Exhibit 99.1
3003 Tasman Drive, Santa Clara, CA 95054
www.svb.com
For release at 1:00 P.M. (Pacific Time) | | Contact: | | |
October 26, 2006 | | Lisa Bertolet | | Meghan O’Leary |
| | Investor Relations | | Public Relations |
| | (408) 654-7282 | | (408) 654-6364 |
NASDAQ: SIVB
SVB FINANCIAL GROUP ANNOUNCES 2006 THIRD QUARTER FINANCIAL RESULTS
SANTA CLARA, Calif. — October 26, 2006 — SVB Financial Group (NASDAQ: SIVB) today announced financial results for the quarter ended September 30, 2006.
Consolidated net income totaled $25.2 million for the quarter ended September 30, 2006, which represents an increase of $11.6 million or 85.29 percent as compared to consolidated net income of $13.6 million for the second quarter of 2006. Consolidated net income for the third quarter of 2006 increased by $2.1 million compared to consolidated net income of $23.1 million for the third quarter of 2005. Compensation and benefits expense, a component of noninterest expense, included $5.2 million in share-based compensation expense in the third quarter of 2006 compared to $5.6 million for the second quarter of 2006 and $2.0 million for the third quarter of 2005. Additionally, consolidated net income for the second quarter of 2006 included a pre-tax charge of $18.4 million due to impairment of goodwill.
Consolidated net income totaled $61.0 million for the nine months ended September 30, 2006, a decrease of $5.9 million, or 8.82 percent, compared to $66.9 million for the same period a year ago.
Earnings per diluted common share (EPS) were $0.68 for the third quarter of 2006 compared to EPS of $0.36 for the second quarter of 2006. EPS were $0.60 for the third quarter of 2005.
EPS for the nine months ended September 30, 2006 were $1.61 versus $1.73 for the same period a year ago.
Non-GAAP consolidated net income for the third quarter of 2006 was $25.2 million, compared with $24.0 million for the second quarter of 2006. Non-GAAP consolidated net income for the second quarter of 2006 excludes a pre-tax charge of $18.4 million due to impairment of goodwill. A complete reconciliation between non-GAAP consolidated net income and GAAP consolidated net income is provided in an attached table under the section “Use of Non-GAAP Financial Measure”.
Third Quarter Highlights
· Net interest margin increased to 7.45 percent in the third quarter of 2006 from 7.30 percent in the second quarter of 2006.
· Net interest income increased by $4.0 million to $89.8 million in the third quarter of 2006 from $85.8 million in the second quarter of 2006.
· Noninterest income decreased by $10.0 million in the third quarter of 2006 to $31.0 million from $41.0 million in the second quarter of 2006.
· Noninterest expense decreased by $18.6 million to $75.0 million in the third quarter of 2006 from $93.6 million in the second quarter of 2006.
· The yield on the Company’s loan portfolio increased to 10.49 percent for the third quarter of 2006 from 10.31 percent in the second quarter of 2006.
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· Quarterly average loans of $2.98 billion in the third quarter of 2006 increased by $245.1 million or 8.98 percent, compared to the second quarter of 2006, and represented the highest quarterly average in the Company’s history. The increase was driven by growth in the commercial loan portfolio and was funded primarily by increases in short-term borrowings.
· During the third quarter of 2006, the Company repurchased 551,800 shares of its common stock at an aggregate cost of $25.0 million under the stock repurchase program.
“The results of the third quarter speak to the strength of our core business: loans passed the $3.0 billion mark for the first time and loan growth for the quarter exceeded our expectations,” said Kenneth Wilcox, president and CEO of SVB Financial Group. “Despite variability in the markets we serve, we continue to demonstrate our ability to identify and meet the changing needs of our clients.”
