Q4 2019 Earnings Call

Signature Bank 2019 fourth quarter and year end results conference call.

Hosting the call today from signature bank or Joseph J., Depaolo, President and Chief Executive Officer.

Our Howell executive Vice President corporate and business development.

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It is now my pleasure to turn the floor ever to Joseph J., Depaolo, President and Chief Executive Officer, you may begin.

Thank you Christine.

Good morning, Thank you for joining us today for the signature during 2019 fourth quarter and yearend results conference call before.

Before I begin my formal remarks, there's a moves will read the forward looking disclaimer. Please go ahead Susan.

Thank you Joe This conference call an oral statements made from time to time by a representative contain forward looking statement 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 are subject to numerous risks and uncertainties relating to our operation.

Then 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 opening business strategy, new products and future dividends and.

Share repurchases as you consider forward looking statements you should understand that these statements are not guarantees a performance or results. They involve risks uncertainties and assumption that could cause actual results to differ materially from those in the forward looking statements. These factors include those described in our quarterly and annual reports filed with the FDIC, which you should review care for.

At least for further information.

Keep in mind that any forward looking statements made by signature bank speak only as of the date, which they were made now I'd like to turn the call back to Joe.

Thank you Susan I will provide some overview each of the quarterly and annual results <unk> ever come along VP of corporate and business development.

Thanks, one each performance in greater detail, Eric and I will address your questions at the end about remarks.

That was 19 was a strong year for signature bank. We grew deposits by solid 4 billion, which significantly improved our liquidity position and we executed better than planned well not diversification strategy, while maintaining credit quality and delivery to 17% increase net income.

Moreover, we have laid the necessary groundwork for future downwards and robust growth with the launch of sickness.

Block chain based payments platform.

You put your opening about food service.

Good point banking office in San Francisco.

The hiring about venture banking group.

The onboarding of the specialized mortgage servicing banking team.

Further advancement of bolt on digital assets banking team.

And one banking division.

Furthermore, we ended the year with a really strong fourth quarter.

Now, let's take a look.

Close look at earnings net income for the 2019 fourth quarter was 148.2 million with $2.78 diluted earnings per share compared with 160.8 million with 2094 cents diluted earnings per share reported in the same period last year.

The decrease in net incomes, mainly the result.

Well the decrease in loan prepayment penalty income.

Well as widely non interest expense coming to significant investment in new private client banking team.

Looking at deposits deposits increased 1.3 billion to 40.4 billion this quarter, while average deposits grew by 1.4 billion.

Do you.

<unk> increased 4 billion, an average deposits increased 2.9 billion.

Noninterest bearing deposits was 13 billion, representing 32.2% of total deposits.

We grew 1 billion over 8% to do you.

Deposit and loan growth led to an increase of 3.3 billion.

With 70% in total assets for the year, which caused you to be building.

Now, let's take a look at all lending businesses loans during the 2019 fourth quarter increased nearly 1.2 billion with 3.1 person.

For the year loans grew 2.7 billion was 7.4%.

Continue we don't diversification strategy increase in loans. This quarter was driven by growth in all commercial and industrial lending categories, including specialty finance he'd be L. Traditional seeing on insulin banking.

Total see an eye increase for the quarter was 1.7 billion was 16.2%.

Conversely, we further reduced you on these loans this quarter on 428 million Green North Sea RV concentration level down to 480% from peak 593%.

Furthermore, floating rate loans will now 20.3% of total loans, which is a dramatic improvement.

<unk>, 0.1% year ago, and our loan to deposit ratio decreased again this quarter to 96.8%.

Turning to quote unquote, well portfolio continues to perform well nonaccrual loans was 57.4 million well 15 basis points of total loans compared with 32.5 million nine basis points.

The 2019 third quarter.

Well past due loans were at the lower and above normal range would go to 89 days past due loans 31 million on 90 days past due loans remained low at only.

2.3 million.

2019 fourth quarter net charge was 2.5 million, what three basis points compared with 2.9 million for the 2019 third quarter.

The provision for loan losses.

For the 2019 fourth quarter were 9.8 million compared with 1.2 million for the 2019 third quarter and 6.4 million.

2018 fourth quarter.

You allowance for loan losses remain stable at 64 basis points of loans [laughter] walk coverage ratio stands at a healthy.

