SVB Financial Group (SIVB) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the SVB Financial Group Fourth Quarter 2020 Earnings Call. (Operator Instructions) I now would like to hand the conference over to your speaker today, Ms. Meghan O'Leary, SVB Head of Investor Relations. Please go ahead.

Thank you, Gabriel, and thank you, everyone, for joining us today. Our President and CEO, Greg Becker; and our CFO, Dan Beck, are here to talk about our fourth quarter and full year 2021 financial results and will be joined by other members of our management team for the Q&A.

Our current earnings release, earnings highlight slides and CEO letter have been filed and are available on the Investor Relations section of our website at svb.com.

We'll be making forward-looking statements during this call and actual results may differ materially. We encourage you to review the disclaimer in our earnings release dealing with forward-looking information, which applies equally to statements made in this call.

In addition, some of our discussion may include references to non-GAAP financial measures. Information about those measures, including reconciliation to GAAP measures, may be found in our SEC filings and in our earnings release. And now I will turn the call over to our President and CEO, Greg Becker.

Thanks, Meghan, and thank all of you for joining us today. You can see from the materials we followed -- filed earlier today that we had another outstanding quarter with continued balance sheet growth driven by robust client liquidity, net interest income above our guidance despite pressure from low rates, strong core fee income, outsized warrant and investment gains, strong investment banking revenue and continued stable credit. It was an outstanding finish to an outstanding year. We are pleased with the continued resilience and health of our clients and the broader innovation economy.

Now we'd like to move right into Q&A. So I'll ask the operator to open up the lines.

Absolutely. (Operator Instructions) Your first question will come from Ebrahim Poonawala of Bank of America.

I guess I wanted to start with capital. I know, Greg, you addressed that a little bit in your letter as well. But looking at sort of the leverage ratios both at the bank and holdco level, why not raise some common equity, given where the stock is trading at, given what looks like a pretty strong growth outlook? Just give us a sense of like why not do it when who knows markets can be volatile, so why not take advantage of the currency to raise some capital today? And if then, you can remind us in terms of the capacity at the holdco to downstream capital to the bank if needed?

Yes, Ebrahim, I'll start and Greg might want to follow on. As we look at capital and we look at where the growth in balances have created at least some reduction in the capital levels, it's in the Tier 1 leverage.

And if we look at the cheapest way to be able to fund that Tier 1 leverage and at the same time the way that we've done it in the recent past is really through preferred issuance that we downstream to the bank as well as senior debt.

We have a recent history of doing that, and we've got the flexibility to be able to do it. So I think that allows, especially as we look at the Tier 1 leverage ratio, the flexibility for us to be able to manage that.

In terms of the capacity as the holding company, if we look at the amount of liquidity that remains there, we're sitting right now roughly $700 million. And that's after downstreaming close to $700 million to the bank in order to support the Tier 1 leverage ratio.

So we believe that we've got the flexibility to manage through preferred, through senior debt to that 7% to 8% leverage ratio.

Got it. And I guess, just moving in terms of the expense outlook. I know normally we give you a hard time and expense growth is stronger. But just given how strong your revenue growth outlook is, I'm looking at the low single-digit expense growth.

Are you kind of pulling back on investments that you would make in a perfect way? Or is -- are you kind of maxing out all investment opportunities? I'm just wondering why not make more investments right now and use this momentum to build the business and grow it even faster?

This is Greg. I'll start. And Dan will walk through the positives and negatives and how we think about it. There's a couple of things that drove higher expenses at the end of the year with SVB Leerink to being one of those components, clearly, their incredible results in 2020 and just a higher payout ratio.

So you look at that and say, that's a big number. So if you pull back a little bit on the revenue forecast, that will have an impact on expenses. We had a real estate write down on some leases that we looked at. And the other the fees that we're donating for PPP. So when you add up all those things that actually is a pretty big number.

So if you normalize all that, we actually do have nice growth built in for '21. And so we are investing in the same places that were -- have been in the past. We're actually increasing the investments we're making and have been making in infrastructure.