Selected Third Quarter Financial Results
| | For the three months ended | | % Change | | % Change | |
(Dollars in millions,
except per share amounts) | | September 30,
2006 | | June 30,
2006 | | September 30,
2005 | | Current Quarter/
Prior Quarter | | Current Quarter /
Prior Year Quarter | |
| | | | | | | | | | | |
EPS (Diluted) | | $ | 0.68 | | $ | 0.36 | | $ | 0.60 | | 88.89 | % | 13.33 | % |
Net Income | | 25.2 | | 13.6 | | 23.1 | | 85.29 | | 9.09 | |
Average Total Assets | | $ | 5,405.6 | | $ | 5,296.5 | | $ | 5,288.3 | | 2.06 | % | 2.22 | % |
Return on Average Assets (1) | | 1.85 | % | 1.03 | % | 1.73 | % | | | | |
Return on Average Equity (1) | | 17.24 | % | 9.33 | % | 16.93 | % | | | | |
(1) Ratios represent annualized consolidated net income divided by quarterly average assets/equity.
| | For the nine months ended | | | |
(Dollars in millions,
except per share amounts) | | September 30,
2006 | | September 30,
2005 | | % Change | |
| | | | | | | |
EPS (Diluted) | | $ | 1.61 | | $ | 1.73 | | (6.94 | )% |
Net Income | | 61.0 | | 66.9 | | (8.82 | ) |
Average Total Assets | | $ | 5,322.8 | | $ | 5,151.2 | | 3.33 | % |
Return on Average Assets (2) | | 1.53 | % | 1.74 | % | | |
Return on Average Equity (2) | | 14.09 | % | 16.68 | % | | |
(2) Ratios represent annualized consolidated net income divided by year-to-date average assets/equity.
Quarterly Average Assets, Loans, Investment Securities, Deposits and Short-Term Borrowings
Quarterly average assets were $5.41 billion for the third quarter of 2006 compared to $5.30 billion in the second quarter of 2006.
Quarterly average loans of $2.98 billion in the third quarter of 2006 increased by $245.1 million or 8.98 percent, compared to the second quarter of 2006.
Quarterly average investment securities of $1.59 billion for the third quarter of 2006 decreased by $194.6 million, compared to the second quarter of 2006. Quarterly average investment securities represented approximately 29.3 percent of total average assets in the third quarter of 2006, compared to 33.6 percent of total average assets in the second quarter of 2006.
Quarterly average deposits of $3.83 billion during the third quarter of 2006 decreased by $130.8 million or 3.30 percent in comparison to the second quarter of 2006.
Quarterly average federal funds purchased, FHLB borrowings and securities sold under agreement to repurchase (“short-term borrowings”) of $523.4 million during the third quarter of 2006 increased by $209.0 million or 66.48 percent, compared to the second quarter of 2006.
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Period-End Assets, Loans, Investment Securities, Deposits and Short-Term Borrowings
Total assets of $5.87 billion at September 30, 2006 increased $401.4 million from June 30, 2006, and increased $504.0 million from September 30, 2005.
Loans, net of unearned income, increased $368.9 million to $3.32 billion at September 30, 2006 as compared to June 30, 2006, and increased $680.8 million from $2.64 billion at September 30, 2005.
Investment securities decreased $32.9 million to $1.73 billion at September 30, 2006 as compared to June 30, 2006, and decreased $403.0 million from $2.13 billion at September 30, 2005.
Total deposits of $3.97 billion at September 30, 2006 increased $61.2 million from $3.91 billion at June 30, 2006, and decreased $317.6 million from $4.29 billion at September 30, 2005.
Short-term borrowings of $809.8 million at September 30, 2006 increased $276.0 million from $533.8 million at June 30, 2006, and increased $690.6 million from $119.2 million at September 30, 2005.
Net Interest Income
Net interest income of $89.8 million in the third quarter of 2006 increased by $4.0 million or 4.66 percent, from $85.8 million in the second quarter of 2006, and increased $12.1 million or 15.57 percent, from $77.7 million in the third quarter of 2005. The increase in the third quarter of 2006 as compared to the second quarter of 2006 was primarily due to an $8.5 million increase in interest income from the loan portfolio partially offset by a $1.9 million decrease in interest income from the investment securities portfolio and a $3.2 million increase in interest expense related to increases in the levels and rates of short-term borrowings. The increase in interest income from the loan portfolio reflects growth in the loan portfolio and the full quarter effect of increases in SVB’s prime rate made in the second quarter of 2006 in response to federal funds rate increases. On February 1, 2006, March 29, 2006, May 11, 2006 and June 30, 2006, SVB Financial Group increased its prime-lending rate, each time by 25 basis points, bringing its prime-lending rate to 8.25 percent at September 30, 2006. As of September 30, 2006, 65.67 percent, or $2.19 billion, of the Company’s outstanding gross loans were variable-rate loans that reset at a prescribed measurement date upon a change in the Company’s prime lending rate or other variable indices.