436%.

And finally on this topic looking at the future undersea. So we have completed the implementation of various models and upon adoption in the first quarter, we anticipate an increase of 15% to 20%.

Our allowance for loan losses.

As for the provision moving forward.

We expect greater volatility and it is difficult to project given a heavy reliance on macroeconomic variables loan portfolio composition and the product mix.

Now onto the team fraud.

2019, we added four private client banking teams, including the 20 person venture banking group and the 15 member specialized movie servicing banking team.

We've become more focused on specialty niche business lines.

Truly help us.

Truly help us distinguish.

We hope to us to distinguish us in the marketplace.

This point I'll turn the call over the arrogant you would be the quarter's financial results in greater detail.

Thank you John and good morning, everyone.

I'll start by reviewing net interest income and margin.

Net interest income for the fourth quarter reached 338.3 million an increase of 3.1% were 10.3 million from the 2019 third quarter.

Net interest margin on a linked quarter basis improved four basis points to parents, 72%.

Excluding prepayment penalty income core net interest margin for the linked quarter increased one basis point to 2.67%.

Let's look at asset yields of funding cost for a moment.

Interest, earning asset yields for the 2019 fourth quarter decreased 70 basis points from a linked quarter to 3.87% decrease in overall asset yields was due to significantly higher cash balances and lower reinvestment rates and or primary asset classes from a lower rate environment.

Yields on the securities portfolio decreased 13 basis points linked quarter to 3.05% due to the decline in market rates and our portfolio duration of remained low at 2.6 years.

Turning to our loan portfolio yields on average commercial loans and commercial mortgages decreased two basis points, but 4.18% compared with a 2019 third quarter.

This was mostly due to lower origination yields which was offset by a rise in prepayment penalty income.

Excluding prepayment penalties from both quarters yields decreased by seven basis points.

Now looking at liabilities, our overall deposit costs. This quarter decreased 13 basis points to 108 basis points driven by a significant increase in average noninterest bearing deposits of 483 million and a decrease of 20 basis points in the cost of interest bearing deposits.

Average borrowings excluding subordinated debt decreased 752 million to 4.5 billion were 8.9% of our average balance sheet.

Bridge borrowing cost decreased one basis point from the linked quarter.

2.58%.

The overall cost of funds for the quarter decreased 14 basis points to 1.26% driven by both reduction in deposit cost as well as paying down higher cost borrowings.

Onsen noninterest income expense non interest income for the 2019 fourth quarter was 7.3 million an increase of 1.4 million when compared with the 2018 fourth quarter.

The increase was mostly due to a rise of 1.3 million in fees and service charges as well as an increase of 2.5 million in trading income.

The increase was partially offset by a rising tax credit investment amortization of 1.5 million.

Noninterest expense for the 2019 fourth quarter was 138 million versus 119 million for the same period a year ago.

The 19 million or 16% increase was principally due to the addition of new private client banking teams, including the venture banking group and the specialized mortgage servicing banking team.

Thanks, Sufficiency ratio was 39.9% for the 2000 might you fourth quarter versus 34.9% for the comparable period last year and 40.2% for the 2019 third quarter.

Turning to capital.

In the fourth quarter of 2019, the bank paid a cash dividend of 56 cents per share and repurchased 722000 shares of common stock for a total of 89 million.

Additionally, the bank raised 200 million and subordinated debt and a public offering.

The dividend and share buybacks had a negligible effect on capital ratios, which all remain well in excess of regulatory requirements and augment the relatively low risk profile the balance sheet as evidenced by a tier one leverage ratio of 9.6% in total risk base ratio, 13.32% as of the 2019.

Fourth quarter, and now I'll turn the call back to Joe. Thank you. Thanks, Eric.

I was a 19 was very solid year for us, where we executed better than planned in transforming the balance sheet two significant growth in floating we commercialize industrial loans of 3.6 billion by reducing our exposure in fixed rate commercial real estate loans by 1.1 thing let's see.

He concentration level is now down to 480%.

Peak of 590 degree.

Furthermore, we demonstrated the capability of offering each franchise to robust deposit growth of 4 billion, including an increase of 1 billion in non interest bearing deposits.

This way.

