SIVB (2020 - Q2)

Welcome to the SVB Financial Group Q2 2020 Earnings Call. My name is Adrienne, and I'll be your operator for today's call. . Please note, this conference call is being recorded. I'll now turn the call over to Meghan O'Leary. Meghan O'Leary, you may begin. Meghan O

Thank you, Adrienne, 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 second quarter 2020 financial results and will be joined by other members of management for the Q&A.

Thanks, Meghan, and thank you all for joining us today. You can see from the materials we filed earlier today that we had a very strong second quarter with outstanding balance sheet growth, including exceptional client liquidity, low credit losses, solid net interest income and very strong revenues from SVB Leerink. Overall, our clients and our markets are showing strong resilience, and we feel really good with our results for the quarter. You'll also see that we're providing outlooks for select business drivers for the second half of 2020. While it's still challenging to predict outcomes for the year given the uncertain economic environment, we've tried to provide as much color as we can for the rest of the year. With that, we know you have questions. So I'll ask Adrienne to open up for Q&A. Thank you.

Adrienne, is the queue open? I didn't see any names in there.

Yes, it is. And our first question comes from Ebrahim Poonawala from Bank of America.

I guess just the first question, Greg or Dan, around capital. In your letter, you mentioned that you have abundant capital at the holding company to downstream. But I would appreciate some color around your appetite if you decide if the growth remains strong in terms of raising common equity. And also, if you can talk to how the bank is positioned differently today than, I guess, 2014, '15 when you had raised capital to support balance sheet growth around just being able to channel deposit growth on or off balance sheet.

Yes. Ebrahim, it's Dan. So I'll start, and Greg might want to add to it. I think if you look at actions that we took in the quarter by raising senior debt at the holding company for $0.5 billion and take a look at the overall cash position at the holding company at $1.4 billion, that provides, number one, an ample amount of cash to be able to downstream down to the bank. So if you think about it, for every $100 million that we downstream, that gives us about, let's call it, 13 to 15 basis points worth of running room on Tier 1 leverage. So not all of that $1.4 billion could be downstream, but a good portion could. So that's number one.

Got it. And just part of that, in terms of -- Dan, if you can speak to how you're thinking about channeling deposits on versus off balance sheet. And is there any difference in terms of just how the bank is set up while you've done some hiring on this end around how you think about moving deposits of balance sheet versus on?

Yes. I mean I think as you've seen over the last year, we have had our clients, and number one, they are, I think in this type of environment, looking for more safety and more security on a bank balance sheet perspective. So our products are here, our products are in place, and I think our clients are comfortable with our on-balance sheet products as well as what they see off-balance sheet-wise. So I think you're going to continue to see more of a desire for our clients to drive deposits on the balance sheet. And I think we, from a, like we just talked about, a capital perspective, are able to continue to support that and at the same time, earn not as good of a spread as I would like to, but at least a good spread on those deposits in the form of investment securities with that excess liquidity.

Got it. And just one more, Greg, you mentioned about investment activity remains very confined to large funds, larger companies. At the same time, you added a record amount of clients this quarter, I think 1,500. Just kind of if you could reconcile what's going on there in terms of, I guess, client formation, what SVB is picking up and what the outlook is as you think about the back half?

Sure, Ebrahim, let me answer that. It is -- on the fundraising side, clearly, it is later stage. It's later stage. It's some IPOs, but mainly secondaries. So that's a very active market, and you see that with the SVB Leerink results. But as you know, when we talk about new client acquisitions, that is mostly, or almost exclusively, at the early stage. And so what we've been investing in and building around our early-stage practice, first of all, we've gotten even more focused on that. We've developed a broader product set to bring more clients in. And I have to acknowledge, I think right now, and Dan touched on this a little bit, that when you have an economic downturn that we've seen, this pandemic, a lot of companies want to go where they view a trusted organization. So we believe that's been a catalyst as well. And we've strengthened our team there.

And our next question comes from Steven Alexopoulos from JPMorgan.

So I'm trying to reconcile this record growth of client inflows with the exit markets clearly being disrupted. Do they not matter? Do the exit markets not matter anymore? Like how do you figure, if we saw a record period-end growth of $22 billion this quarter, given everything that's happening?

