SVB Financial (SIVBQ) 23 Oct 202020 Q3 Earnings call transcript

Welcome to the SVB Financial Group Third Quarter 2020 Earnings Call. My name is Darrell, 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 that this conference is being recorded. call Meghan the Investor Head turn Relations. now over O'Leary, to of I'll begin. you Meghan, may

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

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

svb.com. during encourage on current this call. We'll our an X-K this in with earnings been have to disclaimer filed of statements forward-looking release, Our making section earnings are and be slides materially. call, equally actual results in dealing the you in available letter differ may release website Relations forward-looking and We applies made at summary the information, CEO which to review Investor statements our and

some filings I And including GAAP reconciliation measures. and may to include In our our to found in to SEC CEO, release. the and discussion our measures, Greg President references now, in Information Becker. those addition, will non-GAAP of turn our call about over be measures, may financial earnings

of Meghan, for thank all you Thanks, Great. joining us and today.

so team, Investor to that putting information the really O'Leary Beck, the acknowledge our tried balance a together. CFO IPOs, Anna Relations You going also growth, investment strong we deck about to We from what's the are you guys outstanding today warrant like I'd really lot Meghan low Dan a earlier we outsized investment Vu great work on. another improved informed cost client core see done revenue, terrific investor fee with gains that and you release. and banking continued filed from give had have and quarter including reserve of can in our that materials sheet income, credit

So like move to right now, Q&A. into I'd

to the up operator ask I'll lines. the So open

from question Go you. We'll our Instructions] ahead, Ken. the from comes now question-and-answer begin Stanley. [Operator Zerbe Ken first session. And Thank Morgan

start guys. evening, wanted Thanks. Great. right. I All off. to Good

or leverage bank need and now low ratio Are raise any your under X.X%. capital, to getting of terms Board would you could just before equity? regulators raise guess equity is, in you Just your I to either go from actually how pressure

company Hey, It's cash position, to manage a at the through of that's got primarily to cash ratio, with of look $X.X we've the which for capital in quarter so a available holding Dan. at Ken. company, we a If our or flexibility close something holding the continue raise. exited large leverage portion billion without the bank And is downstream. we because decent to

that through I raise. good growth allow we think continue manage the I the feel that. the to to bank about confident to that and of and continue fact have without a the will combination So profitability manage at us level capital

Can through that’s reserve to in or And All release? your release. right. turning the the that? with a And then your Great. obviously just expense, mean, Thanks. model credit actually provision walk us how is seeing? what sizeable then are it release reserves like driving you negative was changing I that reserve maybe you pretty

may want Dan to start. I'll add. Marc. It's Sure.

Moody's and unemployment The third them driver. Bank resume some unintuitive And quarter, performance a with in segment. volatility in enrolled Private what with is continued the so outlook are others we that about in scenarios losses private largely in very third so resulted rest starts further the that economics loan the expected extreme the our frankly release that's drivers in of further strong the GDP, in that the the in noticed strong was vast significant thought main supporting other had we quarter-over-quarter, life is deferral improved model significantly And from improved then payment the that was higher, were their the our over results and particular, likely and And that segment. of And it bank we've occur. in quarter particular, continued the few the majority that and program, many on. The the rely or payments performance. to clients making reinforced that

that, And arrive so smooth having the qualitative X.XX%. did in elect reserve the segment of that the effectively light lower created, volatility to model a of the out we effect that to adjustment a make volatility particular or for on to was at

experience this think releasing, did enough any confident for appropriate yet that experience we behind to provision quality a strong story while expect we continue the do to release to really and bulk of net that, we be. was think So And said reserve the that we what not so, Having credit from quarter. credit benefit. adequate more do our and expect segment, the is that

That Okay. in if And squeeze just could sense. last question. makes I one

change excess growth that of just Your over quarters? couple deposit next how has are And it cash? How been liquidity that versus much just outstanding. the might investing of keeping you

I'll and our Dan. goes to home we his start. is in work. to put to of close that the working They've team And billion put to single money you that work very quarter And worth tired, every $XX tired home an investment in hard This money security. goes been treasurer day. saw

if remixing stability, to in effect investment we next cash to down leads moving the out refilled we've year, you us billion it, continuing back to securities into and us target set And of continues let's bucket call $X the there of about billion terms cash. to additional $X into quarter from that, really the be total that's the that's next getting that the plan margin. and into it, shown with and deploy margins think that on So really and liquidity into

to treasury it. And team again, treasurer are that. after working and actively tired doing we're invest our So

Great. Thank All right. you very much.

