly capital. then to that segments concentration other start some portfolio new the off liquidity growing out our adding pressure notwithstanding, example. we and of we is there thing little and point see private the hope private comments for that note and some a Greg liquidity, and at take good growth bank those more other It of the

being it's what add to And that. of a And the on I'll think as more I you a the but one really the that that, has fee of of deposits have team earnings company, growth. is as client that's tech example driven is of of both amount of look time would and headwinds spending what percentage banking but thing and look by you been by mean I I maybe income overall loan at the that an the portfolio, if incredible core it the liquidity, which the at well deposit of percentage we're is call total funds as lot

so it's the the holistically with our drivers equity, as and have and And even side of at key look business to the loan we loan the well. on been look of remember margins it part it's the but also growth, one of private lowest at

part the and holistically that revenue it the best we And so look it. look we at is way at

And you just revenue so focusing based lending. by more on much the broad would than look growth it's

related it. lines one the line And that's yourselves case you funds, if a with Okay, that primary they topic, and secondary kind the there? they lines equity multiple them funds where venture mechanically that's positioned great - just I how are view of would capital color, private and are the have do line question or other have as appreciate to most of

all Almost capital lines. call Greg. is This are our

fact may In Marc none. say

facility. this, one Excluding is there credit

strip. senior it's a So one - you kind lenders, lender a it’s one, you're there one, if agreement They of isn't junior these multiple under only so one have call passive. and capital have very impressive typically and loans, in don't and

The a to funds and there's borrower. a typical course think where one given I have or than funds I firm line of those for only loan credit and each that hard right there's firms of management have of thing pressed that's multiple any funds helps. am lines under is a more and so it's very if to then multiple credit think add that I to instances would and fund

my That’s for questions. taking great. Thanks

Yep.

question. Matthew Keating next you our Matthew Barclays. comes from from can ahead question And your go with

on in hear international I think Great, and in a a recently we more Asia, the followup more ago have back and China lot and more invested U.K., of and in particular energy thank lot you. Germany Canada. SVB question we about business, years effort several if the time, a

at provide what recent on point just on going And banks in if and Thanks. you issues of going but had with India, on your trade level obviously already out what's of this the could the so China an maybe investment is there? update

is Asia, Yes, U.S. funded venture things, is Asia there's to clients of and our offshore which deposits usually two from firms a there's capitalists. so couple SVB having in Chinese business one parts taking the by

parent local business a company is then downstreamed a really have country put account and That in well. Cayman it they get in deposits to So China. mostly [ph] into a account doing

private when deposit on also it's deposits a that $X to lending deposits side billion also so so at business , of capital at firms we mostly well. have Hong you're Kong to exceptionally then those from and loans We the call $X is do Asian are $XXX heavy, doing million varies, out that anywhere venture and it And to in capital lending equity of range. million you're the kind strong that $XXX very that billion. but that

is highlighted business, venture, we're taking That long really The the only we the that we I'll a doing when that it. that's we're well. start and about we we at doing be to term being said Now well. very said, venture comment in with way that in think joint really, really said joint going term approach this do business long to view that that's beginning the so that the

time We have and much to a venture one, number year at on perspective. modest loans grown XX-XX last of a breakeven is talking kind line basis of joint we're years that spending it's bottom in in I'm it's because two couple a about assets billion per the of growth venture roughly number it Right? that perspective again The loss from kind joint $X reason dollars XXX% for XX% a deposits. why

we to track years we're So adding we we headed like put in isn't and believe numbers or put we actually to China. we ahead place we're what that there, that a and in that several plan want we And get value is Valley believe the in We're Bank yes. back bank the place we're believe to right said out contribution Silicon which the right plan to do is build that of our great. do on answer the to

point. the a we answer answer of going the Your on from what's at was, no, not perspective trade see impact do and last is the this is question

comments Great, I'm it's then thank any up you more to milestones color progress, you of initiatives if in that on just keep Greg whether for terms just those around have your following corporate can and curious about bucket, trying how your longer. clients banks now progress of are were type and number to that the clients next that on that Thanks. the the monitor transitioning or we kind finance assess growth number of front? of clients clients

client $XX example I you one loan point data can $XX is have loans than think concentrations kind on maybe at their want of year-over-year maybe so the you'll a may $X typically loan. you so that to point for say billion something and we the to, of from so look million on larger is can where about we've see you might gone or Matt growth of greater to to indication hold billion

clients. focus the hardware on and more want So software you might to

see a holding attracting as growth, definitely we use to on you'll kind some larger clients. our So and data on to making of also longer some then have that clients show that point progress been

Mike. much, very thanks Great,

from next David And Chiaverini comes question from Wedbush. our

question ahead You can go your David. with

Hi, thanks.

some a the or and hire out fully hiring team building required private the strategic capability additional hire, you're banking leadership that segment? with in mentioned is that is place in You key spending in

start. I'll Yes, this Greg. is

for I So space emerging you as few would well. talked management as bank the a we have say we we've private believe wealth that great and opportunity in a in such the know, years in about

private bank acquisition in the you the done have on in actually been growth private the say on we look is the We good. look job have place say scratching banks has say I really potential. very, very in only client and private we're we at at new bank, look the But I had would the a can would also that strategy at we good that which loan a of deposits executing it we surface still the and

that go find And somebody a different let's experiences. out so our has we in try look let's is as said of as team good lot take to just the market a and

in is place Capital And team many XX, she businesses. us to at if background you so the and at along so what XX a running then firms came We she's believe from of that that actually look years to has so a spent different she in got development type One, grow include also rooted being background, business. technology, kind last one broad has in her has Yvette worked with is She going have allow more these to and combination of last the the we is background.

the Now the out to and is we to to noticeable believe specific come believe have we few something this yes in question we're investments I or quarters. and answer so. be it look going going say specifically space don't in be that do is there's next making that the quarter would

I the the coming run to think we're happen going in be over it tomorrow. able something going rates will that be you is the years, in that to it's to provide but not

be it opportunity, analysts significant a I make be enough So that say to will paying investors be is capitalize view It attention our lot is sure yes to going would but that to the investment. or we of are to an won't it. answer so

Great, that's all much. Thanks very had. I

question-and-answer for to the CEO, turn that session. back call Greg to concludes our And comments. Becker would like I closing

Darryl. thanks Great,

outlook board, across the Just to time raised wrap up, great the another obviously for we this second our had quarter year. really

and obviously markets doing the and well, really I the well, doing is on with team results our pleased think really our strategy. We’re are the effectively are clients executing

face with As employees clients always, number whether two was of about one our that we it’s meeting inspiring, get and employees are I with to inspires And time function employees, directly clients with it it incredible that are spend the we’re and so because our that truly our I feedback our to engage amount our the just other one. and face no mind the and and clients, them do. me hearing our with in employees things Number is are what inspires commitment clients, opportunity to and see the our they best to and incredibly the clients absolutely think have things; my work I clients having the they’re two how an of clients to bank what get SVB. success to we really and their I dedicated so dedicated they our the and doing exposure that is no doubt gets way doing gets have a is that I are clients and first-hand

So of about are certainly to as things we the good us two and be feel the successful allow combination as we outlook.

thank So to everyone just wish and everyone joining day. just for want that, great a with Thanks. us I

concludes ladies you this And conference. may gentlemen, disconnect. thank you for now you Thank and today’s participating,