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 |