Signature Bank (SBNY) 2016 Q4 法說會逐字稿

Welcome to Signature Bank's 2016 fourth-quarter and year-end 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 is now my pleasure to turn the floor over to Mr. Joseph J. DePaolo, President and Chief Executive Officer. You may begin.

Thank you, Crystal. Good morning and thank you for joining us today for the Signature Bank 2016 fourth-quarter and year-end results 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 a representative, 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 operation 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 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 to turn the call back to Joe.

Thank you, Susan. I will provide some overview into the quarterly and annual results. And then Eric Howell, our EVP of Corporate and Business Development, will review the Bank's financial performance in greater detail. Eric and I will address your questions at the end of our remarks.

Signature Bank delivered another year of strong growth and performance, resulting in our ninth consecutive year of record earnings, notwithstanding challenges in our taxi medallion portfolio. Additionally, for the fourth quarter, we again delivered strong average deposit growth and robust loan growth, expanded top-line revenues, and maintain solid credit quality, leading to a record quarter of earnings.

I will start by reviewing quarterly earnings.

Net income for the 2016 fourth quarter reached a record $113.9 million or $2.11 diluted earnings per share, an increase of $10.9 million or 10.6% compared with $103 million or $2.01 diluted earnings per share reported in the same period last year.

The improvement in net income is mainly the result of an increase in net interest income, primarily driven by strong deposit and loan growth. These factors were partially offset by an increase in the provision for loan losses as well as non-interest expense attributable in part to regulatory and compliance costs.

Looking at deposits, deposits increased $466 million or 1.5% to $31.9 billion this quarter. And average deposits grew by $1.16 billion. For the year, deposits increased $1.5 billion, and average deposits increased $4.5 billion. Non-interest-bearing deposits of $10.5 billion represented 33% of total deposits, and grew $2 billion or 23% for the year. The substantial deposit and loan growth, coupled with earnings retention and our equity and subordinated debt raises, led to an increase of $5.6 billion or 16.7% in total assets, which crossed $39 billion.

Now let's take a look at our lending businesses. Loans during the 2016 fourth quarter increased $1.27 billion or 4.6%. For the year, loans grew $5.3 billion and represent 74.4% of total assets compared with 71.1%, one year ago. The increase in loans this quarter was primarily driven by growth in commercial real estate, multifamily loans, and commercial and industrial loans.

Turning to credit quality. Non-accrual loans decreased to $157.6 million or 54 basis points of total loans compared with $162.8 million or 59 basis points for the 2016 third quarter, and $71.9 million or 30 basis points in the 2015 fourth quarter.

However, more than 85% or $135 million of the non-accrual loans are taxi medallions. Therefore, for the remaining portfolio of over $28 billion in loans, we have only $22 million or 8 basis points in non-accruals.

During the 2016 fourth quarter, we saw a decrease of $19 million in our 30- to 89-day past due loans to $109 million. And 90-day-plus past due loans increased by $29 million to $57 million. However, the increase in the 90-day-plus past due loans was predominantly due to medallion loans that have matured, yet continue to pay under their original terms. And we are in the process of renewing.

The provision for loan losses for the 2016 fourth quarter was $22.2 million compared with $80.5 million for the 2016 third quarter and $16.7 million for the 2015 fourth quarter. Net charge-offs for the 2016 fourth quarter were $13.5 million or an annualized 19 basis points compared with charge-offs of $100.5 million or 146 basis points for the 2016 third quarter, and $4.6 million or 8 basis points for the 2015 fourth quarter.

The allowance for loan losses was 0.74% of loans versus 0.74% in the 2016 third quarter and 0.82% for the 2015 fourth quarter. Additionally, the coverage ratio increased slightly to 135%.

For a moment, let's review teams. In 2016, we added three teams. We also appointed several veteran bankers to existing teams; and, earlier in the year, opened our 30th office in Bay Ridge, Brooklyn. Looking ahead, to 2017, the pipeline for teams is robust.

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 fourth quarter reached $296.8 million, up $28.5 million or 10.6% when compared with the 2015 fourth quarter, and an increase of 2% or $6.3 million from the 2016 third quarter. For the year, net interest income, for the first time, surpassed $1 billion.

