Delaware | 000-15637 | 91-1962278 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.142-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Description |
99.1 | Release, dated January 24, 2013, announcing the Company’s financial results for the fourth quarter and year ended December 31, 2012. |
Date: January 24, 2013 | SVB FINANCIAL GROUP | |||||
By: | /s/ KAMRAN HUSAIN | |||||
Name: | Kamran Husain | |||||
Title: | Chief Accounting Officer and Principal Accounting Officer |
Exhibit No. | Description |
99.1* | Release, dated January 24, 2013, announcing the Company’s financial results for the fourth quarter and year ended December 31, 2012. |
* | This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934. |
For release at 1:00 P.M. (Pacific Time) | Contact: | |||||||
January 24, 2013 | Meghan O’Leary | |||||||
Investor Relations | ||||||||
NASDAQ: SIVB | (408) 654-6364 |
• | Average loan balances of $8.3 billion, an increase of $367 million (or 4.6 percent). Period-end loan balances were $8.9 billion, an increase of $755 million (or 9.2 percent). |
• | Average deposit balances of $19.0 billion, an increase of $731 million (or 4.0 percent). Average total client funds (including both on-balance sheet deposits and off-balance sheet client investment funds) were $40.2 billion, an increase of $1.0 billion (or 2.5 percent). |
• | Net interest income (fully taxable equivalent basis) of $161.0 million, an increase of $6.1 million primarily attributable to growth in interest-earning assets. Net interest margin held steady at 3.13 percent, compared to 3.12 percent. |
• | A provision for loan losses of $15.0 million reflective of strong period-end loan growth, as well as net charge-offs of $5.9 million, compared to $3.4 million in the third quarter. |
• | Gains on investment securities, net of noncontrolling interests, of $17.2 million, compared to $7.5 million. The gains of $17.2 million were primarily related to valuation increases from our fund investments, including gains of $9.2 million from a single investment in two of our managed funds. |
• | Gains on equity warrant assets of $7.0 million, compared to $0.5 million, reflecting increased valuations from several of our warrant positions. |
• | An increase in noninterest expense of $7.9 million (or 5.8 percent), primarily related to increased incentive compensation expense resulting from our strong financial performance in the fourth quarter. |
(Dollars in millions, except share data and ratios) | Three months ended | Year ended | ||||||||||||||||||||||||||
December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | ||||||||||||||||||||||
Income statement: | ||||||||||||||||||||||||||||
Diluted earnings per common share | $ | 1.12 | $ | 0.94 | $ | 1.06 | $ | 0.78 | $ | 0.81 | $ | 3.91 | $ | 3.94 | ||||||||||||||
Net income available to common stockholders | 50.4 | 42.3 | 47.6 | 34.8 | 35.6 | 175.1 | 171.9 | |||||||||||||||||||||
Net interest income | 160.6 | 154.4 | 151.9 | 150.9 | 140.1 | 617.9 | 526.3 | |||||||||||||||||||||
Provision for loan losses | 15.0 | 6.8 | 8.0 | 14.5 | 8.2 | 44.3 | 6.1 | |||||||||||||||||||||
Noninterest income | 126.7 | 69.1 | 80.4 | 59.3 | 73.1 | 335.5 | 382.3 | |||||||||||||||||||||
Noninterest expense | 143.0 | 135.2 | 135.8 | 132.0 | 134.7 | 546.0 | 500.6 | |||||||||||||||||||||
Non-GAAP net income available to common stockholders (1) | 50.4 | 42.3 | 42.1 | 34.8 | 35.6 | 169.6 | 147.5 | |||||||||||||||||||||
Non-GAAP diluted earnings per common share (1) | 1.12 | 0.94 | 0.94 | 0.78 | 0.81 | 3.79 | 3.38 | |||||||||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests and excluding gains on sales of certain assets (1) | 75.6 | 55.6 | 57.8 | 51.4 | 62.1 | 240.4 | 222.7 | |||||||||||||||||||||
Non-GAAP noninterest expense, net of noncontrolling interests (1) | 141.2 | 132.4 | 131.8 | 129.2 | 132.0 | 534.7 | 492.2 | |||||||||||||||||||||
Fully taxable equivalent: | ||||||||||||||||||||||||||||
Net interest income (2) | $ | 161.0 | $ | 154.9 | $ | 152.4 | $ | 151.4 | $ | 140.6 | $ | 619.8 | $ | 528.2 | ||||||||||||||
Net interest margin | 3.13 | % | 3.12 | % | 3.22 | % | 3.30 | % | 3.10 | % | 3.19 | % | 3.08 | % | ||||||||||||||
Balance sheet: | ||||||||||||||||||||||||||||
Average total assets | $ | 22,377.8 | $ | 21,727.2 | $ | 20,890.9 | $ | 20,232.5 | $ | 19,660.6 | $ | 21,311.2 | $ | 18,670.5 | ||||||||||||||
Average loans, net of unearned income | 8,274.9 | 7,907.6 | 7,237.2 | 6,804.3 | 6,394.8 | 7,558.9 | 5,815.1 | |||||||||||||||||||||
Average available-for-sale securities | 10,743.8 | 10,569.7 | 10,931.7 | 10,497.7 | 9,530.3 | 10,685.6 | 9,350.4 | |||||||||||||||||||||
Average noninterest-bearing demand deposits | 13,843.8 | 12,914.7 | 12,264.0 | 12,026.0 | 11,586.3 | 12,765.5 | 10,237.8 | |||||||||||||||||||||
Average interest-bearing deposits | 5,147.0 | 5,345.6 | 5,143.6 | 4,939.8 | 4,925.7 | 5,144.6 | 5,331.0 | |||||||||||||||||||||
Average total deposits | 18,990.9 | 18,260.3 | 17,407.6 | 16,965.8 | 16,512.0 | 17,910.1 | 15,568.8 | |||||||||||||||||||||
Average long-term debt | 458.1 | 458.4 | 553.9 | 603.3 | 605.4 | 518.1 | 796.8 | |||||||||||||||||||||
Period-end total assets | 22,766.1 | 21,576.9 | 21,289.8 | 20,818.3 | 19,968.9 | 22,766.1 | 19,968.9 | |||||||||||||||||||||
Period-end loans, net of unearned income | 8,946.9 | 8,192.4 | 7,789.8 | 7,121.3 | 6,970.1 | 8,946.9 | 6,970.1 | |||||||||||||||||||||
Period-end available-for-sale securities | 11,343.2 | 11,047.7 | 10,621.0 | 11,527.5 | 10,536.0 | 11,343.2 | 10,536.0 | |||||||||||||||||||||
Period-end non-marketable securities | 1,184.3 | 1,163.8 | 1,132.3 | 1,021.9 | 1,004.4 | 1,184.3 | 1,004.4 | |||||||||||||||||||||
Period-end noninterest-bearing demand deposits | 13,875.3 | 12,598.6 | 12,842.3 | 11,837.6 | 11,861.9 | 13,875.3 | 11,861.9 | |||||||||||||||||||||
Period-end interest-bearing deposits | 5,301.2 | 5,126.4 | 5,226.6 | 4,879.3 | 4,847.6 | 5,301.2 | 4,847.6 | |||||||||||||||||||||
Period-end total deposits | 19,176.5 | 17,725.1 | 18,068.8 | 16,716.9 | 16,709.5 | 19,176.5 | 16,709.5 | |||||||||||||||||||||
Off-balance sheet: | ||||||||||||||||||||||||||||
Average total client investment funds | $ | 21,175.8 | $ | 20,929.1 | $ | 19,863.9 | $ | 18,883.2 | $ | 18,458.7 | $ | 20,213.0 | $ | 17,736.4 | ||||||||||||||
Period-end total client investment funds | 22,512.8 | 21,058.4 | 20,097.1 | 19,111.7 | 18,743.9 | 22,512.8 | 18,743.9 | |||||||||||||||||||||
Total unfunded credit commitments | 8,610.8 | 8,710.2 | 8,752.7 | 7,866.1 | 8,067.6 | 8,610.8 | 8,067.6 | |||||||||||||||||||||
Earnings ratios: | ||||||||||||||||||||||||||||
Return on average assets (annualized) (3) | 0.90 | % | 0.77 | % | 0.92 | % | 0.69 | % | 0.72 | % | 0.82 | % | 0.92 | % | ||||||||||||||
Non-GAAP return on average assets (annualized) (1) | 0.90 | 0.77 | 0.81 | 0.69 | 0.72 | 0.80 | 0.79 | |||||||||||||||||||||
Return on average common SVBFG stockholders’ equity (annualized) (4) | 10.99 | 9.44 | 11.21 | 8.61 | 8.99 | 10.09 | 11.87 | |||||||||||||||||||||
Non-GAAP return on average SVBFG stockholders’ equity(annualized) (1) | 10.99 | 9.44 | 9.91 | 8.61 | 8.99 | 9.77 | 10.18 | |||||||||||||||||||||
Asset quality ratios: | ||||||||||||||||||||||||||||
Allowance for loan losses as a % of total gross loans | 1.23 | % | 1.23 | % | 1.25 | % | 1.41 | % | 1.28 | % | 1.23 | % | 1.28 | % | ||||||||||||||
Allowance for loan losses for performing loans as a % of total gross performing loans | 1.16 | 1.16 | 1.18 | 1.16 | 1.23 | 1.16 | 1.23 | |||||||||||||||||||||
Gross charge-offs as a % of average total gross loans (annualized) | 0.36 | 0.23 | 0.78 | 0.41 | 0.43 | 0.44 | 0.41 | |||||||||||||||||||||
Net charge-offs (recoveries) as a % of average total gross loans (annualized) | 0.28 | 0.17 | 0.59 | 0.21 | 0.22 | 0.31 | (0.02 | ) | ||||||||||||||||||||