To rise in net income was 83.6 million was 70% and a 12.8% return on equity despite the significant investments me.

Several new initiatives.

Additionally, we optimize our capital position to repurchase of common stock.

And issuance of low cost subordinated debt, while also maintaining our dividend.

We organically grew the bank as opposed to expanding to M&A is a better utilization of capital to higher teams all lines of businesses into acquired banks.

On that no we built for the future significant team filings, including the venture banking group.

Specialized mortgage servicing banking team.

As long as with the opening of all full service San Francisco Office.

These new teams as well as our existing franchise position us well for future expansion and we look forward to their contribution.

And lastly, I would be remiss, if I did not mention the bank reached the milestone board recognized.

Less than 19 years signature bank has grown from 15 million specifically.

Total assets pure we organically feet, we believe nor the bank has accomplished.

We have a culture of growing organically by serving all clients not by buying them.

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

Thank you so let's now open for questions.

This time it had a question or comment please press star one on your Touchtone phone.

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Thank you. Our first question is coming from Ken Zerbe of Morgan Stanley .

Great. Thanks, good morning.

Good morning trends.

Maybe start and in terms of the she and I growth Joey I know you said the growth is coming from all categories and she and I could you dive into that just a little bit more or like where are you seeing the strongest growth in the quarter.

Basically just outlined by sort of sub category would be very helpful.

Well the I'll start with one banking.

Well they had strongest growth.

Oh ever given obviously, yeah, one banking was up almost 1.2 billion for the quarter.

We also saw growth in our traditional.

Business that was up 143 million.

Quarter.

Asset based lending was up 87 million.

The signature financial again had a very strong fourth quarter with 233 million times fourth quarter kinds of your strongest quarter and it was a again this year and then venture capital came in at just shy of 40 million in growth. So is really across across the board growth in all of our student lending areas.

And it's what we expected we expected that we were.

Reducing global commercial real estate that that would be taken all why you.

Hi.

Gotcha understood no not very very good results there.

I guess switching over to multifamily or Siri just in general.

I guess, the $400 million run off seems a little high I know you had the where you were elevated last quarter for very specific reasons in terms of Siri run off are you seeing additional customers that you're sort of gently pushing out of the bank is that is that the reason for the decline are there other reasons.

For the 400 million and it's just a good number like going forward. Thanks.

In part.

The continuation of the previous quarter.

We had some run all of them, we weren't able to get all those clients that were not relationship we've been out in the quarter. So important that was.

The fourth quarter reduction and then there would you some additional prepayments.

The pipeline.

It is pretty significant now it takes a while when youre in a mode of.

We do seem to portfolio.

To the marketplace to understand that you back in business.

No we've seen the pipeline pretty strong.

Yeah, we got we anticipate going forward that will be relatively stable on that front, we couldn't be down a couple of hundred million could be up 100 couple of hundred million, but we're looking for that portfolio. Its remaining at least a flatter will of course the year.

Okay Perfect and then just last question for you the increase in non accrual loans I know, it's still fairly low all things considered but was there anything in particular that drove the higher.

Nothing.

[laughter] system nickel global.

It was one credit.

That was not as an abundance of caution it was put on non accrual. It was 60 days past due.

So wasn't 90% keep days it was a retail plus office building or there's a gallon tool.

Oh, and we're working with the guarantor the owner.

It's pretty well secured <unk>.

We did not put a reserve on.

It was no multi family increase non cool.

Alright, perfect. Thank you very much.

Thank you Ken.

Thank you. Your next question is from Casey Haire of Jefferies.

Thanks, Good morning, guys.

When it was wondering if you could if you guys could touch on the NIM outlook, specifically, you know where our new money loan yields quarter to date and do you expect again.

[noise] more help on the on the deposit side of things.

Yeah, I mean, we certainly anticipate that we'll continue to have a strong deposit growth, especially given all the new lines that we put in place and they really.

I have just started to to kick in so and should be beneficial to our overall margin.

Generally we anticipate in the short term the next quarter or two that will be flat with an upward bias.

After that it's going to be dependent on many factors the shape of the yield curve, what the fed dogs, what our deposit growth is what our DTA grosses and what ultimately our loan growth.

And the mix about loan growth that's coming in.

Right now on the yields.

Say, a phone banking coming in a 363 70.

