Good day, and thank you for standing by. Welcome to the SVB Financial Group Q1 2021 earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ms. Meghan O'Leary, the Head of Investor Relations. Please go ahead. Thank you, May. Thank you everyone for joining us today. Our President and Chief Executive Officer, Greg Becker, and our Chief Financial Officer, Daniel Beck, are here to talk about our first quarter 2021 financial results, and they'll be joined by other members of our management team for the Q&A. Our current earnings release, highlight slides, and CEO letter have been filed with the SEC and are available on the investor relations section of our website. 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. Now I will turn the call over to our President and CEO, Greg Becker. Thanks, Meghan, thank you all for joining us today. As you can see from our earnings announcement and slides, which we filed a few hours ago, SVB had a great quarter of exceptional growth and profitability, and it was our best quarter in history. We're notably increasing our outlook for 2021. Our Q1 performance was marked by continued outstanding balance sheet growth, strong net interest income, incredible warrant and investment gains, outstanding SVB Leerink revenue, solid core fees, and stable credit overall. We'd like to go right into Q&A, and I'm going to ask the operator to open up the lines. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. We have our first question from the line of Ken Zerbe from Morgan Stanley. Your line is now open. All right, great. Thanks. Good afternoon, everyone. Hi, Ken. Greg, I would agree with you. It was a fantastic quarter, it seems. One thing that stood out to me actually looking through the materials was the very large increase in the held-to-maturity securities portfolio. It looks like on an end-of-period basis, it was up about $25 billion. I guess I'm not overly surprised that you're investing some of this excess cash into securities. Can you just talk about why held-to-maturity versus available-for-sale, and what exactly are you investing in? Thanks. Hey, Ken, it's Dan. I'll take this one. Obviously you've seen just incredible liquidity growth coming through the end of last year, and continuing through the quarter. Based on the view of that liquidity and the overall market conditions and how much incremental liquidity remains in the market, we are comfortable being able to put some of that money to work in longer duration in the held-to-maturity category. Think in the 3-5 year range. One of the things that gives us comfort with being able to do that is that in our available-for-sale maturity, we're also targeting a much shorter duration. Think about something along the lines of two-year durations. That helps us reduce the other comprehensive income risk, also frees up liquidity for us to the extent that we need it. Based on the trends that we continue to see and the stability of the liquidity in the market, we're comfortable putting that type of money to work. Now, what are we investing in? We continue to invest in agency securities. This is also a mix of agency mortgage backs as well as agency CMOs in that three to five-year maturity range. Got it. Okay. That helps. I know this is going to be a tough question that you may not want to answer, but just in terms of the investment security and warrant gains. Again, fantastic growth. It certainly surprised even everyone despite your pre-announcement a little while ago. When you look at the portfolio, is there any reason not to assume that this continues? I think both ourselves and probably the rest of the Street's been sort of caught a little bit flat-footed quarter after quarter after quarter, just the amazing growth that you guys have been able to put up or gains in that portfolio. I'm just wondering, should we just assume, at least for the near term, that this level of gains continues over the next several quarters if you have that level of visibility? This is Greg. I'll start, and Dan may want to add. This quarter was extraordinary. Last quarter was incredibly strong, and the quarter before that as well, as you highlighted, Ken. Obviously, we do not expect Q1 to be repeated. I guess it could happen, but that's certainly not in our forecast. What drives the warrant and securities gains are obviously IPOs, public offerings, and it's also driven by M&A. Right now the market is being driven by IPOs. Clearly, we have warrants and securities gains that are benefiting from that. To say that it would continue at this pace is just unlikely. Do we expect that we're still going to have some gains for the balance of the year? Absolutely. Not to the extent we just had. It's just been extraordinary in many ways. Understood. If I could just fit one last question in. Greg, in your written remarks, you mentioned that you were interested in growing the business through targeted acquisitions and hiring teams with special skills. Can you just elaborate in terms of what kind of skill set you are looking for, either through team hires or through acquisitions? That point was mainly related to two specific areas. One, this is realistically post Boston Private integration and the deal closing, assuming everything goes as we expect it will go. Looking at wealth management teams that fit into our strategy there from both cultural fit and a target market perspective. That's one area that we'd be looking at. The second area, we've talked about this for quite a while, is in technology investment banking. We executed this past quarter on bringing in a healthcare services medtech, digital health team with Barry Blake leading that. You've seen the announcements that we