Signature Bank at Goldman Sachs U.S. Financial Services Conference

Dec 05, 2017 AM EST
SBNY - Signature Bank
Signature Bank at Goldman Sachs U.S. Financial Services Conference
Dec 05, 2017 / 01:20PM 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
   *  Vito Susca
      Signature Bank - CFO and SVP

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Presentation
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 Unidentified Analyst,    [1]
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 All right. Up next, we are pleased to have Signature Bank. Signature has continued to generate stronger than peer loan growth, industry-leading efficiency and low to mid-teens returns. In addition, it took steps to put much of its taxi medallion risk behind them and is now focused on continuing to drive peer-leading loan growth.

 Here to tell us more is President and CEO, Joe DePaolo; and EVP of Corporate and Business Development, Eric Howell. Today's presentation is going to be a fireside chat.

 Good morning, guys.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [2]
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 Morning.

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [3]
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 Morning.

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 Unidentified Analyst,    [4]
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 So Joe, maybe first before we get into business, when you presented at a conference earlier this quarter, you talked about an approximately $400 million of quarter-to-date loan growth and about $700 million of average deposit growth. Can you maybe talk about how that's evolved over the last few weeks? Have there any been changes to the pipeline, which I believe you said were broadly consistent with last year but not as robust as prior years.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [5]
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 Thank you, by the way. Good morning, everybody. I appreciate you being here. I know we're up against a big institution, a too big to fail Wells Fargo, but I'll give you an update. Loan growth through Friday last week was about $750 million. So it was $400 million at the previous conference that we were at, now we're up $750 million. It looks like we'd be on our way to a $1 billion growth, but I wouldn't say that because I'm not sure. Our pipeline is actually a little bit more robust than it was at the previous conference. Well, we also have a lot of prepays we know are coming down. So whether they happen in the fourth quarter or the first quarter, we're not sure. It looks as if we'll have some prepays certainly happening this quarter, so it's hard to say. But it looks rather promising that we could end up with a $1 billion loan growth, but I didn't say that. On deposits, we're just about where we were several weeks ago at the other conference, averaging more or less around $750 million -- $700 million, more or less. What's interesting is something I said previously was that it's very choppy. While it continues to be very choppy, we have wide swings of deposits going in, coming in and going out. What's interesting is it's not always the same players. It's some different players now. It could be because of a real estate transaction or particularly a 1031. It could be someone is raising funds. We have a few of those happening right now where they're raising some money to do a real estate fund or a private equity fund. And you never know what's going to go out. We have an idea. Eric and I and some of our senior colleagues have an idea of what's coming in, but at the last moment, you never know what's going out. But still, it's pretty good average. On the team front, we actually interviewed a team yesterday that was from a bank that usually don't get many opportunities to hire people from, and I would say that it's a good pipeline, particularly when we're in 2017 and we're already talking about 2018. So on the team front, we're still out there seeking teams. And I think that's about it. I feel you should want me -- if you have any...

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Questions and Answers
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 Unidentified Analyst,    [1]
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 No, that was great. So maybe just building on the loan growth. Eric, you guys have talked about -- or Joe, you guys talked about $3 billion to $5 billion of earning asset growth, which again would put you near the top of the peer group. Maybe just talk about as the landscape is evolving into 2018, can you talk about maybe some of the factors that put you at the low end versus the top end and what are you doing to manage these? And now that we have most of the details around tax reform, do you think this could be a catalyst for increased activity in the New York market?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [2]
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 Well, we always look at the $3 billion to $5 billion as deposit -- as assets, total assets. So that's loans, investment securities. But we really judge ourselves by the deposits we gather, more so than the loans. I will tell you this: there's some real exciting things going on. We now have made some changes because of retirements. We have a new Chief Credit Officer. We have a new Chief Lending Officer. We never had a Chief Lending Officer. And you can see the things that are occurring already since he took charge on November 20, that we're going to have some real opportunities in the C&I world to do things that we didn't in the past. It's a rejuvenation on the C&I. That's what's -- that's very exciting. Two things that are exciting that affect the bank and will affect our earnings in a positive fashion is the tax reform. If -- we pay -- I know we tell the analysts 39%?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [3]
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 38%, 38%.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [4]
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 38%, 39%. That's actually down from several years ago when it was 42%. That's right to the bottom line. So we don't see any issues in terms of anything going away in the tax bill that was an advantage for us because we were pretty much a straightforward taxpayer as an institution. So if the rates go down, it's really right to the bottom line for the most part. And the third item is really kind of interesting, if it happens sooner than later, is the $50 billion. Eric has talked about this quite a bit, that our expenses would swap -- I'm sorry, our expense growth would swap because there will be things that we would be required to do that either we won't be required to do or there'll be some sort of modification as what would be required. And if you want to add to that on the expense side?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [5]
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 Well, yes, I mean, yes, obviously, we slowed down in our bill bond areas that are going to be quite costly for us, in particular the LCR, right? It's a big expense that we have coming down, right, if we don't see that $50 billion move as well as the living will. Those are 2 areas we haven't done a significant amount of work on, and we're going to delay given what's going on right now for a little while because we are pretty hopeful at that $50 billion market move.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [6]
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 And that's significant expense, significant expense.