Net Interest Margin
Net interest margin was 7.45 percent in the third quarter of 2006, compared to 7.30 percent in the second quarter of 2006. This increase was largely due to an increase in yields and growth of the loan portfolio, partially offset by increases in the levels and rates of short-term borrowings as well as a decrease in the amount of investment securities. The yield on the loan portfolio, net of unearned income, rose to 10.49 percent for the third quarter of 2006 from 10.31 percent for the second quarter of 2006, reflecting a full quarter’s impact of increases to SVB’s prime rate made in the second quarter of 2006 in response to federal funds rate increases.
For the nine months ended September 30, 2006, net interest margin reached 7.34 percent, increasing from 6.35 percent for the equivalent prior year period.
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| | For the three months ended | | % Change | | % Change | |
(Dollars in millions) | | September 30,
2006 | | June 30,
2006 | | September 30,
2005 | | Current Quarter /
Prior Quarter | | Current Quarter /
Prior Year
Quarter | |
| | | | | | | | | | | |
Average Loans, Net of Unearned Income | | $ | 2,976.0 | | $ | 2,730.9 | | $ | 2,450.2 | | 8.98 | % | 21.46 | % |
Average Investment Securities | | 1,585.6 | | 1,780.2 | | 2,034.4 | | (10.93 | ) | (22.06 | ) |
Average Deposits | | 3,833.9 | | 3,964.7 | | 4,217.9 | | (3.30 | ) | (9.10 | ) |
Average Short-Term Borrowings | | 523.4 | | 314.4 | | 88.1 | | 66.48 | | 494.10 | |
Fully Taxable Equivalent: | | | | | | | | | | | |
Net Interest Income | | $ | 90.2 | | $ | 86.2 | | $ | 78.2 | | 4.64 | | 15.35 | |
Net Interest Margin | | 7.45 | % | 7.30 | % | 6.54 | % | 2.05 | | 13.90 | |
Period End Prime Rate | | 8.25 | | 8.25 | | 6.75 | | — | | 22.22 | |
Average SVB Prime Lending Rate | | 8.25 | % | 7.89 | % | 6.41 | % | 4.56 | % | 28.71 | % |
| | For the nine months ended | | | |
(Dollars in millions) | | September 30,
2006 | | September 30,
2005 | | % Change | |
| | | | | | | |
Average Loans, Net of Unearned Income | | $ | 2,791.3 | | $ | 2,292.9 | | 21.74 | % |
Average Investment Securities | | 1,739.2 | | 1,996.8 | | (12.90 | ) |
Average Deposits | | 3,952.6 | | 4,176.4 | | (5.36 | ) |
Average Short-Term Borrowings | | 344.6 | | 32.3 | | 966.87 | |
Fully Taxable Equivalent: | | | | | | | |
Net Interest Income | | $ | 261.0 | | $ | 219.8 | | 18.74 | |
Net Interest Margin | | 7.34 | % | 6.35 | % | 15.59 | |
Average SVB Prime Lending Rate | | 7.85 | % | 5.92 | % | 32.60 | % |
Noninterest Income
Noninterest income of $31.0 million in the third quarter of 2006 decreased by $10.0 million or 24.39 percent, from $41.0 million in the second quarter of 2006 and increased by $6.1 million from $24.9 million in the third quarter of 2005. The decrease in the third quarter of 2006 in comparison to the second quarter of 2006 was primarily driven by a $8.0 million decrease in net gains on derivative instruments and a $2.4 million decrease in net gains on investment securities, partially offset by an increase in client investment fees of $0.6 million.
