Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the SVB Financial Group Q4 2021 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press star one. Thank you. It is now my pleasure to turn the call over to Meghan O'Leary, Head of Investor Relations. Ma'am, please go ahead. Thank you, Brent, and thank you everyone for joining us today. Our president and CEO, Greg Becker, and our CFO, Dan Beck, are here and will be joined by other members of our management team for Q&A regarding our fourth quarter and full year 2021 financial results. 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, specifically our financial release and slide deck. 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. We're pleased to be reporting another quarter of strong growth and profitability. Our core business continues to fire on all cylinders with a growing balance sheet, healthy net interest income in spite of NIM pressure, robust fee income, and excellent credit quality. While warrants and investment gains moderated from record levels in Q3, we see continued strength across our entire business. We are reiterating our strong 2022 outlook and raising our expectations for loan growth and net interest income. In addition, our outlook does not include the significant positive impact of future short-term rate increases, which seem increasingly likely. We filed our earnings materials early this afternoon, and they are available on the investor relations section of our website. With that, I'll ask the operator to open up the lines and turn it over for questions. Thank you. At this time, I would like to remind everyone in order to ask a question, press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press the pound key. Your first question comes from Ebrahim Poonawala with Bank of America. Your line is open. Good afternoon. Hey, Ebrahim. I guess, hey, Greg. Maybe just in your letter, you mentioned public market volatility a couple of times. When I look at your results, extremely strong, the outlook is strong. When you look at the stock performance since October, it's tracked what we are seeing in with tech stocks in the IPO market. Remind us in terms of if we do have a sustained sell-off in technology, higher growth stocks, where will that manifest itself in terms of your growth outlook, be it credit, be it in terms of fee or balance sheet growth? Yeah. I'll try to answer it in a couple different ways, Ebrahim, and then Marc Cadieux may want to talk about credit, or Mike want to talk about the commercial bank. When you see the volatility that we've seen in public markets, you know, there's a few places that you could see that. Obviously, in any ECM business we have in the investment bank, that could be one area. I'll counter that with the upside of we have a lot of M&A capabilities, and I think M&A will pick up. I actually think it will offset and there's you know, more upside there, and we can get into investment banking a little bit later. That's one place. Second place is in the volatility we would see in moderating warrant and investment gains, which we talked about in the letter. Clearly if we stay in this place for a material period of time where tech stocks are down, you could see some compression there. Still, we expect even with some compression, we still believe it will be healthy in 2020. You know, credit quality-wise, I'll give my perspective and then Marc may want to add. You know, you really have to see the ripple effect in a pretty material way, right? Valuations are not what repays loans. You have cash flow and cash that repays loans, and the companies, public and private, are incredibly strong from a balance sheet perspective. Their ability to raise money is also very strong. We don't see, you know, and the outlook obviously is very healthy. We think it's gonna be healthy even if there is some volatility in the market. You know, those are a few places that you could see it in maybe new client growth. But again, we've seen for the last three years a really nice tick up in our new client additions, and we still obviously are very bullish on the innovation economy. I don't see that slowing down. A temporary volatility in the public markets net isn't going to have that material of an impact. Got it. I guess just a separate question maybe around rate sensitivity for you, Dan. You've laid out the impact from a rate hike both on NII and investment fees. Talk to us about, one, cash came down a fair bit this quarter. How are you thinking about the bond book in terms of what are we adding duration and credit-wise? Is there any meaningful credit risk in that corporate bond portfolio that you added over the last few years? Just give us some color on that, if you could. Yeah, Ebrahim. On the first question, specifically if you look at, you know, cash balances, as we've talked about in previous years, there's a pretty substantial amount of distributions that happen around private equity and venture capital. We saw that plus, you know, effectively putting over $20 billion to work in the investment securities portfolio in the quarter. We're still bullish on liquidity as you see in the guidance for 2022. Now, when we look at the investment securities portfolio and where we're putting money to work, based on the current environment, we'd probably be putting money to work in the 1.65-1.75 range, with the vast majority of that still being agency mortgage-backed securities, mortgage collateral, things along those lines. The corporate book is still quite small, and that's all high credit quality. Don't expect to see any issues there from a credit perspective. The