Signature Bank (SBNY) 21 Jan 212020 Q4 Earnings call transcript

Company Profile

Participants

Joseph DePaolo	Co-Founder, President, Chief Executive Officer & Director
Susan Lewis	Media Contact
Eric Howell	Executive Vice President, Corporate & Business Development
Kenneth Zerbe	Morgan Stanley
David Rochester	Compass Point
Ebrahim Poonawala	Bank of America Securities
Jared Shaw	Wells Fargo Securities
Matthew Breese	Stephens Inc.
Steven Alexopoulos	JPMorgan Chase & Co.
Chris McGratty	KBW
Mark Fitzgibbon	Piper Sandler & Co.

Call transcript

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Operator

Welcome to Signature Bank's 2020 Fourth Quarter and Fiscal Year-End Results Conference Call. Hosting the call today from Signature Bank are Joseph J. DePaolo, President and Chief Executive Officer; and Eric R. Howell, Senior Executive Vice President, Corporate and Business Development. Today's call is being recorded. now J. to is over the It Joseph to Instructions] my turn pleasure floor [Operator and Executive President DePaolo, Chief Officer.

You may begin.

Joseph DePaolo

quarter Signature Thank thank you, XXXX the you and results fourth Bank for joining call. Laurie. us today Good and year-end morning conference for

remarks, my forward-looking Susan. Lewis will Before disclaimer. formal read go Please I Susan begin ahead, the

Susan Lewis

are our the This statements that within forward-looking Joe. oral to Private you, of contain Litigation subject call Thank Act statements made uncertainties. meaning of and representatives and conference from Securities Reform time-to-time by risks the XXXX

numerous You of those should operations not statements to our because place all and may undue are which reliance they on are uncertainties and subject risks environment, beyond predict our to relating different and business be to control.

our interest the each and concerning the strategy growth, overall. interest statements impact team private deposit and business the include rate on on loan performance, new COVID-XX future the of operations, loan new and foregoing business of hires, and client information rates our results, openings environment, office Forward-looking pandemic

materially forward-looking consider you include quarterly could guarantees review involve those described should not these you are for results. statements or annual to performance and the factors filed in of should uncertainties carefully statements, you results differ actual FDIC, reports information. and in which assumptions risks, forward-looking cause statements. understand that the These that As our from those They with further

Signature statements on by forward-looking You which any made. Bank only should were as keep mind in the they made speak of date that

call to to the like turn back I'd Now, Joe.

Joseph DePaolo

at the address protractive remarks. and from recovery and and Howell, greater your of financial annual will our during overview to review pandemic. the continues in results, challenging Eric the bank's then, quarterly Eric Business I the our detail. the country's experience extraordinary will growth some and will Susan. end I Bank you, COVID-XX provide Development Thank EVP of Signature questions Corporate performance and into

model point of Directors to led by of continues in of experienced client-centric philosophy contact distinguish a us, business Our single times particularly, Group distress.

growth multi-faceted commences. and with Banking, growth, Lending, in healthier banking to Angeles. look as a solutions. collective Banking, We businesses, record including New leading pre-provision Additionally, recovery our teams specialized and Signet the San record position to Francisco Asset-Based Further the The of COVID-XX of net Venture fortifying private Signature Banking, market client including profile of record mortgage deposit earnings national traditional Financial, record Los multitude an Fund Digital strength bank accelerating growth, franchise XXXX charge the bank's are unbelievable has pandemic banking from loan our quarter an led and pre-tax income. forward the York,

by substantial investments compared by million in driven a Coast of for XX%, million a $X.XX billion, the $XXX let's XXXX in earnings year. take in fourth look diluted asset $XXX.X record with compared reported earnings; or earnings. for new diluted share, we growth period per increase closer Pre-tax XXXX of fourth quarter. an was income the look $XX quarter pre-provision at million quarter let's fourth XXXX were take earnings million, $XXX.X a Now, at million Net the with for West share The earnings our income was offset increase last or $XXX.X made the businesses, the or $X.XX including expansion. same per predominantly $XX.X

grew deposits; this a billion $X at while $XX.X to record quarter, Looking increased $XX.X deposits XX.X% or billion. billion a record deposits average

of total increased $XX.X a deposits deposits. bearing increased For and deposits record billion represent billion. a billion high of $XX.X $XX.X a XX% year, Non-interest average deposits the record

nearly $XX led billion. growth record loan increase which and XX% or billion of deposit for to the year, a $XX.X in assets Our total reached

