Signature Bank (SBNY) 2013 Q2 法說會逐字稿

Welcome to Signature Bank 2013 second 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.

(Operator Instructions). It's now my pleasure to turn the floor over to Joseph J. DePaolo, President and Chief Executive Officer. You may begin.

Good morning. Thank you for joining us today for the Signature Bank 2013 second quarter conference call. Before I begin my formal remarks, Susan Lewis will read the forward looking disclaimer.

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're 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 would like turn the call back to Joe.

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.

The second quarter of 2013 continued our string of record quarters with strong performances exhibited across the entire organization. This resulted in solid core deposit and loan growth, while maintaining sound credit quality, leading to another quarter of top line revenue growth in our 15th consecutive quarter of record earnings. Furthermore, we are excited four new banking teams joined during the second quarter.

I will start by reviewing earnings. Net income for the 2013 second quarter reached a record $53.6 million or $1.12 diluted earnings per share, an increase of $8.3 million or 18% compared with $45.3 million or $0.96 diluted earnings her share reported in the same period last year. A considerable improvement in net income is mainly the result of an increase in net interest income, primarily 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 $472 million or 3.2% to $15.3 billion this quarter, including core deposit growth of $612 million. For the first half of 2013, deposits have increased $1.2 billion, exceeding 8% and for the trailing 12-month period, deposits have increased $2.3 billion or nearly 18%. Average deposits for the quarter increased $526 million or 3.6%.

Non-interest bearing deposits of $4.7 billion represented 30.7% of total deposits. Our deposit growth, loan growth and securities purchases this quarter pushed total assets to $19.7 billion, an increase of $3.8 billion or 24% since the second quarter of last year. The ongoing strong core deposit growth is attributable to the superior level of service provided by all of our product client banking teams who continue to serve as a single point of contact to their clients.

Now, let's take a look at our lending businesses. Loans during the 2013 second quarter increased $701 million or 6.8%. For the past 12 months, loans increased more than $3 billion and represent 56.1% of total assets compared with 50.6% one-year ago. The increase in loans this quarter was primarily driven by growth in commercial real estate, multifamily loans, and specialty finance.

Non-accrual loans remain stable at $35.9 million or 32 basis points of total loans this quarter compared with $35.1 million or 34 basis points for the 2013 first quarter, and $31.9 million or 40 basis points for the 2012 second quarter. The allowance for loan losses was 1.08% of loans, versus 1.09% of loans in the 2013 first quarter and 1.21% from the 2012 second quarter.

Additionally, the coverage ratio or the ratio of allowance per loan losses to non-accrual loan continued to be a very healthy 332%. The provisions for loan losses for the 2013 second quarter was $9.7 million, compared with $9.9 million for the 2013 first quarter, and $10.3 million for the 2012 second quarter.

Net charge-offs for the 2013 second quarter were $3.5 million or an annualized 13 basis points, compared with $4.5 million or 18 basis points for the 2013 first quarter and $4.7 million or 25 basis points for the 2012 second quarter.

Now, turning to the watch list and past due loans. Watch list credits decreased by $14 million this quarter to $139 million or a low 1.26% of loans. During the 2013 second quarter we saw a decrease of $1.7 million in our 30 day to 89 day past due loans to $40 million and we also saw a decline of $11.6 millions in our 90 day plus past due category to $5.1 million.

While we are pleased that our credit metrics remain strong this quarter, we remain mindful of the uncertainty in the economic environment, and again, we conservatively reserved.

Just to review teams for a moment. Four private client banking teams joined during the 2013 second quarter, bringing our total added for the year to seven. Also, two group directors joined existing teams. Additionally this quarter we opened our 27th office, our second in Staten Island. At this point, I'll 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 second quarter reached $154.5 million, up $20.3 million or 15.2% when compared with 2012's second quarter, and an increase of 4.3% or $6.4 million from the 2013 first quarter.

The linked quarter increase was positively impacted by an additional $1.4 million of loan pre-payment income. The net interest margin was down 18 basis points in the quarter versus the comparable period a year ago and decreased 7 basis points on a linked quarter basis to 3.36%. When pre-payment penalty income is excluded from the 2013 first and second quarters, core net interest margin for the link quarter declined 9 basis points to 3.21%.