good news at least on where we're putting money to work is that that is above effectively the yield of the portfolio. It's the margin compression that we've been seeing by putting money to work underneath the securities yield, you know, seems to be abating in this better rate environment. Do you expect any difference in deposit behavior than this cycle was what we saw in 2016, 2017, just given the Fed might be hiking at a much faster pace, you have larger customers. Do either of those dynamics change how deposit betas, the mix shift could behave this cycle versus last? Yeah, Ebrahim, we're watching that and modeling sensitivities to that. All in our rate sensitivity, we've got a 60% deposit beta, and that's on the interest-bearing balances that we have in the portfolio, which is consistent with the last cycle. We've effectively, for conservatism, you know, modeled a faster beta in some of these net interest income assumptions, meaning that they would take place sooner in the rate cycle than we experienced during the last hike. We feel like we've got some measure of conservatism in there just to take into consideration the fact the Fed could move faster and client behavior could be different this time. That's how we're getting comfortable with that all in, you know, $100 million-$130 million annualized pre-tax net interest income number. Got it. Thank you. Your next question comes from the line of Steve Alexopoulos with Bank of America. Your line is open. Hi, everybody. I'm still at JP Morgan. Thought you changed jobs, Steve. No. Ebrahim, I think he is still at BofA. Greg, I wanted to start with the environment. We're obviously paying a lot of attention to the equity markets, but are VCs getting more cautious, you know, given the recent correction in tech stocks now playing out? With SPAC stocks seeing even more of a bit of a beating, are private companies starting to see down rounds? It's very early since this you know correction in the tech market is played out. I would say the engagement we have in our discussions, we're paying very close attention to it, but we really haven't seen it. Our channel checks in talking with our clients and talking with venture capitalists still very active. I think you have to. Could there be a little bit of a slowdown? It's possible. Again, we haven't seen it yet. You have to remember, there's so much money that was raised last year. There's so much dry powder, and they need to put it to work. Could there be some valuation corrections in a later stage? Yeah, there could be as companies look to raise money. If they do, they're still at healthy valuations. I think, you know, when companies need to raise money, there's ample money out there for them to raise money. Could they hold out and wait for a higher valuation? Possibly. You know, again, we're just not seeing it yet, and I think you have to wait at least a quarter or two to really see if there's anything that starts and then a trend beyond that. Okay. Now, I want to follow up on that. VCs and PE firms are sitting on a record dry powder. If the exit markets were to get disrupted, do you think we would see the pace of investments slow the way we've seen in other cycles? Or because of all this dry powder, do you think that firms will just invest right through a market disruption? Well, when you go back and talk about cycles, right? I mean, the last time we had a, I'll call it a dip, was back in 2016. If you remember, that was because of, you know, Asia and concerns around the, you know, Asia market. It literally slowed down for about 90 days or 120 days. We were very worried it was going to continue to be a very slow decline or a pause. It quickly came back. You know, you can look at the beginning of the pandemic. We thought with everyone going to Zoom that people wouldn't be making investments because it's a different way to do it. That was about a 90-day cycle. You really have to go back and look at 2010 to say when there was really a pause or a slowdown. When I talk to limited partners, when I talk to investors, the one mistake I think most of them would say is they didn't put money to work more quickly. They waited too long to jump back in. As you combine those things with just the innovation market growing very fast domestically and globally, you know, could there be a prolonged slowdown? It's possible. I just think the likelihood is a lot less than it has been in prior significant cycles. It's because of the dry powder on the sidelines? That's why you think it'll be narrower. It's because. Well, it's two things. It's the dry powder, number one. Number two, it's the innovation economy still growing on a global basis, right? And number three, if you do see, you know, valuations even to do a minor correction, I think people are going to look at it and say, "That's an opportunity to get back in," and that this is going to be temporary. Those are the three reasons I would point to say that it could be short-lived if there is a short-term kind of slowdown. Mm-hmm. Okay. Final question for Dan. Assuming we do see rate hikes and other guidance as expected rate hikes, you talk about reinvesting a portion of it. How should we think about how much of that potential benefit you guys will reinvest back into the company? Yeah. I think, Steve, to the extent that we see rate increases, it's clear we're going to reinvest a portion of those increases, you know, across the strategic objectives. The question is really about the timing of those rate increases when that occurs. You know, imagine we see rate increases March-June timeframe, that could potentially move us