Attached files
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| 8-K - FORM 8-K - SVB FINANCIAL GROUP | d8k.htm |
 Corporate
Overview and Second Quarter 2011 Financial Results
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
•
Strong deposit franchise
•
Diversified revenue streams
Leader
•
Leading market share
•
More than 600 venture firm clients
•
The
bank for innovation companies
Established
(1)
•
26 U.S. and seven international offices
•
12,000+ clients and 1,400+ employees
•
$19.4 billion in total assets
•
$34.5 billion in total client funds
(2)
(1) At 6/30/11
(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 Q2 2011
Performance 6
Strong Performance
4
th
consecutive
quarter of loan
growth
6
th
consecutive
quarter of credit
quality
improvement
Improved net
interest margin
Strong warrant
and VC gains
Net interest
income at record
highs
Strong loan
pipeline
Outstanding
deposit growth
Positive conditions
in client markets
Record high loan
and deposit
balances |
 Strong Organic
Growth in Q2 2011 7
7
Strong Performance
(1)
Non-GAAP
numbers.
GAAP diluted EPS of $1.50 and net income of $65.8 million included $0.55 from sales of
investment securities and gain on dept repurchase. Please see non-GAAP
reconciliations at end of presentation and our most recent financial releases for more information.
(2)
Compared to prior quarter. |
 Net Interest
Income Remains Strong 8
Millions
8
Strong Performance
NIM |
 An Expanded
Balance Sheet DRIVERS
•
Deposit growth due to low interest rate environment
•
New client acquisitions
•
Solid client liquidity
FOCUSED BALANCE SHEET MANAGEMENT
•
Ensuring clients are in the right deposit and
investment products
•
Developing new client investment products
•
Recent debt repurchase of $313 million
•
Maintaining strong asset sensitivity
•
Maintaining high-quality balance sheet
9
9 Strong Performance
|
 A Liquid Balance
Sheet (1)
(1)
At 6/30/11.
(2)
Net of non-controlling interests, non-marketable securities were $331.6 million.
Non-GAAP number. Please see non-GAAP reconciliations 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.
10 Strong Performance
Non-Marketable
Securities
(VC Investments)
(2) |
 Our Growth
Initiatives 11
UK
India
China
Israel
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
11
Growth Initiatives |
 Drivers of
Growth in 2011 •
Positive business environment for our clients
•
Solid client revenues due to strong
technology spending
•
Active venture-backed exit markets
•
Initial results from growth initiatives
•
Leveraging our core competencies to retain
and grow our business
12
12
Outlook for 2011 |
 (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 financial press release dated July 21, 2011, for more information.
(4)
The timing, magnitude and realization of these gains (or losses) is uncertain and is dependent
on market conditions.
Full Year Outlook: 2011 vs. 2010
Metric
2010 Actual
2011 Outlook
(3)
as of 7/21/11
Loans (average)
$4.4B
Mid-twenties % growth
Deposits (average)
$12.0B
High-twenties % growth
Net Interest Income
$418.1B
Mid-twenties % growth
Net Interest Margin
3.08%
Between 3.05% and 3.15%
Allowance for loan losses for performing loans
/period end gross performing loans
1.37%
Between 1.20% and 1.30%
Net Loan Charge-Offs
$34.5M
Lower than 0.25% of average total gross
loans
Non-Performing Loans/Total Loans
0.71%
Lower than 2010 levels
“Core”
Fee Income
(1)
$109.0M
Mid single-digit % increase
Net gains (losses) on equity warrant assets
(4)
$6.6M
Between $25 million and $35 million
Net gains on investment securities (net of gains
on sales of available-for-sale securities and