And the one thing I would say, if you look at the last part is if the performance of the bank or if SVB Leerink outperforms those expenses will be on the higher end. So we do have capacity in there to invest in the business, and we're investing more than we did last year. And so we feel good about the level that you have in there. But Dan, do you want to give any additional color?

Yes. Greg, the only additional color would be just numbers-wise, we had $20 million of incremental expenses in the fourth quarter just for the PPP donation. Real estate was another $30 million. And if you look at just the performance in the year in the fourth quarter, that was over $85 million of incremental expense.

So yes, the year-over-year guide looks low. But to Greg's point, when you strip all of that out, the investment levels much more along the lines of our traditional high single digits investment pace from an operating expense perspective on a much bigger number. And I think that's really the key. We are clearly investing heavily in opportunity. It's there.

Yes, on slide 31, Ebrahim, if you look at that, you can look at the places where the numbers may pick up. So we may decide to accelerate some strategic investments. We have the Boston Private integration planning. We have moving to [LFI] from a regulatory side. So we do -- there are things in there that could cause it to be higher, in addition to if, again, as I said, if SVB Leerink exceeds the expectations that we have built into forecast. So those are all things to pay attention to.

Our next question will come from the line of Steven Alexopoulos of JPMorgan.

I wanted to start, Greg, first, with a big picture question. So if we look at the incredible growth in 2020 from the company, is it your sense that this represented how much the innovation economy grew or are you taking significant market share here?

Yes. Steve, I'll start. It's -- I haven't gone through and done the analysis to say exactly what contributed to the growth and (inaudible) out between the 2 things the way I think about your question. One is the markets that we serve and then our ability to execute.

There's no question that the markets that we serve, when you look at Slide 8, where we try to describe the level of venture capital activity, PE activity, and you can look at public markets, as you know, all of those have been incredibly strong. So that's the kind of the tailwind that we have based on the success of the market that we're in.

But I would also say, when I think about what we've been doing to build out our capabilities, so you can look at health care and life sciences with SVB Leerink, we get a benefit from having that being on our platform because we're able to do more with health care, life science companies, so our market share is going up.

You can look at the quality of deals that we're doing in later stage, winning more syndications than we have in the past. And so working with later-stage companies and keeping our market share, in fact, increasing our market share.

And the final point is the market share we're having with what I would say is the best or the highest quality companies. All 3 of those things have improved. And so when you think about that and you add to that, the global presence that we have, all those things combined really are about execution.

So what you see the results that we're delivering, or we delivered in 2020 and what we certainly expect in '21 is a combination of an incredibly strong market and then secondly the execution that we've had and the share improvement that we've seen as well.

Okay. That's helpful. Greg, if I look at total client funds, it took the company 34 years to reach $80 billion, and you just grew by more than that amount in 2020. What could go wrong here? Right? What worries you that could derail this momentum?

Well -- and I'll answer the question, and then I'll come back to what's the probability, at least from my lens, right? So when I think about where the risks are, so you got a public market that is very strong. Valuations are high, and that's trickling down into private markets.

You have very few places globally for investment dollars to flow, right? Fixed income is really difficult because rates are so low. Real estate and other investments that would historically be places that money would be deployed, there's so much uncertainty around that, that you're not seeing money deployed there.

So you look at those things and you see where is growth coming from? It's the innovation economy, both tech and life sciences. So that's what's driving it. So what could derail it? Well, if public markets all of a sudden valuations dropped substantially in tech and health care companies and IPO slow down dramatically and valuations take a hit, that will trickle down into private markets.

Now as I said, why don't I believe that will happen. I believe it won't happen because there are a very few places for that money to be deployed. Growth is being driven in these markets and I expect that to continue.

And then the final piece is our strategy about taking out kind of the 4 pillars; commercial bank, the private bank, SVB Capital and investment banking are all part of that strategy. So I believe from a market perspective, the market is healthy. And while it may soften a little bit, I certainly believe that it's the best place in the long run to invest.