Net interest margin decreased 16 basis points in the quarter versus the comparable period a year ago, and remained stable on a linked-quarter basis at 3.14%. Excluding prepayment penalty income, core net interest margin for the linked quarter decreased 1 basis point to 3.06%.

Let's look at asset yields and funding costs for a moment.

Interest-earning asset yields for the 2016 fourth quarter declined 10 basis points to 3.61% compared with the fourth quarter of last year, mostly due to a $4.2 million decrease in loan prepayment penalty income. On a linked-quarter basis, yields decreased just 1 basis point.

Yields on the securities portfolio decreased 5 basis points, linked quarter, to 2.99% due to a pickup in premium amortization from faster CPR speeds and lower reinvestment yields for most of the fourth quarter. This trend turned after the November elections, and we anticipate yields to increase in the first quarter. Also the duration of the portfolio increased to 3.71 years, given the rise in rates.

And turning to our loan portfolio, yields on average commercial loans and commercial mortgages increased 1 basis point to 3.9% compared with the 2016 third quarter. This is mostly due to a slight rise in prepayment penalty income. Excluding prepayment penalties from both quarters, yields remain stable.

And now looking at liabilities, our overall deposit costs this quarter remained flat at 42 basis points. Average borrowings, excluding subordinated debt, decreased $371 million to $2.3 billion or only 6.1% of our average balance sheet. Given the lower-cost nature of the borrowings that came off, the average borrowing cost increased 10 basis points from the prior linked quarter to 1.44%. The overall cost of funds for the quarter remained stable at 53 basis points.

And on to non-interest income and expense. Non-interest income for the 2016 fourth quarter was $10.1 million, an increase of $700,000 when compared with the 2015 fourth quarter. The rise was across all non-interest income categories, but partially offset by an increase of $1.2 million, and other losses from additional amortization of low income housing tax credit investments.

Non-interest expense for the 2016 fourth quarter was $95.9 million versus $88.4 million for the same period a year ago. The $7.5 million or 8.5% increase was principally due to the addition of new private client banking teams as well as further costs in our risk management and compliance activities. The Bank also incurred increased FDIC assessment fees.

Factoring in the significant hirings since last year, and increased regulatory costs, the Bank's efficiency ratio still improved to 31.3% for the 2016 fourth quarter compared with 31.8% for the 2015 fourth quarter.

And turning to capital, our capital ratios were all well in excess of regulatory requirements, and augment the relatively low-risk profile of the balance sheet as evidenced by a Tier 1 leverage ratio of 9.61% and total risk-based ratio of 13.46% as of the 2016 fourth quarter.

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

Thanks, Eric. In summary, the 2016 fourth quarter contributed to yet another exceptional year for Signature Bank, where we grew deposits an astounding $5.1 billion or 19%. Increased loans by $5.3 billion or 22%; loans now account for 74.4% of total assets. Significantly reduced our exposure in taxi medallion loans by writing down our Chicago portfolio while maintaining exceptional quality -- credit quality in the remainder of our loan portfolio. To this end, non-accrual loans, excluding all medallions, are only 8 basis points of total assets.

We expanded net interest income by $170 million or over 17%, truly top-line revenue growth. And as said earlier, net interest income for the first time surpassed $1 billion annually. We added three private client banking teams and several seasoned bankers to existing teams. We improved our already superb efficiency ratio to 31.7% while continuing to invest in our risk management and compliance functions. Significantly bolstered our capital position with two successful offerings: a common stock offering of nearly $320 million; and our first subordinated debt offering of $260 million. And we delivered a 6% increase in net income to a record $396.3 million.

In closing, we would like to thank all of our fellow colleagues for their efforts and execution which led to our ninth consecutive year of record earnings. We look forward to the opportunities 2017 will present for Signature Bank.

Now we're happy to answer any questions you might have. Crystal, we will turn it back to you.

(Operator Instructions). Casey Haire, Jefferies.

Just wanted to I guess start on the NIM outlook. Sort of where -- I was surprised to see the securities book actually down, on a quarter basis. Where are new money yields on securities placements, and is there still a thought to grow the securities book?

Yes, Casey, there is absolutely a thought to grow the securities book. It's a very advantageous market for us to do that right now. Remember, for most of the fourth quarter, there wasn't a very good market to invest in, and we actually saw a pickup of about $530,000 in our premium amortization expense.