Other ratios: | ||||||||||||||||||||||||||||
Operating efficiency ratio (5) | 49.72 | % | 60.33 | % | 58.31 | % | 62.65 | % | 63.06 | % | 57.15 | % | 54.98 | % | ||||||||||||||
Non-GAAP operating efficiency ratio (1) | 59.67 | 62.93 | 62.70 | 63.72 | 65.16 | 62.16 | 65.56 | |||||||||||||||||||||
Total risk-based capital ratio | 14.05 | 14.34 | 13.85 | 14.30 | 13.95 | 14.05 | 13.95 | |||||||||||||||||||||
Tangible common equity to tangible assets (1) | 8.04 | 8.27 | 8.06 | 7.87 | 7.86 | 8.04 | 7.86 | |||||||||||||||||||||
Tangible common equity to risk-weighted assets (1) | 13.53 | 13.93 | 13.35 | 13.54 | 13.25 | 13.53 | 13.25 | |||||||||||||||||||||
Period-end loans, net of unearned income, to deposits | 46.66 | 46.22 | 43.11 | 42.60 | 41.71 | 46.66 | 41.71 | |||||||||||||||||||||
Average loans, net of unearned income, to deposits | 43.57 | 43.30 | 41.57 | 40.11 | 38.73 | 42.20 | 37.35 | |||||||||||||||||||||
Book value per common share (6) | $ | 41.02 | $ | 40.10 | $ | 38.63 | $ | 37.19 | $ | 36.07 | $ | 41.02 | $ | 36.07 | ||||||||||||||
Other statistics: | ||||||||||||||||||||||||||||
Average full-time equivalent employees | 1,607 | 1,594 | 1,566 | 1,556 | 1,522 | 1,581 | 1,451 | |||||||||||||||||||||
Period-end full-time equivalent employees | 1,615 | 1,602 | 1,562 | 1,554 | 1,526 | 1,615 | 1,526 |
(1) | To supplement our unaudited condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use certain non-GAAP measures. A reconciliation of non-GAAP calculations to GAAP is provided at the end of this release under the section “Use of Non-GAAP Financial Measures.” |
(2) | Interest income on non-taxable investments is presented on a fully taxable equivalent basis using the federal statutory income tax rate of 35.0 percent. The taxable equivalent adjustments were $0.5 million for each of the quarters ended December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011. The taxable equivalent adjustments were $1.9 million for the year ended December 31, 2012 and $2.0 million for the year ended December 31, 2011. |
(3) | Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and annual average assets. |
(4) | Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and annual average SVBFG stockholders’ equity. |
(5) | Ratio is calculated by dividing noninterest expense by total taxable equivalent net interest income plus noninterest income. |
(6) | Book value per common share is calculated by dividing total SVBFG stockholders’ equity by total outstanding common shares. |
Q4'12 compared to Q3'12 | ||||||||||||
Increase (decrease) due to change in | ||||||||||||
(Dollars in thousands) | Volume | Rate | Total | |||||||||
Interest income: | ||||||||||||
Short-term investment securities | $ | 109 | $ | (164 | ) | $ | (55 | ) | ||||
Available-for-sale securities | 608 | 2,787 | 3,395 | |||||||||
Loans | 5,557 | (2,699 | ) | 2,858 | ||||||||
Increase (decrease) in interest income, net | 6,274 | (76 | ) | 6,198 | ||||||||
Interest expense: | ||||||||||||
Deposits | 58 | 27 | 85 | |||||||||
Short-term borrowings | (6 | ) | (4 | ) | (10 | ) | ||||||
Long-term debt | — | 2 | 2 | |||||||||
Increase in interest expense, net | 52 | 25 | 77 | |||||||||
Increase (decrease) in net interest income | $ | 6,222 | $ | (101 | ) | $ | 6,121 |
• | An increase in interest income on available-for-sale securities of $3.4 million to $43.3 million for the fourth quarter of 2012. This increase was reflective of a $4.2 million increase related to lower premium amortization expense and a $0.6 million increase related to higher average balances of $174 million, partially offset by a $1.4 million decrease related to lower yields. Premium amortization expense decreased by $4.2 million to $13.1 million for the fourth quarter of 2012, reflective of a decrease in mortgage prepayment levels for fixed-rate mortgage securities. As of December 31, 2012, the remaining unamortized premium balance on our available-for-sale securities portfolio was $115 million. The decrease in yields was driven by the reinvestment of portfolio cash flows into lower yielding securities reflective of the current low rate environment. |
• | An increase in interest income on loans of $2.9 million to $124.3 million for the fourth quarter of 2012, primarily due to an increase in average loan balances of $367 million, partially offset by a decrease in the overall yield of our portfolio. The decrease in yields is reflective of a continued shift in the mix of our loans that are indexed to the national Prime rate versus the SVB Prime rate. |
Three months ended | Year ended | |||||||||||||||||||
(Dollars in thousands, except ratios) | December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||
Allowance for loan losses, beginning balance | $ | 101,524 | $ | 98,166 | $ | 85,246 | $ | 89,947 | $ | 82,627 | ||||||||||
Provision for loan losses | 15,014 | 6,788 | 8,245 | 44,330 | 6,101 | |||||||||||||||
Gross loan charge-offs | (7,562 | ) | (4,637 | ) | (7,041 | ) | (33,319 | ) | (23,904 | ) | ||||||||||
Loan recoveries | 1,675 | 1,207 | 3,497 | 9,693 | 25,123 | |||||||||||||||
Allowance for loan losses, ending balance | $ | 110,651 | $ | 101,524 | $ | 89,947 | $ | 110,651 | $ | 89,947 | ||||||||||
Provision for loan losses as a percentage of total gross loans (annualized) | 0.66 | % | 0.33 | % | 0.47 | % | 0.49 | % | 0.09 | % | ||||||||||
Gross loan charge-offs as a percentage of average total gross loans (annualized) | 0.36 | 0.23 | 0.43 | 0.44 | 0.41 | |||||||||||||||
Net loan charge-offs (recoveries) as a percentage of average total gross loans (annualized) | 0.28 | 0.17 | 0.22 | 0.31 | (0.02 | ) | ||||||||||||||
Allowance for loan losses as a percentage of period-end total gross loans | 1.23 | 1.23 | 1.28 | 1.23 | 1.28 | |||||||||||||||
Total gross loans at period-end | $ | 9,024,248 | $ | 8,266,168 | $ | 7,030,321 | $ | 9,024,248 | $ | 7,030,321 | ||||||||||
Average total gross loans | 8,347,013 | 7,976,257 | 6,446,061 | 7,623,417 | 5,863,319 |
• | Net gains on investment securities were $68.2 million for the fourth quarter of 2012, compared to net gains of $20.2 million for the third quarter of 2012. Net of noncontrolling interests, net gains on investment securities were $17.2 million for the fourth quarter of 2012 compared to $7.5 million for the third quarter of 2012. The gains, net of noncontrolling interests, of $17.2 million for the fourth quarter of 2012 were primarily driven by the following: |
◦ | Gains of $10.1 million from our managed direct venture funds, which included valuation increases and carried interest of $9.2 million from a single investment in two of our managed funds. |
◦ | Gains of $3.6 million from our investments in debt funds, driven by valuation increases from the investments within the funds. |
◦ | Gains of $2.5 million from our strategic and other investments, driven by distributions and valuation increases from certain fund investments. |
Three months ended December 31, 2012 | ||||||||||||||||||||||||
(Dollars in thousands) | Managed Funds Of Funds | Managed Direct Venture Funds | Debt Funds | Available- For-Sale Securities | Strategic and Other Investments | Total | ||||||||||||||||||
Total gains on investment securities, net | $ | 5,290 | $ | 56,251 | $ | 3,558 | $ | 649 | $ | 2,490 | $ | 68,238 | ||||||||||||
Less: income attributable to noncontrolling interests, including carried interest | 4,909 | 46,109 | 6 | — | — | 51,024 | ||||||||||||||||||
Non-GAAP net gains on investment securities, net of noncontrolling interests | $ | 381 | $ | 10,142 | $ | 3,552 | $ | 649 | $ | 2,490 | $ | 17,214 | ||||||||||||
Three months ended September 30, 2012 | ||||||||||||||||||||||||
