SVB Financial (SIVBQ) 24 Jan 192018 Q4 Earnings call transcript

Welcome to the SVB Financial Group Q4 2018 Earnings Call. My name is Adrian 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] Please note this conference is being recorded. call Meghan the Investor Head turn Relations. now over O’Leary, to of I'll may O’Leary, begin. Meghan you

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

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

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

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

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

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

strong was year. fourth quarter outstanding an finish to Our a

and quarter $X.XX per associated interest higher $X.XX million with interest robust credit Leerink, represents stable EPS. and we of earnings income which of expenses quality. by fee income approximately loan of and share core delivered reflect net income million of results These growth, also margin, the healthy of $XXX For driven net $X.X our acquisition

per share and For the $XX.XX earnings full year doubled of with XXXX we income profitability million. of nearly net $XXX our

our to equity to Core particular of due our $X.X by Average strength client income increased loans by equity as funds. across to billion, XX.X% business. investment growth and excellent marked growth year $XXX XX% return as XX% our in average bank, sheet the by investment We in interest private and an in robust million well also billion, FX income grew reflecting balance global credit by client liquidity was and interest to with as private delivered of deposits $XXX sciences XX.X%. growth XX% robust XX% the as investments driven and $XX.X on life was client growth It in grew exceptional Client and Net sheet strong higher by our business funds well fee growth funds. businesses strong in excellent. XX% total growth execution team by billion, balance quality to remained off reflecting rates.

market Venture nearly $XXX a gains Our controlling increased record interest, XX% related factor billion of record net XXXX. industry as our as invested in in million, end was health million still powder well and from levels VC to be invested. $XX $XXX another billion dry performance. major our of year with of raised Capital had investments warrants The fundraising healthy and a to effective $XXX

XXXX. While majority highest dollars values Venture later with market stage all-time of clients companies. highs. since stage of these reaching the invested, improved with the highest and number remained since aggregate IPO year represented IPOs, over XXXX IPO the SVB’s investing early significantly received the Venture aggregate backed XX value prior companies very strong The XX%

robust remain raised And billion activity billion. $XXX deal more with offerings Secondary private overall than in equity XXX transactions. surpassed $XX

The board, in added to healthy strong best including contributed activity deals history second core record clients in commercial and XXXX. helped growth the new of a fuel X,XXX The a year number of nearly on closed. our supply client liquidity across

also unicorns and clients healthy. raising. opportunities good be be expect expected is dollars. for to growing number they of XXXX the XXXX another expected our have the government and Looking expected to their from companies and anticipate broader either investment a funding us exit go economy remain venture strong announced VC ahead, tell backed up Anecdotally, portfolio expected are remains publicly VC and soon is the vibrant highly resolved majority is year A shutdown make or they year IPOs the assuming stable. to public for growth to fund environment valued to IPOs and of

our the include macro IPO shutdown with rate the of and a In environment many These them government market U.S. equity have flat challenges, ongoing market. battle, to of the in potentially intense terms beyond, do challenges prolonged a and XXXX trade environment. closed volatility,

factors, macro remains deposits fierce. for these Beyond clients loans, and competition

part traction initiatives, for effectively higher deposit you that remained drive reiterate markets long quality and as compete our capital our equation. of solid to investments can because provides making We has which part strong optimistic to in I Investor strategies to liquidity, as of we're the growth drive confident although come want market about and But and in talked to cycles funds from fact gain have high costs. the about variety continue deposit and support our We're results in see balance our our been and always We confident that us flexibility also and of today. deposit our remain at growth. XXXX of relatively sheet, We're the stable. because rate franchise we with prospects growth, our our competition our the client Day as to

direct broadened business. and a is global fee came private has our XXXX income. growth growth of set of will to First as Partners few. business, recently, expand of name in our and our services Much investment product the our equity our result Leerink and our driving acquisition a our investments More private bank, across in

us with is in Second, creating more will in engage experience, better, ways. richer meaningful investment including digital robust a our clients a enable that client platform to

allow improving that and client the our now employees the robust their bank and to processing pace really want. value believe make infrastructure. think continue and the our activities. to transformation they'll through enable our tools, deliver can highest through investments to to is mobility fifth enablement an in operating loan investment processes Fourth, our strong is grow to growth. these from employee we onboarding global And our model, and management, and risk time support systems is us on structures to so is data in creating focus across we systems business to propelling investments at investment in We Third, systems

Another reason business uniqueness is for our and power of model. the our confidence

We fastest been investment have funding. represents most companies, the most growing always and and attract which the and economy, innovation to active on focused the ones able

focus on clients, services. products longtime to Our the these set us create innovation tailored enhance for products economy and to and the innovation services continuously enable of and broadest

and in XX% core clients. challenging networks have And team to case over our culture, through strong We client a help and this This rate and environment. our environment have our best at values rate relationships the earned times as XX% our X.X% and Fed unique able finally as has to XX-years a a the and XX% in people above we flat us in attracted many growth funds means well to succeed a of SVB-ers making our true and will enable deliver ROE hires skills to expertise. business because our approach term, XX% at partner. clients they're environment. profitability consistent a our good rising many performance, and investments strong, least and times. our our environment approach our least to in and the EPS reputation us hire newer career Normalized over believe model, growth including trust We're of in amazing leveraging in cemented high rate low long as client world-class who We we're quality bring including an our and sustainable normalized expertise people

assuming We market good in current for are seeing momentum conditions opportunities expansion our hold. and business XXXX, expect across continued growth in

a I Although attention outlined paying we're the to close challenges earlier.

