SVB Financial Group
Q1 2013 Earnings Call Transcript

Published: 26 Apr 2013

[Operator:]

Good afternoon. My name is Kyle, and I will be your conference operator today. At this time, I would like to welcome everyone to the SVB Financial Group First Quarter 2013 Earnings Conference Call. [Operator Instructions] Ms. O'Leary, you may begin your conference.

[Meghan O'Leary:]

Thank you, Kyle, and thanks, everyone, for joining us today for our first quarter 2013 earnings call. Our President and CEO, Greg Becker; and our CFO, Mike Descheneaux, are here to talk about our first quarter results. As usual, they'll be joined by other members of the management for the Q&A. I would like to remind everyone that our current earnings release is available on the Investor Relations section of our website at svb.com. I will caution you that we will be making forward-looking statements during this call and that actual results may differ materially. As usual, we encourage you to review the disclaimer in our earnings release dealing with forward-looking information. This disclaimer 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, may be found in our SEC filings and in our earnings release. [Operator Instructions] And with that, I will turn the call over to our CEO, Greg Becker.

[Gregory W. Becker:]

Thank you, Meghan, and I thank all of you for joining us today. In the first quarter, we delivered a strong performance and continued to make progress on our growth strategy. We posted net income of $41 million and earnings per share of $0.90 versus consensus of $0.88 per share. Our performance compares favorably to the same period last year when we delivered net income of $34.8 million or $0.78 per share. Highlights from the quarter included 20% annualized loan growth, average loan growth. As we expected, period-end loan balances were effectively flat due to paydowns of capital call lines of credit, which were elevated in the fourth quarter for tax-motivated reasons. We also delivered very healthy credit quality, a higher net interest margin due to lower premium amortization expense and a strong growth in FX and credit cards. Overall, it was a very good quarter. Our clients continue to do well, and we are executing on our strategy of winning clients early and staying with them as they grow, providing products, services and solutions that can scale with our clients; and expanding globally. Let me start with clients. SVB has built a reputation over its 3 decades for being a great partner to innovation companies. This reputation and our track record of helping clients succeed give us a significant competitive advantage with clients at all stages. That advantage was clear in the first quarter as we continue to add new clients, book new loans and expand existing relationships at a very healthy pace. For example, this first quarter was one of our strongest ever for early-stage client acquisition. We added 438 new early-stage clients during the quarter, compared to 352 in the same period last year. We have seen no slowdown in new company formation. Our clients are benefiting from healthy levels of what we think of as innovation capital. Innovation capital comprises funding from angel investors, seed-stage funds and corporate venturing groups, as well as traditional venture capital investing. We are more than maintaining our strong market share of startups, and we are working successfully to make sure our market share includes an even higher percentage of the best, fastest-growing startups that will become larger growth stage and corporate finance clients. To illustrate how this works, of the 66 venture-backed companies that went public in the last 15 months, 41 were SVB clients. These fast-growth companies use more products and services. For instance, the majority of those clients that went public invested their IPO proceeds, some $2.6 billion, into SVB's off-balance sheet products, which generate fees for us. And of course, borrowing from larger clients has driven the majority of loan growth in recent quarters, as we've outlined before. So you can see, how capturing companies at their early stages creates a built-in pipeline for growth and capturing the best companies can accelerate that growth. In the same vein, we have steadily improved our pace of new client wins in corporate finance, that is clients with revenues greater than $75 million. We are winning 20 to 30 new corporate finance clients every year, effectively double the pace of 3 years ago. Now that may not sound like a big number compared to our early-stage client acquisition, but if you consider there our larger client relationships are anywhere from 10 to 20x more profitable for us, it represents important momentum. Our ability to win more of these larger clients as a result of our ongoing investment in the products and services that our clients need as they grow. We saw continued solid growth during the first quarter in 2 of the most in-demand products among our larger clients

[Michael R. Descheneaux:]

Thank you, Greg, and good afternoon, everyone. Let me start off by saying that we are pleased with our first quarter performance. The quarter included strong average loan growth, high credit quality, an increase in our net interest margin and growth in certain key fee income lines. Despite continued pressure from low interest rates, we are off to a good start in 2013. There are 4 items I want to highlight today

[Operator:]

[Operator Instructions] Your first question comes from the line of Herman Chan from Wells Fargo Securities.

[Herman Chan:]

With 2 former high-level executives of the bank now focused on Asia, what's the longer-term opportunity there? If we were to fast-forward, say, 10 years from now, what's that business going to look like?