$XX loans PPP billion. increased a or quarter or lending record billion at look during Now, the let's to businesses. $X.X a fourth our Core XXXX X.X% excluding loans take

or quarter in capital XX%. the assets C&I billion ninth million For $XXX or fund diversify consecutive loans or $XX the again record the facilities; primarily loans our we XX to quarter the core the was this banking rate more as transformation points with of is year quarter. portfolio. total core Non-accrual sheet floating The where driven continue new this include loans basis CRE third increase outpaced million $X.X points XX a balance of by compared rapid to furthering were basis XXXX loans grew for growth,

if if to very X.XX%. ACL for I The we secured provision allowance million; to but [ph] XX much to that higher banking are fund XX stands guaranteed $X.X the Bank's well think day now compared COVID-XX out, loans or basis know given losses to quarter million past for it XXX%. were by and day excuse PPP million. XX I coverage me, processing $XX.X the with $XXX.X -- important excluding $XX.X and for point third quarter. loans that credit the XX we past ratio, third $XX.X due XXXX of Net increased with million to delays XXXX compared and the million, ratio XXXX loans quarter. loans, would the a be the healthy for X.XX% for losses charge-offs at at the documentation past remained quarter due was were circumstances took would plus $XX.X the caused for look, million it fourth XX Despite to is like government at points, credit XX-day current we and million very XXXX $XX.X low dues at fourth

balance short-term will we Turning XXXX billion Of effect has of CECL, covered or coming Bank since we for we the adding COVID adoption allowance and allowance to We $XXX level the and losses to charge-offs remain the believe for modifications. have the that principal of come. modifications into the quarters our doubled in that of [ph] X.X%. a $X.X prudently due the fully XX, of are given may December modifications million we where credit million what adequately COVID-XX loans increased non-accrual anticipate as acted $XXX of or interest

Southern Coast. front York, Francisco, Angeles now the client financial a San we on California marketplace. this had In client onto XX we've he and private success. XXXX, the quarter's point, area I'll private XX team detail. much Eric, which At will West total marking greatly in of a are in the XXX greater where two over Now, had entry located teams banking Greater our has of and the Los five review The Bank total expanding the in to of into XX teams; banking results in the turn call New

Eric Howell

decrease and $XXX income good quarter. morning, the Joe, for increase Net $X.X interest then interest the by points. points third to some to X.XX% due quarter net compared margin. reviewing XX balances million X.XX% margin was for and declined from an third cash excess by you, XX interest from and Thank with XXXX the deposit basis margin the of basis entire flows the income I'll everyone. Net significant XXXX impacted quarter reached quarter; million, start fourth the which for

and to balances a look overall driven funding for which XX costs yields yields quarter $X.X grew for Let's asset billion average $XX.X Interest again by cash the was the in the X.XX%. decreased asset fourth quarter. yields earning at excess The basis XXXX moment. linked-quarter during from decrease the asset billion from to points

to our XX remains basis well rates X.XX% lower our affected bank the be portfolio Yields rate to linked-quarter by as of floating at X.X continue investing yields points as to market asset portfolio all in decline due years. decreased rates, reinvestment in securities classes. asset duration on Additionally, in and the securities low the

lower to and points mortgages compared X.X% both yields Turning commercial XXXX average decreased yields. origination the prepayment X to quarters, basis this due loans X excluding our basis to loan penalties commercial decreased portfolio; third by And quarter, yields points. mostly on with from was

points XX low our decreased interest anticipate basis points, X overall to this continue environment; this basis in Now downward at rate to the due cost looking liabilities; XXXX. trend we quarter deposit to

an for qualifies our XXXX from the $XXX.X overall a period client fourth ago, and by average for actually despite comparable debt points and result A was deposit $XX.X $XXX turning the compared and for in for Series On year, non-cumulative During or improved to income of margin in for funds to significant capital. million Tier non-interest stock XX.X% million XXXX due for the expense; a X banking to of gained million period fourth average team is the decreased cost coupon. $X.X The basis reduction the and fourth versus decreased XX% principally due ratio new by our raised was the charges, for addition quarter, mostly efficiency operating And $X.X with a $XX.X borrowings by $X XX Non-interest or quarter, the fourth as addition year non-interest offset costs the an significant of increase quarter was the perpetual during XX% in points subordinated as well X% XX% hirings billion. and million to of decreased slightly same compression cash as the of and XXXX increase versus quarter the to trading basis And to of the third service the the borrowing balances, million, increase was fees million expense XXXX in quarter. million The private capital; quarter driven million Banks successfully rise Bank when with $XXX quarter million and which increase quarter. a last income income. teams. XXXX XX.X% X preferred which to $X.X as $XXX balances leverage

paid excess risk-based subordinated common fourth relatively of per finally, issued balance quarter. All Thank leverage the ratio $XXX And well you. the evidenced XXXX in by capital ratio X total now, debt Tier and which as to a X stock. a of I'll ratios $X.XX risk profile And the Tier the as as in regulatory cash X.XX% share requirements turn XX.XX% of remained Bank dividend call the of of the capital. augment million back sheet, low Bank Additionally, Joe. and qualifies of

Joseph DePaolo

have Bank. like to of needs I'd and clients dedication are today, year on the execute like franchise thank Signature clients provide. the our continue our many, my pandemic. achievement we listening truly their extraordinary Eric. their their advice to of colleagues, call reflects the many who growth that the XXXX and performance our a and for demonstrated truly colleagues level was and to Times these, this as care value of of who fronts. Thanks, my for year strength on And remarkable during number our efforts

our with most at $XX deposits we room increased QX which $XXX a of basis for And importantly, across million to -- of On the deposit XXX key deposit of excuse cost XXXX unbelievable teams points in were our metric, at New remain deposit teams XX year record me, basis points delivered And all existing growth literally record $X.X XX to Demand from billion is high came our year-end our the that $X.X deposits. million from traditional reductions. to we billion deposits grew high XX%. and There of the over for or board York growth further banking front, XX% businesses. reduced each. a the of in new total

