Signature Bank

Good morning, and thank you for joining us today for the Signature Bank 2012 Second Quarter Results Conference Call. Before I begin my formal remarks, Susan Lewis will read the forward-looking disclaimer.

Please go ahead, Susan.

Thank you, Joe. This conference call and oral statements made from time to time by our representatives contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties.

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

Forward-looking statements include information concerning our future results, interest rates, and the interest rate environment, loan and deposit growth, loan performance, operations, new private client team hires, new office openings and business strategy. These statements often include words such as may, believe, expect, anticipate, intend, potential opportunity, could, project, seek, should, will, would, plan, estimate or other similar expressions.

As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements.

one, prevailing economic conditions; two, changes in interest rates, loan demand, real estate values and competition, any of which can materially affect origination levels and gain-on-sale results in our business, as well as other aspects of our financial performance including earnings and interest-bearing assets; three, the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit-loss reserve levels; four, changes in the monetary and fiscal policies of the U.S. government, including policies of the U.S.

Treasury and the Board of Governors or the Federal Reserve System; five, changes in the banking and other financial services regulatory environment; and six, competition for qualified personnel and desirable office location.

As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions and can change as the results of many possible events or factors, not all of which are known to us or in our control.

Although we believe that these forward-looking statements occur or our beliefs, assumptions and expectations were incorrect, our business financial condition liquidity or results of operations may vary materially from those expressed in our forward-looking statements. Additional risks are described in our quarterly and annual reports filed with the FDIC.

You should keep in mind that any forward-looking statements made by Signature Bank speak only as of the date on which they were made. New risks and uncertainties come up from time to time, and we cannot predict these events or how they may affect the bank.

Signature Bank has no duty to, and does not intend to, update or revise the forward-looking statements after the date on which they are made. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this conference call or elsewhere might not affect (sic) [reflect] actual results.

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

Thank you, Susan. I will provide some overview into the quarterly results and then Eric Howell, our Chief Financial Officer, will review the bank's financial performance in greater detail.

Eric and I will address your questions at the end of our remarks.

We continued 2012 on another solid note with strong deposit growth, record loan growth and our 11th consecutive quarter of record net income, all proving our already strong credit quality position. Moreover, we're excited to have launched Signature Financial, which will further diversify our revenue streams and broaden our asset deployment.

Let's discuss earnings. Net income for the 2012 second quarter reached a record $45.3 million or $0.96 diluted earnings per share, an increase of $8.7 million or 24%, compared with $36.6 million, or $0.87 diluted earnings per share, reported in the same period last year.

The considerable improvement in net income is mainly the result of an increase in net interest income driven by continued core deposit and loan growth. These factors were partially offset by an increase in noninterest expense.

Looking at deposits. Deposits increased $450 million to $12.95 billion this quarter.

For the trailing 12-month period, deposits increased over $2 billion or 19%. Average deposits in the second quarter were $12.7 billion, up $2 billion or 19% compared with $10.7 billion from the 2011 second quarter.

Non-interest-bearing deposits of $3.5 billion represented 27% of total deposits.

With our considerable deposit growth and capital generation, total assets reached $15.9 billion, an increase of $2.8 billion or 21% versus last year's second quarter.

Now let's take a look at loans. Loans during the 2012 second quarter surpassed $8 billion, up a record $665 million or 9%.

This marks the first time that loans represent more than 50% of total assets. For the past -- in the past 12 months, loans have increased over $1.9 billion or 31%.

The increase in loans this quarter was mostly due to growth in commercial real estate and multifamily loans, as well as the launching of the bank's specialty finance business, which hit the ground running.

Nonaccrual loans again declined to $31.9 million, representing 0.4% of total loans in the quarter, compared with $35.5 million, or 0.48% for the 2012 first quarter, and $44.2 million or 0.72% for the 2011 second quarter.

The allowance for loan losses was 1.21% of loans versus 1.25% in the 2012 first quarter and 1.28% for the 2011 second quarter. Additionally, the coverage ratio, or the ratio of allowance for loan losses to nonaccrual loans, further improved to 305%.

The provision for loan losses for the 2012 second quarter was $10.3 million compared with $10.7 million for the 2012 first quarter and $12.9 million for the 2011 second quarter.