[Gregory W. Becker:]

So Herman, this is Greg. I'll answer them. I guess, Dave and Mike may want to chime in. So from a long-term perspective, there's really 2 things that I would look at as far as the opportunity in China for us. Clearly, one is the domestic business for the innovation companies, venture-backed companies, technology companies that exist and will be growing in China over the next 5 to 10 years. And as you know, that's what our core competency is here in the U.S. The second part, and I think sometimes we gloss over this, is that you look at companies in the United States, so technology companies. And I would say they are anywhere from small companies up to companies of a level of $400 million or $500 million plus revenue. As they expand into Asia or have relationships in Asia, one of the things that we found that they're looking for is a strong, trusted partner in the market. And if we can play that role in the joint venture, we certainly believe there's a big opportunity for that. Now how big is that? How big will it become? Honestly, it's hard to predict exactly what that will look like. But clearly, we believe it's a big enough long-term opportunity that we have. We're committing, as you said, 2 very senior people to the initiative and expect to have that commitment for the long time.

[David A. Jones:]

Herman, this is Dave. I think that one of the things that's important for a startup, and I acknowledge that what we're doing in China is much of a startup, is execution and process implementation. And that's a significant challenge for us, and we do not want to regret having not dedicated enough resources to it. So my commitment is to work with and make sure that we're not short of the resources we need for the kind of execution the market deserves.

[Herman Chan:]

Understood. And my second question, with interbank [ph] exit slowing and the pace of fundraising sort of muted, it seems like the activity within your core customer base is slowing. However, in your prepared comments, you did seem fairly optimistic. How do you sort of reconcile those 2 views?

[Gregory W. Becker:]

Yes, Herman, so this is Greg again. I'd say there's a couple of ways to think about it. We look at it as this constant innovation capital being one. And that's -- it's really important because it's not just venture capital. Venture capital is a core critical part of it. And I agree with your points that clearly fundraising from venture capital has slowed down, no question about that. But when you look at the level of corporate venturing that's coming in, when you look at the seat funds that are being put out there, when you look at the level of Angel funding that's coming in, all those things contribute to this innovation capital which we, again, feel is very healthy. The secondary point to that is when you look at the capital that it takes to form companies today, it's a lot less. So you're seeing companies form with very, very little capital and get to revenue much more quickly. Literally, it could take a 10th of the level of capital that it did a decade ago. So we looked a lot at company formations, which is why as I said in my prepared remarks, we look at the number of companies we're bringing in at the very early stage. And at the very early stage, for the third year and fourth year in row, since we've really spent a lot of time tracking it, we've seen very strong growth in that number. So part of our point of view is the number of companies we're bringing in, part of our point of view is that we're doing a better job of tracking the total innovation capital. And the last part of this is what's happening in the market, which is companies are just running more efficiently with less capital. So I agree with your point on the venture capital side, but we're taking, I'd say, a more broad-based approach to -- with the help of the market.

[David A. Jones:]

And Herman, this is Dave. I think a better measure to watch, as opposed to the dollars, because as Greg is indicating, depending upon what is innovative at the time, some companies require more capital than others. We're right now in a part of the cycle where new companies can be started and managed to cash flow breakeven off of smaller dollars. I think the number to watch instead of dollars is the number of rounds that are closed on a quarterly basis. And what you will find is that there's a long history with roughly 800 or 900 companies every quarter closing on rounds, and that indicates that the volume of opportunity is not decreasing.

[Operator:]

The next question comes from the line of Julianna Balicka from KBW.

[Julianna Balicka:]

I just wanted to ask in terms of the securities portfolio, are there any new comments in terms of the yields on your reinvestments, how much they're decreasing each quarter? Or any particular remarks as to durations or anything like that?

[Michael R. Descheneaux:]

So just the 2 few -- 2 of the high-level comments. One, the duration is about 2.4 years. So it hasn't really changed a whole lot since the prior quarter. In terms of reinvestment yield, they're approximately around that 1.5%, so it's a touch below the current yield that's on our portfolio, but again not too, too far. Also, the downward progression that we had seen over time, assuming to be tempering, as you know, as I mentioned in the prepared remarks, that we were certainly helped by the reduction in the premium amortization expense for the quarter.

[Julianna Balicka:]

Okay, very good. And then a follow-up to your remarks about the deposits being down in the quarter, and 1 quarter does not make a trend. But in terms of seasonality, is there any seasonality we should thinking about there or not really?