into the next expense guidance range of the mid-twenties. That's kind of the way to think about it. If we see a March-June increase, then we could move into that next range as we reinvest a portion of that spend. At that point, we would talk about, you know, the impacts into 2023, how much of that is one time, how much of that is recurring. Got you. Okay. That's helpful. Thanks for taking my questions. Yep. Thanks, Steve. Thanks, Steve. Your next question comes from the line of Casey Haire from Jefferies. Your line is open. Thanks. Good afternoon, guys. Hey, Casey. On the loan growth guidance, just curious about the mix. Obviously fund banking, capital call you know, drove about 60% of it in 2021. Are you expecting, you know, the same kind of strength where it's driving the majority of the loan growth? Or do you see the mix changing? And if so, you know, how? Hey, Casey, it's Dan. I'll start. Mike might want to add. As we look at 2022, I think the mix will still be predominantly capital call lending from a growth perspective. As we continue to develop and we continue to be excited about the integration with Boston Private Banking & Wealth Management, see the opportunity for mortgage lending, which is already strong, to continue to see that grow. Predominantly capital call lending, but starting to see mortgage as well as, you know, other elements of private bank lending pick up in the new year. Now, at the same time, don't count out what's happening in technology, healthcare, life sciences lending. Even with all of the liquidity that's been in the markets, we've seen, you know, good growth there. Still predominantly capital call, but Private Bank as well as what we do in core technology, healthcare, life sciences will also contribute. Very good. Thank you. Just, Dan, you mentioned that, you know, the new securities yields 1.65, 1.75. I know you guys kind of update that at year-end. You know, the 10-year obviously 30 basis points higher than where we were at the beginning of the year. You know, is that 1.65, 1.75 accurate relative to where we are today rate-wise? Yeah. I think, you know, based on where the 10-year is sitting and the sell-off we've seen over at least the last couple of weeks, you could, and it's hard to count on this for a longer period of time, you know, look to add another 10-15 basis points to that yield if we stay effectively at the same rates today throughout the rest of the quarter. A lot of that depends on market opportunities. A lot of that depends on liquidity flow. We're comfortable with the 165-175. To the extent that longer term rates and the sell-off that's here today sticks, there could be some small opportunity there. Okay. Just last one for me on the credit front. The charge-off guidance is down a little bit. Is that the slide deck makes it seem like it's more environment driven? Is that finally just a reflection that the low risk capital call is just a much, you know, is over half the book? And then also the ACL ratio kind of plateauing here at 65 basis points, is that also a good level going forward? Yeah. Starting, it's Marc Cadieux, and starting on the charge-off question. Yeah, I think it is reflective of the continued evolution of the portfolio towards the lower risk forms of lending like capital call lending, mortgage lending. By extension, while early-stage lending, where we've historically taken the majority of our losses continues to grow in dollar terms but continues to shrink as a percentage of total loans. Those things are certainly conspiring to bring the guidance down. To your question about reserve, I think adjusted for the change in composition of the portfolio from the beginning of COVID to now, I think what you see basically is that, adjusted for that change in composition, we have finally, I think, found, if not the bottom, probably pretty close to. It's hard to imagine where more reserve release would come from. We'll certainly have some growth in capital call lending, as we've mentioned before is certainly figures prominently in the outlook. If that continues, you could see some continued modest downward pressure on the reserve. I think at this point, most of what was built during COVID is now out of it, and we're back to normal. As I think the also more normal provision in the fourth quarter reflective of the growth would suggest. Great. Thank you. Your next question comes from the line of John Pancari with Evercore ISI. Your line is open. Good afternoon. Hey, John. You know, back to the loan growth. Just to kind of dig into a little bit more in terms of if we do get. I mean, there's some expectations for practically, you know, 8 hikes by the end of 2023. If we do get that, and we get that pace starting, you know, relatively soon in 2022, can you talk about how in isolation that may impact your loan growth expectations at all? Just curious if in that dynamic, if you see much of an impact or does the dry powder factor that you've talked about really trump that? Thanks. I'll start. Hey, John, this is Mike. Oh, go ahead, Greg. Sorry, Mike. No, go on. No, I was just trying to figure out how to unmute so I could do the best. Hey, John, this is Mike Descheneaux here. You know, in general, I mean, as you know, and you've been following this for a number of years, the first few basis points hikes really is not gonna have much impact on the loan books as well, too. Clearly, if you're looking at some leverage loans in that particular area or some buyouts that they might consider. But still nonetheless, debt is still so much cheaper than equity, so you're still gonna have people that are gonna use