a long conditions. of to ability the have effectively history and under growth We variety of discipline market execute

quality Beck. high high over ourselves liquidity stability will delivering can balance Dan the I’ll and in of CFO, growth you. turn focused and capital sheet, long-term. over and call on In remain investors strong we the to the and provide sustain market and with that our a aligning quality addition now, flexibility strong returns downturn. And We event Thank best our the companies

good Thank you, Greg, everyone. and afternoon

driving the results impact throughout full-year Our The markets. in following quarter to public turbulence excellent key the strengthen included capital A seen trends the continue our environment of year. of business client and strong highlights. continuation we've equity were the substantial core quarterly venture and despite private and the liquidity

loan growth in solid First, healthy higher loan yields. interest net and growth income due to

off balance sheet and client strong funds flat Second, average deposits. growth

well total or and well funds healthy to warrants about $X.X core with and by or as sixth, outstanding bank. environment X.X% client sheet billion. funds continued private offerings $X.X in strong related Average grew increased all solid IPO sheet investment income the related $XXX.X billion as sheet. and equity growth client fee billion our foreign on and robust secondary activity costs. fees. Greg by funds and Fifth, driven quality was reflecting balance due to balance segments. X.X% start talked portfolio to funding off credit client investment This Third, billion I'll as across and growth as private as $X.X held off-balance particularly primarily investment sciences balance billion, client decline or deposits growth $XX.X loans driven billion Average science exchange in stable securities mostly momentum by call in for Average by our acquisition. Fourth, at continued gains to flat billion. capital a life in life X.X% increased as sheet solid lines success compensation to underlying $XX.X expenses Average decrease our the funds well by on trends. from with continued with $XX

non-interest of atXX%. Our increased in interest to remained average of new majority billion $X.X deposits to period our accounts it from approximately a stable mix accounts The deposit into basis flows deposit end of billion occurring $X.X December. total late strategy. deposit bearing or bearing by On X.X%

As and throughout we quarter. distributions inflows Asia these and growth our indicated clients in slower year Investor Day by offset PEF some higher the of at our

hand year announced quarter million repurchase price $XXX stock the end $XXX to program. $XXX of common an we During at of million share. shares we on used of approximately Through per average stock common cash XXX,XXX also repurchase a

closing cash on million. Finally Partners acquisition of of Leerink our closed paid Xth $XXX January with at

flows to higher the move the rates. income by the income loan I'll higher X.X% rates taxable to manage basis million reflecting $XXX $X equivalents an of by of statement. and billion decreased interest billion due investment our market drove million fund and increased $X.X interest Net sale X.XX%. to by the to term flows, repay income impact meet balances average $XXX short to growth, result yields million. primarily a rates. cash cash term the is from higher ensure September to borrowings securities due on funding balances short needs. resulting an now $XXX forward a Overall higher our basis accounted larger fourth in increased funding to by $X cash for by the in higher interest loan increase portfolio fixed million we $XX this increased to percent cash cash costs Net during offset increased to accounts. seven increase. and by loan part our our Higher LIBOR growth onto rates at increased our related XX points and on X.XX% rate borrowing earning in from our higher quarter needs. points securities bearing primarily to loan the million. expense interest intend decrease moving a is portfolio point cash Interest by average one business fund We deposit higher portfolio by yields continue balance the five available cash $XXX loan sale initiatives. rely income We growth in prepayment loan on has basis fees costs. The in of have and $X.X hike and and of borrowings in increase of margin in Federal for points Reserve interest times in and $X.X to points three for Now our intent basis the deposit to In deposit medium of timing flexibility management balances billion to to growth. limit by of average, the Loan increased and income for loan on long-term and increase basis growth to due loan benefit yields Interest the to of in the flows increase increase loan $X due short as the million to may a growth manage funding reflects and costs quarter term position primarily offset deposit somewhat in cost their cash increase Total and increased timing use based deposit million interest the basis due borrowing by interesting our use and nine future to million and