Our billion and team our over Venture newly West The mortgage established banking billion grew teams billion. specialized $X grew on solutions Banking Digital grew $X.X Banking The over billion. $X $X the Group deposits. grew over in Coast team nearly

distinguished We the in predominant have ourselves bank digital as clearly the space.

loans; to Fund new $X of loan $X nearly our billion had growth in growth. billion, loan of another we nearly which division, Banking by delivered core driven Turning to businesses record

ranked we $X and and billion Additionally, team; space, lender the Signature planned, XXX% from a for CRE in as and XXth as remarkable XXX% held outstanding that few our years largest accomplishment another last great Furthermore, loan Financial real surpassed truly loans had concentration over guys. XXXX. at congratulations, flat this year-end bank year estate balances made our strides to in strong commercial in reducing the

million take earnings, hold. Looking and and or of had year million income to our just despite due excess or grew non-interest pre-tax earnings provisioning the are several the for a $XX.X for Banks and fee the of income strong grew XX% year starting a by pre-provision Fee cash compressions heavy initiatives of balances. amount income to or margin ROE we $XXX XX.XX%, by at XX%

Additionally, we efficiency ratio improved our during the already year XX.X%. best-in-class to

we year for stage we hiring we teams opening Angeles our the capital we XX while the and And future program of issuance we with this the we to Moreover, we million we client would billion offices everything maintained did. improved do importantly, $XXX did; in our support off debt On meaningfully with we capital the preferred five buyback the in banking tremendous subordinated of stock. level by the set our front, position million said of of and in the do growth new $XXX dividend turning marketplace. said most private would year, Los Everything growth. over $X this

equivalent Bank but and strong for growth years as Our to institution shareholder organically to expanding XXXX enters the did acquiring Bank, Top come. without much a XXXX very and it we XX was we the financial look value. Signature forward

we happy it have. Now, might Laurie, any are you I'll to you. back questions answer to turn

Operator

opened Our question Zerbe line Stanley. Thank you. first now Ken comes questions. The of floor [Operator is of from the Instructions] for Morgan

Kenneth Zerbe

Fantastic Great. the Thanks, in? positive deposit deposit earning mean But guys outright a guess my question good deposits you spread morning. this new the [ph] I on growth quarter, coming stunning. growth, on just are I

Joseph DePaolo

deploy issue; it it have we the we quickly. that's to No, deploy and to have

not cost still coming, and making even spread. deposit had new coming is much recently, the and the just at though they're we're when we lower in So a

Eric Howell

the margin. that's been when before, but net the through is see moderate substantial that a see growth in loan have affecting And interest every environment through what continued that this the fund future. deposit have time. our loan -- we've We've have to will and growth cycles we we growth, rising now a the before; is rates But take deposits rise, trade-off clearly rate we'll been also we will we'll

So a have, us Ken. for -- and for very problem we're is that high-class to the loaded this

Joseph DePaolo

bring taking an in. Ken, taking specialized that the this getting mortgage we market instance, mortgage $X.X opportunity we're that's grew team, year, business for servicing they with by to like servicing are -- market they're billion share share, and the

So it later. day deploy it all we'll take and

Kenneth Zerbe

the Yes. paying. just paying I higher currently quarter could I think it's in would by like view. the very -- is much how I negative it's gain I -- a was the see But than said, my spread you're guess, with I share I awesome you rate guess like mean, market getting,

like feel do some So loan you still and be lower It the your question new to room yields you keep to -- than there paying more your like, that deposits? that offering growth? your elevated seems definitely on is this just have support yield deposit new might you're

Joseph DePaolo

points end month of in at probably had to be quarter in cost XX XX forward We the XXs the Yes. the quarter. we're points January so fourth basis by and down basis December to continuing XX for of was the mid -- quarter. low basis rate in to The bring points; we'll thus down, the the

in there brought basis we've points is reason X bring the So basis in we XXXX. down no first can't fourth down why quarter, it it the of X points or more quarter

Kenneth Zerbe

that? are you the for quantify just say charge-offs, the potential been you portfolio. And Joe, of help okay. charge-offs then, gears switching you little net it, say you very is Thank a Got concerns reasonable overtime, But you. which you expect when guys significant the a do around has higher think content Can maybe what one expectation. loss I higher bit. like exactly Signature that in thinking CRE mentioned when you

Joseph DePaolo

of more our last the not some but seeing why a in be than XXXX, pretty back we're that's and Well, I had by tell now we of been we're higher happening We're the and not been CARES been pretty right not mean is the I'll by said handing negligible, it it Act, saying which you years, they've which I the through; in clients was we're seeing the opportunity it to quarters, not what's are charge-offs clients but again, had but be and charge-offs then with in what it just -- seeing expect keys. was necessarily than -- a negligible. meeting; saying, get expect that. I two coming what last we We've retail charge-offs had the paying XXXX to to lot have some pandemic, during are not core with start -- CRE of and an the lot couple

Eric Howell

Yes.

with frankly, them. to we've to and find quite to of fact, team credits we're our and just finding In identify to ahead now challenged deal bad not get this the them;

are see up. Now give as businesses their the properties, the where want livelihood to in point our they clients not future, their their at they

more positive news up. look the to reason the things them just less in to forward and give vaccines, will of the a the administration new gives from giving that it's to future, to the the on the come of potential stimulus horizon, With vaccines, vaccines them want lot

as much are we're as but the we So looking charge-offs for and just to anticipating them, not have coming we'll fruition.

