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 April 24, 2014, announcing the Company’s financial results for the first quarter ended March 31, 2014. |
Date: April 24, 2014 | 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 April 24, 2014, announcing the Company’s financial results for the first quarter ended March 31, 2014. |
* | This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934. |
3003 Tasman Drive, Santa Clara, CA 95054 | Contact: | |||||||
www.svb.com | Meghan O'Leary | |||||||
Investor Relations | ||||||||
For release at 1:00 P.M. (Pacific Time) | (408) 654-6364 | |||||||
April 24, 2014 | ||||||||
NASDAQ: SIVB |
• | Average loan balances of $10.8 billion, an increase of $629 million (or 6.2 percent). |
• | Average available-for-sale securities of $12.2 billion, an increase of $1.2 billion (or 11.3 percent). |
• | Average total client funds (including both on-balance sheet deposits and off-balance sheet client investment funds) of $50.8 billion, an increase of $3.1 billion (or 6.5 percent) with average total on-balance sheet deposits increasing by $2.2 billion (or 10.2 percent) and average total off-balance sheet client investment funds increasing by $0.9 billion (or 3.5 percent). |
• | Net interest income (fully taxable equivalent basis) of $196.8 million, an increase of $9.3 million (or 5.0 percent). |
• | Net interest margin of 3.13 percent, a decrease of 7 basis points. |
• | Provision for loan losses of $0.5 million, compared to $28.7 million. |
• | Gains on investment securities of $223.9 million, compared to $163.5 million. Non-GAAP gains on investment securities, net of noncontrolling interests, were $37.4 million, compared to $26.1 million. (See non-GAAP reconciliation under the section “Use of Non-GAAP Financial Measures”.) |
• | Gains on equity warrant assets of $25.4 million, compared to $16.6 million. |
• | FireEye, Inc. ("FireEye") gains on investment securities of $113.0 million ($21.8 million net of noncontrolling interests), $15.2 million from gains on equity warrant assets and an unrealized loss on available-for-sale securities of $8.2 million reflected as a $4.9 million decrease (net of tax) in other accumulated comprehensive loss in stockholders' equity. See Investment Securities section for details related to FireEye activity during the first quarter of 2014. |
• | Foreign exchange and credit card fees of $27.5 million, an increase of $2.4 million (or 9.5 percent). |
• | Noninterest expense of $172.4 million, an increase of $3.6 million (or 2.1 percent). |
(Dollars in millions, except share data and ratios) | Three months ended | |||||||||||||||||||
March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | ||||||||||||||||
Income statement: | ||||||||||||||||||||
Diluted earnings per common share | $ | 1.95 | $ | 1.27 | $ | 1.46 | $ | 1.06 | $ | 0.90 | ||||||||||
Net income available to common stockholders | 91.3 | 58.8 | 67.6 | 48.6 | 40.9 | |||||||||||||||
Net interest income | 196.3 | 187.0 | 177.1 | 170.1 | 163.2 | |||||||||||||||
Provision for loan losses | 0.5 | 28.7 | 10.6 | 18.6 | 5.8 | |||||||||||||||
Noninterest income | 310.2 | 238.7 | 257.7 | 98.2 | 78.6 | |||||||||||||||
Noninterest expense | 172.4 | 168.9 | 160.5 | 143.3 | 149.0 | |||||||||||||||
Non-GAAP core fee income (1) | 50.9 | 49.0 | 43.2 | 42.0 | 41.3 | |||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests (1) | 123.5 | 100.9 | 105.8 | 67.5 | 56.1 | |||||||||||||||
Non-GAAP noninterest expense, net of noncontrolling interests (1) | 169.1 | 165.2 | 157.2 | 140.4 | 146.2 | |||||||||||||||
Fully taxable equivalent: | ||||||||||||||||||||
Net interest income (2) | $ | 196.8 | $ | 187.4 | $ | 177.5 | $ | 170.5 | $ | 163.6 | ||||||||||
Net interest margin | 3.13 | % | 3.20 | % | 3.32 | % | 3.40 | % | 3.25 | % | ||||||||||
Balance sheet: | ||||||||||||||||||||
Average total assets | $ | 27,767.6 | $ | 25,331.4 | $ | 23,072.7 | $ | 22,093.3 | $ | 22,314.6 | ||||||||||