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 Unidentified Analyst,    [7]
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 Joe, maybe I'm going to build on each of the 3 things that you laid out here. So in terms of the Chief Lending Officer that you mentioned, as you've created new roles and talked about opportunities in C&I, can you give us examples of what are the types of things that you weren't able to do before you put this gentleman into the role and what this is now enabling you to do? And what -- is it product enhancement? Is it new lending verticals? What is it that -- what kind of doors are opening for this?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [8]
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 It's both, product enhancement in terms of what his background is and familiarity with certain things that we didn't concentrate on before. You see, the biggest thing really is that we had one person do both positions and it became clear to us as time was going on that we needed to create 2 positions. So you now you have someone that's concentrating 100% of their time on building the C&I business. We had someone that was concentrating on building commercial real estate. We had someone that's concentrating on building ABL. We had someone that was concentrating on Signature Financial, equipment leasing and financing. But what we were missing was a Chief Lending Officer for every -- for the whole bank, but also concentrating on C&I. So when you have someone that's concentrating on C&I, you have someone that's doing it full time and it's a lot more time out in the field, meeting with the lenders. He's restructuring so that the lenders are more -- again, the underwriters are more efficient. That restructure is -- here, restructuring is easy to do. It's not a massive restructure, but a restructuring is easier to do when you have someone different come in. So I would say, that's really good approximate.

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 Unidentified Analyst,    [9]
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 And then, Eric, in terms of taxes, so 38% to 39% tax rate, when you think about what the bills that we've seen from both the House and Senate, obviously, there's some uncertainty in terms of reconciliation. First part of the question, one, what do you think this means for the factory? Do you expect to get almost -- significantly all or all of the 15%? And then second, given the nature of your lending market, can you maybe talk about what you think it means competitively? Obviously, commercial real estate is a brokered market. Do you think some of the pricing gets eroded? Can you talk about what you think the second and third order impacts of it are?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [10]
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 Well, I mean, for us, it should be almost dollar-for-dollar, like Joe said, on the rate, so we'll have to see what comes out of reconciliation. But we're not seeing anything right now that, that would really significantly affect that. So we should have a meaningful impact to taxes without a doubt. If you look at the second tier impact to our clients, and certainly, you could see banks pricing and passing this through, but I think it's going to take time, right? Similar to what we saw with interest rate rises, right, the first couple of moves, people really didn't pass those through, they're happy to make more money for a change. I think banks are going to be happy to make more money for a while. It's not -- a lot of our competitors out there don't make the 12% ROEs that we do, right? So they might want to see it rise a bit. So I think you will see over time it get passed through, but it's hard to believe it can be much more competitive than what we're seeing today, right? We're seeing 5-year fixed rate commercial real estate loans, multifamily loans in the mid-3s, right? Our competition is at 3.5, 3.75 at most, right? So the [2.10] spread's the tightest that we've really ever seen. So it's hard to believe it can be passed more through than it already is.

