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8-K - FORM 8-K - SVB FINANCIAL GROUP | d349964d8k.htm |
Corporate
Overview and First Quarter 2012 Financial Results
Exhibit 99.1 |
The presentations
made at todays meeting contain projections or other forward- looking statements
regarding managements 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 Companys latest Annual
Report on Form 10-K for the year ended December 31, 2011, which was filed on
February 28, 2012, and our latest Quarterly Report on Form 10-Q.
These
documents contain and identify important risk factors that could
cause the
Companys 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
todays date and the Company undertakes no obligation to update such forward-
looking statements.
Safe Harbor Disclosure
2 |
SVBs
Unique Model Strong Performance
Growth Initiatives
Outlook
Overview
3
*
*
*
* |
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)
27 U.S. and seven international offices
$20.8 billion in total assets
$35.8 billion in total client funds
(2)
(1) As of 3/31/12
(2) Total client funds includes deposits and off-balance sheet client investment
funds 4 |
An Expansive
Platform 5 |
Strong Q1 2012
Performance Outstanding
loan growth
Continued strong
credit quality
overall
Lower non-
interest expense
Higher net interest
margin
Robust net
interest income
growth
Strong client
transaction
volumes
Continued deposit
growth
Positive conditions
in client markets
Total client funds
at all-time high *
6
*Total client funds includes deposits and off-balance sheet client investment funds.
|
Growth in Average
Loans of 65% Since Q1 2008 Growth Drivers
Resilience of innovation
sector and our clients
Growing pervasiveness of
technology
Growth initiatives:
o
U.S. domestic
o
Segmentation
o
Private Bank
o
Global
M&A market activity among
our clients
7 |
A Diversified
Loan Portfolio Total Loan Portfolio
$7.1 Billion as of 3/31/12
Technology and Life Sciences
Portfolio Only
$4.5 Billion (62% of Total Portfolio)
Cash Flow Buyout
15%
Commercial Finance
13%
Early Stage 10%
Factoring 7%
Early-Stage Loans = $467 Million
(7% of TOTAL Loan portfolio
Note: Cleantech-related loans are reported under
hardware, software, life science and other commercial
loan categories, as applicable.
8
Balance Sheet
Lending
55% |
Powerful Deposit
Franchise Organic Factors
Highly liquid clients
Clients performing well
New client acquisition
Other Factors
Safety of the balance sheet
(unlimited FDIC
insurance*)
Low rate environment
$35.8
$25.8
Billions
* For non-interest-bearing accounts through December 31, 2012
9 |
44% Annual Growth
in Net Interest Income Since Q410 10 |
Solid Credit
Quality Through Market Cycles Our loss experience through multiple cycles
suggests the diversity and resilience of innovation industries results in
little concentration risk. 11 |
Growing
Core Fee Income
Total Core
Fee Income
$32.4m
Core
is defined as fees for letters of credit, client investment fees, credit card fees, deposit
services and foreign exchange, in aggregate. Non-GAAP measures. Please see
non-GAAP reconciliations at end of presentation for more information.