Average loans, net of unearned income | 10,767.7 | 10,138.3 | 9,545.9 | 9,022.2 | 8,680.9 | |||||||||||||||
Average available-for-sale securities | 12,248.9 | 11,004.3 | 10,082.2 | 10,425.8 | 10,887.5 | |||||||||||||||
Average noninterest-bearing demand deposits | 16,880.5 | 15,240.7 | 13,665.5 | 13,257.5 | 13,386.5 | |||||||||||||||
Average interest-bearing deposits | 6,795.9 | 6,247.5 | 5,894.4 | 5,356.7 | 5,399.0 | |||||||||||||||
Average total deposits | 23,676.4 | 21,488.2 | 19,559.9 | 18,614.2 | 18,785.5 | |||||||||||||||
Average long-term debt | 455.2 | 455.8 | 455.8 | 457.0 | 457.5 | |||||||||||||||
Period-end total assets | 29,711.0 | 26,417.2 | 23,740.9 | 22,153.9 | 22,796.0 | |||||||||||||||
Period-end loans, net of unearned income | 10,833.9 | 10,906.4 | 9,825.0 | 9,622.2 | 8,844.9 | |||||||||||||||
Period-end available-for-sale securities | 12,843.1 | 11,986.8 | 10,209.9 | 10,043.3 | 10,908.2 | |||||||||||||||
Period-end non-marketable and other securities | 1,770.5 | 1,595.5 | 1,425.1 | 1,255.4 | 1,215.8 | |||||||||||||||
Period-end noninterest-bearing demand deposits | 18,314.8 | 15,894.4 | 14,105.7 | 13,213.6 | 14,038.6 | |||||||||||||||
Period-end interest-bearing deposits | 7,162.1 | 6,578.6 | 5,891.3 | 5,476.5 | 5,271.3 | |||||||||||||||
Period-end total deposits | 25,476.9 | 22,473.0 | 19,997.0 | 18,690.1 | 19,309.9 | |||||||||||||||
Off-balance sheet: | ||||||||||||||||||||
Average total client investment funds | $ | 27,134.7 | $ | 26,224.5 | $ | 24,958.6 | $ | 23,201.0 | $ | 22,490.0 | ||||||||||
Period-end total client investment funds | 28,237.8 | 26,364.0 | 25,318.3 | 24,001.8 | 22,980.8 | |||||||||||||||
Total unfunded credit commitments | 12,371.3 | 11,470.7 | 10,675.6 | 9,785.7 | 9,170.3 | |||||||||||||||
Earnings ratios: | ||||||||||||||||||||
Return on average assets (annualized) (3) | 1.33 | % | 0.92 | % | 1.16 | % | 0.88 | % | 0.74 | % | ||||||||||
Return on average SVBFG stockholders’ equity (annualized) (4) | 17.63 | 11.60 | 14.05 | 10.12 | 8.89 | |||||||||||||||
Asset quality ratios: | ||||||||||||||||||||
Allowance for loan losses as a % of total gross loans | 1.13 | % | 1.30 | % | 1.26 | % | 1.23 | % | 1.26 | % | ||||||||||
Allowance for loan losses for performing loans as a % of total gross performing loans | 1.07 | 1.11 | 1.13 | 1.13 | 1.18 | |||||||||||||||
Gross charge-offs as a % of average total gross loans (annualized) | 0.79 | 0.52 | 0.34 | 0.68 | 0.26 | |||||||||||||||
Net charge-offs as a % of average total gross loans (annualized) | 0.74 | 0.41 | 0.23 | 0.49 | 0.20 | |||||||||||||||
Other ratios: | ||||||||||||||||||||
Operating efficiency ratio (5) | 34.01 | % | 39.62 | % | 36.89 | % | 53.32 | % | 61.52 | % | ||||||||||
Non-GAAP operating efficiency ratio (1) | 52.81 | 57.29 | 55.50 | 59.01 | 66.53 | |||||||||||||||
Total risk-based capital ratio | 13.41 | 13.13 | 14.16 | 14.03 | 14.59 | |||||||||||||||
Bank total risk-based capital ratio | 11.47 | 11.32 | 12.31 | 12.42 | 13.01 | |||||||||||||||
Tier 1 leverage ratio | 7.99 | 8.31 | 8.75 | 8.78 | 8.39 | |||||||||||||||
Bank tier 1 leverage ratio | 6.72 | 7.04 | 7.46 | 7.66 | 7.35 | |||||||||||||||
Period-end loans, net of unearned income, to deposits | 42.52 | 48.53 | 49.13 | 51.48 | 45.80 | |||||||||||||||
Average loans, net of unearned income, to average deposits | 45.48 | 47.18 | 48.80 | 48.47 | 46.21 | |||||||||||||||
Book value per common share (6) | $ | 45.59 | $ | 42.93 | $ | 42.64 | $ | 40.65 | $ | 41.85 | ||||||||||
Other statistics: | ||||||||||||||||||||
Average full-time equivalent employees | 1,735 | 1,690 | 1,675 | 1,657 | 1,655 | |||||||||||||||
Period-end full-time equivalent employees | 1,737 | 1,704 | 1,683 | 1,657 | 1,663 |
(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 $0.4 million for each of the quarters ended March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013. |
(3) | Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average assets. |
(4) | Ratio represents annualized consolidated net income available to common stockholders divided by quarterly 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. |