Net charge-offs for the second quarter of 2012 were $4.7 million for an annualized 25 basis points versus $5 million or 29 basis points for the 2012 first quarter and $7.7 million or 53 basis points for the 2011 second quarter.

Now turning to past due loans and the watch list. During the 2012 second quarter, our 30 to 89 past due loans remained stable at $58 million.

The 90-day plus past due category decreased $18.2 million from $34.8 million to $16.6 million. Last quarter, we noted there was one client experiencing issue that owned 5 properties totaling $23.5 million.

These loans were successfully resolved during the second quarter, leading to the decrease in our 90-day plus past due category.

Watch list credit again decreased this quarter by $15 million to $200 million or 2.49% of total loans. While we are pleased our nonaccrual and watch list loans decreased this quarter and our credit metrics remained strong, we are mindful of the uncertainty in the economic environment and we again conservatively reserved.

Just to review recruiting for a moment. We had a busy second quarter.

Signature Financial, our specialty finance subsidiary, grew by 21 colleagues on top of that 26 professionals that joined at the very end of the first quarter, for a total of 47. As we indicated last quarter, given our recent hirings, we would not need to hire another team this year to secure continued growth.

However, if an opportunity presents itself, we will not be shy.

At this point, I'll turn the call over to Eric, and he will review the quarter's financial results in greater detail.

Thank you, Joe, and good morning, everyone. I'll start by reviewing net interest income and margin.

Net interest income for the second quarter reached $134.2 million, up $21.2 million or 19% when compared with the 2011 second quarter, an increase of 6% or $7.4 million from the 2012 first quarter.

Net interest margin was down 10 basis points in the quarter versus the comparable period a year ago and increased 4 basis points on a linked quarter basis to 3.54%. The linked quarter increase was mostly due to a $1.8 million increase in loan prepayment penalty income.

When you exclude prepayment penalty income from the 2012 first quarter and the 2012 second quarter, core net interest margin for the linked quarter remained unchanged at 3.44%.

Let's look at asset yields and funding costs for a moment. Overall interest earning asset yields declined only 2 basis points this quarter to 4.28%, as it was assisted by an improved earning asset mix that and an increase of $1.8 million in prepayment penalty income on loans, to offset the continued low interest rate environment.

Given the continued low interest rate market and tighter spreads, coupled with strong loan growth, we were very selective in securities deployment. As a result, yields on investment securities declined 9 basis points to 3.41%, and that the duration reduced to 2.8 years.

Turning to our loan portfolio. Yields on average commercial loans, mortgages and leases declined 5 basis points to 5.16%, compared with the first quarter of 2012.

Excluding prepayment penalties from both quarters, yields would have declined 14 basis points.

Now looking at liabilities. Money market deposit costs this quarter further declined 8 basis points to 86 basis points, as we again decreased deposit costs given the low interest-rate environment.

This decrease, coupled with an increase of $142 million or 4% in average non-interest-bearing deposits, helped lead to a decline of 5 basis points in our overall deposit costs.

Now onto non-interest income and expense. Non-interest income for the 2012 second quarter was $9.9 million, a decrease of $361,000 when compared with the 2011 second quarter.

We had a strong quarter in our SBA business. The net gains on sales of securities included $2.6 million gain on sales of an SBA interest-only strip security.

And our core SBA pool assembly business produced gains on sales of loans of $2.7 million, an increase of $1.9 million from the 2011 second quarter and $1.3 million from the 2012 first quarter.

Additionally, other income was negatively affected by a scheduled amortization of low income housing tax credit investments of $2.2 million. The offset to this amortization are related low income housing tax credits that helped to reduce our quarterly tax rate to approximately 42.6%.

Noninterest expense for the second quarter of 2012 was $54.9 million versus $45.2 million for the same period a year ago. The $9.6 million or 21% increase was principally due to the addition of new Private Client Banking teams, and the Signature Financial hirings.

Bank's efficiency ratio increased slightly to 38.1% for the 2012 second quarter compared with 36.7% for the same period last year, again driven by the Signature Financial hirings.

And turning to capital. Our capital levels remain strong, with a tangible common equity ratio of 9.55%, tier 1 risk-based of 16.45%, total risk-based ratio of 17.55% and leveraged capital ratio of 9.57% as of the 2012 second quarter.