America. Ebrahim comes question Go next from of ahead, our And Ebrahim. Bank from Poonawala

Dan I you. on next to relative first, outlook, margin guidance for implies Thank year the follow-up the just guess, also stability.

quarter seeing funding most cost is leverage new where the out repricing be margin margin – that yields guidance like more full-year to about Just to feels is will go book should is loan relative the be relative as for the coming deposit at the you like, talk us Where you've terms the we in it and low XXXX, how fourth are of XXXX in to much a given? there maxed again, – point to think part. through

Yes. Ebrahim, a just couple of factors.

deposit the money in the We're bearing. market change side or yes, probably basis On I of ahead a see versus cost a based looking two deposit movements but a non-interest the point agree. might of see equation, on into just a don't low, creep in major XXXX, up terms overall at

in second said, lending, clearly we our in like we you look environment. yields, by was expectation the the if big we're rate driven But big component, going to So that is there's of really the relative it stability be there. If reset. competitive loan changes think at a

of So a replaced that first got higher in year protection that's been we'll of as the with off portfolio year rolls lending billion see $X.X largely remixing we've is quarter throughout largely, the being expectation priced next the really the through. yielding And paycheck now loans.

a stability securities. the side So a of net-net, lending get then minus the there's you And plus the investment basis points on equation. few to finally there, or

basis investment year securities to to investment are on of points X yields quarter-over-quarter. yields pressure the addition through go And XXX to next the the point we X as on would we the rest at level, point certainly to continue securities there. So with some of those see expect basis basis XXX seeing declines

are of So you those margin to stable get the net-net, next more range components how that year.

talk the I the think Understood. In quoted number number of investments has about clients acquisition. in And I statement, acquired, client you’ve X,XXX you X,XXX. to prepared accelerating past, guess, been around Greg your

look of behave well terms in Just to us tech growth Are opportunities give the to the how a they as tap? it's today give years? a in like, these from healthcare the say to pandemic, and terms a you've as been able was coming been us we some of but that new talk easy of, biotech, out done of coming outlook growth have think you're sense medium-term same from? company? investing sense the growth where last the five us extremely in just in we areas just Just about have there where's for the that to Or standpoint

I'm Descheneaux some as add I'll to well. Yes. start. commentary Mike Ebrahim, ask to going

kind my view, question. least the parts at – there's to two of So

is early stage new in is on client that's and a coming from. part acquisition mostly is where First It of head it where historically that's come. us

is and So relationship the it we've banking making, and team. service mainly investments been been our in client startup management,

in And there. online then a we're layering better and a technology, make building better easier. added digital user lot digital lot digital it a interface, banking onboarding, of to we've So resources

The programming. think I in ways and time, those mirroring about but help team be those. say exceptional together, those more an an the third the of done So navigate help then pandemic, is both two they programming investment startups point difficult our them really this we're in successful. would also navigate has in to fundraising job And it's

– catalyst incredible as remotely. acknowledge a the the well client is that's in the been So to has drive nice team which pickup an got in working acquisition, to done the you catalyst, new pandemic job, main also everyone

feel So that. good about really really,

investments sustain And you in the coming those deck to four making the And in just there's And growth long-term of we just today we categories. second look and that those the four been support the continue four take help The at And have years. have categories. first And I would to those buckets. in we're our investments to over and is Slide really overall. going XX part submitted. clients investments business it's to a add

and we're making look So making where our more. really we're about just investments we feel going good to at

little with the may in want in the So stages Mike, add acquisition. client a you color to early that, more

Greg. Sure,

it's I Descheneaux with would early it. points on really teams are only coming or opposed this here. astounding the correct necessarily been stage that – – has just from Greg I’ll The the stage. environment starting navigating Now to too, just just always been is two stage, is what as Mike where growth into actually capture But COVID accelerated and to absolutely we the banking add our strength exceptionally thing this there well at the up maybe startup refocusing is clients helpful our extremely also even add well. lately as to directly

digital happening leads Greg the doing, And the as some of again, of, of also in terms too. saying, the we've outreach as so been more well, but was that's

business strong us switching they investing again, digitization, So for easier with and really do make better to getting how where we're engage that's to that sure you eliminating well to the over make why you as it as is the well. the have trying too. And and of us to well kind accounts converting been much us, so investing that product as strong friction products with we're expanding with deposit by continue of coupled our combination And in forth. that of are fact set of into to quality the as client experience seeing and them continuing levels all acquisition, we then

quarter. So it’s incredibly strong just

is And a that hiring quarter. talk we’ve support see It up headcount that your of went frontline the to third around to any when like is XX% strong color it you hiring pretty the quarter-over-quarter, initiatives? Just in seen? was or digital lot

I'll detailed the more give Ebrahim, a in So high start and it's will level, going – level to I'm been you area. board. been It high a answer. across Dan has the At really at product give

really by area adding the of both in That in down technology team already be on up onboard have Mike and bringing down, people strong and the As we we tripling are we're area. has said, side. married team incredible transformation product the to the digital product we're talent our lot a doubling

in the evenly across with spread the So is one organization of those rest then And adding both we're pretty areas. exception.

