Q2 2020 SVB Financial Group Earnings Call
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Please note. This conference call is going according I'm not trying to college Meghan O'leary Meghan O'leary you may begin.
Thank you Adrian and thank you everyone for joining us today, I, President and CEO, Greg Becker, and our CFO Dan back here to talk about our second quarter Twentytwenty financial results and will be joined by other members of management for the Q and at our current earnings release flight and Prime rate. Your letter happened filed an 8-K and are available.
The Investor Relations section of our website <unk> Dot com.
We'll be making forward looking statements. During this call actual results may differ materially I encourage you to read the disclaimer in our earnings release dealing with forward looking information, which applies equally to statements made in this call.
In addition, some of our discussion may include references to non-GAAP financial measures information about those measures, including reconciliations to GAAP measures maybe found in our SVP climbing and in our earnings release now I will turn the call over to our President and CEO Greg Becker.
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Thanks, Megan and thank you all for joining us today.
You can see from the materials, we filed earlier today that we get are very strong second quarter with outstanding balance sheet growth, including exceptional client liquidity.
No credit losses solid net interest income and very strong revenues from S. BBU Barrick.
Overall, our clients that are markets are showing strong resilience, we feel really good what their results for the quarter.
You also see they were providing outlooks for select business drivers for the second half a 2020.
While it's still challenging to predict outcomes for the year given the uncertain economic environment. We've tried to provide as much colors, we can't for the rest of the here.
With that we know you have questions. So I'll ask Adrian to open up for Q1 I. Thank you.
Thank you.
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Adrian at the Q open I didn't see any names in there.
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And our first question costume Abraham Corolla from Bank of America.
Nothing.
She got good Oh.
Hey, Brian.
Oh I guess is the first question, though they go down no I don't capital in your letter you mentioned that you have abundant capital at the holding company to downstream, but Oh would appreciate though some color that all your appetite. If you decide to go to remain strong in terms of raising common equity and also if he can talk to how.
The bank is positioned differently today than I guess 2014 scheme and you had its capital to support balance you'd go up but I'll, just being able to China deposit go its own wrote off balance sheet.
Yeah, you frame.
Dan So I'll start and Greg might want to add to it I think if you look odd actions that we took in the quarter by raising the senior debt at the holding company, if or half a billion and take a look in the overall cash position at the holding company at 1.4 billion.
That provide number one ample amount of cash ought to be able to downstream down to the bank. So if you think about it for every 100 million that we downstream that gives us about well yeah lets call 13 to 15 basis points worth of running room on tier one leverage so not all that a billion for could be downstream, but.
Good good portion could so that's number one number two from an unrealized gain perspective on the investment securities portfolio got close to 1 billion three pretax a that that's it's they're available to the extent Oh, we wanted to monetize some of that in order to grow from a capital perspective.
Oh and third maybe just look at the overall earnings of the franchise.
It's still a moving it at a pretty good clip so between all of those things that we think we've got ample resources you already sitting on the balance sheet to deal with uncertainty.
And secondly to the extent that we need to to be able to support our growth. So but I don't think that yeah. This is the same situation and we wouldn't be looking externally for capital a at this point.
Got it and this part of that in terms of all done if you can speak to how you're thinking about channeling deposits on what's it off balance sheet and you did any difference in double just how the bank is set up by you've done some hiding will be sent that Oh, how you think about moving to political balance sheet.
Yeah, I mean, I think as you've seen over the last year, we have had a our clients and your number one they are I think in this type of environment looking for more safety more security on a bank balance sheet perspective, so our products are here or products are in place and.
I think our clients are comfortable with our on balance sheet products as well as what they see a off balance sheet wise. So I think you're going to continue to see more of a desire for a fine to a drive deposits on the balance sheet and I think we oh from a like we just talked about a capital perspective.
Of are able to continue to support that and at the same time earn no I'm not not as good of a spread as I'd like to but at least a good spread on those deposits in the form of investment securities with that excess liquidity.
But the next one more did you mention about investment activity. The means they can find two large zones larger companies at the same time radixact. Good amount of cost declines this quarter I think 1500, Oh, just kind of makes a good he can side whats going on there in terms of I guess kind formation, what I see these picking up and what the outcome.
Because I do think about the back half.