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 Unidentified Analyst,    [11]
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 Got it. And then just to follow up on the comments regarding the $50 billion threshold. Obviously, there is a bipartisan agreement that has been reached. I do remember the last time I met with you, Joe. You said it was going to happen in 1Q '18, so good of you for predicting the right timing. But it's only been a few weeks but, one, can you talk about, are you starting to see any regulatory behaviors changing, the feet on the ground? And then second, Eric, when you talked about some of these expenses, are these just expenses that you had anticipated that you were going to be spending over the next 2 to 3 years that you're not going to be spending? Or do you think that you've already spent that you could maybe now go rationalize?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [12]
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 I'll take the second part first. So it's really expenses that we anticipated spending going forward. Remember back in 2014 and throughout 2015, we really developed a game plan and started to implement upon that in a big way in 2016 and throughout 2017. Most of what we've done thus far is around stress testing and we're really well on our way there and pretty much done at this point with the stress testing and what we need to invest in that. And then the next part of the process was to go on to the LCR and the final phase will be the living will. And those are 2 areas I can discuss that we can significantly push off now.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [13]
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 Yes. Would be nice not to have more consultants walking around.

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 Unidentified Analyst,    [14]
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 Not for the consultants.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [15]
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 Not for the consultants, but certainly for us. What part did you want me to answer?

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 Unidentified Analyst,    [16]
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 Just are you seeing any changes yet in terms of the behaviors of the regulators?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [17]
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 The regulatory bodies really function separate and apart from anything -- from the White House or the Congress. It really depends on who's leading the charge off the top and that change hasn't been made yet.

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 Unidentified Analyst,    [18]
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 Maybe switching gears to deposits. This has been a very competitive environment. If I think year-to-date, you guys have continued to grow deposits a couple of billion dollars. Your deposit base has been in the middle of the pack, about 15% or 16%. Can you maybe just talk about what you're seeing competitively on the deposit side? It's been a couple of months since we've seen a rate hike. Is the competitive intensity easing at all? Or is -- are we just at a point of the cycle where it's just going to continue to get worse?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [19]
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 It's intensifying. If I had to use a word, I would say it's intensifying. You have HSBC, Capital One and a few other banks paying rates far and above what the rest of the banks would want to pay. We happen to be in a business that we have high-end clients that keep significant amounts of demand deposits and so they want more return on their money market than, say, someone walking in off the street and being a retail customer walking in and opening up an account for $10,000. We're talking $10 million, $20 million, $50 million. So we have to be within a range. We don't have to match, but we have to be within a range, 15, 20 basis points. On the loan side, it's similar. We are on commercial real estate. As long as we're within 25 basis points, we can, because of the service levels that are given, can get 3.75 instead of a competitor offering 3.50. On the deposit side, we always say to the group directors, who are the team leaders, you have to be worth something because of the service levels that you and your team give. And if you give the service that is expected and if somebody's paying 1.40, you should be able to get away with 1.15 or 1.20. But it's still forcing the hand of raising the rate because some institutions are going a little bit beyond what we thought they would. Now what we've been doing is in anticipation of the December 13 date and the potential increase. I think it's over 98% that they expect that it would happen. We're negotiating rates now in some instances and saying on December 1, this is what we'll do. On December 10, this is what we'll do in anticipation of; or can we do it at the end of the year? This is what we're willing to do. Whether we give 40% of the increase, 10 basis points or 60% of the increase, 15 basis points. But it is pretty intense.

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 Unidentified Analyst,    [20]
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 And is it client by client or are you making broad-based pressing changes?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [21]
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 It's client by client. We'll make a broad-based change probably December 29 as a result of the increase in rate by the Fed. We'll do something before the end of the month broad based.