Yes. There's a lot of things going on, Steve. And I'll start, and Mike Descheneaux, our President of the bank, he may want to add some color to it as well. So the markets that have been exceptionally strong, the exit, when I think of exit, you're thinking of IPOs or M&A, that has been soft. But when you look at secondaries, especially in health care, life sciences, that has been exceptionally strong. And that's been one of the key catalysts of the success of SVB Leerink. And we think that there's a part of that that's going to continue, to a degree, for the balance of the year. So that's one major category, and that's been a big part of that client funds growth, especially in the second part of the quarter. So that's been incredibly positive. The second part is that you can still look at venture capital. And so there's 2 pieces: dollar flow; and companies -- the number of companies that are getting money. So the number of companies that have gotten money, venture capital, has shrunk. It was down a fair amount. But the dollars, as you saw, were actually pretty strong, actually very, very strong. And so you benefit from the markets being very active in late stage. You benefit from secondary markets. And then again, as I said, I also believe there's a part where they want to go and put their money with the trusted organization. So all three of those things have really been strong, strong catalysts. And yes, we benefited from that, and the numbers were pretty extraordinary.

Maybe one thing to add, Steve, is -- or a couple of things maybe. When you think about the dry powder as well in the venture capital arena as well, it's still incredible levels there. So when they are able and willing to deploy, and particularly now as -- when we first started in the COVID environment, it's a little bit tougher to kind of engage and invest, but the venture capitalists are working through and triaging some of their companies, starting to focus on the winners as well too and starting to adapt and get more comfortable with deploying the dollars out in the marketplace. So again, they have that dry powder that they can put to work.

Mike, is having Leerink helping you? I mean we saw the press releases they put out. Is that helping get more of that secondary money into your bank? Is that a fact now?

We definitely are. I mean they've been good partners, obviously, when they have a relationship or we have a relationship with the client, and so we certainly have great products and solutions for our clients. And so yes, it does open up the avenue, and we've had a really good success rate with our clients.

Okay. And then on credit, I think Marc's probably there. What were the -- what was the number of early-stage abandonments this quarter? How did that compare to last quarter? And then when we look at the 2 NPLs, the severity seemed high. Do you call these one-offs? Or is that the outlook? Should we have more defaults in those books?

Sure, Steve. It's Marc. I'll start, and Dan or Greg might wish to add. So in terms of the number of investor abandonments, so to speak, probably a better way to think about the quarter, Steve, is in terms of the charge-offs and the new nonperforming loans. As you can see, charge-offs were really pretty low in the quarter. And the granular investor-dependent didn't show up the same degree. But again, it's a very small number. And so there's not a lot you can really take away from that, in part because it's -- there's one, roughly $4 million, charge-off in there that kind of dominates the investor-dependent segment of it. And then going to new nonperforming loans. We have a handful -- beyond the large two that I'll come back to in a moment, the rest is what I would call the typical granular early or investor-dependent, but largely early-stage. And in terms of the numbers of those, I don't have an exact count on them, Steve. But I think when you take the two bigger ones out of the new nonperforming mix, what's left isn't that large of a number.

Yes. That's very helpful.

And our next question comes from Ken Zerbe from Morgan Stanley.

I guess my question, in terms of guidance, one of the line items that you did give guidance on was noninterest expenses of $900 million to $930 million. It seems like we're missing kind of a rather important piece, which is probably Leerink because -- and I totally understand the link. If they make more money, they should get paid more money. It makes sense. But can you comment a little bit about what your expectations are for Leerink because if that doesn't do fantastic in 3Q, then it seems like your expenses are probably unusually high?

Yes. This is Greg. I'll start and then turn it over to Dan. Ken, clearly, what you just said is a key component of the expense outlook, which is the variability. And it is a percentage of revenue. So the way the payout ratio works, or the way the earnings work, it's a function of how well they do. And obviously, they did really well second quarter. And obviously, you guys can look at the press releases into the third quarter and see that there is -- the momentum is continuing into the third quarter. So that's part of it. There are other components that I'm going to ask Dan to comment on that are onetime in nature, that are going to be impacted either from Q2 that were onetime expenses or even in Q3 and Q4, that will be onetime expenses. But the other component is, again, as we said for years, we're continuing to invest in the business because we certainly believe we have many, many, many opportunities. And that's in client experience, employee enablement, driving the revenue growth. All those things are continuing to invest behind that. But I think the majority of it actually relates to Leerink and some of the onetime things. So I'll ask Dan to comment on that.