Remember, we use actual CPR speeds, not forward-looking estimates. It takes a good 60 to 90 days for mortgages to work through the pipeline. So we will see the benefit of slowing CPR speeds much more so in the first quarter. So it actually went the opposite direction in the fourth quarter. But we anticipate that we will see a pickup in securities yields and overall NIM for the first quarter and for the foreseeable future, anywhere around 1 to 2 basis points per quarter, Casey. Because we're really seeing pickups in all of our asset categories, and yields -- of new yields that we are putting on the books today.

Okay, great. And just on the expense outlook, obviously some nice expense leverage this quarter. I can't remember the last time you guys have done that. Just what was driving that? And what is the -- can we get improvement on an already low efficiency ratio of 31% in 2017?

We can, but it will be at a very slow pace. We remain in a heightened regulatory environment, and we still have a fair amount of work to do before we cross through the $50 billion threshold. So we're going to stay with our expense guidance of 10% to 15% for now, but we are hopeful that will be at the low end of that range.

Okay great. And just lastly, on the medallion front, can you just give us an update on where some of the metrics are, specifically the loan-loss reserve ratio? And obviously there is some activity in the quarter with some other banks taking their reserve coverage ratios meaningfully higher. Just curious why we are not seeing the same in Signature.

Well, be mindful that not all clients are created equal, and those other banks might be dealing with some unreputable fleet owners that fortunately in New York, we are not dealing with. So not all medallion loans are the same, Casey. I would say if you look at our Chicago portfolio, there's not really much of a change there. But the biggest thing that did happen in Chicago for us was that one of the three fleet owners that we put on non-accrual last quarter actually brought us fully current and continues to pay us. So that's some good news there.

So that means two out of the three large fleet owners there are current on their payments, but they all remain in non-accrual. We are not about to put them back on accrual status. There were two sales in the quarter. So not much sales activity; about $67,500 average, so our carrying value is well below the sales activity. So Chicago, there's really not too much in change.

In New York, the market remains fairly stable. We reduced our overall balance by $24 million in the quarter to $568 million. We also increased our allowance on the portfolio by $12 million, bringing our allowance ratio to 7.8% on that portfolio, and taking on net exposure on the overall New York portfolio down to $524 million. So, in total, that net exposure is down $36 million for the quarter.

As we've stated in the past, these loans were primarily originated through brokers, many of which are fleet owners. We made significant strides this quarter to take over these loans on a direct basis, which will allow us to refinance these notes on a more timely manner. This should really help us to bring down our past due loans. Many of our 90-day past dues, as Joe mentioned in our remarks, are matured loans that continue to pay us their regular monthly payments. And we anticipate -- we really anticipate being able to refinance these now.

Great, thanks. I will step back.

Ken Zerbe, Morgan Stanley.

Maybe a quick question on the pace of just total loan growth. It looks like -- again, it's very strong growth, and I will certainly give you credit for it. Maybe a little weaker than what I was looking for on an average basis, but very strong end of period. Is it fair to say that most of your growth in the quarter came right at the very end, and kind of -- the second part of the question is when you think about the state of 2017, what does it imply for total loan growth and/or total asset growth? Thanks.

I would say that a large part of the growth came toward the end, as you said. As we look forward to 2017, we are still confident that we're going to grow between $4 billion and $6 billion, as we have been saying. We anticipate that there will be less growth in CRE, as we are seeing less appetite to refinance due to higher interest rates and cap rates. However, there is also less competition; so as a result, we can be more selective.

Although we anticipate less growth in CRE, we expect that securities and C&I will make up for it. They are far more attractive asset classes for us than they have been in the past, with interest rates going up. So we will be -- it will be a movement between asset classes, but still strong $4 billion to $6 billion growth.

Got you. $46 billion in total assets on an end-of-period basis, just to be super clear.

Yes, yes.

Okay. And then just maybe one follow-up. From the regulatory perspective, obviously just still a lot of concern that the OCC is pressuring some of the smaller banks. Are you able to comment on your experience with the OCC and/or just broad regulatory pressures that you might be feeling, or might not? How is that impacting Signature?

Well, we are not regulated by the OCC.

Yes.