(Dollars in thousands) | Managed Funds Of Funds | Managed Direct Venture Funds | Debt Funds | Available- For-Sale Securities | Strategic and Other Investments | Total | ||||||||||||||||||
Total gains (losses) on investment securities, net | $ | 12,139 | $ | 2,034 | $ | 5,439 | $ | (101 | ) | $ | 717 | $ | 20,228 | |||||||||||
Less: income (losses) attributable to noncontrolling interests, including carried interest | 11,351 | 1,427 | (2 | ) | — | — | 12,776 | |||||||||||||||||
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests | $ | 788 | $ | 607 | $ | 5,441 | $ | (101 | ) | $ | 717 | $ | 7,452 |
• | Net gains on derivative instruments were $6.3 million for the fourth quarter of 2012, compared to net gains of $1.1 million for the third quarter of 2012. The following table provides a summary of our net gains on derivative instruments: |
Three months ended | Year ended | |||||||||||||||||||
(Dollars in thousands) | December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||
Net gains on equity warrant assets | $ | 7,027 | $ | 547 | $ | 14,064 | $ | 19,385 | $ | 37,439 | ||||||||||
Gains on foreign exchange forward contracts, net: | ||||||||||||||||||||
Gains on client foreign exchange forward contracts, net | 899 | 607 | 811 | 3,901 | 2,259 | |||||||||||||||
(Losses) gains on internal foreign exchange forward contracts, net (1) | (1,265 | ) | 220 | 1,433 | (103 | ) | 1,973 | |||||||||||||
Total (losses) gains on foreign exchange forward contracts, net | (366 | ) | 827 | 2,244 | 3,798 | 4,232 | ||||||||||||||
Change in fair value of interest rate swaps | 32 | 74 | (3 | ) | 603 | (470 | ) | |||||||||||||
Net losses on other derivatives (2) | (373 | ) | (337 | ) | (1,777 | ) | (1,666 | ) | (2,520 | ) | ||||||||||
Total gains on derivative instruments, net | $ | 6,320 | $ | 1,111 | $ | 14,528 | $ | 22,120 | $ | 38,681 |
(1) | Represents the change in fair value of foreign exchange forward contracts used to economically reduce our foreign exchange exposure related to certain foreign currency denominated loans. |
(2) | Primarily represents the change in fair value of loan conversion options. |
◦ | Net gains on equity warrant assets of $7.0 million for the fourth quarter of 2012, compared to $0.5 million for the third quarter of 2012. The third quarter of 2012 included net losses of $3.4 million from changes in the marketability discount and remaining life assumptions applied to our private warrant portfolio. The net gains of $7.0 million for the fourth quarter of 2012 included the following: |
• | Net gains of $4.7 million from changes in warrant valuations from both private and public warrant clients. |
• | Net gains of $2.4 million from the exercise of equity warrant assets. |
◦ | Net losses of $1.3 million on internal foreign exchange forward contracts for certain of our foreign currency denominated loans for the fourth quarter of 2012, compared to net gains of $0.2 million for the third quarter |
• | An increase of $1.8 million in other noninterest income, primarily attributable to an increase of $1.1 million in unused commitment fees driven by the recognition of fees at the expiration of certain commitments at year end. |
• | An increase of $4.3 million in compensation and benefits expense, primarily driven by increased incentive compensation attributable to our stronger than expected financial performance during the fourth quarter of 2012. The following table provides a summary of our compensation and benefits expense: |
Three months ended | Year ended | |||||||||||||||||||
(Dollars in thousands) | December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||
Compensation and benefits: | ||||||||||||||||||||
Salaries and wages | $ | 37,145 | $ | 37,769 | $ | 34,936 | $ | 150,536 | $ | 134,719 | ||||||||||
Incentive compensation plan and ESOP | 24,514 | 20,185 | 25,371 | 86,684 | 97,265 | |||||||||||||||
Other employee benefits (1) | 21,899 | 21,308 | 20,207 | 89,722 | 81,059 | |||||||||||||||
Total compensation and benefits | $ | 83,558 | $ | 79,262 | $ | 80,514 | $ | 326,942 | $ | 313,043 | ||||||||||
Period-end full-time equivalent employees | 1,615 | 1,602 | 1,526 | 1,615 | 1,526 | |||||||||||||||
Average full-time equivalent employees | 1,607 | 1,594 | 1,522 | 1,581 | 1,451 |
(1) | Other employee benefits expense includes employer payroll taxes, group health and life insurance, share-based compensation, 401(k), warrant and retention plans, agency fees and other employee-related expenses. |
• | An increase of $1.2 million in premises and equipment expense, primarily due to the write-off of $2.3 million for certain assets in the fourth quarter of 2012. The third quarter of 2012 included the write-off of $1.2 million for certain assets. |
• | An increase of $1.2 million in professional services expense, primarily due to increased consulting fees related to our ongoing business and infrastructure initiatives. |
Three months ended | Year ended | |||||||||||||||||||
(Dollars in thousands) | December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||
Net interest income (1) | $ | 25 | $ | (50 | ) | $ | (38 | ) | $ | (106 | ) | $ | (122 | ) | ||||||
Noninterest income (1) | (56,565 | ) | (14,416 | ) | (11,052 | ) | (88,823 | ) | (125,328 | ) | ||||||||||
Noninterest expense (1) | 1,848 | 2,723 | 2,699 | 11,336 | 11,567 | |||||||||||||||
Carried interest (2) | 5,451 | 892 | 75 | 2,883 | 2,992 | |||||||||||||||
Net income attributable to noncontrolling interests | $ | (49,241 | ) | $ | (10,851 | ) | $ | (8,316 | ) | $ | (74,710 | ) | $ | (110,891 | ) |
(1) | Represents noncontrolling interests’ share in net interest income, noninterest income and noninterest expense. |
(2) | Represents the preferred allocation of income earned by the general partners or limited partners of certain consolidated funds. |
• | Net gains on investment securities (including carried interest) attributable to noncontrolling interests of $51.0 million, primarily from gains of $46.1 million from our managed direct venture funds and $4.9 million from our managed funds of funds. |
• | Noninterest expense of $1.8 million, primarily related to management fees paid by the noncontrolling interests to our subsidiaries that serve as the general partner. |
Current full year 2013 outlook compared to 2012 results (as of January 24, 2013) | |
Average loan balances | Increase at a percentage rate in the low twenties |
Average deposit balances | Increase at a percentage rate in the mid single digits |
Net interest income (1) | Increase at a percentage rate in the mid single digits |
Net interest margin (1) | Between 3.10% and 3.20% |
Allowance for loan losses for total gross performing loans as a percentage of total gross performing loans | Comparable to 2012 levels |
Net loan charge-offs | Between 0.30% and 0.50% of average total gross loans |
Nonperforming loans as a percentage of total gross loans | Comparable to 2012 levels |
Fees for deposit services, letters of credit, credit card, client investment, and foreign exchange, in aggregate | Increase at a percentage rate in the mid teens |
Noninterest expense (excluding expenses related to noncontrolling interests) (2) | Increase at a percentage rate in the mid single digits |
(1) | Our outlook for net interest income and net interest margin is partly based on management's current forecast of prepayment rates on our mortgage-backed securities in our available-for-sale securities portfolio and their impact on our forecasted premium amortization expense. Such forecasts are subject to change, and actual results may differ, based on market conditions and actual prepayment rates. See also other factors that may cause our outlook to differ from our actual results under the "Forward Looking Statements" section below. |