Sure Ebrahim, let me answer that it is on the fundraising side clearly it is later stage. Its later stage its some ideas, but mainly secondaries. So that's that's a very active market you see that with the as to be lyric results, but as you know when we talk about new client.
Acquisitions that is mostly or almost exclusively at the early stage and so what we've been good investing it in building around or early stage practice.
First of all gotten even more focus Tonight, we developed a broader product set to bring more clients and and I have to acknowledge I think right now and Dan touched on this a little bit that when you have an economic downturn that we've seen what gets pandemic a lot of companies want to go where they view a trusted organization. So we believe that's.
For the catalyst as well in we've strengthened our team there. So overall our started banking group has done a really really good job. So the results are from that very very strong quite acquisition in the second quarter and so we're going to continue to invest in that early stage practice, we feel really really good about it so we'll see about formation and how's that.
Plays out with the balance there.
Okay. Thanks for taking my questions.
Yep.
Your next question comes from Steven Alexopoulos from JP Morgan Your line is open.
Everybody.
Hey, Steve.
I'm trying to reconcile this record gross client inflows with the exit markets clearly being disrupted.
Do they not matter the victim to take the markets I better anymore like how do you figure we saw record.
I'm sure you then growth of 22 billion this quarter given everything that's happening.
Yeah, it's there's a lot of things going on Steve and I'll start and Mike Descheneaux, Our President the bank you may want to add some color to it as well.
So the markets that had been exceptionally strong you you know the exit when I think it exit you're thinking of IPO is your M&A, but has been soft.
But when you look at secondaries, especially in healthcare life Sciences that has been exceptionally strong and that's been one of the key catalysts of the success of best would be Leerink and we think that there's a part of that's going to continue to a degree for the balance of the year. So that's one major category and that's been a big part of that quite funds growth.
Specially in the second part of the quarter.
So that's been incredibly positive. The second part is that you can still look at venture capital and so there's two pieces dollar flow.
And companies the number of companies that are getting money. So the number companies that have gotten money venture capital has had shrunk it was down a fair amount, but the dollars you saw were actually pretty strong actually very very strong.
So you benefit from the markets being very active in late stage you benefit from secondary markets and then again as I said I also believe there is a part where they want to go and put their money with a trusted organization. So all three of those things have really been strong strong catalyst and yeah, we benefited from that.
And the numbers were pretty extraordinary.
Greg anyway, maybe one thing that I believe it or a couple of things that maybe when you think about the dry powder as well and the venture capital Arena as well, it's still incredible levels. There. So they are able and willing to deploy particularly now as we you know when the first started in the covidien environment, its little bit tougher to kind of guy.
Page and in that but the venture campus I working through entry ice and some of their company starting to focus on the winners as well too and starting to adapt to get more comfortable with deploying the dollars out in the marketplace. So so again they have that dry powder that they can put to work. Some other things that we saw obviously the stimulus money has put a lot of cash money out of the seven system, whether its PPP or somebody other.
Strong things the government has done well certainly has helped the environment for sure and then you start to think about burn rate slowing as well to write the people were getting smarter about.
What money they have left for the rest of year I'm trying to say look do I need to save it or not so the combination all these factors that Greg described these few other things and really the combination of the strength of liquidity there.
Mike is having leerink, helping you when we saw the press releases. They put out is that helping get more that secondary money into your bank is that if we definitely harmony with they've they've been good partners. Obviously, when they have a relationship or we have a relationship with the client and so we certainly have great products and solutions for our clients and so yes. It does open up.
Yeah, I mean, we've had really good success rate a with our clients.
Okay, and then on credit I think marks probably there what were the what was the number of early stage abandonments this quarter, how that compared to last quarter and then when we look at the two NPL. The severity seemed high you call. These one offs or is that the outlook should we have more defaults and those books. Thanks.
Sure, Steve It's Mark I'll start and data Greg May wish to add so in terms of the number of investor abandonment, so to speak probably a better way to think about the quarter Steve is.
In terms of the charge offs in the new nonperforming loans.
You can see charge offs were.
Really pretty low in the quarter.
And.
Granular investor dependent.
Didn't show up the same degree, but again, it's a very small number and so there's not a lot you can really take away from that.