Our capital ratios were all well in excess of regulatory requirements and augment the relatively low risk profile of the balance sheet.

And now, I'll turn the call back to Joe. Thank you.

Thanks, Eric. Signature Bank had another successful quarter, with solid deposit growth and record loan growth, leading to our 11th consecutive quarter of record earnings.

For the past 12 months, loan growth has just about matched deposit growth of $2 billion. This is transformative to our balance sheet, and for the first time in our history, loans exceeded 50% of our total assets, at 50.6%.

Our client-centric approach and steadfast commitment to depositor safety first and foremost is allowing Signature Bank to flourish in these tumultuous times and positions us for future success.

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

On the mix of the loan growth, can you just quantify the breakdown of that, sort of what the contribution was from Signature Financial and then the growth in multifamily commericial real state?

The $665 million, slightly more than $200 million of that $665 million growth was from Signature Financial, and the rest was primarily the commercial real estate group, including the multifamily.

Great. And the $200 million that you saw this quarter in growth, or a little bit more than $200 million, is that sort of a good run rate to expect from this group going forward?

Or do you think it could potentially be a little higher outside of any seasonal slowness you might see in 3Q?

Oh, Dave, it's a great question. I think we're going to need a couple more quarters.

I'll tell you why. They continue to grow the book in July, but in discussions, we've learned that August is a treacherously slow month for specialty finance nationwide, so there's some seasonality there.

And then the fourth quarter is usually the best quarter for specialty finance, so there's seasonality there. So it's very hard to predict what the run rate would look like until after we see several more quarters.

But needless to say, we expect to continue to have robust loan growth during the third quarter. It's hard to predict whether it's going to be that record growth that we had at $512 million, which we had in the first quarter, or the $665 million that we had in the second quarter.

If I were to bet, I would say we'd be closer to the first quarter because of the slowness in August. And even in the commercial real estate world, you have a tendency to have a slowdown in the month of August, but we will have a continued robust growth.

But with seasonality built in over the next couple of quarters, I think it would be better that we give you an idea in January what our thoughts are.

Yes. That sounds good.

I appreciate that. And just switching to loan pricing.

So we've heard throughout the quarter from the brokers that rates are coming on multifamily commercial real estate pretty much for all the banks in this market. Just as an aside, they consistently said you were getting higher rates because of the reasons you talked about in the past, the fast closings and whatnot.

But I'm just wondering if you could update us on where you guys are now and that step up rate and the 5/1 ARM rate. And then if you have the CRE rate as well, that would be great.

On the multifamily, on the 5-year, we're getting mid-to-high 3s. We are seeing our competitors on the low 3s.

So what we're seeing here is that competitors only have a pricing advantage, and that's how they're trying to win some business. And like you said, what we've said in the past, because of the efficiency, because we close in 45 days, the wonderful team, the commercial real estate banking team that we have, that is able to keep the rates where they are.

It's because of that efficiency, it's because of the service that they give. So we're kind of a mid-to-high 3s.

I would say the differential was anywhere between 25 basis points to 38, to -- could possibly get to 50. But once you get close to there, it's very hard to win business if you're that far away.

On the -- other than multifamily, we're seeing low-to-mid 4%.

Great. All right.

And then just one last on real quick. On the securities reinvestment rate, can you just kind of update us what you're seeing at this point.

You said you're going to be more selective. Or are you still around the 3% handle?

Yes, and we're starting to dip down into the high 2s. Dave, again, the key there is being very selective, and the loan growth has allowed us to do that.

So we're seeing anywhere from a high 2s to low 3s. If we had to invest in a heavy way, we'd probably be more in the mid-2s.

I just want to be sure that I heard you correctly on the loan growth. It sounds like your expectation would be in the third quarter you're somewhere between the first and the second and probably closer to the first.

Is that a good summary of what you all said?

Yes, I would say that was a very good summary. But it's just because of the seasonality or what happens in August that is very hard to predict.

Sure. And other than seasonality, does this second quarter seem to feel like a good representation of what this business is capable of?

I would say so. Yes.

Great. And then could you maybe talk a little bit too about what the average yield was on the loans that came from the specialty lending business and the average loan size?

And remind me are these loans or leases or a mix? And just maybe give a little more color there.

