Signature Bank
Q1 2017 Earnings Call Transcript

Published: 19 Apr 2017

[Operator:]

Welcome to Signature Bank's 2017 First Quarter Results Conference Call. Hosting the call today from Signature Bank are Joseph J. DePaolo, President and Chief Executive Officer; and Eric R. Howell, Executive Vice President, Corporate and Business Development. Today’s call is being recorded. At this time, all participants have been placed in a listen-only mode and the floor would be opened for your questions following the presentation [Operator Instructions]. It is now my pleasure to turn the floor over to Joseph J. DePaolo, President and Chief Executive Officer. You may begin.

[Joseph DePaolo:]

Good morning and thank you for joining us today for the Signature Bank 2017 first quarter results conference call. Before I begin my formal remarks, Susan Lewis will read the forward-looking disclaimer. Please go ahead, Susan.

[Susan Lewis:]

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 are subject to numerous risks and uncertainties relating to our operations and business environment, all of which are difficult to predict and may be 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. 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. These factors include those described in our quarterly and annual reports filed with the FDIC, which you should review carefully for further information. 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. Now, I'd like to turn the call back to Joe.

[Joseph DePaolo:]

Thank you, Susan. I will provide some overview into the quarterly results. And then Eric Howell, our EVP of Corporate and Business Development will review the Bank's financial performance in greater detail. Eric and I will address your questions at the end of our remarks. Signature Bank delivered an exceptional quarter of growth and performance, resulting in another quarter of record earnings. We again saw a solid deposit in loan growth, expanded top volume revenues and maintained overall strong credit quality notwithstanding challenges in our taxi medallion portfolio. I’ll start by reviewing earnings, net income for the 2017 first quarter reach to a record 133.9 million or $2.48 diluted earnings per share, an increase of 29.9 million or 29% compared with 104 million or $1.97 diluted earnings per share, reported in the same period last year. Excluding net tax benefits of 14.4 million, net income for the quarter would have been a record 116.6 million or $2.15 diluted earnings per share. The considerable improvement in net income is mainly the result of an increase in net interest income, primarily driven by strong deposit in loan growth as well as reduced taxes. These factors were partially offset by an increase in non-interest expense attributable to our revenue growth initiatives as well as regulatory and compliance cost. Looking at deposits, deposits increased 1.1 billion or 3% nearly 33 billion this quarter, and average deposits grew 581 million. Since the end of the 2016 first quarter, deposits increased 4.8 million and average deposits increased 4.6 billion. Non-interest bearing deposits of 10.2 billion represented 31.1% of total deposits. The strong deposits in loan growth coupled with earnings retention led to an increase of 5.4 billion or 15% in total assets since the first quarter of last year. Now let’s take a look at our lending businesses. Loans during the 2017 first quarter increased 980 million or 3.4% to 30 billion. For the prior 12 months, loans grew 5 billion and represent 74.6% of total assets compared with 71.8% one year ago. Turning to credit quality, now withstanding the taxi medallions portfolio, our credit metrics remain strong this quarter. We saw a decrease of 17.5 million in our 30 to 89 day pass-through loans to 91.4 million while 90 day plus pass-through loans also decreased 14 million to 42.8 million. Non-accrual loans increase to 226 million plus 75 basis points of total loan compared with 157.6 million or 54 basis points to 2016 fourth quarter and 105 million or 42 basis points to the 2016 first quarter. The increase was driven by restructured New York taxi medallions loans. A decision was made to place these loans on non-accrual, which allows all payments made to reduce outstanding principal. It is essentially to note that approximately 62 million of non-accruing taxi medallion loans are current. Excluding taxi medallion loans, non-accrual loans are just 21 million or nearly 7 basis points of total loans pretty astounding. The provision for loan losses for the 2017 first quarter is 19.6 million compared with 22.2 million for the 2016 fourth quarter and 19.8 million for the 2016 first quarter. Net charge-offs for the 2017 first quarter were 9.2 million on an annualized 13 basis points, compared with 13.5 million or 19 basis points for the 2016 fourth quarter and 7.8 million or 13 basis points for the 2016 first quarter. The allowance for loan losses was 0.75% of loans versus 0.74% in the 2016 fourth quarter and 0.83% for the 2016 first quarter. Additionally, the coverage ratio remained supportive at 99 basis points. Just to review teams for a momentum, we have a private client banking Group Director to an existing team in the first quarter and one team thus for joined us in the second quarter. Our key pipeline remains active, and we look forward to the opportunities for attracting talented banking professionals to our network. At this point, I’ll turn the call over to Eric, and he will review the quarter's financial results in greater detail.

