| Item 7.01. | Regulation FD Disclosure. |
On March 22, 2021, in connection with the proposed offering described in Item 8.01 below, SVB Financial Group provided its outlook for the quarter ending March 31, 2021. Attached hereto as Exhibit 99.1 is a discussion of this outlook which is incorporated herein by reference.
The information in this Item 7.01 shall not be treated as “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Securities Act of 1934, except as expressly stated by specific reference in such filing.
On March 22, 2021, SVB Financial Group announced a proposed offering of 2,000,000 shares of its common stock, par value $0.001 per share (the “offering”). A press release announcing the offering is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
The prospectus supplement for the offering contains the following risk factor:
We have recently experienced, and continue to experience, very significant deposit growth. Deposit growth depends on a number of factors, many of which are outside of our control, and is inherently difficult to predict, however, if it continues at a similar or greater rate we may need to raise additional equity beyond this offering to support our capital ratios.
Beginning late in the first quarter of 2020 and continuing into the first quarter of 2021, we experienced significant deposit inflows. In 2020, our average deposits increased by 36.25% to $75.0 billion and our deposits ended the year at $102.0 billion up from $61.8 billion at the end of 2019, with $17.2 billion in deposit growth in the fourth quarter of 2020 alone. This general trend has continued into the first quarter of 2021. For example, we expect average deposits to be between $109.0 billion and $111.0 billion for the quarter. See “Summary—Financial Outlook for the Quarter Ending March 31, 2021.” In recent periods, deposit growth has been driven by our clients across all segments obtaining liquidity through liquidity events, such as IPOs, secondary offerings, SPAC fundraising, acquisitions and other fundraising activities—which have been at record high levels over the last 12 months. We are unable to predict whether these liquidity events will continue at all or at the rate they have been occurring over the last 12 months. In addition, our level of deposits depends on whether clients determine to keep proceeds from liquidity events and other funds in deposit products with us (as opposed to off-balance sheet products, such as third party money market funds). Although clients have historically retained a significant portion of their funds on our balance sheet, we are unable to predict whether they will continue to do so. We report on the level of period end deposits; however, these are numbers measured at a single point in time, and given this volatility, should be reviewed in the context of our average deposit numbers, which provide a sense of deposit levels across reporting periods.
The increase in on-balance sheet deposits also increases our assets and accordingly decreases our capital ratios for which assets (both total and risk-weighted) is the denominator. Although the net proceeds of this offering will be used to support those capital ratios, if there is further deposit growth we may need to raise additional capital, including potentially common equity.
| Item 9.01. | Financial Statements and Exhibits. |