The linked quarter decreases in overall and core margins are predominantly due to the reinvestment of cash flows from investments and commercial mortgages, including refinance activity, and to lower yielding investments and loans. Let's look at asset yields and funding costs for a moment. Due to the prolonged low interest rate environment, interest earning asset yields declined 36 basis points at 3.92% from a year ago. Given the bank's abundant capital base and advantageous market conditions at the very end of the second quarter, we capitalized in the steeper yield curb by pre-investing future cash flows in our securities portfolio.

As a result, our average investment portfolio increased $207 million. Yields on the portfolio declined 10 basis points to 3.01% this quarter, mostly due to the reinvestment of higher yielding security cash flows into lower yielding securities. With the higher interest rates at quarter end, the duration of the portfolio extended to 3.7 years. This will benefit yields in future periods.

Turning to our loan portfolio. Yields on average commercial loans and commercial mortgages declined seven basis points to 4.7% compared with the 2013 first quarter. Excluding pre-payment penalties from both quarters, yields would have declined 12 basis points.

Now looking at liabilities. Money market deposit costs this quarter further declined three basis points to 71 basis points, as we again decreased deposit costs given the low interest rate environment. This decrease led to a decline of three basis points in our overall deposit costs to 51 basis points. With the strong loan growth and advantageous market for securities investment, average borrowings increased $370 million to $1.84 billion. Given the short-term nature of these incremental borrowings, the average cost of borrowings is down 27 basis points from the prior quarter to 1.41%.

On to non-interest income and expense. Non-interest income for the 2013 second quarter was $9.3 million, a decrease of $600,000 when compared with the 2012 second quarter. The decrease was driven by a $3.2 million decline in net gains on sale of securities.

Just to remind everyone. In the 2012 second quarter, we recorded a $2.6 million pre-tax gain on the sale of an SBA interest only stripped security. This quarter's decline in non-interest income was partially offset by improvements in commissions, fees and service charges, trading income, and other income.

Non-interest expense for the 2013 second quarter was $61.4 million versus $54.9 million for the same period a year ago. The $6.6 million or 12% increase was principally due to the addition of new private client banking teams and our continued investment in the growth of Signature Financial.

Even with the significant hiring since last year, the bank's deficiency ratio improved slightly to 37.5% for the 2013 second quarter compared with 38.1% for the 2012 second quarter. In turning to capital, our capital levels remain strong with a tangible common equity ratio of 8.65%, tier one risk base of 14.9%, total risk base ratio of 15.94%, and leverage capital ratio of 9.14% as of the 2013 second quarter.

Our capital ratios were all well in excess of regulatory requirements and augment the relatively low risk profile to balance sheet. Lastly, I'd like to point out that during the latter part of the quarter, we moved select securities of approximately $845 million from available for sale to held to maturity, given market volatility and potential changes in Basel III capital requirements. Although we have an abundance of capital and a decline in other comprehensive income is a temporary issue, as we expect to hold the vast majority of our AFS portfolio to maturity anyway, we felt this was a prudent action to take. And now I'll turn the call back to Joe. Thank you.

Thanks, Eric. The second quarter of 2013 marked our 15th consecutive quarter of record earnings, supported by strong core deposit growth, excellent loan growth, solid credit metrics and top line revenue growth. We're pleased to achieve these results while continuing to invest in the future through further private client banking team additions and the ongoing expansion of Signature Financial. Now we'll be happy to answer any questions you might have. Laurie, I'll turn it over to you.

(Operator Instructions). Our first question comes from the line of Erika Penala of Bank of America.

Good morning.

Good morning, Erika.

My first question is a follow-up to your prepared remarks, Eric. In how should we think about the relative size of the securities book going forward? On one hand, I hear you loud and clear that you were managing AOCI risks by transferring some securities to available for sale or to held to maturity from available for sale, but how should we think about -- should this continue to shrink as a percent of earning assets, or do you expect some deposit growth to catch up in the second half of the year as some of your new hires and new teams come on board?

Well, certainly a lot of its going to be predicated upon deposit growth. If we have continued strong deposit growth we'll continue to invest inthe securities portfolios as well as into loans. We really saw an opportunity at the end of the second quarter to invest in securities, an opportunity that we hadn't seen throughout the quarter. We started off the quarter with a low 10-year at 160 and we really held off from making any securities purchases until we saw a pick up in the 10-year to the mid to high twos. If we continue to see strong deposit growth and if we continue to have a market to invest in, then I would think we would still be increasing the size of that securities portfolio, but it's really predicated upon those two things.