made about those hires. That would be an example. Two other things that could happen are, one in the wealth space and the second one in technology investment banking. Outside of that, it's mostly targeted hires in many areas across the platform, but it really isn't what I would call a team-based approach. All right. Thank you very much. Yep. Next is Ebrahim Poonawala from Bank of America. Your line is now open. Good afternoon. Hey. Just, Dan, quickly wanted to follow up on the, I guess, repositioning of the securities book. Is that complete? Given the move, I understand the big swing in the AOCI this quarter. Going forward, if we get another 50 basis points move in the 10-year, is the book protected where you don't have as large an AOCI hit? Can you just talk about that and in terms of how protecting against higher rates informs just how you're managing the liquidity and balance sheet? Dan- Sorry about that. Yeah, Ebrahim, we're certainly positioning at this point for the potential for higher rates. In the quarter, we put on close to $10 billion worth of swaps on that available-for-sale portfolio. We're going to continue to do more to protect against that to mitigate the impact of potential further rate movements. If you take a look at our target duration in that book, we're going to cut that in half here pretty quickly. While at the same time, as I mentioned to Ken, taking the rest of our investment dollars in held-to-maturity where we're more protected, being able to do more long duration. Net, we're still going to be able to invest new money at anywhere between, let's call it 135 and 145 while protecting against that OCI risk. We're not going to be able to isolate for all of it. It'll be in that two-year duration, much more protected than it was in the early first quarter. Just tied to that, Dan, the $18 billion in cash liquidity, which was earning seven basis points, does that continue to grow until we get to higher rates? It doesn't look like the liquidity inflow's going to slow anytime soon. Is that kind of something that you're comfortable with? Ebrahim, we put a lot of money to work in the quarter. As you can see, just in the held-to-maturity purchases, that's up close to $20 billion in the quarter. We're certainly putting money to work, with the continued deposit growth in the quarter there's still certainly a lot of liquidity still sitting in cash. Our intent is to progressively, as we talked about before, work that down throughout the rest of the year to that $7 billion-$9 billion range. We'll be strategically positioning part of it into that held-to-maturity, as well as continuing to invest shorter in the available-for-sale category to protect against that OCI risk. Again, net investing at about 135 to 145. Got it. Just one separate question around the Boston Private acquisition. Greg, you once again highlighted the $400 billion client opportunity. Just give us a sense of once the deal closes, how quickly can you start bringing in that opportunity on the balance sheet in terms of market share? Where do we see that? Do we see it in the private banking mortgage loans growing significantly? How much do we see on the fee revenue side? Just give a sense of the timing and the magnitude of how we should sort of look for Boston Private adding to the private banking strategy. Yep. A couple things. One is that, look, we're still early. We are very focused on integration and getting things closed and getting all the approvals across the board. That's the number 1 thing. Obviously, as part of our discussions, we're talking about when we close the deal, what's going to happen and how long it will take. We're spending a lot of time talking about the go-to-market strategy and how that will work, and we're optimistic. Let's just assume for the second that the deal will close as we expect it to. We're looking at making sure we've got the right teams focused on the right opportunities and making sure that those referrals are going to come from the Commercial Bank. You'll see that in mortgages, which we expect to expand clearly from where we are, and where Boston Private is. That's one big area. We look to expand in specialty lending. That's lending to these high-net-worth individuals in the innovation economy. There's obviously the wealth opportunity, and that's one of the key reasons is fee income around wealth. How fast that will come? Ebrahim, we're not ready yet to kind of share that plan. Clearly at the next earnings call, we'll take a more focused approach in rolling that out as we get closer to the announcement date and the final close. Again, assuming everything goes well. Got it. Thank you for taking my questions and congrats on completing 10 years as CEO. Thank you. Thank you, Ebrahim. We have our next question from the line of Steven Alexopoulos from JPMorgan. Your line is now open. Hi, everybody. Hi, Steven. Greg, I'll echo Ebrahim's comments. Congrats on 10 years in the CEO seat. Thank you. Hard to believe you guys had $30 billion of client funds when how you took over. Now you're at $300. It's pretty good. Along those lines, this might seem like a crazy question, but when we think about the client funds where they've moved to, how large could that go given the infrastructure of the company today? Could you go to $500 billion, for example, with your current infrastructure? I'll start. Dan may want to add. It's not as if the infrastructure has been static. We've continued to add capabilities, and we do every quarter look to reinforce and add to it. Clearly, the growth that we've seen over the last 12 months, once we started seeing it, we started to really start to double down on more infrastructure. Thinking