this here. We're not really anticipating that we'll have that strong of an impact here. But obviously something to keep an eye on. Got it, Mike. That's helpful. Thanks. In terms of the warrant and investment gains, I know reasonably you expect them to moderate off of the very strong 2021 levels. I know this is probably a tough question, but any way to help us gauge the magnitude of moderation that we can expect? Any way to kind of frame it as you're looking at the market now and the backdrop? Just trying to see how we should think about it. Yeah. John, this is Dan. It's really hard, and that's obviously why we don't guide to it, to put a range around what that could look like coming out of the year with close to $1.1 billion worth of warrant and investment gains. What I think is clear is that that's exceptional, and likely not to repeat. But at the same time, as we've been talking about, we're still bullish on the environment. Hard to put a percentage around it. We just know that with this market volatility, you know, it could be slower, at least, you know, for the next quarter or so, especially relative to what we saw in 2021. Still again expecting 2022 to be a good year. Got it. Okay. Maybe- Yeah, I figured it was helpful. Maybe, John, I'll just add on top of what Dan is saying. I mean, it is no doubt a very difficult thing to predict, but just some of the factors to consider. I mean, we keep talking about dry powder. There's a lot of dollars out there. But there's a lot of companies that have been formed over the last couple of years that are primed and really great candidates to go public as well. I mean, we had something like close to 300 public listings in 2021. If you look at some of the fact sheets, the number of companies that are valued greater than the median value of what went public last year is significantly greater than what went public. There is a lot of good companies that can be candidates for exit there. The fundamentals are still really strong and a lot of good companies out there. Got it. Thanks, Mike. All right. Then I know, Greg, you referenced it earlier on, but just curious around the, you know, investment banking trends. If you can maybe give us a little bit of color on the outlook there and pipeline and everything. Also in terms of impacts that you expect from what we're seeing right now if we are looking at certainly a rising rate environment and this backdrop we're in, how does that impact that outlook? Thanks. We've got a couple slides in the deck that talk about both the revenue side of what we've seen in a quarter-to-quarter basis. Really it's when I think of 2022, we have a pretty nice growth built in there relative to what the record quarter or record year was in 2021. You know, the question really is, okay, how volatile is that? How do we think about that? To answer that question, I would break down the business into a few categories. First is the historical SVB Leerink business. It was mainly biopharma, it was ECM, it was trading, research, and they just continue to do an exceptional job in that area. Exceptional. Moving up the league tables. Had a great year last year. What we're building out capability-wise is healthcare services, technology, and M&A, and ECM, and then M&A for biotech, and now with research with technology as well. While you're hearing from some other larger investment banks softness as they go into 2022, for us, especially in technology and healthcare services, and then of course M&A, we're going from either zero base or a very little base. When you think about the team that we've assembled, we certainly believe that the upside from where we are is still significant, even if it's a soft, softer market in 2022. I also believe if the, you know, equity capital markets are slow, again, what we push towards is having a balance of both ECM and M&A. In fact in technology, and in healthcare services, the main teams were more M&A-led. We feel good about the outlook, and we feel good, not just about the outlook for 2022, but the trajectory in 2023 and 2024 based on the people that we brought onto the platform who really are exceptional. Great. Thanks, Greg. Appreciate it. Yep. Your next question comes from the line of Bill Carcache with Wolfe Research. Your line is open. Thank you. Good afternoon. Greg, I wanted to ask a question on wealth management. It would seem that the wealth management teams would find the opportunity to join SVB as quite compelling given your client base. Can you speak to the pace at which you'd expect to onboard new teams as you grow that business? You know, is there maybe a certain number per year that you're targeting or are there any sort of parameters you can share on the characteristics of the teams you'd be looking to onboard, including maybe like a minimum level of assets under management? Any color. Yeah. When we add wealth advisors, it's a little bit different. Again, I'll break this down into a couple different parts. One is the interest level. The interest level is very high. Lots of inbound, and when we do approach targeted individuals that are in the innovation economy, we're getting a very positive reception. We added 14 wealth advisor hires in 2021, and really you think about it, that was mainly the last, you know, three or four months of the year. We expect as we roll into this coming year that we're gonna have, you know, anywhere from 14 to 20, maybe 25 adds in 2022. I've been on some of those calls to recruiting calls and discussions and it's very positive. In talking to some of our team members who have joined, we've been on the platform for, you know, 