Signature Bank at Morgan Stanley Financials Conference

Jun 14, 2017 AM EDT
SBNY - Signature Bank
Signature Bank at Morgan Stanley Financials Conference
Jun 14, 2017 / 02:35PM GMT 

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Corporate Participants
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   *  Eric R. Howell
      Signature Bank - EVP of Corporate & Business Development
   *  Joseph J. DePaolo
      Signature Bank - Co-Founder, CEO, President and Executive Director

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Conference Call Participants
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   *  Kenneth Allen Zerbe
      Morgan Stanley, Research Division - Executive Director

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Presentation
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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [1]
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 All right. Good morning, everybody. Just want to go ahead and kick off the next session. So as you know, I'm Ken Zerbe, the Midcap Bank's analyst here at Morgan Stanley. The fireside chat that we're doing today is with Signature, one of our overweight-rated stocks. Joining me today are President and CEO, Joe DePaolo; and Executive Vice President for Corporate and Business Development, Eric Howell. Before we go into Q&A, which we hopefully will try to keep this very informal, we'll turn over to Joe for just any opening remarks you might have.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [2]
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 Thank you, Ken, and good morning, everyone. I'll give just a quick update and then we will go into Q&A, as Ken said. Since the first quarter earnings release, we hired a second team that came on board at various times over the last week or 2. Very excited about this particular team. They will be housed in New York and sometimes in San Francisco as well. They came out of First Republic. So very excited about that. In terms of the deposit side of the business, we averaged -- the average growth for the first quarter was $580 million. The average growth as of the beginning of this week for the second quarter is approximately $700 million.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [3]
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 Deposits?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [4]
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 Deposits -- average deposit growth. So it was $580 million in the first quarter, $700 million in the second quarter thus far. Wide swings, as Eric always says, we have a lot of swings and that's why we look at the averages. So that's where we are on the deposit side. We are seeing some higher rates from some of the competitors. I don't think it's any more or less competitive, it's just with some higher rates, it's a little bit more of an annoyance. On the loan side, in the first 2 months of this quarter, we saw on commercial real estate, a slowdown, particularly on sales and purchases. There seemed to be very few, if any, sales and purchases in the first 2 months of the quarter. We also kept our rates rather higher than our competitors. Usually, we're 1/4 to 3/8 higher. In some instances, we were 50 basis points higher. Also in addition to keeping the rates a little higher, and now it's probably within 1/4 to 3/8 in this month, in anticipation of some slowness or slowdown or some softness, I should say, we increased our vacancy factors and increased our cap rates in anticipation, although we haven't seen any issues out there in the space that we're in, but we did lose some deals as a result of that because the dollars we wanted to give out were less than what some of our competitors would give out because of some factors we've changed. Having said that, the month of June has been very active, much more active than the first 2 months, which were very slow, in commercial real estate I'm talking about. So we've seen a big pickup in June and we've seen a pickup in our pipeline for July. The portfolio still is stellar. We've had no issues whatsoever in the commercial real estate portfolio. We've also seen for the quarter a pickup in Signature Financial, which is the C&I portion of our business, and in regular C&I, outside of Signature Financial has picked up as well.

 And if anybody out there doesn't know Signature Financial, it's equipment financing to leasing.

