Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT ON FORM 8-K - SVB FINANCIAL GROUP | d8k.htm |
 JMP Securities
Research Conference May 9, 2011
Exhibit 99.1 |
 The presentations
made at today’s meeting contain projections or other forward- looking statements
regarding management’s expectations about the future events or the future financial
performance of the Company, as well as future economic, market and tax conditions.
Forward-looking statements are
statements that are not historical facts.
We wish to caution you that such
statements are just predictions and actual events or results may
differ materially,
due to changes in economic, business and regulatory factors and trends.
We refer you to the documents the Company files from time to time with the
Securities and Exchange Commission, specifically the company’s latest Annual
Report on Form 10-K for the year ended December 31, 2010, which was filed on
February 25, 2011, and quarterly report on form 10-Q, which was filed on May 6,
2011.
This document contains and identifies important risk factors that could
cause the Company’s actual results to differ materially from those contained in
our projections or other forward-looking statements.
All subsequent written or
oral forward-looking statements attributable to the company or persons acting
on
its behalf are expressly qualified in their entirety by these cautionary statements.
All forward-looking statements included in this presentation are made only as of
today’s date and the Company undertakes no obligation to update such
forward- looking statements.
Safe Harbor Disclosure
2 |
 SVB’s
Unique Model
Strong Performance
Growth Initiatives
Outlook for 2011
Appendix
Overview
3
Overview |
 A Unique
Financial Services Company Differentiated business model
•
Focus on “innovation”
markets
•
Balance sheet lender
•
Low cost funds from highly liquid clients
•
Diversified revenue streams
Leader
•
Leading market share
•
More than 550 venture firm clients
•
The bank for high-growth innovation companies
Established
(1)
•
26 U.S. and seven international offices
•
12,000+ clients and 1,350+ employees
•
$32.4 billion in total client funds
(2)
•
$18.6 billion in total assets
1) At 3/31/11
2) Total Client Funds includes deposits and off-balance sheet client investment
funds. 4
SVB’s
Unique Model |
 Complete
Financial Services Platform 5
SVB’s
Unique Model |
 Solid Q111
Performance 6
Strong Performance
Third straight
quarter of
loan growth
Fifth straight quarter
of credit quality
improvement
Improving net
interest
margin
Strong
warrant and
VC gains
Net interest
income at
record highs
Strong loan
pipeline
Outstanding
deposit
growth
Improving
markets for
our clients |
 Strong Organic
Growth in Q111 7
7
Strong Performance
* From prior quarter
•
Diluted earnings per share of $0.76 vs.
street consensus of $0.48 •
Net income of $33 million •
Average loan growth of $305 million
(6.1%)*
•
Average deposit growth of $1.4 billion
(10.3%)*
•
Record net interest income of $120 million …underscored by outstanding credit quality
|
 Net Interest
Income Remains Strong 8
8
Strong Performance |
 An Expanded
Balance Sheet DRIVERS
•
Low interest rate environment
•
Solid client liquidity
•
New client acquisition
•
High-quality balance sheet
WE REMAIN FOCUSED ON MANAGING OUR BALANCE
SHEET
•
Ensuring clients are in the right deposit and
investment products
•
New client investment products
•
Recent debt repurchase of $313 million
•
Strong asset sensitivity
9
9
Strong Performance |
 Our Growth
Initiatives 10
UK Branch
Application
India Branch
Application
China JV
Application
Israel Office
Correspondent
Banking
Network
Debit & Credit
Cards
New Products &
Services
Custom Credit
Products &
Programs
GLOBAL MARKETS & REACH
Global Core
Banking System
IT Backbone
Upgrade
Global Payment
Systems
Enhanced On-
line/Mobile
Systems
GLOBAL PLATFORM
PRODUCT LINES
Front-Line
Sales Staff
Private
Bank
Client
Segmentation
Client
Experience
CLIENT NEEDS
10
Growth Initiatives |
 Our 2011 Outlook
Has Improved 1) See latest quarterly press release for more information
2) Excluding expenses related to non-controlling interests. Non-GAAP number.