about getting ready for LFI, large financial institution, improving our risk management infrastructure across the board from a technology perspective. This has been what we have been working on for quite a while. It's just gotten accelerated given the growth that we have seen over the last 12 months. If you were to say, could we get to $600 billion on what we have right now today? The answer is no, probably not. We know that, which is why we're making investments. We've upped our guidance on expenses. Part of that is going to, again, building out infrastructure, supporting growth, and on slide 11, you see all the areas that we're investing in, and those are important. There's both what our capabilities are and what the market opportunity. The market opportunity over time clearly is substantial. You guys read this every day. The attention that's being given to the broad innovation economy, both domestically and globally, has never been this high. While it may be volatile, I'm certainly betting, we're betting on it continuing to go up and to the right over the long run. It's a huge market. It's getting bigger, and we're doing everything we can to support our infrastructure to be able to capture that growth. Okay. That's helpful. I actually saw that language in your statement on the large financial institution compliance in the U.K. business. Is that essentially you guys now thinking you're going to cross a new regulatory threshold given the overseas deposits? Is that now coming? Yeah, there's two pieces to it, Steve. One is domestically. Obviously, once you cross $100 billion, you move into LFI. We've obviously done that. We've done it faster than we thought we were going to. We saw that coming, and we started preparing for it last year, and that will be things that we're doing that Dan can give you more perspective on or better perspective on over the next quarters and years to make sure that we're compliant with all the LFI requirements. Globally, there's also different requirements when you hit certain thresholds. In the U.K., one of those thresholds is the amount of deposits you have to smaller companies, and that definition is. There's a revenue definition, there's other definitions. As you know, we have companies that are both substantial in size but actually have very low revenue. That still contributes to crossing that threshold. As we head down a path to create a subsidiarization in the U.K., that is also building our capabilities. We have LFI domestically, and we have the subsidiarization in the U.K., all of which is building infrastructure to support our longer-term growth. Okay. That's helpful. Then, Greg, what about-- I know the exit markets have clearly supported your business results across the board, but the IPO market, it's been a little bit weaker recently, right? SPACs have had a bit of a challenge. Is this having any immediate impact on client flows? Client flows obviously have been incredibly strong, and I think as we've said in prior quarters, when the market gets very strong, it doesn't usually stay that way. Well, it doesn't stay that way indefinitely. I think all of us would've expected a little bit of slowdown in the market. We're starting to see that. The pipeline, and you know this and many other people do as well, is still incredibly strong. We expect the exit market to still be healthy for the balance of the year. Could it be bumpy? Probably. We would expect it to. My view is then the other part of the market may pick up more than the capital markets. It could be M&A, and it probably will be M&A. When we think about growing the business from an exit perspective, it is M&A and capital markets, equity capital markets. If it slows down, maybe we'll see greater loan growth in the technology and life science portfolio. That's usually what happens. We're competing right now as much with liquidity coming from public markets and large private rounds as we are anything else. A slowdown in that would expectedly show some pickup in loan outstanding. We feel whichever way it goes, we're positioned well to take advantage of those opportunities. Greg, if I could sneak one more in. Is that crowding out the reason you're not seeing your early-stage balances grow despite that the new client adds are accelerating? Well, the early stage, so thinking about the whole portfolio, right? We actually saw in this last quarter nice growth in outstandings in tech and life sciences, and so the team's doing a great job. In fact, our win rates are incredibly strong. The pipeline is incredibly strong. They're doing truly an amazing job. Is it being crowded out by liquidity? The answer is absolutely. There is no slowdown in our desire to drive more loan growth in those segments. Maybe one other point that you've seen, and maybe this is driving the question, is the percentage of early-stage lending relative to total lending, it's down to 3%. It's still been growing. It's just the rest of the portfolio is growing at such a rapid pace that it becomes a lower percentage of the overall loan portfolio. It's a matter of our growth and it's a matter of liquidity being incredibly strong out there. Okay. That helps. Thanks for taking my questions. Absolutely. Thanks, Steve. We have our next question from Bill Carcache from Wolfe Research. Your line is now open. Thank you. Good afternoon. There's been a lot of focus on pent-up demand dynamics across the broader economy as we look ahead to continued vaccinations. Can you discuss how you see the impact of these pent-up demand dynamics across your customer base? Is there potentially an opportunity to remix more of your earning assets to higher-yielding loans, either in