Q1'14 compared to Q4'13 | ||||||||||||
Increase (decrease) due to change in | ||||||||||||
(Dollars in thousands) | Volume | Rate | Total | |||||||||
Interest income: | ||||||||||||
Short-term investment securities | $ | 217 | $ | (30 | ) | $ | 187 | |||||
Available-for-sale securities | 4,801 | 3,467 | 8,268 | |||||||||
Loans | 6,587 | (5,403 | ) | 1,184 | ||||||||
Increase (decrease) in interest income, net | 11,605 | (1,966 | ) | 9,639 | ||||||||
Interest expense: | ||||||||||||
Deposits | 388 | (79 | ) | 309 | ||||||||
Short-term borrowings | 1 | (6 | ) | (5 | ) | |||||||
Long-term debt | (3 | ) | 9 | 6 | ||||||||
Increase (decrease) in interest expense, net | 386 | (76 | ) | 310 | ||||||||
Increase (decrease) in net interest income | $ | 11,219 | $ | (1,890 | ) | $ | 9,329 |
• | An increase in interest income from available-for-sale securities of $8.3 million to $55.6 million for the first quarter of 2014, primarily reflective of a $1.2 billion increase in average balances as a result of significant deposit growth. The overall yield on our available-for-sale securities portfolio increased 13 basis points, reflective of an increased yield impact of 6 basis points from lower premium amortization expense, a 4 basis point impact from a lower number of days in the first quarter of 2014, and slightly higher reinvestment yields resulting in an increased yield of 3 basis points. The remaining unamortized premium balance as of March 31, 2014 and December 31, 2013, was $38.8 million, net of discounts of $63.0 million, and $59.0 million, net of discounts of $48.3 million, respectively. |
• | An increase in interest income from loans of $1.2 million to $148.2 million for the first quarter of 2014. This increase was reflective of an increase in average loan balances of $629 million, largely offset by a two day decrease in the number of days during the quarter (compared to the fourth quarter of 2013) reducing interest income by approximately $3.3 million, as well as a decrease in a lower overall yield on loans. The overall yield on loans decreased to 5.58 percent from 5.75 percent, primarily attributable to a decrease in both gross loan yields and loan interest recoveries. Gross loan yields, excluding loan interest recoveries and loan fees, decreased to 4.61 percent from 4.68 percent, reflective of a continued change in the mix of our overall loan portfolio from higher yielding indexed loans to lower yielding indexed loans primarily resulting from increased competition and growth in our higher credit quality venture capital and private equity and sponsor led buyout loan portfolios. Loan interest recoveries for the first quarter of 2014 were $1.0 million, compared to $2.2 million for the fourth quarter 2013. |
• | A $15.2 million gain from the exercise and conversion of our warrants during the quarter as we exercised the warrants at a share price of $88.19 on March 4, 2014 compared to the December 31, 2013 price of $43.61. Subsequent to our exercise and conversion of our warrants to common stock, FireEye’s share price decreased to $61.57 as of March 31, 2014 resulting in a loss of $8.2 million, which is included as an unrealized loss in equity recorded in accumulated other comprehensive loss. |
• | A $113.0 million ($21.8 million net of noncontrolling interests) gain from the sale of a portion of shares through FireEye’s follow-on equity offering in March 2014, and the increased valuation of the remaining shares from the December 31, 2013 market share price, held by our managed direct venture funds. |
Three months ended | ||||||||||||
(Dollars in thousands, except ratios) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Allowance for loan losses, beginning balance | $ | 142,886 | $ | 124,734 | $ | 110,651 | ||||||
Provision for loan losses | 494 | 28,670 | 5,813 | |||||||||
Gross loan charge-offs | (21,150 | ) | (13,516 | ) | (5,626 | ) | ||||||