Part because it's there's one.
Roughly $4 million charge off in there that kind of dominate the investor dependent segment of it.
And then going to new nonperforming loans.
We have a handful beyond the large to that I'll come back to in a moment aircraft is what I would call. The typical granular early earth investor dependent but largely early stage and in terms of the the numbers are those I don't have an exact count on them, Steve, but I think when you take the.
The two bigger ones the out of the new nonperforming next what's left is.
That larger number going to the two large ones I think it'd be fair to say that both of those are examples of businesses that were significantly therapy disrupted by coveted or efforts to stem the spread of covert 19.
At the same time.
So from that standpoint, I would say a bit.
Nobilis to the extent that the arrival of Cove, and knocking companies over suddenly as Bob anomalous.
And here I'd say just on the largest of those.
We are encouraged that the moment I'm working as we always do with sponsors and management.
To work together to try to get beyond this and back to a place where the business can recover recognizing that you have this was severely disrupted and so there's some degree of uncertainty hanging over that as I think is just typical of of the entire environment right. Now so it's out there Steve hope I'm answering the question you're asking.
Yes.
Very helpful. Thanks for taking my questions.
Good.
Your next question comes from Ken Zerbe from Morgan Stanley Your line is helping.
Great. Thanks.
I guess my question in terms of guidance what line items that you did give guidance on was it.
Non interest expenses of nine to bind 30.
It seems like we're missing kind of a rather important piece, which is probably leerink, because and I totally understand the link gets if they make more money they should get paid more money. It makes sense, but can you comment little bit about what your expectations are for leerink, because if that doesn't.
Do fantastic in Threeq, you that seems like your expenses.
Probably unusually high.
Thank you.
Hi, This is Greg I'll start and then turn it over to Dan.
Can clearly what you just said as a key component of the expense outlook, which is the variability and it is mix. It is a percentage of revenue. So the way the payout ratio work. So the way the earnings work. It's a it's a function of how well they do and obviously they did really well second quarter and obviously you guys can look at the press releases into the third.
Quarter and see that there's that momentum is continuing into the third third quarter.
So thats part of it.
There are other components.
The vast Dan to comment on that or.
A onetime in nature that are going to be impacted either from.
Q2 that were onetime expenses or even in Q3 in Q4 thatll be onetime expenses, but the other component is.
Again, as we've said before.
For for years, we're continuing to invest in the business because we certainly believe we have many many many opportunities and that's in quite experience employee enablement driving revenue growth. All those things are continuing to a two to invest behind that but I think the majority of it.
Actually relates to Leerink and some of the onetime things off Dan to comment on that.
Yeah. Thanks, Thanks, Greg So it really there are three things. So if we could just baseline the expenses for the second quarter first.
As Greg mentioned, there were some exceptional items in the quarter SVB lyrics performance professional services for the Paycheck protection program and higher levels of incentives at the bank for performance. So all of that represented let's call. It approximately 70 million. So the baseline of costs. If you look at and here in the range of four.
15 for 25 for the quarter.
From there as Greg mentioned, we continue do expect to invest in the franchise as a way to think about it is and on a quarterly basis something on the order of magnitude between 2% to 2.5% expense increase just for the investments and then finally, we do expect continued strong performance for Lee rank in the markets in which the.
They operated for the remainder of the year and on top of that we have the paycheck protection program professional fees and a donation expense of roughly 20 million in the fourth quarter.
So those are all the moving pieces that lead to Ken what you pointed out was what looks like a higher expense guide.
In the second half.
Got it okay that does help quite a bit.
And then just the other question in terms of your guidance for core fee income.
It obviously was weaker this quarter I think some of us may have been expecting.
Mike If we were to troop draw a corollary to what other banks are saying about their fee income, which I know, it's totally different but.
We're seeing a lot more activity a normal customers or.
Using their cards and it seems that most other banks are seeing sort of an increase in that core fee line and correct, yes years is different than theirs.
What are you seeing that gives you confidence that you're not going to see a rebound in your core fee income.
In a meaningful way in second half because after you were on such a good trajectory.
Prior to the pandemic.
So.
Ken I'll take it and Mike might want to add to it if you look at where the growth our core fee income has come over the last couple of years a lot of it has been driven by that very strong client fund.