in-sourcing some or we that things the are We conversion of some historically. have of outsourced doing

contractors, third-party taking the FTEs. in that it consultants converting we're done cases them we've So and then and some to through

expensive you that consulting have benefit the full-time net-net bring them a with as when overhead so actually is on And or costs you'd firms. economic employee us versus a to

to And still into combination headcount the of been be we expect growth we're driving the growth. going headcount things all So XXXX. seeing those is what's

relative year, Bangalore gone other About product it. organization. our – has the as those to to hiring the about Greg, the place in-sourcing just where finer efforts another XX% our to to this last utilizing and digitization put XX% just a growth across the then over effort, a on XX% center development Yes. and hire, to we of point are

gives that detail there. more a So you bit

Very deck. Got And Thanks my for comprehensive. job slide it. questions. great taking the Thanks. on

Thanks, Ebrahim.

our comes Alexopoulos Steven. [Operator JPMorgan. Instructions] next from And Go ahead, question Steven from

Hi, everyone.

Steve. Hey,

What is So I of X%, the pandemic, middle there's just question start quarters? wanted explain in rate past a we're opinion picture everywhere. to billion inflows that two so about turmoil with your in big of unemployment given $XX the a client over would the

categories. the question, that back into it great Steve. income, investors And venture commercial market. capital mean is can't you right places economy. what it's very and into level, isn’t Clearly, the put for it is, fact I the would the I flowing It's our that two few money put one It's to in estate their The innovation real the highest from at there's wind now. a by looking fixed put attractive

when so for you're And people only at real economy. in think the growth. invest looking you one of is places deploying are growth about And where innovation money, you the can

IPOs marry follow-on in along being you And with so fundings, you that public and to and venture the include capital in see that venture in see financings. then that growth funds you raised, markets

public $XX quarter, markets markets, of public funds client And the so the billion in about you the even roughly when drove think right.

market IPOs the and and of in IPOs the venture-backed on XX% of quarter over XX% the tech the have the of year. venture-backed share course We health

got at wind you've we're technology. the So investing our economy, where people, the then and with again, in marry in execution you investing where innovation we're that from back

economy, at So it's executing incredible and with the two those things and driving strategy the combination growth. our of the funds is our back client total wind

helpful. That's Okay.

Greg VC. add to it powder record this in from To is step have Descheneaux. just of of few put what perspective Maybe on things standpoint, Steve, industry levels we the the is Mike for a dry back kind saying.

is but if record last XXXX, highs kind innovation little In that the with because marry entered terms on about had think of seeing, that for you fundraising sector year, towards ahead here bit slowdown into a as down, you then the year-to-date pace shutting incredible right, it, versus the The we as pause COVID year-to-date you're of VC. of into we of of we're levels, investment rates here, and going fundraising, are with the money that you're this. resurgent great lot to Greg still low and of Their And There's like industries specifically a is overnight look start what lot of companies exactly more being general. to deploy saying. being a burn is of are in the a created just environment. we such all people for with and right. having rate There opportunities some then shutdown, opportunities are and invest which

have expense they're sense, some more being or less operating of in sense, an a efficient they in So burden.

doubt some solid even to And up from travel, In is sense, there's too, just example, well, maybe So out no working for because of efficiency lot as lower not right, as people there. home. we're companies work. having commute a to

to is why And strong the challenges the life despite a get great to know, We so that's as these through tech And things we think economy. is plus, broader in enabler. you’re continuing and need us all sciences I things help see such this.

positive we done execution why all make said, has an sense. the it as and kind things, job. is like, And that's all about step we're back and just to So again, and team – this wow, Greg startled amazing just an again, But incredible of you when run. think wondering starts

given That's larger growth, resumed. capital helpful Yes. you the And color. really closing the see deals it starting or resume? guys deals Are then looks now to strong like

bit one with venture hit, weeks we Yes. with it doing the We those were This a it's weeks This the and ago capitalists them a XX well more two and into this companies. as just Greg. and it of Everyone it. first it were in capitalist. that up. equity there of goes the kind Zoom everyone the those into, how I'll considering and which may call then normal, team back was the a definitely in talking was said weeks definitely doing how on it. look investments But pandemic three venture in doing start, was efficient note, Zoom about a few first the where holding We're as one probably executive is is was crisis. There maybe of and was to COVID different had new is private true little on broadly when they founders, number picking the call, was obviously, allow And to and calls that. I at same, easier seeing add. connect And was markets slower. Mike

are done feeling question no they're that there's think Zoom. actually So really I that about being over deals it. And good

has We, no at seeing here there. are really and the about we I doubt, strong into enter levels. The momentum out as team mean, are QX. record our pipelines been

right. they to that the of with starting are we they yes, people initially more are so, doing comfortable doing more were I knew, already people see follow-ons And deals. mean, kind doing and

And So people to more do just Zoom, you just that finalized. to able into those to new the were deals in opportunities. this see starting on got it, with coupled done to closing deploy really you're you are being some being as going have order and then interesting be deals recognizing to capital

to And say quarter the so Zoom really here to we the fourth here, level move is that definitely be I able of would comfort as into do increasing.