30 days, 60 days, kind of getting their feedback. Again, very positive for a couple different reasons. One is the opportunity, which as we always said is incredible here, given our connections to the innovation space where wealth is created at an incredibly rapid pace. That's number one. Number two, the collaborative environment that exists on the platform. Those two things are very compelling. You know, it's still early, so we certainly can't claim victory. So far I feel really good about our ability to recruit. It's not just about recruiting, it's about who is the team that you have already here, and I feel really good about that as well. I think the outlook is positive. We kind of have a, I'll call it tempered outlook because we wanna see the evidence of it happening. More to come over the coming quarters, but the foundation is very strong. That's very helpful. No, thank you. Following up on your earlier comments, where would you say the technology investment banking business is in its ramp from last September's launch? I'm guessing it hasn't hit full stride yet, but it would be helpful if you could, you know, frame for us, I guess just give us a sense of what you've assumed in your outlook. Yeah. It's actually we expected that it would take, you know, really 6-9 months for really to hit. I wouldn't even say full stride, but I would say really starting to get a little bit of a flywheel. I don't think you're really going to see what I'll call the full potential until later this year and into 2023. It just takes time to get everything in order to get everyone communicated with. That being said, what has impressed me right out of the chute is that we've had more than 10 very significant mandates signed up. A very, very strong pipeline in the technology side and healthcare services. Again, you know, in the biotech side, it's already an incredibly robust team and outlook. I think we're in a really good trajectory. Again, most of those are M&A, but we certainly have already signed on a couple public offerings as well. Again, feeling really good about the foundation that's being built. Okay, great. That's great to hear. Last one from me, for Dan. Your reserve build was growth driven. Maybe looking ahead, should we expect the reserve rate to hold such that the growth in your reserves will generally be commensurate with your loan growth? Is that a reasonable way to think about it? Yeah. Bill, I think that, Marc might wanna add something to it. I think when we look at where the reserves are, we're effectively probably at the bottom from a reserve rate perspective. I think, to the extent that we continue to add on additional lending, that is gonna drive the additional formulaic provision that we saw this quarter. Obviously, those loans are generating good, solid net interest income and client relationships. Certainly going to see more provision associated with loan growth. Nothing to add here, Dan. Thank you. Got it. Okay. Thank you for taking my questions. Your next question comes from the line of Jared Shaw with Wells Fargo Securities. Your line is open. Hey, everybody. Good afternoon. Thanks. Hey, Jared. Hey. Maybe just circling back on the expense conversation and the expectation for additional investment if rates or once rates do go higher. How should we be thinking about that? Is that really more when we look at slide 14, it will just be an acceleration, a pull forward of investments that may otherwise have taken a little bit longer, or would there be new initiatives? Are there new opportunities that you would use that opportunity, you know, from revenue to expand? Yeah. Jared- Jared. Go on. Oh, go ahead, Greg. I was going to say, Jared, to start. I wouldn't call it necessarily a pull forward. Here's what I would say, we have an incredible amount of opportunities to invest in, a very long list. Part of this is we're constrained by, you know, just how many things you can do at once. There is some, you know, we want to make sure that we're investing at the right pace. If we do see revenue start to pick up with some rate increases, we're going to look at opportunistic opportunities to accelerate some of those investments. Is it a pull forward? I wouldn't describe it that way because a pull forward means that you have a certain dollar amount, you're moving it up, and then it'll drop down to a lower level. It's more we're gonna take advantage of those investment opportunities. I think I just would think about it as saying it's opportunistic, and we have a lot of opportunities ahead of us. If we do get that rate increase, we'll put some of it to work for sure. Okay. All right. Thanks. You know, looking at the AUM guide and in light of the prior question around the success you've had bringing people relationship managers onto the platform and the expectation for that to continue. The AUM guide seems a little conservative, I guess, given the growth we were used to expecting from Silicon Valley. What could cause AUM to grow faster with the broader expectation of the support you're putting behind the private bank? Yeah. I think we have to get what I'll call the flywheel up and running, and we're just getting it started. That's one thing. Let's just talk about the differences between wealth management and what I'll call commercial banking. In commercial banking, you have a commercial client. They have a lending need, and it's usually within a reasonable period of time. You put that together, you put the loan in place, and they borrow money. It's a relatively short time period, I'll call it, to bring on those type of new clients. When you're looking at