 So I think that's about a good enough update and fire away.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [5]
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 Perfect. All right. Maybe just looking at some of the guidance numbers that you gave or the update numbers that you gave, some of average deposits of $700 million and I noticed deposits balance sheet growth just but it's darn close. How should we think about sort of the pace you're on in first quarter, in second quarter so far versus your full year guidance let's call it roughly $4 billion to $6 billion of total balance sheet growth for the year. It seems that you're little bit slower. It might come in below that, is that a fair statement?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [6]
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 I don't know, we're up $700 million in 2/3 of -- a little bit more than 2/3 of the second quarter. I think $4 billion to $6 billion is still a good number for growth.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [7]
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 So, in the $700 million, should we take that as 2 months and then sort of increase it by 50% to get the full quarter number or $700 million? I just want to make sure I understand when you say 2 months of the quarter.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [8]
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 Well, I mean, it's through the beginning of June -- the average growth through the beginning of June. So there's still the month of June left to grow the deposit average more.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [9]
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 Got it. Okay. But you're still comfortable with the $4 billion to $6 billion. Okay. And at this pace would you disagree if I said at the lower end of the $4 billion to $6 billion?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [10]
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 Yes, if you look at every quarter the same and you look at mathematics, that's the way it looks like it's coming out, I'm not quite sure.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [11]
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 Sure, okay.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [12]
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 But I wouldn't disagree with you.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [13]
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 Got you. Can you tell us a little bit more about the team from First Republic. They just hired a -- I've covered First Republic since the IPO. Their -- one of their big positives is they never lose people -- or almost never lose people. So this is surprising, positive certainly that you were able to get the First Republic team. What is it about the team that makes you so excited?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [14]
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 They are very experienced. Well, first of all, this is our second team from First Republic. We hired 1 last year.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [15]
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 Last year, okay.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [16]
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 I don’t think that means anything other than we've had some opportunities to bring some high-quality people on board. Certainly, there are high quality or high level of banker there. This is an opportunity to get into a segment that we're not in, and it's deposit growth, and that's what the exciting part of it is, because they are highly experienced, high quality and a deposit gatherer, primarily.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [17]
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 Sorry, what you said -- the segment that you aren't in currently with?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [18]
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 One of the areas that, that is not for profits and I'll say private schools. So we are in the not for profits, but we're not into the private school segment.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [19]
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 Got it. Okay. And then in terms of rates. I mean, obviously, you guys, if I heard you right, you are 1/4 to 3/8 higher this month. Can you just clarify why is the market increasing rates more of an annoyance for you? And wouldn't that be helpful in terms of giving you the opportunity to get better yields on your loans?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [20]
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 They're doing it on the deposit side.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [21]
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 Oh, on deposit side...

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [22]
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 That's where the annoyance is.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [23]
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 That makes more sense.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [24]
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 Like for instance, one of the big institutions doing a lot of teaser rates, but they're 50 basis points more than what other banks are offering. So at least you have to get into a discussion with your client and they love the relationship -- long-term relationship, interest rates rarely come into play, have the operating accounts and then all of a sudden someone is offering them 50 basis points to 60 basis points more than you are and you have the DDA accounts and the operating accounts and the fee income. You have to at least have a discussion about that and make some changes.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [25]
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 And are you seeing -- and I guess, as a result of those conversations, is it, I mean, were you seeing an upward bias to your deposit costs in a noticeable way this quarter?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [26]
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 Not noticeable, but more than the 2 basis points we did in the first 3 increases.

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [27]
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 Right. But it's not unexpected, right? We anticipated with each rate increase that we'd see more and more pressure, right? So -- but we're not -- it's not 10 basis points or 20 basis points either. It's still a handful of basis points to talk about.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [28]
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 Got you. And then just kind of -- because if we look at the, obviously, the liability side so that upward pressure there, and then on the loan yield side, I'm not sure if you mentioned this in your opening comments, are you seeing a commensurate increase in the yields you're getting? Are you able to offset the higher deposit costs?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [29]
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 Predominantly. I mean, when the 10-year was up at 260, we were certainly able to offset it and now it's pulled back quite a bit. So we're still seeing yields on the asset side, north from where they were preelection. So we should be able to mostly offset the deposit pressures.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [30]
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 Okay. Maybe jumping over to the taxi portfolio. To kind of go there, obviously it's a big debate, lot of questions around that. It's been such a headwind to your stock, to your multiple, not as much to your earnings though. One thing that we've heard recently is there has been increased interest by private equity buyers, potentially others, wish to get involved in some of the more distressed medallion guys. Can you just talk -- what do you see, is that a fair assessment? Is there real activity going on there?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [31]
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 Yes, I think that's definitely a fair assessment. And we are seeing a lot of different parties doing their homework right now, educating themselves on this space, specifically looking at our portfolio, spending time with garage owners and operators to try to line up those people looking at servicers, which we happen to think that we're the best servicer out there. So there are certainly a number of interested parties that are looking at the space today. I think that's the big difference than versus 3 months and certainly 6 months ago. Back then, we had a few people sniffing around, but now there's clear interest in this space.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [32]
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 Have there been any -- like sales of either individual medallions or in bulk?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [33]
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 Not yet. I mean, we're working on some bulk sales. We had 1 individual sale happen for $500,000 last month. We're lining up a few more of those. So we continue to sell individually. We're working on some smaller, say, packages and obviously, we're entertaining -- we're hopefully entertaining offers to exit that portfolio.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [34]
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 So you're entertaining offers to sell the entire portfolio?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [35]
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 Hopefully, hopefully, we'll see. There's a lot of work to be done yet, Ken.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [36]
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 But those discussions are happening.