We are the FDIC and New York State Department of Financial Services. Although they still follow the same interagency guidelines, we have been over 300% outstanding loan -- CRE loan balances through -- compared to the capital since the middle of 2010. And our belief, along with the regulators when we concur with this, is that you have a much higher level of responsibility in terms of policies, procedures, systems, and the like.

So the pressure we feel is to continue to make sure that our systems are more top-of-the-line than they would be if they -- if we were at below 300%, and that we have a tight rein on our portfolio in terms of information technology. And that's the pressure. And I believe some of the smaller institutions that were approaching 300% were not anywhere near they needed to be in order to pass 300% and have the policies and procedures in place.

Got you, okay. And just one really quick one. On the $1.2 million additional amortization of the low-income tax credits, is that something -- is that a one-time item? Or is that something that sort of will continue at this pace going forward?

No. That will continue as we make low-income tax credit investments. We will see that continue to increase with an offset in our tax expense.

Okay, thank you very much.

Bob Ramsey, FBR.

I know you mentioned that there have been I guess a drop in some of the competitive -- competition there in New York in the multifamily market. Just wondering if you could share any color on where you see easing coming from, and what the opportunities are there as a result, and how you are seeing -- what you're seeing from customer demand too?

Well, we could be more selective, and we have been, and we've done that through interest rate as well. For instance, the 5-year fixed since early November has increased from 3 3/8% to -- I'll give you a range of 3 7/8% and 4%, with the pressure being more on the 4%. On the seven-year, we read 3 7/8%, and we had a range of 4.5% to 4.75%. So it's allowed us to -- in this environment we're rates of gone up, to react quickly and raise the rates, and allows us to be more selective.

And has the softening of competition -- has that been more of the smaller guys? Or where are you seeing people pull back? Without naming names, who is it?

I would agree it would be the smaller ones.

Okay.

Actually as I say that, there is also a mixture in there of some that are our size as well.

Okay, so I guess sort of broad base. And then sort of shifting gears to fee income, it certainly seems like a good quarter for commissions and fees. Even though those aren't a real big piece of your revenue stream, just wondering if you could comment on what is giving you the lift there, and what higher rates may mean on that fee income piece.

We continue to add brokers in Signature Securities that helps to drive that, our assets under management there continually grow, as well as some fee income coming out of Signature Financial. So those are the primary drivers.

Okay. All right, thank you.

Ebrahim Poonawala, BoA Merrill Lynch.

I guess just first to follow up on what you said on expenses, the 10% to 15% growth, just wanted to get your views around -- obviously there's been some chatter around potential for the 50 asset threshold getting pushed higher. While I guess -- want to get a sense of how you guys feel about it. And secondly, is that sort of impacting how you're building up towards becoming a $50 billion asset bank?

Ebrahim, we are pretty optimistic that the $50 billion threshold will eventually increase. However, until it actually does, we're not changing our plans, and we will continue to invest accordingly to the $50 billion guidelines. We do anticipate that we, Signature Bank, will cross the $50 billion threshold in mid-to-late 2019, so we do have some time. And when we say mid-to-late 2019, we mean being four quarters' average of $50 billion or more.

But one thing we want to point out is this section of the [war] is ultimately anti-competitive and protectionist of the mega banks, as it really stifles competition as no one wants to grow above that number. You should want more banks to grow past $50 billion. Banks of our size and capabilities are the only ones that can compete with the mega banks. And in fact, in Washington, a bill that would move the threshold to $125 billion would actually pass overwhelmingly in both the House and the Senate on a bipartisan basis. The concern is that it gets caught up by trying to make too many changes at once to Dodd-Frank.

They really just need to move the number to allow for more competition in the marketplace, and then they can deal with the rest. So as you can tell, we do have an opinion on this.

That is pretty clear. So I guess for now, no changes. If you see some movement that may have an impact on how we think about buildout in terms of compliance costs down the road.

Exactly. And even if it does move up, we would have to learn what does change. Because we suspect that the regulators, even if there is a change to $125 billion, may keep certain things in place.

Understood. And switching gears just on the deposit timing, obviously another strong quarter or year for deposit growth, I think as we start thinking about potentially getting multiple rate hikes this year, can you talk about in terms of avenues of deposit growth, your comfort on getting that $4 billion to $6 billion? And what would dictate you coming in at the higher end versus the lower end of that $4 million to $6 billion of guidance, when we think about deposit growth?