And good into and pretty XXXX. so why that's going feel QX into we

to But look specs now. when think where you out issuance, clients of on were, Mike record you? number Greg, there's a like about are starting there Is to IPO to do record right, and willing how feel now we this to you at Zoom, deals a many bubble

It's question, to elevated are that relative there's a valuations good And no Steve. in actual performance. their companies question more

are I same to to comment growth companies years other perfection. are for part And companies just the meaningful very, so is for nice. back to And are would invest. there But starting performing factors. would several The say ago these places, there's other valuations. say is really places to – I and well. the two are aren't rates I going One was people is price the when comment, then become take And you looking my this making growth very

that that that drops, Now much question. how of take the the of long if a don't to shift? know I And when How any, change? does it valuations take for to answer that And come were place? out if will to could

these think, to I many risk going being But growth valuations. pay in we're And at transformation I healthcare That's trajectory, a I and have people to look are rate and going a in some rates companies to. the risk both low you done Yes. while. deflation of valuations? this about think nervous that when be create for tech believe environment think buy people see into definitely a a growth from to the we holdup it is could it attention that – to

Okay. Terrific. Thanks taking for my questions.

Yes. Steve. Thanks,

next question comes Jennifer our Truist Securities. from Demba from And

evening. you. Thank Good

Following what know propensity really of culture remote to up theme, is important I working? to on move SVB’s workforce you. more that Greg, to your is

are and culture thoughts what the a work-from-home more bring maintaining to on to Thanks. everybody productivity So in office? your back environment

question. great Yes. Jennifer, it's a

this have with work about. have across success and key weekly each the part you're to the organization really of because I'll done. culture debate collaboratively be we other engage right. to our exactly And how a We is start The we able how we comment get first stuff that operate, to

thinking the we're right about doing So we're absolutely that sure making and that way.

note, working, working we in said are as home. from almost We exclusively our

thinking forever. to in office. days our that's we back in have of very Exactly what week many a clearly balance the small is how that and about are five fully we're group going changed We get we more vaccine, the have going people are the to be to workforce a be But a are to be settles is going going in have dust people remote. the to when effective, And going versus to strategy office. people, of while for sure,

feedback to employees a and coming that a haven't we a question going our decided and get percentage to number have percentage, the four smaller no a week. that really was of home, clear. lot smaller week three in but wanted was there's to hours kind were week, that do more from We yet, to that higher five full are days a of was be pretty one will the only in week. periodically. feedback that we're mix working plus, a It We XX and that XX people but one the office to surveys and fair was there It days a come of days a a

look we'll to factor in. And so that

some the higher believe you As we said at that prudent taking that's direction when was estate in look real actually we're expense getting it's made we on the a guidance, we But the Not leases. – few. about a in comments hit kind fourth of our in of our note, the of potential headed. many, expenses of expense quarter one out

that of have back that they working now be actually environment. when where of another we but normal be and focused making small coming new to are health, that, mental up expect ways make our work, helping going and actually vaccine we their to a to with it. on we're we'll before have year-end, going taking I safe, HR is our announcing else department we're with sure into we gets So on on culture and that everything up only get the a to make component is we're and employees, will we're thing with building set of sure We a that, culture, working said, sure Then team of in engaging factoring model them whatever be between future our it that on employees. need the in a clearly that be team where we around to that to with care critical go people this they're they're

so Thanks much.

Yes.

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

Good everybody. Hi. evening,

Jared. Hey,

revenue was for should especially an quarter element third we quarter, have Just would looking that drove there that Or large at in figure item, activity there the would revenue from that? impacted we third that what we revenue? something thinking that in higher. been some the there quarter be aware were thought line in out-sized Was second Leerink of have for deal following was

hard And have best The the wide, no by Greg. you a is kind wide, wide of answer This history quarter that. in is it's margin. when to Yes.