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [37]
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 People are interested in. So...

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [38]
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 How much -- I've always said, this is again of course my opinion, but I've always said that you guys could write-off half your medallion portfolio, take a $200 million, $300 million loss and I would be fine with it, just get rid of it. When you think about what you're willing to sell it for, just given the pressure you've had on your stock versus sort of the potential value it has. How do you balance the two?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [39]
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 You have to add one other factor, the depositors, and what their reaction is, because they keep significant deposits with us.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [40]
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 The medallion...

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [41]
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 No, I'm talking about all of our depositors. So someone, that's your client, that keeps $150 million in deposits -- $175 million in deposits, you want to know what they're thinking in terms of the safety and soundness of an institution and what it is that occurs on a quarterly or annual basis. And you take that into account. Believe it or not, as valuable as the shareholders are, the value of the institution of the depositors, for us the shareholders. And you want to make sure that their reaction is always a positive one. And if there is a negative one, you have to be ready for a lot of discussions with your best clients. So that comes into play.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [42]
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 All right. And Eric, you mentioned -- I thought I heard you say you sold 1 at $500,000, probably a little bit lower than where it was several months ago. Is there any reason to believe taxi losses could be potentially a little bit higher this quarter or over the next couple of quarters given what we are seeing transactions?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [43]
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 It's possible. I mean, it all depends on where the cash flow model comes out. And cash flows are more -- pretty much in line with what we anticipated. They declined, but not at a significant pace and that's what we had modeled in. So we got to -- we triangulate that with the sales in the marketplace, but a lot of the sales that we've seen thus far are stressed sales, rather foreclosures or state sales. We've seen some buyer finance sales with bond recourse. So that's not really arm's-length. So we really have to dig through each one of those transactions and try to get better understanding of what occurred there.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [44]
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 Is their -- barring a sale, right, and I really -- be nice if you did sell a portfolio, but barring a sale, given sort of these of one-off kind of lower value sales or transactions, is there anything you would even want to do to say or let's write it down. Let's take a bigger loss based on fair market values versus the cash flow model that you have, because that is a big concern among investors, which is you have it, but values keep falling -- I'm going to say we are, "waiting for the losses to happen." But if you can sort of accelerate that with the reserves, is that something you could or would even consider doing?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [45]
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 I think it would be data dependent, really. We just can't take a mark for the sake of taking a mark. And we have a policy that we follow, which includes cash flow modeling as well as sales data, and again it's got to be arm's-length transactions, which are hard to find in this marketplace.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [46]
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 And you also have to careful as to whether or not you have a for-sign sale or a welcome-in sale. Because if you have a for-sign sale then you have to characterize it on your -- classify it on your balance sheet it's held-for-sale and then you have to mark it. So we're certainly inviting people to come in and look, but it's not necessarily a for-sale sign.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [47]
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 Right. Before I switch over to different topic, I just want to make sure to open up to the audience to see if there's any questions on the taxi portfolio, potential sales taxi. Anything anyone might want to know? All right. Maybe switching over to commercial real estate lending. Just broadly speaking, you did mention -- one of the questions I had was, are you seeing any signs of deterioration, and you did say very clearly that you're seeing no signs...