non-controlling interests)
(4)
$16.1M
Between $15 million and $20 million
Non-interest expense
(excluding expenses
related to non-controlling interests)
$410.5M
(2)
Mid-teens % increase
13
Outlook for 2011 |
 |
 Appendix
1)
Quarterly Review
15
•
Highlights
17
•
Loans & Credit Quality
18
•
Assets and Client Liquidity
23
•
Sensitivity Charts
25
•
Capital Ratios
27
2)
Annual Metrics
28
•
Highlights
29
•
Loan Portfolio
30
•
Balance Sheet
31
3)
Growth Initiatives
32
4)
Venture Capital Markets
36
5)
Non-GAAP Reconciliations
39 |
 Quarterly
Review 16
Appendix –Quarterly Review |
 Quarterly
Financial Highlights Q2 2011
Q1 2011
Q4 2010
Q3 2010
Q2 2010
Diluted Earnings Per Share
$1.50
(1)(2)
$0.76
$0.41
$0.89
(3)
$0.50
Net Income Available to
Common Stockholders
$65.8M
(1)(2)
$33.0M
$17.5M
$37.8M
(3)
$21.1M
Average Loans
(Change)
$5.5B
(+4.2%)
$5.3B
(+6.1%)
$5.0B
(+11.3%)
$4.5B
(+9.4%)
$4.1B
(-0.1%)
Average Deposits
(Change)
$15.3B
(+4.1%)
$14.7B
(+10.3%)
$13.3B
(+11.6%)
$11.9B
(+0.1%)
$11.9B
(+8.6%)
Net Interest Margin
3.13%
2.96%
2.74%
3.14%
3.20%
Net Interest Income
$130.5M
$120.3M
$104.5M
$106.3M
$106.4M
Non-Interest Income
$123.7M
(1)
$90.0M
$71.9M
$86.2M
(3)
$40.2M
Net Charge-Offs
(Recoveries) /Total
Average Gross Loans
0.00%
(4)
(0.19%)
(5)
0.57%
0.73%
0.38%
Non-Interest Expense
$121.0M
(2)
$117.4M
$115.9M
$104.2M
$104.2M
(4)
Includes gains of $0.34/share or $14.2M (net of tax) from sales of AFS securities.
(5)
Represents net charge-offs of $30K.
(6)
Represents net recoveries of $2.5M.
(1)
Includes gains of $0.51/share or $22.5M (net of tax) from sales of AFS securities.
(2)
Includes gains of $0.04/share or $1.9M (net of tax) from the early extinguishment of
debt and the termination of corresponding interest rate swaps.
17
Appendix –Quarterly Review |
 Loans Are at an
All-Time High 18
18
Appendix –Quarterly Review |
 Loans Are at an
All-Time High 19
19
Appendix –Quarterly Review |
 A Focused,
High-Quality Loan Portfolio Risk Composition of Technology
and Life Science Lending
Total Loan Portfolio (6/30/11)
$6.0 Billion
20
Appendix –Quarterly Review |
 Credit Quality
Has Improved 21
Appendix –Quarterly Review |
 Credit Quality
Has Improved 22
Appendix –Quarterly Review |
 Solid Franchise
With Consistent Growth 23
Billions
23
Appendix –Quarterly Review |
 Our Clients Have
Ample Liquidity 24
Billions
24
Appendix –Quarterly Review |
 Rate Increases
will Benefit us Significantly Each 25 bps increase in the Fed Funds rate contributes
approximately $5 –
$9 million to Net Interest Income**
**Tax-effected, estimates are based on static balance sheet and assumptions as of
6/30/11 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
+16.8M
$0.39
+0.9%
+0.16%
+100
+$27.0M
$0.62
+1.4%
+0.25%
+200
+$67.9M
$1.58
+3.4%
+0.64%
+300
+$109.7M
$2.56
+5.3%
+1.03%
25
Appendix –Quarterly Review |
 Higher Loan
Balances will Benefit us **Estimates
are
based
on
static
balance
sheet
and
assumptions
as
of
6/30/11
Each $250 million increase in loan volume contributes
approximately $0.24 to EPS**
Growth in
Overall Loan
Balances
($$)
Changes in
Net Interest
Income (tax
effected)
Incremental
EPS Effect
Incremental
ROE Effect
Net Interest
Margin
Effect
+250 million
+$10.4M
$0.24
+0.5%
+0.10%
+500 million
+$20.9M
$0.49
+1.1%
+0.20%
+750 million
+$31.3M
$0.73
+1.6%
+0.29%
+1 billion
+$41.7M
$0.97
+2.1%
+0.39%
26
Appendix –Quarterly Review |
 We Are Well
Capitalized *
*
27
Appendix –Quarterly Review
•
TCE/TA and TCE/RWA are non-GAAP Numbers; please Refer to Non-GAAP reconciliations at end
of presentation and our most recent financial releases for more information.