Yes. Thanks, Greg. So really, there are 3 things. So -- and if we could just baseline the expenses for the second quarter first. As Greg mentioned, there were some exceptional items in the quarter: SVB Leerink's performance; professional services with the Paycheck Protection Program; and higher levels of incentives at the bank for performance. So all of that represented, let's call it, approximately $70 million. So the baseline of costs, if you look at it, you're in the range of $415 million, $425 million for the quarter. From there, as Greg mentioned, we continue to expect to invest in the franchise. So the way to think about it is in -- on a quarterly basis, something on the order of magnitude between 2% to 2.5% expense increase just for the investments. And then finally, we do expect continued strong performance for Leerink in the markets in which they operate for the remainder of the year. And on top of that, we have the Paycheck Protection Program professional fees and the donation expense of roughly $20 million in the fourth quarter. So those are all the moving pieces that lead to, Ken, what you pointed out was what looks like a higher expense guide in the second half.

Got it. Okay. That does help quite a bit. And then just the other question, in terms of your guidance for core fee income, obviously, it was weaker this quarter than I think some of us may have been expecting. Like if we were to sort of draw a corollary to what other banks are saying about their fee income, which I know it's totally different, but we're seeing a lot more activity and normal customers are using their cards, and it seems that most other banks are seeing sort of an increase in that core fee line. And granted, yes, yours is different than theirs. But what are you seeing that gives you confidence that you're not going to see a rebound in your core fees in a meaningful way in the second half because obviously, you were on such a good trajectory prior to the pandemic?

So Ken, I'll take it, and Mike might want to add to it. If you look at where the growth in our core fee income has come over the last couple of years, a lot of it has been driven by that very strong client funds growth. Now that is rate-sensitive. So we certainly saw that come off in the quarter, down into the 12 basis point range. We do expect that that's probably going to settle out in the high single digits. So even as we continue to add client investments, that overall spread income that we earn there is going to continue to contract. So that's going to be a headwind. At the same time, I think our business activity in foreign exchange in cards, it's been off meaningfully in the second quarter, down in the 20% range on both of those. We may start to see some small rebound in those areas as the markets pick back up. But at the same time, we're going to continue to see that pressure from the client fund fee income. So I think that's how we're getting to our view on how things are going to look here in the second half. Mike, I don't know if you have anything else to add?

Yes. Maybe just a few things to think about, Ken. I mean obviously, a lot of it depends on the level of activity in the economy, right? With the economy, let's just say the volume levels of activity are down, that's certainly impacting our business. So you can -- let's start with credit cards, for example. A lot of our clients use the credit cards for travel, and that's a significant part of the spend on the credit card. And so that's down significantly as well, too. So depending if we start to see travel picking back up, that will certainly help. Though certainly, we're shifting to other areas where they're spending, but it's going to take some time. Then you think about foreign exchange. We had an incredible first quarter. And so the number -- the comparison from Q1 to Q2 is a little bit tougher comparison. And that certainly was impacted in Q2 with respect that there's less deal activity, cross-border investments as well too, which is having an impact on the FX as well. So again, with people becoming a little bit more resilient and returning back and starting new deals, you could start to see some foreign exchange pick back up. But again, it's still obviously very challenged in this environment here. And then Dan was covering the client investment fees as well too, given the fact that that's very rate-centric and rate-oriented. And again, our volumes are up significantly, no doubt. But of course, the margins are down with respect to the interest rates. And then similarly, on the deposit service charges as well too, we certainly have higher volumes of deposit, but that's also meaning people are getting higher levels of earnings credit as well to offset some of their transactions. And plus, activity and payment volumes are certainly down in this environment. But nonetheless, again, I think it does tie back to the environment, and we're obviously all keeping a watchful eye. And hopefully, it is a bit more resilient in the second half.

And the next question comes from Jennifer Demba from SunTrust.

Just a question on the nature of your net charge-offs. Could you just give us a little bit more detail and color on those charge-offs?

Yes. So as noted before, few in number, our gross number was around $15 million. And that was concentrated in one balance sheet-dependent loan that represented about 1/3, about another almost 1/3 of the gross in one investor-dependent life science credit. And the rest after that, pretty granular and relatively speaking, concentrated mainly in investor-dependent.

When you look at your entire loan portfolio, it's vastly different from any of your regular commercial banking peers. But are there any particular segments of the portfolio that look more sensitive to this pandemic than others, I'm thinking maybe specifically the wine portfolio or other parts of it?