Joseph DePaolo

And year. our you know, doubled to $X.X this billion during over we've allowance

well certainly it. we're So prepared for

Kenneth Zerbe

right, hear. thank much. it's good to now very right, All you All

Operator

next Your from Point. line Compass comes question of Dave the of Rochester

David Rochester

easier your NII I on point? And you just mid-XXs outlook deploy your is then then Hey, how more have outlook, the in your then being to some maybe Hey, about. the on much cash way the balance what seen to fast low on just talk down we've that guess in or hear of NIM I of were that following guys. the ton mentioned good was of that thoughts you're you part this which And to recently? as curious I cost guys a was morning, should there year? obviously steepening for there ever securities? curve borrowings outlook, sheet. in a how to the pay you the the thoughts deposit into willing And wondering at

Eric Howell

the there amount. borrowings substantial not on is a latter is to a part bit Yes, little first. a but take more; pay, bit I'll little more There

out, to another and the So points -- the in hope Dave. We we low-XXs mid so, savings down to much loan basis the get work side, deposit pointed as Certainly, quarter and billion to or to do asset come securities see we work can portfolio per Joe be to the we $X billion the there, ability on X we'll billion $X too won't we to to of side. $X on the quarter-end. really billion costs quarter in another have per the $X deploy put

to we in that's growth. So us is to growth. to it's to slowed I is flows, We quarter have a expect which still deposit this mean, $X we're anticipate going billion asset little down an but quarter thus in far billion but $X coming predict. great. flows a to bit, continue little have $X easier the of The it hard we for deposit this don't billion worth bit part happen, certainly

more. that and point and and will predict this the at predict being it's be it say make all of the on, NII can nicely. to a to should we hard but the to substantial said, is We're to and that be meaningful The in pretty cash be deposit sitting that able going impact to So NIM have impossible nature up, will come a NII much should we because we're growth. flows up of pretty all it

David Rochester

That sense. makes

to So a to growth your $X cap concerns when loan talking $X a a billion you $X you're quarter thoughts? that or $X about $X for in growth $X billion or are billion in billion and that in capital what quarter billion right? So you're securities to at growth $X quarter, getting is asset billion billion

Eric Howell

No. I mean, we're not drive ample through to capital concerned about capital; we earnings. ability have generation

provision there. was we'll equity soon so power. the bit a earnings quite be more going less have deposit common think said, I on it we're even will is is to to that a as us normalized there, there last don't this earnings robust it have get the return gives growth Like as relatively year; and going to growth I think little We get XX.X% so I quarter;

on So capital we and the we very supportive our earnings feel comfortable should where front. are really growth of be

David Rochester

which Yes, these on today are are doing those pricing call yielding? capital still some the are asset you where those And and then on you are of then seeing sometimes And days? lines lower where pricing just floaters great. securities

Joseph DePaolo

LIBOR and the is becoming it's have floor, we'd to capital or anywhere LIBOR pricing lines, little that's XXX become -- from points thereabouts is tighter, On a XX to a basis based we it's pricing call and like the know the XXX. tighter, tighter if LIBOR on floor the but become but because

David Rochester

Yes.

Okay.

Eric Howell

will basis securities that We're and selective points on side, are as on a And at bit over on so floating then anywhere of continue do to X% at in basis curve. in being on probably least I'd end one security the say, come other the we're the reinvestment. the we on rates are the anticipate security XX rate putting still from the blended points, high long XX to will longer side little rise, back investments

Joseph DePaolo

far, for first two And more have going last to million. days, quarter, exceeding bit have than we Thus the we're for X,XXX $XXX the and the applications loans. little a PPP

number get process a to $X a -- So the personnel system hope so SPA to to have applications significant more. we get of up be done billion, the us number, and the have gives deployed into we've SPA the if ready not and we to is

David Rochester

currency sounds know last Yes, side; Maybe the guys on quick one just deposit you real one, I firms. crypto good. bank

wondering, deposit story. So of I you is for coming chunk digital, that strong the could to big mentioned then customers? for crypto is the that growth just in your your if just was And talk you for from you about segment? these the of And a how what's positive do nice what curious, outlook that's I growth know guys? in

Eric Howell

whether [ph] or that blockchain that or type different or is tech of bank stable asset there types we OTC of Well, exchanges number digital it's space. and others clients, client a in companies

I very we've have we our digital So clearly deposits asset in been crossed of over pre-eminent so that in become growth, space. billion solid team; just think $XX area -- we a player the with approaching it's

to in that happening assets about those obvious but something losers So away, happy firms. we're are bank very not they be, digital the we're future, not very -- the that we're all sure and for are and what's going are winners going we're who cryptocurrencies the the excited and various there. It's

Joseph DePaolo

of there the is Signet we handles January that currencies world the XXXX; one that so team platform, exciting. using crypto on pack few the can ahead platform areas we're wise. enhancements technologically and we of where leader, being exciting being very helps -- the XX/X/XXX, and beyond And what a where ecosystems the have it's X, areas very announced is of one that follow-up continuous -- there the staying not the the of It's other those

David Rochester

Thanks, Appreciate color. the guys. Great.

