Signature Bank (SBNY) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Signature Bank's 2013 first quarter results conference call. With us today are Joseph J. DePaolo, President and Chief Executive Officer, and Eric R. Howell, Chief Financial Officer. During today's presentation, all parties will be in a listen-only mode. Following the presentation the conference will be open for your questions. (Operator Instructions).

This conference is being recorded April 23, 2013.

I would now like to turn the conference over to Joseph J. DePaolo, President and Chief Executive Officer. Please go ahead, sir.

Good morning, and thank you for joining us today for the Signature Bank 2013 first quarter conference call. Before I begin my formal remarks, Susan Lewis will read the forward-looking disclaimer. Please go ahead, Susan.

Thank you, Joe. This conference call, and all 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 rate 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 and uncertainties and assumptions that could cause actual results to differ materially were those in the forward-looking statements. These factors include those described in our quarterly and annual reports filed with the FDIC which you should read -- review carefully 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 would like to turn the call back to Joe.

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

2013 started off on another solid note, with stellar deposit growth and strong loan growth, which led to a further transformation formation of our well-capitalized balance sheet. Loans are now 56.7% of total assets, and we have maintained solid credit quality. This led to top line revenue growth and our 14th consecutive quarter of record earnings.

I will start by reviewing earnings. Net income for the 2013 first quarter reached a record $50.6 million, or $1.06 diluted earnings per share, an increase of $8.3 million or 20% compared with $42.4 million, or $0.90 diluted earnings per share, recorded in the same period last year. The considerable improvement in net income is mainly the result of an increase in net interest income, driven by continued core deposit and loan growth. These factors were partially offset by an increase in non-interest expense.

Looking at deposits, deposits increased $718 million to $14.8 billion this quarter, including core deposit growth of a $582 million. In the past 12 months, total deposits have increased $2.3 billion, or more than 18%. Average deposits for the quarter increased $607 million, or 4%. Non-interest bearing deposits of $4.3 billion represented 29% of total deposits. With the substantial deposit and loan growth, as well as earnings retention, total assets reached $18.27 billion, an increase of $3 billion, or 20%, since the first quarter of last year. The ongoing strong core deposit growth is attributable to the unparalleled level of service provided by all of our Private Client Banking Teams who consider to serve as a single point of contact to their clients.

Now let's take a look all our lending businesses. Loans during the 2013 first quarter increased $593 million, or 6%. For the past 12 months, loans increased $3 billion, and now represent 56.7% of total assets compared with 48.2% one year ago. The increase in loans this quarter was primarily driven by growth in commercial real estate, multi-family loans, and specialty finance. As a reminder, due to the correctly anticipated 2013 increase in the capital gains tax approximately $184 million in loans closed in the 2012 fourth quarter that would have otherwise closed in the 2013 first quarter.

Non-accrual loans were $35.1 million, or 34 basis points of total loans this quarter, compared with $27.2 million, or 28 basis points, for the 2012 fourth quarter. Non-accrual loans for the 2012 first quarter were $35.5 million, or 48 basis points.

The allowance for loan losses was 1.09% of loans versus 1.1% of loans in the 2012 fourth quarter, and 1.25% for the 2012 first quarter. Additionally, the coverage ratio, or the ratio of allowance for loan losses to non-accrual loans continue to be a very healthy 322%.

The provision for loan losses for the 2013 first quarter was $9.9 million, compared with $10.4 million for the 2012 fourth quarter, and $10.7 million for the 2012 first quarter. Net charge-offs for the 2013 first quarter were $4.5 million, or an annualized 18 basis, points compared with $5.9 million, or 25 basis points, for the 2012 fourth quarter, and $5 million, or 29 basis points, for the 2012 first quarter.

Now turning to the watch list and past due loans. Watch list credits increased by just $500,000 this quarter to $153.4 million, or 1.5% of total loans. During the 2013 first quarter we saw a decrease in our 30 to 89 day past due loans of $6.9 million to $41.8 million, and we also saw a decline ever of $12 million in the 90 day plus past due category to $16.7 million. While we are pleased that our credit metrics remain strong this quarter, we are mindful of the uncertainty in the economic environment and, again, we conservatively reserve.

Just to review teams for a moment -- three Private Client Banking Teams joined during the 2013 first quarter and thus far in the second quarter we added a fourth team. Two of the new teams will be based in our soon to open second office in Staten Island, our 27th overall.