Moving to remains credit solid trends. with stable underlying quality, it

was $XX of $XX reflects million $X compared Our third then provision new loan primarily of $X million and losses reserves amount million nonaccrual specific the unfunded period to and million commitment reserve $X for a This reserves growth for for credit million quarter. higher and in balances. for loans loan

of fund our round among of by our portfolio. to which fee compared in Now emphasize gains I’ll were from restrictions, warrant in equity $XXX of that are investments $X.X valuation gains. increases and income, million and securities acquisition driven from fluctuations from venture variety related gains strong investments losses quarter strong the updates Non-GAAP of and driven net of and on core not our non-interesting decrease controlling as $X venture warrants gains our Net million non-interesting of non-interesting $XXX factors lower from interests, related million to volatility, clients. capital I composed quarter. is the net lockups. were gains from prior IPO sales a and was $XXX subject million Equity losses $XX million GAAP warrants. million by to to capital offset unrealized primarily securities, interest primarily turn market and and capital venture was $XX by income investment market and from including want at come valuation related healthy prior income, such related activity public $XX reflecting million million non-controlling gains investments, a

driven to and funding Moving by in levels rates core transaction client increase and $X.X XX.X% a client $XXX by in result all exit and to income on primarily core investment exchange million higher of fees, environment to core higher fund fee our from healthy for to was a came foreign in growth million areas, increase This market spreads increased related balances currency due volatility from investment a as million. increased but fee clients. $X.X fees fees the

consulting related of expenses. Now, $XX lower $X associated and incentive in decreases turning of market expense higher the and compared decline services quarter. legal million partially mostly professional Noninterest were Leerink benefits the to Compensation of million compensation to costs decreased These due primarily with million offset broader lower warrant to by expense compensation. third consisting $XXX as was and of result million expense expenses acquisition Holdings. the $XXX by the a

Turning due saw to effective taxes. higher to We a benefits. tax part share-based in tax XX.X% compensation rate lower of

full-year tax was compared XX% Our to XX.X% XXXX. in effective rate

position. increased capital, Moving XX X.X% liquidity our to Tier increased current capital good capital on to leverage the and across ratio market We remained about capital volatility. strong our the ratios and very bank light our very and by points in X by board, provided feel of basis flexibility liquidity strong

October. we I Now to our like and XXXX would outlook our in preliminary update discuss provided outlook

is are for year on outlook means not This full quarterly based balance rates of XXXX. year the sheet reminder averages. full the versus averages, As growth this a full year XXXX

Fed outlook increases but XXXX, to-date of without reflects Our the funds, impact the rate non-interest rate income in assumes of expense we our categories and in of Leerink. impact SVB no provided fee outlook core with the and increases further

about which our higher single-digits. funding is range at of traction average with proportion maintaining lower. the Starting forecast in be good the preliminary discussed is growth to deposit average deposit balances success we at our of a of current or the outlook our deposits market Day, variety interest of far, our loan we grade and growth and initiatives outlook we for estimate deposits drive that include trends half higher on our so based conditions outlook, are grow of a factors mid-teens, loans, our than change. subject Finally with our are with bearing and will percentage assumptions based market on exit about and high to Investor initiatives. consistent We the could These in the expect

All our into outlook. of this factored is

with is our income higher consistent be growth teens. preliminary industry leading it rate also expectation funding We albeit to reflects a to our the outlook we deposit full net year the interest margin net in percentage expect This costs, X.X% overall, the expect the for interest between of and at grow costs and X.X%.

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

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

We of our for points And be expect loans. XXXX. gross non-performing to XX expect we points basis and XX basis comparable loans well losses loan were allowance between be with performing total

at all-time we this Although staying basis not low points. of XX do foresee

growth income in outlook Leerink, client to expectations primarily stronger due the the we review high-teens of for on of the fee to increasing fee This reflects growth the off the mid-teens in With to the impact mid-teens investment core expect quarter by our the the funds process. slow the sheet income of SVB our and SEC driven IPO shutdown high-XXs. We balance December increase. are revenues from rate government core banking the impact first balances

are a mid-teens. growth expect the outlook and we the reflects continued in Leerink, We mid-XXs. our in for our growth in With investment employees. non-interest outlook growth expense SVB expense maintaining This infrastructure

In rate momentum tax lower into of Finally, share-based compensation outlook and our tax our benefit proud pleased for between going saw of our the and our quarter This reflects the year, be performance from we closing, expect we than expectation strong we to in effective XXXX. and are XXXX. XX%. XX% with

solid ahead. and expecting we growth year are healthy are clients credit thriving and Our in the

particular in changing conditions incentive to and robust the position timing and gives manage on sufficient projects us necessary. growth certain adapt strong anticipated that if liquidity We compensation also capital of we and flexibility expenses, the our to have to flexibility a have hiring

we you. ask Thank remain funds. open execution positive on on now, Q&A. growth the now though our And to and our For the operator focused outlook is I'll

Thank you.

Ken We from will And session. first [Operator from now Morgan Instructions] begin our comes question-and-answer Stanley. the question Zerbe

open. is line Your

evening. thanks. Good Great,

Ken. Hi,

It you're quarter deposits what some pocket it you had definitely that the is trends the back us was in first the pocket this quarter into there that little was potential Investor than so in originally over and air – risk mostly behind first that negative bit see a you at was Day the air any good is that flagged. about that had far seeing you or to highlighted and carries Can point? talk less of

are Ken, with what a in fourth talked we distributions the deposit. we've where continuation private about Yeah. the so, venture seen and in both of capital we quarter fund the equity