Range on their new loans.

Signature financials in the low fours the high threes.

Traditional seen an eye is in the low fours.

Oh.

Ventures in the high fives.

Since we have a member of our bankers listening would be good no.

We expect that they'll be able to get the cost of deposits down further.

I would tell you how much that will be but there is an expectation that we have some room.

At least in the first quarter.

Very good and I'm a liquidity into it obviously.

Good results on the deposit side, so liquidity built up do you expect to work down in short order and if so.

To what end or would it be paying down borrowings are just wondering longer.

Yeah, we funded a significant amount of loan growth in the last two weeks of the over the fourth quarter. So we've really worked down that liquidity already. So it was mostly would pick mostly with funding loans, but we did also pay downs from high cost borrowings. We continue to have some higher costs borrowings that we'll be able to pay down.

Over the course of next several quarters.

Well certainly be beneficial to the margins.

Okay, and just last one for me on the deposit growth momentum is.

Is pretty strong you. This is two quarters in a row, where you're basically running in a billion after quarter, which if this were to continue would sustain you know well above your three to 5 billion of asset growth per annum.

I just was wondering if you have some updated thoughts on that and then.

We cannot woods like you as best I understand you're not getting any contribution from that team.

So why wouldnt the contribution from kind of awards accelerate this this deposit growth pace, we've seen over the last two quarters.

Well.

That's seen has opened up a significant number of accounts that have not yet been funded.

Oh, the all contributing the big big deposits like they have to billion or so.

Oh come with Oh, we time.

Take some time to get them over.

But.

By the number of accounts they have open we're fairly confident.

And we would be disappointed.

For the whole year 2020, if we didn't end up on the higher end of the three to five.

Very good thank you.

Thanks.

Thank you. Your next question is from Ebrahim Poonawala of Bank of America Securities.

Good morning, guys.

Good morning Ebrahim.

So just wanted to follow up on the margin I guess, you mentioned you expect it to be flat to maybe slightly higher over the coming quarters [laughter] just talked wasn't going to we've done it can vitamin doesn't change what drives meaningful margin expansion materials like your balance sheet growth should be neutral in command.

Could you give to the to 17 margin give or take like we.

It did put into the see any meaningful expansion into much in the current trade back drop like what needs to happen for us to get there.

I think if you're looking at the current rate backdrop, we would need a significant amount of D.A. growth for low cost deposit growth really drive anything meaningful.

As a pretty still pretty flat yield curve that we're operating under.

If we got some steepness to the curve that could also leads us.

Widening margins a bit but in this current rate environment. It would have to be deposit flows that would drive.

And on deposits has a customer appetite or the customer demand for they.

Have you seen that's upside over the last few months, where incrementally do Blake I'm just wondering what seemed so many cost of deposits that sub 100 basis points of it that 100 basis points for that.

I would say that the competition is white.

Yeah.

One is over the last several quarters or last couple of years.

That's what I would say just on deposit rate.

Understood and just moving over to expenses.

16% do we should expect them to 12% growth next year and if any updates that all hiding sounds I know you always looking for opportunities for higher but no any update or would be helpful.

Yeah, we weeks, we ended up at 16% for the fourth quarter, which is right in line with what we've guided.

We project next year that will be like 15% to 12% ranch starting at the high end of the Ranjan going down somewhat linear fashion over the course of the year. So when we look at the first quarter, it's probably 15% growth and then 14 13 as well.

Percent, we're working on a number of initiatives on the team fronts nothing that we really want to disclose at this time, but we do have a number of friends in the pipeline.

Got it really from his question.

I think it's really all about net interest income.

If the margins stay stable, we continue to grow our efficiency ratio.

As is.

We'll be able to go to break that nicely with a net interest income.

Agreed and just one last quick follow up on the multifamily if it comes up on the stock.

Discussion with investors, how do you will see the multifamily market in New York, playing out like do you expect any hiccups or the next few quarters over the next year like just based on what you've seen due to do feel comfortable where you feel good about like this not forcing any creditors to signature.

Well, we talk to our clients all the time and their multi generational.

Holdings of huge portfolios and not highly leverage.

That's a substantial portion of our multifamily client.

So that bodes well for us.

We haven't seen any.

Negative trends other than that there's some value. So you know.