Sure. So I think, as we've mentioned before, investor-dependent and particularly, the early-stage end of it, I would characterize as probably our most vulnerable clients. Given that they're early-stage, they're cash-burning. And as we've noted in the past, historically speaking, that has been where the bulk of our losses come from in periods of economic stress. And we think in the bonus of time, that will probably be the same case. After that, there are a number of businesses in various technology segments that serve industries most disrupted, right, travel, hospitality, things like that. And so those fortunately are a fewer number in terms of the ones that had been severely impacted. And then you mentioned wine. Certainly, we were very concerned coming into this that we would, now given the shutdown of tasting room revenue, of restaurant revenue, that our wine borrowers would be very severely impacted. And I think a combination of, relatively speaking, stronger performance in the second quarter than we expected, coupled with PPP and in some cases, owners infusing cash as well, that portfolio, so far, is looking better than we might have expected, recognizing again that there's a lot of uncertainty hanging over the second half, parts of California going -- either rolling back the phased reopening or pausing. And to some degree, that may continue to be a source of stress for our wine borrowers. But again, that, I think, remains to be seen.

And our next question comes from Jared Shaw from Wells Fargo.

Maybe just looking at the early-stage book, when you look at the potential severity of loss, do you still feel that that's where we -- similar to where it was in past cycles? Or some of the improvements and sort of client interaction and underwriting, do you feel that, that could help limit severity of loss? And then also, what's the remaining months of liquidity as far as you know on the early-stage book?

Sure. I'll start. Dan or Greg, Mike, if they want to jump in on this. So maybe a good way to think about it is just this downturn relative to the global financial crisis, I think, is a good place to start. And generally speaking, coming into this downturn, venture-backed investor-dependent companies had, on average, more liquidity and were, I think, in a better position to weather a storm. And then a number of things have happened to make that liquidity situation better still, right, PPP loans, our programmatic deferrals, payment deferrals. Companies were pretty quick to reduce expenses. That helped as well. And then finally, investor support has been much stronger, frankly, than I recall seeing in the last downturn. And the combination of those things have, I think, on average, put quite a bit of runway in front of the average investor-dependent company. And you see that, of course, reflected in the lower losses that we experienced in the second quarter. So those are, I think, some key differences. And one of the reasons why we have some cautious optimism, that while there's still a lot to go and a lot of uncertainty, the hope is that we will do better. And then again, emphasis on hope than we did in the global financial crisis. I'll stop there. I'm sorry, you had a second part to your question. I'm drawing the line.

What the remaining months of liquidity is in the year.

Correct. Yes. So that is a statistic. We do track but have not disclosed, and so I'm going to resist the urge to do it here. But we'll again say, from -- generally speaking, liquidity for this cohort, better this time for the reasons I mentioned than in the global financial crisis.

Okay. That's great color. And then I guess, looking at the capital call lines, a little bit of a pullback this quarter. Can you just comment generally about on the trends there, the new fund formation. I know there's a lot of dry powder on the existing funds, but the new fund formation as well as the change in the competitive landscape in that product over the past few quarters.

This is Greg. I'll start, and Mike may want to add. So a couple of things. One is new fund formation, as we've talked about, for larger funds has actually been pretty good. You can look at the numbers from PitchBook or other things that we've talked about, and they've actually been pretty healthy. I think there was a concern that it was going to slow down dramatically. And I think, especially for larger, more established firms, which a lot of PE firms are, people have gotten comfortable. LPs have gotten comfortable in this virtual environment. And so the closing has actually been pretty good. As far as competition and competition overall, I mean, it's still a competitive market. When we think about how we have shown up, I give our teams a huge amount of credit, they've been incredibly effective. We've had very, very, very little turnover, and we've been able to add new clients along the way. So the function of where we are from a volume perspective is more about just overall activity levels. As we said at the beginning -- or last quarter, we thought that there would actually be a greater decline in private equity volumes from an outstanding perspective, but it was actually -- it held up pretty well. So we're going to watch and pay attention to the balance of the year, but feel pretty good about where we are and feel very good about where we are from a competitive positioning perspective.

And our next question comes from John Pancari from Evercore.

I have a question regarding the -- your commentary on charge-offs. I know you expect -- you indicated you expect them to be elevated in the second half. I just wanted to see if you can give us some idea on the level that you would be pointing to in terms of elevated. Would that be up a significant amount from where we're at now at the 32 basis points?

Yes. It's Marc. I'll start and probably finish on this one. As noted in our materials, we believe there is just too much uncertainty to provide any reliable guidance on that particular topic. And so I would have to beg off the question, at least this quarter.

Okay. And I know you also, in that same comment, you indicated that while you do this to be elevated, you do -- you indicated that they're largely reflected in your current loan-loss reserve. But I went -- I go back to where you gave the detail of the loan-loss provision for this quarter, of the $66.5 million, and you indicated that $10.5 million of that $66.5 million was related to charge-offs that were not reserved for. So what is that $10.5 million? What type of charge-offs are you seeing now that were not in your CECL lifetime reserve?