So continue that which we our that level in and continued. trend of in operate. on same has at our reaffirm to made time product able confidence guidance to position both in – one we And But the off appropriately on the strong have second as able markets deposits but progress we the we've client, strong two balance in being positioning sheet. for be position with the to liquidity

with So we But levels. that guidance options we ability think placement at grow we have in think. and product flows a reaffirm you have to I that the client strong fund guidance. these further have and to the market Mike,

Yeah, was Ken, maybe were I around being saying. we color. it we the down at about million something more Day correct what right bit Investor little a it’s just Mike was think mean as you’re so $XXX Descheneaux or talked I about

when like there. VC QX. at what towards It good coming that P you looks to the the look to to the see to late it as and the is have, they Day we felt come another and we there. as again back during starting come some we of and IR December going of mean you about of level backdrop I comfortable think you was certainly powder of all deployment you doing of that said in investment it's into that When look back nice the why, rebound start of we When you know the that dollars have feel back we had at suspected, kind the at dry did as So dollars, after QX raised, high. it you pretty end the but really really would fundamentals step look of actually

thing QX, other to added did sheet healthily balance is like in the grow about Now quite our think off we at we I actually $X.X funds. million. mean

means our So we which billion have in balance $XX dollars sheet. about now

tap of focus So from the the various on on redirect and teams, are into the some try that balance various initiatives, the to to that they sheet. able

really to a it’s good So have. position

there Some that’s other whether yet. anything things going they're or just our CEO the not to channel income that checks and fee about feeling us with to with think good they’re out derail very is XXXX the seeing VC, about our clients it’s

that I’m pretty be things to Now to about watching. are some going the little going mean some talk we’re bit a I of obvious.

something of I on the pretty keeping government shutdown, these can So IPO. you going good amount get all when a we’re with watch the eye market you do to IPO with we a you But it. but feeling into together as about healthy again obviously very, think when imagine down, think close things add things funding very coming being the shut we’re from

definitely No me. always nothing China really the that’s use we’re what’s with going that in watching. et to it’s and not Uncertainty But something that’s doubt watching. we’re Brexit on again not cetera we’re the year we’re in and So the again tariffs right? with . to last you when the look kind long-term. but been know that’s We for certainty going over innovation strong of resilient seems and like, it what something the be business economy, has at

few about. the think those to things just of So some are

in to That’s on of sheet? just sheet single-digits, correct? very high terms you have on some Is onboarding of include clear that the off sheet super deposits that of more be balance towards on that you does helpful. or at initiatives bring gave the And the guidance deposit to balance least the balance the that

clear, interest that is it’s about Ken, deposits going of the growth be we're Yeah, expecting be to what XX% to us. of is bearing. And

confidence in level point of cost points XXXX deposit of XX So, to expected we those basis to have because when we let's be XX range for basis overall expecting initiatives the take a or that that the average in. at call we're look

Perfect. your And competitors as space getting last then into capital a lot just some heard the good from call such question, we’ve quarter of from pretty example for one and obviously a business they Like had competitors signature coming seeing seeing call you a from balances. impact are or your usual in, capital driving What it for as you you is new guys? for perspective? noticeable are these lending

Ken.

You seeing portfolio. any we were deterioration

I fact we our team be in there stronger banks In are market feel than with competitive a it’s have Coast very in as involved. PS out before. that again, I always on belief there team so our we leadership so to our great the mean, ever market is have such a there's large many particular going just East

more our about than So, we’re to to add there. again, feeling nothing our the good capabilities pretty new continue bounces own so, and holding

Great. much. very right. you All Thank

Bank Next question of America. Poonawala comes from from Ebrahim

line is Your open.

afternoon. Good

Ebrahim. Hi,

there should at given muted So, the asset I and hike some be just relative the just helpful. Dan we’ll around talk fourth would and balance the we to tight question the from any think guidance, would first of thoughts quarter should color to margin margin in security, December the the – the that get the the there to how your also margin to when on, is, helpful, sheet expect of we quarter about expansion was first in be mix on wondering what the shift love your you expect reinvestment terms so you of mix in in it like at can just through the look incrementally I terms least seems what if

Yeah.

trying that. unpack So, to

and where by look first to of X December borrowings quarter, hike well that First, to that cost going yielding sheet interest points. the being look the balance were close in of as net going you're into the quarter, some the with of quarter where But rate had especially growth the position margin drop first expansion the interest expansion bearing we is basis December. payoff NIM in we going at perspective. the the in into to the expansion we NIM funding that fourth that to on carry a the as quarter, at the mix into so the as something to said, muted not ahead funds we because end that the as of bottom of from lower the see line is first securities with That Fed deposits

be up on you'll So same NIM less a overall know as the slightly will earning time the at you an the we position fourth out the pay or basis see assets average quarter. up average borrowing expansion, but of

there a if you We'll have there. lot questions. So follow-up was see any

and that be? then hike maybe XX So you think to year end Where was that I of does if for would what basis disclose the go that you deposit number that's at back helpful you and would sensitivity upside. in $XX I points million guess $XX NII on the it based stand about the the million, dynamics are seeing

the sensitivity that that increase said eat balance still perspective being static going is that static into – that the That – deposit number a a but sheet cost sheet we slightly, that have. from is still on balance into to that holds. So eat