12
Credit Cards and FX
driving growth |
Diversified
Growth Across the Business 13 |
Supporting
Clients At All Stages ~50%
Market Share
<15%
Market Share
< 10%
Market Share
14 |
Outlook for 2012
Performance (1)
Change estimates are for full-year 2012 results relative to 2011 full-year results;
outlook is as of April 26, 2012, and may change. (2)
Core
is defined as fees for deposit services, letters of credit, business credit card, client
investment, and foreign exchange, in aggregate. (3)
Non-GAAP measures. Please see non-GAAP reconciliations at end of presentation and in our
most recent financial releases for more information. Business Driver
2012 Outlook vs. 2011
(1)
Average loans
Mid-twenties % growth
Average deposits
Low-teens % growth
Net interest income
High-teens % growth
Net interest margin
Between 3.20% and 3.30%
Allowance for loan losses for total gross
performing loans/total gross performing loans
Comparable to 2011 levels of 1.23%
Net loan charge-offs
40-70
bps
of
average
total
gross
loans
Non-performing loans/total gross loans
Lower
than
2011
levels
of
0.52%
Core
(2)
fee income
Mid-teens % growth
Non-interest expense (excluding expense
related to non-controlling interests)
(3)
High single digit % growth
15 |
*
*
*
*
*
*
*
*
*
*
*
***************** |
Appendix
1)
Financial Results
18
Highlights
19
Loans
23
Credit Quality
26
Client Liquidity
27
Balance Sheet
28
Fee income
29
Sensitivity Charts
32
Capital Ratios
34
2)
Venture Capital Markets
36
3)
Non-GAAP Reconciliations
39 |
Financial
Results 18
Appendix
*
*
*
*
*
*
*
*
*
* |
Quarterly
Highlights: Q1 2011 Q1 2012
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Diluted Earnings Per Share
$0.76
$1.50
(1)(2)
$0.86
$0.81
$0.78
Net Income Available to
Common Stockholders
$33.0M
$65.8M
(1)(2)
$37.6M
$35.6M
$34.8M
Average Loans
Change
$5.3B
6.1%
$5.5B
4.2%
$6.0B
8.6%
$6.4B
6.5%
$6.8B
6.4%
Average Deposits
Change
$14.7B
10.3%
$15.3B
4.1%
$15.8B
3.5%
$16.5B
4.5%
$17.0B
2.7%
Net Interest Margin
2.96%
3.13%
3.13%
3.10%
3.30%
Net Interest Income
$120.3M
$130.5M
$135.5M
$140.1M
$150.9M
Non-Interest Income
$90.0M
$123.7M
(1)
$95.6M
$73.1M
$59.3M
Net Charge-Offs
(Recoveries) /Total
Average Gross Loans
(0.19%)
(3)
0.00%
(4)
(0.15%)
(5)
0.22%
(6)
0.21%
(7)
Non-Interest Expense
$117.4M
$121.0M
(2)
$127.5M
$134.7M
$132.0M
(4)
Represents net charge-offs of $30K
(5)
Represents net recoveries of $2.3M
(6)
Represents net charge-offs of $3.5M
(7)
Represents net charge-offs of $3.6M
(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
(3)
Represents net recoveries of $2.5M
19
Appendix
Financial Results (Highlights) |
Annual
Highlights: 2008 -2011 2008
2009
2010
2011
Diluted Earnings Per Share
$2.16
$0.66
$2.24
$3.94
Net Income Available to
Common Stockholders
$73.6M
$22.7M
$95.0M
$171.9M
Average Loans
Change
$4.6B
31.5%
$4.7B
1.4%
$4.4B
-5.6%
$5.8B
31.1%
Average Deposits
Change
$4.9B
23.6%
$8.8B
79.6%
$12.0B
36.8%
$15.6B
29.4%
Average AFS Securities
$1.3B
$2.3B
$5.3B
$9.4B
Net Interest Margin
5.72%
3.73%
3.08%
3.08%
Net Interest Income
$368.6M
$382.2M
$418.1M
$526.3M
Non-Interest Income
$152.4M
$97.7M
$247.5M
$382.3M
Net Charge-Offs (Recoveries)/
Total Average Gross Loans
0.87%
2.64%
0.77%
(0.02%)
Non-Interest Expense
