Good day ladies and gentlemen and welcome to the Silvercrest Asset Management Group's Fourth Quarter and Year End 2016 Earnings Call. At this time, all participants are in a listen-only-mode. [Operator Instructions] As a reminder today's conference maybe recorded. Before we begin, let me remind you that during today’s call Silvercrest will make forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding future events and developments, and Silvercrest’s future performances, as well as management’s current expectations, beliefs, plans, estimates, or projections relating to the future are forward-looking statements. These forward-looking statements are only predictions based on current expectations and projections about future events. These forward-looking statements are subject to a number of risks and uncertainties, and they are important factors that could cause actual results, level of activity, performance or achievements to differ materially than the statements made. Among these factors are fluctuations in quarterly and annual results, incurrence of net losses, adverse effects with management focusing on implementation of our growth strategy, failure to develop and maintain the Silvercrest brand and other factors disclosed in the company’s filings with the SEC, including those factors listed under the caption entitled Risk Factors in the company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC. In some cases these statements can be identified by forward-looking words such as believe, expect, anticipate, plan, estimate, likely, may, will, could, continue, project, predict, goal, the negative or plural of these words, and other similar expressions. These forward-looking statements are predictions based on Silvercrest’s current expectations and its projections about future events. All forward-looking statements made on this call are made as of the date hereof, and Silvercrest assumes no obligation to update these forward-looking statements. I’d now like to introduce your host for today's conference Mr. Rick Hough, Chairman and Chief Executive Officer. Sir, please go ahead.

Thank you. Good morning. Welcome to our fourth quarter and year-end 2016 call. Silvercrest continued its history of delivering strong organic growth in both its core family business and institutional business during the fourth quarter ended December 31, 2016. Silvercrest added approximately 100 million in newly committed client accounts and assets and we continue to remain very proud of our ability to maintain our history of organic growth. Our strong investment performance during the fourth quarter contributed additional growth of approximately $500 million in discretionary assets combined with our organic growth during the fourth quarter discretionary assets increased approximately 600 million to 13.8 billion as of December 31, 2016, a 14% increase in our discretionary assets under management for the calendar year. The firm has continued its growth while maintaining our fee basis for assets under management and margins and investing in the business for future growth. Importantly, Silvercrest proprietary value equity strategies continued strong performance with outstanding results for 2016. Each of the firm six primary equity strategies have outperformed that their relevant benchmarks for nearly all measured periods as well as since inception. We’re enormously proud of this achievement during a time when many active managers have struggled on a relative basis. We believe Silvercrest growth and our culture, premier brand and the fast-growing RIA business makes it’s a desirable business partner, and to that end we remain optimistic about complementing our organic growth with accretive acquisitions to add both professional talent and to broaden our high network of clients. With that I'll turn the call over to Scott Gerard our CFO, who will go through the financials for the fourth quarter as well as the year. And then we’ll take questions. Scott?

Thanks, Rick. As disclosed in our earnings release for the fourth quarter again discretionary AUM as of December 31, 2016 was 13.8 billion and total AUM as of the same date was 18.6 billion. Revenue for the fourth quarter was 21.2 million and reported consolidated net income for the quarter was 2.5 million. So looking at the quarter, year-over-year NIM [ph], fourth quarter revenue of 21.2 million represented approximately a 10% increase over revenue of 19.2 million for the same period last year. This increase was driven primarily by growth in our management and advisory fees as a result of increased AUM. Expenses for the fourth quarter were 17.9 million representing approximately a 17% increase from expenses of 15.3 million for the same period last year. This increase was primarily attributable to increases in compensation and benefits expense of 2.5 million. So, comp increased primarily because of higher equity based compensation expense as a result of restricted stock grant units that were primarily made in August of 2005 and then there were some additional grants that were made in May 2016. We also had increased salary expense as a result of both merit based increases and increased headcount due to the Jamison and Cappiccille acquisitions and we had an increase in the accrual for year-end bonuses. General and administrative expenses for the quarter basically remained flat in $4.2 million as compared to the fourth quarter of last year. We had increased historic G&A as a result of change in the fair value of earnout arrangements related to the Milbank and Jamison acquisitions and we increased our accounts receivable reserve in line with increased revenue. These were offset by decreases to both professional fees and sub-advisory fees. Reported consolidated net income was $2.5 million for the quarter and as compared to…

Great. Thanks very much, Scott. I think we’re ready for questions at this time.

[Operator Instructions] Our first question comes from the line of Andrew Disdier with Sandler O’Neill.

So, first one is on distribution. I saw the institutional discretionary AUM buckets saw a nice growth year-over-year from about $2.2 billion to $3.3 billion. So, can you talk about those drivers and update us with where you could see this midcap and equity income reception kind of going out forward?