the U.S. or internationally on the back of this accelerating economic growth? Your results are exceptional today. Just curious to hear your thoughts against that backdrop, how that changes. Yeah. Bill, this is Greg. I'll start, and Mike Descheneaux, our Silicon Valley Bank president, and Marc Cadieux may want to add some commentary. We clearly believe that there's a lot of pent-up demand, and you're hearing about that, as you said, and kind of everyone's talking about it. We believe for the consumer economy it's going to create a very strong second half of the year with very strong GDP growth. How does that impact us? Clearly, some of our clients that are in e-commerce, in consumer-facing industries are going to benefit from that. Will that allow us to reposition our lending portfolio? I guess I don't really see that driving much change from the direction that we're headed in right now. I don't see a big change there. Do I think it's going to be healthy for the market overall? Yeah, I think it'll be healthy. I don't think it's going to have much of an impact on the loan portfolio. I'll see if Marc or Mike have a different point of view than that. Mike, you are on mute. Okay. Can you hear me now, Greg? Yep. I'll go ahead. I'll start, Marc will jump on here. Clearly the pent-up demand I think is a real factor, I think that is excellent in terms of potential going forward. There's a few different things that we think about the ripple effect of that. Clearly, I think there could be some pull-through on loans. When you think of ad tech industries, when you think of hospitality and travel and the innovative companies that we have that center and serve those areas, I think you could certainly see some pickup. Obviously, it's not necessarily a huge piece of the loan portfolio, but certainly it will lift the boats there. Moving on to kind of the fee income. When we start to see more pent-up demand opening the economy, you're going to start to see credit card fees, right? People spending and traveling and moving around. We should potentially benefit from the credit card activity as well as potentially some of the FX deal activity as well. As people start to move around, there are certain groups of people that maybe have been holding back in terms of deal activity. Maybe they'll start to do more deals, cross-border deals as well too. Again, since there's been some limitations on travel international, so I think that could certainly open up some cross-border deal activity. Again, I think the opening up the economy, the pent-up demand is a net positive to us overall. It's Marc. I think Mike Descheneaux and Greg Becker covered the waterfront there. Nothing further to add here. That's super helpful color. Thank you all. Separately, Greg, you mentioned being cognizant of the risk of deposit outflows. How do you view the stickiness of the deposits on your balance sheet today versus history? Is there anything in particular that you call out as being a greater risk today? The short answer is no. Other than the growth and the size has been so dramatic, we haven't seen that historically. If you do go back and look at history, and this is in our Chart eight in the deck, we've tried to help answer that question a little bit. We go back to 2006 all the way through this quarter, and during that period of time, we only had one year where client funds dropped a little bit, and that was a minor drop from 2008 to 2009. Other than that, through cycles, we've been up and to the right. It's more of a question of what pace of growth that we have seen. Could there be some softness in deposits on a quarterly basis and even in a few quarters? Possibly, if the market really started to soften. I'll go back to what I said in answering a few other questions, which is just about the innovation economy and how you really do look at this innovation market domestically and globally. My view is this market is the place to be. It is going to continue to outpace most, if not all other markets. That in turn will drive liquidity and deposits and our balance sheet funds. From that standpoint, we're still very optimistic about the upward trajectory. Understood. If I could squeeze one last one in for Dan. Dan, as you look to deploy more of your liquidity into securities as you've described, is there any constraint on how high you guys are willing to take that mix relative to your average earning assets? We saw the investment securities portfolio reach a peak of 74% of average earning assets back in 2014 versus the 58% where you guys finished this quarter. First is how high can that go? Is your decision on when to deploy that liquidity at all influenced by potential changes in tax policy? For example, would you be more interested in growing a municipal bond portfolio in the event that we do see higher tax rates? Yeah. Thanks for the question. I think as we take a look at the deployment of liquidity, our past practice and our continued objective is to continue to progressively put that excess liquidity to work. You continue to see us put it to work, and at the same time, you see now every quarter close to $3 billion of that portfolio cash flow coming off. I think that creates a lot of flexibility for us to be able to just continuously deploy the excess cash into investment securities. In terms of a hard limit of how we go, we don't have one. I think what we would continue to do is take the practice that we have and put that excess liquidity to work. Again, understanding that we've got about $3 billion of cash flow coming off of that portfolio. At the same time, we've got enough short-term liquidity in that AFS, available-for-sale portfolio. That's the extent that