Growth now that is rate sensitive. So we certainly saw that come off in the quarter.
Down into the 12 basis point range, we do expect that that's probably going to settle out in the high single digit so even as we continue to add client investments.
Is that overall spread income that we earn there is going to continue to contract. So that's going to be a headwind.
At the same time, I think our business activity in foreign exchange in cards.
It's been off meaningfully in in the second quarter down in the 20% range on both of those we may start to see some small rebound in those areas as the markets pick back up but at the same time, you're going to continue to see that pressure from the client fund fee income. So I think that's how we're getting.
To our view on how things are going to look here in the second half Mike I don't know if you have anything else to add.
Got it May just if you think that think about Ken.
Obviously, a lot of it depends on the level of activity in the economy right with the economy, Let's just say the volume levels of activity are down Thats certainly impacting our business. So you can start with credit cards for example.
A lot of our clients use the credit cards for travel and that's a significant part of the spend on the credit card and so thats down significantly as well too so depending if we start to see travel picking back up that will certainly help there certainly we're shifting to other areas, where they're spending but it's going to take some time. Then you think about foreign exchange, we had an incredible first quarter thats at a number of the comparison.
For Q1, Q2 that little bit tougher comparison and that certainly was impacted in Q2 with respect that there's less deal activity cross border investments as well too which is having an impact on the FX as well, so again with people, becoming a little bit more resilient and returning back I mean do deals you could start to see some foreign exchange pick back up but again, it's still obviously.
Challenge in this environment here and the dad was covering the client investment thesis, while too given the fact that thats very rate centrica rate oriented and again, our volumes are up significantly no doubt but of course the margins are down in both respect interest rates and then somebody on the deposit service charges as well too we certainly have higher volumes the deposit, but that's also meaning people.
Getting higher levels of earnings credit as well to offset some of their their transactions at plus activity and payment volumes are suddenly down in this environment, but nonetheless again I think it does tie back to the environment and we obviously, all keeping a watchful eye and and hopefully it can be as a bit more recently the second half.
Alright, great. Thank you.
Your next question comes to Jennifer Demba from Suntrust. Your line is open.
Hi numbers.
Yes. Thank you.
Just a question on.
The nature of your net charge offs could you give us a little bit more detail.
In color on this charge offs. Thank you.
Yes, so as noted before.
You in a number our gross number was around $15 million.
And that was concentrated in one balance sheet dependent loan that represented about a third about another.
Almost third of the gross and one investor dependent life Science credit.
And the rest after that.
Pretty granular and relatively speaking concentrated mainly in investor dependent.
When you look at your higher loan portfolio vastly different from any of your regular commercial banking peers that are there any particular segments.
Falling a bit more sensitive.
This pandemic than others, I'm thinking, maybe specifically the wine portfolio or or other parts. Thank you.
Sure. So I think is as we've mentioned before investor dependent and particularly the early stage and the but I would characterize is probably our most vulnerable clients Bob given that the early stage their cash burning.
As as we've noted in the past historically speaking that has were and where the bulk of our losses come from in periods of economic stress and and we think of the bones of time that will probably be the same pace.
After that there are a number of businesses in.
Various technologies segment that served industries, most disruptive try travel hospitality things like that.
And so those.
Fortunately our.
You were a number in terms of the ones that have been severely.
Impact and then you mentioned wine.
Certainly.
We were very concerned coming into this.
We would not have given the shutdown to tasting room revenue of restaurant revenue.
Our wind borrowers would be very severely impacted and I think the combination of.
Relatively speaking stronger performance in the second quarter than we expected coupled with PPP and in some cases.
Owners infusing cash as well.
That portfolio. So far is looking better than we might have expected recognizing again that theres a lot of uncertainty Holt hanging over the second half parts of California, gelling, either rolling back the phase three opening or pausing and to some degree that may continue to be a source of stress for our.
Wind borrowers.
But again that I think remains to be seed.
Thank you.
Your next question comes from Jared Shaw from Wells Fargo. Your line is open.
Hi, good afternoon.
Hey, Gerry maybe.
Maybe just looking at the at the early stage book.
When you look at the potential severity of loss do you still feel that thats.
Where we.
Similar to where it was in past cycles or some of the improvements and I'm sort of client interaction in underwriting do you feel that that could help.