Looking at 2013 our pipeline remains very active, as we continue to benefit from competing bankers that use Signature Bank as the bank of choice. We look forward to welcoming these talented bank professionals to our network. At this point I will turn the call over to Eric and he will review the quarter's financial results in greater detail.

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

Net interest income for the first quarter reached $148.1 million, up $21.3 million, or 16.8%, when compared with the with 2012 first quarter, and an increase of 0.7%, or $1 million from the 2012 fourth quarter. The linked quarter increase was negatively impacted by a decrease of $3.2 million in pre-payment penalty income.

Net interest margin was down 7 basis points in the quarter versus the comparable period a year-ago, and decreased 10 basis points on a linked quarter basis to 3.43%. The linked quarter decline was again mostly due to a $3.2 million reduction in pre-payment penalty income, or 8 basis points in margin. When you exclude pre-payment penalty income from the 2013 first quarter and the 2012 fourth quarter, core net interest margin for the linked quarter declined 2 basis points to 3.30%. The decrease in core margins was mitigated by loan growth and a further reduction in our deposit costs.

Let's look at asset yield and funding costs for a moment. Overall, interest-earning asset yields declined 14 basis points this quarter, or 4.02%, as we continue to feel the effect of the low interest rate environment, and decreased pre-payment penalty income. Given the strong deposit growth, we selectively added an average of $89 million in investments to our securities portfolio when we saw appropriate entry points. Yield on our overall investment portfolio declined 8 basis points to 3.11% this quarter, mostly due to increased premium amortization of approximately $1 million. And the duration of the portfolio extended slightly to three years.

Turning to our loan portfolio, yields on average commercial loans and commercial mortgages declined 33 basis points to 4.77% compared with the fourth quarter of 2012. Excluding pre-payment penalties from both quarters, yield would have declined 16 basis points.

Now looking at liabilities. Money market deposit costs this quarter further declined 4 basis points, to 74 basis points, as we again decreased deposit costs given the low interest rate environment. This decrease led to a decline of 4 basis points in our overall deposit costs to 54 basis points.

On to non-interest income expense. Non-interest income for the 2013 first quarter was $8.8 million, a decrease of $278,000 when compared with the 2012 first quarter. The decrease was driven by a $1.3 million decline in other income due to the amortization of low-income housing tax credit investments. This decrease is partially offset by an increase of $1.1 million in net gains on sales of loans in our SBA pool assembly business.

Non-interest expense for the 2013 first quarter was $58.9 million, versus $50.4 million for the same period a year-ago. The $8.6 million, or 17%, increase was principally due to the addition of new Private Client Banking Teams and the launch of Signature Financial, which included the hiring of more than 50 professionals. Despite the significant hiring since last year the bank's efficiency ratio remains stable at 37.5% for the 2013 first quarter, compared with 37% for the 2012 first quarter.

Turning to capital, our capital levels remained strong, with a tangible common equity ratio of 9.39%, Tier 1 risk base of 15.21%, total risk base ratio of 16.26%, and leverage ratio capital of 9.31% as of the 2013 first quarter. Our capital ratios were all well in excess of regulatory requirements and augment the relatively low-risk profile of the balance sheet.

And now I will turn the call back to Joe. Thank you.

Thanks, Eric. Signature Bank started off the year with our 14th consecutive quarter of record earnings, supported by exceptional core deposit growth, strong loan growth, solid credit metrics and top line revenue growth. While we continue to invest in the future with a well-capitalized balance sheet and further private client banking team additions, now we are happy to answer any questions you might have. Alicia, I will turn it over to you.

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions). Our first question comes from the reason of John Pancari with Evercore Partners. Please go ahead.

Hi. This is Rahul Patil on behalf of John.

Good morning.

Morning.

Quick question on your loan growth outlook. I know last quarter, you mentioned that you budget around $2.2 billion in loan growth for 2013. This quarter you had, you know, $600 million in loan growth just this quarter, and I get a sense in doing that, you know, this quarter was affected by the pull forward in -- at year end of 2012. How do you look at your loan growth outlook going forward?

Well, we try not to take too much into account in the first quarter because there was a lot of mixed things in there such as the pull-forward into the fourth quarter as you mentioned. And we also looked at the last five years, and traditionally this first quarter is usually the light quarter in terms of seasonality of loan growth. So that would lead you to believe that we would be beyond the $2.2 billion in growth. But we'll wait and see what we do in the second quarter before we give you an idea of whether that -- that figure would be too low, and we would be beyond the $2.2 billion. We just don't like to change after one quarter's growth.