[Eric Howell:]

Thank you, Joe, and good morning everyone. I’ll start by reviewing net interest income and margin. Net interest income for the first quarter reached 301.8 million, up 23.4 million or 8.4% when compared with 2016 first quarter, and an increase of 2% or 4.9 million from the 2016 fourth quarter. Net interest income when compared to the linked quarter was affected by a decrease in pre-payment penalty income of $3.2 million and approximately $5 million for two less days in the quarter. Net interest margin decreased 18 basis points in the quarter versus the comparable period a year ago and remained stable on a linked quarter basis at 3.14%. Excluding pre-payment penalty income, core net interest margin for the linked quarter increased 3 basis points to 3.09%. The linked quarter increased in core margin is due to an increase on yields on securities portfolio and two less days in the quarter. And let's look at asset yields and funding cost for a moment. Interest-earning asset yields decreased 12 basis points from a year ago and increased 3 basis points from the linked quarter to 3.64%. The increase in overall asset yields was due to a slowdown in premium amortization on securities and an increase in loans as a percentage of the balance sheet. Yield on the securities portfolio increased 5 basis points linked quarter to 3.04% given the slowdown in premium amortization on securities from slowing CPR speeds and stronger reinvestment yields. The duration of the portfolio remains stable at 3.69 years. And turning to our loan portfolio, yields on average commercial loans and commercial mortgages declined 3 basis points to 3.87% compared with a 2016 fourth quarter. Excluding pre-payment penalties from both quarters yields would have declined 2 basis points. Now, looking at liabilities, our overall deposit cost this quarter increased 2 basis points to 44 basis points, mostly due to an increase of 2 basis points in money market cost, driven by selective increases to certain deposit clients. Average borrowing increased to 738 million to 3.1 billion or only 7.8% of our average balance sheet. The average borrowing cost decreased 7 basis points from the prior quarter to 1.37% due to the lower cost nature of shorter term borrowings. Overall, the cost of funds for the quarter increased 3 basis points to 56 basis points. And onto non-interest income and expense, non-interest income for the 2017 first quarter was 1.9 million, an increase of 1.4 million when compared with the 2016 first quarter. The increase was driven by growth in most non-interest income categories were partially offset by an increase in other losses predominantly due to low income housing tax benefit investments. Non-interest expense for the 2017 first quarter was 103.2 million versus 92.3 million for the same period a year ago. The 10.9 million or 11.8% increase was principally due to the addition of new private client banking teams and our continued investment in growth of Signature Financial as well as an increase in costs in our risk management and compliance activities. The bank also incurred increased FDIC assessment fees. The bank’s efficiency ratio slightly increased to 33.1% for the 2017 first quarter compared with 32.2% for the 2016 first quarter. The increase is mostly due to lower pre-payment penalty income as well as increased by FDIC assessment fees. And let’s discuss taxes which had a few moving pieces this quarter. Our tax expense this quarter included $14.4 million net benefit associated with the reduction from the New York City tax base of net interest earned on qualified affordable housing and low income community related loans in accordance with legislation enacted in 2015 impacting the 2015 and 2016 tax years. This reduction will benefit our effective tax rate in future period as well. Also we received the tax benefit of 2.9 million related to the first quarter adoption of new stock-based compensation guidance. This item does not impact our perspective effective tax rate; however, we will see this impact each year as stock-based primarily in the first quarter. And turning to capital, our capital ratios all remained -- all strengthened this quarter and then remained well in excess of regulatory requirements and augment the relatively low risk profile of the balance sheet as evidenced by a Tier 1 leverage ratio of 9.61% and total risk-based ratio of 13.57% as of the 2017 first quarter. And now, I’ll turn the call back to Joe. Thank you.