Please see non-GAAP disclosures at end of presentation and our most recent financial
releases for more information 11
Outlook for 2011
Metric
2011 Outlook
(1)
Prior Outlook (1/20/11)
Deposits (average)
Low double-digit % growth
High-single digits %
increase
Net Interest
Income
Mid-twenties
% growth
High teens % increase
Allowance
for Loan Losses as % of
Total Performing Loans
Between 1.25% and 1.35%
Between 1.30% and 1.40%
Net Loan Charge-Offs
Lower than 0.50% of
average total gross loans
Comparable
to 2010
Non-performing Loans
Lower than 2010 levels of
0.71% of total
gross loans
Comparable
to 2010
Net gains on equity warrant
assets
Between $7
and $10
million
Comparable
to 2010
Net gains on investment
securities
(net of gains on sales of AFS securities
and non-controlling interests)
Between $13 and $16
million
$4 to $8 million
Non-interest
expense
(2)
Mid-teens
% increase
Low double-digits %
increase |
 Street
Estimates: 2011 EPS and ROE* * Based on published reports as of 05/08/11. Certain
estimates and adjustments have been made where necessary. Please refer to analyst
reports before forming any conclusions. 12
Outlook
for
2011
–
vs.
Street
Estimates |
 *
Based
on
published
providing
estimates
for
average
loan
growth
as
of
05/08/11.
Certain
estimates
and
adjustments
have
been
made
where
necessary. Please refer to analyst reports before forming any conclusions.
Street Estimates: Average Loans*
13
Outlook for 2011 –
vs. Street Estimates
SVB 2011 Outlook:
Mid-20s % Growth
Upside Drivers
•
Strong economic growth
•
Strong IPO/M&A markets
•
VC investment returns to
pre-recession levels
Downside Drivers
•
Lethargic economic recovery
•
Deleveraging by clients
•Adverse
global events Our Assumptions
•
Modest economic
growth in 2011
•
Stabilizing IPO/M&A
markets
•
Stabilizing VC
investment |
 Street
Estimates: Average Deposits* 14
Outlook for 2011 –
vs. Street Estimates
Higher Deposit Drivers
•
Strong economic growth
•
Increased VC Fundraising
•
Increased IPO activity
•
Continued low interest rates
•
New client acquisition
Lower Deposit Drivers
•
Client adoption of off-balance
sheet products
•
Continued economic malaise
or downturn
•
Decrease in tech spending
•
Increased interest rates
Our Assumptions
•
Modest economic growth
•
VC Investment improves
but remains low
•
Strong tech spending
•
Success of target initiatives to
increase off-balance sheet funds
* Based on published reports providing estimates for average deposit growth as of
05/08/11. Certain estimates and adjustments have been made where necessary.
Please refer to analyst reports before forming any conclusions.
SVB 2011
Outlook:
Low Double Digit
% Growth |
    Street Estimates:
Net Interest Income* 15
Outlook for 2011 –
vs. Street Estimates
Upside Drivers
•
Rising rate environment
•
Continued strong
demand deposit growth
•
Strong loan growth
Downside Drivers
•
Higher interest bearing
deposits in low rate
environment
•
Increase in Fed Funds rate
•
Declining loan balances
* Based on published reports providing estimates for net interest income as of 05/08/11.
Certain estimates and adjustments have been made where necessary. Please refer to
analyst reports before forming any conclusions.