Alright. Thank you. And then just on the NIM -- how should we look at NIM compression going forward to 2013? Should we perfect the pressure to kind of ease, the quarterly pressure to ease through the remainder of 2013?

Yes. Well, for the next quarter we expect that we will see a 5 to 10 basis points decline in NIM mostly due to day count, continued deposit growth, and really competition in all lending areas. We really see heated competition across-the-board in all lending categories. But ultimately we're focused on net interest income growth, and we expect that we will continue to have that. And then after that we're probably looking at a 3 to 7 basis points decline in core margins looking out a few more quarters.

Alright. Thank you. That's helpful. Thank you.

Thank you.

Thank you. Our next question comes from the line of Dave Rochester with Deutsche Bank. Please go ahead.

Hey. Good morning guys.

Hey Dave. Good morning.

Can you just give us an up the date on the loan pricing? You had mentioned more competition, and we heard from I guess some of the players in the market that they had lowered pricing during the quarter. But according to the brokers you guys from able to holds the line -- I was just wondering how you think that trends going forward.

Well, that's correct. In the first quarter, similar to the fourth quarter and the third quarter, we held the line on our pricing and were able to get a quarter to three-eighths higher than most on the commercial real estate multi-family world. What we have seen, though, a little lately, and we had some heavy discussions as to what we could do this quarter in terms of reducing pricing -- we have seen somewhat we would characterize as overly aggressive pricing.

I would say it's somewhat unexplainable. What I mean by that as an example we have seen some banks do 35 and 40 year amortizations, we have seen some sub-3% five-year fixed, we have seen ten-year fixed at 3%, we have seen ten-year fixed with no pre-payment penalty, which we believe is -- is overly aggressive and certainly things that we would not do. However, we can't expect our clients to be beyond three-eighths pricing from where we are to accept that.

You know, some of the pricing is a 50 to 75 basis points differential which although we're busy and our pipeline is pretty active, we have probably quality credit, that's what we're talking about here, quality credits where we are having LTVs 50% and below. We don't want to lose that opportunity and, therefore, we would have to consider bringing our pricing down. So you are correct.

It's not only in the CRE and multi-family world, we're not seeing any in all loan categories whether it's specialty finance, or C&I. In fact, in the C&I world, where the too big to fail banks are in our space -- or we're in their space, however you view it -- we're seeing where quality credit versus a mediocre credit, you would expect 100 to 150 basis points differential in pricing. We're seeing 25% of that. So maybe where the quality credit certainly deserves the lower pricing, some of the mediocre credits are commanding that as well because of the overly aggressive stances from the big banks. So we're not seeing relief anywhere.

So would you say that your five to ten basis points in margin pressure outlook incorporates your lowering pricing in Q2 and I guess the 3 to 7 basis points beyond that would that incorporate that as well?

Yes, I would say that.

Great -- and just one last one. On the funding costs side, you mentioned you were able to bring those down this quarter. Are there any additional plans to trim those rates this quarter? Have you already done that or is that coming up?

We have done some of that. We've brought it down from 78 basis points to 74 in the first quarter. That's on the interest bearing money market. In the month of March that rate was 72. So we expect to bring it down a little further in the second quarter. As Eric likes to say, we have little runway left but we're somewhat running out of the runway as we get more into the year.

All right, great. Thanks, guys.

Thank you.

Our next question comes from the line of Erika Penala with Bank of America Merrill Lynch. Please go ahead.

Good morning guys. This is Ebrahim on behalf of Erica.

Good morning.

I guess one quick follow-up on the NIM. In terms of pre-payment income, like are we sort of running out of what the potential for additional pre-pay income might be as we go forward? Or is that going to be sort of a drag relative to where pre-payment income was in the first quarter? Or it could still be volatile and could move higher quarter to quarter given the potential for loans that could still be sort of refinancing?

Yes. Well, it's very difficult to predict human behavior, Ebrahim, but I think we expect that we'll see loan pre-payment penalty income slowly go down over the course of this year. And if there is any type of signaling event that interest rates will rise, we will see an obvious spike in that pre-payment penalty income. But we expect from the level of the first quarter we expect that will steadily decline over the course of the year.