[Joseph DePaolo:]

Thanks, Eric. As we begin 2017, which marks our 16th year in operations. Signature Bank grew another quarter of solid financial performance. The 2017 first quarter saw record earnings as well as both strong deposit and loan growth. Additionally, this quarter we appointed a private client banking Group Director to an existing team and in April in fact just this week, we added one private client banking team. We remained focused on growing our network by continuing to attract veteran bankers who can flourish at Signature Bank and in turn provide the level of service to which their clients and our clients have grown across them. Now we are happy to answer any question you might have. Crystal, I'll turn it over to you.

[Operator:]

The floor is now open for your questions. [Operator Instructions] Our first question comes from the line of Dave Rochester with Deutsche Bank.

[Dave Rochester:]

You guys had some nice growth this quarter. But just wondering how the loan and deposit pipeline was at quarter end and how those compared to levels going into 1Q? And then just on deposits specifically I was just wondering, if you think that, that in the period growth is going to stick around and you'll grow that from here?

[Joseph DePaolo:]

I'll start with deposit first. The flows, the flow rates in and out rather large. So, one quarter doesn’t necessarily affect the other all the time. We'll stick with that. We have a lot of opportunities. We have quite a bit of new clients on-boarding, and deposit for those on-board clients was soon to be onboard the clients or rather large, coupled with the new team and the new Group Director we've brought on-board both deposit gathers. It bodes well for us on the deposit side. On the loan side, we're looking for a little bit more diversity than what we've had in the past. In the first quarter, we had about a 185 million growth ex in the activity in taxi. We had a 185 million in growth including the Signature Financial and Signature Financials quarter, first quarter is usually their slowest traditionally. So, the second quarter bodes well. What we've said in the past, in the recent past I should say is that we've been looking for the asset side of the balance sheet to have a little bit more floating rates that's where the C&I comes in, and we wanted to grow the investment portfolio as well. So that concluded in the 4 billion to 6 billion.

[David Rochester:]

And in terms of the loan pipeline just rough side now versus what it was going into the last quarter. I mean it sounds like there might be a little bit stronger, but just I don’t want to put words in your mouth. What are you guys thinking there?

[Joseph DePaolo:]

I would say it's about similar.

[David Rochester:]

Okay, great. And just switching to the NIM, I know you guys have talked about the part of pricing pressure recently. But the numbers you told ex-prepay this quarter was stronger than you guys have predicted. Just wondering has that deposit pricing pressure intensified it all post to the March hike? And how are you guys thinking about the NIM beyond the stronger update here?

[Joseph DePaolo:]

Look, deposit pricing pressures are always there. It's always competitive, but clearly we are able to overcome it with deposits increasing over $1 billion, and we're seeing our deposit cost just go up 3 basis points on average from the prior year. But we anticipated with each Fed move that pressures to be greater and that’s certainly the case, but it's in line with what our expectations have been. For the NIM moving forward really going to be flattish from this point and the near term for the second quarter day count affects us negatively. So, probably some 1.5 basis points positive this quarter for the NIM due to day count proceed negative basis points for the second quarter due to day count. From now on, we are really going to be flattish at these levels.

[Dave Rochester:]

Okay. And what are you assuming for rate hikes and the 10-year going forward?

[Joseph DePaolo:]

We are looking at two more rate hikes in the 10 year to really kind of down from these levels, so that's difficult to predict.

[Dave Rochester:]

Right, exactly. So in terms of the rate hikes one like mid-year and then one end of 3Q-ish?

[Joseph DePaolo:]

Pretty correct, yes, three to maybe early four.

[Dave Rochester:]

Perfect. Then one last if I could to some expenses. Are you guys still thinking that 10% to 15% range for year-over-year growth is good? And are you still thinking that you will be in the bottom of the range?