little confidence connection rate Greg lose $X.X more where the investments? point small decline bearing guidance a deposit equity could fair function or we a On issues precursor question we how bit seeing we a where one quick non-interest popping they billion had is on see be of environment you at as love to get a any credit this environment around start year your bit the would compares even XXXX, if a around XXXX thoughts separate the topic a when deposit have markets growth like, slowing are of this we

back early XXXX. XXXX Several to bring I'll questions and one question. underneath it that

there then with beginning too dislocation the which you created end XXXX. in first period you that would you if were look in go than invested that back back there that there's companies One you I if the in higher the know at many they the on. funded, combine number the of going argue that time were year at look the data were So were of today. significantly companies and all several were at market that happened things is

down You had capitalists had Right. a that slowed credit higher actually venture you cost funding.

short I've things dollar meaning healthier venture for there a last couple improved. variety that's basically but groups actually lot today. average capital raising today number the of dollars. was going that back period the that is two, XX the fewer different was So actually and There's the you it. spent although What which balances to weeks Mike of number and question kind is company, higher a there that said to of quick one. on. creates It haven't really pretty a it Contrasting companies big know then, are a going a it slowdown of than was was lived, of days Number is time company we seen asked this, with that

opportunity market some of be them. the their are You dollars, the of flowing open are some as they're a IPO the so happen of and to they about get one how the lot was very those public, in of actually very with to companies but good ones. fundings going big person So about should on money raised it good still feedback we It the about venture larger upon feel front depends may a funds outlook in they’ve and they capital that XXXX? feeling what's getting and temperature slowdown may see typically a feel the

So, anything when This right because don't context not we we're we it about is quality we I’ll seeing think on as which concern that's cause slowdown. nice comment us continue. this that engine. Credit that to going now that deposit see would liquidity a believe the is briefly, why is

you to from now. it do prolong if strong in stage. we're see portfolio if base and again, start our see deterioration could a decreasing it's slowdown does But early quality coming of of happen an So, percentage it’s you're some incredibly the the that's when going see we and to right

So, I'll anything Mark appropriately. and pause to see maybe then your answered the there question and if I side has add credit on

sentiment. winter XXXX thorough the investor I was would that coming and Pretty of very Yeah. to hearing QX The a your they're recently is channel answer. up. checks Contrasting thing course what when is only about were point optimistic add we to

into starting outlook things recognizing change. year of a different that And so is there I think that least very indicative right could at

helpful. it. Got Very Thank you.

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

Your open. line is

Good evening. Hi.

Hi, Jared.

margin. the Just on circling back

You for – the portfolio? what pickup roll-on in now out of flow are seeing were the you is roll-off talking terms yield the coming about the portfolio. of investment What of type and cash

Dan. Yeah. Jared, it’s

the in the and perspective fourth XXX we have the but close the kind weren't did are execute from yield a roll-off on XXX to $X.X billion range. buying, with in deposit sales securities mature. The the maturing position, security a with quarter deposit – So did securities we to

So at off that's point. rolling what's this

Okay.

then over -- pickup see bit So you the from a there? of should still a little

Yeah.

And management are now? the Okay. sheet the of levels view what in at then, balance funds, client on peak off that for terms was the we that and

Yeah.

we basis think I we’re quarter get could out coming spread fourth of hikes, worth if get we the that And of points. another that. couple rate XX So points of additional to were out basis of

we capped of quarterly saw one fourth into So XX getting think out coming the of sustainable year. incomes strong but that the reasons basis was in at we're quarter this which point, next that's I don't growth points out

And market level on of in were to finally With me coming a should into with stable the going Thanks. see through beginning November, we you and here? the consistently [ph] into the expect buyback. a year in the just of the play repurchasing that five for quarter plan

$X.X with depended continue against made conditions, So continue good we've authorized billion watch repurchase, that. to to it's progress so and obviously has all conditions it, the market market upon continued we execute

Great. Thank Okay. you.

Yeah.

Alexopoulos, question next your Steven from comes And JPMorgan.

Your line is open.

everyone. Hi,

Steve. Hey, Hi,

your the you health and if cash regarding on follow-up ask adjusting the I'd clients clients, conversation Investor of burn Day, startup startup had first of Descheneaux, you really seen the The Mike of have clients steady said startup burn holding amount holding of terms steady, reduction? still tremendous a seen volatility. cash since your market they in or you Are we've were then, any seen at

So be don't well you clearly at about have anything steady. Steve, again, what's Mike everybody now, too. But again. the the it here. good watching on would and point, other one this the seems Again, I to too well But as this yeah, still is we mark going feeling It's XXXX of as environment backdrop know is said in Greg the I still say to macro and said show are right way as pretty or Descheneaux consistent, steady. people it’s

the our are? coming half the shift the rates guidance incentives then Okay. that from regarding in non-interest-bearing, now That's mix just given helpful. over product of guys where interest-bearing, interest-bearing preferring deposit is clients changing or coming in growth more And you pricing and

Yeah Steve, it’s Dan.

on clients our actually products our So, we we've balance new placement and open product enhance have needs meet that been balance sheet as where their part, on that’s more gone off product that sheet. to otherwise would’ve that to have we able continued