$312.9M
$343.9M
$422.8M
$500.6M
20
Appendix
Financial Results (Highlights) |
Q1 2012 and FY
2011 Key Metrics Summary INCOME STATEMENT
Q112
2011
Earnings Per Share
$0.78
$3.94
Net Income
$34.8M
$171.9M
Net Interest Income
$150.9M
$526.3M
Non-Interest Income, net of non-controlling interests
and Gains on available-for-sale securities*
$51.4M
$222.7M
Non-Interest Expense, Net of non-controlling
interests and Debt Repurchase*
$129.2M
$492.2M
AVERAGE BALANCE SHEET AND CLIENT FUNDS
Q112
2011
Assets
$20.2B
$18.7B
Loans
$6.8B
$5.8B
AFS Securities
$10.5B
$9.4B
Deposits
$17.0B
$15.6B
Long-Term Debt
$0.6B
$0.8B
Client Investment Funds (off-balance sheet)
$18.9B
$17.7B
* Non-GAAP measures. Please see non-GAAP reconciliations at end of presentation and in
our most recent financial releases for more information. 21
Appendix
Financial Results (Key Metrics) |
CREDIT
QUALITY Q112
2011
Net Charge-offs (Recoveries)/Average Total Gross
Loans (annualized)
0.21%
(0.02%)
Gross Charge-offs/Average Total Gross Loans
(annualized)
0.41%
0.41%
NPLs/Total Average Gross Loans
0.58%
0.52%
Provision for Loan Losses
$14.5M
$6.1M
Allowance for Loan Losses/Total Gross Loans
1.41%
1.28%
Allowance for loan losses for Performing Loans/Total
Performing Loans
1.16%
1.23%
YIELDS
Q112
2011
Net Interest Margin
3.30%
3.08%
Average Loan Portfolio Yield
6.47%
6.70%
Total Cost of Funds
0.17%
0.23%
Average AFS Portfolio Yield
1.87%
1.83%
AFS Portfolio Duration
2.1 years
1.8 years
22
Appendix
Financial Results (Key Metrics)
Q1 2012 and FY 2011 Key Metrics Summary |
Loans at an
All-Time High 23
Appendix
Financial Results (Loans) |
A Diversified
Loan Portfolio Total Loan Portfolio
$7.1 Billion as of 3/31/12
Technology and Life Sciences
Portfolio Only
$4.5 Billion (62% of Total Portfolio)
Cash Flow Buyout
15%
Commercial Finance
13%
Early Stage 10%
Factoring 7%
Early-Stage Loans = $467 Million
(7% of TOTAL Loan portfolio
Note: Cleantech-related loans are reported under
hardware, software, life science and other commercial
loan categories, as applicable.
24
Appendix
Financial Results (Loans)
Balance Sheet
Lending
55% |
Loan Portfolio
Evolution Note: Cleantech-related loans are reported under hardware, software, life
science and other commercial loan categories, as applicable. 25
Appendix
Financial Results (Loans) |
Credit Quality
Has Remained Strong 26
Appendix
Financial Results (Credit Quality) |
Strong Client
Liquidity * Total client funds includes deposits and off-balance sheet client
investment funds. 27
Appendix
Financial Results (Liquidity) |
A Highly Liquid
Balance Sheet (1)
As of 03/31/12.
(2)
Net of non-controlling interests, non-marketable securities were $360.2 million.
Non-GAAP number. Please see non-GAAP reconciliations at end of presentation and in our most
recent financial releases for more information.
Non-Marketable
Securities
(VC Investments)
(2)
28
Appendix
Financial Results (Liquidity) |
Core
Fee Income Is Growing
Total Core
Fee
Income
$118.4M
Core
is defined as fees for letters of credit, client investment fees, credit card fees, deposit
services and foreign exchange, in aggregate. Non-GAAP measures. Please see non-GAAP
reconciliations at end of presentation for more information.