Joseph DePaolo

Thank you.

Eric Howell

Thank you, David.

Operator

Our of America Poonawala from Ebrahim the Securities. Bank comes question line next of of

Ebrahim Poonawala

about guess, just expense Good Eric terms of in outlook, year. maybe basis morning. growth of in just talked quarterly peaking of expense previously generally terms I early you part out the

So year? give And growth? translates you've and on based operating on color the efficiency seen us some how for expense into that what leverage ratio

Eric Howell

I we XX number Yes. year, of probably XX reasonable anticipate to a mean, hired hiring XXXX. teams teams that early on we XX not in in the but the teams,

So a expenses leverage And had have income, have Even in the drive a ton we right? out over powerful right. we of XX% net down model should though, XX%, year. gained then the in keep we on range, that really teams; but we can see start it our the are trend hired leverage demand slowly that course really and we operating XX year, XX%, declining We maybe cash, this infrastructure. it for some a on yet we sitting so we our very hopefully

cash especially to efficiencies. think keep positive should gain be have earning in we we'll check side put operating we see the So on more and I expenses work and as the able leverage, and to

Ebrahim Poonawala

the that billion you $X cash maybe in be negative where -- $X I you it. -- number previously said And to to just fourth Got feel carry the billion, see From cash have what position -- should on that going billion I $XX.X the think quarter. should adequate. be the about back you

fair quarters? that about that? towards about it to billion do you loans to that the we $XX is Just there's think how So $X redeploy over and will next assume securities few billion

Eric Howell

more yes, absolutely. earning We into going quarters, but than the have it's year this least. little to few take of I us over flowing at bit think, should interest a billion $XX a assets course

Ebrahim Poonawala

for deposits are deposits not higher because number bringing disclose around question continue going coming Like offers. the around paying deposits in, earlier for much you're marginally it I'm where franchise the what is color these right? that? to than And value cost if in deposit fairly the the these and talk back maybe to able over in to rates mid-XXs, I'm up static, lower more is time just Signature? in market the in total in why doesn't terms through, than we that deposits assuming sure near-term of what low but And come stay Eric, to new to any to worth that us, expect And the terms of that of going going add

Joseph DePaolo

XX stayed are you when range. We're then two combine flowing the in you frequently. the and down example point for XX -- that servicing then of servicing that mortgage of out paying specialized basis -- the some right bearing team, the non-interest accounts much daily a DDA XX% in the and Well, now less basis coming mortgage But on the number tremendous bring they escrows DDA, of XX. of are dollar below

much focus but efficient group efficiency, but think NIM, retail the focuses -- a Retail on in is place said because we're a group. to these everyone in the December but so points I the don't bringing we retail deposits would quickly advertising like don't where have can earned have high well deposit more as our we I have we'll also efficiency that, we where expense, lot that estate bodes real drive XX basis the we costs, we're month lower they then January further. So, for we in points, portfolio. to have have on the basis drop from lot in room, but will marketing We now, ratio, of have the by X we don't to the don't that component, brought account we clients costs for you have component continue we one higher real costs, will have so but rates basis that cost as retail points XX earlier the down a down large

Ebrahim Poonawala

one Thank one, quick helpful. and -- Eric. just you That's

Just the for tax outlook year? the rate for

Eric Howell

earlier is state are a one-time rate have than we that XX%, those bit so probably down That been little we had some in higher our as the year. file we'd brought we and tax, true-ups returns, should

tax should any to we for year. changes a next effective back Barring XX% obviously taxes. So get rate

Ebrahim Poonawala

Thank it. Got you.

Operator

of comes of question next from the Your Shaw Jared line Wells Fargo.

Jared Shaw

as Hi, in deposit Can other digital ways balances? growth good looking conditioned Maybe how first -- quarter, And Signet that's this upon growth. upon the be dependent that thinking back at XX% to line about monetize we summarizing is see fee up income well? and Signet and great those level other you a ways, or the relationships? you that the as we well, I'm can Or guys. deposit morning is what can with going just should us growth how And almost also share -- from?