So, versus non-interest-bearing clients directly it’s opting interest-bearing. interest-bearing into in noninterest-bearing from to that largely

once core like And the it XX% just big the impact rate contribution, now that XX% from goes will core on into a and fairly how view growth Okay. expenses, Leerink material total income? That’s run looks income expenses with around of finally around rate fee will updated represent a picture Leerink the the helpful. based overall guidance, fee to of

Yeah.

line a still rest a while and – the to small basis important really The Steve line the business – the franchise. is rest So of impact on it’s bottom of that's us. to relative

stands growth that XXXX for an dependent continues opportunities forward we you where know from we going go know where to in in guidance do area that to what we we’ve you right market really a invest. So the is know want the a areas the obviously and expect this be where strong see of on those see got upon basis investment to and be we you now

it. to a color little add I’ll

of the Boylan portfolio just know too time actually in – our and we activity the we Leerink lot you two Jeff XXXX very that see spending lined companies the markets go. with and outlook there commercial is is were life great up capital Jim It's to There side key be So place appears be. for in the to ready a and – strong. this yesterday we’re principles science very, and a in banking to

it next year at you look and year, think of those that strong want we where again an are the or a very, investment at of if numbers was be. we look the year. related And to and fueling big XXXX acquired fits XXXX to be kind very, go so biotechnology for top capital in it healthcare exactly strong in companies can sciences incredibly public very strong life the if You and to growth venture on that investments was

very, feel a Leerink. give good To because quarter the about you little a about we more first we So color, it’s business. very will talking SVB be

math at the you look can the you can along. outlook You but help do others and

to You revenue what contribution that's that would kind of at you in we're looking can math up. look XX% show right. million look pre-tax at probably XX% the And million to at can $XXX in range, kind you're $XXX of outlook the that

a markets. very, to Now there's first slow of equity very quarter as because big their business capital is be we part said, going

everyone And know be the in does there's up. market as and to right we else it's and very line pipeline way anybody nothing the good now looks on the about until You markets equity opens that well happening going as backlog robust the that capital But it. business. feel

great. Thanks color. Okay, all the for

The from from Piper Rabatin comes next Brett question Jaffray.

Your line is open.

good everyone. Hey, afternoon,

Hey Brett.

what balances is guys about businesses DDA in and growth going this seeing the back and year any DDA give you on color you're makes maybe on DDA is thinking us just of early stage early at ask clients? the deposits expect the you then early DDA, with to can what And any color just point? to this on Wanted up or stage that stage

we a when don't client again or front don't Hey know Mike seen base. Dan think in behavior we Brett, that of change me, broad have it's about important the you I I'll start. I have do. really if But not

that have and that balances seen rates kept have we've just raise when or they large with Dan the low, of interest-bearing where balance it to moved rounds Obviously off seen solutions either seen change. rates the that – we've DDA. their some are in sheet We talking seen have bigger and it companies to some We've it they they about. have gone moved was financing up,

So is else see anything really we Dan to I have is, no. if have seen Mike think what answer the change? you're getting or I'll add. to anything And

of and Yeah. XX% sheet in as percentage total up neighborhood It’s around there. stage when you running early about tech from somewhere balance emerging XX% is start on that to think That deposits. on approximately deposits somewhere

then about well? in continued you're And about has I that that being either great. to success a line anything of ask the Okay, of There business in credit just in lines and other other what pricing you competition, or was or changed able stymie really any as comment meaningfully and not do? to verticals business to related question talked the seen – call competition, want capital is,

biggest market will the equity competitive. all continues the platform say of something. – compression may prior I prior start very things message and Yeah would quarters. it's want have we've competition levels. it's the private very, three – be I say it's those people, and I And is across the we it’s very just we about would price and in to Look, that I'll Mike described in service just to that And add is and consistent quarters differentiator not what the differentiated. are delivered with services, have the in the product the it’s

we're premium. That typically a that even a consistently jump it's see change. a a bit very when see is level that to little price of don’t and I win expect we likely ball we'll show up get certain we’ll and what and So changed it we it hasn't if

Now, we doing day. to very and earn teams in tune are have much single our But job. with continue are incredible to every an that that

you. Okay. That’s color. Thank fair

Deer The next question comes from Sandler O'Neill. Aaron with

is open. Your line

Hi, good afternoon everyone.