And can you remind us or tell us where you're reinvesting in terms of the rate and duration?

Well, duration is in the 3-4 year range. Generally, the levels we purchased at are anywhere from the low threes to the mid threes. We've been investing agency CMOs, as well as some CMBS and select corporates.

And just one last question, loan growth accelerated quarter-over-quarter in terms of sequentially. Should we expect this to continue at the same pace for the second half of the year or should we be wary of a seasonal slowdown in the third quarter?

Well, I would say that usually there would be a seasonal slowdown because of the summer and then the holiday, Labor Day and some of the Jewish holidays. However, our pipeline at the end of the second quarter leading into the third quarter was much more active than it was going into the -- ending the first quarter leading into the second quarter, so it does bode well for continued growth, the pipeline.

Got it. Thank you for answering my questions.

Thank you, Ericka.

Thank you, Ericka.

Your next question comes from the line of Casey Haire of Jefferies.

Hey, good morning guys. How are you doing?

(multiple speakers) Good morning.

Digging deeper on the NIM. How much was premium amortization this quarter and how much is left?

We really haven't disclosed what's left, Casey. I don't have that. Premium amortization this quarter last is relatively flat.

Okay. And just the loan pricing update. I know last quarter you guys talked about losing a little bit of your cushion. How has that held up and where are we quarter-to-date?

On the commercial real estate side, we were -- last time we spoke, we were at 3.5%, although we were doing a number of loans between 3.25% and 3.5%for 5-year fixed. Now our pricing is 3.75% with some exceptions being made at 3 5/8%, again, again for 5-year fixed.

Great. Just longer term, if I got this right, it sounds like you guys tapped some short-term borrowings and obviously the duration is blowing out. Longer term, how do you manage interest rate risks? What kind of limits are there on duration and your appetite for shorter term borrowings?

Casey, we have such a large amount of core deposits still that we were at a real low in our borrowings and we still have a tremendous amount of borrowing capacity left, an we have a tremendous amount of cash flow coming off of that portfolio of roughly between $125 million to $150 million per month for us to use. We're very well-positioned for the current interest rate environment that we're in, and for rates if they were to rise further.

Gotcha, thank you.

Thanks, Casey.

Your next question comes from the line of Matthew Clark of Credit Suisse.

Hi, guys.

Hi, Matthew.

Hi, Matt.

Can you update us on the expense front? You're hiring at a faster clip than previously expected, so the year-over-year increase is 12% versus maybe 10% expected. Can you talk toward the second half and what you might expect? Is there more hiring to do on the Signature Financial or are we done there?

There's still more hiring to do there. They're still rounding out their capabilities, their sales force, their product offerings, so we do expect to add there. I think with all of the hiring we've done in the beginning of this year, which was a bit more as you pointed out than we had anticipated, that we expect expenses to be up in the 10% to 12% range as opposed to what we were saying earlier, which was 10%, so it's not too much of a change, Matthew, but maybe a little bit of a pick up in expenses.

Okay. On the core margin front, are you willing to offer some guidance there? Sounds like you have gotten some relief in pricing, you invested late in the quarter, better yields, and I would assume there might be some slowdown in the premium amortization in the upcoming quarter?

That's right, we said that, that we would be down 5 to 10 basis points in the second quarter and then 3 to 7 basis points looking out a couple of quarters. That 3 to 7 basis points now looks like it's more to stable to down possibly 5 basis points. We expect the yields on new assets will still continue to price below prepaying assets, so we're still going to have some pressures there, but it's definitely mitigated by the steepness of the yield curb, assuming that stay in place for a while.

Okay, great. On the team hiring front. Is that fairly active? Could we see more in the second half here?

It is fairly active, but we're really centered on 2014. Most of the teams that we're talking to. That doesn't mean if an opportunity -- doesn't -- if an opportunity comes along we wouldn't seize upon it and hire, but right now the pipeline is very active with 2014 discussions.

Okay, thanks, I'll step back.

Thank you.

Your next question comes from the line of Dave Rochester of Deutsche Bank.

Good morning guys.

Good morning.

Hey, Dave, good morning.

Given your commentary on the securities rate front, it sounds like reinvestment rates are above the book yield. You expect to see premium [M unwind]Should we start to see the securities yields move higher in terms of the book yields?

They should start to move higher. It might take a quarter or so for that to work through, but they should start to go up.

Can you also update us on the pricing for the equipment finance loans that you're doing right now?