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Gains on Derivative Instruments, Net
| | | | | | % Change | |
| | For the three months ended | | % Change | | Current Quarter / | |
(Dollars in thousands) | | September 30,
2006 | | June 30,
2006 | | September 30,
2005 | | Current Quarter/
Prior Quarter | | Prior Year
Quarter | |
| | | | | | | | | | | |
Foreign exchange forwards (1) | | $ | 5,386 | | $ | 6,639 | | $ | 5,024 | | (18.87 | )% | 7.21 | % |
Foreign exchange forwards (2) | | (22 | ) | (520 | ) | (138 | ) | (95.77 | ) | (84.06 | ) |
Total gains on foreign exchange forwards, net | | 5,364 | | 6,119 | | 4,886 | | (12.34 | ) | 9.78 | |
| | | | | | | | | | | |
Change in fair value of interest rate swap | | 397 | | (1,586 | ) | — | | (125.03 | ) | — | |
| | | | | | | | | | | |
Equity warrant assets change in fair value: | | | | | | | | | | | |
Cancellations and expirations | | (1,623 | ) | (722 | ) | (1,875 | ) | 124.79 | | (13.44 | ) |
Other changes in fair value | | 591 | | 8,916 | | 29 | | (93.37 | ) | —- | |
Total net (losses) gains on equity warrant assets (3) | | (1,032 | ) | 8,194 | | (1,846 | ) | (112.59 | ) | (44.10 | ) |
| | | | | | | | | | | |
Total gains on derivative instruments, net | | $ | 4,729 | | $ | 12,727 | | $ | 3,040 | | (62.84 | )% | 55.56 | % |
| | For the nine months ended | | | |
(Dollars in thousands) | | September 30,
2006 | | September 30,
2005 | | % Change | |
| | | | | | | |
Foreign exchange forwards (1) | | $ | 17,330 | | $ | 14,188 | | 22.15 | % |
Foreign exchange forwards (2) | | (1,075 | ) | 2,087 | | (151.51 | ) |
Total gains on foreign exchange forwards, net | | 16,255 | | 16,275 | | (0.12 | ) |
| | | | | | | |
Change in fair value of interest rate swap | | (4,060 | ) | — | | — | |
| | | | | | | |
Equity warrant assets change in fair value: | | | | | | | |
Cancellations and expirations | | (3,099 | ) | (2,694 | ) | 15.03 | |
Other changes in fair value | | 10,587 | | 3,378 | | 213.41 | |
Total net gains on equity warrant assets (3) | | 7,488 | | 684 | | 994.74 | |
| | | | | | | |
Total gains on derivative instruments, net | | $ | 19,683 | | $ | 16,959 | | 16.06 | % |
(1) Represents the income differential between foreign exchange forward contracts/non-deliverable foreign exchange forward contracts with clients and opposite way foreign exchange forward contracts/non-deliverable foreign exchange forward contracts with correspondent banks. See Note 13 “Derivative Financial Instruments” under Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005.
(2) Represents change in fair value of foreign exchange forward contracts with correspondent banks to economically reduce foreign exchange exposure risk related to certain foreign currency denominated loans.
(3) Includes net gains (losses) on equity warrant assets held by consolidated investment affiliates. Relevant amounts attributable to minority interests are reflected in the interim consolidated income statement under the caption “Minority Interest in Net (Income)/Losses of Consolidated Affiliates”.
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Impact of Derivative Equity Warrant Assets on Income before Income Taxes
Interest income from loans in the third quarter of 2006 included $2.1 million from amortization of gross warrant loan fees, compared to $1.8 million in the second quarter of 2006. Net losses on derivative equity warrant assets totaled $1.0 million in the third quarter of 2006 compared to a net gain of $8.2 million in the second quarter of 2006. The components of derivative equity warrant assets gains (losses) are presented in the table above. Net gains on investment securities in the third quarter of 2006 were $3.7 million as compared to a $3.2 million net gain in the second quarter of 2006 related to the sale of equity securities obtained from the exercise of warrants. As of September 30, 2006, the Company directly held 1,849 warrants in 1,275 companies.
Client Investment Fees
Client investment fees totaled $11.6 million in the third quarter of 2006, which represents an increase of $0.6 million, or 5.45 percent, compared to client investment fees of $11.0 million for the second quarter of 2006. The increase in client investment fees was due to an increase of $0.60 billion in average total client investment funds to $17.80 billion during the third quarter of 2006 from $17.20 billion during the second quarter of 2006.