It's loans and leases, but it's predominantly loans, the vast majority are loans. The weighted average yield is a little over 4%, and that's weighed down a bit by the taxi medallion business, where the yields are coming in, in the mid to low 3s.

That business line made up about half of their growth in the second quarter, and we were able to really hit the ground running there because we had an existing taxi medallion business already. So yields are generally a little over 4% but -- I'm sorry.

The yields on the remaining business lines are in the mid to high 4s. And the overall is weighed down a little bit by the medallion business.

Okay, great. And then with the new hires that you all had this quarter, what date were [ph] they were part of this group, were they're fairly early in the quarter?

Or should we see a little bit more of sort of a full quarter expense impact in the third quarter?

They really came in right at the beginning of the quarter. And there were quite a few hires at the end of the first quarter as well, Bob.

So I think we got a pretty good picture of what the expense run rate is on that group.

Great. And then the guidance I think you all gave before was 20% to 25% year-over-year in expenses.

That still is how you all see the world right now?

That's correct. We expect that the third and fourth quarters will be 20% to 25% over the prior year's quarters.

That's right.

All right. And then last question.

Could you share your thoughts some sort of where you expect margin will go from here? Do you think you can continue to stay flattish on a core basis?

Or with the yield curve where it is, does that just get tough?

I mean, we expect the margins will be pressured given the interest rate environment and loan competition. Margins will most likely be down in the coming quarters, but we should be able to control the rate of decline, and we will definitely have net interest income growth.

But the positive, obviously, to control the rate of decline are our loan growth, which we saw this quarter, and really a little bit more room for continued deposit cost for decline. So those couple of things should help us to stem off the margin decline.

Maybe I'll follow up on the comments on lower deposit cost. Looking at the money market yields at 86 bps, given what your competitors are offering, could you push that much lower here?

We can push it a little bit lower. I know what our competitors are offering, and that's why it's making it somewhat difficult.

But we did move it down 8 basis points this quarter from 94 to 86, so it would be hard to duplicate that in the third quarter. But I will tell you for the month of June, the average was 84 basis points.

So we're already starting to bring that down a little bit further, which -- and we're trying to get it closer to 80. We've seen significant deposit flows -- well, let me retract that.

We've seen deposit flows coming in at 65 and 75 basis points. So if we can bring in new clients from other institutions at 65 to 75, that will help us drive down the rate a little bit further.

And like I said, we're already starting off the quarter at 84, where the average was 86 for the second quarter. So there is some room, albeit not at 8 basis points.

Got you. And to follow up on Eric's comment, to expect margin pressure in the third quarter.

Is the right way to think about this, if we have a seasonal slowdown in loan growth, there are some offsets on the deposit side? But with the change in earning asset mix, we'll see some pressure.

Then if loan growth comes back seasonally stronger 4Q, we should see the pressure go away then? Is that how we should think about this?

Well, I don't think the pressure's going to be because loan growth could be seen only a pressure. I think loan growth is still going to be robust.

I just think it's because the pressure we're seeing on the entire planet of margins, we just think that we're better equipped to handle that pressure because of the loan growth. I think part of it is going to be how much is that deposit growth that we have because we have a deposit growth and we have the cash flow coming off the investment portfolio.

This is a great quarter for us because the deposit growth was $450 million and loan growth was $665 million. So if deposit growth is $300 million and loan growth is $400 million, that bodes well for us.

Another thing that will help us a little bit on the margin are borrowings. We have $75 million in borrowings coming due this quarter, $25 million already on July 3 was 4.77%.

We have another $25 million at 3.17% and a third $25 million a 2.97%, and both the last 2 are in August. So the borrowings of $75 million, in addition to us being able to bring down some deposit costs, will help us.

We just feel that what we're seeing in reinvestment opportunities on the investment portfolio and some of the things we're seeing on the C&I world in terms of rate, the spread to LIBOR, that is going to be pressure for us. The good news is that we do have some opportunities to build a loan portfolio.

Okay, great. Maybe just a final question.

Eric, any initial thoughts on the impact to your capital ratios from the proposed Fed rules?

Yes, I mean the proposed rules really should have very little impact on us. 95% of our balance sheet since securities mostly government securities, as well as commercial real estate, both of those asset classes are basically unaffected by Basel III.