And so I don't think you're going to see a slowdown in the long run. It's more about could there be volatility in the short run or medium term, that's clearly a possibility.

Okay. That's helpful. If I could ask you one final question. So if I look at tangible book value, it grew almost 30% in 2020, helped by roughly $630 million of investment in warrant gains. If you look at the investment warrant gains, the growth rate of those is accelerated, right? And it was a good year for IPOs, but it wasn't 2.5x better than 2019. What are these larger gains going -- do you guys attributable to? Are you positioning better in the winners? Like what have you guys observed on that front because this is a material driver of book value.

Yes. Yes. Yes. So I think about it in a few different ways, Steve. One is it goes back to the first question you asked. And the quality of companies that we're winning are the higher-quality companies. So our market share with the best companies is improving.

And as you know, if you're in the best companies, the returns that are being driven by the top companies are greatly outsized compared to average or below-average companies. So our ability to be in the best companies helps to drive those gains, number one. Number two is the product set. So when you think about the breadth of product set that we have, where it's mezzanine debt, it's acquisition financing, it's early stage, it's late stage, it's across the board, there's a variety of different ways where you can participate in the upside, and the team has done an excellent job of delivering on that. And again, these gains aren't coming from deals that were done this year, these gains are what was being derived from deals that were done 3 years, 4 years and 5 years ago or longer. And now those benefits are being realized.

So from that standpoint, again, we think about the number of warrants that we're taking in companies, we think about the new products we're offering. We're trying to work as hard as we can to come up with new products, new solutions that allow us to continue to build on those equity positions that we have had over a period of time.

And then finally, in SVB Capital, the amount of money that we're putting under management, raising new funds, direct funds and fund to funds has also been substantial. And while those take a while to realize the carried interest and the other benefits, we certainly expect that to continue over time.

So just like the last question, we'll see some volatility but we certainly feel good about the long-term return of those investments and the loans we're making in the innovation economy.

Next question will come from the line of Ken Zerbe of Morgan Stanley.

All right. Great. I guess maybe the first question I had, just in terms of deposit growth or your outlook. Obviously, it looks like your outlook for this upcoming year still implies tens of billions of dollars of additional deposit growth from here.

Can you just talk about like how sustainable some of that is? I get the stimulus and everything, and there's just a lot of cash out there, but it just feels like there's been such a meaningful step-up in the level of deposit growth. And then the expectation is that you keep all that and continues to grow. Can you just help us understand why that's the case?

Yes. I'll start and Dan or Mike Descheneaux may want to add to it. I'll start with just almost repeating what I had said to Ebrahim and with Steve, which is the market share that we have on the best companies is really driving that. And those companies are able to raise money at higher and higher valuations because those are the ones that are performing. And while their burn rates may increase, right? when their burn rates may increase, we don't believe it will have a substantial impact.

So part of it is the starting point of where we finished the year, and we do have growth built into it. But as we talk to our teams, as we talk to venture capitalists, we remain optimistic about how '21 will play out.

And if you look at public markets, I know we're early in the new year, but they have remained robust. You can look at, again, the activity levels that SVB Leerink has and their public offerings in the press releases as I always reference that as a way to gauge how well they're doing, they've had incredible number of deals already this year. And what I've heard from the technology investment banks in the market is their pipeline is incredibly strong.

So we certainly believe, at least as far as we can see, that the momentum will continue, maybe not at the same pace, but probably not at the same pace we saw in the fourth quarter, but it's still going to be healthy. Dan or Mike, do you guys want to add anything to that?

Yes. I'll hop in there, Greg. I think if -- you said it right at the end, we don't expect a fourth quarter continuation of the same deposit flows. I think as we look at just the overall liquidity that's in the market, especially with COVID and with the incremental liquidity that's been added to the market and the fact that we're going to see additional investments in the space, private equity, venture capital, the liquidity is clearly there and in the market. We, for our guidance, didn't forecast an identical 2020, we are looking at something that's closer to a 2019. But since we're in a lower rate environment, more of that is going to find its way on the balance sheet than off the balance sheet.