They're generally in the mid 3%s to 4% range, even low 4%s.

Great.

It depends on the vertical, Dave.

On the institutional money market deposit fronts. Do you think you can continue to bring those down two to three basis points for the next few quarters?

It will be much tougher than it has been. I know we brought them down three basis points this quarter and the past several quarters prior to quarter, it was four basis points, but we're actually seeing some movement in the private bankings/middle market arena for money market interest rates to be held steady and start moving up a little, so it's going to be difficult. We're trying to bring in some of the newer money that's coming from the too-big-to-fail banks at lower than what we are today at 71, but it's going to be much tougher.

Great. One last one on pure C&I growth side. When do you expect to see some more on that front?I know a lot of your growth in the commercial bucket at this point is in the equipment finance side. Any thoughts there would be great.

I think we really need to see some clarity out of Washington. Our clients still seem very concerned about their health care costs, as well as the increased tax rates, so until we see more clarity on those fronts, they are starting to hire a little bit more, things seem to be headed in the right direction, but they're really not ratcheting up their businesses in a meaningful way.

There's just too much uncertainty.

Great. All right, thanks, guys.

Thanks, Dave.

Thanks.

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

Thanks. In terms of revised new guidance of flat to down 5 basis points for each of the next couple of quarters. What's the biggest area of volatility there? What do you have to see in the market or in pricing to get to the zero versus to what you have to see to get to the down five basis points?

I think we just need to see the yield curbs stay in the position that it's in now, that will be helpful. We've seen this before. We saw it pop up in the second quarter and it went right back down. We're one event away from having the 10-year go back down, so it's really -- if we operate in this yield curb environment for a quarter or two, we should be more on the stable front as opposed to being down five basis points.

Got it, perfect.

Competition is also a pretty big factor there, too.

Are you seeing, I guess with the quick, I guess recent pull back into 10-year or 5-year just from the peak that it was at? Have you seen any reacceleration of competition or are people stabilized at a little bit higher yields.

I would say they've stabilized at a little higher yields.

Okay, perfect. One quick question on the pipeline. You obviously talked that it's much more active than it was a quarter or two ago. Are you able to quantify that so we can get a sense of magnitude of the increased pipeline?

Not to quantify it, but I will tell you this; some of the things leading to why it's more active, in speaking to our commercial real estate banking team, what they're seeing is for the first time in a while, actually some sales and purchases of properties, so that may be stemming from owners believing that now is the time to sell because rates may be moving up and not moving down, so we're seeing some of that. We're also seeing as a result of rates going up, an increase in the activity of re-fies and again, it may be because they believe the rates are going to be moving up and staying there that this is the best time to refinance. Without quantifying exactly, I'll say it's probably as active as it's ever been.

Excellent, thank you.

Thank you.

Your next question comes from the line of Bob Ramsey of FBR.

Hey, good morning, guys. You gave a lot of color last quarter about competition and how concerning it was. Obviously, it's a positive that with a movement up in rates you've been able to bring multi-family commercial real estate loans rates up as well. Just curious if you can give more color on what you're see in the marketplace from competitors today?

It seemed to get me in a little bit of trouble last time when I talked about competition and everyone thinking that we were going to slow down. We were trying to point out some overly aggressive pricing. It hasn't changed. Look at it this way. There was some 5-year fixed being done at 2 7/8% and 3%. Today it's being done at 3.25%, so that doesn't necessarily mean they've come up, but what's interesting is they haven't come up to the market, and what I mean by that is a number of our competitors fund not through core deposits, and their expense for funding has gone up maybe 60 to 70 basis points, but yet they're not passing that along, so we believe there's still some overly aggressive pricing. The fortunate thing for us is we have some terrific people, our colleagues, who are able to get out term sheets, close loans in 45 days and satisfy the clients through the servicing and they know that they're still going to be here when they want to refinance, so servicing is trumping pricing and that's what's happened in the second quarter and that's what will continue to happen in the third quarter.

Okay, that's helpful. And then do you just have the balance of specialty finance loans at the end of the quarter?

Approximately $1.2 billion.

Great, thank you, guys.

All right, Bob.

Thanks, Bob.

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

Good morning, everyone.

Good morning, Steven.

Hey, Steve, good morning.

Can you give more color on why pre- fund the securities book with borrowing seems to be a bit outside of the core business? Then maybe talk about the costs of the funds that you borrowed and the yield on the securities you got with those borrowings?