| | For the three months ended | |
(Dollars in thousands) | | September 30,
2006 | | June 30,
2006 | | September 30,
2005 | |
| | | | | | | |
Client Investment Fees | | $ | 11,555 | | $ | 10,972 | | $ | 8,700 | |
| | | | | | | | | | |
Client Investment Funds and Deposits
(Dollars in millions) | | At
September 30,
2006 | | At
June 30,
2006 | | At
September 30,
2005 | |
| | | | | | | |
Client Investment Funds (1): | | | | | | | |
Client Directed Investment Assets | | $ | 10,911.1 | | $ | 10,428.4 | | $ | 8,419.3 | |
Sweep Money Market Funds | | 2,332.5 | | 2,476.3 | | 1,663.1 | |
Client Investment Assets Under Management | | 4,454.8 | | 4,591.1 | | 3,740.0 | |
Total Client Investment Funds | | 17,698.4 | | 17,495.8 | | 13,822.4 | |
| | | | | | | |
Deposits: | | | | | | | |
Noninterest-Bearing Demand | | 2,956.6 | | 2,758.4 | | 2,696.7 | |
Negotiable Order of Withdrawal (NOW) | | 30.4 | | 46.5 | | 35.7 | |
Money Market | | 672.0 | | 777.3 | | 1,264.0 | |
Time | | 315.5 | | 331.1 | | 295.7 | |
Total Deposits | | 3,974.5 | | 3,913.3 | | 4,292.1 | |
| | | | | | | |
Total Client Investment Funds and Deposits | | $ | 21,672.9 | | $ | 21,409.1 | | $ | 18,114.5 | |
(1) Client Investment Funds invested through SVB Financial Group are maintained at third party financial institutions.
Gains on Investment Securities, Net
Net gains on investment securities were $1.6 million in the third quarter of 2006, compared to net gains of $4.1 million in the second quarter of 2006 and a net gain of $1.3 million in the third quarter of 2005. Net gains on investment securities of $1.6 million in the third quarter of 2006 is due to gains of $3.7 million on the sale of equity securities obtained from the exercise of warrants partially offset by a net decrease in the fair values of our venture funds and venture debt investments. As of September 30, 2006, the Company held investments, either directly or through its managed investment funds, in 349 private equity funds, 44 companies and three venture debt funds.
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Noninterest Expense
Noninterest expense for the third quarter of 2006 totaled $75.0 million compared to $93.6 million in the second quarter of 2006. Noninterest expense for the second quarter of 2006 included a charge of $18.4 million due to impairment of goodwill and a $1.8 million charge in connection with the expected settlement of a litigation matter.
Noninterest expense of $239.3 million for the nine months ended September 30, 2006 increased $50.2 million or 26.55 percent, compared to $189.1 million for the same period a year ago.
The increase in noninterest expense during the nine months ended September 30, 2006 is principally attributable to a charge due to impairment of goodwill and increases in compensation expense and professional services, partially offset by a reduction in the allowance for unfunded credit commitments. The increase in compensation expense was largely due to the Company’s adoption of Statement of Financial Accounting Standards 123(R), Share-Based Payment (“SFAS 123(R)”), which requires expensing of share-based compensation costs including all share-based grants prior to, but not yet vested, as of January 1, 2006. The increase in professional services expense was primarily related to consulting costs incurred as part of ongoing efforts to enhance and maintain compliance with various regulations.
Share-Based Compensation
The Company adopted SFAS 123(R) on January 1, 2006 using the modified prospective method. SFAS 123(R) requires the Company to measure all employee share-based compensation awards using a fair value based method, estimate award forfeitures, and record such expense in its consolidated statements of income. Consolidated net income for the third quarter of 2006 includes $5.2 million (pre-tax) in share-based payment expense as compared to $5.6 million (pre-tax) for the second quarter of 2006. Share-based payment expense is primarily from stock option, restricted stock and employee stock purchase plan expense calculated in accordance with SFAS 123(R). Share-based payment expense for the third quarter of 2005 was $2.0 million. The Company has not reflected employee stock option and employee stock purchase plan expenses in consolidated net income in periods prior to 2006.
Income Tax Expense
The Company’s effective tax rate was 42.69 percent for the third quarter of 2006 compared to 40.08 percent for the second quarter of 2006. The higher tax rate was primarily attributable to an increase in tax payable related to the 2005 Federal tax return, the tax impact of the SFAS 123(R) expense for share based payments and the lower impact of the Company’s federally tax-advantaged investments on the overall pre-tax income.
The Company’s effective tax rate for the nine months ended September 30, 2006 was 42.29 percent compared to 39.71 percent for the same period a year ago. The higher tax rate was primarily attributable to the tax impact of the SFAS 123(R) expense for share-based payments on its overall pre-tax income.