So I think when we look at all of those things, there's plentiful liquidity, we think it will be invested in the space. And when we look at lower rates and compare that back to where we were in 2019, we think we're at the jumping-off point and that this is a reasonable guide.

Maybe just to add on top of that, Ken, this is Mike Descheneaux here. Just stepping back and looking at the amount of dry powder that's out there, it's over $2 trillion worldwide. So there's a significant amount of dollars that are wanting and willing to be deployed.

And then when you think about what COVID has actually done, it has accelerated basically in technology and innovation and more compressed that might have taken a couple of years to deploy. And now it's also being accelerated here. And it's opening up and creating a lot of new investment opportunities. So the combination of all the things that Greg and Dan and myself are saying, that's why we feel pretty confident or pretty good here over the next couple of quarters that it's going to continue unless something [disruptive].

Got it. Okay. And then just sort of my second question, which is a very short but multi-part question. What was your CECL day 1 reserve ratio? And is that still a good target? And given the meaningful drop in your CECL this quarter, how quickly do you think you might get back to that, sort of new target level?

So just want to make sure I understand your question. It's Marc Cadieux by the way. Are you asking where our Q4 reserve is compared to the first quarter of CECL reserves? Is that...

Yes. Technically, I'm kind of thinking like if you back out all of the COVID-related issues, right, which obviously you guys have a little less than other banks, certainly, but like where is the right CECL reserve ratio for SVB bank? Because obviously, it wasn't -- I think -- I'm looking at your reserves, it wasn't 188 or 160, it's probably not 126, it's probably something lower I suspect.

Like what is that -- and usually, I guess, sort of what normally we've talked about is sort of the CECL day 1, which is kind of where it was on January 1 before we knew we were going into a pandemic, and most banks are targeting that level is kind of their "right" level to get back to eventually. And that's what I was asking for you guys.

That's helpful. So certainly, as you see the year pick up, right? we like so many others had a significant provision in the first half of the year, significant reserve build against what we expected, I think everybody expected to happen, what economic forecast were suggesting would happen.

And as you see the economic forecast that are a key driver of the CECL reserve methodology, improve in Q3 and Q4, you see some of those reserves come down. And so just going to our funded reserve, we were at 99 basis points in the fourth quarter.

And that compares to the fourth quarter of '19 in basis points terms, pretty accurately. Having said that, if our portfolio composition was consistent with where we were at the end of 2019, then yes, apples-to-apples, we still have a reserve that's higher than pre-COVID.

And I think the presumption is that if things continue to be stable in credit, the economy continues to improve, then like others, we, too, would get back to where we were pre-COVID, not quite there yet.

Your next question will come from the line of Jennifer Demba of Truist Securities.

Leerink has obviously been a great performer for you. How conservative is your guidance for Leerink for '21? And what does the pipeline look like right now for them?

Jennifer, this is Greg. We -- when I think about pipeline, it's hard to think about, at least from my standpoint. But I would say the best way to gauge how they're doing is, again, just look at the press releases they're giving out. And again, through the first few weeks of the year, you're going to see that the press releases are pretty darn robust.

So I think it's a good indication. Predicting what's going to happen in the balance of the year isn't easy. I would say that we were expecting or going to be forecasting a lower number than what we have in here. But again, as we talk with the leadership team of SVB Leerink, feeling good about the first half of the year. So I would say that, that is the accurate forecast of where we are. Clearly, if we see the continued high level of activity that we're already seeing in January, and we see that play out in the year, just by definition, the numbers are going to be very strong.

But again, just to put it in context, last year, I would encourage anyone that has a question about the activity levels in the health care market, we issued a report on the robustness of the public markets for the health care sector.

And there's no question last year was the best year, period, end of story. And so it is really hard to predict and maybe impossible to predict that you're going to have back-to-back record years because some of that equity is really a pull forward of raises that we would expect to see in '21.