Sure. So, first of all a lot of that increase is due to the fact that we laid the ground work now for several years and have very tight consultant relationships that continue to build business. Secondly, one thing we’ve talked about in the past and particular in 2014 and 2015 that we definitely saw happen come to fruition in 2016 and in particular in the fourth quarter, is growth in the absence [ph] Silvercrest small cap fund as well as with our Morgan Stanley UMA accounts, the group grew very nicely. Despite the good results actually there was a bit of headwind for us in the institutional business throughout the year, but it saw for sure in the fourth quarter and I can only assume we’ll see it to some extent this year for the first quarter and that is with a very strong equity performance for our consultant relationships, a lot of the institutional businesses rebalancing. So as we win accounts due to that strong performance which is certainly a major reason we’ve been doing well, we’re also seeing some outflows offsetting the strong growth as our performance is better than other equity managers or other asset classes. In terms of what we see going forward, as I mentioned in our last call the institutional pipeline of potential new business was a little bit lower than it had been historically, we see that again now we’re still getting our great share of wins, but I would just moderate our expectations compared to what they were say a year ago in terms of institutional pipeline. We are actively going out to market with our equity income and Smith Cap strategies, we’ve remain hopeful that we’re going to pick up some nice relationship there, especially sub-advisory relationships, as you may recall starting in 2014 and 2015 we’ve really started -- I’d say really got the momentum going in 2015 to try to get the sub-advisory relationships because of course there is a growing of assets rather than a mere discretionary allocation. That marketing is going well, and we’ll just have to see how it turns out in 2017. In addition, we’re going out with a couple of other more refined or smaller strategies in terms of their appeal such as in Focused, which is a concentrated equity portfolio as well as with our REIT and MLP strategies, but those are a bit smaller in terms of the opportunity set as compared with equity income in Smith which have a lot of more capacity, but also which have performed extraordinarily well. We’re very proud of the equity performance as you can imagine based on the results we’ve now reported for the year.

Understood. Absolutely, the performance was very strong and kind of thinking on the opposite side of the spectrum, you let us know that last quarter the small cap strategy there was a soft close. So, just wondering the contributions whether it would be positive inflows or negative obviously outflows. How it impacted some of the underlying flow trends this quarter?

Yeah. The total rebalancing our client withdrawals were I think about 59 million for the fourth quarter. So it's around that 60 million. We actually netted inflows of a total even after those outflows of around $62 million and then market appreciation of those assets was about $278 million so you saw that, an increased total 340. But it was effectively 60 out against a base of 120 something in, so that was a net of 62. And that was rebalancing the soft close really had no effect on that per-say and we have left, the reason it's a soft close is that Small Cap is open for a couple of institutional accounts that we're promise capacity up to a certain number, as well as for high net worth client base.

Got it. In last call, it was only a few days out ahead of the U.S. presidential election and a lot has clearly changed since then. So we're starting to getting a little bit of visibility as far as President Trump's initiatives, one that was I was thinking about is how do you think potential tax reform could impact your client base particularly the high net worth section, and taking it one step further, do you think flows could be positively impacted in such that you see more of a plough back into some Silvercrest strategies.

So let me just tackle the Trump administration. I think tax reform and tax changes are so complicated given the different constituencies involved that it's going to be a long time before we really see what that might mean. The 1986 tax reform took a good year and half to two years to get done. And this one is very significant. I think many commentators aren't expecting to see a whole lot until very late this year at best. The emphasis also seems to be as much on corporate taxes. Obviously, that would benefit us and other corporations very significantly. On the high net worth side, where there is a little less attention to the extent our clients would have more discretionary assets to put to work, on balance that would obviously help our firm to some extent. But at this stage we're not really putting much stock into what the Trump administration might do either for our business or for our clients, I just think it's a little far off. We need to concentrate on what we have done which is organically growing the business until we really see what comes to fruition. So I wouldn't put much stock in that. Where I think things do matter, which is what we've seen since the election with the increase in consumer confidence, business confidence, orders, the increase in the stock market, is as the market increases it does draw attention and it does tend to incline investors to be more interested in equities than they have in the past. And so there is a potential for additional equity inflows merely as a phenomenon of that optimism and the rising market. Over the past six years or seven now, since the end of the crisis, the interest in equities has been pretty muted. People have always been concerned and waiting for the other shoe to drop across the board and other managers certainly compared to Silvercrest have struggled with the flows in the equities. I think that the new environment on the anticipation of what may happen in a variety of ways whether it's regulatory or tax is potentially helpful for driving future equity flows especially with such low interest rates. I also think that as we move to a more normalized economic environment, and by that I mean one with interest rates that are closer to what you might expect in a growing economy compared to what we've had over the past several years. It may provide the opportunity for equity markets to be a bit more favorable to active management. We've done very well, but that environment can only help us as well.