Credit Quality
Nonperforming loans (NPLs) totaled $9.3 million, or 0.28 percent of total gross loans, at September 30, 2006, compared to $7.4 million, or 0.25 percent of total gross loans, at June 30, 2006 and $13.5 million, or 0.51 percent of total gross loans at September 30, 2005. The Company’s allowance for loan losses was $39.5 million, or 1.18 percent of total gross loans and 424.25 percent of NPLs, at September 30, 2006. This compares to $37.9 million, or 1.28 percent of total gross loans and 514.55 percent of NPLs, at June 30, 2006. At September 30, 2005, the allowance for loan losses totaled $34.9 million, or 1.31 percent of total gross loans and 258.59 percent of NPLs.
The Company recognized $3.2 million in gross loan charge-offs and realized $2.1 million in gross loan recoveries during the third quarter of 2006. This compares to gross loan charge-offs of $5.9 million and gross loan recoveries of $3.2 million in the second quarter of 2006.
The Company’s allowance for unfunded credit commitments increased by $0.5 million to $13.8 million at September 30, 2006, compared to $13.3 million at June 30, 2006.
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Minority Interest in Consolidated Affiliates
Minority interest in net income (losses) of consolidated affiliates decreased by $6.7 million during the third quarter of 2006 compared to that in the second quarter of 2006, primarily due to losses on investments in our venture funds and venture debt funds and lower realized gains on exercised warrants. Minority interest in the capital of consolidated affiliates increased by $3.7 million for the third quarter of 2006 compared to the previous quarter, primarily due to capital calls from certain consolidated affiliates, partially offset by a distribution of realized gains on exercised warrants and repaid loans at one consolidated affiliate.
Stock Repurchase Plan and Stockholders’ Equity
On July 20, 2006, the Company’s Board of Directors increased the stock repurchase plan and authorized up to an additional $70.0 million of common stock to be repurchased. The Company may, at its discretion, exercise this additional repurchase authority at any time on or before June 30, 2008 in the open market, through block trades or otherwise, pursuant to applicable securities laws. Depending on market conditions, availability of funds, regulatory considerations and other relevant factors, the Company may begin or suspend repurchases at any time prior to the termination of the repurchase program on June 30, 2008, without any prior notice.
During the third quarter of 2006, the Company repurchased 551,800 shares of its common stock at an aggregate cost of $25.0 million under the stock repurchase program, leaving $77.2 million in remaining authorization under the current program. Repurchases of common stock during the nine months ended September 30, 2006 totaled $94.3 million and represented 1,944,415 shares.
Stockholders’ equity totaled $595.8 million at September 30, 2006, an increase of $27.7 million compared to $568.1 million at June 30, 2006 and an increase of $50.0 million compared to $545.8 million at September 30, 2005. Stockholders’ equity increased during the third quarter of 2006 due to unrealized gains on available-for-sale investment securities and an increase in consolidated net income, partially offet by common stock repurchases. Both SVB Financial Group’s and Silicon Valley Bank’s capital ratios were in excess of regulatory guidelines for classification as a well-capitalized depository institution as of September 30, 2006.
Outlook for the Fourth Quarter of 2006
SVB Financial Group currently expects fourth quarter 2006 earnings to be between $0.68 and $0.74 per diluted common share. This outlook reflects lower growth in average loans and total client funds compared to the third quarter. The growth in the loan portfolio is expected to increase net interest income but at a slower rate than the third quarter as a result of no further expected changes in the Federal Funds rate. While we expect the average yield on our lending to increase slightly, we expect the net interest margin to be comparable to the second quarter of 2006. Our outlook also reflects higher noninterest income, a higher amount of provision for loan losses and unfunded credit commitments (on a combined basis) and higher noninterest expense than recorded in the third quarter. The Company’s guidance does not anticipate the impact of any proposed accounting pronouncements and in particular the exposure draft of SFAS No. 128, Earnings Per Share, which may change its accounting for the calculation of EPS for its contingently convertible debt to the “if-converted” method for the fourth quarter of 2006. The Company’s effective tax rate is expected to be lower than the third quarter of 2006. The preceding statements regarding our expectations of diluted earnings per share, loan and total client funds growth, net interest income, loan yields, net interest margin, noninterest income, provision for loan losses and unfunded credit commitments, noninterest expense and the effective tax rate for the fourth quarter of 2006 are forward looking statements. Actual results may differ.