in the private bank and wealth, you typically it takes a while to build that relationship, to reconnect with them, to convince them that you know you have the full product set for them that's capable. That's even for wealth advisors that are coming over. Because again, we're looking specifically at the innovation economy. It's gonna take a little bit of time. Once we see that, then I think you're gonna see an outlook that's gonna be increasing at a much accelerated pace. I think we're just saying until we see that flywheel effect, we're not gonna set overly ambitious goals in wealth AUM at this point. Okay, great. Thank you. Yep. Your next question comes from the line of Chris McGratty with KBW. Your line is open. Hey, great. Thanks. I'm interested in kind of your thoughts on the geography of deposit growth in 2022 under a varying rate outlook, you know, on or off balance sheet, the mix, where you see it going. Hey, Chris. It's Dan. I think you know as we look at the first couple of rate increases, imagine you know 25, 50 basis points. I think we're gonna start to see behavior pretty similar to what we saw during you know the last rate rise cycle where you're not really seeing a massive shift towards off balance sheet and not even seeing much of that money start to be motivated to move into the interest bearing sectors. I think as we start to get into 75, 100, 125 basis point Fed funds, that's when the money market rates off the balance sheet really can start to be more attractive. I think that's when you can start to see more movement and that's where I think we've just got a competitive advantage if you look at the total $400 billion worth of client funds. You have clients that may want to look for some higher rates, which we could offer on the balance sheet and money market as we did during the last cycle and still by doing that end up with a very low cost of deposits and deposit base. I think, you know, first 25, 50 basis points, no big shift in client behavior. 75, you know, to 100 basis points is when you start to see a little bit more migration. Again, I think that's where the liquidity that we have really plays in our favor, to be able to manage between that on and off balance sheet, put to use some of these products that we've been developing here over the last couple of years. Yeah. That's great. Thanks, Dan. Maybe a follow-up. I heard from one of your peers yesterday that they obviously are gonna try to take down some of their rate sensitivity as rates go up. I know you have some hedges on the balance sheet, but just interested in kind of the appetite to moderate it a bit, if we get the forward curve? Yeah. Chris, this is one where almost by the balance sheet growth that we've been experiencing, we've been moderating asset sensitivity naturally. Just look at what we've been doing in moving cash liquidity into the investment securities portfolio as we're seeing at least some movement in the rate environment out in term. That helps dampen some of that sensitivity and in effect lock in some of that rate environment that we see. You're generally seeing more just organically by the way we're putting that money to work in the investment securities portfolio some dampening of the asset sensitivity and we're taking advantage of those rates in the environment that exists today. you know, we will always be asset sensitive just by the nature of the balance sheet, but certainly seeing it being tempered in this environment by the actions we're taking with the portfolio. Okay. Thank you. Again, if you would like to ask a question, press star followed by the number 1 on your telephone keypad. Your next question comes from the line of Chris Kotowski with Oppenheimer & Co. Your line is open. Yeah. Let me start, I guess, with another shot at the equity and warrant gains, just in the sense that your portfolio today is about $2.5 billion, and back in 2018, 2019, it was like $600 million to $900 million. It's roughly 3 times. A normalized level should still be bigger than what we saw in 2019, I guess, is the first part of it. Secondly, am I right in thinking that, like, you probably wouldn't put an equity position on your balance sheet if you didn't expect a kind of mid-teens through the cycle return-ish? Hello? Hey, Chris. It's Dan. I think the way to think about it is that these are highly granular positions. So if you think about the fact that we've got warrants in close to, I think it's close to now 3,000 individual companies, those individual companies obviously react to what's happening from a market condition perspective. Now, what's actually happened over the last couple of years is, we've gone from a warrant portfolio of 1,500 granular names to closer to that 3,000. So there's actually more variability there today than back in the previous period. So it's really hard to make, and if it were easier, we would certainly have a guidance range about it, you know, the broader assumptions that you're making. Yeah. No, but I was wondering specifically. I realize the warrants are particularly different, but, presumably, on the equity positions that you take, presumably you'd be targeting a mid-teens return or, you know, granted that there's lumpiness, but through the cycle. Yeah. In many cases, those equity positions are the results of the conversion of the warrants into equity positions while we're in the lockup period. So there's no, you know, return threshold, you know, in particular associated with it. So Okay. The conversion of that into the warrant in post the IPO. Okay. On the $2.5 billion that is on your balance sheet today, is there a