Great thank you for that. And then moving on to the DOL so we've discussed your preparation in order to comply with the rule in the past. Obviously, we have seen some updates and proposals for the delay. And which means some financial headlines about firm's reversing courses on their past preparation. So two-part question for you, one, how do you plan on dealing and proceeding with the preparation. And then two, do you think there are assets or potential clients are sidelined, that are kind of playing a wait-and-see game before committing capital to Silvercrest?

So let me answer the DOL rule first. We were as we've discussed far less effected by the DOL role around being fiduciary for a risk around. Then, the large players in that space who tend to be broker dealers and part of the reason of course is because we’re an RIA and we’ve always been a fiduciary and only act in a fiduciary capacity. So, any preparation we did, which there were some due to that, was pretty minor. The additional rules that could have come along with it, it could have had a greater effect on us, but since we haven't seen them I wouldn’t expect to see a big change for our business. It certainly makes things more helpful, as if things had gone through we would have definitely seen the prospect of higher regulatory expense and cost, we've seen plenty over the past several years and so that’s just one more relief. Where we would have really had to separate some of the clear advice we were providing on a fiduciary base from the equity capabilities we have in house, which by the way act as a fiduciary as well on behalf of our clients. That’s off the table, so it’s really a future expense that we’re not going to see that we have on top of regulatory expenses we’ve already experienced. I don’t think that particular rule making has helped our prospectus clients on the sidelines. So, I also don’t think that necessarily frees up more money for us. I think the other factors I mentioned in my prior answer are more meaningful for our own equity flows.

Great. Thank you. And then just a couple of modeling questions. So, with regards to performance you have definitely captured some nice upside there.

Yeah.

I understand the majority of the performance fees, they're a function of the Muni Bond asset class.

That’s right.

You know kind of looking at performance prior to the election, the Bloomberg, Barclays index, Muni Bond index was up about 3%, but the final tally, gains were kind of wiped away at the end of the year, only finish up 25 basis points. So, could you just provide a little clarification around that?

Sure. So, the partnership that has performance fees associated with here at Silvercrest is a high yield municipal strategy which is investing in essential services and communities, healthcare, retirement living, education, water, et cetera. And it does not use any leverage. So, the index that you referenced is really more applicable to plain vanilla municipal strategy not as compared with our high yield which has a much higher yield to maturity and a longer duration as well. So, the appropriate index there would be the high yield indices.

All right. Thank you for that. And then finally just looking comp, it came in a little higher than I was expecting and I noticed there were a lot of non-core expenses, but just any color there would be helpful.

Yeah. So, yeah and I saw your note this morning, thank you for that. Cash compensation as a percentage of revenue ended the year with 55.6%. The performance fees in the municipal fund are unfortunately reported as part of our equity income on our P&L. And so that has to be added into the figures to boost revenue a little bit more than I think a lot of people calculate. And historically the firm has hovered anywhere from right on 55% to about 57% in the past few years. We were pretty satisfied with 55.6%. It's very close to the 55%, some of that slight increase that we’re targeting is due to investments in the business and hiring people for future growth. Remember revenue for the year, even ending 21-31 is not necessarily -- we’re only billing four days a year and we’re going to be hiring during that for future growth. So, it's not like we had 80 million in revenue going into 2016, we grew through it and improved payroll with it. So if we have been static and not made any investments, which of course we don’t want to do, because we do want to continue growing the firm for investors. We would have been below 55% this year. And we go into 2017, on that higher revenue base, it just hasn’t caught up, the revenue is just a quarter off of what our hiring is, if you think of it that way, because of the 12-31 billing day. Does it make sense.

Yeah, understood.

Yeah. And we’re hovering around that 60% mark that we've talked about in the past. When you include the equity incentive comp that we provided in 2015.

Understood, that's it from me. Thank you for taking the questions gentlemen.

Very welcome.

[Operator Instructions]. I'm showing no further phone questions at this time, I'd like to turn the call back to Mr. Hough for any closing remarks.

Great. Well thank you very much for joining us this morning. We're again very proud of our results for the calendar year. The organic flows and growth in this business have now had seven years of positive flows which I think is quite remarkable given the headwinds that many active managers and wealth managers have faced since the crisis and it concludes our fourth straight year with three years of being a public company and a sub-year as a public company. So we're very proud of those results, and in particular driven by a very strong equity performance delivered by our equity team as you saw at the end of the year by our high-yield municipal team and very unique strategy that's highly desirable to high net worth investors seeking income, and the team work here at Silvercrest. We have a wonderful culture and we're excited about the future in 2017. Thank you very much.

Ladies and gentlemen thank you for your participation in today's conference. This concludes the program. And you may now disconnect. Everyone have a great day.