we need to dip into that liquidity. We can certainly do it. We're protecting at least on the short term with what we've got in available-for-sale, and we're certainly investing both in the longer duration and held-to-maturity and what we're doing in the available-for-sale portfolio. To your question on how do we look at deployment. We've certainly added more to the municipal bond portfolio that's close to a $3.5 billion book, at least at this point. I think we have continued room to grow that, especially with the potential for tax reform coming here in the coming year or so. We're going to continue to deploy. We've got the room to do it, and that benefit of liquidity coming back to us every quarter gives us a lot of flexibility to be able to do it. That's very helpful. Thank you all for taking my questions. That's great color. We have our next question from John Pancari from Evercore ISI. Your line is now open. On the securities investments, again, sorry, another question around that. Can you just talk about the pace of incremental additions from here? I know you just mentioned the $3 billion-$3.5 billion in cash flow, you're clearly putting incremental liquidity into the book as well. How should we think about the pace of the incremental investments maybe quarterly as we go through the year into the portfolio? Thanks. Yeah, John, this is Dan. I think the way to look at it, we certainly came out of the quarter in a very healthy cash position, and our objectives really remain the same, which is to bring that cash position down, let's call it to the $7 billion-$9 billion range by the time it gets to the end of the year. We're going to opportunistically deploy that. There was certainly a substantial amount of deployment in the first quarter, and that was occurring on the backs of a very strong deposit growth quarter. Obviously seeing the deposit trends since the first quarter, we thought that we had the ability to be able to put that to work faster than we otherwise would. Based on our forecast for the remainder of the year, I think you'll see us more progressively put that money to work over the coming quarters. There's no perfect answer to it, but I think it's going to be more progressive based on the forecast of liquidity than what we saw here in the first quarter. Got it. Thanks, Dan. In terms of the progression of the duration towards that less than two years versus the current 4.3 year duration, is that a similar time frame that you're trying to get to that point, or will that take longer? No, we're going to do that pretty quickly. I would say here over the next month or so. That's easier to do because we'll be able to use derivative instruments to do that than legging in with progressive purchases in that portfolio. We'll be able to, as we did by putting $10 billion worth of swaps on in early March, we'll be able to move pretty quickly to shore up the duration there and at least move it to be shorter. You'll see that happen here pretty quickly. Got it. Okay. Then on the loan book, just want to see if you can give us the updated new money loan yields that you're getting in the capital call portfolio. Hi, it's Marc Cadieux. I'll take that question. Regrettably, I'm compelled to decline to answer the question just given competitive forces in the marketplace and not wanting to disclose too much on this call about where our current pricing sits. Apologies for that. Okay. Understood. No problem. John? Yes. John, I think what we can say is just overall when we take a look at pricing all of the new money yields on capital call lending, the mortgage book as well as healthcare and tech are included within our guidance of margin and net interest income for the remainder of the year. We can't give you the specifics, but where we are and how we expect that to progress is included in the guidance for the remainder of the year. Got it. Okay. Good. Then just two other quick ones. Sorry for the multiple questions. On the credit front, just on the heels of the fraud, can you just update us what changes have you implemented as a result of it just given that the fraud surfaced with this pretty quickly after origination of the loan. Now that you've had a little bit of time to implement, what type of changes to your approach have you implemented, or was nothing material needed to be done since it was more isolated? Thanks. Yeah. Marc, I'll start. Others may wish to chime in. I think you nailed it with the end of the question. As we've noted before, we did a review of the loan in question, our overall portfolio as well, and concluded that our belief that this is an isolated incident. Consistent with that, I would just remind you and everyone else on the call that we've been doing capital call lending for 30 years and have done it, I think, very well over that period of time. During that period of time, this potential fraud incident is the one and only incident that we've encountered. While we have, of course, in the wake of something like this taken a look at everything we do. The conclusion we've ultimately come to is it's a good opportunity to reinforce through training and awareness that we need to be on guard against this kind of thing. That really is the extent of it. I'll stop there and invite anybody else to chime in if they wish. Okay. All right. Well, thank you. I promise my last one is just on the operating efficiency ratio. I know it's at 58.5% here for the first quarter. Can you give us maybe your expectation on how we should think about the full year and maybe long term for that ratio and what your expectations are? Thanks. Yeah, John, I think the best way to look at it is we are clearly going to continue to invest