Good. Okay. Thank you. And I guess one follow-up in terms of the specialty finance portfolio. I guess it was $750 million at the end of the year like would you have what the quarter-end balances were in terms of your outlook and where -- how do you see the progress of that business? I guess it's been about a little over a year since we went in into that business.

Well, they were just shy of $1 billion at the end of the first quarter and now in April they've crossed that $1 billion threshold. We're obviously pleased with that level of growth. Looking out to next year it's still difficult for us to predict what their growth is going to be just having one year under our belt. And now that they've got that $1 billion on the books we're seeing pre-payments from that so we're having to fight the -- swim upstream a little bit now that we're seeing our portfolio pay us back, which is a good thing. So, we would be more than pleased if they were to put on another $1 billion over the course of the next year.

Alright. Thank you very much.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Steven Alexopoulos with JPMorgan. Please go ahead.

Hey. Good morning, guys.

Hey, Steve.

Good morning.

I wanted to follow up first on some of the margin commentary. It looks like core loan yield ex pre-pays are down roughly 20 bps a quarter for the last two quarters. Do you expect that to continue at about that pace? And from roughly 4.55% or so, where do you see the bottom -- that bottom given where you're bringing new loans into the portfolio?

We expect the decrease over the last several quarters to continue, as you suggested. I don't know where the bottom is yet. I will tell you this. There are certain loans across all category that we would not meet the pricing that's currently being suggested by some of our competitors today. Without giving away too much, I won't say what those prices are, but I will tell you this we will not be doing 40 year amortization loans, we will not be doing ten year fixed at 3% and no pre-payment penalties.

It just doesn't make sense because there are quality credits out there that don't want to deal with some of the competitors, don't want to deal with the Fannie Maes and would prefer to deal with the quality professionals we have. And that gives us a little bit of an advantage that we can price a little higher so that we're not getting into the sub 3s on commercial real estate or sub 2s on C&I.

So it's hard to predict the -- where the bottom is. I just know that there is certain loans and certain categories that we would not be able to compete with what we again characterize as overly aggressive pricing.

Great. And to follow up on that commentary on the overly aggressive pricing, do you think we could see your loan growth perhaps slow through the year? I mean is it to the point where you're walking away from more and more deals now?

No. Actually if we lower our pricing, we actually had these conversations over the last week or so, we would expect our loan growth to increase. We just believe that there are some out there that would really prefer to do business with us, and if we slightly lowered our pricing our volumes would go significantly higher. So we're not seeing that there will be a slowdown in the growth if we don't meet some of that pricing. Conversely, if we meet some of that pricing, we will see a significant increase in the growth.

Okay.

I mean, that's what we believe.

Okay. Maybe I could shift gears to expenses for a minute. And Eric, could you help us understand why we didn't see a seasonal increase in the comp expense? It seemed that total reported expenses were a bit below the guidance you suggested last quarter, and do you still expect roughly 10% year-over-year total expense growth in the next few quarters?

Yes. Well, with two less days in the quarter that helped us out a bit on the expense front so that probably added a couple percent or took a couple percent out of expenses. We did have a few weeks of the Signature Financial hirings in the first quarter of last year so that's probably where we were off on the 20% guidance year-over-year growth and came in a little bit better than expected. Now in the second quarter moving forwards since we've had Signature Financial and those hirings onboard since the second quarter of last year this year we still expect that 10% is a good number.

Okay. Thanks for all the color. Appreciate it.

Thank you Steve.

Thanks Steve.

Thank you. Our next question comes from the line of Jason O'Donnell with Merion Capital Group. Please go ahead.

Good morning.

Hey Jason. Good morning.

You know, contrary to the trends we witnessed over the last few quarters, it looks like your reserve as a percentage of loans, is relatively stable. Is that a function of a lower contribution this quarter from the multi-family segment, or a more cautious outlook or are there other -- other factors in there that are impacting the trend?

Well, some of that had had to do with less charge-offs, so that was beneficial to the overall analysis. But we're just mindful of the overall economic environment. We added some more as we have every quarter into our economic reserves. We're a little bit concerned, still, that we've been in this not so good operating environment for an extend period of time and we're mindful of the growth that we've been putting on in all of our various asset classes. So we just feel that we should continue to be conservative in our provision.