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 Unidentified Analyst,    [22]
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 Now Eric, I know you've talked in the past about off-balance sheet liquidity sitting on the balance sheet. And I guess, to the point that Joe had said these are larger sophisticated clients, can you talk about the thought process of paying up for some of these deposits to stay versus letting it migrate back towards off-balance sheet liquidity? What is the thought process there for the bank? And are you seeing some of that migrating money market mutual funds?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [23]
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 We haven't seen a huge migration by any means really to off-balance sheet. It's not quite there yet. A couple more moves, it probably will be. Look, we're a deposit-driven institution. We'd like to keep those balances on balance sheet, right? We have loans to fund. And as Joe talked about, we've got a pretty robust loan pipeline. So our goal would be to keep them on balance sheet, but you do have to obviously strike a balance. And it is a good way to utilize capital, have it in off-balance sheet product and it will be nice to start earning fees again. That scenario that we used to earn about $3.5 million per quarter in fee income on off-balance sheet money market funds. Now I think we're down to $250,000, $300,000. So it would be a much better utilization capital, but ultimately, you want the deposits. We've got loan and growth to fund.

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 Unidentified Analyst,    [24]
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 I guess with competition intensifying is the word that you used, Joe, we still haven't really heard much in terms of earnings credit rate. Are you seeing any movements there? And I do recall you guys are one of the higher providers of earnings for the rates, and there you should be more insulated. But are you seeing any more changes to behaviors and that marketed from competitors? And what are -- how are you guys reacting to other stuff?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [25]
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 We're seeing some, but we're getting credit for the fact that we didn't go down to the floor, to practically 0, on the earnings credit when things were so interest rate low environment. We're getting credit for not going down, staying at a level that it's going to take a few more increases in the Fed -- by the Fed before anyone catches up to us. And I think another thing to point out is we talk about the competition for the deposits. There's -- our franchise is predicated on privately owned businesses, not retail. And so we don't have all the expenses that they have in the retail market. I always use the example of going up the steps -- the escalator in Grand Central. And early in the morning, there's no one at around. Let's say it's 5:45 in the morning. And as you go up the escalator, you start seeing some light. And then when you go through the door, you're hit with this bright blue that practically blinds you and then you turn this way and you're hit with a bright red, practically blinding you. And it's Citibank, probably paying enormous amounts per square foot plus the electricity and Bank of America. So they pay for that because they want the retail business. We don't have those expenses. So if our margins are in the middle of the pack, but our efficiency ratio is at the top of the list in terms of being very low, that bodes well for us. I think that's an important point that we're trying to get across to everyone because we believe we have significant franchise value. And the fact that we have to pay up is because a client that keeps $10 million in DDA is different than a client that keeps $1,000 in DDA.

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 Unidentified Analyst,    [26]
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 Makes sense. I guess, Eric, just to round out the discussion on loans and deposits. So when I think about all the things you said, competition picking up a little bit on the deposit side, loan pipeline feels strong, what do you think this all means for the net interest margin? I think you had given guidance to -- hoping to be on the low end of the 2 to 5. If we get a December hike and if the forward curve proves to be correct, do you still feel good about the short and intermediate-term outlook for the margin?

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 Vito Susca,  Signature Bank - CFO and SVP   [27]
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 Yes, it still looks we'll be down a couple basis points. We said 2 to 5 and hopefully we're at the low end of that range in the near term. That contemplates the December rate hike, a few rate hikes next year, but we're starting to see the assets catch up now. They bottomed out, which they were continuing to go down for most of last year. So the asset was level when you look at third quarter, second quarter. And now I think you're going to start to see the asset side catch up and start to creep up and that will help to offset those deposit pressures.

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 Unidentified Analyst,    [28]
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 Got it.

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [29]
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 What's intensifying is there are more prepays because the clients want to get the rate now because they expect rate hikes next year. Some economists say 4, some economists say 2, and they want to go out more than 5 years. So we're getting competition on the 7-year.

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 Unidentified Analyst,    [30]
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 So are you extending duration and offer clients on that one-off basis?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [31]
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 We'd rather not. On a one-off basis, yes, but we'd rather not and we'd rather stick with the 5-year. If it's the 7-year, we're going to roll into 4s, 4% rate?