|
 Annual
Metrics 28
Appendix –
Annual Metrics |
 Financial
Highlights: 2007 -2010 2007
2008
2009
2010
Diluted Earnings Per Share
$3.28
$2.16
$0.66
$2.24
Net Income Available to
Common Stockholders
$120.3M
$73.6M
$22.7M
$95.0M
Average Loans
(Change)
$3.5B
(+22.2%)
$4.6B
(+31.5%)
$4.7B
(+1.4%)
$4.4B
(-5.6%)
Average Deposits
(Change)
$4.0B
(+1.0%)
$4.9B
(+23.6%)
$8.8B
(+79.6%)
$12.0B
(+36.8%)
Average AFS Securities
$1.4B
$1.3B
$2.3B
$5.3B
Net Interest Margin
7.19%
5.72%
3.73%
3.08%
Net Interest Income
$375.8M
$368.6M
$382.2M
$418.1M
Non-Interest Income
$221.0M
$152.4M
$97.7M
$247.5M
Net Charge-Offs/Total Average
Gross Loans
0.35%
0.87%
2.64%
0.77%
Non-Interest Expense
$346.5M
$312.9M
$343.9M
$422.8M
29
Appendix –
Annual Metrics |
 Loan Portfolio
at 12/31/2010 Risk Composition of Technology
and Life Science Lending
Total Loan Portfolio
$5.7 Billion
30
Appendix –
Annual Metrics
Note: Due to rounding, charts may not sum to 100% |
 Balance Sheet at
12/31/2010 (1)
Net of non-controlling interests, non-marketable securities were $298.1 million.
Non-GAAP number. Please see non-GAAP reconciliation at end of
presentation
and
our
most
recent
financial
releases
for
more
information.
(2)
Includes A) Premises and Equipment Net of Accumulated Depreciation and Amortization, and B)
Accrued Interest Receivable and Other Assets. 31
Appendix –
Annual Metrics
(1) |
 Growth
Initiatives 32
Appendix –
Growth Initiatives |
 We’re
Supporting Clients At All Stages ~50%
Market Share
10% –
12%
Market Share
< 10%
Market Share
33
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
Develop
NBFC
Branch or
subsidiary
3-5 years
We Are Extending Our Platform Globally
34
34
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
35
Appendix –
Growth Initiatives |
 Venture Capital
Markets 36
Appendix –
Venture Capital Markets |
 Stabilizing VC
Markets 37
Appendix –
Venture Capital Markets
Source:
ThomsonReuters,
National
Venture
Capital
Association,
PricewaterhouseCoopers
-
MoneyTree |
 Source:
ThomsonReuters,
National
Venture
Capital
Association,
PricewaterhouseCoopers
-
MoneyTree
38
Appendix –
Venture Capital Markets
Stabilizing VC Markets |
 Non-GAAP
Reconciliations 39
Appendix –
Non-GAAP Reconciliations |
 Non-GAAP Net
Income Reconciliation For additional Non-GAAP disclosures, please refer to our
regularly filed Forms 10-Q and 10-K, as well as our quarterly earnings releases.
40
Appendix –
Non-GAAP Reconciliations
June 30,
March 31,
June 30,
2011
2011
2010
Net income available to common stockholders
65,750
$
33,007
$
21,120
$
Less: Gains on sales of available-for-sale securities
(37,314)
-
(1,094)
Tax impact of gains on sales of available-for-sale
securities
14,810
-
433
Less: Net gain from note repurchases and
termination of corresponding interest rate swaps
(3,123)
-
-
Tax impact of net gain from note repurchases and
termination of corresponding interest rate swaps
1,240
-
-
Non-GAAP net income available to common
stockholders
$41,363
$33,007
$20,459
Three months ended
Non-GAAP net income
(Dollars in thousands) |
 Non-GAAP EPS
Reconciliation 41
Appendix –
Non-GAAP Reconciliations
June 30,
March 31,
June 30,
2011
2011
2010
GAAP earnings per common share — diluted
$1.50
$0.76
$0.50
Less: Gains on sales of available-for-sale securities
(0.85)
-
(0.03)
Tax impact of gains on sales of available-for-sale
securities
0.34
-
0.01
Less: Net gain from note repurchases and
termination of corresponding interest rate swaps
(0.07)
-
-
Tax impact of net gain from note repurchases and
termination of corresponding interest rate swaps
0.03
-
-
Non-GAAP earnings per common share — diluted
$0.95
$0.76
$0.48
Weighted average diluted common shares
outstanding
43,739,743
43,426,306
42,475,959
Non-GAAP earnings per share
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
TCE/TA and TCE/RWA Reconciliation 42
Appendix –
Non-GAAP Reconciliations
June 30,
March 31,
June 30,
2011
2011
2010
GAAP SVBFG stockholders' equity
1,436,893
$
1,313,574
$
1,237,103
$