I the team results, add almost I'm I at more to people going see what are team You're number at the exceptionally that. is and smaller to They're well. always behind executing thrilled absolutely to feel they kind unique the But higher. quarter. levels share to advantage – of doing and market nothing going of of there's up continue about see. were second were that opportunity bit great the They a take to look a Their looking that just little the just they job. is doing. activity a the they're

to read great into nothing So it, results.

then And more guess, there, maybe Thanks. I through would've the you that quarter-over-quarter fees on Okay. showing I was takes puts comp. comp and lower I guess, given thought it in the, the up can go and the assuming baseline then given the into you as referenced flat? going fees investment this revenues banking banking for well? good quarter, stayed comp fourth a lower that And new – is given hires maybe

Dan let that exact I'll breakdown. closer give to He's Yes. you detail. the

Dan. So

referencing. expenses. spending And the while just performance, work lower, getting embedded digital QX to as the on I our in there what Greg are question we amazing on the numbers. look were second bank bit and teams really some in saw very the three on and that's One, incentives than strong. was been just more we've investments baseline, been of the that and Mike quarter doing, still the balance Leerink’s including a and QX again, warrants Yes. are about what's happening growth at we your a QX a the from that things perspective, think Jared, if performance,

we performance-based to relative what in previous story. costs mostly had QX guidance the So is

still the comp also quarter look will factors be largely Paycheck We'll to three see the fourth we so potential expect fourth on the probably at We quarter, Protection the their in quarter. As the those Leerink there. levels equally are have in strong donation elevated in fourth quarter, an Program.

another million estate there's talking the million roughly of $XX real $XX Greg $XX that charges to about. million was So and there

step a from Leerink quarter look for real for $XXX million at closer baseline around to and Paycheck when as the strong the So we to something you get million. estate, the we $XXX Protection normalizing Program back fourth performance, and of that, all

we year. the is QX million have the So that million baseline to of coming $XXX we’re you see in what there the in really $XXX out guidance.

off great then over has over years. side, growth a And That’s strong that the color. think so growth think rate you last Okay. in expectation the two growth been XXXX? sheet? total And Or more just you slows to is that balance client shifting the what's fund deposit maybe moderates? that is making I moving Thanks. that maybe deposit back then guess do

Yes. Jared, may then, to Mike continues and and exceptional been seen Dan we've right now. add. strong it's I'll be Yes, start and growth, – to want

what into next have think I as the in. we look don't year, you government don't is you flowing money obviously have

one is that's part that area So it. of

but be so honest, look of it The just up just it, it. expecting going we're that We great, other part year this, if been it's is to to happens much. like not be can't into next and it's assume

in continues a give have range see we to and finish this – going guidance we on to quarter if be super the if And so strong growth, And fourth we're XXXX. guidance. up into it we continue to

job in the think really is it a deck, would kind is really, really in higher Those I – ranges dictating drivers does that that what try take so And that give range. what and clarity to good then pull what team the think could giving the are wider And are it those a up the could we the factors into for the but of do things I the it's that XXXX? guidance. driving really do our are that have the that down So really are drivers below I direction, coming look on we detail. year

how flows? aggressive me, had more longer-term try cash a target. this Dan, just of billion think you'll How some given get you finally then the at point that just $X to And the referenced Okay. $X Or is do Thanks. – aspiration there? quickly for you of billion to we or

mostly dependent it's think the in seeing market on I are and what that Jared, we're opportunities there. out

build We But those continue more of portfolio. back, trying the agency we've with things things bond the treasuries, done to CMBS, agency mortgage what along lines. we're obviously, historically to municipal along CMBS, our look also

what to we that So are it's work. in putting actively we're based seeing opportunity and spaces, money those on

at So but continue money work us not probably you'll see actively last billion we pace continue put to $XX that to the saw same quarter, find we those opportunities. as

much. so Thanks

Chris. And from Go Chris KBW. from comes our next question ahead, McGratty

Great. Thanks want topic talk to favorite question. everyone's taxes. I the about for Dan,

Given it what you be tax just us being we sensitivity an the on proposed administration? the XXXX prorating Or happened Washington. if as munis election that? you after and the and get the in is might comments just simple do what under what's Can a at hike looking through made as walk

Chris, I to increasing is hard at as rate with an is that we tax some out. where clear put pressure on But we tell get start. earnings tax the – at year. thing post-tax that it's least the think into rate will play Yes. to as exactly I'll I going mean, next one look

bottom what the decrease, happened rest back went employees with during we of kind tax through. let the flow split line Looking the to it what and we

go-forward but for performance basis. right sure important think, paying as work think is probably and thing us on the for obviously much possible, a that optimize we people I I most we'll making as to have the

play out be tax rate get see up. could a from all-in we'll quarters we where to three XX%, but an ends the of we'll impact back to to up So ultimate close that point, as a there. perspective the the If ROE point rate tax goes something a

for to us in of grow most employees to take care and invest think and thing important is space. that our I continue the

of could been Can I COVID, cards, guide? more surprise market, the and speak on in If what by ask income way seeing outlook in somewhat FX, those outlook. kind to the your one the or the could the with that some Great. of you what one have other you're you businesses, impacted fee

This is Mike.

start. So will I'll go ahead and in. me hear jump Can Maybe Dan you now?