Hi, Aaron.

to Looks sensitivity. Does of just on taken terms you are now time. liquidity. holdings some reducing maybe over some of just of else but up some a asset like in follow of of were curious or plans actions sheet up future maybe that more the reduce what are that, in balance Day, want of to undertaking is asset your sensitivity that subject I something at which Investor the came the kind the

it’s Dan. Aaron, Yeah

of yes target with So we to rate to bring than about talked chart points continue XX%. goal sensitivity is a that down the XXX less the basis sensitivity reduce rates to to

to in adding as swap addition the lending and So that’s continued of that extending interest the duration our to And securities extension moving on swap force taking, secondly rate actions and we’re where program the program to appropriate portfolio. investment contract. part a

to get sensitivity. So are and the XX% in all to of three those that options less motion than is expectation

a then thought at question And Okay. Leerink.

that activity in Stephen through you business at if get was those the to and the revenue say but the that just quarter. for outlook expenses to any the given given with if think that's if consistently more if be going to deal plan guidance for trying curious the I accrue tied maybe this given to or year the

It’s know largely you Dan. deal to activity. tied It’s

the deal reduction of see activity, and expense we just cost a be is you standard fixed through. don't that there that side also you’ll to come continue there amount the So would on but a have know assuming

it quarter from be flat assuming to weaker could a you in quarter. profitability perspective, in first a all P&L net profit So know the first the

my Thanks for questions. great. taking Okay,

comes next question Chris from our McGratty And from KBW.

I million know think for confirm there expenses, Thanks about $X,XXX the I number the on the I timers question. starting this $X of was kind for looks to that’s million for Yeah. want year Dan just point reported in one the again quarter. of like

Yeah.

using basis. We’re the million the $X,XXX is

extent And flex the maybe that on Thanks. could I talked about kind that changes, you of prepared bit a some flexibility. remarks level environment elaborate mid-teens in in Okay. to of then your you the think

Yeah.

then we As have compensation have we and obviously and along you things from a know project incentive those controllable, spend know hiring mentioned perspective a you do lines. in do we controllable

through trajectory in the investments, built to changes the those that extent environment that can this we flexibility thus on we So change the expenses.

common Great. probably on couple Stifle a any one becoming more I getting know more, And specific. a initial then from conference of quarters away maybe is calls, [ph] talk comments

July be It's to expect time what the right. by QX the impacts in going view have to earnings in and we'll we range of we’ll you're Yeah, our get early probably, we XXXX. still

then. So we to till hold have

you. Right. Thank

comes question from next Pancari from Your John Evercore.

open. line Your is

afternoon. Good

John. Hi,

capital On call lines. the

terms seeing coming on yields a as in new in and you've competitive? give lines contraction – spreads yields couple Can us if any books getting of more in Just these the seen are questions that and, where know the there. of the of you money you it's you're terms

basically fours the has I'll one. Yields only are are the high note narrowed really the only yields to same. Yes. are interest It’s the in take they historical point VCNP are Mark. and the the that around between where spread

material further be of withstanding In continues in segment. that as mentioned compression pricing terms fierce earlier nothing to really competition that not

QX because rate We a know as those actually to increases saw a amount as in with the too as tied a rates bit well obviously pickup are variable of you too. fair well

Got it. it. Got

– the separately Okay. And also the lines. then on

for know bridge just see You the in acknowledged financing, lines and know, past the more I popular more that but as return are products you've return for we using industry funds increasingly the can using them become not as the with enhancement the and enhancement.

does in funds So that for that terms of that lastly capital does to rate using Thanks. does that any implications have portfolio then quality for mean have you're in that you of have of portfolio get? it call they’re implications the that what as the implications of if have doing in of any that and lines of terms quality return the able using terms any duration it for credit does after it enhancement, credit

Sure.

there. questions So, – three Maybe there really at with starting in there all. a credit no is so implications quality,

to fund call quality borrowers the high VC assignment of past, ones no PE we we've than that tend right to there. tend very LP As an we've basis, defaults losses to a they time a bit the loan same about it's But of had borrow zero talked the do. the longer in have at have the capital

thing keep out enhancement the that our to a a standpoint. fund frankly good get And it APE wants from longer extent so, bit that some is and to IRR

hasn't longer. more risk us XX-day longer relative much. imagine ability And PE As to moved isn't the advance for duration rate know is whether generally the VC duration participants. about is other for going to or to you The different, there the same it's market because really the be our charge no really might you or any then,

relatively to Private You to that XXX-day, the years. historically be borrowers that's XXX-day XX-day speaking. last in borrowers be know tend but been stable over can equity several XX-day to VC

I think questions, did. got all hope your of I I

your in in know VC did. – the side high, market have PE and I the within side is a middle able PE you market? to do calculate share what now Yeah, And yet was, you the you but are is better pretty last thing

don't We thus and of estimate low for an overall is we have room market to for us lot think pretty if growth of other than that participants. other a and say

such not market it's Hey, and a U.S. just It's the a John, also it’s large global market.

So portfolio. to calculate certainly it's continue we really grow share. that hard market But, to our

in us for plenty there's to share. go So of of market terms runway

All Got right. Thanks, it. Mike.