(2) | Non-GAAP |
Three months ended | Year ended | |||||||||||||||||||
(Dollars in thousands, except share data) | December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||
Interest income: | ||||||||||||||||||||
Loans | $ | 124,304 | $ | 121,446 | $ | 104,895 | $ | 469,146 | $ | 389,830 | ||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Taxable | 41,923 | 38,493 | 40,493 | 171,863 | 165,449 | |||||||||||||||
Non-taxable | 871 | 894 | 900 | 3,564 | 3,623 | |||||||||||||||
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities | 1,070 | 1,125 | 1,514 | 4,145 | 6,486 | |||||||||||||||
Total interest income | 168,168 | 161,958 | 147,802 | 648,718 | 565,388 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 1,825 | 1,740 | 1,483 | 6,660 | 8,862 | |||||||||||||||
Borrowings | 5,780 | 5,788 | 6,249 | 24,194 | 30,249 | |||||||||||||||
Total interest expense | 7,605 | 7,528 | 7,732 | 30,854 | 39,111 | |||||||||||||||
Net interest income | 160,563 | 154,430 | 140,070 | 617,864 | 526,277 | |||||||||||||||
Provision for loan losses | 15,014 | 6,788 | 8,245 | 44,330 | 6,101 | |||||||||||||||
Net interest income after provision for loan losses | 145,549 | 147,642 | 131,825 | 573,534 | 520,176 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Gains on investment securities, net | 68,238 | 20,228 | 19,755 | 122,114 | 195,034 | |||||||||||||||
Foreign exchange fees | 12,647 | 12,211 | 11,494 | 48,992 | 43,891 | |||||||||||||||
Deposit service charges | 8,587 | 8,369 | 7,994 | 33,421 | 31,208 | |||||||||||||||
Credit card fees | 6,624 | 6,348 | 6,054 | 24,809 | 18,741 | |||||||||||||||
Gains on derivative instruments, net | 6,320 | 1,111 | 14,528 | 22,120 | 38,681 | |||||||||||||||
Letters of credit and standby letters of credit fees | 4,723 | 3,495 | 3,749 | 15,150 | 12,201 | |||||||||||||||
Client investment fees | 4,313 | 3,954 | 2,714 | 14,539 | 12,421 | |||||||||||||||
Other | 15,236 | 13,423 | 6,771 | 54,401 | 30,155 | |||||||||||||||
Total noninterest income | 126,688 | 69,139 | 73,059 | 335,546 | 382,332 | |||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Compensation and benefits | 83,558 | 79,262 | 80,514 | 326,942 | 313,043 | |||||||||||||||
Professional services | 18,965 | 17,759 | 17,807 | 67,845 | 60,807 | |||||||||||||||
Premises and equipment | 12,459 | 11,247 | 8,763 | 40,689 | 28,335 | |||||||||||||||
Business development and travel | 7,666 | 6,838 | 6,821 | 29,409 | 24,250 | |||||||||||||||
Net occupancy | 5,869 | 5,666 | 5,461 | 22,536 | 19,624 | |||||||||||||||
Correspondent bank fees | 2,640 | 3,000 | 2,351 | 11,168 | 9,052 | |||||||||||||||
FDIC assessments | 2,894 | 2,836 | 2,358 | 10,959 | 10,298 | |||||||||||||||
(Reduction of) provision for unfunded credit commitments | (776 | ) | (400 | ) | 2,266 | 488 | 4,397 | |||||||||||||
Other | 9,774 | 8,963 | 8,369 | 35,962 | 30,822 | |||||||||||||||
Total noninterest expense | 143,049 | 135,171 | 134,710 | 545,998 | 500,628 | |||||||||||||||
Income before income tax expense | 129,188 | 81,610 | 70,174 | 363,082 | 401,880 | |||||||||||||||
Income tax expense | 29,526 | 28,470 | 26,284 | 113,269 | 119,087 | |||||||||||||||
Net income before noncontrolling interests | 99,662 | 53,140 | 43,890 | 249,813 | 282,793 | |||||||||||||||
Net income attributable to noncontrolling interests | (49,241 | ) | (10,851 | ) | (8,316 | ) | (74,710 | ) | (110,891 | ) | ||||||||||
Net income available to common stockholders | $ | 50,421 | $ | 42,289 | $ | 35,574 | $ | 175,103 | $ | 171,902 | ||||||||||
Earnings per common share—basic | $ | 1.13 | $ | 0.95 | $ | 0.82 | $ | 3.96 | $ | 4.00 | ||||||||||
Earnings per common share—diluted | 1.12 | 0.94 | 0.81 | 3.91 | 3.94 | |||||||||||||||
Weighted average common shares outstanding—basic | 44,524,789 | 44,449,243 | 43,366,891 | 44,242,002 | 43,004,451 | |||||||||||||||
Weighted average common shares outstanding—diluted | 44,982,031 | 44,914,564 | 43,816,572 | 44,764,395 | 43,636,871 |
(Dollars in thousands, except par value and share data) | December 31, 2012 | September 30, 2012 | December 31, 2011 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $ | 1,008,983 | $ | 906,680 | $ | 1,114,948 | ||||||
Available-for-sale securities | 11,343,177 | 11,047,730 | 10,536,046 | |||||||||
Non-marketable securities | 1,184,265 | 1,163,815 | 1,004,440 | |||||||||
Investment securities | 12,527,442 | 12,211,545 | 11,540,486 | |||||||||
Loans, net of unearned income | 8,946,933 | 8,192,369 | 6,970,082 | |||||||||
Allowance for loan losses | (110,651 | ) | (101,524 | ) | (89,947 | ) | ||||||
Net loans | 8,836,282 | 8,090,845 | 6,880,135 | |||||||||
Premises and equipment, net of accumulated depreciation and amortization | 66,545 | 68,270 | 56,471 | |||||||||
Accrued interest receivable and other assets | 326,871 | 299,594 | 376,854 | |||||||||
Total assets | $ | 22,766,123 | $ | 21,576,934 | $ | 19,968,894 | ||||||
Liabilities and total equity: | ||||||||||||
Liabilities: | ||||||||||||
Noninterest-bearing demand deposits | $ | 13,875,275 | $ | 12,598,639 | $ | 11,861,888 | ||||||
Interest-bearing deposits | 5,301,177 | 5,126,427 | 4,847,648 | |||||||||
Total deposits | 19,176,452 | 17,725,066 | 16,709,536 | |||||||||
Short-term borrowings | 166,110 | 508,170 | — | |||||||||
Other liabilities | 360,566 | 330,038 | 405,321 | |||||||||
Long-term debt | 457,762 | 458,314 | 603,648 | |||||||||
Total liabilities | 20,160,890 | 19,021,588 | 17,718,505 | |||||||||
SVBFG stockholders’ equity: | ||||||||||||
Preferred stock, $0.001 par value, 20,000,000 shares authorized; no shares issued and outstanding | — | — | — | |||||||||
Common stock, $0.001 par value, 150,000,000 shares authorized; 44,627,182 shares, 44,510,524 shares and 43,507,932 shares outstanding, respectively | 45 | 45 | 44 | |||||||||
Additional paid-in capital | 547,079 | 538,454 | 484,216 | |||||||||
Retained earnings | 1,174,878 | 1,124,415 | 999,733 | |||||||||
Accumulated other comprehensive income | 108,553 | 122,010 | 85,399 | |||||||||
Total SVBFG stockholders’ equity | 1,830,555 | 1,784,924 | 1,569,392 | |||||||||
Noncontrolling interests | 774,678 | 770,422 | 680,997 | |||||||||
Total equity | 2,605,233 | 2,555,346 | 2,250,389 | |||||||||
Total liabilities and total equity | $ | 22,766,123 | $ | 21,576,934 | $ | 19,968,894 |
Three months ended | |||||||||||||||||||||||||||||||||
December 31, 2012 | September 30, 2012 | December 31, 2011 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Average balance | Interest income/ expense | Yield/ rate | Average balance | Interest income/ expense | Yield/ rate | Average balance | Interest income/ expense | Yield/ rate | ||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||
Federal reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1) | $ | 1,419,980 | $ | 1,070 | 0.30 | % | $ | 1,287,103 | $ | 1,125 | 0.35 | % | $ | 2,040,398 | $ | 1,514 | 0.29 | % | |||||||||||||||
Available-for-sale securities: (2) | |||||||||||||||||||||||||||||||||
Taxable | 10,655,623 | 41,923 | 1.57 | 10,478,071 | 38,493 | 1.46 | 9,438,012 | 40,493 | 1.70 | ||||||||||||||||||||||||
Non-taxable (3) | 88,141 | 1,340 | 6.05 | 91,654 | 1,375 | 5.97 | 92,252 | 1,385 | 5.96 | ||||||||||||||||||||||||
Total loans, net of unearned income (4) (5) | 8,274,878 | 124,304 | 5.98 | 7,907,606 | 121,446 | 6.11 | 6,394,784 | 104,895 | 6.51 | ||||||||||||||||||||||||
Total interest-earning assets | 20,438,622 | 168,637 | 3.28 | 19,764,434 | 162,439 | 3.27 | 17,965,446 | 148,287 | 3.27 | ||||||||||||||||||||||||
Cash and due from banks | 308,065 | 309,934 | 307,273 | ||||||||||||||||||||||||||||||
Allowance for loan losses | (105,862 | ) | (102,506 | ) | (89,552 | ) | |||||||||||||||||||||||||||