Yes.

So fees, when about these we impacted been we by that client right, are new think income, key about driving talked which of rates. clearly the fee had some impacts investment

on significant there's that. drag been so And a

travel. probably has start full-year no seen of of think is you by And the certainly that's XXXX due so, obviously that the going spending been doubt card – in was Then impacted. into drop-offs when to We've lot fee about income, that effect to to going A about XX%. impacted. that

So that to well QX, and as things travel activity FX, well. here expenses nice you're like as deal when and too, see about that more as back, you we well, more and again, as see rebound think will be spend. did certainly starting helpful in entertainment coming a cross-border

we see so those we kind as And go we – QX and XXXX, of still so rebounding. into into

So a starting travel to that, are said the back we aside up. setting see wild having again, trend card, all

got XXXX. why absorb of to And pullback XXXX so we is on you with par we're kind for saying that kind here because XXXX saw in the basically of that's

those kind that. I the want So on would of are three know some additional color areas. Dan don't to add main if

friction earlier, the you as to able help we as clients about about which adding in talked investing, Mike. of to expand to to think digital, continue rate. Mike sustain At our reach in just Well, covered saying going I talk the to reduce to growth was number help it, be continue will same us product, time also we are our that's people

the on And the get are building of and client grow a streams because investment going but able rates, new drag digital basis to capabilities forward. new so, continue next into product additions, as fees we've these got obviously, we to be also to year that a the earning we're client

for color. Great. the Thank you

Kotowski. question ahead, Chris. next from Chris comes our Go And

Is bank meant suggest quarter. just that evening. basically in correctly debt slide and declines should program fourth I pretty quarter? understand make kind Good in the – sure same deferrals XX the I'm to the to wine exceed Slide of Yes. that and venture this much because the we understanding wanted private vanished

of it. few participants were correct. and those up billion wine programs, resumed quarter. three six-month It's that all Marc. both bank has that's a those out across in XX-day and Wine roughly of program different this with all started there's a third generally private $X.X also of take for We one. the But $X.X programs. in made roughly almost speaking, programs, largely billion. I'll Hi. in those And payments And the clients million $XXX the

the really that debt thirds the venture are two November X majority deferral to is clients of similarly the payments We That's resume optimistic watch. the fourth vast program in population. roughly date starting of quarter. cautiously their will

bank to catalyst related quite expect granular note as are loans. majority And program vast be as loans wine. the a the same generally speaking, be expected elsewhere non-performing so again, private And deck, in what as to we resume. time the and Don't we that at with in saw the that, clean could being we in for point this relatively participants

is resume, too won't driver that the a NPL while in the beyond. NPLs, that, may to the some quarter so vast we And the be it or much hope majority have extent of fourth again,

nearly could by paper, said Okay. now another your well, secondly, Leerink extend on to extension can years built be I'm and that do most all, with it's as one team you've obvious that kind on platform business securities your think would business experience info you And mean, wondering then the to the some least build at And into acquisition, be be worked got been single would two does the team by it's of technology. with now team? of that and think you I that – that you Or with at need built acquisition? incredibly

This Greg. it. take Yes. is I'll

the So those their positive. And how are fantastic Leerink thrilled all is both operate, we two the with performance. are incredibly say SVB would clearly It's been One how well they also in is, I people, team, doing. they engage, things. how things

So that's good. really

make build we're investing in platform. to to and We the to want capabilities we continue investment banking make resources to platform. sure want out First, that the we're adding sure healthcare

and that's, the foremost, important first So thing. most

And platform The We're already at banking a about talked unlikely market. looking second actively to in, I've we platform. I've is part, a technology and have the because said, be it before. this we're investment this, engaging as watching we're and

already and banking. we infrastructure So have investment

be it'll the my adding and than be software technology likely platform, than likely So is, than M&A. people – to will more in view likely people from side more the in

this people, We're actively And looking talking that. definitive to point. so we're at but nothing at

is, short purchase. unlikely platform be question So a to your to answer

me. it Great. Thank for Okay. That's you.

Okay. Thank you.