[Michael R. Descheneaux:]

I could start off and Greg or Dave can maybe -- perhaps add. I don't really think as so much as the seasonality for at least for the deposits, but the one thing I perhaps suggest to consider is the runoff we had in fourth quarter was so strong. And I mean, we grew several billion dollars in that fourth quarter. So this could be just a little bit of tempering and kind of getting back to normal level for things after settling down such a rapid run up. Setting back a bit, and that's what we talk a little bit about the total client funds, over all is that -- look, there's still a lot of cash and deposits running around our different clients. In fact, we saw our average total client funds increase to over $1 billion in the quarter. So again, it still looks very healthy. Again, as we said, 1 quarter doesn't make a trend. You'll certainly keep an eye on it. But the positive result, as we mentioned on the capital ratios as well too, has certainly helped our Tier 1 leverage ratio at the bank go up to 7.35 for the first time in over 2 years or so. So again there's some positive results to that, but we'll certainly keep an eye on it.

[Gregory W. Becker:]

Yes, the only thing I would add, Julianna, is just from the standpoint of -- again we spend a lot of time just looking at this total client funds and think it's in the right direction. If you just take -- try to temper the fourth quarter a little bit, and I think that's prior way to think about it, the trend line actually would still be, from my standpoint, still headed in the right direction. Plus, again, this is part of our strategy. We've been talking about that we've seen we would expect to see some tempered deposits for quite a while. And finally, we're starting to see it. So we're not surprised by it. And again, we look at the total client funds as an indicator of the health of the overall market.

[Operator:]

Your next question comes from the line of Steven Alexopoulos from JPMorgan.

[Steven A. Alexopoulos:]

Maybe as my first question, many banks out there are talking about competition for lending being taken up quite a few notches here in the first quarter. Could you comment as you continue to build out the mid-stage market share, you need to be more competitive on price and how should we think about this flowing through to pressure on loan yields?

[Gregory W. Becker:]

Yes, Steve, this is Greg. I'll start and then Dave will probably want to add. As I said in my comments, Mike said in his comments, clearly, we're seeing a very competitive market, and we've kind of talked about that all of last year even part of the year before. And we've clearly saw that in the first quarter. And as we sit back, and from my standpoint, this isn't a surprise. We've talked about the fact that there really isn't a lot of growth in the consumer side of the business, the retail side of the business and say you're going to see a lot more competition in the commercial side or wholesale side. So that isn't a surprise to us. Again, what we've been doing for many years is building on 2 things. One is making sure that we're doing everything we can to add more value in a differentiated way to our clients. That's number 1. Maybe a couple of examples is some of the different events that we're doing. And the second part is what we can do from a product set perspective to make it very easy for our clients to do business with us. And whether it's our Net Promoter Scores, whether it's the feedback on the new mobile application we're rolling out, we're getting a lot of really positive feedback, plus my comments also about some of the awards that we've won in either international area or other cash management. So it is competitive. It's a dogfight out there, to be honest. And again, it's not a surprise to us, and we're doing everything we can to make sure that we're maintaining and actually growing our market share.

[David A. Jones:]

And Steve, this is Dave. And I'll just expand on one thing that Greg mentioned, and that is the product side of it. So we don't want to think about the lending opportunity by solely focusing on the interest rate and the loan fees. What we want to do is we want the entire banking relationship. So the companies that are going to find the better competitive environment are also the companies that are going to be producing more cash flow, more fee opportunities. So it is for us an all-in value of that client, not just strictly on the loan rate.

[Steven A. Alexopoulos:]

Okay. And maybe if I -- that's helpful. If I could just ask one follow-up. Greg, in your comments, you said that new early-stage clients acquire up, looks like 25% or so year-over-year. Is the market actually growing that fast, or is just your share expanding here?

[Gregory W. Becker:]

Steve, so no, I don't think the market is expanding that fast. Although I do think it's expanding faster than what people would believe. And that's part of what we said earlier. Just the ability to start a company today is easier from a capital perspective. It's easier from a technology perspective, and so more companies from our standpoint are being started. So that's clearly a part of it. Another part of it is I think our 2 teams are just doing, quite honestly, an excellent job of being in the right place in the right market, whether it's we had teams of people down at South by Southwest, we're getting really close to a lot of the key incubators and accelerators. And just making sure that we're there and working with them, adding value, building relationships at a very early stage. So it's really a combination of both those things that's driving that 25% growth.