Other assets (6) | 1,736,952 | 1,755,335 | 1,477,403 | ||||||||||||||||||||||||||||||
Total assets | $ | 22,377,777 | $ | 21,727,197 | $ | 19,660,570 | |||||||||||||||||||||||||||
Funding sources: | |||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||
NOW deposits | $ | 112,677 | $ | 97 | 0.34 | % | $ | 105,302 | $ | 88 | 0.33 | % | $ | 110,801 | $ | 72 | 0.26 | % | |||||||||||||||
Money market deposits | 2,873,675 | 1,357 | 0.19 | 2,790,021 | 1,219 | 0.17 | 2,573,761 | 945 | 0.15 | ||||||||||||||||||||||||
Money market deposits in foreign offices | 113,170 | 28 | 0.10 | 118,002 | 29 | 0.10 | 120,242 | 30 | 0.10 | ||||||||||||||||||||||||
Time deposits | 150,737 | 105 | 0.28 | 157,585 | 130 | 0.33 | 158,216 | 189 | 0.47 | ||||||||||||||||||||||||
Sweep deposits in foreign offices | 1,896,783 | 238 | 0.05 | 2,174,737 | 274 | 0.05 | 1,962,725 | 247 | 0.05 | ||||||||||||||||||||||||
Total interest-bearing deposits | 5,147,042 | 1,825 | 0.14 | 5,345,647 | 1,740 | 0.13 | 4,925,745 | 1,483 | 0.12 | ||||||||||||||||||||||||
Short-term borrowings | 8,348 | 2 | 0.10 | 26,751 | 12 | 0.18 | 1,288 | — | — | ||||||||||||||||||||||||
5.375% Senior Notes | 347,961 | 4,820 | 5.51 | 347,910 | 4,818 | 5.51 | 347,761 | 4,813 | 5.49 | ||||||||||||||||||||||||
Junior Subordinated Debentures | 55,225 | 831 | 5.99 | 55,269 | 830 | 5.97 | 55,401 | 831 | 5.95 | ||||||||||||||||||||||||
5.70% Senior Notes | — | — | — | — | — | — | 145,070 | 423 | 1.16 | ||||||||||||||||||||||||
6.05% Subordinated Notes | 54,950 | 127 | 0.92 | 55,214 | 128 | 0.92 | 55,074 | 111 | 0.80 | ||||||||||||||||||||||||
Other long-term debt | — | — | — | — | — | — | 2,103 | 71 | 13.39 | ||||||||||||||||||||||||
Total interest-bearing liabilities | 5,613,526 | 7,605 | 0.54 | 5,830,791 | 7,528 | 0.51 | 5,532,442 | 7,732 | 0.55 | ||||||||||||||||||||||||
Portion of noninterest-bearing funding sources | 14,825,096 | 13,933,643 | 12,433,004 | ||||||||||||||||||||||||||||||
Total funding sources | 20,438,622 | 7,605 | 0.15 | 19,764,434 | 7,528 | 0.15 | 17,965,446 | 7,732 | 0.17 | ||||||||||||||||||||||||
Noninterest-bearing funding sources: | |||||||||||||||||||||||||||||||||
Demand deposits | 13,843,839 | 12,914,697 | 11,586,280 | ||||||||||||||||||||||||||||||
Other liabilities | 335,836 | 452,160 | 312,306 | ||||||||||||||||||||||||||||||
SVBFG stockholders’ equity | 1,825,592 | 1,782,443 | 1,570,556 | ||||||||||||||||||||||||||||||
Noncontrolling interests | 758,984 | 747,106 | 658,986 | ||||||||||||||||||||||||||||||
Portion used to fund interest-earning assets | (14,825,096 | ) | (13,933,643 | ) | (12,433,004 | ) | |||||||||||||||||||||||||||
Total liabilities and total equity | $ | 22,377,777 | $ | 21,727,197 | $ | 19,660,570 | |||||||||||||||||||||||||||
Net interest income and margin | $ | 161,032 | 3.13 | % | $ | 154,911 | 3.12 | % | $ | 140,555 | 3.10 | % | |||||||||||||||||||||
Total deposits | $ | 18,990,881 | $ | 18,260,344 | $ | 16,512,025 | |||||||||||||||||||||||||||
Average SVBFG stockholders’ equity as a percentage of average assets | 8.16 | % | 8.20 | % | 7.99 | % | |||||||||||||||||||||||||||
Reconciliation to reported net interest income: | |||||||||||||||||||||||||||||||||
Adjustments for taxable equivalent basis | (469 | ) | (481 | ) | (485 | ) | |||||||||||||||||||||||||||
Net interest income, as reported | $ | 160,563 | $ | 154,430 | $ | 140,070 |
(1) | Includes average interest-earning deposits in other financial institutions of $170 million, $211 million and $417 million for the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011, respectively. For the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011, balance also includes $1.0 billion, $887 million and $1.4 billion, respectively, deposited at the Federal Reserve Bank, earning interest at the Federal Funds target rate. |
(2) | Yields on available-for-sale securities are based on amortized cost, therefore do not give effect to unrealized changes in fair value that are reflected in other comprehensive income. |
(3) | Interest income on non-taxable available-for-sale securities is presented on a fully taxable equivalent basis using the federal statutory tax rate of 35.0 percent for all periods presented. |
(4) | Nonaccrual loans are reflected in the average balances of loans. |
(5) | Interest income includes loan fees of $19.5 million, $19.0 million and $17.6 million for the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011, respectively. |
(6) | Average investment securities of $1.4 billion, $1.4 billion and $1.1 billion for the quarters ended December 31, 2012, September 30, 2012 and December 31, 2011, respectively, were classified as other assets as they are noninterest-earning assets. These investments primarily consisted of non-marketable securities. |
Year ended | ||||||||||||||||||||||
December 31, 2012 | December 31, 2011 | |||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income/ Expense | Yield/ Rate | Average Balance | Interest Income/ Expense | Yield/ Rate | ||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1) | $ | 1,191,805 | $ | 4,145 | 0.35 | % | $ | 1,974,001 | $ | 6,486 | 0.33 | % | ||||||||||
Investment securities: (2) | ||||||||||||||||||||||
Taxable | 10,594,533 | 171,863 | 1.62 | 9,256,688 | 165,449 | 1.79 | ||||||||||||||||
Non-taxable (3) | 91,031 | 5,483 | 6.02 | 93,693 | 5,574 | 5.95 | ||||||||||||||||
Total loans, net of unearned income (4) (5) | 7,558,928 | 469,146 | 6.21 | 5,815,071 | 389,830 | 6.70 | ||||||||||||||||
Total interest-earning assets | 19,436,297 | 650,637 | 3.35 | 17,139,453 | 567,339 | 3.31 | ||||||||||||||||
Cash and due from banks | 303,156 | 283,596 | ||||||||||||||||||||
Allowance for loan losses | (102,068 | ) | (88,104 | ) | ||||||||||||||||||
Other assets (6) | 1,673,787 | 1,335,554 | ||||||||||||||||||||
Total assets | $ | 21,311,172 | $ | 18,670,499 | ||||||||||||||||||
Funding sources: | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
NOW deposits | $ | 105,060 | $ | 343 | 0.33 | % | $ | 87,099 | $ | 270 | 0.31 | % | ||||||||||
Money market deposits | 2,703,434 | 4,569 | 0.17 | 2,508,279 | 5,131 | 0.20 | ||||||||||||||||
Money market deposits in foreign offices | 125,962 | 124 | 0.10 | 130,693 | 294 | 0.22 | ||||||||||||||||
Time deposits | 154,917 | 596 | 0.38 | 258,810 | 1,102 | 0.43 | ||||||||||||||||
Sweep deposits in foreign offices | 2,055,209 | 1,028 | 0.05 | 2,346,076 | 2,065 | 0.09 | ||||||||||||||||
Total interest-bearing deposits | 5,144,582 | 6,660 | 0.13 | 5,330,957 | 8,862 | 0.17 | ||||||||||||||||
Short-term borrowings | 70,802 | 137 | 0.19 | 16,994 | 25 | 0.15 | ||||||||||||||||
5.375% senior notes | 347,886 | 19,269 | 5.54 | 347,689 | 19,244 | 5.53 | ||||||||||||||||
3.875% convertible senior notes | — | — | — | 71,108 | 4,210 | 5.92 | ||||||||||||||||
Junior subordinated debentures | 55,291 | 3,324 | 6.01 | 55,467 | 3,325 | 5.99 | ||||||||||||||||
5.70% Senior Notes | 59,375 | 863 | 1.45 | 185,956 | 1,877 | 1.01 | ||||||||||||||||
6.05% Subordinated Notes | 55,079 | 509 | 0.92 | 131,899 | 1,274 | 0.97 | ||||||||||||||||
Other long-term debt | 481 | 92 | 19.13 | 4,704 | 294 | 6.25 | ||||||||||||||||
Total interest-bearing liabilities | 5,733,496 | 30,854 | 0.54 | 6,144,774 | 39,111 | 0.64 | ||||||||||||||||
Portion of noninterest-bearing funding sources | 13,702,801 | 10,994,679 | ||||||||||||||||||||
Total funding sources | 19,436,297 | 30,854 | 0.16 | 17,139,453 | 39,111 | 0.23 | ||||||||||||||||
Noninterest-bearing funding sources: | ||||||||||||||||||||||
Demand deposits | 12,765,506 | 10,237,844 | ||||||||||||||||||||
Other liabilities | 350,610 | 268,721 | ||||||||||||||||||||
SVBFG stockholders’ equity | 1,735,281 | 1,448,398 | ||||||||||||||||||||