And Go ahead, our next question Bill. comes from Bill Carcache from Research. Wolf

come as drill Thank a replicate you offerings call you. has having lending discuss integral call investors, just capital what lending that of your advantage, other specifically, business? At sustainability some the specifically And to can about level, business afternoon, inability you capital durability a and hear into your of why everyone. of up not to thoughts. is and your that the the Good in to with topic the but competitive view conversations high would in balance it's sheet just love banks

add at going is want a Mike it. then start level, Bill, to to and I'll high to Yes.

business has we've doing call for – capital almost than anybody the been us been think I longer for So this else.

the deepest team, the have most team, experienced We broadest team.

long And goes so that knowledge, way. that experience a

would client the with I against which part. that marry anybody is put experience, You secondary a up

again, well connectivity or equity venture in and not winning private equity not every firm evolve, The but economy. capital more firm every third venture More economy. area, private capitalist, innovation is firms the the equity are into private innovation

bear I services the relationships. definitely how so about we that is can clients guess, in that just thinking bring doing that time those And and we to are to different other we appealing. those operate what spending we have all space is What are stickiness additional, adds

well, helpful it's adding think But client has right in to next our more looking things or approach, to technology key service we'll XX team, now, a our the industry. the is months it's part be of the I also them. And arrows and and those and actually so and over so, quiver at their that expertise, been expect which it's it as I that to we're would

add that. So Mike, let onto I'll you

Mike, want add to do you to…

No.

well. he think add. covered to Nothing it I extremely

That brought super tuned Thank I to other bear that or this any was at of bit on And can services appreciate helpful. a preview you. be Okay. it. stay point?

a things. the variety different of across looking are We Board whole at

now. close nothing So enough right to talk about

different And to discuss super There's gears both color. cut view completely Thank switching Understood. hoping philosophy. you. That's could helpful that can that hedging topic. I hedging was a you ways. then your Okay. a

times, overall your to would NII You broad ability also future? have you it. can even generate love environment any asset to be period hurt guys from it emerge and this to if if philosophy? just to out in but time reasonable you from view And this I growth, you hedging the gives would rate hear on by didn't compression the eventually continue hedges benefit further And on on that certainly of growth over margin strong more putting such at such outpace we can that it as as thoughts engage to normalize, And hedging? the hedging starts healthy you look the we

I'll This Yes. Dan. is take it.

in we've would in look be at way the to place we pretty we would looked what material to strategy, hedging that consider as case was we a make something protection the So had be rates. sure always short-term in at which our it reduction of unfortunate,

disaster it of think So as protection.

on And good we at side of the So on that's at to the thankfully, that to now it. the of way portfolio. interest swaps. the least rate investment put continue on place, lending looked securities a in And we equation. put day, forwards duration We amount extended this

environment. over the waiting improvement opening And think, lower to some environment. up is on position time, right, we're I So rate doing we look in the in for what a you're the rate degree clearly, a ahead, next be as go-forward we'd basis,

of monthly, that actively correctly. up rates move. additional in sense. So make that might from gap couple so securities hedging more the we the so. position, sure here investment the that would to bridge goal we're to take ready to here ultimately, on to doesn't the basis the We But open years to year we're next a quarterly our or duration the extent next over necessarily started that the be just And make on some over watched positioned

you That's much very color. very Thank for helpful. the

Thank you.

John. Evercore. John with from we'll Now Pancari Instructions] ahead Go [Operator ahead go

afternoon. Good

John. Hi

Hi.

the flagged several And the you On in of the I also clients higher of dependent you charge-offs in the side, increase as dependent investor drivers drivers non-accruals. as flagged credit know clients investor quarter.

hopped give can a just more to you can other types or on late. earlier, little I detail missed if that? us the granularity any that you on So on want borrowers us if Sorry, give see I of

worries. No Marc. This is start. I’ll

Going pretty to annualized levels. pre-COVID and and quarter, higher the relatively with on basis charge-offs, again, still in third consistent far an so while the low

Relatively granular quarter. very similarly typical credits. of it was In terms composition,

a there rest of over spread with of sector later in early development, little and it those was a Stage sub-sector. roughly population of and in the largest think stage, the I XX mid total terms $X of million. was around stage, being half and

no And so trends deteriorating discernible is really really, again, diversified. that pretty any way or are segments in

new quarters I'd Moving is again, third this seen we've industry is and a say non-performing into environment. a diversified. in this NPLs, from sector of was loans. roughly from large was fairly higher standpoint and one, new that, The stage granular the and standpoint the loan a of development side. consistent non-performing an pretty reflective similar of one perhaps But roughly million $XX after to sub-sector where case, on relatively there And again, it that. one gets loans,

reserves just Okay. in like interestingly, Got It And also to so released it. of reserves investor-dependent more Thanks Marc. to you But then stage that. the the you portfolio, little bit want on looks later get a stage color follow-up in your investor-dependent. early on added one that.

terms dynamic the in given is there on the difference reserves? flagging, going worth that thing the any a So treatment of in of