So we should really see minimal impact. The other 5% of our balance sheet really there's some pluses and some minuses, but again, it's 5% of our balance sheet.

So overall, I think that we'll be largely unaffected. And certainly, relative to peers, we will be quite a bit less affected than our peer group.

Just a follow-up on the Signature Financial business. I'm just wondering, would you guys have a view, and if you could just help us out with some of the assumptions, behind the view of what breakeven is for this business in terms of the amount of loans?

Yes, we haven't stated as it relates to amount of loans, Casey. I mean, I think what we've said is that we expect to break even in 18 months.

We still believe that, that will be the case with a bias towards breaking even sooner than that. But we think we're looking at an 18-month breakeven.

Okay. And then I guess switching to credit.

Obviously, a pretty good result on the net charge-offs this quarter. Was there a big level of recovery this quarter?

Or we kind of -- can they stay at this level going forward?

No, recoveries certainly can stay at this level going forward. We had about 400,000 in recoveries.

That's a very manageable number for us. It's what we've seen more or less 300,000 to 500,000 for the last several quarters.

We really just saw a reduction in the charge-off level.

Okay, and then just lastly, on the loan growth front. I know that 2008 was a big year for you guys, multifamily-production-wise.

As we look ahead to 2013, how should we think about sort of the roll off of what was a massive production year 5 years earlier?

Well, we're actually starting to see that now. I mean, there's a bunch of refinances going on because it's -- they're usually not waiting for the end of the 5-year period.

They want to refinance now. Some of that is contributing to the prepayment penalty that we've had over the last several quarters.

So we're not seeing a massive amount, but we're seeing a moderated amount throughout the quarters. And we would expect to continue to see that.

They'll not all going to come due at once. They're really trying to refinance sooner than take advantage of the low rates.

The deposit insurance from $250,000 to $100,000, can you just talk about potential impact on deposits or any expectations here? I think it's resetting at end of the year?

Great question. De minimis.

We really don't have a retail base, where clients are worrying too much about the deposit insurance here. We really have our banking teams, the 78 banking teams, stress the safety and soundness of the institution, hence we keep higher levels of capital than our competitors.

Most of our deposits are actually uninsured, if you look at the interest-bearing piece, anyway. I know that the non-interest-bearing is totally insured, at least through the end of the year.

But on the interest bearing, most of our deposits are above $250,000, so whether it goes down to $100,000 or goes elsewhere, we think that the effect will be de minimis. I think the bigger question may be is TAG going to continue on the non-interest-bearing, is that going to go away?

And the jury is out as to whether or not that will go away because we've seen the American Bankers Association and a couple of other banking associations support the continuation of TAG, where our non-interest-bearing deposits are uninsured or -- excuse me, insured unlimited. We think that will have a de minimis affect on us as well.

Okay. Great.

Just a further question on the size of the investment portfolio. Can you maybe talk, Joe, about the expectations?

I don't think it grew much or maybe it even shrunk a little bit this quarter. Just on the earning asset piece of the equation, how much you expect securities to go either up or down in the next 2 quarters?

Yes. This is actually the first quarter that I can really remember where we shrank the securities portfolio.

And ultimately, our goal would be to have deposits really reinvested into loans and to keep that securities portfolio flat, even down. It's really I think going to be a function of deposit growth, and deposit growth as you know, is much more difficult for us to predict than loan growth.

So we've had quarters of $300 million. We've got quarters of $750 million.

So that will really be what the securities portfolio will be based on. But our goal is to really just maintain that at a flat level for now.

Okay. Great.

Last question, the tax rate is 42%, is that about right going forward?

I'd use 43% going forward. We got a little bit more of a benefit this quarter.

But our effective tax rate for now going forward should be 43%.

Can you talk about what you're seeing on the C&I side in terms of the contribution there? And how did utilization rates run in the quarter?

I'll hit the utilization first. I mean, utilization rates were flat to down a little bit this quarter.

It seems like our clients are still concerned about the environment and weary of what's going on there and not looking to draw down and increase inventory of built products. It's a little disappointing this quarter.

On the C&I activity, we're seeing more activity in the second quarter and as we start the third quarter. It hasn't equated to increases in loan balances, but we are seeing more activity.