[Joseph DePaolo:]

Well, yes. We are maintaining our expense guidance 10% to 15% given the volatile regulatory environment that we're in, and we're hopeful that we're at the low end of that range.

[Operator:]

Our next question comes from line of Steven Alexopoulos of JP Morgan.

[Steven Alexopoulos:]

On your favorite topic Joe, taxi, and maybe Eric, if you give us the rundown of balance of New York, I know Chicago small now, maybe hit on NPLs in each market reserves. And I don't know if you had any medallion sales in this quarter?

[Joseph DePaolo:]

Yes, the balance, we've done a pretty good job of knocking the balance overall down, down by 36 million. This quarter was down over 30 million to prior quarter. So, we continue to twiddle that. In New York, the balance is 537 million with an associated reserve of about 9% of $48 million. So, the net exposure is down to 489 million. Chicago, our net exposure of reserves is down to 42 million, and we have 1 million left in Philadelphia net reserves. So, total 532 million which is a pretty sizable decline from prior quarters.

[Steven Alexopoulos:]

Well, any medallion sales in the quarter?

[Joseph DePaolo:]

We did not sell any in the quarter. There were three in New York, actually 19 medallion sales in Chicago. So, we see the market firming up there a bit. Those 19 sales averaged 64,000, which is north of our $58,000 carrying value. So, that was good to see. The New York sales averaged -- we're really looking at one foreclosure at 550,000 to place more value in that. The two other sales were in the state sale and a driver who retired and left the country and it's all cash sales, so it was pretty depressed. Our cash flow which is really what we're utilizing to the value medallion remained pretty stable. We actually looked that medallion value is going back to their peak. It averaged medallion value or medallion cash flow for revenues, is down 14.9% from their peak in 2012. And so, it certainly doesn’t lead to a 50% drop in values that we've seen. So we're really keeping eye on cash flows more so than anything else, and with a 15% decline from the peak, we're not all of that concerned at this point. But we will continue to provide, we will continue to charge off. We've received principal payment every single day and we will just keep on twiddling way these balances.

[Steven Alexopoulos:]

And Eric, on the increase in the non-performers this quarter in taxi. What was that drove that? Were the defaults there that drove that?

[Eric Howell:]

No. Actually, not at all, but cash flows are getting a little bit tighter there, and we just felt that it was more conservative taking accruing TDR. So, they are already in our TDR numbers and moving those accruing TDRs to non-accrual. We just felt that was more conservative and now that allows us to take every dollar of repayment and apply to principal.

[Steven Alexopoulos:]

Okay, that's helpful. Just to circle back to the comments around deposits. I'm really surprised looking particularly the money market deposits. There, you're not seeing more of an increase there with several hikes now behind us. Are you seeing more pressure building to start raising those rates?

[Joseph DePaolo:]

You know what. We've raised the rate at the very end, almost the last day of the quarter, some of the rates. So, we wouldn’t see that reflecting in the first quarter. You would see that more reflected in the second quarter.

[Steven Alexopoulos:]

Okay, so we'll see in the next quarter. Thanks and if I could squeeze one more in. Eric, you've talked about maybe a lower tax rate going forward. Can you help us think about the effective tax rate where we should be?

[Eric Howell:]

Yes, we've had an effective tax rate about 40%, which I guess going to dropdown to 39%. So, at least 39% will go forward.

[Operator:]

Our next question comes from the line of Casey Haire with Jeffries.

[Casey Haire:]

Eric, I wanted to follow up on the medallion. We can all see the fair box on the TLC website and to your point it is, it's under pressure but it's not catering. At what point, are we still good or you guys are still okay with the $20 million provision per quarter outlook? And at what point -- at what kind of pressure do we have to see on a cash flows worse than that 10% year-over-year before that provision goes up?

[Eric Howell:]

That level of provisioning really anticipates to 10% to 15% reduction in cash flows, year-over-year going forward. As I've said, we've only seen cash flows impacted by 15% since 2012 in totality. So, it's reflective of a fairly significant declines continuing. So, we need to see something more to 20% before we impact that $20 million provision number.