Okay. And in terms of the overall outlook on the reserve, though, just given kinds of the contribution for multi-family and what you're seeing, is it fair to assume sort of a continued downward bias in the reserves to loan ratio or is that not a safe assumption at this point?

No. I think it's safe to assume that there would still be a downward bias in that.

Okay. Great. And just one housekeeping item. What was your OREO expense for the first quarter?

Zero.

Zero.

Zero. Okay. Thanks a lot.

Thank you, Jason.

Thank you. Our next question comes from the line of Bob Ramsey with FBR. Please go ahead.

Hey. Good morning guys.

Hi Bob.

Just a couple questions left. One, you know, last quarter I thought the other expense line had some extra expenses related to Hurricane Sandy and so while total expenses look good this quarter, I was a little surprised to see that line item increase this quarter off of that base. Is there anything unusual in there this quarter?

No. There's nothing unusual in there, there's nothing more due to sandy. I think it's just growth related, you know, increase in expenses.

Okay. Fair enough. And then I was wondering if you could comment a little bit on -- on the new team outlook. Obviously, you all have hired four new teams year-to-date. You sort of hit what you had conservatively targeted to do this year. Just curious what the pipeline looks like, what you're hearing from bankers out there on the street, and how you are thinking about new teams through the rest of the year.

Well, pipeline it's rare for me to say very active, but I will say very active. We have exciting that we've already brought on four teams and we expect to bring on some more. Don't have a number for you because we're in varying stages of course of discussions with different teams. One thing I will point out if you notice two of the four teams that we have hired thus far came from Citibank, which is fairly new for us. We see some opportunity there to bring on some teams that we have never seen in the first nearly 12 years of our existence. So that bodes well for us. Seems like a new fertile ground for us to hire from.

They have are making some internal changes within the institution which has allowed us to talk to some people that have been there for -- for not only years but decades. So bodes well for us. We're going to continue to make that investment, and we'll also hire throughout the institution and the commercial real estate area we'll be doing some additional hiring, and in Signature Financial we'll be doing some additional hiring.

That sounds great. Thank you guys.

Alright, Bob. Thank you.

Thank you. Our next question comes from the line of Matthew Clark with Credit Suisse. Please go ahead.

Hey. Good morning.

Hey Matthew. Good Morning.

On the new teams, can you give us a sense for of the four you hired, you know, maybe what was the largest team that you have brought on in terms of their legacy portfolio? Just trying to get a sense for size-wise.

They're all I would say the first four teams are more deposit-driven than loan-driven. I won't be able to give you any balances in terms of the size, but, you know, they're on average about four people -- four team members per team on average and I will tell you two are in Staten Island, one is in Great Neck, Long Island, and one is going to be based in Brooklyn of the first four teams.

Okay. And on the -- on the commission line that seems to -- can you give us a sense for whether or not that has bottomed in the last couple of quarters? It's ticked back up. I'm just curious as to what your thoughts are going forward. I'm sure higher rates would help but.

The higher rates would certainly help. You know, we did see some good activity out of our brokerage channel with the equity markets picking back up a bit. so we're hopeful that it's bottomed out at this point, but still can't predict. Depends on where rates go.

Okay. And then the $600 million of loan growth this quarter -- can you break it down for us in terms of what came from multi-family, C&I, and it sounds like Signature Financial was about $225 million maybe?

That's about right. It was $375 million out of multi-family, another $56 million out of commercial property, and then C&I was about another $150 million of that.

Okay. Great. Thanks, guys.

Thank you. Our next question comes from the line of Casey Haire with Jefferies & Company. Please go ahead.

Hey. Good morning guys.

Hey Casey, good morning.

I was wondering -- I know you guys have talked about sort of on your long herm horizon eventually outside the footprints of New Jersey/Connecticut. I was just wondering, given what sounds like a more competitive marketplace locally if that pulls forward those plans?

You know, what whether pull forward the plans would be the opportunity. Believe it or not the competitiveness in the marketplace is not -- will not drive that. The reason for it is so few banks control 60% of the market, so there is a lot of fertile ground not only for us to continue to grow, but all the banks that have been coming in from Florida, Connecticut, New Jersey, Rockland County, there's certainly room to take -- continue to take business away from the too big to fail banks, which control so much the market.

We'll go into New Jersey and Connecticut and when we see some opportunity. And we actually, over the past several years, have been telling you on the market that we're always considering it. And we're still considering Connecticut and New Jersey because we still have -- they're on outgrowth of what we do in the concentric circle growth of our business. But I don't think the competition will push us there.