Huh.

The values or portfolio pretty.

What do you will.

Relative to others, who use a different kind of cap rates were very comfortable where we all know portfolio have not seen any correct.

Got it thanks for taking my questions.

Thank you.

Thank you. Your next question is from Jared Shaw with Wells Fargo Securities.

Hi, good morning.

Good morning.

Maybe just following up on the teams could you give us update on how the pipelines look going into the beginning of the year those are.

Stable, increasing sort of across the board given the the balances you gave us earlier.

Yeah. The pipeline looks good as you know a lot of what we've discussed over the last I'd say several months is that we're bidding ultra selective.

Given the very large teams of business lines that we brought on board to go over the course of the next couple of years, our focus is gonna be on nurturing those businesses, but not on the traditional team hiring front really turned our attention to the west coast and we have a number of teams and the pipeline there.

Okay. Thanks, and then the on the capital management now that growth is Oh are staying at the at these higher levels and the stocks are done done well should we expect to see sort of a continued mix of dividends and buybacks as a way to manage capital or is that and try.

Decision.

Start at the beginning of the here.

Well I think we're going to maintain the dividend that we've seen no I don't really see that moving meaningfully.

On the buyback front given the robust growth that we've had I would anticipate that would probably slow down a little bit on the buybacks.

Well, we won't stop because we spoken to stock is on the value.

Okay, but in terms of.

The this year he capital concentration and the absolute capital levels, you're you're comfortable.

We're continuing to look at that call. It a total total capital return and the.

<unk> hundred 20 130 million dollar.

Ranger quarter.

Yeah, it will probably be a little bit less than that given given the amount of growth that we see.

Got it thank you.

Thank you.

Thank you. Your next question is from Steven Alexopoulos sub JP Morgan.

Hey, good morning, everybody, Hey, Steve how long it.

The first follow up on the Cana Woods team.

If you look at your ability to move the business has there been any resistance, thus far from customers to move over to signature any products or services capabilities, you still need to add.

No as.

We've got I'd say, 95% to 90% of the products and services that we need there's certainly a few things that we want to tweak and enhance but nothing thats really meaningful amount space and stopping us from moving over the client.

I think as any new entrant into that particular arena. The clients are testing US right now they're opening up accounts are starting off with smaller dollar accounts.

But they're generally we're seeing a lot of activity there and a lot of account openings you know they came in with about $30 million imbalances in the fourth quarter, which we're very pleased with predominantly DDIY, which is what we anticipated from them.

I think they've already brought in more than that thus far this quarter. So we're seeing really good activity. We're hearing good things from the clients.

And we expect that that will lead to more and more as we go through the course of this year.

Eric as we think about the potential ramp from that business do you think this becomes more of a 2021 event than 2020 event.

I'm not necessarily I think we'll see some really strong deposit.

Flows this year.

Probably some large deposit flows coming in.

Mid to late this year, maybe so many clients that they have that have launched deposits than just getting one or two.

I would put us in the heck of going to be range immediately.

Okay.

And finally, so reaching 50 billion of assets is clearly a big milestone, but 50 billion or we think of the three to 5 billion asset growth target per year that implies just under 10% growth do you think about the size of the company or the days a signature being able to grow the balance sheet double digit now behind us given the size.

Sure.

Do you have a strategy to hire more teams to get back to double digit growth. How do you think about that.

I think of under promise and over deliver.

[laughter].

Fair enough. Thanks for taking my questions. Thank you Steve.

Thank you for next question is from Chris Mcgratty of KBW.

Okay, Great just wanted to clarify on the buyback commentary I.

I think Joe and as you said continued buyback, but but slower pace I think you've got 100 left how should we be assuming the proceeds from the the debt offering.

A portion earmarked for buybacks I'm, just trying to manage capital ratios and.

Hi back expectations.

Yeah, well, we'll we'll be going out the our next the annual meeting to re upped the buyback to the 500 million level again, and then we'll have to go for regulatory approval for that as well so.

We anticipate going to increase the buyback certainly when we issued the subordinated debt we anticipated that some of those ones would be utilized for the buyback.

But ultimately the buybacks going to be dependent on what we see is our level of growth.

And as I said earlier, we do anticipate a fair amount of growth in front of us So we'll be selective on the buyback.