Loan recoveries | 1,312 | 2,998 | 1,367 | |||||||||
Allowance for loan losses, ending balance | $ | 123,542 | $ | 142,886 | $ | 112,205 | ||||||
Provision for loan losses as a percentage of period-end total gross loans (annualized) | 0.02 | % | 1.03 | % | 0.26 | % | ||||||
Gross loan charge-offs as a percentage of average total gross loans (annualized) | 0.79 | 0.52 | 0.26 | |||||||||
Net loan charge-offs as a percentage of average total gross loans (annualized) | 0.74 | 0.41 | 0.20 | |||||||||
Allowance for loan losses as a percentage of period-end total gross loans | 1.13 | 1.30 | 1.26 | |||||||||
Period-end total gross loans | $ | 10,920,482 | $ | 10,995,268 | $ | 8,922,829 | ||||||
Average total gross loans | 10,852,905 | 10,222,203 | 8,755,699 |
• | Gains on investment securities of $223.9 million for the first quarter of 2014, compared to $163.5 million for the fourth quarter of 2013. Net of noncontrolling interests, net gains on investment securities were $37.4 million for the first quarter of 2014 compared to $26.1 million for the fourth quarter of 2013. The gains, net of noncontrolling interests, of $37.4 million for the first quarter of 2014 were primarily driven by the following: |
◦ | Gains of $20.6 million from our managed direct venture funds, driven by the continued strong stock performance of public companies (including FireEye). |
◦ | Gains of $10.0 million from our managed funds of funds, primarily related to unrealized valuation increases from two of our funds of funds. |
◦ | Gains of $3.7 million from our strategic and other investments, primarily driven by strong distributions from strategic venture capital fund investments. |
◦ | Gains of $3.0 million from our investments in debt funds, primarily from unrealized valuation increases from the investments within the funds. |
Three months ended March 31, 2014 | ||||||||||||||||||||||||
(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 | $ | 111,448 | $ | 105,702 | $ | 3,001 | $ | 60 | $ | 3,701 | $ | 223,912 | ||||||||||||
Less: income (losses) attributable to noncontrolling interests, including carried interest | 101,451 | 85,114 | (13 | ) | — | — | 186,552 | |||||||||||||||||
Non-GAAP net gains on investment securities, net of noncontrolling interests | $ | 9,997 | $ | 20,588 | $ | 3,014 | $ | 60 | $ | 3,701 | $ | 37,360 | ||||||||||||
Three months ended December 31, 2013 | ||||||||||||||||||||||||
(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 | $ | 78,687 | $ | 78,687 | $ | 2,381 | $ | (411 | ) | $ | 4,203 | $ | 163,547 | |||||||||||
Less: income attributable to noncontrolling interests, including carried interest | 72,366 | 65,039 | — | — | — | 137,405 | ||||||||||||||||||
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests | $ | 6,321 | $ | 13,648 | $ | 2,381 | $ | (411 | ) | $ | 4,203 | $ | 26,142 |
• | Net gains on derivative instruments were $24.2 million for the first quarter of 2014, compared to $14.4 million for the fourth quarter of 2013. The following table provides a summary of our net gains on derivative instruments: |
Three months ended | ||||||||||||
(Dollars in thousands) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Net gains on equity warrant assets | $ | 25,373 | $ | 16,626 | $ | 3,505 | ||||||
Gains on foreign exchange forward contracts, net: | ||||||||||||
Gains (losses) on client foreign exchange forward contracts, net | 302 | (215 | ) | 49 | ||||||||
(Losses) gains on internal foreign exchange forward contracts, net (1) | (1,029 | ) | (2,702 | ) | 6,200 | |||||||
Total (losses) gains on foreign exchange forward contracts, net | (727 | ) | (2,917 | ) | 6,249 | |||||||
Change in fair value of interest rate swaps | (12 | ) | (6 | ) | 60 | |||||||
Net (losses) gains on other derivatives (2) | (467 | ) | 679 | 478 | ||||||||
Total gains on derivative instruments, net | $ | 24,167 | $ | 14,382 | $ | 10,292 |
(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 instruments. |
(2) | Primarily represents the change in fair value of loan conversion options. |