Noncontrolling interests | 726,279 | 570,762 | ||||||||||||||||||||
Portion used to fund interest-earning assets | (13,702,801 | ) | (10,994,679 | ) | ||||||||||||||||||
Total liabilities and total equity | $ | 21,311,172 | $ | 18,670,499 | ||||||||||||||||||
Net interest income and margin | $ | 619,783 | 3.19 | % | $ | 528,228 | 3.08 | % | ||||||||||||||
Total deposits | $ | 17,910,088 | $ | 15,568,801 | ||||||||||||||||||
Average SVBFG stockholders’ equity as a percentage of average assets | 8.14 | % | 7.76 | % | ||||||||||||||||||
Reconciliation to reported net interest income: | ||||||||||||||||||||||
Adjustments for taxable equivalent basis | (1,919 | ) | (1,951 | ) | ||||||||||||||||||
Net interest income, as reported | $ | 617,864 | $ | 526,277 |
(1) | Includes average interest-earning deposits in other financial institutions of $250 million and $324 million for the years ended December 31, 2012 and 2011, respectively. For the years ended December 31, 2012 and 2011, balance also includes $726 million and $1.4 billion, respectively, deposited at the Federal Reserve Bank, earning interest at the Federal Funds target rate. |
(2) | Yields on interest-earning investment securities do not give effect to changes in fair value that are reflected in other comprehensive income. |
(3) | Interest income on non-taxable investment securities is presented on a fully taxable equivalent basis using the federal statutory tax rate of 35.0 percent for all periods presented. |
(4) | Nonaccrual loans are reflected in the average balances of loans. |
(5) | Interest income includes loan fees of $76.1 million and $65.9 million for the years ended December 31, 2012 and 2011, respectively. |
(6) | Average investment securities of $1.3 billion and $958 million for the years ended December 31, 2012 and 2011, respectively, were classified as other assets as they are noninterest-earning assets. These investments primarily consisted of non-marketable securities. |
Three months ended | Year ended | |||||||||||||||||||
(Dollars in thousands) | December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||
Equity warrant assets (1): | ||||||||||||||||||||
Gains on exercises, net | $ | 2,423 | $ | 2,417 | $ | 5,887 | $ | 10,000 | $ | 17,864 | ||||||||||
Cancellations and expirations | (98 | ) | (252 | ) | (116 | ) | (1,522 | ) | (1,806 | ) | ||||||||||
Changes in fair value | 4,702 | (1,618 | ) | 8,293 | 10,907 | 21,381 | ||||||||||||||
Total net gains on equity warrant assets (2) | $ | 7,027 | $ | 547 | $ | 14,064 | $ | 19,385 | $ | 37,439 |
(1) | At December 31, 2012, we held warrants in 1,270 companies, compared to 1,248 companies at September 30, 2012 and 1,174 companies at December 31, 2011. |
(2) | Net gains on equity warrant assets are included in the line item “Gains on derivative instruments, net” as part of noninterest income. |
Three months ended | Year ended | ||||||||||||||
(Shares in thousands) | December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | ||||||||||
Weighted average common shares outstanding—basic | 44,525 | 44,449 | 43,367 | 44,242 | 43,004 | ||||||||||
Effect of dilutive securities: | |||||||||||||||
Stock options and employee stock purchase plan | 293 | 346 | 327 | 370 | 517 | ||||||||||
Restricted stock units | 164 | 120 | 123 | 152 | 116 | ||||||||||
Total effect of dilutive securities | 457 | 466 | 450 | 522 | 633 | ||||||||||
Weighted average common shares outstanding—diluted | 44,982 | 44,915 | 43,817 | 44,764 | 43,637 |
December 31, 2012 | September 30, 2012 | December 31, 2011 | |||||||
SVB Financial Group: | |||||||||
Total risk-based capital ratio | 14.05 | % | 14.34 | % | 13.95 | % | |||
Tier 1 risk-based capital ratio | 12.79 | 13.07 | 12.62 | ||||||
Tier 1 leverage ratio | 8.06 | 8.02 | 7.92 | ||||||
Tangible common equity to tangible assets ratio (1) | 8.04 | 8.27 | 7.86 | ||||||
Tangible common equity to risk-weighted assets ratio (1) | 13.53 | 13.93 | 13.25 | ||||||
Silicon Valley Bank: | |||||||||
Total risk-based capital ratio | 12.52 | % | 12.70 | % | 12.33 | % | |||
Tier 1 risk-based capital ratio | 11.23 | 11.41 | 10.96 | ||||||
Tier 1 leverage ratio | 7.05 | 7.00 | 6.87 | ||||||
Tangible common equity to tangible assets ratio (1) | 7.41 | 7.61 | 7.18 | ||||||
Tangible common equity to risk-weighted assets ratio (1) | 12.08 | 12.40 | 11.75 |
(1) | These are non-GAAP calculations. A reconciliation of non-GAAP calculations to GAAP is provided at the end of this release under the section “Use of Non-GAAP Financial Measures.” |
(Dollars in thousands, except ratios and client data) | December 31, 2012 | September 30, 2012 | December 31, 2011 | |||||||||
Loans (individually or in the aggregate) to any single client, equal to or greater than $20 million | ||||||||||||
Commercial loans: | ||||||||||||
Software | $ | 1,125,767 | $ | 929,588 | $ | 745,772 | ||||||
Hardware | 452,836 | 453,485 | 355,188 | |||||||||
Venture capital/private equity | 970,973 | 684,469 | 490,810 | |||||||||
Life science | 352,189 | 352,708 | 291,832 | |||||||||
Premium wine (1) | 6,500 | 6,000 | 5,400 | |||||||||
Other | 117,198 | 57,019 | 157,714 | |||||||||
Total commercial loans | 3,025,463 | 2,483,269 | 2,046,716 | |||||||||
Real estate secured loans: | ||||||||||||
Premium wine (1) | 73,816 | 74,343 | 77,125 | |||||||||
Consumer loans (2) | — | — | 18,932 | |||||||||
Total real estate secured loans | 73,816 | 74,343 | 96,057 | |||||||||
Consumer loans (2) | 45,000 | 45,000 | 48,000 | |||||||||
Total loans individually equal to or greater than $20 million | $ | 3,144,279 | $ | 2,602,612 | $ | 2,190,773 | ||||||
Loans (individually or in the aggregate) to any single client, less than $20 million | ||||||||||||
Commercial loans: | ||||||||||||
Software | $ | 2,168,123 | $ | 2,053,832 | $ | 1,772,118 | ||||||
Hardware | 676,648 | 751,574 | 606,681 | |||||||||
Venture capital/private equity | 778,930 | 723,877 | 637,710 | |||||||||
Life science | 725,269 | 685,619 | 580,581 | |||||||||
Premium wine | 138,437 | 129,194 | 126,152 | |||||||||
Other | 200,733 | 256,158 | 187,874 | |||||||||
Total commercial loans | 4,688,140 | 4,600,254 | 3,911,116 | |||||||||
Real estate secured loans: | ||||||||||||
Premium wine | 340,531 | 306,212 | 270,116 | |||||||||
Consumer loans | 685,493 | 609,525 | 514,885 | |||||||||
Total real estate secured loans | 1,026,024 | 915,737 | 785,001 | |||||||||
Construction loans | 65,726 | 48,505 | 30,319 | |||||||||
Consumer loans | 100,079 | 99,060 | 113,112 | |||||||||
Total loans individually less than $20 million | $ | 5,879,969 | $ | 5,663,556 | $ | 4,839,548 | ||||||
Total gross loans | $ | 9,024,248 | $ | 8,266,168 | $ | 7,030,321 | ||||||
Loans individually equal to or greater than $20 million as a percentage of total gross loans | 34.8 | % | 31.5 | % | 31.2 | % | ||||||
Total clients with loans individually equal to or greater than $20 million | 102 | 85 | 71 | |||||||||
Loans individually equal to or greater than $20 million on nonaccrual status | $ | — | $ | — | $ | — |
(1) | Premium wine clients can have loan balances included in both commercial loans and real estate secured loans, the combination of which are equal to or greater than $20 million. |
(2) | Consumer loan clients can have loan balances included in both real estate secured loans and other consumer loans, the combination of which are equal to or greater than $20 million. |
Period end balances at | ||||||||||||
(Dollars in thousands, except ratios) | December 31, 2012 | September 30, 2012 | December 31, 2011 | |||||||||
Nonperforming and past due loans: | ||||||||||||
Loans past due 90 days or more still accruing interest | $ | 19 | $ | 5,000 | $ | — | ||||||
Impaired loans | 38,279 | 39,397 | 36,617 | |||||||||