in the franchise. We're a growth company. It absolutely makes sense for us to put the money to work to be able to drive that. I think in the first quarter, you see us paying for performance across the banking activity as well as the excellent performance of SVB Leerink. You see us investing in our initiatives and that's certainly driving higher operating efficiency ratio. I think as we look for the rest of the year, we'll certainly see continued higher operating efficiency just because we're going to continue to invest because we see this growth opportunity ahead. Exactly where that's going to end up is so dependent upon what happens with more net investment gains as well as what happens within the Leerink business that it's hard to say exactly what that long-run operating efficiency ratio should look like. Again, the focus here is on investment. We're a growth company, and it makes sense for us to put that money to work. Got it. Thanks. Take all my questions. Yep. Next is Jared Shaw from Wells Fargo Securities. Your line is now open. Hi, good afternoon. Thanks. Hey, Jared. Hey. Maybe could you just update us on either the strategy or the preference for on-balance sheet client flows versus off-balance sheet, I guess especially in light of your capital utilization levels. Obviously great that you're able to raise capital to the extent you did this quarter, but you still have TCE sequentially down. Any thoughts, I guess, on what that strategy is and the success of being able to direct those flows? This is Greg. I'll start, and then Mike and Dan may want to add to it. First of all, it starts with the client and what makes sense for the client. What we've said in the past really year is that what we've done is built a much broader product set in allowing clients to choose options that make sense for them. If you look at last quarter, we're kind of in that 50/50 on and off balance sheet. We have said in the past that that's a good place to be. That being said, could we see more of it move off balance sheet just given where yields are and so forth? Clearly, that's a possibility. It starts with client preferences and what they're looking for. Secondly, it's the product set that we have, making sure we give those options to our clients. The third is we can look in a very small way, change a little bit of behavior by moving some spreads around. That's hard to do when rates are zero. It really does boil down to product set and client preference. Dan or Mike, anything to add? Yeah, Greg, it's Dan. I'll just go on to the capital topic, and Jared, since you brought it up. When we think about capital, we're really thinking about two things. One is profitability, and two is growth. What's really clear is that our profitability remains strong, and that could support strong balance sheet growth. The leverage ratios have been under pressure from exceptional growth in the last two quarters, and you obviously see that on the balance sheet. That exceptional deposit growth we saw in the first quarter continues to put pressure on the Tier 1 leverage ratio at the bank. As Greg was talking about, we certainly are, and you see it because 50% of the client inflows for the quarter went off balance sheet. We're certainly where we can, where it makes sense for the clients, moving deposits off the balance sheet to help buffer some of that impact. Our common equity transaction also this quarter helps free up additional capacity to support our growth in the ways that we've done it in the past. That includes preferred debt issuance to support the Tier 1 leverage ratio. The markets have been open to us to do those transactions, and that provides very low cost regulatory capital to us to be able to continue to grow. When we look at all those things, that's the way we're thinking about capital. Our risk-based capital measures remain very strong. If you look at CET1 at the holding company, we closed the quarter at about 12.2%. All in, that's how we're thinking about capital. Okay, great. Maybe just finally for me, a broader picture question. We heard the news today about the potential tax changes that were proposed. When you look at the potential for higher income taxes, but also higher capital gains, how do you see that impacting the funding market and the appetite for funds versus maybe potentially a higher appetite for traditional bank lending for some of these companies? This is Greg, I'll start, and Dan you may want to add. That was specifically about capital gains taxes related to individuals, and I don't personally see that having any real material impact on a direct basis. Indirectly, there's going to be lots of speculation over the next few weeks about is that going to soften the stock market? Is it going to cause valuations to come down, and what could the ripple effect be of that? I think it's too early to tell. I would just say on a direct basis, I don't see a lot of impact to our business. Great. Thanks. Next is Chris McGratty from KBW. Your line is now open. Great. Thanks for the question. Dan, just wanted to kind of combine a few of the questions that we've heard on what you're doing with the balance sheet, but you guys have obviously been one of the most asset-sensitive banks in the country. All the actions you're taking with the held-to-maturity and the swaps and adding the duration. Broadly speaking, how much are you changing the rate profile of the company? Yeah. Chris, we remain quite asset sensitive and in effect, the actions that we're taking with held-to-maturity, you can almost think of it as a barbell. What we're doing is extending the duration in the held-to-maturity book, in that three to five-year range, and shortening