Okay indicators or minus Eric the governor, which ratio and what level.

Traditionally the tightest ratio for us has been the total capital ratio.

So when that starts to get down to 12% or nearing a 12% I think that starts to be mindful of our capital levels.

Okay, great. Thank you.

Thank you.

Okay.

Thank you. Your next question is from Brock Vandervliet VBS.

Great. Thanks for the question that was reassuring with respect to that are increasing and non accruals being retail and office as opposed to multifamily.

What.

[laughter] <unk> and I'll come back to that but separately on signal. This is something you've kind of intermittently talked about.

Since it's been introduced could you kind of review for US what the business proposition is there and what exactly what industries. This is focused on.

Well, the it's focused on a number of industries.

I would have ecosystems.

I would fit well with the on the payment platform that we've created.

We are now in it for a little bit more than a year.

We have a one more enhancements that we want to work that we've been working on which will come out in April .

Which we believe will take us to.

Next step.

Primarily right now.

It's a.

Did you.

Flak platform that we have.

Requires us.

Two.

Ed.

Is one application in April and one doing some.

And those two applications will actually take us to the next level.

Uh huh.

One of the things everything I was talking about.

Well as having the analysts have a demonstration on it so.

So you can see.

What you actually gone.

And what platforms.

It would work well with.

One of the one of the areas.

Oh, we we signed up for client, yes, it was about a year ago.

And we've been adding to on capabilities.

And once April comes along.

We'll have a and energy company one football.

Signal with clients that they service.

Let me provide energy too.

Okay. Thank you.

And just just true view on the multifamily.

How large is the renovation.

On portfolio and how much of your reserves or are focused on that area.

Oh that portfolio, it's about 1.27 billion, it's down about 422 million in the quarter.

I think reserve wise its I don't know if I had a reserve breakout I don't think it's meaningfully different from our overall.

Multifamily reserves, which are around 60 basis points.

Okay, but down significantly in the quarter. Thank you.

Thank you. Your next question is from Lana Chan of BMO capital markets.

Thank you good morning.

Hi, My Love the morning.

Wondering if you could give us an update on the capital call.

Commitments are at the ended the quarter.

Yes, the amount of Ah of commitments at the quarter.

Lot of were 4.7 billion.

Okay. Thank you and Tom.

I guess.

Allergy that there's going to be some level of volatility and uncertainty with c. so in going forward, but.

As you grow the commercial loan portfolio versus I guess.

And mixed shifts from CRB multifamily should we think about I guess with yours T cell analysis.

The reserve to loan ratio should that.

The increasing over time, given the commercial loan growth.

You know super hard to predict.

At this point.

But keep in mind that are seeing eye portfolio. The majority of the growth that we've seen that aren't has been very well secured.

Capital call facilities to major private equity firms that are traditionally for us three and four rated credits.

And they are shorter duration.

Right. So it's a one to three year alone.

Three to four rated credit.

Versus our C or re loans, which are five year, some seven but mostly five year theory loans, which are.

Predominately four and five rated credits so all else being equal.

That's very important to know because there's so many dynamics that come into play.

When you look at and talk to receive going all the modeling and forecasting that you have to do but all else being equal probably argue that the at the reserve would come down.

Okay.

Thank you and then just one more question on theory multifamily New York talked about she does.

Pipeline and expect to expectations that you should see some stability in that.

Segment in 2020 can you talk about you know what's changed in terms of the competitive environment I thinking a couple of quarters ago, you talked about.

Seeing a lot of competition from Freddie and Fannie in that space has anything changed there.

No it's gotten worse.

But even sandy doing 10 year interest only.

Loans wouldn't get criticized by the regulators for doing the loans that they're doing.

And so in that environment, given I assume the pricing is still pretty competitive how.

How are you competing with.

In terms of pricing.

Most of the clients like the relationship.

Being the balance sheet London.

Although we can't do the 10 year.

Can you don't want to continue interest only.

Fixed rate loans, they would prefer.

They would prefer to deal with a balance sheet, London. So it's something during a period of time to get borrowing.

Occurs that needs to adjust what they're doing on borrowings you don't have to be killed when prepayment penalty.

From the Fannie Freddie I dealing with us.

Now I'd like to turn around and the fact that we the price maybe a little higher than.