[Operator:]

Your next question comes from the line of Joe Morford from RBC Capital Markets.

[Joe Morford:]

On the lending side, I wondered if you could comment a bit more on the loan pipeline, specifically how you saw billed through the quarter? And also, if you could comment on the mix, including if capital call-ins are again a big part of that?

[David A. Jones:]

Sure. So Joe, let me start that. In the quarter, as expected, we saw the capital call activity fall off. Period end to period end, it was roughly $400 million decline. As you look at the period end numbers, total loans were only down $100 million. So there were $300 million of incremental loans in other areas. And an important factor for that is capital call loans, as you all know tend to be very short. A lot of them, not all of them, but a lot of them, 10- and 20-day outs, versus a lot of this other business would be out, in a lot of cases, the entire 90 days of a 90-day quarter. So having that kind of growth puts us with a good platform for the second quarter. I also look at what we have been saying and the loan approval loan committee process for the last several weeks, and we continue to see good quality opportunity at that corporate finance, the buyout level. Now it's not all about corporate finance and buyout. Every part of our business is seeing growth as was discussed with Steve a moment ago. Early-stage are small loans. So a lot of them wouldn't necessarily make a huge difference in terms of overall volume. Middle-stage are bigger, but still it takes a lot of them to make for huge. But if we have a few of the buyout corporate finance loans that fund at a $25 million level, then it doesn't take quite so many of them to provide the kind of growth that we need in our guidance for low 20% growth.

[Joe Morford:]

Okay, that's very helpful. And then the other question is for Mike. You touched on this a bit, but I just -- your guidance for net interest income assumes premium amortization levels similar to the first quarter. Since period end, we've seen tenured yields down, and I was just curious, have you seen prepayments increase again or is that already taken into account with your new guidance?

[Michael R. Descheneaux:]

Yes, we've taken into account at the moment. But to your point, it can move up and down. But again we obviously raised our guidance, so we feel fairly confidently going forward based on levels we're at.

[Operator:]

Your next question comes from the line of Brett Rabatin from Sterne Agee.

[Brett D. Rabatin:]

Wanted to get a little more color, if I could, basically asking a previous question in a different way. If we're thinking about linked-quarter loan yields, they were down 20 basis points. And if I heard it correctly, 13 of that was lower prepaid fees this quarter. Would it be reasonable to assume the pace of pressure on loan yields aside from prepay is similar going forward? Or should it increase just given the competition?

[Michael R. Descheneaux:]

At this juncture, I think it's -- you're probably going to see a fairly consistent trend going down. Again, it's partly competition, but it's also a little bit of a loan mix. Because when you're seeing some capital call lines, they're actually at a much lower rate, a primer in that neighborhood as well, too. So it's a little bit of both. But again, I think you can kind of see that glide down over time as kind of that similar trend. But again just considered the mix of the type loans we're doing.

[Brett D. Rabatin:]

Okay, fair enough. And then the other thing I wanted to get a little more color and if I could was just on the fee income guidance, and kind of how you changed at this quarter given the lower yields on certain products. It doesn't seem like rates have changed too much, can you talk a little more about just the product sets and the investment fees that you're essentially seeing decrease relative to your previous expectations.

[Michael R. Descheneaux:]

Yes. Let me just try to put it in perspective a little bit. We adjusted the driver outlook from the mid-teens to low teens. So really we're talking about 2%, 2.5% decline in the outlook. And when you're looking at the number, you're talking about $3 million, $4 million, $5 million, somewhere in that neighborhood, again just kind of a range. But really the key driver is coming from that investment piece as I alluded to in my prepared remarks. But specifically, when you look at the repo transactions that we're facilitating for our clients, the yield in that area has just been down quite a lot in the first quarter. So when there's only 3, 4 basis points for our client, there's just no way you can really capture much of the fee for ourselves as well. So that's kind of big driver. So when you think about that kind of investment fee number being down some $1.5 million, $1.6 million in the quarter. You kind of extrapolate that out for the rest of the year. You're looking at $3 million, $4 million, $5 million a year. So again, we just wanted to tweak it a bit. But again, it is real and repo rates are absolutely down.

[Operator:]

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

[Ken A. Zerbe:]

Maybe just more of a broad theoretical question. Is there anything that we sort of externally to the bank kind of look at it even a sense of a taste of growth in the VC market or how that's trending up on any given quarter just given that obviously you had the 400-ish million dollar decline in capital call lines. Is there any way that we would know that ahead of time or have an index to at least get a sense of it?