the duration on available-for-sale into that less than two year. Net, the overall position of the investment securities portfolio remains about the same. You're thinking in the three to four-year range on an all-in basis. Obviously, that's going to fluctuate quarter-to-quarter based on what's going on with the rates. All in the intent not to change the position for the total portfolio, but to protect against sudden rate movements in the available-for-sale portfolio. If we look at the asset sensitivity we've got that included within our slide deck. We're still in a good place from a sensitivity perspective, and to the extent that we see rate movements, we would still benefit in a strong way from it. Okay, great. On the reserve, how do we think about the reserve going forward given the outlook on credit compared to day one? You've heard a lot of banks this quarter talk about getting back to day one by the end of the year, and obviously you guys have worked your reserve down a little bit given the actions you took last year. Thanks. I'll start. It's Marc, and Dan may wish to add. Following this first quarter, and recognizing that our loan portfolio composition has evolved a fair bit in the four or five quarters since COVID arrived. We're probably largely back at this point to pre-COVID levels and would not expect any significant reserve releases related to further improving market conditions going forward. Great. Thank you. Next is David Smith from Autonomous. Your line is now open. My questions were answered. Thank you. We have Brock Vandervliet from UBS. Your line is now open. Oh, thanks very much. I think the team here is extremely adept in these calls and communicating with the Street. I just kind of raised an eyebrow when I heard the comment on capital call and capital call pricing. Some of your competitors that are in the space talk about it pretty regularly. I think we all know it's extremely competitive and written margin business. That's not new. I'm just wondering if we should read into, or if there's anything to add in terms of, has there been a change or intensification of the competitive dynamic there that we should be aware of? Thanks. This is Greg. No change. It's an incredibly competitive market and we're sensitive. I'm sensitive to when you're the market leader and you start sharing information, I would say that we are pretty much the market, and we command a premium just because again, I give credit to our teams who do an exceptional job. Nothing has changed. It's a competitive market. At this point, you can back into getting close to what it is by the analysis that Marc and team talked about. Again, I wouldn't read anything into it. Okay, good. The client investment fees, I know those have kind of gone down with lower rates. How quickly could those kind of claw back in the other direction, assuming we get some activity on the short end of the yield curve at some point? This is Greg. If you look at slide 14, I think the team did a really good job of describing the rate sensitivity in the third box in the upper right, it talks about the balance sheet client funds and what could happen with, say, 25 basis point increase in fees. The number is an expected increase of $90 million-$120 million of growth in fees based on the initial increase of 25 basis points in short-term rates. It's pretty clear there and obviously a very nice impact if that happens. Yeah. Got it. Okay. Thanks for the questions. Yep. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. No further questions at this time. I turn the call back over to Greg Becker for some brief closing comments. Great. Thank you. Thank you all for joining us today. We are obviously pleased with our results, not just the quarterly results, but our improved outlook for 2021. As we say in every call, we certainly believe the long-term opportunity in this market is exciting. As we really refine our strategy to really build out and capitalize on the growth of the innovation economy, these four businesses, the commercial bank, the private bank, the investment bank, and SVB Capital, our intent is to support, to grow, to expand each one of those businesses. At SVB, we're focused on strong execution, continuous learning and improvement, and always focused on the client working better, smarter, faster to help our client achieve what their goals are. As importantly, being focused on doing the right thing for our employees to ensure their professional success and well-being is taken care of because none of this would be possible without our great, talented, and dedicated employees. My last comment I would say is the following. You've heard a couple people talk about congratulating me on 10 years as CEO, and this is my 10th year of a quarterly call. We just wrapped this up. Obviously incredibly proud of what the institution has built over the last 10 years. I say on a regular basis, both internally and externally, I'm confident I have the best CEO job in banking and believe I probably have one of the best CEO jobs in any industry because of who I get to work with every day, and our clients who are changing the world in a way that is incredibly inspiring. I get more energy and excitement from engaging with our clients and talking to our teams than almost anything. I feel incredibly fortunate. Really want to thank the exec team, thank the board of directors, thank the entire SVB team, and our clients for allowing me to have such a great job. I couldn't be more excited about where we're going. Thank you everyone for joining us, and we will talk next quarter. Take care. This concludes today's conference call. Thank you for participating. You may now disconnect.