Okay. Understood. And then just question about capital. I mean I know you guys have plenty of cushion versus that 8% floor, but you are consuming capital at a decent clip here, just given the balance sheet growth. We have seen other banks take advantage of low rates and issue some preferreds to shore up the Tier 1 leverage ratio. I was wondering is that something you would consider?

We have such an abundance of capital in our internal capital generation is really pretty high, 50 million a quarter, that I don't really see us raising capital any time soon whether it be in a common or a preferred nature.

Got you. Thanks, guys.

Thanks, Casey.

Thanks, Casey.

Thank you. Our next question comes from the line of Herman Chan with Wells Fargo Securities. Please go ahead.

Hi. Thanks. Back on the aggressive pricing commentary that you guys mentioned, how much of a loan book is that risk related to that overly -- overly aggressive pricing that you have seen? You have mentioned not doing the ten year fixed with no pre-payment penalties. You know, how much of that business are you doing currently at the ten year?

Very little, if any, on ten year. We have a product that we use, which is a step up which we can do three years, three years -- three tranches of three years with a price that steps up and then we also do four year, three year, three years. So it's essentially a nine year or a ten year where the rate steps up in the second and third tranches, although the third tranche is really an option for them because there's no pre-payment penalty.

so we think -- we thought of some creative ways to do things and we're continuing to think of other creative ways of being able to match the competition without giving up too much yield, but certainly we're not lowering our credit standard. I don't think -- I ever never viewed it that our portfolio is at risk. I view it as how much growth do we want to have? We feel that we will continue to have growth with the current environment, with our current pricing, and that we met the overly aggressive pricing of our competition, our growth could go to stratospheric measures. So we're not concerned too much about what is at risk.

Got it. And you mentioned the active pipeline in recruiting. With some new competition coming into your markets as you articulated earlier, have you seen the competition for hiring intensify at all? And have you had to change your compensation model at all for the team hires?

Well, I will answer the latter part first. Our compensation model is extremely competitive. If you are very good at developing business, it's hard to match our compensation model.

Regarding the recruitment, I think that our record shows -- and that's why -- our record shows our consistency of the way we do things and the environment that we create for the -- for the bankers to work in and that allows us to have an advantage, I believe, over some of the other institutions in terms of recruiting. So we haven't seen the competition increase, no.

Got T thank you very much.

Thank you.

Thank you. Our next question comes from the line of Chris McGratty with KBW. Please go ahead.

Hey. Good morning guys.

Hey Chris.

Eric, just a follow up on the expenses. Can you remind us what the -- I think I missed it, the expense guidance for the rest of the year.

10% quarter-over-quarter so.

So Q2 over Q2.

Q2 over Q2, correct.

That's it. Thanks.

Thanks, Chris.

Thank you. Our next question comes from Peyton Green with Sterne Agee. Please go ahead.

Good morning. Congratulations on another strong quarter, but one question, Joe, and make we're all getting caught a little bit too much in the 90 day trap here, but at the margin, when you look at building Signature over the last decade or so -- do you think the hiring pipeline activity plus the improving market share mining outlook outweighs the pricing competition or is it -- what's your thought on that?

No. You know, I don't think it outweighs the pricing competition. To some extent it does because we're able to get on the loan side we're able to get between a quarter and three-eighths higher. But I think once you go beyond a quarter and three-eighths because of the overly aggressive pricing no matter how much the client was a banker it's hard when it's 50 basis points, 75 basis points differential.

Okay. Great. And then in terms of the hiring pipeline, I mean where would you -- or how would you characterize the level of the pipeline compared to prior years?

Probably as active as it's ever been.

Okay. Alright. Great. Thank you very much.

Thanks, Peyton.

Thank you. There are no further questions at this time. I would like to turn the conference back to management for closing remarks.

Thank you for joining us today. We appreciate your interest in Signature Bank. Assails we look forward to keeping you apprised of our developments. And Alicia, I will turn it back to you.

Ladies and gentlemen, this concludes Signature Bank's 2013 first quarter results conference call. If you would like to lesson to a replay of today's conference, please dial 1-800-406-7325 or 303-590-3030 with access code 4612827 followed by the pound sign. An archive of this call can be found at www.signatureny.com. ACT would like to thank you for your participation. You may now disconnect.