And the competitors.

He still like the relationship we have.

That's a big difference between us and other banks and deal with just the Broncos.

We will deal with just a broker we won't have to be relationship.

And have been broken be part of the situation not the only.

C suite.

Okay. Thanks, Joe.

You know I wanted to I just want to say.

On a signal a there's a few other industries that we're working on comedy services supply in Congo services and training in shipping.

Some of the ecosystem that when dealing with.

Just don't I knew that on previous cool.

Thank you. Your next question is temporary Preston of Stephens, Inc.

Good morning, everyone. How are you.

Good morning Warner.

Just wanted to follow up on on C.. So appreciate the color that all else equal the reserve should.

Should trend down or could come down I'm just wanted to get a sense for you know day to provisioning and how we should think about that from here.

Quite frankly super hard to predict from you know as I said, it's gone going to be.

More volatile than a sedatives now.

It's going to be based on macro macroeconomic forecast the state in the economy, our loan portfolio composition.

And the product mix.

Mix of growth so its at this point, it's difficult for us to say.

Okay, and then on the on the deposit team front, specifically on the Cana Woods appreciate the.

The color that you know they've opened a significant number of accounts and so you know beyond deposit growth, though as we anticipate should we anticipate fee income you know what should we anticipate for fee income from that team and how should we be thinking about fee income as a proportion of revenues moving forward.

You should think that we would have a pretty significant increase into income over a 2020 and 2021.

Where we are today, it's not only vaccine also the phone banking team collects a lot of fee income.

And as since we've improved the.

The lead into less that.

That's going to.

Uh huh.

Included in the growth of fee income so the expectation that they should be double digit increase.

Okay, that's great.

And then.

So I have two more questions one's a clarification, you know I'm going back to the rent regulated multifamily and some of this still comes up and discussions of investors but.

Just wanted to clarify you know.

The size of the book and then what percent of it.

What's the portion of it that is underwritten to current cash flows.

So.

When you look at the multifamily book right that right now is 15.1 billion. It was down about 100 million.

This quarter, that's all under written to card cash flows.

So the construction and land portfolio, which we talked about earlier.

Decreased about 422 million during the quarter down to 1.27 billion. That's predominantly made up of those 80 see loans that we talked about.

And those are again those would be the ones written to forward looking cash flows, but we take significant enhancements.

Those credits, whether the rental hold backs or.

Our entry into the borrowers. So that's the part of the portfolio that I guess you'd said is underwritten to future cash flows. Okay. So it would be corrected so somebody that you know only the construction portion of that multifamily book.

Rent regulated multifamily book is underwritten to future actually construction and 80 see it gets underwritten this forward correct.

Well have enhancement to them.

Yeah, I understand that and then I guess, a bigger picture question you know.

You guys got a lot to sort of changed the composition of the company over the last year. You know you had some comments in the release that sort of alluded to all the steps we've taken in 2019, and so I guess as we think about you know the next five to 10 years, you know I understand that it's difficult to forecast, but what are you sort of expectations for you know balance.

Mix, and where you would like to be as we progress over the next five to 10 years.

Well, we certainly like to have them.

More in the West coast.

We think that in addition to here in New York is a real opportunities.

Well continue to look for niche businesses that we.

John over the last two years.

I would you still want to be looked at as a savings bank we don't.

At some point, we're doing a C ari will be compared to banks that well nothing like us.

Truly a commercial bank that goes with privately owned businesses.

That wants to be has been just wants to continue to be a deposit machine.

And we just lumped in with banks that we think we should be lumped in with.

All right great. Thank you very much on Erik I appreciate the color.

Yes.

[noise] [noise]. Thank you. Your next question is from David should have a rainy of Wedbush Securities.

Hi, Thanks, I wanted to ask about your strong deposit growth and the sustainability of that growth I was curious about.

What's the driver was in the fourth quarter was at new teams existing teams what industries and segments was at law firms any color would be helpful.

It was existing primarily be existing teams, we had some growth from a newer initiatives, but it was primarily the existing.

Teams that have been around for quite a few years.

And did anything change in the dynamics of those industries to cause you know such a strong surgeon in the fourth quarter.

No.

Nothing nothing unusual.

Got it thanks very much thank you.

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