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 Unidentified Analyst,    [32]
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 Joe, when I think about some of the opening remarks you made about a team that you're seeing from institutions that you potentially haven't had the opportunity to take from in the past, hopefully not my institution, when I think about some of the things that Eric's talked about now that you have areas like LCR and living will that you would have had to invest in that you're not going to, does this allow you to become more aggressive in terms of going out and recruiting teams, either a, more teams, or b, being able to go out and get teams that you might've historically been priced out of because they're too expensive? Does this change that dynamic at all?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [33]
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 I don't think so, because we always are on the prowl, so to speak, for teams. We're proud that Forbes Magazine years ago called us the poachers. So I think what will happen is we'll have some more time to seek out teams or teams that are seeking us. But the investment that we would make, if we made an investment, may be outside of the New York area. But if we had a chance to hire 8 teams today and it was going to be a very expensive, we would do that. I personally made a mistake early on. We had hired 4 teams from EAB. EAB was acquired by Citibank. This is even before we went public. And we really had a chance to go after 8 teams and I held back because I was worried about the expense. We hadn't been profitable yet and we wanted to become profitable. If I had to do it over, I would've tried to have hired 8 teams instead of 4. Now coincidentally, those 4 teams we didn't hire are now with us because they went to North Fork. And then when North Fork was taken over by Capital One, we were able to bring them over. But it would have been better to have them sooner than later. So that's a regret. So having -- I would think that we're always on the lookout for the teams and the expense shouldn't get in the way. If we think the team's going to be successful, the expense should not get in the way.

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 Unidentified Analyst,    [34]
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 Joe, just following up on it, but one of the things that surprised me is you've stated in the past just how much growth the original team that you brought on has continued to generate. Is that still the case, that the earlier teams are still generating, call it, double digit growth? And how much more capacity is there for the existing teams to continue to grow at such a robust pace?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [35]
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 Well, they grow because they can add on more people. So they are allowed to add on more business developers. We have teams that have come on that were 3 or 4 people that are now 8 and 11 in size. If you have a business -- think of it this way, if you have a business or you have a bank and you continue to grow it because you're adding on and you have the capital, why should a team be any different than a company that wants to grow? Not every team is at double digits. Some teams have plateaued. We've seen a team of 2 plateau and then have a retirement that rejuvenate and take off. So we're pretty confident. We've actually had -- something we never really talk about is we've had changes in our teams. We have this past 2 years probably close to 20 group directors leaving through retirement and the like. And we have plans for everyone of the teams pretty much. So yes, that can continue, that certainly can continue.

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 Unidentified Analyst,    [36]
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 I just want to hit on a handful of other topics that continue to come up in investor conversations. There's 7 minutes to go here, so I apologize, to hit on taxi now. But look, I think we all think that you've put a lot of this behind you. You've talked a lot in the past about people doing their homework on these. As we look forward, how do you weigh the alternatives of continuing to collect cash flows and keeping them on the books and working out one loan at a time versus putting it behind you and being done with them?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [37]
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 Look, I mean, we're really seeing the market level there. Cash flows are declining but at a much slower pace. We're seeing the fleet owners really get their feet underneath them again and building up their businesses. We've had a lot of success in selling one-off medallions to them. But ultimately, us writing those values down from 500-something, 1,000 medallion down to the net of 336, where we are today, gives us a lot of flexibility in working with the drivers. And these are people who want to feed their family. They want to work with us. They just can't afford $3,200 a month anymore, right? So we're getting in front of them. We're talking to them about what number can they afford. They're coming to the table and we're refinancing these loans, and it's happening every day. Pretty much every day I'm seeing 1 or 2 loans close and be refinanced. So have a lot of success there. So we -- at the same time, people are doing their homework. There's a couple of groups that are doing a lot around the market, but we'll see what they come up with it. It's got to be a reasonable price because it makes absolutely no sense for us to give these things away, not at this point. We're having too much success in refinancing.

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 Unidentified Analyst,    [38]
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 Joe, I wanted talk about M&A for a second. First, I'm going to come out of it probably from a different angle than I've heard others in the past. But as...

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [39]
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 I'm getting in trouble.