Corporate Finance fees were driven by the companys M&A unit, which was sold in
2008. 29
Appendix
Financial Results (Fee Income) |
Investment
Securities Gains and Losses 30
30
Appendix
Financial Results (Non-Interest Income)
* Numbers are inclusive of non-controlling interests. Gains (losses) on securities
attributable to NCI not reported for these periods. Non-GAAP measures. Please see
non-GAAP reconciliations at end of presentation and in our most recent financial releases for more information. |
Gains and Losses
on Equity Warrants 31
31
Appendix
Financial Results (Fee Income) |
Rising Rates
Will Benefit Us Significantly We expect each 25 bps increase in the Fed Funds rate to
contribute approximately $4
$7 million to Net Interest Income*
* Tax-effected; estimates are based on static balance sheet and assumptions as of
3/31/12 32
Appendix
Financial Results (Sensitivity)
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
+13.7 million
$0.31
+0.6%
+0.12%
+100
+$21.6 million
$0.49
+1.0%
+0.19%
+200
+$54.1 million
$1.23
+2.4%
+0.47%
+300
+$89.2 million
$2.02
+3.9%
+0.77% |
Higher Loan
Balances Will Benefit Us * Estimates
are
based
on
static
balance
sheet
and
assumptions
as
3/31/12
33
Appendix Financial Results (Sensitivity)
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
+0.4%
+0.08%
+500 million
+$18.9
million
$0.44
+0.9%
+0.16%
+750 million
+$28.4
million
$0.66
+1.3%
+0.25%
+1 billion
+$37.9
million
$0.87
+1.7%
+0.33%
Each $250 million increase in loan volume contributes
approximately $0.22 to EPS* |
We Are Well
Capitalized 34
Appendix
Financial Results (Capital Ratios)
* TCE/TA and TCE/RWA are non-GAAP numbers; please refer to Non-GAAP reconciliations at
end of presentation and in our most recent financial releases for more information. |
We Are Well
Capitalized 35
Appendix
Financial Results (Capital Ratios)
(1)
All ratios, except TCE/TA and TCE/RWA are as reported in our most recent Bank Call
Reports. Bank TCE/TA and TCE/RWA ratios are as reported in our most recent financial releases.
(2)
TCE/TA and TCE/RWA are non-GAAP numbers; please refer to non-GAAP reconciliations at end
of presentation and in our most recent financial releases for more information. |
Venture Capital
Markets 36
Appendix
Venture Capital Markets
*
*
*
*
*
*
*
*
*
*
* |
Source:
National Venture Capital Association 37
Appendix
Venture Capital Markets
Stabilizing VC Markets |
Source:
National Venture Capital Association 38
Appendix
Venture Capital Markets
Stabilizing VC Markets
Billions
No. of Transactions |
Non-GAAP
Reconciliations 39
Appendix
Non-GAAP Reconciliations
*
*
*
*
*
*
*
*
*
*
* |
Non-GAAP
TCE/TA and TCE/RWA Reconciliation
40
Appendix
Non-GAAP Reconciliations
For additional non-GAAP disclosures, please refer to our latest Forms 10-Q and 10-K,
as well as our quarterly earnings releases. (Consolidated)
|
Non-GAAP
TCE/TA and TCE/RWA Reconciliation
41
Appendix
Non-GAAP Reconciliations
For additional non-GAAP disclosures, please refer to our latest Forms 10-Q and 10-K,
as well as our quarterly earnings releases. (Bank Only)
|
Non-GAAP
Non-Interest Income Reconciliation 42
Appendix
Non-GAAP Reconciliations
For additional non-GAAP disclosures, please refer to our latest Forms 10-Q and 10-K,
as well as our quarterly earnings releases. |
Non-GAAP
Core Fee Income Reconciliation
43
Appendix
Non-GAAP Reconciliations
Year ended
(Dollars
in
thousands)
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
GAAP noninterest income
(as reported)
$ 71,426
$ 81,393
$ 107,774
$ 117,495
$ 141,206
$ 220,969
$ 152,365
$ 97,743
$ 247,530
$ 382,332
Less: gains on investment
securities, net
(10,679)
(9,614)
5,198
4,307
2,551