Sure. So it's Marc, I'll start. And the -- it's rare outside of investor-dependent early-stage to see credits devolve quickly into loss. Having said that, I think as we had all recognized, these had been highly unusual times. And that one balance sheet-dependent credit I mentioned earlier, roughly 1/3 of our gross charge-offs, falls into that category of severely and very rapidly disrupted. And that is, at $5 million, roughly half of the unreserved charge-off number. The rest is what I would characterize as there's one other bar, we're in there, I would characterize as in trouble before COVID arrived and COVID finished the job. And the rest are what I would characterize as, again, severe and sudden disruption. And so said another way, it's rare that we would find ourselves in a situation with 2/3 of charge-offs. Unreserved is pretty rare. But again, these had been extraordinary times.

Got it. Okay. That's helpful. And then on the reserve, where it stands now, I know you added $50 million to the reserve this quarter. So I just wanted to get an idea. Do you -- given that and given what you just mentioned around credit, do you expect any incremental additions to the reserve from here? Or do you think it substantially represents your outlook at this time?

Yes. Well, as I think mentioned earlier, we are not providing credit guidance given the high degree of uncertainty. And so by virtue of that, difficult to provide any guidance on what further provisioning over the balance of the year might look like.

Okay. No. That's understandable. If I could just ask one more, also on credit, but do you have your level of criticized assets for the quarter, of how that changed?

As we note in our materials, criticized loans did increase in the quarter, but remain at relatively low levels from a historical standpoint.

And our next question comes from Chris McGratty from KBW.

Greg, with Leerink's strength in the quarter, I'm just trying to back into what kind of profitability you've got at the bottom line. It looked like the revenues are about $100 million in the comp that you call out. Is it kind of in the 50% range that we should be thinking about in terms of the increase in costs associated with Leerink?

So I'm going to give you some high-level comments, Chris, and then I'm going to ask Dan to share his perspective. We're -- the comp ratios that we have with them are pretty consistent in the industry, at least what we have seen as we were looking at the deal. This is 1.5 years ago, number one. Number two, we have structures in there so that there is some additional -- if they perform really well, there's some additional earn-out capabilities, which they have hit. And to be honest, I'm very happy they're hitting those earn-out levels because it's a great sign in their -- in what they're delivering. I think one way to think about it is when you're at these elevated levels, we're probably around that pretax profit level of kind of in that 15% to 20% range when you look at it. And so take a look at the revenue, and if it stays at these more elevated levels, even with the earn-out, you're in that range. So it's been very, very great from a contribution perspective and feel really good about what they're delivering. And they're just staying incredibly busy, which is nice, too.

Yes. And Greg -- and Chris, just to add to it, just looking at, on a pretax basis, what drops is, this quarter, $55 million for Leerink, and that compares to about $1 million in the first quarter. So obviously, a big change, but that's absorbing all of the comp that Greg was mentioning.

Great. Maybe one more on just the outlook for capital call growth. Some of your peers, kind of the numbers this quarter that I've seen are somewhat up, somewhat down. Maybe just a little more color on activity in terms of what might drive your forecast for loan growth to be on either side of conservatism?

Yes. This is -- I'll start, Chris. And I think one of the ways to think about it is we're staying very focused in what I'll call the middle-market category. It's what our teams are exceptionally good at. It's what they really understand. What they're not chasing are what I'll call the funds that are $10 billion-plus, where the margins are low and the size of the commitments that you have to put in place are substantial. So yes, these are larger loans that we have. But as I said earlier, the teams have done an excellent job of supporting clients, being there for them, providing them information and insights about what's going on and adding new clients. And so we're really -- the -- given the market share that we have, for the most part, the dramatic change in volumes is going to be a function of activity levels. And so as activity levels pick up, we certainly believe that you're going to continue to see loan growth back on a consistent trajectory that we've seen historically. But until that gets back to what I would say is normal, it's just more uncertain. So it's very -- it's more difficult to predict. Mike, you may want to have some additional commentary.

Not a whole lot to add there, Greg. I mean I think we are keeping true to how we underwrite as well, too. I mean certainly in the market and competitive environment that it is, I mean, you are seeing some banks that might be doing some things that we don't feel comfortable with, such as funding prior to a call or giving higher limits on the size of the fund versus the line. So there's just a variety of different things. But again, the team is doing really well. They're bringing in new clients as well too into Greg's. And really, the key point is when we start to see levels of activities pick up, that's when you're going to continue to see the strength. But again, a really solid portfolio.