SVB 2011 Outlook:
Mid-20s % Growth
Our Assumptions
•
No increase in Fed Funds
rate in 2011
•
Slower deposit growth
•
Steady investment rates
•
Mid-20s% loan growth
•
Success in moving funds
off the balance sheet |
 Solid Momentum
For Growth in 2011 •
Improving business environment
•
Growing client revenues due to increasing
technology spending
•
Improving venture-backed exit markets
•
Beginning to see results from growth
initiatives
16
16
Outlook for 2011 |
 |
 Appendix
1)
First Quarter 2011 Review
19
•
Highlights
20
•
Loans & Credit Quality
21-24
•
Assets and Client Liquidity
25-26
•
Balance Sheet
27
•
Sensitivity Charts
28-29
•
Capital Ratios
30
•
2011 Outlook
31
2)
Annual Metrics
32-33
3)
Growth Initiatives
34-37
4)
Venture Capital Markets
38-39
6)
Non-GAAP Reconciliations
40-44 |
 First Quarter
2011 Review 19
Appendix
–
First
Quarter
2011
Review |
 Quarterly
Financial Highlights Q111
Q410
Q310
Q210
Q110
Diluted Earnings Per Share
$0.76
$0.41
$0.89
(1)
$0.50
$0.44
Net Income Available to
Common Stockholders
$33.0M
$17.5M
$37.8M
(1)
$21.1M
$18.6M
Average Loans (Change)
$5.3B
(+6.1%)
$5.0B
(+11.3%)
$4.5B
(+9.4%)
$4.1B
(-0.1%)
$4.1B
(-5.8%)
Average Deposits (Change)
$14.7B
(+10.3%)
$13.3B
(+11.6%)
$11.9B
(+0.1%)
$11.9B
(+8.6%)
$11.0B
(+11.0%)
Net Interest Margin
2.96%
2.74%
3.14%
3.20%
3.30%
Net Interest Income
$120.3M
$104.5M
$106.3M
$106.4M
$100.8M
Non-Interest Income
$90.0M
$71.9M
$86.2M
(1)
$40.2M
$49.3M
Net (Recoveries) Charge-
Offs/Total Average Gross
Loans
(0.19%)
(2)
0.57%
0.73%
0.38%
1.46%
Non-Interest Expense
$117.4M
$115.9M
$104.2M
$104.2M
$98.6M
1)
Includes $23.6 million in pre-tax gains from sale of AFS securities
2)
Represents net recovery of $2.5 million
20
Appendix
–
First
Quarter
2011
Review |
 Loans Are At an
All-Time High 21
21
Appendix
–
First
Quarter
2011
Review
$5.65 |
 A Focused,
High-Quality Loan Portfolio Risk Composition of Technology
and Life Science Lending
Total Loan Portfolio (3/31/11)
$5.7 Billion
22
Appendix
–
First
Quarter
2011
Review |
 Credit Quality
Has Improved 23
Appendix
–
First
Quarter
2011
Review |
 Credit Quality
Has Improved 24
Appendix
–
First
Quarter
2011
Review |
 Solid Franchise
With Consistent Growth 25
Billions
25
Appendix
–
First
Quarter
2011
Review |
 Our Clients Have
Ample Liquidity 26
Billions
26
Appendix –
First Quarter 2011 Review |
 A Liquid Balance
Sheet (1)
1)
At 3/31/11
2)
Net of non-controlling interests, non-marketable securities were $310.1 million.
Non-GAAP number. Please see non-GAAP reconciliation at end of
presentation
and
our
most
recent
financial
releases
for
more
information.
3) Includes A) Premises and Equipment Net of Accumulated Depreciation and
Amortization, and B) Accrued Interest Receivable and Other Assets 27
Appendix
–
First
Quarter
2011
Review |
 Rising Rates
Will Benefit Us Significantly Each 25 bps increase in the Fed Funds rate contributes
approximately $4 –
$8 million to Net Interest Income**
**Tax-effected, estimates are based on static balance sheet and assumptions as of
3/31/11 Changes in
Fed Funds
Rate (basis
points)
Changes in
Net Interest
Income (tax
effected)
Incremental
EPS Effect
Incremental
ROE Effect
Net Interest
Margin Effect
+75
+14.3 million
$0.34
+0.8%
+0.14%
+100
+$23.4 million
$0.55
+1.3%
+0.22%
+200
+$57.7 million
$1.36
+3.1%
+0.56%
+300
+$93.7 million
$2.21
+4.8%
+0.90%
28
Appendix
–
First
Quarter
2011
Review |
 Higher Loan
Balances Will Benefit Us **Estimates
are
based
on
static
balance
sheet
and
assumptions
as
of
3/31/11
Each $250 million increase in loan volume contributes
approximately $0.22 to EPS**
29
Appendix
–
First
Quarter
2011
Review
Growth in
Overall Loan
Balances
($$)
Changes in
Net Interest
Income (tax
effected)
Incremental
EPS Effect
Incremental
ROE Effect
Net Interest
Margin
Effect
+250 million
+9.5 million
$0.22
+0.5%
+0.09%
+500 million
+$18.9 million
$0.45
+1.0%
+0.18%
+750 million
+$28.4 million
$0.67
+1.5%
+0.27%
+1 billion
+$37.9 million
$0.89
+2.0%
+0.37% |
 We Are Well
Capitalized *TCE/TA and TCE/RWA are non-GAAP Numbers; please Refer to Non-GAAP
reconciliations at end of presentation for more information. 30
Appendix
–
First
Quarter
Review |
 Full Year
Outlook: 2011 vs. 2010 Metric
2010 Actual
2011 Outlook
(3)
as of 4/21/11
Loans (average)
$4.4 Billion
Mid-20s % growth
Deposits (average)
$12.0 Billion
Low double-digit % growth
Net Interest Income
$418.1 Million
Mid-twenties % growth
Net Interest Margin
3.08%
Between 3.30% and 3.40%
Allowance for loan losses for performing loans
/period end gross performing loans
1.37%
Between 1.25% and 1.35%
Net Loan Charge-Offs
$34.5 million
Lower than 0.50% of average total gross
loans
Non-Performing Loans/Total Loans
0.71%
Lower than 2010 levels
“Core”
Fee Income
(1)
$109.0 million
High single-digit % increase
Net gains on equity warrant assets
$6.6 million
Between $7 and $10 million
Net gains on investment securities (net of gains
on sales of available-for-sale securities and
non-controlling interests)
$16.1 million
Between $13 and $16 million
Non-interest expense
(excluding expenses
related to non-controlling interests)
$410.5 million
(2)
Mid-teens % increase
1)
“Core”
is defined as fees for deposit services, letters of credit, business credit card, client
investment, and foreign exchange, in aggregate 2)
Non-GAAP
number.