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 Unidentified Analyst,    [40]
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 No, I'm going to -- what I was going to actually ask is as the bank involves you moving more towards C&I, Eric's talked about, hopefully, opportunities for fee income to continue to rebound, as the bank shifts more towards C&I, are there any opportunities or areas where you can -- would considerable bolt-on acquisitions to drive additional fee income, that maybe it's a capability that would be helpful to a lot of the small, medium-sized business owners that you guys are doing business with?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [41]
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 I would say it's more likely that we would add on to our institution in similar businesses that we're in to generate spread income that we want. We're taking deposits and not lending the money out. But Eric reminds me, if we work -- if somebody presents us a bank and it's in our market or bank like or a financial institution offshoot in our market, we can always hire the teams. So it's unlikely that we would do anything in-market. We're in San Francisco now. We have an office there, and we hired a team that's both New York and San Francisco. So if we had an opportunity there to add on to an acquisition, that would be more likely than not. I don't see us, at least today, acquiring anything that's fee generating although we haven't looked at and there's possibilities, but we still see so much opportunity, and I don't mind saying this because they're right next door. But on the West Coast, there's a lot of opportunity, a lot of opportunity. There are many unhappy bankers at Wells Fargo. There are many unhappy bankers in some of the other institutions on the West Coast. I don't want to say they're begging for us to come, but they believe that we have an opportunity. Now having said all that, there's no -- in our business plan, there's nothing in the business plan, so I don't want anybody to jump out of their seat. We have no plans, but we're certainly looking at it. You want to add to that?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [42]
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 No, I mean, I think you really hit it all on the head.

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 Unidentified Analyst,    [43]
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 There will be more. A team hiring, then it would be a...

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [44]
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 Yes. Most -- look, if we can find teams in a given marketplace when we find enough teams, certainly, that's something we can look to now. If we can find a small bite-sized bank as a platform to add teams to, that's something we might look as well. I think the other place where we could potentially see an acquisition is within Signature Financial. So your vertical, that makes sense that we're not really strong in like technology or health care. That's an area that you can see a bolt-on acquisition in that space. But our focus is, as Joe said, you got to be in the New York Metro area. If we can grow $3 billion to $5 billion here organically, why wouldn't we just keep doing that?

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 Unidentified Analyst,    [45]
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 We have about 2 minutes. Let me see if there's any questions from the audience. Dan?

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 Unidentified Analyst,    [46]
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 Yes, if the bills went through and apparently close, what do you guys think the effective tax rate is for you?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [47]
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 Well, it's -- I mean, they've got to reconcile, right? So it depends on which bill. But it's -- I don't know, we're looking at high 20s, low 30s, somewhere in that range.

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 Unidentified Analyst,    [48]
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 Any whitespace opportunities for you guys on the product side? For example, you don't do resi mortgages even for some of these very high-quality customers you're working with. Anything like that you might explore?

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 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [49]
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 Using your example, it depends on what's going to happen with the CFPB. I mean, we basically -- they come in and spend not hours with us, but minutes with us, because we're running a consumer business. Right now, I would say no. What we're trying to do is improve on -- we have cash management services that we think are very good, but we're trying to improve on those. We're trying to improve on our foreign exchange business, where there's a number of products that we don't have. So I would say foreign exchange and cash management are 2 of the areas.

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 Unidentified Analyst,    [50]
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 Okay, one last question.

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 Unidentified Analyst,    [51]
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 Can you just help us think about how to frame credit expectations for next year? The reserves are kind of running down and it's not clear you're kind of working through this taxi, but there could be a lot of leverage between this year and next year on the provision. So any thoughts on how to think about that?

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 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [52]
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 I mean, if you look at a normalized provision ex taxi, you're probably in a 5 to 10 -- $5 million to $12 million range on reserves, right? So assuming most of our growth continues to come from multifamily, commercial real estate, where there's really not a significant reserve needed for those loans. So I think normalized just to give something [a wide case] because you never know what issues might pop up in C&I. You're looking at $5 million to $12 million. Taxi at this point, there could be a given event, but it's -- it would be pretty isolated, I think.

------------------------------
 Unidentified Analyst,    [53]
------------------------------
 All right, great. Well, we're out of time, so please join me in thanking Joe and Eric.

------------------------------
 Joseph J. DePaolo,  Signature Bank - Co-Founder, CEO, President and Executive Director   [54]
------------------------------
 Thank you.

------------------------------
 Eric R. Howell,  Signature Bank - EVP of Corporate & Business Development   [55]
------------------------------
 Thanks, everyone.




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