Nonperforming loans as a percentage of total gross loans | 0.42 | % | 0.48 | % | 0.52 | % | ||||||
Nonperforming loans as a percentage of total assets | 0.17 | 0.18 | 0.18 | |||||||||
Allowance for loan losses | $ | 110,651 | $ | 101,524 | $ | 89,947 | ||||||
As a percentage of total gross loans | 1.23 | % | 1.23 | % | 1.28 | % | ||||||
As a percentage of total gross nonperforming loans | 289.06 | 257.69 | 245.64 | |||||||||
Allowance for loan losses for impaired loans | $ | 6,261 | $ | 6,003 | $ | 3,707 | ||||||
As a percentage of total gross loans | 0.07 | % | 0.07 | % | 0.05 | % | ||||||
As a percentage of total gross nonperforming loans | 16.36 | 15.24 | 10.12 | |||||||||
Allowance for loan losses for total gross performing loans | $ | 104,390 | $ | 95,521 | $ | 86,240 | ||||||
As a percentage of total gross loans | 1.16 | % | 1.16 | % | 1.23 | % | ||||||
As a percentage of total gross performing loans | 1.16 | 1.16 | 1.23 | |||||||||
Total gross loans | $ | 9,024,248 | $ | 8,266,168 | $ | 7,030,321 | ||||||
Total gross performing loans | 8,985,969 | 8,226,771 | 6,993,704 | |||||||||
Reserve for unfunded credit commitments (1) | 22,299 | 23,075 | 21,811 | |||||||||
As a percentage of total unfunded credit commitments | 0.26 | % | 0.26 | % | 0.27 | % | ||||||
Total unfunded credit commitments (2) | $ | 8,610,791 | $ | 8,710,228 | $ | 8,067,570 |
(1) | The “reserve for unfunded credit commitments” is included as a component of “other liabilities.” |
(2) | Includes unfunded loan commitments and letters of credit |
Three months ended | Year ended | |||||||||||||||||||
(Dollars in millions) | December 31, 2012 | September 30, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||
Client directed investment assets | $ | 7,123 | $ | 7,528 | $ | 8,200 | $ | 7,335 | $ | 8,683 | ||||||||||
Client investment assets under management | 10,385 | 10,283 | 9,656 | 10,282 | 8,803 | |||||||||||||||
Sweep money market funds | 3,668 | 3,118 | 603 | 2,596 | 250 | |||||||||||||||
Total average client investment funds | $ | 21,176 | $ | 20,929 | $ | 18,459 | $ | 20,213 | $ | 17,736 |
(Dollars in millions) | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | |||||||||||||||
Client directed investment assets | $ | 7,604 | $ | 7,363 | $ | 7,003 | $ | 7,147 | $ | 7,709 | ||||||||||
Client investment assets under management | 10,824 | 10,291 | 10,398 | 10,190 | 9,919 | |||||||||||||||
Sweep money market funds | 4,085 | 3,404 | 2,695 | 1,775 | 1,116 | |||||||||||||||
Total period-end client investment funds | $ | 22,513 | $ | 21,058 | $ | 20,096 | $ | 19,112 | $ | 18,744 |
(1) | Off-Balance sheet client investment funds are maintained at third party financial institutions. |
• | Income and expense attributable to noncontrolling interests — As part of our funds management business, we recognize the entire income or loss from certain funds where we own less than 100 percent. We are required under GAAP to consolidate 100 percent of the results of the funds that we are deemed to control or in which we have a majority ownership. The relevant amounts attributable to investors other than us are reflected under “Net Income Attributable to Noncontrolling Interests.” Our net income available to common stockholders includes only the portion of income or loss related to our ownership interest. |
• | Gains of $5.0 million and $37.3 million from the sales of certain available-for-sale securities in the second quarters of 2012 and 2011, respectively. |
• | Gains of $4.2 million from the sale of certain assets related to our equity management services business in the second quarter of 2012. |
• | Net gains of $3.1 million from the repurchase of $109 million aggregate principal amount of our 5.70% Senior Notes and $204 million aggregate principal amount of our 6.05% Subordinated Notes and the termination of the associated portions of interest rate swaps in the second quarter of 2011. |
• | Tangible common equity to tangible assets ratio; tangible common equity to risk-weighted assets ratio — These ratios are not required by GAAP or applicable bank regulatory requirements, and are used by management to evaluate the adequacy of our capital levels. Our ratios are calculated by dividing total SVBFG stockholders’ equity, by total assets or total risk-weighted assets, as applicable, after reducing amounts by acquired intangibles. The manner in which this ratio is calculated varies among companies. Accordingly, our ratios are not necessarily comparable to similar measures of other companies. |
• | Non-GAAP return on average assets ratio; Non-GAAP return on average SVBFG stockholders’ equity ratio — These ratios exclude certain financial items that are otherwise required under GAAP. Our ratios are calculated by dividing non-GAAP net income available to common stockholders (annualized) by average assets or average SVBFG stockholders’ equity, as applicable. |
• | Non-GAAP operating efficiency ratio — This ratio excludes certain financial items that are otherwise required under GAAP. It is calculated by dividing noninterest expense by total taxable equivalent income, after reducing both amounts by taxable equivalent income and expense attributable to noncontrolling interests and the gains noted above for applicable periods. |
Three months ended | Year ended | |||||||||||||||||||||||||||
Non-GAAP net income and earnings per share (Dollars in thousands, except share amounts) | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||
Net income available to common stockholders | $ | 50,421 | $ | 42,289 | $ | 47,603 | $ | 34,790 | $ | 35,574 | $ | 175,103 | $ | 171,902 | ||||||||||||||
Less: gains on sales of certain available-for-sale securities (1) | — | — | (4,955 | ) | — | — | (4,955 | ) | (37,314 | ) | ||||||||||||||||||
Tax impact of gains on sales of available-for-sale securities | — | — | 1,974 | — | — | 1,974 | 14,810 | |||||||||||||||||||||
Less: net gains on the sale of certain assets related to our equity management services business (2) | — | — | (4,243 | ) | — | — | (4,243 | ) | — | |||||||||||||||||||
Tax impact of net gains on the sale of certain assets related to our equity management services business | — | — | 1,690 | — | — | 1,690 | — | |||||||||||||||||||||
Less: net gain from note repurchases and termination of corresponding interest rate swaps (3) | — | — | — | — | — | — | (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 | $ | 50,421 | $ | 42,289 | $ | 42,069 | $ | 34,790 | $ | 35,574 | $ | 169,569 | $ | 147,515 | ||||||||||||||
GAAP earnings per common share — diluted | $ | 1.12 | $ | 0.94 | $ | 1.06 | $ | 0.78 | $ | 0.81 | $ | 3.91 | $ | 3.94 | ||||||||||||||
Less: gains on sales of certain available-for-sale securities (1) | — | — | (0.11 | ) | — | — | (0.11 | ) | (0.86 | ) | ||||||||||||||||||
Tax impact of gains on sales of available-for-sale securities | — | — | 0.05 | — | — | 0.05 | 0.34 | |||||||||||||||||||||
Less: net gains on the sale of certain assets related to our equity management services business (2) | — | — | (0.10 | ) | — | — | (0.10 | ) | ||||||||||||||||||||
Tax impact of net gains on the sale of certain assets related to our equity management services business | — | — | 0.04 | — | — | 0.04 | — | |||||||||||||||||||||
Less: net gain from note repurchases and termination of corresponding interest rate swaps (3) | — | — | — | — | — | — | (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 | $ | 1.12 | $ | 0.94 | $ | 0.94 | $ | 0.78 | $ | 0.81 | $ | 3.79 | $ | 3.38 | ||||||||||||||
Weighted average diluted common shares outstanding | 44,982,031 | 44,914,564 | 44,711,895 | 44,460,005 | 43,816,572 | 44,764,395 | 43,636,871 |
(1) | Gains on the sales of $316 million and $1.4 billion in certain available-for-sale securities in the second quarter of 2012 and 2011, respectively. |