[Gregory W. Becker:]

So Ken, this is Greg, and then Dave may want to add something. So we obviously have internal information that we look at that we kind of track to give us little bit of an indication. But really, from a public perspective, the best data that you're going to look at is going to be anything related in National Venture Capital Association data. And there are some other 2 or 3 different groups out there that kind of track it. But outside of that, honestly, there really isn't public data and it wouldn't be something that we would obviously share within the quarter to give -- to get that information. So...

[David A. Jones:]

And Ken, this is Dave. I guess one other thought that we've talked about in prior calls is timing is everything. Again, with capital calls tending to be out 10, 15, 20 days at a time, a transaction closed on say, December 10, 2012, might have been repaid by December 31. So depending upon when the transaction is closed, close to quarter end, they can make a big difference in terms of $100 million, $200 million or $300 million. I guess I'd also say that on the capital call side, we have a huge market share for the venture capital side and we have a building market share good, but building market share on the private equity. The difference in size is significant. So a venture capital firm making an investment could be anywhere from, say, high 6 figures to high 7 figures versus a private equity firm making an acquisition, the capital call could very easily be several tens of millions of dollars. So the one thing that I think can be watched with less than perfect information is just what maybe said generally about the volume of M&A transactions and particularly the business involved in the private equity side.

[Ken A. Zerbe:]

Got it. But again just to be super clear, you guys, do you feel about good about the refund and capital call lines going into the next sort of the rest of the year versus what we saw this quarter?

[Gregory W. Becker:]

Let's put it this way, Ken. There's nothing out there that we would point to that would cause us to change our point of view about an average capital call borrowings and so forth. Again, it was just down from last quarter. But again, as we predicted, last quarter was elevated, and we expected this quarter to be down, and that's how it's laid out. And so do we think it will rebound? I think you have to take a little bit of an average point of view from a quarter-to-quarter because again, you could literally have the -- concerning how large these deals are, and they only are out for 10 to 20 days. If you're looking at a period of time, point of period end, you could end up with some spikes. So there's nothing that we see that will cause us to change our outlook for what we see from capital call lending.

[Operator:]

Your next question comes from the line of Gaston Ceron from Morningstar.

[Gaston F. Ceron:]

I just wanted to address one quick point, which is one thing you mentioned is it looks like on the release you guys said that the concentration -- it looks like the concentration of loans to large clients has come down a little bit. I'm talking about the loans to any center clients greater than $20 million [ph]. I think that went down about from $3.1 billion to $3.0 billion. I'm just curious, what you would expect somewhere over the longer term, if I think you said it earlier in your comments that in startup activity what not you're seeing companies being started with less amount of capital these days, so would you expect then that concentration of loans to kind of larger clients kind of go down overtime?

[David A. Jones:]

And Gaston, this is Dave. So some information in terms of the clients with funded balances, $20 million and larger. For the December period, there were 103 of them. For the March period, there were 100 of them. So nearly the same number. The significant decline, as you might expect, and well I guess as you see with the disclosure, is and what happened with the private equity lines of credit, and again that's the capital call. So there, as I indicated with a response to Joe, you can see that there is a little bit of growth in some of the other areas. So I think that there's nothing to read in that decline in the first quarter. I think that the kinds of trends that you would have seen first and second quarter, third quarter of last year might be more indicative of what you could expect to see going forward.

[Gaston F. Ceron:]

Okay. And then very quickly, just a follow-up on [indiscernible]. A lot of your loan growth has come at a time when frankly the economic recovery that we've seen has been tepid to look warm. I'm just -- you've seen pretty nice longer when you say that the sector continues to do well. I'm just curious, what your expectations would be [indiscernible] recovery ever really kind of pick up speed. I mean, obviously you would expect you would -- I would think you would expect kind of longer to trend higher, but you seem pretty healthy as it is, so...

[Gregory W. Becker:]

Yes, this is Greg. And loan growth from a standpoint of, if you look at it the last several years, a part of it has been clearly coming from the low point from a lower point from a lending perspective. And part of that's kind of -- that being built back up. If we weren't -- if this market were to stay where it is right now, again, we got it towards 20% average growth this year. Could that slow down a little bit in '15 or '14, '15 and '16? Yes, I think so. But clearly if the market picks back up, it would be the higher end of that range. And so we're fortunate, whether it's 20% on average or even a little bit less than that or a little bit more, the technology innovation market is the market that is outpacing the rest of the economy, and we're fortunate to be so concentrated in that space that we benefited from that. And that's really what's been driving the growth and will continue to drive the growth.