Great question, but part of the question, such as what avenues we would get the growth from, is not something we would like to say publicly because that would let our competition know where we're getting our deposit growth from. All I will say is that we have 98 teams. Some of the teams that just came on board in the last year or so starting to kick in. The existing teams that have been around for a long time have had double-digit growth in deposit growth. And we have a pipeline that is pretty strong of new teams and individuals coming on board, primarily with deposit growth in mind. So I'm glad you brought up the question because those from Signature Bank that are listening will understand how important 2017 is for deposit growth.

Understood. And one last question, if I can sneak it in. I was wondering if you had any sort of views on changes through 1031 exchanges if we get to a tax reform at some point this year, and how it could impact the appetite and activity in the multifamily space.

We do have some of that business, but don't really have an opinion. It's just so much up in the air; and rather not comment on which way they would go with it.

Understood. Thanks for taking my questions.

Jared Shaw, Wells Fargo Securities.

Just wanted to confirm the $4 billion to $6 billion growth is total asset growth, not loan growth. Is that correct? Around --

Correct.

And then we should still be looking at roughly a $10 billion securities book by the end of the year.

Approximately.

Yes, okay. And then when you look at the -- where the -- that loan growth is coming from on the C&I side, is that a ramp-up of Signature Financial? Are you -- can you talk a little bit about the growth you are seeing there? Or is it more on the C&I, and more of the traditional New York City-based customers that we should be seeing that growth from?

Good question. It's actually a combination of both. We expect some growth in the traditional C&I, which we are starting to have, as well as Signature Financial.

Okay, thanks. And then, on the expense growth, the 10% to 15% guide, when you are talking -- when you're looking at the spending on new teams versus continued or finalization of the risk management and compliance costs, should we be looking at, on the team side, similar to what we saw in 2016, maybe a handful of teams and a handful of individuals added to existing teams with -- so a continued ramp-up in the risk management investment?

Yes, on both fronts.

Okay, thanks. And then on the risk management side, is that continued personnel hiring, or is that more systems and consultants, I guess for lack of a better word?

It's actually both. It's a little less on the consulting side, more on the systems, and bringing on our own new colleagues in lieu of having consultants.

Okay, great. Thank you very much.

Steven Alexopoulos, JPMorgan.

I wanted to start -- and maybe follow up on the NIM guidance that Eric gave to be up 1 to 2 basis points a quarter. That seems pretty low, given your comments around new loan and securities yields. Eric, could you run through -- what is the beta assumption you are using for the money market deposits?

Steve, thus far, with the couple rate moves that we've had, we've seen very little pressure on our money market rates. I think over the course of the ramp, one year, I think the debate is around 50%, with a 10% decay assumption. But I have a feeling our modeling is very aggressive, or conservative, let me say, on that front.

We certainly -- depending on the frequency and the severity of the rate moves, we will see what happens with that deposit cost. But if they are less frequent and less severe, we should be able to continue to significantly lag on that front.

So, ultimately, I think we're being conservative in our guidance. But remember, we do have a very large commercial real estate book that will take quite a while to reprice. So that's a bit of an anchor for us.

Right, right. And then, Eric, on the provision, this quarter you generally were pretty much right in line with the original guidance you gave, around $20 million. Do you still think that is roughly a good range here, near term?

Yes; we anticipate that we'll be at this elevated level for several quarters as we continue to work through the medallion portfolio.

Thanks. And maybe just one final one: if this 50 threshold was eventually lifted, there are certain things you guys would clearly not need to do; say, living [will]. But there are others that you likely would still do, say enterprise risk management. There's some other areas you probably would continue to invest in.

So when you think about this, if the threshold was lifted, would it have a material impact? We've talked about 10% to 15% expense growth just about every year for you guys. If it's lifted for 2018, would that go down materially?

Well, there are other areas unrelated to the $50 billion that is going to continue to have [if it were going to occur]. One example would be BSA, AML. That is never going away, and will probably continue to be heightened. Not only on the regulatory side, but in the political legislature, they will never change it.

Okay. So should we assume that range will generally stay about intact, even if the 50 threshold was lifted?