Please
see
non-GAAP
reconciliations
at
end
of
presentation
and
our
most
recent
financial
releases
for
more
information.
3)
See latest financial press release for more information.
31
Appendix
–
First
Quarter
Review |
 Annual
Metrics 32
Appendix –
Annual Metrics |
 Financial
Highlights: 2008 -2010 2008
2009
2010
Diluted Earnings Per Share
$2.16
$0.66
$2.24
Net Income Available to
Common Stockholders
$73.6M
$22.7M
$95.0M
Average Loans (Change)
$4.6B (+31.5%)
$4.7B (+1.4%)
$4.4B (-5.6%)
Average Deposits (Change)
$4.9B (+23.6%)
$8.8B (+79.6%)
$12.0B (+36.8%)
Average AFS Securities
$1.3B
$2.3B
$5.3B
Net Interest Margin
5.72%
3.73%
3.08%
Net Interest Income
(Change)
$368.6M
$382.2M
$418.1M (+9.4%)
Non-Interest Income
$152.4M
$97.7M
$247.5M
Net Charge-Offs/Total
Average Gross Loans
0.87%
2.64%
0.77%
Non-Interest Expense
$312.9M
$343.9M
$422.8M
33
Appendix –
Annual Metrics |
 Growth
Initiatives 34
Appendix
–
Growth
Initiatives |
 We’re
Supporting Clients At All Stages 50%
Market Share
10% –
12%
Market Share
< 10%
Market Share
35
Appendix
–
Growth
Initiatives |
 Prior to
2011
2011 -
2012
Long Term
Financial
Impact
-
Rep office
-
LPO
Branch and
full product
set
Subsidiary bank +
Europe;
expansion and
growth
0-2 years
-
Rep Office
-
Funds
JV Bank and
related
activities
Subsidiary
Branch;
expansion and
growth
3-5 years
-
Rep Office
-
LPO
Expansion and
growth
0-2 years
-
NBFC
-
Fund
Branch or
subsidiary
with full
product set
Subsidiary
3-5 years
We Are Extending Our Platform Globally
36
36
Appendix –
Growth Initiatives |
 Private
Bank •
Expanded private banking services
•
Tailored lending for influencers in the SVB
ecosystem
•
An advanced, easy-to-use, online platform
•
Support for clients’
success in all arenas:
business, family, life
37
Appendix
–
Growth
Initiatives |
 Venture Capital
Markets 38
Appendix
–
Venture
Capital
Markets |
 VC Markets Are
Stabilizing Source: Thomson Reuters, National Venture Capital Association, Dow
Jones 39
Appendix –
Venture Capital Markets |
 Non-GAAP
Reconciliations 40
Appendix
–
Non-GAAP
Reconciliations |
 Non-GAAP
TCE/TA and TCE/RWA Reconciliation
Non-GAAP tangible common equity and
tangible assets
(dollars in thousands, except ratios)
March 31,
December 31,
March 31,
2011
2010
2010
GAAP SVBFG stockholders' equity
$ 1,313,574
$ 1,274,350
$ 1,173,480
Less: intangible assets
749
847
979
Tangible common equity
$ 1,312,825
$ 1,273,503
$ 1,172,501
GAAP total assets
$ 18,618,266
$ 17,527,761
$ 14,125,249
Less: intangible assets
749
847
979
Tangible assets
$ 18,617,517
$ 17,526,914
$ 14,124,270
Risk-weighted assets
$ 10,000,214
$ 9,406,677
$ 7,324,526
Tangible common equity to tangible assets
7.05 %
7.27
%
8.30 %
Tangible common equity to risk-weighted
assets
13.13 %
13.54 %
16.01 %
For additional Non-GAAP disclosures, please refer to our regularly filed Forms 10-Q and
10-K, as well as our quarterly earnings releases. 41
Appendix
–
Non-GAAP
Reconciliations |
 Non-GAAP
Non-Interest Income Reconciliation Three