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [48]
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 No signs of deterioration, no signs of weakness. I have to remind everyone that the portfolio is primarily in the multi-family world. It's low-to-moderate income. It's not the high-end where there is a lot of more softness. We've had no -- in our commercial real estate portfolio, we have no nonperforming loans and the portfolio is over $20 billion. And no nonperformers. And right now, we have no past dues, which is a spectacular portfolio.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [49]
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 That's very impressive on $20 billion. Are there any subclasses, I mean, I know you just mentioned the high-end is obviously seeing some weakness. Are there any areas, whether or not you're in the -- participating in the subsegment that you're more worried about?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [50]
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 Well, we meet quite -- we talk every week and we meet quite often, and one of the discussions we had just this week, just yesterday as a matter of fact, was making sure that we were okay and on top of our retail portfolio. And most of our retail is in the neighborhoods that you have the pizzeria, the nail salon, the dry cleaner, the local stores, even if it's a strip mall, or you have the bank and you have a Starbucks. It's not mall-type retail. And we certainly don't have any of the high-end retail on Fifth Avenue. So we just went through that portfolio in terms of having a discussion to make sure everything is okay. We had 1 loan that we've been talking about for years. This hotel -- we rarely do hotels, we did a hotel in Connecticut. That one is actually being sold. It hasn't been a problem -- it had been a problem in the past, not necessarily today. So it is something we talked about. So if there was a subset or a subclass, I would say retail was the discussion, but we didn't see anything else in the portfolio that needed to have any discussion.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [51]
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 One of the areas -- actually office in New York City Morgan Stanley recently put out somewhat negative note, from our REITs team looking at office exposure, talking about pressure on the high-end of the office market. I believe that within your portfolio, if I got my numbers right, you have something like 8% or so of your CRE in office. Can you just talk about that. Obviously, we're concerned about the big trading floors. I mean, there is -- in terms of office, but what kind of -- can you just elaborate what is sort of a typical office loan for you guys and are you seeing any stress in that market?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [52]
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 So -- don’t think of the avenues, think of the streets and think of 38th Street, 37th Street, 22nd Street. We're in those blocks, not on the avenues. So we don't have the GM Building or 666 Fifth Avenue or the big Park Avenue building. It's the smaller buildings, not necessarily A type and many tenants.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [53]
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 Okay, great. I guess, maybe looking at just rates a little bit. Obviously, you have held up -- I know we talked about this just a little bit. But you've held up remarkably well given rate hikes. The key supplement to understand there is obviously there's a pretty big disconnect between your reported asset sensitivity -- your liability sensitivity versus actually what we are seeing. Now in fairness, I'd say most banks have a huge disconnect between the two, but you're one of the few banks that have sort of reported liability sensitivity, which does worry people to some extent. Can you just talk about like what scenarios does your disclosures actually prove correct versus how should we think about the impact on Signature from say today's rate hike?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [54]
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 Well, I think the biggest disconnect that you have is that the reported NIM is around -- has growth in it. And what we're projecting is on a static balance sheet, right. So when you're layering growth to the equation that's going to be beneficial for us. And we tend to be pretty conservative on our deposit assumptions. We do have a predominantly business client base, where 85% of our deposits are commercial. So we have to be very careful in how we model around that and we want to be conservative around that for our own planning purposes. So we've taken a pretty conservative bent thus far. We have predicted, at the end of the first quarter that we would have a 20% deposit beta and we had in actuality a 9% deposit beta. But again, most of that's probably due to the growth that's layered into that. So we think ultimately we're pretty neutral, right. We could see, as rates -- whatever twist and turn there is to the yield curve, we're going to stay relatively flat from where we are today. And that's ultimately what we want. We want to drive that interest income. That's really the key for us, right. If we can grow $4 billion to $6 million a year, keep a relatively stable NIM and have a 30% efficiency ratio, we're going to make a lot of money for our shareholders.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [55]
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 In terms of the loan growth, obviously we certainly want higher net interest income as well. But the loan growth commentary that was weak, picking up, we can make our adjustments for our models as necessary, but can you just talk about the diversification, like how much -- you talked about Signature Financial a little bit, other core C&I little bit, like how should we view, whatever, pick your next 3 months -- next 12 months of growth between C&I versus CRE. And if you can also comment on sort of how the regulatory environment is playing into that, your decision on where you want to see growth?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [56]
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 Well, the regulatory environment certainly plays a role, but we've talked about even before the regulators started to get on top of a number of banks because of their CRE concentration. We've talked about the diversification on the asset side of the balance sheet. That's why 5 years ago, I think, everyone forgets that, we started to talk about diversification and we did instill that because Signature Financial has been there -- been here over 5 years and that portfolio is now...