Well, look at it this way. We had loan growth of $700 million and on the deposits side, at June 18th we had deposit growth of $740 million, but the total deposit growth ended up being 12 days later, $470 million, that's because in the last two weeks of the quarter, we had outflow of deposits that were escrows, which happens all the time, but we saw an opportunity because of the rates going up to buy securities so we couldn't fund it with the deposits because we only had -- we had all of the deposit growth funding the loan growth, so therefore, we funded it with short-term borrowings. Does that give you a prospective of why?

That makes sense in terms of why, Joe, but if you could follow up, like maybe what was the cost of the borrow funds, and then talk about the yields on the new securities that were purchased?

Sure. The costs were approximately 40 basis points and the securities yielded anywhere from the low threes to the mid threes.

Eric, how do we think about duration extension risks of the entire portfolio at this point?

Well, with rates rising up, we actually like the ration extension. That means we slow down the premium amortization on the securities that we have. This is what we really anticipated happening and what we wanted to have happen. Even with the extension, we still have well in excess of $100 million a month, it's probably closer to $150 million a month in cash flows coming off of the securities portfolio, Steve. We don't mind the extension at all, it's really what we had planned for.

Then just a final question. You guys have grown from a $10 billion asset bank to $20 billion over the past three years. Can you continue to grow at these rates without a major investment in infrastructure, in systems, et cetera?

Well, we have been making the appropriate investment that we need to make. Most of our systems are third party and we get the opportunity of research and development that's done by a third party to service a number of banks at the same time. It's not a lot of in-house systems that we use, it's a lot of external systems that stay on top of the development that needs to be for innovation, so we're pretty comfortable there. I think more so is, and the answer is yes, are the people that our colleagues ready? I think one thing you should know is that most of if not all of the people that come on board are usually coming from places that are far bigger, and it's not necessarily just those that we're hiring in the teams dealing with clients and developing business, it's in the support areas where they usually come and usually have responsibility for people and systems far greater than what they're coming into at signature. They are just coming into a better environment, so that helps to us grow into it, so we've had no issues in terms of the growth. In fact, the amount of growth in such a short period of time.

Okay. Then just a final one. Eric, I think last quarter you spoke of we should anticipate 10% or so year-over-year growth. Given all of the new hires, is that still a reasonable level or should we be bumping that up here in terms of expectation?

I think we should bump it up slightly to 10% to 12%.

Okay, thanks for all of the color.

Okay, Steven.

Thank you, Steven.

Your next question comes from the line of Herman Chan of Wells Fargo Securities.

Hi, thanks. Wondering how you're thinking about the TCE ratio especially with the balance sheet growth and some AOCI fluctuations. I recall the bank bolstered its equity base in 2011 as the TCE ratio was hovering around the 8% mark. Can you give us color on your thought process there and how you view potential capital rates down the road as you continue to expect stronger [net worth] as you just articulated?

Let me start off by saying we don't expect to continue second quarter growth to happen in the near or intermediate quarters. This was almost having two quarters of growth in one quarter, so we may be going back to our normal $500 million to $800 million growth as opposed to what we had this quarter. But in terms of TCE, we actually look at the leverage ratio more so, where we're above 9%. I know in the past people had asked and we were talking about TCE being at 8% and that was kind of our bright line, but that was when we were less than half of the size we are today.

We're around now more than 12 years, we're nearly a $20 billion institution, and there's some uncertainty on what levels are needed by our competitors because of what's happening with Basel III. We're going to take a wait and see type approach. Let me say we don't need to do a capital raise because our earnings are fairly strong and that earnings allows us to grow at a fairly significant amount each quarter. Having said that, we always said we wouldn't be shy to do so if needed, but I think we want to wait and see what happens over the next 60 days when comments are coming out about Basel III and what the regulators have said in their suggestions about what rates should be, and then we'll have a better thought process as to where we want to be. But I think if I was giving you guidance, I would look at the leverage ratio more so than TCE.

Great. Eric, on the pre-payment fees, I was wondering if you could give your view on how that should trend going forward given the higher rate environment?

It's very, very difficult to predict human behavior. We do think that it will pick up maybe slightly, given that clients might want to lock in rates now with the pick up in the 10-year and will probably have elevated pre-payments for the next couple of quarters and eventually all this pre-payment has to come to an end.

Understood. Thanks for the color.