[Casey Haire:]

Okay, great. And then just switching back I guess to the -- I guess the NIM and growth outlook. On the securities book was -- I think you guys are targeting 10 billion for the year approximately very, very small build this quarter obviously yield curve is not -- has not worked in your favor, but any updated thoughts on what the securities book will look like end of year? I mean it looks like where given the strong loan growth that we're looking at a more favorable mix of loan growth versus securities?

[Eric Howell:]

Well, I mean, we wouldn’t necessarily say that that’s a more favorable mix. I think this curious portfolio brings us significant amount of liquidity, which is very important for our deposit base. So, we want to continue to grow that securities portfolio that brings other aspects to us. It's not all just about the NIM. So, we anticipate that we're going to growth that book between 200 million to 400 million per quarter.

[Casey Haire:]

Okay, great. And just so I am super clear on the tax rate, Eric, to be the -- if I add back the [14.4] that gives me a 37% tax rate, but it sounds like you expect that to stick?

[Eric Howell:]

We do. You also have to back out the one-time adjustment, the [EPIC] adjustment as well. So, when you factor that into the equation, I think it gives you back to 38.3% tax rate and to be conservative we're saying used 39% going forward.

[Operator:]

Our next question comes from line of Lana Chan with BMO Capital.

[Lana Chan:]

Could you give us an update on just the overall CRE multifamily market in New York, any changes due to competitive environment and demand overall particularly with the cash out re-fi market?

[Joseph DePaolo:]

The most recent effect has been that we reduced our rates slightly. I am interested on the five year. Right after the election or right around the election, we were -- five year fixed was at 3 and 3.8, and from that point on move last week, we have raised it a number of times in multiples of an 8, and it went from 3% and 3.8% to 3.78% to 4%. That was the range 3.78% to 4%. And this week, we drop that 3.78% to 4% to 3% and 3.25% to 3.78%. And that was just simply the gap between what we were charging and what our competitors were charging. Usually, we're about a 0.25 to 3.8 higher and we were above half higher. So, we've brought it down so that we would be little bit more competitive in terms of interest rate. In terms of competition, nothing has really changed in the last quarter or so.

[Lana Chan:]

And the secondly, I think in the past you've given some numbers around classified criticized assets for the quarter. Do you have those over 1Q?

[Eric Howell:]

No, we'll have to wait for tax year to come out in that.

[Operator:]

Your next question comes from the line of Ebrahim Poonawala with BOA Merrill Lynch.

[Ebrahim Poonawala:]

Just a follow-up in terms of I guess, Joe, if you can talk to in terms of the health of the multi-family market in terms of the borrowed demand that you're seeing and I understand your willing, your desire to change the loan mix, but how sort of the underlying market have you seen a slowdown in re-fi activity? And your ability to sort of get as much growth that you won despite sort of the competitor landscape?

[Joseph DePaolo:]

The ability -- well, let's take this later. The market is still very active. We want to have more diversity, but wanted to have more diversity doesn’t necessarily mean, if there is less or more competition. We see everything being pretty much the same as it has been with the exception of the interest rates that I just talked about with Lana. We drop that rate a range of about an eight on either side of the range. Although, we anticipate less prepayments and I'll give an example, this quarter our prepayment income was actually lowest that's been in five years. So, I don’t know if that indicative of the re-fi markets slowing down. But if you think about the re-fi market in the last number of years, a drop in refinancing, they've been able to drop the rate decline, they've been able to take out more cash. And if once you do those two, one other thing left is to extend the number of years which they're trying to do at certain times to go from 5 to 7 years. But there is a little bit of a slowdown on the re-fi activity, but it is no slowdown in terms of total activity. It's just our desire to have more diversification on the asset side. Like Eric just said, we want to grow the investment portfolio and there are a number of very strong reasons to do that. And we want to have C&I because we want to have more floating rates, particularly, if rates going to rise, we want to have some floating rate. That doesn’t mean that we are still not going to have greater opportunities to continue to growth the CRE portfolio which is pristine. So, in a nutshell I would say that it's not any more or less competition than it has been in the last several quarters.