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [57]
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 Almost $3.5 billion.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [58]
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 $3.5 billion. So it is $3.5 billion we didn't have 5 years ago and that was part of diversification. The one area there of disappointment is the C&I outside of Signature Financial. Disappointment in that we're not penetrating more. And I'm not going to make excuses, but one of the reasons why we're not penetrating as much is because in the CRE world, there are -- in the world that we are in, there are a limited number of players. In the Signature Financial world, they're very -- equally as good as the CRE team, again not everybody is in that. So there are not a limited number of players, but there is a smaller group than the traditional C&I. Just on Long Island, we're seeing banks that are much smaller than us -- much, much smaller than us, banks a little smaller than us, banks our size and all the money centers, all competing for the same business. And, in fact, we just did a deal where we're sharing with a money center bank and it's LIBOR plus 100, something that we wouldn't have done years ago because of the thinness in the spread, but we realize that diversification and floating rate is something we want. So we would certainly like to have to go forward, 50-50, but I don't think that's going to be what we're going to get in the foreseeable future, 50%, 50% CRE and C&I.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [59]
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 And just looking at your expenses, your efficiency ratio is 33%, the lowest of my entire coverage universe. But obviously, as you get bigger, there is increased regulatory demands, requests, technology, systems processes you have to build out, can you outgrow the increase in expenses, like if you think about that 33%, does that go to 38% or 28%, like from you're not going all the specific number but I'm just thinking the direction of expense growth?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [60]
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 It's hard to get lower than that.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [61]
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 It is?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [62]
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 I don't see anything with a two-handle in our lives.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [63]
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 So that would be tough.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [64]
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 That would be tough. I would say, yes, we stay in the 30s.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [65]
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 Okay, even with regulatory demands and..

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [66]
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 Well, as Eric likes to say "baked in." It has been for years. We started this 4 years ago with the regulatory pressures and a lot of that number, unfortunately, is toward the regulatory cost. It would be great if that number was all made up of teams. So it has been built in -- I mean, it has been included in and it's built into the future of the growth that we're projecting in expenses that we're going to continue to have the regulatory dollars. So I don't think it should change.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [67]
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 Just given all the concern about commercial real estate, just -- we're saying "No, you guys have done a very good job," but just thinking more holistically, is there any value in, let's just say merging with a larger company with a very strong capital base where you could actually grow your portfolio in a bigger way?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [68]
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 So you want to know if we're being acquired?

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [69]
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 Yes.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [70]
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 Well, not that I'm aware of at the moment.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [71]
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 Not right now. But -- how do you think about the potential for possibly selling the bank at some point?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [72]
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 There is always that potential. Our Chairman said that on March 23, 2004, the first day of trading, when Signature Bank stock, it went for sale. Of course, now being a public company, you have to bring to your board any legitimate offer. We certainly believe that we'll have continued growth in New York Metropolitan area. But if we wanted to grow geographically, not contiguous, like in Chicago or Los Angeles or San Francisco, where we believe we would compete, we'd probably do it better as part of a bigger institution.

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 Kenneth Allen Zerbe,  Morgan Stanley, Research Division - Executive Director   [73]
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 Any final questions? All right. Well, we will leave it there. Thank you very much.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [74]
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 Thank you everybody.

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [75]
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 Thank you.




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