Here, I'll really. say, not

of quality. was at with zoom the And economic relative when same at we again, historical we out, early probably strong earlier, where at the like present. relatively pretty adequately coverage reserved I remain for but the think charge-offs, remains coupled noted the the driver movement, you continued we look sort to I you are pronounced, I most pretty As there. strong a is time, when And scenarios feel credit think stage improved think,

then do you your just quarter? Thanks. total the Okay. And did what lastly, for have assets criticized

might be I that can't it recall? earnings I something do historically released, although not. or if believe that's in you have don't remember is we – Dan,

my certainly be will the – in head. It the can of XX-Q. I off be top

All it. Got right. Thanks All right. Thanks Marc. Okay. Dan.

from follow-up a Chris Chris. Oppenheimer. from Kotowski ahead, we question have Go And

taking Thanks for the Yes. follow-up.

a chunky deal a say, in you about. as equity. came of gain either other there big and us or firm's pose big parameters into Just how on your out sweat the any put could the just willing occasion if there story there's cash Are and BigCommerce of such just your I'm kind opposed to be also if of can But day, with risk you one the wondering, equity and risk curious investments share opportunity? how much I'd to are that

I'll start, jump I'm Chris level, going ask high to in. to Marc a at

So would three loan decade. this loans really We we of main I to that by do mezzanine few it see loan for a convertible roughly years we've and driven last the what say, gain a we did – in the these, would was ago. similarly very operates that done

much. not case it coupon is when very So obviously And is a little very, basically trade it of And rate low if but really, you BigCommerce. the And a really that there happened it's difference, works, works think difference, bit you biggest for about a this, convertible the is feature. well. what with

while So when did market recently. and to more two loan We we one little driven components one the Obviously, it, has convertible expansion. pieces. did two we there’s structured, did we a of a valuation and the lot back

of drove and the the a market very loan structure the really of large outcome. So also, very, the combination

we we've different Now, the place wasn't that put argue, I many, for what from one, years. many in tolerance that again, risk this in done would

a not of so structure a lot lower where go I a as things in like just different deals when taking really think that. a that a we're important company well, feature risk that's convertible you point the a for get It's And coupon trades upside. can

we with can thrilled them. are we're it. find certainly more we for obviously looking So pretty BigCommerce, at straightforward, if And

So more come. hopefully be to there'll

you. Thank Okay.

Yes.

question from And Poonawala of follow-up Ebrahim from Bank we Go ahead, America. a Ebrahim. have

around very that some earlier mentioned if one-offs, the think the be I for applying a should the in the just rate, fourth your Dan. out response back rate XXXX quarter. $XXX you use million expenses, expense run of the $XXX Should core as quick you base To given? that follow-up, million we to Hey, growth you've

off the our should be rate No, actual expenses. growth of

rate growth is actual. of So the the digits low to off mid-single

it. probably forgot I

you Okay. are this quickly Rule or investing on how the And the new last does thinking earlier about very funds Volcker not? question, change in the in year change just

Greg. it's Ebrahim,

because period long pre-XXXX, a coming a them basically we of with up, you runoff Rule, certain we of back and to we Rule XXXX, For had have them go we Volcker made discount. to still came of positive we them into any would all putting the to when way the date, by sell didn't place, first over money the without work, new at the would Volcker basically if sell is there actually a time benefit which the to investments a benefit all, we there's was have if had, the have

pay let So allows them us to the those without time to it discount. sell continue a over first actually out benefit having at to funds is

a have. thing big nice but nice number, So not advantage, it's that's a to a

do of investments question would the our in second but almost not And part balance our put investing it, it's say our The I almost LLP your money. no bit to we very Capital, part may off SVB own in of of our and for little going business is be of The a is SVB really. answer money last into is, changing to an funds an – sheet? main is really put SVB and Capital We money we have it's it view the it, short selective. decade,

advantage it, we out. into change but see as X%, and help the new in a a would of Rule raise the one So Volcker actually fundraising, X%, I our money we dramatic the own X%, X%, funds, may we coming that'll have don't with little us put

Thanks. it. Got

Yes.

it at Greg some questions back more Becker no time. this closing have to We turn comments. to like I'd for brief

everyone I just I I Steve I'm dealing of parents, are all to obviously go with growth for the things working question, them being incredible And of not care Well, some and the this first joining that deal liquidity. right with think with now other cases. small they're with but to this having, they're dealing with I'll Again, we're environment, of today. proud people in one because remotely, apartments or only super in thank dealing all that any want kind taking and about, the results they're are having thrilled parents from happening think back the of is us Great. from asked the really [indiscernible] in We're is QX. first questions of how

these in put such and their our phenomenal clients. really And to can taking want to want a deal are to be course, of we with. just so to to I this care of And all of we results, them all And hard in deliver trust supportive then say doing thank things for especially you to employees to job, just just for those continuing clients, to do us, environment. everything again, our our

guys and all to us, stay for joining you Have safe of a thanks So day. and healthy. great

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

now may disconnect. You