It should ease some, right? It's very hard to quantify what that is going to be. Because you don't know what the regulators are still going to believe is best practice or not. But it should ease off some of the pressure on the expense growth, Steve.

Okay. Fair enough.

One other item is on the CRE side with the stress testing. We will continue to be doing that, and that will probably take on more responsibility on our end. So as much as the $50 billion we want to go away, there will be other things that we will be worried about as we grow larger.

Okay. Thanks for all the color, guys.

Chris McGratty, KBW.

Eric, maybe could you allocate the $1 billion, $2 billion [free] of loan growth between commercial real estate and C&I this quarter?

Yes, we had about $180 million in C&I growth for the quarter. That was a combination of traditional C&I and Signature Financial. Multifamily grew about $383 million in the quarter. We had another $450 million or so in CRE.

And is that kind of -- is that a targeted mix, based on your comments, for 2017? Is that how we should think about the allocation of the growth?

We generally think we're going to see a little bit less in CRE end more in C&I. We have a number of growth initiatives there that are starting to take hold. We are also hopeful that we will see Signature Financial continue back to normal growth as we put the medallion portfolio behind us, so we're very focused on growth in that area.

Great. And just one quick follow-up. You talked about increased pricing on your commercial real estate and multifamily. How are -- how has pricing changed on C&I, and how have credit spreads been trending over the past two quarters?

Not much of a change in spreads, but obviously LIBOR has increased, prime has increased, so that's helpful.

Okay. Thanks for taking the questions.

Lana Chan, BMO Capital Markets.

Just wanted to follow up on that last question. Could you actually give us what the blended yield is on C&I loans right now?

I'd say it is slightly over 4% right now.

Okay. And on new securities purchases?

Between 3.10% and 3.25%.

Great. Thanks, Eric.

David Rochester, Deutsche Bank.

On the deposit beta assumption, I just want to make sure I heard that correctly. You said you are using a 50% deposit beta with a 10% decay assumption for the recent rate hike. (multiple speakers)

No, it's over time. It's over a couple-year period.

Got you, okay. And then are you assuming any other rate hikes in that 1 to 2 BP up, or any other curves deepening in your NIM guidance for the rest of the year?

We're assuming two more rate hikes.

Two more. What's the timing on those?

March; and then, one later in the year.

Okay. And then I appreciate the 4% yield on C&I. Where's the Signature Financial new production coming on right now?

They are in the low 4s, as well.

Okay. Switching to provision real quick, are you thinking you can get to where you need to be on the medallion book after only a year of elevated provisioning, assuming that cash flows stabilize where they are today?

If cash flows stabilize where they are today, we are there. It's hard to -- we don't have a crystal ball. But if we were to take a guess which way cash flows were going to go, we certainly would anticipate they would go down before they go up. So that $20 million level of provisioning allows for further decline in cash flows in that space. But our models are based on the cash flows that happened during the quarter and sales that happened during the quarter. If they stay at those levels, then we won't have to provide further.

Then you're good, okay.

(multiple speakers) hard to predict, particularly if you have a change in administration in New York City.

Yes. And just one last one, on the teams, you said that the pipeline was robust. Was just curious if you are looking at more deposit teams, or if there are any lending areas you're looking to tack onto.

More deposit, yes.

Okay. Great. All right. Thanks, guys.

Erik Zwick, Stephens Inc.

Just curious, within your C&I portfolio, do you have any borrowers whose businesses are internationally exposed that could potentially face operating headwinds from a stronger US dollar?

I would say it would be inconsequential.

Okay. And then finally, in your prepared comments, you noted the increase in loans as a percentage of total assets to about 74% at the end of 2016. Would you expect that to stay relatively consistent? I'm just trying to reconcile your comments about -- maybe increased C&I of loan growth.

Yes, I would say where [are these at] now, to slightly up.

Great. Thanks for taking my questions.

This concludes our allotted time for today's conference call. I will now turn the conference back to Joe for any closing remarks.

Thank you for joining us today. And if you want to characterize how the quarter went, I would quote President Warren G. Harding who said: a return to normalcy. Thank you, and I will turn it back to you, Crystal.

If you would like to listen to a replay of today's conference, please dial 1-800-585-8367 and refer to conference ID 51388109. 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.