(2) | Net gains of $4.2 million from the sale of certain assets related to our equity management services business in the second quarter of 2012. |
(3) | Net gains of $3.1 million from the repurchase of $109 million of our 5.70% Senior Notes and $204 million of our 6.05% Subordinated Notes and the termination of the corresponding portions of interest rate swaps in the second quarter of 2011. |
Three months ended | Year ended | |||||||||||||||||||||||||||
Non-GAAP return on average assets and average SVBFG stockholders’ equity (Dollars in thousands, except ratios) | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||
Non-GAAP net income available to common stockholders | $ | 50,421 | $ | 42,289 | $ | 42,069 | $ | 34,790 | $ | 35,574 | $ | 169,569 | $ | 147,515 | ||||||||||||||
Average assets | $ | 22,377,777 | $ | 21,727,197 | $ | 20,890,876 | $ | 20,232,543 | $ | 19,660,570 | $ | 21,311,172 | $ | 18,670,499 | ||||||||||||||
Average SVBFG stockholders’ equity | $ | 1,825,592 | $ | 1,782,443 | $ | 1,707,321 | $ | 1,624,256 | $ | 1,570,556 | $ | 1,735,281 | $ | 1,448,398 | ||||||||||||||
Non-GAAP return on average assets (annualized) | 0.90 | % | 0.77 | % | 0.81 | % | 0.69 | % | 0.72 | % | 0.80 | % | 0.79 | % | ||||||||||||||
Non-GAAP return on average SVBFG stockholders’ equity (annualized) | 10.99 | 9.44 | 9.91 | 8.61 | 8.99 | 9.77 | 10.18 |
Three months ended | Year ended | |||||||||||||||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests (Dollars in thousands) | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||
GAAP noninterest income | $ | 126,688 | $ | 69,139 | $ | 80,426 | $ | 59,293 | $ | 73,059 | $ | 335,546 | $ | 382,332 | ||||||||||||||
Less: income attributable to noncontrolling interests, including carried interest | 51,114 | 13,524 | 13,384 | 7,918 | 10,977 | 85,940 | 122,336 | |||||||||||||||||||||
Noninterest income, net of noncontrolling interests | 75,574 | 55,615 | 67,042 | 51,375 | 62,082 | 249,606 | 259,996 | |||||||||||||||||||||
Less: gains on sales of certain available-for-sale securities | — | — | 4,955 | — | — | 4,955 | 37,314 | |||||||||||||||||||||
Less: net gains on the sale of certain assets related to our equity management services business | — | — | 4,243 | — | — | 4,243 | — | |||||||||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests and excluding gains on sales of certain assets | $ | 75,574 | $ | 55,615 | $ | 57,844 | $ | 51,375 | $ | 62,082 | $ | 240,408 | $ | 222,682 |
Three months ended | Year ended | |||||||||||||||||||||||||||
Non-GAAP net gains on investment securities, net of noncontrolling interests (Dollars in thousands) | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||
GAAP net gains on investment securities | $ | 68,238 | $ | 20,228 | $ | 25,809 | $ | 7,839 | $ | 19,755 | $ | 122,114 | $ | 195,034 | ||||||||||||||
Less: income attributable to noncontrolling interests, including carried interest | 51,024 | 12,776 | 14,502 | 7,338 | 12,259 | 85,640 | 125,042 | |||||||||||||||||||||
Net gains on investment securities, net of noncontrolling interests | 17,214 | 7,452 | 11,307 | 501 | 7,496 | 36,474 | 69,992 | |||||||||||||||||||||
Less: gains on sales of certain available-for-sale securities | — | — | 4,955 | — | — | 4,955 | 37,314 | |||||||||||||||||||||
Non-GAAP net gains on investment securities, net of noncontrolling interests and excluding gains on sales of certain available-for-sale securities | $ | 17,214 | $ | 7,452 | $ | 6,352 | $ | 501 | $ | 7,496 | $ | 31,519 | $ | 32,678 |
Three months ended | Year ended | |||||||||||||||||||||||||||
Non-GAAP operating efficiency ratio, net of noncontrolling interests (Dollars in thousands, except ratios) | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||
GAAP noninterest expense | $ | 143,049 | $ | 135,171 | $ | 135,766 | $ | 132,012 | $ | 134,710 | $ | 545,998 | $ | 500,628 | ||||||||||||||
Less: amounts attributable to noncontrolling interests | 1,848 | 2,723 | 3,947 | 2,818 | 2,699 | 11,336 | 11,567 | |||||||||||||||||||||
Less: net gain from note repurchases and termination of corresponding interest rate swaps | — | — | — | — | — | — | (3,123 | ) | ||||||||||||||||||||
Non-GAAP noninterest expense, net of noncontrolling interests | $ | 141,201 | $ | 132,448 | $ | 131,819 | $ | 129,194 | $ | 132,011 | $ | 534,662 | $ | 492,184 | ||||||||||||||
GAAP taxable equivalent net interest income | $ | 161,032 | $ | 154,911 | $ | 152,419 | $ | 151,421 | $ | 140,555 | $ | 619,783 | $ | 528,228 | ||||||||||||||
Less: income attributable to noncontrolling interests | (25 | ) | 50 | 38 | 43 | 38 | 106 | 122 | ||||||||||||||||||||
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests | 161,057 | 154,861 | 152,381 | 151,378 | 140,517 | 619,677 | 528,106 | |||||||||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests | 75,574 | 55,615 | 57,844 | 51,375 | 62,082 | 240,408 | 222,682 | |||||||||||||||||||||
Non-GAAP taxable equivalent revenue, net of noncontrolling interests | $ | 236,631 | $ | 210,476 | $ | 210,225 | $ | 202,753 | $ | 202,599 | $ | 860,085 | $ | 750,788 | ||||||||||||||
Non-GAAP operating efficiency ratio | 59.67 | % | 62.93 | % | 62.70 | % | 63.72 | % | 65.16 | % | 62.16 | % | 65.56 | % |
Non-GAAP non-marketable securities, net of noncontrolling interests (Dollars in thousands) | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | |||||||||||||||
GAAP non-marketable securities | $ | 1,184,265 | $ | 1,163,815 | $ | 1,132,312 | $ | 1,021,941 | $ | 1,004,440 | ||||||||||
Less: noncontrolling interests in non-marketable securities | 708,157 | 689,492 | 671,813 | 661,750 | 647,432 | |||||||||||||||
Non-GAAP non-marketable securities, net of noncontrolling interests | $ | 476,108 | $ | 474,323 | $ | 460,499 | $ | 360,191 | $ | 357,008 |
SVB Financial Group tangible common equity, tangible assets and risk-weighted assets (Dollars in thousands, except ratios) | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | |||||||||||||||
GAAP SVBFG stockholders’ equity | $ | 1,830,555 | $ | 1,784,924 | $ | 1,715,360 | $ | 1,639,490 | $ | 1,569,392 | ||||||||||
Less: intangible assets | — | — | — | 559 | 601 | |||||||||||||||
Tangible common equity | $ | 1,830,555 | $ | 1,784,924 | $ | 1,715,360 | $ | 1,638,931 | $ | 1,568,791 | ||||||||||
GAAP total assets | $ | 22,766,123 | $ | 21,576,934 | $ | 21,289,772 | $ | 20,818,337 | $ | 19,968,894 | ||||||||||
Less: intangible assets | — | — | — | 559 | 601 | |||||||||||||||
Tangible assets | $ | 22,766,123 | $ | 21,576,934 | $ | 21,289,772 | $ | 20,817,778 | $ | 19,968,293 | ||||||||||
Risk-weighted assets | $ | 13,532,822 | $ | 12,812,798 | $ | 12,850,191 | $ | 12,102,502 | $ | 11,837,902 | ||||||||||
Tangible common equity to tangible assets | 8.04 | % | 8.27 | % | 8.06 | % | 7.87 | % | 7.86 | % | ||||||||||
Tangible common equity to risk-weighted assets | 13.53 | 13.93 | 13.35 | 13.54 | 13.25 |
Silicon Valley Bank tangible common equity, tangible assets and risk-weighted assets (Dollars in thousands, except ratios) | December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | |||||||||||||||
Tangible common equity | $ | 1,591,643 | $ | 1,547,061 | $ | 1,479,817 | $ | 1,403,570 | $ | 1,346,854 | ||||||||||
Tangible assets | $ | 21,471,111 | $ | 20,325,446 | $ | 20,027,219 | $ | 19,596,848 | $ | 18,758,813 | ||||||||||
Risk-weighted assets | $ | 13,176,493 | $ | 12,478,371 | $ | 12,482,417 | $ | 11,752,897 | $ | 11,467,401 | ||||||||||
Tangible common equity to tangible assets | 7.41 | % | 7.61 | % | 7.39 | % | 7.16 | % | 7.18 | % | ||||||||||
Tangible common equity to risk-weighted assets | 12.08 | 12.40 | 11.86 | 11.94 | 11.75 |
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