Less: intangible assets
709
749
935
Tangible common equity (TCE)
1,436,184
$
1,312,825
$
1,236,168
$
GAAP total assets
19,366,735
$
18,618,266
$
14,903,986
$
Less: intangible assets
709
749
935
Tangible assets (TA)
19,366,026
$
18,617,517
$
14,903,051
$
Risk-weighted assets (RWA)
10,470,532
$
10,000,214
$
7,751,856
$
Tangible common equity to tangible assets
7.42
7.05
8.29
%
Tangible common equity to risk-weighted assets
13.72
13.13
15.95
Non-GAAP tangible common equity and tangible
assets (dollars in thousands, except ratios)
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 Income Reconciliation 43
Appendix –
Non-GAAP Reconciliations
June 30,
March 31,
June 30,
December 31,
December 31,
2011
2011
2010
2010
2009
GAAP noninterest income
123,708
$
89,954
$
40,157
$
247,530
$
97,743
$
Less: income (losses) attributable
to noncontrolling interests,
including carried interest
26,558
43,562
2,921
54,186
(24,901)
Noninterest income, net of
noncontrolling interests
97,150
46,392
37,236
193,344
122,644
Less: gains on sales of available-
for-sale securities
37,314
-
1,094
24,699
-
Non-GAAP noninterest income,
net of noncontrolling interests
and excluding gains on sales of
available-for-sale securities
59,836
$
46,392
$
36,142
$
168,645
$
122,644
$
Three months ended
Year ended
Non-GAAP noninterest income,
net of noncontrolling interests
(dollars in thousands)
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
Operating Efficiency Reconciliation 44
Appendix –
Non-GAAP Reconciliations
(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.
June 30,
March 31,
June 30,
December 31,
December 31,
2011
2011
2010
2010
2009
GAAP noninterest expense
121,032
$
117,435
$
104,180
$
422,818
$
343,866
$
Less: amounts attributable to noncontrolling
interests
2,621
3,481
2,880
12,348
12,451
Less: net gain from note repurchases and
termination of corresponding interest rate
swaps
(3,123)
-
-
-
-
Less: impairment of goodwill
-
-
-
-
4,092
Non-GAAP noninterest expense, net of
noncontrolling interests
121,534
$
113,954
$
101,300
$
410,470
$
327,323
$
GAAP taxable equivalent net interest income
130,929
$
120,806
$
106,948
$
420,186
$
384,354
$
Less: income (expenses) attributable to
noncontrolling interests
45
7
25
28
(18)
Non-GAAP taxable equivalent net interest
income, net of noncontrolling interests
130,884
120,799
106,923
420,158
384,372
Non-GAAP noninterest income, net of
noncontrolling interests
59,836
46,392
36,142
168,645
122,644
Non-GAAP taxable equivalent revenue, net
of noncontrolling interests
190,720
$
167,191
$
143,065
$
588,803
$
507,016
$
Non-GAAP operating efficiency ratio
63.72
%
68.16
%
70.81
%
69.71
%
64.56
%
Three months ended
Year ended
Non-GAAP operating efficiency ratio
(1)
, net of
noncontrolling interests (dollars in
thousands, except ratios) |
 Non-GAAP
Non-Marketable Securities Reconciliation 45
Appendix –
Non-GAAP Reconciliations
June 30,
March 31,
June 30,
2011
2011
2010
GAAP non-marketable securities
875,194
$
798,064
$
616,339
$
Less: noncontrolling interests in non-marketable
securities
543,548
488,013
362,065
Non-GAAP non-marketable securities, net of
noncontrolling interests
331,646
$
310,051
$
254,274
$
Non-GAAP non-marketable securities, net of
noncontrolling interests
(dollars in thousands)
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-Marketable Securities Reconciliation 46
Appendix –
Non-GAAP Reconciliations
December 31,
December 31,
December 31,
December 31,
2010
2009
2008
2007
GAAP non-marketable
securities
721,520
$
553,531
$
467,206
$
339,877
$
Less: noncontrolling interests
in non-marketable securities
423,400
320,523
298,140
225,000*
Non-GAAP non-marketable
securities, net of noncontrolling
interests
298,120
$
233,008
$
169,066
$
$ 114,877*
Non-GAAP non-marketable
securities, net of noncontrolling
interests
(dollars in thousands)
For additional Non-GAAP disclosures, please refer to our regularly filed Forms 10-Q and
10-K, as well as our quarterly earnings releases. * Estimated
|