So now some of these companies have 3 or 4 years' worth of cash on their balance sheet, public biotech companies. Could they go out and do more? It's possible, but unlikely. So I would say the forecast that we have in there is what we expect in that range. But again, you'll be able to see it kind of on a weekly basis as you look at the activity levels that are being published by the team.

(Operator Instructions) Your next question will come from the line of John Pancari of Evercore ISI.

Just on your NIM guidance of 2.20% to 2.30%, it implies a fair amount of compression from the -- sort of coming off the 2.40% level for the fourth quarter. And I believe it's down from your prior guide as well.

So I just wonder if you can give a little bit of color about what's driving that? Is that liquidity? Or is there other factors that you could walk through?

Yes, John, it's Dan. I'll take that. The guidance and the NIM compression is largely just driven by the liquidity deployment as well as the continued paydowns in the investment securities portfolio. So on a quarterly basis, we're getting about $2.5 billion to $3 billion worth of paydowns in the investment securities portfolio. So between that, and the incremental deployment of cash and these cash balances that we expect throughout the rest of next year, you're going to see the NIM compression come through.

If we look at the other factors, we look at lending, we look at the deposit side of the equation, those will roughly stay flat. You might see up to 10 basis point reduction from a lending perspective, just mostly because of loan mix.

But overall, it's really this liquidity going to work at lower rates and paydowns in the investment securities portfolio obviously translating to a good improvement in NII.

Got it. Okay. That's helpful. And then separately, this might be more of a question for you Greg or Mike. But just want to see if you can update us on the competitive backdrop by business. When -- I guess, if you could talk about it perhaps from the perspective on the lending front. I mean, clearly, we see a lot of other banks that are active now in capital call lending.

So would love to get your thoughts on that front as well as your other lending areas. But -- and then maybe even maybe a competitive assessment on where you stand in general in some of your other (inaudible) areas.

Yes. This is Greg. I'll start, and then I don't know Michael want to add with more detail. But here's a couple of ways to think about it. One is -- first of all, it's a competitive market. So let's -- we'll acknowledge that.

And as banks feel more comfortable with their results, they're leaning in and asking where growth can come from. And clearly, we're -- our market, as evidenced by our performance is a place where people are looking. But it's been that way for a long time that this has been the market that people are looking at.

And so what have we tried to do to compete against that? Well, there's a lot of things. One is just strategically, and I said this in -- earlier in answer to a question, is that the more that we can provide one-stop shopping across all the needs of our clients and not just doing an okay job but doing exceptional job why would you go any other place.

So you think about it from a commercial bank perspective and what Mike and his whole team is doing, it is exceptional. And there's ways that we can even improve it and make it better. You can look at what we're doing in SVB Capital. And it's not just the investments we're making, but it's also the new capabilities they have with the acquisition that we did with West River Group and the debt capabilities that expands our capacity to lend money to those commercial bank clients.

You've got the investment bank with SVB Leerink, and they have done -- as well as they have done, and they've done an unbelievable job. The team is not resting on its laurels. We're looking at bringing on new teams, new capabilities, which we'll be announcing shortly.

And thinking about technology investment banking. So I think about expanding in those areas, again, it goes back to being able to help our clients in all their needs. And finally is the private banking and wealth.

And with the acquisition of Boston Private, again, if we can add value to our clients in all 4 of those areas and do an exceptional job for them, right, that's competitive differentiation. And that's why we're so focused on executing on that strategy.

So is it competitive? Absolutely. But we've shown that we can deliver for our clients. And to be honest, we're just getting started in building out the full platform. And that, I think, is going to be, as I said, the biggest competitive differentiator over time. I'll turn it over to Mike to add some additional color.

Sure, Greg. Maybe just a few things, John, just to think about it. Well, you mentioned global funds banking specifically. As you saw here in this quarter, we had basically a record quarter for the team, so the team is the best platform in the business. And so they continue to do extraordinary well, extraordinarily well, and there's a lot of opportunities in front of us as well, no doubt.