46,724
(14,777)
(31,209)
93,360
195,034
Less: gains on derivative
instruments, net
11,815
20,200
3,428
6,750
17,949
23,935
18,505
(753)
9,522
38,681
Less: other noninterest
income
8,789
9,067
10,959
9,711
23,565
26,096
19,052
29,961
35,642
30,155
Non-GAAP core fee income
$ 61,501
$ 61,740
$ 88,189
$ 96,727
$ 97,141
$ 124,214
$ 129,585
$ 99,744
$ 109,006
$ 118,462 |
Non-GAAP
Core Fee Income Reconciliation
44
Appendix
Non-GAAP Reconciliations
Non-GAAP Core Fee
Income
Three months ended
(Dollars
in
thousands)
March 31,
2009
June 30,
2009
September 30,
2009
December 31,
2009
March 31,
2010
June 30,
2010
September 30,
2010
December 31,
2010
March 31,
2011
June 30,
20011
September 30,
2011
December 31,
2011
March 31,
2011
GAAP noninterest
income (as reported)
$ (5,581)
$ 28,275
$ 34,307
$ 40,742
$ 49,273
$ 40,157
$ 86,236
$ 71,864
$ 89,954
$ 123,708
$ 95,611
$ 73,059
$ 59,293
Less: gains on
investment securities,
net
(35,045)
(6,750)
3,905
6,681
16,004
4,805
46,611
25,940
51,337
71,680
52,262
19,755
7,839
Less: gains on
derivative instruments,
net
1,814
(2,847)
(1,090)
1,370
1,982
1,326
1,257
4,957
551
13,651
9,951
14,528
5,976
Less: other noninterest
income
2,782
12,799
6,249
8,131
6,063
7,463
11,381
10,735
10,264
10,012
3,108
6,771
13,078
Non-GAAP core fee
income
$ 24,868
$ 25,073
$ 25,243
$ 24,560
$ 25,224
$ 26,563
$ 26,987
$ 30,232
$ 27,802
$ 28,365
$ 30,290
$ 32,005
$ 32,400 |
Non-GAAP
Gains (Losses) on Investment Securities Reconciliation 45
Appendix
Non-GAAP Reconciliations
For additional non-GAAP disclosures, please refer to our latest Forms 10-Q and 10-K,
as well as our quarterly earnings releases. Year ended
Three
months
ended
(Dollars
in
thousands)
2005
2006
2007
2008
2009
2010
2011
Q1 2012
Gains (losses) on investment
securities
$ 4,307
$ 2,551
$ 46,724
$ (14,777)
$ (31,209)
$ 93,360
$ 195,034
$ 7,839
Less: gains (losses) on investment
securities attributable to
noncontrolling interests
5,743
5,032
35,449
(8,929)
(26,638)
52,586
125,042
7,338
Gains (losses) on investments
securities, net of noncontrolling
interests
(1,436)
(2,481)
11,275
(5,848)
(4,571)
40,774
69,992
501
Less: gains on sales of certain
available-for-sale securities
-
-
-
-
-
24,699
37,314
-
Gains (losses) on investment
securities, net of noncontrolling
interests and gains on sales of
certain available-for-sale securities
$ (1,436)
$ (2,481)
$ 11,275
$ (5,848)
$ (4,571)
$ 16,075
$ 32,678
$ 501 |
Non-GAAP
Non-Interest Expense Reconciliation 46
Appendix
Non-GAAP Reconciliations
For additional non-GAAP disclosures, please refer to our latest Forms 10-Q and 10-K,
as well as our quarterly earnings releases. Year Ended
Three
months
ended
Non-GAAP operating efficiency ratio, net of noncontrolling interests
(Dollars in thousands, except ratios)
December 31
March 31,
2011
2012
GAAP noninterest expense
$
500,628 $
132,012 Less: amounts attributable to noncontrolling interests
$
11,567 2,818
Less: net gain from note repurchases and termination of
corresponding interest rate swaps
$
3,123 -
Non-GAAP noninterest expense, net of noncontrolling interests
$
492,184
$ 129,194
|
Non-GAAP
Non-Marketable Securities Reconciliation 47
Appendix
Non-GAAP Reconciliations
March 31,
2012
GAAP non-marketable securities
1,021,941
$
Less: noncontrolling interests in non-marketable securities
661,750
Non-GAAP non-marketable securities, net of noncontrolling interests
360,191
$
Non-GAAP non-marketable securities, net of noncontrolling interests
(dollars in thousands)
For additional non-GAAP disclosures, please refer to our latest Forms 10-Q and 10-K,
as well as our quarterly earnings releases. |
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