Safe Harbor
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Management has in the past and might in the future make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements are statements that are not historical facts. Broadly speaking, forward-looking statements include, without limitation, the following:
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· Projections of the Company’s revenues, income, earnings per share, noninterest costs, including professional service, compliance, compensation and other costs, cash flows, balance sheet, capital expenditures, capital structure or other financial items
· Descriptions of strategic initiatives, plans or objectives of management for future operations, including pending acquisitions
· Statements about the efficacy of the Company’s strategy
· Forecasts of venture capital funding levels
· Forecasts of future interest rates
· Forecasts of expected levels of provisions for loan losses, loan growth and deposits
· Forecasts of future economic performance
· Forecasts of future prevailing interest rates
· Forecasts of future recoveries on currently held investments
· Descriptions of assumptions underlying or relating to any of the foregoing
You can identify these and other forward-looking statements by the use of words such as “becoming,” “may,” “will,” “should,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “estimates,” “seeks,” “expects,” “plans,” “intends,” the negative of such words, or comparable terminology. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it has based these expectations on its beliefs and assumptions, such expectations may prove to be incorrect. Actual results of operations and financial performance could differ significantly from those expressed in or implied by management’s forward-looking statements.
In this release, the Company makes forward-looking statements discussing the Company’s management’s expectations about the following:
· Its financial results for the three months and year ended December 31, 2006
· Future performance
· Future market interest rates
· Future economic conditions
Factors that may cause the outlook for the fourth quarter of 2006 to change include the following:
· Accounting changes, as required by generally accepted accounting principles in the United States of America
· Changes in the state of the economy or the markets served by the Company
· Changes in credit quality of the Company’s loan portfolio
· Changes in interest rates or market levels or factors affecting them
· Changes in the performance or equity valuation of companies in which the Company has invested
· Variations from the Company’s expectations as to factors impacting its cost structure
For additional information about factors that could cause actual results to differ from the expectations stated in forward-looking statements, please see the text under the caption “Risk Factors” included under Item 1A of Part I of the Company’s most recently filed Form 10-K for the annual period ended December 31, 2005 and Form 10-Q for the period ended June 30, 2006. The Company urges investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this discussion and analysis. 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. The forward-looking statements included in this release are made only as of the date of this release. The Company does not intend, and undertakes no obligation, to update these forward-looking statements.
Certain reclassifications were made to prior years’ results to conform to 2006 presentations. Such reclassifications had no effect on the Company’s results of operations or stockholders’ equity.
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Earnings Conference Call
On October 26, 2006, the Company will host a conference call at 2:00 p.m. (Pacific Time) to discuss the third quarter 2006 financial results. The conference call can be accessed by dialing (800) 540-0559 and referencing the conference ID “7SILICON.” A listen-only live webcast can be accessed on the Investor Relations page of the Company’s website at www.svb.com. A digitized replay of this conference call will be available beginning at approximately 4:30 p.m. (Pacific Time), on Thursday, October 26, 2006, through midnight (Pacific Time), on Sunday, November 26, 2006, by dialing (800) 283-4605. A replay of the webcast will also be available on www.svb.com for 12 months following the call.
About SVB Financial Group
For more than 20 years, SVB Financial Group, the parent company of SVB Silicon Valley Bank, has been dedicated to helping entrepreneurs succeed. SVB Financial Group is a financial holding company that serves emerging growth and mature companies in the technology, life science, private equity and premium wine industries. Offering diversified financial services through SVB Silicon Valley Bank, SVB Alliant, SVB Analytics, SVB Capital, SVB Global and SVB Private Client Services, SVB Financial Group provides clients with commercial, investment, international and private banking services. The company also offers funds management, broker-dealer transactions, asset management and a full range of services for private equity companies, as well as the added value of its knowledge and networks worldwide. Headquartered in Santa Clara, Calif., SVB Financial Group operates through 27 offices in the U.S. and three internationally. More information on the company can be found at www.svb.com.
Disclaimer:
SVB Silicon Valley Bank refers to Silicon Valley Bank, the California bank subsidiary and the commercial banking operation of SVB Financial Group. Banking services are provided by Silicon Valley Bank, a member of the FDIC and the Federal Reserve. SVB Private Client Services is a division of Silicon Valley Bank. SVB Financial Group is also a member of the Federal Reserve.
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