When you start to think about the tech and life sciences, a lot of the competition is -- comes in the form of debt funds as well. And Greg mentioned, our acquisition of West River Group extends our capabilities for off-balance-sheet activities like that from the debt funds as well, too.

But the teams are doing extraordinarily well as well there. But then shifting to, we don't talk about a lot, but the deposit franchise as well, too, is incredibly strong. Our client acquisitions essentially another record quarter in Q4 and the quality that we're getting just continues to improve. And it's not at the early stage, but it's also at the accelerated stage that we're making really great progress as well, too.

So we feel very good about client acquisition. And that really is the key, and we just do a lot of things right and being relevant to our clients. And then you mentioned kind of in the fee areas, let me just touch upon a little bit of that as well, too. But it really gets back to the capabilities that we have to deliver to our clients, the expansion of our product set as well, too, which we've been very focused on over the last couple of years.

And so I know some of the fee income items took a bit of hit during COVID, but you saw FX had another record quarter. Again, a lot of that is with some -- a lot of our -- as we expand our private equity clients as well to as we extend our global reach as well, whether it's in London or Asia as well, too, that just continues to be strong.

And similarly, on the [card] side as well, too, again, enhancements in some of the product set and putting it in the hands of our clients as well as we acquire them when they come on board here. As well, again, we're going to -- we're starting to get back to COVID levels, excluding travel, but we are starting to get back and see some of that volume come back significantly as well.

So we feel pretty good where we're at in terms of the competitive front and look for more to come.

Your next question will come from the line of Bill Carcache of Wolfe Research.

Greg, I was hoping you could give us a bit of an inside view on your new client growth. This quarter in your CEO letter, you talked about the 1,500 clients that you guys added during the quarter. Can you give some color on how those new client wins came about? Broadly speaking, what percentage of those wins were a result of referrals from existing clients? And how is that number of referrals from existing clients been trending? And would you expect similar new client growth trends to hold as you look ahead?

Yes. Bill, I'll start, and my guess is Michael want to add to it. The trend of 1,500 has been consistent with the last few quarters and has been at near-record levels. So we are thrilled with the level of new client growth that we have.

Now kind of peeling that the onion and understanding of a little bit more where it's coming from, I'd break it down into 2 different ways. First of all, it's our start-up banking team. These are the companies that are just being formed, pre-venture capital backed. And we have an absolutely exceptional team there. And what to me is so impressive about what they have done and what they're building is it's all about how you add value to these companies, how can you be a mentor, how can you be a coach, how can you give them advice to, as we like to say, increase their probability of success.

And what they're working on is making sure the companies are working with are -- have the highest potential of getting that next round of -- or first round of equity financing. So I think that the team that is coming together to do that is really -- the quality is really -- the quality of the team is driving the quality of the results.

So that is a big portion of those 1,500 clients. But what we've seen in the last couple of quarters, quite honestly, gets me even more excited, which is we've had an uptick in wins in what I'll call venture-backed mid -- early mid-stage and even later-stage companies, just new wins.

And the only way that happens, again, it goes back to what I said earlier, an incredible team but it's also how we come together to deliver for them across our product set. And so while the 1,500 clients is a very high level, again, what excites me is the quality of companies that exist in that 1,500.

And do I think that's going to continue? I certainly expect it to from a quality perspective, the number of companies will certainly be a function of how -- the markets, the activity levels and so forth. But to me, there's no reason that we would see that slow down, at least as I see it. So feeling really good about that number and feeling really good about the quality. Mike, I don't know if you have anything to add to it?

No, Greg, you covered it very well.

Separately, if I could ask about rates. And if you could discuss the impact of curve steepening on both the loan and securities portfolios and where your gearing to the long end of the curve is greatest?

Dan, I don't know if you're coming through.