Great. And Dan, I just want to make sure I heard you right. The fee rate on the client funds, did you say 12 basis points as kind of the range?

Where we ended the second quarter and we expect as we head into the third quarter to be in that, let's call it, high single-digit range.

And our last question comes from David Smith from Autonomous .

Back on the PE/VC loans, could you speak a little bit about how unfunded balances for those loans have trended since 1Q and how your utilization has gone? Were you able to grow committed lines, at least, in the quarter despite the loss in balances?

This is Greg. I'm going to ask Marc to comment on that. Marc may have those numbers handy. Marc, do you have that?

I am working on that.

So Marc said -- his voice is out a little bit. His sound is off. I think they -- actually, I would just say, we don't have the data right now. And so we can follow up on it. And you'll see that in our 10-Q when it comes out.

Great. And then your assumption for the PPP loan forgiveness, it seems like that went up to 75% versus 50% to 65% last quarter. Anything in particular you can share about what drove that increase?

Yes. This is Dan. I think that as you look at how the SBA and the rules have been changing, the extension of the items that are available for forgiveness and the time line, the amount of weeks and months that are available, make us feel like there's just going to be more dollars that are eligible for forgiveness. So that's the reason and the rationale for the shift in the amount that we expect to be forgiven.

Sure. Makes sense. And anything you can share about the pipeline for Leerink in terms of deal volume over the next quarter or two?

Yes. This is Greg. As we have found out, the pipeline for investment banking is very hard to predict more so than almost anything else. So it's really a function of activity levels. What I've said to people, inter-quarter when they ask me how it's doing, and obviously, we can't share the numbers, I just say pay attention to the press releases that SVB Leerink is printing. And you clearly saw last quarter, it was incredibly active. And I think you'd see so far, this quarter, it's been very active. So if you want an indication of how well they're doing, again, in a broad level, that's probably the best indicator. I would just say, generally speaking, on top of that, look, when you think about the health care, life science market and biotech specifically, there's still a lot of momentum. But as we know with public markets, IPOs or secondaries, it can change very quickly. To try to predict what -- what's going to happen with public markets for secondaries and IPOs is, I would say, that would be very challenging for us to do. But super happy with the team, really happy with what they've done and feel really good about the market share they have.

Yes. Certainly an incredible quarter.

And this concludes our question-and-answer session. I will now turn the call back over to Greg Becker for final remarks.

Great. Thanks, Adrienne. So I just want to thank everyone for joining us today. We obviously feel really good with the performance in the second quarter and feel good in our ability to manage effectively through these challenging times. Obviously, there's still a lot of uncertainty out there, and it seems like every day, there is changing information about closures and what may happen. So the crystal ball is pretty cloudy from that perspective. But as we pointed out, we're in the best financial position we've ever been in and have the resources, expertise to, we believe, effectively execute and support our clients. Before I thank our team and our clients, I just want to add a few comments on inclusion, diversity and equity at SVB and the innovation economy. So let me start with SVB. One, incredibly proud of SVB and our team. We have much more work to do around making SVB a more diverse, more inclusive and more equitable company. One of our values that we talk about on a regular basis is embracing diverse perspectives. And to really live that value, we need to do better. This is something we, at all levels of the company, have been focused on, particularly in recent weeks. Secondly, I want to talk about the market that we serve, which is the innovation market, the innovation economy. We know the numbers, and the market knows the numbers, and they aren't good on the innovation economy. Many groups are underrepresented in the investment, founder and worker categories of the innovation space. So while we've issued reports highlighting these issues, I just would say, I know that we haven't done enough to lead change. So while we're working on the details of the how we'll do this, I want to let everyone listening know that where we will be doing more, driving change and being more transparent in holding ourselves accountable. So as I always end on these calls, I want to thank our employees. They do such an incredible job. They're dedicated, passionate and creative in how they help our clients, something we don't talk about that much. They've also just done an incredible job in core operations, just really making sure the businesses run smoothly. Every SVBer has a role to play and make a difference, and so I just want to thank them. I also want to thank our clients. As I always say, their trust and willingness to give us an opportunity to show them what our long-term partnership mindset is, is great, and we think that's especially been true in this difficult time right now. And finally, our hearts and thoughts are with everyone who has been personally affected by this crisis. We wish you all good health and safety. And with that, we're going to close. Thank you.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating, and you may now disconnect.