The limit severity of loss and then also what's the.
Remaining lots of liquidity as far as you know in the early stage book.
Sure I'll start Dan or Greg, Mike They want to.
Jump in on the so maybe a good way to think about it is just.
This downturn relative to the global financial crisis, I think that the good place to start and generally speaking coming into this downturn.
Venture backed investor dependent companies had on average.
More liquidity and where I think in a better positioned to weather. The storm and then a number of things have happened to make that liquidity situation better still right PPP loans, our programmatic deferrals payment deferrals.
Companies were pretty quick.
To reduce expenses that helped as well and then finally investor support as Ben.
Much stronger frankly that I recall seeing in the last downturn and the combination of those things have I think on average put quite a bit of runway in front of the average investor dependent company and you see that of course reflected in the lower losses that we experienced in the second quarter.
So those are I think some some key differences and one of the reasons why.
We have some cautious optimism.
Yes.
Oh, there's still a lot to go and a lot of uncertainty.
I hope is that we will.
Do better and again emphasis on hope that we did and the global financial crisis I'll stop there I'm sorry, you had a second part to your question on underlying alike.
With the remaining months of liquidity is in the.
Yes, so that is a statistic, we do track, but have not disclosed and so I'm going to resisting urged to do it here.
Well again say from a.
Generally speaking liquidity for this cohort better that's tied for the reasons I mentioned that in the global financial crisis.
Okay. That's great color. Thanks, then I guess.
Looking at the capital call lines a.
A little bit of a pullback this quarter can you just comment generally about on.
On.
The the trends there the new fund formation, I know theres, a lot of dry powder on the existing funds, but the new fund formation as well as the the change in the competitive landscape in that product over the past few quarters.
This is Greg I'll start and Mike made would add.
So couple of things one is.
New fund formation as we've talked about for larger funds has actually been pretty good.
You can look at the numbers.
From pitch book or other things that we've talked about and they've actually been pretty healthy right. There was a concern that.
It was going to slow down dramatically and I think that's especially for larger more established firms, which a lot of PE firms are.
People have gotten comfortable Lps have gotten comfortable.
In this virtual environment and so the closings actually been been pretty good.
As far as competition and competition overall, I mean, it's still a competitive market will be thinking about how we have have shown up I give or teams a huge amount of credit they've been incredibly effective we've had very very very little turnover and we'd be able to add new clients along the way so.
The the function of where we are from a volume perspective is more about just overall activity levels.
As we said at the beginning of last quarter, we thought there would actually be greater decline in private equity volumes from an outstanding perspective.
But it was actually.
Held up but held up pretty well, so we're going to watch and pay attention to the balance of the year.
But you don't feel pretty good about about where we are very good about where we are from competitive positioning perspective.
Thank you.
Yes.
Your next question comes to John Kerry from Evercore. Your line is open.
Good afternoon.
Hey, John.
The other question regarding the or your commentary on charge offs. I know you expect you indicated you expect them to be elevated in the second half.
But if you can give us some idea on the level that you would be pointing to in terms of elevated would that be.
A significant amount from where we're at now it took 32 basis points.
Yes, Mark I'll start and probably finish on Thats, what as noted in our materials. We believe there is just too much uncertainty to provide any reliable guidance on on that particular topic in south.
The big off the question at least this quarter.
Okay and I know you also in that same comment you indicated that.
You do need to be elevated you do.
You indicated that are largely reflected in your current loan loss reserves.
But I when I go back to where you gave the detail of the loan loss provisions for this quarter of the 66.5 and you indicated that tenant a half million of that 66 and a half.
Was related to charge offs that were not reserve for so what does that 10 and a half million what type of charge offs are you seeing now that we're not in your Cecil lifetime Reserve.
Sure.
So it's mark I'll start and.
The it's rare outside of Investor dependent early stage to see.
Credits devolve quickly into loss.
He said that I think as we'd all recognize these have been highly unusual times and that one balance sheet dependent credit I mentioned earlier, roughly a third of our gross charge offs falls into that category of severely and very rapidly.
Disrupted and that is.
At $5 million roughly half of the unreserved charge off number the rest is what I would characterize as.