And based on the pipeline, we should expect in the third quarter there to be growth there unlike the second quarter. So our expectation is across the board in the third quarter that we'll have the specialty finance, the continued robust growth in the commercial real estate area.

And we'll start seeing some of that growth that we talked about and the activity that we talked about earlier this year in the C&I book more towards the third quarter and the fourth quarter.

Great. And the second question.

I wanted to about team recruitment and retention going forward. With a couple of new competitors entering the New York marketplace, how do you think a new recruitment will play out especially with the roughly 50 hires you have with the specialty finance already in place?

And also I wanted to get your thoughts on retention as well as these new competitors start to build up their operations.

Sure. We always think it's best that there is competition and that the competitors would always want to go after the best, which means they would want to target our teams because we believe our teams are the best.

But we've had an established organization here now more than 11 years, and the competitors that are coming in have different stories as that -- are like ours, and they're coming from really more of out-of-market. And we believe that we have the advantage because we're in-market.

We're seeing more opportunities for our teams and for our business because clients want to do business with us. So we're actually surprised it's taken this long.

There were some great institutions -- Republic National Bank, EAB, NatWest, NorthFork. All these great institutions are all gone, and there's certainly a void in the marketplace, and we were able to fill that void.

So we're surprised that it has taken this long for competitors to come in. The market is wide, and we welcome them.

From a retention standpoint, the teams that are performing very well, which is most, if not all, have real opportunities to continue to do well here, and we hope that they'll continue to do well here.

Just stepping back a bit from this quarter's financial results, can you just comment on your intermediate to long-term growth strategy this point geographically speaking? I'm wondering specifically sort of what markets outside of the greater New York city market you're keeping an eye on and whether you'd consider a whole bank transaction to enter a new market.

Well that's a mouthful. Let's start with the traditional private client banking business that we have, including the commercial real estate business.

That is still a robust business, and that we see robust opportunities for growth in the major Metropolitan New York area, which includes New Jersey and Connecticut. We try to build out in concentric circles and we haven't seen any real opportunities for us to grow outside this market because that opportunity has be to be far greater than the in-market opportunity.

And our in-market opportunity is just fantastic. This is the largest market for deposits by far.

I think it's 2.5x to 3x greater than the #2 market. It's the largest market for privately-owned businesses.

So from that aspect, we're not considering other than maybe some possibilities of growth in New Jersey and Connecticut, which haven't occurred yet, we're not considering any other market. When it comes to the Signature Financial business, which is more of a nationalized business, think of it as the NBA, where the NBA cities are, where the teams are in the NBA.

And that's where we have an opportunity to do that business because the team we've brought over not only had in-market business but had national opportunity. So from that aspect, some of the equipment financing will be out of the New York market.

But we have no, at least, short to intermediate plan, to go outside in our private client banking and commercial real estate business out of this great area of New York.

It's for Russel Gunther on for Erika. At this point, our question has been asked and answered.

Quick follow-up on the securities book. Can you just discuss what you're seeing in terms of prepay speeds [ph] in the securities portfolio particularly given the pullback in yields?

Yes, we're certainly seeing a pickup in prepayments. I'd say we had about it 1.5 million more in amortization this quarter than we did the prior quarter, John.

But we do selective strategies to try to stem that risk. But certainly, given where rates are and given what the government is looking to do, we've got some pressures there.

Okay. And what type of strategies?

Can you just give us a little more detail about what you're doing to mitigate that?

I mean, listen. Generally we're looking for securities with prepayment characteristics that are different from the market based on underlying collateral so, we're adding selectively agency CMOS with locked-out structures, and again, with more predictable prepayment characteristics.

We're adding to our re-remic portfolio. We're doing a small amount of financial corporates and CMBS.

Okay. All right.

And then, lastly I know you indicated that it doesn't sound like you have any additional teams to announce here. But I just want to get your thoughts, is it likely that we could see some additional team hires here in the near terminal?

Sure. We have about 1 or 2 that we're discussing the pipeline, so sure, we could see a team hire sometime in the third quarter.

Well, I want to thank everyone for joining us today. We appreciate your interest in Signature Bank.

And as always, we look forward to keeping you apprised of our developments. And Patricia, I'll turn it back to you.