Thank you, Herman.

Your next question comes from the line of Lana Chan of BMO capital markets.

Hi, most of my questions have been answered. But did you give an estimate for the [show on common ratio] under Basal III?

No, we did not give an estimate. We basically said we would be in a wait and see, but we were telling everyone that they should look more towards the leverage ratio.

Okay, thank you.

Your next question comes from the line of Chris McGratty of KBW.

Good morning.

Good morning, Chris.

Just a quick one on the loan growth. I think for the year you're up $1.3 billion. If my memory is correct, in January you talked about $2.2 billion for the year. Did Imiss any change from the official guidance for the year?

Well, you know, Chris, we're much better at executing than giving guidance, so no, we didn't change any guidance. We did say that the long pipeline was actually very active and more active than it has been in a while.

Okay. Thanks.

Your next question comes from the line of Terry McEvoy of Oppenheimer.

Thanks, good morning.

Good morning, Terry.

It looks like specialty finance grew from $1 billion to $1.2 billion in the second quarter. Are you still on pace for about a billion dollars of growth in 2013? And any way you could provide a snapshot or some sort of breakdown in terms of what's in that portfolio? The last time I think you've done that in the K, the taxi medallion business was a little over $400 million.

The taxi medallion business is around $480 million of that overall portfolio, then the rest is predominantly made up of direct equipment -- indirect equipment and indirect vehicle, as well as about $90 million in capital markets.

Joe, just a question for you. You're probably $20 billion as we speak or very close to it. How do you think about general size, greater regulatory oversight as you get larger, the costs associated with that, and not to say it's going to slow down your growth, but is it something you're putting much thought into today and how does that relate to expenses and building up that larger bank?

We've actually had the expense built in. We've been over the last year treating -- I guess the way you think about this is if you're over $10 billion, anything between -- over $10 billion and up to $50 billion, you treat yourself similarly. We would like to get that changed, but we're doing our stress testing. We're spending considerable dollars using third party firms to help us formulate our stress testing. We're beefing up compliance and some of the operational areas because of the growth. We look at it as an expense to do business, but it's not any different if we were $10 billion, $20 billion, or $30 billion, so we're not looking at it any differently.

Great. Thank you.

Thanks.

Your next question comes from the line of Peyton Green of Sterne Agee

Good morning. Congratulations on a great quarter. A question on the securities, Eric. How close were these bonds bought to par in terms of the late 2Q purchases vs maybe for the past year, year-and-a-half, you maybe had to buy bonds that had a little bit of a premium, which I know you don't like to do, but naturally premium amortization will go down because you were closer to par on the new purchases.

They're a little closer to par, about four points closer to par. But there's still a bit of premium that we're paying for these.

But far less there would have been in the purchases made over the past year?

Correct.

Okay. Great. Then just in thinking about what's next over the next two or three years, rather than maybe the next quarter or two. Are there any opportunities that are emerging or is the marketplace still so big and you all are so still small on a relative basis that market share mining going to be the soup of the day for a long time?

I would say it's the soup of the next couple of months, at least. We still have significant opportunities. Just think about the fact that we in the New York area hired seven more teams.

We believe on the commercial real estate front, it's just such a large, large market in New York City and because of the team we have, we'll be able to continue to reap the benefits there and with Signature Financial we have opportunities because we've told everyone that you have to be in the so-called [NBA] cities and we're probably in less than half of the [NBA] cities right now, so there's opportunity there for us to grow. And then, adding another leg to the store, I wouldn't be surprised any of you on the call, if we don't add another leg to the stool in lending, along the lines of something like an ABL, asset-based lending, somewhere in the very, very near future which would bode well for us for continued diversity in our assets side. So when you put all of that together, it looks like the future is very bright for us.

Okay, great. Thank you very much.

Thank you, Payton.

Your next question is a follow-up from Casey Haire of Jeffries.

I'm all set. Thanks, guys.

Okay, thank you.

There appear to be no further questions at this time. I would now like to hand the floor back over to Joe DePaolo for any closing remarks.

Thank you for joining us today. We certainly appreciate your interest in Signature Bank and we're certainly very excited about the near-term and long-term future for us. As always, we look forward to keeping you apprized of any of our developments as they arise and Laurie, I'll turn it back to you.

That does conclude today's teleconference. If you'd like to listen to a replay of today's conference, please dial 800-585-8367 and refer to conference ID number 21194339. 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.