There's one other borrower in there I would characterize as in trouble before cobot arrived and co bid finish the job.
And the rest are what I would characterize as again severe and sudden disruption.
So said another way, it's it's rare that we would find ourselves in a situation with with two thirds of charge offs.
Unreserved is pretty rare, but again. These are then extraordinary times.
Got it Okay. That's helpful and then on the reserve where it stands now I know you added 50 million to the reserve.
This quarter. So just wanted to get a an idea to you given that and given what you just mentioned around credit do you expect any incremental additions to the reserve from here or do you think.
Substantially represents your outlook at this time.
Yes, well.
As I mentioned earlier.
We are not providing credit guidance given the high degree of uncertainty and so by virtue of that difficult to provide any guidance on what further provisioning over the balance of the year might look like.
Okay, No that's understandable if I could just asked one we're also on credit, but do you have your level of criticized assets or for the quarter, how that's changed.
As we note in our material criticized loans did increase in the quarter, but remain.
At relatively low levels from a historical standpoint.
Okay alright, thank you.
And our next question comes in for Chris Mcgratty from KBW.
Great. Thanks for question.
Greg with Leerink strength in the quarter I'm kind of back into what kind of profitability truck at the bottom line.
Look like the revenues are up about 100 million the comp callout.
Is it kind of in the 50% range that we think about in terms of are increasing costs associated with leerink.
Hi, so I'm going to give you some high level of comments, Chris laminates into to share just perspective.
Were the comp ratios that we have with them are pretty consistent in the industry at least what we have leased we have seen as we were looking at the deal. This is a year and a half ago.
Number one number two.
We have structures in there so that there is some additional if they perform really well there's some additional.
Burnout capabilities, which they have hit and to be honest very happy they are hitting those those are not level. It's good to great side in there and what they are delivering.
I think one way to think about it is when you're at these elevated levels were probably around that pre tax profit level of kind of an that 15% to 20% range.
You look at it and so take a look at the revenue and if it stays at these more elevated levels.
Even with the earn out your on that you're in that range. So.
It's been very very great from a contribution perspective and feel really good about what they're delivering and they're just doing incredibly busy which is nice to see.
And then Greg.
And Chris just to add to it just looking at on a pretax basis would drops is this quarter 55 million for Leerink and that compares to about a million in the first quarter. So.
Obviously, but a big change, but thats absorbing all of the comp that Greg was mentioning.
Great.
Maybe one more on just the outlook for capital call group. Some of your peers Carter numbers, this quarter and exit or somewhat up somewhat down.
Maybe just a little more color on activity in terms of what might drive your forecast for loan growth to be on either side of conservatism.
Yes. This is I'll start.
Chris and I think.
One of the ways to think about it is we're we're staying very focused and what I'll call the middle the middle market category.
Thats, what our teams are exceptionally good at its what they really understand what they're not chasing or what I'll call. The the funds that are.
$10 billion, plus where the margins are low in the size of extended so you had to put in place our substantial. So yes. These are larger loans that we have.
But.
As I said earlier the teams have done an excellent job of supporting clients being there for them, providing that information insights about what's going on.
And adding new clients and so really.
The given the market share that we have for the most part the dramatic change in volumes is going to be a function of activity levels and.
So as activity levels pick up we certainly believe that Youre going is continued to see loan growth back on a consistent trajectory that we see historically, but until that gets back to what I would say is normal.
It's just more uncertain. So it's very it's more difficult to predict Mike you may want to have some additional commentary.
No not a whole lot add there Greg I mean, I think we are keeping true to how we underwrite as well too I mean, certainly in the market competitive environment that it is something you are seeing some banks that might be doing some things that we don't feel comfortable with such as funding prior to call or getting higher limits on a size the fun versus the line.
So there's just a variety of different things, but again the team is doing really well, they're bringing in new clients as well to integrate really the key point is when we start to see levels of activity pick up that's when you're going to continue to see the strength, but again, it really solid portfolio.
Great. Thanks, Indiana, So make sure I heard your at the the fee rate on the client funds usually covances once this conference.
Where we ended the.
The second quarter, we expect as we head into the third quarter to be in that lets call. It high single digits Ranch.
Okay, great. Thanks.
And our next question comes from David Smith from Autonomous your line is nothing.