Joseph DePaolo

very clients, generating digital now income. the Well, little fee right are

are to exchange be quite our clients exchange will the improving digital the point a We foreign foreign bit. that system using

team income But is and charging ecosystems and improvements the FX until there. we're waiting won't for that Signet on and now, on ecosystems not of new could fees some our amount system, the get So fee large we'll the foreign on getting in we time right spot exchange drive happen really Signet a there. for probably some we handles to that drives deposits,

fee income is non-digital. driven being right that's institution now, the So you know,

Eric Howell

better you Banking new which really that Joe of of in we've the income really all certainly talked with board, that there to that's we're a the putting should and or in a seen in Coast particular lot groups about we help new intensive we've the Venture Fund West and fee we're on added that us coming exchange fee the generates benefit the the capabilities. -- which place it's, profits bolster teams a foreign we've mortgage team, and foreign from new that unutilized team, growth system exchange for we brought that fees. whether from Right, lot pretty the pleased banking is know,

a fee that's A card well for working drive as way new credit for continue that us to to So we're for team. Venture West Coast us issue, as income our on. well the the

come So to revenues that and we'll start see generated hopefully that. from some mid-year will out

right? service where bankers unbelievable to who that. of that, that see the out build provide Y, a clients, paid out need traction we in The got we Finance And to We banker is at and a we're the time for our current to nice that we've that, to for all continue certainly phone saw to we their paid of an fact our some Trade tell really right? get that Our environment -- us, this there, other you team we needs. couldn't Group, there, that know, get and to I play some for Bank, even gain talking clients X, more. need our Z Well tell client's them level be starting and on

also revenues. drive that focusing will with we're hopefully banking So that teams and on our

Jared Shaw

Maybe coverage us you're in optimistic just color modifications round you I do guess from? update the with that I share of, Okay, with on, talking loans that's to to when and you that debt potential underlying obviously you that credit, where it's did great And or give then portfolio of the you're the shifting here. the ratios the can content the vacancies. in the and borrowers feel working through whether losses you confidence, confidence gone as you're the guess or second sort sound that thanks. you've why loss service strength an value getting and us Maybe in loan of deferrals? about on year-end

Joseph DePaolo

had somewhat It's we that when their for stepped up multifamily earning in that type deals with not building buildings, that that one livelihood. building to the worth one they've on commercial with on net said, gives do confidence that particularly that have families yield., are And partners that client we and headed the they clients real that you multi-generational estate of the that high relies has the and is everything multi-generational the want families, in that portfolios keep top the high too. deal other world of are but us these their they've

have paying What principal a deferrals, some confidence will be They cost they're these fact deferral. more to clients and they're paying take they most care us on have operating of. paying We are the that that us that interest to also of have and hurting, insurance. that's but still -- taxes, operate able are costs, multiple the not building, the the in they're large buildings still that gives not is

then confidence and start the cash So subside moving starts the want to on just the up that third of interest they the when deferral. have flow they'll the leg principal that to pandemic only properties. pay piece don't their They gives piece that give for when interest the They up. us pay and keeping

is more of now than more think be any for them different a I the than what's a the CARES is that flexible cycle. issue timing banks we and and it the cycles of past in it's have Act can the

Jared Shaw

be loans need able to And great round those that to I color you And round important modification? then most? of thanks. that the that are that you at guess second is targeted PPP, may look or how are to already in I of guess going really second Or PPP deferral then borrowers to when that's the --

Joseph DePaolo

They're separate. really

help help the think loans, their them but I going going help them, is to them the PPP not to going it's pay employees. it's to pay

on. So while survive, a that pandemic takes going the is

piece rent. then it think is the it's humanistic I more paying for

Jared Shaw

lot. Great, thanks a

Operator

Inc. Your from Matthew Breese next comes of Stephens line question of the

Matthew Breese

morning. Good

question. Following up on the credit

So the you that balance was and with deferrals. us composition what being X.X% And the of full LTVs types that of Could the there? C&I provided provide quarter? last just loans the were modification

Eric Howell

were are loans predominantly balance the with mid-XX%. it's on concerned this concerned. the -- clients the service loans overly On so LTVs a not structure interest-only an coverage, not LTV [indiscernible] were portfolio, but we plus know, XXX the paying sure to you lower last Well, modified quarter, about, line where for entire principles, those XXX partial debt in interest-only were those if on really

Matthew Breese

recent the of Okay. as service -- for underwriting? time most at or debt of the And that covered

Eric Howell

underwriting. time the at No, of

Matthew Breese

understood. Okay,

the I second was was driver, just fairly primary In of team this just and for were Fund year The this much loan how question new. Banking curious on is the recognize year. XXXX I'm still growth growth the versus division What to the grow? market old And will ahead, the then are growth XXXX? private Fund much by in tailwinds? verticals do the driven looking you general equity contribute will loan team's Banking how recapturing think customers

Joseph DePaolo

or Well, have somewhere $X million. outstandings, they'll lead could will -- The in growth. somewhere past I which and between $XXX group think Signature million Venture billion Financial, $X the million $XXX Fund Banking probably is million in $XXX probably million a team million to $XXX still have $XXX have -- will

billion San then and Francisco are the we we really don't there. on. that hundred We discount, -- they'll right stay have The C&I in in Angeles two have verticals be purely expect asset could traditional discussing $X.X quarter. Banking between to be to The we how growth And now teams on two that teams million initiatives anywhere several we'll because and know bring Los generators. probably billion Fund $X division then PPP will a do long loans will

half are, in haven't because board, second disclosed on midst the in what they bringing still contribute asset the side. but the on year We of the them they'll we're of

Matthew Breese

Signature And to Okay, all basis, $XXX understood. just the VC, not quarterly correct? year, on million be the for to $XXX million Financial that's clear the a

Eric Howell

a for year. that's No,

Joseph DePaolo

for That's the year.