mark-to-market risk, or is that primarily at cost or lower of cost or market? Yeah. The vast majority of that is mark-to-market. That's already mark-to-market, and we've got the details included in the last 10-K of the mark-to-market methodology associated with it. That's marked on a quarterly basis and is up to date as of 12/31 based on the market activity. Okay. Secondly, just I think you give very detailed guidance on an annual basis, and it makes our job very easy. I was just wondering, do you have a view on the cadence that we should expect through the year, either from environmental factors or from, you know, internal factors like the fact that you've, you know, brought on this big team of bankers, you know, that we start strong or, I mean, should we just step it up ratably during the quarters or does the team start coming on strong early and then kind of flatten out later? Again, if you don't have a view then that's fine, but I'm just curious if you have a view on the cadence of the year that we should expect. I think with balance sheet growth that we've seen, it's been fairly progressive as liquidity has been raised. If you look at core fee income lines, you're generally you know less subject to seasonal factors on a quarterly basis. I think if we look at areas where there would be more volatility, you'd be looking at you know investment banking types of revenues, which are just much more subject to what's happening in market conditions from quarter to quarter, along with the investment in warrant gains that we just talked about. They'll just as there always has been a progressive build from an expense perspective quarter to quarter. You know, generally speaking, that's a good way to think about it. There's really no perfect way to break out the quarters. Okay. Fair enough. Thank you. That's it for me. Your next question comes from the line of Jennifer Demba with Truist Securities. Your line is open. Thank you. Good evening. Question on Leerink. With a broader sector focus now, what is the revenue potential for this company over the next few years? How big a business could this be relative to the rest of SVB? Yeah. Jennifer, it's Greg. I'll start, and Dan may wanna add. You can see what our guidance is for this year, which I would describe it as. We expect to be hitting on, at least in technology and healthcare, it's kind of like four of an eight - four cylinders of an eight-cylinder engine, so we're kind of halfway there. When I think of the full potential, I don't think that's really gonna be reached until, you know, 2023 or maybe even a little bit of 2024. But the answer to your question is difficult in the sense of there's two ways to think about it, right? One way to think about it is, your team and their potential, and the second part is the robustness of the market and the revenue opportunity, the fee opportunities that exist. That's the more unknown. Do I see this business or could I see this business as a billion-dollar revenue business in the next, you know, three years? The answer is, yeah. That's a combination of the quality of people we have, the breadth of the products that they're providing to the market, and I think the market staying relatively healthy. That's the top line. When you get down to the bottom line, you know, you see pre-tax margins that you could be in the, you know, 20%-25% range, which, you know, and maybe even a little bit higher than that as we gravitate towards, you know, more M&A. So yeah, feel really good about the potential for this business to grow. Thanks so much. Yep. There are no further questions at this time. I would now like to turn the call back over to the Chief Executive Officer, Mr. Greg Becker. Great. Thanks everybody. I just wanna really thank you all for joining us today. You know, we're certainly proud of what we delivered this past year and very excited about the year ahead, and the work we're doing to deepen with our clients the relationship, add value and insights, and continue to make meaningful differences in their success. It's one of the things we track, how our clients feel about our ability to have an impact on their success. You know, we had great uptick in that last year, and we certainly expect it to play out that way this year as well. Obviously based on the questions, we're keeping an eye on the markets, and we wouldn't be surprised given the current kind of volatility to see some volatility in private company valuations. Again, as we said, the market is still so robust. There's so much potential. There's so much dry powder that we remain still very optimistic. You know, the bottom line is that we've been here before. We've seen our clients go through many cycles, large and small. We know from experience that those cycles are short, but in no way do they diminish the power of this innovation economy that is just getting more and more attention. I just wanna thank our employees around the world for always giving their best to SVB, to hanging in there during the pandemic and taking care of each other and their colleagues and especially the clients. I wanna thank our clients for their partnership and trust in us. as we hopefully are in the final stages of the pandemic, I certainly look forward to more in-person meetings, in-person dinners, and getting to spend time with members of our team and clients in the market. In the meantime, while we wait for that to play out, hopefully everyone stays healthy and take care of themselves. Thanks a lot, and take care. Ladies and gentlemen, thank you for your participation. This concludes today's conference call. You may now disconnect.