Thank you good afternoon.
Hey, David.
Back on the on the BDC loans could you speak a little bit about how unfunded balances for those loans have trended since when to you and how your utilization has gone well you're able to grow committed mines at least in the quarter. Despite the loss lessen balances.
This is Greg I want to us Mark to comment on that Mark may have those numbers.
Hi, Andy.
Mark do you have that.
Hi.
So March March I can I can see voices out little bit its sound is off.
So I don't I think they.
Actually I would just say we don't have the Peter right now on so we can follow up on it you'll see that in our.
10-Q, when it comes up.
Great. Thanks, and then your assumptions for.
The PPP loan forgiveness seems like that went up to 75% versus 50% to 65% last quarter.
Thing, particularly concerned about what what drove that increase.
Yeah. This is Dan I think that as you look at how the SP a in the rules have been changing the extension of the.
The items that are available for forgiveness and the timeline.
The amount of.
Weeks and months that are available.
Make us feel like there is just going to be more dollars.
That are eligible for forgiveness. So.
That's the that that's the right. The reason in the rationale for the shift in the amount that we expect to be forgiven.
Sure makes sense.
And I think you can share about the.
Pipeline for.
For Leerink.
In terms of deal volume over the next quarter too.
Yes. This is this is Greg.
As we have found out pipeline for investment banking is very hard to predict more so than part of almost anything else. So it's really a function of activity levels, what what I've said to people.
Inter quarter when they ask me, how it's doing and obviously, we can't share the numbers I said just pay attention to the press releases.
That should be Leerink is printing and you clearly saw last quarter. It was incredibly active and I think you'd see so far this quarter.
It's been very active so if you wanted indication of how well they are doing again in a broad level thats, probably the best the best indicator.
I would just generally speaking on top of that.
Look when you think about the healthcare life science market and biotech specifically theres still lot of momentum, but as we know with public markets IPO, where secondaries. It can change very quickly so trying to predict what that's going to happen with public markets for secondaries and Ipos is.
I would say that would be very challenging for us to to do but.
Super Happy with the team really happy with what they've done and feel really good about the market share they have.
Yes, certainly incredible quarter. Thank you.
Great. Thanks.
This concludes our question answer session on that kind of caught that covenant, Greg Becker for final remarks.
Great. Thanks Adrian.
I just wanted thank everyone for joining us today, we're obviously so feel really good with the performance in second quarter and feel good in our ability to manage effectively through these challenging times.
Obviously, there is still a lot of uncertainty out there and it seems like every day there is changing information about closures and what may happen. So the crystal ball is pretty cloudy from that perspective, but as we pointed out we're in the best financial position, we've ever been in and have their resources expertise to.
We believe effectively execute and support our clients.
Before I think our team and our clients I just want to add a few comments on the inclusion diversity and equity at FCB and the innovation economy.
So let me start with SVB.
Well I'm incredibly proud of SVB in our team.
We have much more work to do around making SVB more diverse more inclusive and more equitable company.
One of our values that we talked about on a regular basis is embracing diverse perspectives into really live that value we need to do better. This is something we at all levels of the company had been focused on.
Particularly in recent weeks.
Secondly, I want to talk about the market that we serve which is the innovation marketing innovation economy.
We know the numbers in the market knows the numbers in there good on the innovation economy.
Many groups are underrepresented in the investment founder and worker categories of the innovation space. So while we've issued reports highlighting these these issues I just would say I know that we haven't done enough.
To lead change.
What we're working on the details of the how we'll do this I want to let everyone listening know that where we'll be doing more driving change and be more transparent and holding ourselves accountable.
So as I always enemies calls I want to thank our employees.
They do such an incredible job their dedicated passionate and creative and how they help our clients something we don't talk about that much. They've also just done an incredible job in core operations, just really making sure that businesses run smoothly.
Every ESRD beer has a role to play and make a difference and so I just want to thank them.
Also want to thank our clients.
Zoes say their trust and willingness to give us an opportunity to show than what our long term partnership mindset is.
Great and we think thats, especially been true in this difficult time right now.
And finally, our hearts and thoughts are with everyone who's been personally affected by this crisis. We wish you all good health and safety and with that.
We're going to close thank you.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating in May now disconnect.
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