Matthew Breese

with a banking billion to $X doing quarter? Okay, fund billion $X.X

Joseph DePaolo

Right.

Matthew Breese

Okay.

Joseph DePaolo

For doing net million. could lot a billion, the several to They to lot more overcome amortization. it's had they be Signature Financial, $XXX it's $XXX but the so short-term, a million of

Matthew Breese

Okay. And...

Joseph DePaolo

ahead. go No,

Matthew Breese

and team. and I'm tape at just hired when you sorry, deposits, look the the Banking last first Digital one as you on went Signet back the you Banking digital was

was the little investors It folks mentioned skeptical. just growth And sentiment to from about you then, business space. crypto, playing time years, the be? much back talk are crypto how institutional in past You it appetite could the for adoption, what couple think I Can bit but a how the in of that really different catering year. more for this line interest opportunity over institutional changed investing a and of investors this over

Joseph DePaolo

by and leaps Well, it's bounds. growing

we're the But have fact, doing we're in with and compliance. -- top deposits for that's five are flow only for and we retail this your we exchanges -- institutional of some funds were as doing We space clients, exchanges what taking allowing in we're enhanced doing. pretty much

But bounds. have Now some institutional most are business with The the state. the and they starting regulators growing been and still these part, keeps exchanges to joined given on retail. and we're by by only just the five leaps licenses regulate for

the -- I drove we it in pandemic. what is think part

Matthew Breese

of the on Right. And you see half than outsized the did back the with first year growth enhanced half? that, or

Joseph DePaolo

agree it's Yes, that. with that. would Yes, likely. I We agree with would

Matthew Breese

there. guys. Okay. I'll it Thank stop you. I appreciate

Operator

Your next question the of Alexopoulos Morgan. comes from Steven of JP line

Steven Alexopoulos

morning, Good everybody.

start. just to So

in deferral So they what's that modified, the clear not it's bucket? still those exactly or of on COVID-XX that not Are X.X% to on loans me are loans deferral?

Eric Howell

interest-only of, sort loans that of, structure. are Those were modified, modified, predominantly sort

loans full structure. that $X.X the interest-only that in on to loans were deferral, payment the modified we And full that deferral, then the other disclosed an billion are there's table. that's is P&I there So payment

Steven Alexopoulos

Okay.

there right? essentially mean deferred? being So I payments the being are deferred, least principal

Eric Howell

right. Principal that's Right. deferred, been has

Steven Alexopoulos

being the term deferred. what's is how are you long these of -- Principal for? these the like And Eric, are deferrals providing

Joseph DePaolo

six to Somewhere -- months. anywhere between XX

Steven Alexopoulos

Okay. Yes, yes.

Joseph DePaolo

paying take they're will [indiscernible] their relief. given they're they're we've they're and once We And paying them are insurance, paying their the paying, taxes. their little a loans that paying cost interest-only operating

Steven Alexopoulos

Yes.

Joseph DePaolo

an -- be could a TDR would doing of it would instead it's it interest-only so -- be TDR, possibly be So, maybe modification. a

Steven Alexopoulos

end NPLs Right, high. seem and CARES so deferrals low, if Joe, this thought going Act you still pay either if high an they have not of deferral relatively modifications we postponing relatively NPL term, big be to the NPL. are think you the those have about But to them view it from also you at picture two correct? buckets moving are not of relatively to We today, a were would the

Joseph DePaolo

that believe if that We a would them. is not past somebody If we'll non-performing, moved take charge. also going up be in was to we not we to postpone believe pay some the will us,

Steven Alexopoulos

Yes.

Joseph DePaolo

put reserve it. Specific -- on a specific well, we

Steven Alexopoulos

yes. Yes,

Joseph DePaolo

believe the client amounts, but end where have being say example, won't so As that it. specific is who has it's that we paying, to on But situation we good, client the the don't let's is. up give reserve going an one I a

Steven Alexopoulos

got Yes, you.

growth ship to side. the then And directions to helpful. that's Okay,

it you I a think billion we and XXXX year asset be XXXX. target of So What was used that think ago, actually will its talk billion $XX long $X to did per about is and billion current target, form? not growth we Signature Bank in reasonable now as $X to

Eric Howell

$X in grow to $X billion we billion we ability talk to billion quarter. to $X Steve so billion securities to quarter; the a looking grow loans we to base per you're a -- The as sets billion $XX what growth. billion $X up in billion you have anywhere ability asset $X is Well, from quarter growth $X to at about billion that, to know, that $X

Steven Alexopoulos

Yes.

Eric Howell

the drive place businesses very future last allow of to couple over that in meaningful really years put us will We growth.

Steven Alexopoulos

Yes.

Joseph DePaolo

We fruition. in to brought new did businesses which they on we come initiatives, our quickly know full would -- how

be billion $X $X going realize the for $X to didn't $X billion So to this to is billion quarter. we year, per billion

Steven Alexopoulos

loans Yes, might is know $XX continues to Is to yes. we billion And also, XXXX. deposits in drilldown -- was Or ratio enough should asset absorb mix, to which I Thanks. the side. range. trend you but teams billion, said do on what to Right, deposit loan grew the you think be the there side we this when loan XX%-ish about from so by verticals trying lower I'm you the and expect contributing? here $XX to deposit grew But I guess there think new coming asset the just the there like ratio, on year? all through think I deposit to

Joseph DePaolo

initially, we are on going we probably back lower new of to year. the the verticals trend little -- the think these a year, end the have half will second two because It of

so be generation asset slightly. be we So that the more come ratio in first second will down that in than much mean were that half, half the will could

Steven Alexopoulos

Okay.