[Ebrahim Poonawala:]

Understood. And just as a follow-up on deposit pricing just because it has been sort of quite an issue on the stock recently. I get your point in terms of release rate at the end of the sort of first quarter. And should we expect pricing on deposits to be more a factor of how quickly and how frequently the Fed raise is interested? Or is the market and the smaller banks within sort of the New York market getting more competitive, which is sort of -- which will probably cause you to the rates like how do more those factors play into your decision?

[Joseph DePaolo:]

Well, it's clearly a combination of the two. Our belief is that the frequency of the Fed raising rate hasn’t effect. And what I mean by that is, the more frequent the rate increases are by the Fed the more it's top of the -- top of mind to our clients. The less frequent it's like the less frequent the rates rise, we are going to have clients to get in between the rate rising and there will be more of a lag. So, when we were talking about two rate increases, my goal would be not May not June, but September or October. And then another one in December because that gives us a chance to lag the increase even more so because when they come back in September from vacations, it won't be a top of in their mind. So that’s one piece. And then there is the competition, we're seeing three or four banks increased their rates, one or two other banks have been doing teaser rates. And we try to point that out to the bankers because it's not a rate that we have to compete against. I think what you're seeing smaller institutions, not the too big [Indiscernible] institutions, but the smaller institutions are the one that are raising their rates because they want deposits, so truly a combination of both. But we have a saying here that, we get one short at a client, so it's going to cost us a couple of basis points on a money market account. If we're getting the DDA to bring in the client, you should bring in client. You should build franchise value, bring in the deposits, and not worry so much about the effect of how on a NIM, and we're rather saying that is because it's for cheaper to Signature Bank to bring on a client than it is for another institution to bring us on a client. If you look at our efficiency ratio, right. So, the fact that we may payoff three or four basis points more on an account on average. The cost to bring that over is far less because we don’t do cold calling. We have teams they're efficient because of the relationships that they have and going to have the cost involved of retail and advertising. So, look at this way, how much is the cost to Signature Bank to bring on a client and a deposit versus everywhere. And in every instant, you will look at net interest income and forget about the NIM. Look at the net interest income and how much we building deposits. And that we just think too often everyone gets caught up in the NIM. And I’ll get myself off.

[Operator:]

The next question comes from the line of Ken Zerbe with Morgan Stanley.

[Ken Zerbe:]

Just wanted to ask, you mentioned that you want more diversity in the assets side of the balance sheet. Obviously, you're increasing variable rate loans, probably variable rate securities as well, like how fast can that actually be done? Obviously, if you are cutting your rates on the CRE side, presumably you're still having a lot of the longer durations CRE assets, but how should we think about the changing your assets sensitivity or liability sensitivity I guess over some short or medium period?

[Eric Howell:]

Well, it's going to take a while, Ken. I mean we have a substantial amount of five to seven year duration CRE loans. So, it's -- we are moving a ship here. But we have to start at some point, right, so if we can have a more diversified growth profile, that’s what we want to do. And ultimately, it will be great to see securities at least to stay stable at that 20% of assets and then grow at variable rate loans and Signature Financial to be anywhere from 15% to 20% of the asset each. But that’s going to -- it's going to take a while.

[Joseph DePaolo:]

It's going to take a while because they're still going to put on commercial real estate. We should have a pipeline in commercial real-estate. It's a pristine asset. It's something that we believe we're the best at in the market that we're in, in New York. And when you're at the best at, you're going to continue to do it. So, I think Eric hit on the right work, the growth profile. We have to move the growth profile.

[Ken Zerbe:]

Would you guys consider, I guess expanding Signature Financial in a meaningful way or making potential acquisitions of more variable rate lending teams?