[Operator:]

The next question comes from the line of Jennifer Demba from SunTrust Robinson.

[Jennifer H. Demba:]

Just wanted to get some color on the loans outstanding you have overseas. Are the majority of those in the U.K.?

[Gregory W. Becker:]

Yes, Jennifer, this is Greg. And yes, they are. And again, these are rough numbers, but $500 million in outstandings. You're looking at roughly $400 million, almost $400 million is coming from the U.K., a little bit less than that. And from that standpoint, again, as we've said, that's a growth area that we expect to continue to outpace the rest of the business. We feel very good about that for the reasons we've articulated in the past that the market over there is -- big banks over and the U.K. are still pulling back. And it's not -- we're looking across all the different segments. Whether it's early stage, mid stage in corporate finance private equity services. So we've been able to grow in all those areas. And that's what's appealing, that's what's driving the growth, and that's what we believe will continue to drive the growth.

[Jennifer H. Demba:]

Could you envision dedicating more resources to that particular team like you are in China, given the European banks retreating?

[Gregory W. Becker:]

Yes, it's a little bit since a fewer people in the U.K. right now than we do in the China joint venture for a couple of reasons. One is think about it in a joint venture we're literally building a new bank, So you need all the infrastructure, you need all the compliance, you need all the teams of people there. And that's one aspect of it. But in the U.K., it's a branch, so it's a little bit different, although we have dedicated a lot of resources to it. And we expect that this growth rate that will continue to add resources to it as they are not only needed, but to be able to support what we believe is going to be the growth that would be faster than the rest of the business. So short answer to your question is yes, we will be allocating additional resources to the U.K.

[Operator:]

Your next question comes from the line of Aaron Deer from Sandler O'Neill.

[Aaron James Deer:]

I think most of my questions were answered. I just have one that I wanted to touch on. Rather than the sequential change -- basis point change in the prepayment fees, Greg, can you give the actual dollar amount of what those fees were in the quarter and whether that was running maybe below what the average level is, which typically you might see?

[Gregory W. Becker:]

Aaron, I'm going to Mike answer that question. He's -- he got the numbers in front of him.

[Michael R. Descheneaux:]

Are you referring to the investment securities premium amortization?

[Aaron James Deer:]

No, actually on the loan book.

[Michael R. Descheneaux:]

Yes, on the loan book. So yes, we actually recently added a disclosure in our press release, which you can refer to. But this quarter, total loan fees were about $16.8 million versus last quarter of $19.5 million. So yes, that's a delta of about $2.7 million, but the bulk of that, the $2.5 million out of $2.7 million, relates to prepayment or acceleration of the loan fees, if that's helpful.

[Gregory W. Becker:]

So I think -- this is Greg, I think we actually are done with the questions, so let me just wrap up real quick. In the short summary is that from a good quarter perspective, we're pleased where we ended up in the quarter from a number's perspective and continue to see growth which we are obviously excited about, number one. Number two, from a progress perspective on our growth initiatives, whether it's corporate finance, whether it's the globalization, building on our products and services, again, we continue to make progress along those lines. And again, as I said, what we felt good about is not only do we feel good about our products, our clients feel good about it, but also we're getting some acknowledgment from the grenaches [ph] of the world about what our products are and how they're doing, so we feel good about that. Regarding Dave's moving to China, I think all of us, I know all of us from the team are excited for us that we have to see a seasoned senior person that is going to be over there with Ken to build out the Asia practice. And for those people who haven't spent as much time with Dave over the years, what's great about Dave is that what's allowed him to be so successful over the last 16 years in his role is that he hasn't just been a Chief Credit Officer, he's been a business partner. And clearly, we believe that's what going to allow him to be successful in Asia and allow us to be even more successful in Asia, and so we feel good about that. And the fact that he's built up an incredibly strong team of people to include Mark on the credit side, so we don't believe we're going to miss a beat on that side either. So that's great. And last point I will make is that all of us, again, feel really privileged to have such great clients and great employees at SVB. And again, the combination of those 2 things, along with our strategy, is what excites us for the long term. So with that, I want to thank everyone for joining on the call and have a great day.

[Operator:]

This concludes today's conference call. You may now disconnect.