months
ended
Year
ended
Non-GAAP noninterest
income, net of
noncontrolling interests
(dollars in thousands)
March 31,
December 31,
March 31,
December 31,
December 31,
2011
2010
2010
2010
2009
GAAP noninterest income
$ 89,954
$ 71,864
$ 49,273
$ 247,530
$ 97,743
Less: income (losses)
attributable to
noncontrolling interests,
including carried interest
43,562
19,785
13,891
54,186
(24,901)
Less: gains on sales of
available-for-sale securities
-
-
-
24,699
-
Non-GAAP noninterest
income, net of
noncontrolling interests
$ 46,392
$ 52,079
$ 35,382
$ 168,645
$ 122,644
42
Appendix
–
Non-GAAP
Reconciliations
For additional Non-GAAP disclosures, please refer to our regularly filed Forms 10-Q and
10-K, as well as our quarterly earnings releases. |
 Non-GAAP
Non-Interest Expense Reconciliation
43
Appendix –
Non-GAAP Reconciliations
Three
months
ended
Year
ended
Non-GAAP operating efficiency ratio,
net of noncontrolling interests
(dollars in thousands, except ratios)
March 31,
December 31,
March 31,
December 31,
December 31,
2011
2010
2010
2010
2009
GAAP noninterest expense
$ 117,435
$ 115,891
$ 98,576
$ 422,818
$ 343,866
Less: amounts attributable to
noncontrolling interests
3,481
3,298
3,231
12,348
12,451
Less: impairment of goodwill
-
-
-
-
4,092
Non-GAAP noninterest expense, net of
noncontrolling interests
$ 113,954
$ 112,593
$ 95,345
$ 410,470
$ 327,323
GAAP taxable equivalent net interest
income
$ 120,806
$ 105,025
$ 101,362
$ 420,186
$ 384,354
Less: income (losses) attributable to
noncontrolling interests
7
8
(7)
28
(18)
Non-GAAP taxable equivalent net
interest income, net of noncontrolling
interests
120,799
105,017
101,369
420,158
384,372
Non-GAAP noninterest income, net of
noncontrolling interests
46,392
52,079
35,382
168,645
122,644
Non-GAAP taxable equivalent revenue,
net of noncontrolling interests
$ 167,191
$ 157,096
$ 136,751
$ 588,803
$ 507,016
Non-GAAP
operating
efficiency
ratio
(1)
68.16
%
71.67
%
69.72
%
69.71
%
64.56 %
(1) The non-GAAP operating efficiency ratio is calculated by dividing non-GAAP
noninterest expense, net of noncontrolling interests by non-GAAP taxable equivalent
revenue, net of noncontrolling interests. For additional GAAP to Non-GAAP reconciliation information, please refer to our regularly filed Forms 10-Q
and 10-K, as well as our quarterly earnings releases. |
 Non-GAAP
Non-Marketable
Securities
Reconciliation
For additional GAAP to Non-GAAP reconciliation information, please refer to our regularly
filed forms 10-Q and 10-K, as well as our quarterly earnings releases. 44
Appendix –
Non-GAAP Reconciliations
Non-GAAP non-marketable
securities, net of
noncontrolling interests
(dollars in thousands)
March 31,
December 31,
March 31,
2011
2010
2010
GAAP non-marketable
securities
$ 798,064
$ 721,520
$ 591,692
Less: noncontrolling interests
in non-marketable securities
488,013
423,400
344,890
Non-GAAP non-marketable
securities, net of
noncontrolling interests
$ 310,051
$ 298,120
$ 246,802 |