[Eric Howell:]

Absolutely, I mean we've brought on some teams that have more of the lending profile. We certainly added to Signature Financial over the years with municipal finance or franchise finance and other lines, and we will continue to look to do so. We're now talking to a couple of C&I related teams now, so -- and as it relates to acquisitions or portfolio acquisitions certainly in that space, it's something that we wouldn’t shy away from them.

[Joseph DePaolo:]

In fact, we will be sending a press release out in the next day or so about some hires we've made at Signature Financial. So, hope, it'd be growth of these institutions.

[Operator:]

The next question comes from the line of Jared Shaw with Wells Fargo Securities.

[Jared Shaw:]

Could you just given the breakdown on the other categories of loan growth this quarter I think Joe you've said 185 million was that just Signature Financial, I guess if you could just give us where we are in CRE Signature Financial and C&I?

[Joseph DePaolo:]

Sure, CRE grew at 484 million in the quarter, multi-family grew 311 million in the quarter, traditional C&I grew 112 million in the quarter, specialty finance grew at 72 million in the quarter but that's not inclusive of taxi medallion loans declining by 42 million in the quarter. So, those are the primary categories, the rest are in consumer and SBA-related activities.

[Jared Shaw:]

Where did the commercial real-estate concentration end in the quarter?

[Joseph DePaolo:]

I don’t have that number but I think it remained fairly stable.

[Jared Shaw:]

Okay, so now to think another big move.

[Joseph DePaolo:]

No, not at all.

[Jared Shaw:]

Okay, and then looking -- just going back to the deposit side, and Joe, you had said hoping to try to -- you would rather to see the hikes takes place further out the calendar. But what point do you start seeing that deposit data so if hit trigger where? Is it the absolute level of rates where customers start pushing forward as opposed to just the liquidity of rate hikes or again closer to seeing a higher beta on some of the stuff associated with money markets stuff?

[Joseph DePaolo:]

Well, I mean for the -- I would say after we have the third raise of 75 basis points, we saw more activity with that than we did in first two clearly. So, I think after the third one that coupled with the teaser rate out there kind of what to the clients mind act -- hey, wait a minute, rates should be rising and so we were able to delay, I thought pretty well. You'll see in July when we release second quarter earnings, you'll see the one-third in that. But going back to what I said earlier, I'm not worried about the increase in the money market rates because you get a chance to do a number of things. You get a chance to bring on a quality client and you get a chance to bring on DDA. So, every time we raise the money market, there is also bringing one more DDA, we have over 10 billion of it, which in -- I remember when we were running a public national bank, I think the Group that we ran most DDA we had was 2 billion. So, we're five times back here. So, we will build the franchise value and not worry too much about that as always we can keep our costs well, keep our efficiency ratio where it is. We feel pretty profitable and the fact that which you can't bring in on new teams. We hope by the second quarter earnings, we'll be talking about other teams coming on-board.

[Jared Shaw:]

Okay, thanks. And then just finally, Eric, you had said that you moved all the TDR, New York City TDR taxi loans to MPA. What percentage of the New York City book has now been restructured?

[Eric Howell:]

Let's see, TDRs in New York right now is about 135 million of the overall balance, which is right around 500 million.

[Jared Shaw:]

And then as if you -- as you have more restructurings going forward, what would be the expectation be with those are also immediately just move to non-performing?

[Eric Howell:]

Most likely, if really -- we look at each individual restructure, but most likely it will go on the field.

[Jared Shaw:]

Okay.

[Eric Howell:]

It's not by any means of given.

[Operator:]

This concludes our allotted time and today's teleconference or as the Q&A session. I’ll now turn the conference back to Mr. DePaolo for closing remarks.

[Joseph DePaolo:]

Thank you for joining us today. We appreciate your interest in Signature Bank. And as always, we look forward to keeping you apprised of our developments going forward. And Crystal, I’ll turn it back to you.

[Operator:]

Thank you, sir. This concludes today's teleconference. If you would like to listen to a replay of today’s conference, please dial 1800-585-8367 and refer to the conference ID, 5412803. A webcast archive of this call can also be found at www.signatureny.com. Please disconnect your lines at this time and have a wonderful day.