My fault, forgot to take it off from mute. So if we look at where we are today and where we have -- we're paying the most attention to the curve, it's in the intermediate part of the curve. So look at the 3 year, let's call it, to the 5 year. And that's where, if you look at the liquidity that we're generating, absent the loans that we're putting to work, we're putting investment securities to work.

So that's where -- if we see curve steepening in 2021, we'll start to see those benefits really push through at least in the short term. Obviously, we still remain asset sensitivity -- asset sensitive to short rate movements. But at this point, obviously, aren't expecting a change in Fed funds. So really paying attention to that 3- to 5-year range. That's where we're putting the investment securities portfolio to work.

And any curve steepening there could provide incremental benefits to what we have in the guidance.

Understood. And obviously, your exceptional growth overwhelms low rates. But if I could just follow up on that. So on the lending side in the last (inaudible) cycle, we saw some sort of back book repricing headwinds that led your loan yields to continue to decline really throughout (inaudible).

Do you see a similar dynamic playing out in the current (inaudible) cycle on the lending side? And then on the security side, assuming the short end of the curve remains 0 as you just described, and you do get some more steepening, what level would you need to get to see the dollar (inaudible) and no longer pose a headwind to the securities portfolio yields?

Yes. So first, on the lending side, since the majority of the loan portfolio is variable rate, and is really tied -- the majority of that is tied to prime rate, the resets there have really occurred. So that's really all priced through the majority of the loan book at this point. The only exception being the mortgage portfolio, and obviously, we have been seeing new -- good and new activity there and some pretty decent yield stability.

So I think when I look at loans on an overall basis, we feel good. Over the next year, maybe you'll see, on average, a 10 -- 5 to 10 basis point decline in overall yields. The investment securities portfolio is another story. That's where we are seeing paydowns in the $2.5 billion to $3 billion a quarter range. And obviously, that money is being reinvested at today's rates.

So that's being reinvested in this, let's call it, 110 to 130 type of range. So that's going to continue to be a drag on the overall yield from the investment portfolio perspective. And that's going to take, if you just look at the duration of the book, another couple of years to price all the way through.

So that's the way to think about it. We're still not done, and we've reflected all of the repricing activity that we expect and the new purchases into the net interest income and the NIM guidance for the year.

There are no further questions at this time. I'll now turn the call back over to Mr. Greg Becker for closing remarks.

Great. Thanks. I just want to thank everyone for joining us today. Obviously, we're pleased with our strong results and the continued resilience of our clients in the innovation economy. While there's still uncertainty regarding the broader economy and the duration of the pandemic, we're managing effectively, continue to focus on our strong execution and executing on our long-term strategy. As I've said several times during the call, our plans are about having a long-term strategy and then kind of relentlessly executing on that strategy.

And so where we are today certainly feels good that we're on the right track with the strategy. And certainly, the things that we have ahead of us, we feel really, really good about them. I want to thank, as I always do, our employees for their continued creativity and dedication to helping our clients. And it just reflect on 2020 because that's what these results are -- we're here sharing with you 2020.

And we all know what we went through in 2020, and it seems like in some ways, a long time ago, when you think about going to the pandemic and the work from home and the social justice issues that came up last year and so many other things.

On top of that, we really asked a lot of our team when you think about the execution, the volume increases, looking at acquisitions. And so I just truly want to thank all of them for what they delivered last year for the organization and for our clients. So thank you.

I want to thank our clients for putting their trust in us and we certainly know as good of a job as we have done, we can do better, and we're committed to doing better both on the overall client experience as well as building out a product set that we can be there for them across every aspect of their needs.

And so we feel, again, really good about that and appreciate their trust in us. And finally, I just want to acknowledge that we are well aware that there are still many people struggling and suffering through this economic downturn to pandemic.

We just continue to hold them -- all of them in our hearts, and we are trying to do our part with donations at the end of the year for pandemic relief to other [DENI] initiatives and quite honestly, encourage our clients to do that as well.

So we just want to thank everyone for joining us and wish everyone a safe and healthy 2021. Thank you.

This concludes today's conference call. Thank you for joining. You may now disconnect.