James. next from Long Your Raymond from David question comes

line Your is open.

afternoon. you. Thank Good

Hey Dave.

and starting watching some to are take I that to these that are talk about but initiatives the the you sensitivity reducing we for accelerate on, could level would cause the you you're of of what you that initiatives? As indicators thank sharing asset

folks most at. So would are it looking consistent I think with be what

continue So levels and the overall of to fed pay attention with in expectations the happening futures what's your GDP, funds. inflation market, to

going yields. So we with what's – on and also, attention obviously to short-term paying

So this something drive combination is is of all periodic those going to things are decision. us not again, build time. help you This and a over

over especially a as that look sensitivity. we building the be take building we'll time a interest portfolio hedging at So to that dampen portfolio rate

all Dan. Thanks, I had. That’s

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

and taking guys thanks my questions. afternoon for Good

this group of capital a LPs. forward? So in does this view sub line maybe you change response call event guys as your a your docs loan credit to And gen's going losses Mike, making changes Soc barrage Greg loan any with type to then, and future are dispute

Greg, So, start. is I'll this

have enhance can a familiar be and to PE it, of borrower about we and our et over to issues you directly with when and especially given So, I the direct assignment zero honest I'm we cetera. have that it’s basically we to think loans it’s have time structure be calls especially losses, around had documents or we go so critically And continued the the with us, both situation, challenges can obligation. larger with to where guess, not important but

therefore, issue an potential loans see that that no how increasing from and issue no see portfolio. loss standpoint, with So, we we our we’re restructuring in with

source in loans for life with Got you to non-banks but a a Leerink forward be clients guys a Leerink, should in the and appear to be fourth this fierce it. of noticed quarter going especially, And growth good competitor senior quarter. of growth led and then I was the a you driver couple loan sciences them said of that loan

the there, growth loan the concept? market So can about in you maybe environment this talk expectation XXXX thoughts for your for about and

Yeah.

a drivers the them to more as Over growth more albeit Leerink of able the of in portfolio of XXXX one a course Clearly, had partner acquisition science nice being portfolio. to with with value. able smaller is we and the life be show

our So science life from the see growth portfolio. as we I of that market us standpoint tell to space level capital it’s putting expect is big would the said of firms I flowing for substantial venture capital a overall into market. that is the increasing non-venture venture solid our a there expectations levels, as What is growth, do It's well. into venture more an this in very in capital way and portion are money

solid rate, at increasing good market's think feel we get than to more our So share share fair a we very of that growth. from the about that and prospects standpoint, our of that our fair

in Leerink? numbers? Last could And provide your XXXX XQ at us guidance with Makes compare Leerink sense. full Dan, one for to and then how revenue does you expenses XXXX is maybe Leerink’s

Yeah.

So, we've given is to at view think least we happen in going XXXX. our what of

guidance to think, but on government healthy there that. and a market the Greg business we're paying strong good gives you shutdown, mentioned of what I and It’s obviously, what perspective market the what's are that under a vibrant so going that good a expecting. reflects guidance assessment umbrella Now and from SVB a and attention and we're with the

to numbers So could or are you us QX? you provide not able for us provide

this -- I’ll From it. Greg, is take

entity look how for by when was before, XXXX Leerink a XXXX. mean, Leerink given companies market at acquired we've separate and just life Leerink we've healthy outlook entity very the basically IPO them was strong in So, science XXXX that the we for you'd I see private a had

forecast. the a So, we the as of be believe using XXXX to it’s numbers we’re driver XXXX the from and robust going

it year. on congrats that’s me. the for Thanks, Understood

from comes And Rabatin Jaffray. last your from question Piper Brett

line open. Your is

everyone capital one given shares capital color follow-up. give was or any will can over you next I quarter, a two on get hoping -- quick kind expect the their The you sure Should this just just buyback continued improve profitability expected. to years. ratios. us I’m continue to if which bought ratios the we back of not managing Hey, activity

us obviously of at and should interest based the that. I work authorization based and that a that expectations growth think that mean be at or in use we then about we our options if look repurchases we know right now. share makes on you have, And those talk for capital for dividends that good continued we’ll time through capital. what position and are to on we're sense going work we I the

We’re on share market executing the conditions. repurchase assuming

Okay.

continued So you stock have into to this guys buy year.

this okay. we through activity We, QX year the mean and disclosed I early

you. Thank Okay.

back over finally. Greg CEO, And I will now Great. Becker turn the for call to

So just wrap up to everyone.

are. net we're year, of I board. know expecting a rates Had clients great news in across have conversations having year clearly across activity keeping our the described the broader growth look environment remains investors history good you we're solid income, growth on the lots had see is in best good we with positive. And and the a know we You we're eye XXXX while in We really quarter. we when great EPS all an with

this to and at XXXX how compare lot So I a does answer all was know about of XXXX to was no. the there questions

definitely could it to it because know pretty we feel change but all are So we good about paying it, quickly. attention

the it prepared The change, is to environment. other in to changes liquidity, our just those does we're respond parts capital if

to you So to help the that's going are so. believe and investments we growth will paying a long-term off

the want day, quarterly everyone what doing they're do at our I our appreciate as call. doing each end who’re thank to job a clients. So, the on employees are because ones of fantastic the I for Really

doing. what I So in really And big put they're doing. a and us such trust the secondly, clients the fact what really they appreciate they deal. is appreciate And are their

we we Leerink welcome deal whole talked to really Finally, the And SVB feel the we've about the indications to are the want – X. as we the people with I good all about close outlook. we team, January team on engaged

wonderful that, with and everyone a thanks So again day. have

may now Thank you disconnect. and you for conference you. and gentlemen, Thank this today's call. Ladies concludes participating