Eric Howell

$XX and common and we We earnings returned doing know, we Deposits potential. through building the when one current we've that our of I of they and quarter out, And deposit can uses, But them be this about to the to business losing billion to investments XX.X% take seen deploy off-balance sight Steve, And mean, little right? thing, seen right? is their you people really have we've rates maximize cycles, And that's or bank whether earn of people able think a then this are shareholders. rise, when ultimately return investing we've other right? grew in important slowed I been that. we'll growth by sheet tend more. equity them deposits find bit. the it's

Steven Alexopoulos

Yes.

Eric Howell

cash and the use putting So now what earnings? imagine for to does do that

Steven Alexopoulos

Yes.

Eric Howell

balance Tremendous earnings our of now. power in sheet amount right

Joseph DePaolo

deposits. of billion went we're said, $XX in to I down in $XX billion to $XX for from the And thus drive far we continuing the to billion December quarter January. Like cost

that So and drive more create room little to have more ROE. we a

Steven Alexopoulos

all the Yes. guys. for color, Thanks

Operator

Your comes next McGratty line Chris of from question the KBW. of

Chris McGratty

questions remind answered, next could to Most of a or the the you remaining ones. quarters? PPP couple been Eric that of couple us the through just remind scheduled nitpicky you us Joe, come can fees of are

Eric Howell

much. that forgiven really haven't We

through. a it's have little we around that still be million gas, So to bit of it's come a but to going $XX

Chris McGratty

$XX Okay. million?

Eric Howell

Yes.

Joseph DePaolo

Yes.

Chris McGratty

how couple And amortization -- back to line A has moment. on some maybe have non-interest about a we for other then, a that of the and I'd to masked non-interest back there But think the say tax -- income used line? other income was an seemingly option the quarters line, by that away, is that gone ran it, items. you going on the do that through

Eric Howell

at the year. that reclassified beginning the of We

that that line took move it into expense and of of income out component we a So was we negative out the -- taxes. non-interest the down non-interest income

XX%. XX% So that's to from up tax rate our at effective why rate time the bumped our --

Joseph DePaolo

out years. we also previous the But took

we when is years be growth that would we well. as the because about So previous growth, saying apples-to-apples, re-class

Chris McGratty

out back last if $XX $XX over the I line I'm was, a These your up million looking sustainable call little yield stepped is million, this that it messaging? Okay. run bucks you are fee mean, at what just quarter, rate quarter. of kind a if bond

Eric Howell

that's Correct, right.

Joseph DePaolo

Yes.

Chris McGratty

Got it.

thanks. Okay,

Operator

of next question from Sandler. of Your Mark comes Fitzgibbon the Piper line

Mark Fitzgibbon

good guys, morning. Hey

I guess, plans businesses the questions, of of you for sop prior liquidity? do our new have help lending some up I'm any to sort follow-ups curious to Just

Joseph DePaolo

second we'll Yes, quarter we of should midst in generators. the the in actually next year. discussions, have we board on we're sometime this of are in two -- initiatives is the but both And of fruits the initiatives then start both then them the -- certainly labor have their asset half that seeing and

Mark Fitzgibbon

way? the by scalable are they And

Eric Howell

the sure than really up. expect, really where impact ratchet to able is get we'll so but It have will to take up scalable six running them the I'd be they're for XXXX, some one a fourth and bit months more and it numbers, in quarter more three for realistically other, to but

Joseph DePaolo

[indiscernible] We're we it, that to haven't board yet. them not bought trying about it's be just on

Mark Fitzgibbon

in large Do Fair that I'm the were might those sticky me see be back had you were but temporarily I XXXX, -- flowing half thought past sometime during the of in said Joe, some second maybe the there in, enough. XXXX out? of And that some coming if wrong, deposits some just not you correct that parked. that of

Joseph DePaolo

-- of that $X large you had it fluff we there's $X but saw beginning see the fourth fourth December. all in left end because billion had or There the the of been not, end which it always the so deposits, -- We during third deposits of deposits, fluff, very don't or the during believe some of it deposits, $X.X the of flow but the came or and quarter, nearly were had month was another we in $X.X out. we billion in quarter is billion billion some DDA some and we year about

okay some for money off be to funds, that of a with mutual off that, sheet. sheet will that rise fact, capital don't balance use that but expect fluff, get some will we're we expect balance rates We fee there putting and go we because it money when market in we

we're And on getting income when than a quarter it today, we wasn't fact, $X,XXX,XXX less long In a for balance quarter. fee ago too off sheet. XXX,XXX get

It those little. be expect that some won't it it growth, we to down -- slows the out. of a So just flow

Mark Fitzgibbon

Thank you.

Joseph DePaolo

you. Thank

Operator

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