◦ | Net gains on equity warrant assets of $25.4 million for the first quarter of 2014 included the following: |
• | Net gains of $7.1 million from changes in warrant valuations driven by valuation increases from IPO and mergers and acquisitions ("M&A") activity, primarily consisting of unrealized valuation gains from holdings in existing public companies in our equity warrant portfolio. |
• | Net gains of $18.4 million from the exercise of equity warrant assets, primarily reflective of $15.2 million in gains from the exercise of FireEye equity warrants. |
◦ | Net losses of $1.0 million on internal foreign exchange forward contracts used to economically reduce our foreign exchange exposure to foreign currency denominated instruments for the first quarter of 2014, compared to net losses of $2.7 million for the fourth quarter of 2013. These losses were offset by net gains of $1.0 million from the revaluation of foreign currency denominated instruments that are included in the line item "Other" within noninterest income. |
• | The following table provides a summary of our non-GAAP core fee income: |
Three months ended | ||||||||||||
(Dollars in thousands) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Non-GAAP core fee income: | ||||||||||||
Foreign exchange fees | $ | 17,196 | $ | 15,882 | $ | 14,196 | ||||||
Credit card fees | 10,282 | 9,216 | 7,448 | |||||||||
Deposit service charges | 9,607 | 9,346 | 8,793 | |||||||||
Lending related fees (1) | 6,303 | 7,145 | 3,974 | |||||||||
Letters of credit and standby letters of credit fees | 4,140 | 3,837 | 3,435 | |||||||||
Client investment fees | 3,418 | 3,567 | 3,475 | |||||||||
Total Non-GAAP core fee income | $ | 50,946 | $ | 48,993 | $ | 41,321 |
(1) | Lending related fees consists of fee income associated with credit commitments such as unused commitment fees, syndication fees and other loan processing fees and, historically, has been included in Other noninterest income. Prior period amounts have been reclassified to conform with current period presentation. |
◦ | An increase of $1.3 million in foreign exchange fees as a result of continued strong growth in transaction volumes. |
◦ | An increase of $1.1 million in credit card fees primarily due to an increase in transaction volumes resulting from increased utilization of credit cards by our clients for traditional payable transactions. |
Three months ended | ||||||||||||
(Dollars in thousands) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Compensation and benefits: | ||||||||||||
Salaries and wages | $ | 44,353 | $ | 40,997 | $ | 39,323 | ||||||
Incentive compensation plan | 24,775 | 27,745 | 19,177 | |||||||||
ESOP | 1,673 | 1,297 | 3,016 | |||||||||
Other employee benefits (1) | 31,706 | 26,447 | 27,188 | |||||||||
Total compensation and benefits | $ | 102,507 | $ | 96,486 | $ | 88,704 | ||||||
Period-end full-time equivalent employees | 1,737 | 1,704 | 1,663 | |||||||||
Average full-time equivalent employees | 1,735 | 1,690 | 1,655 |
(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 $3.7 million in additional 401(k) contribution expense as a result of annual incentive compensation payouts to employees during the first quarter. |
• | An increase of $3.4 million in salaries and wages expense, primarily due to an increase in the number of average full-time equivalent employees ("FTE"), which increased by 45 to 1,735 FTEs for the first quarter of 2014 and annual merit increases which took effect during the first quarter. |
• | An increase of $1.5 million in payroll tax expense as a result of the higher compensation levels noted above. |
• | A decrease of $3.0 million in incentive compensation expense, primarily reflective of higher expenses in the fourth quarter of 2013 due to our stronger than expected financial performance during that period. |
Three months ended | ||||||||||||
(Dollars in thousands) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Net interest income (1) | $ | (8 | ) | $ | (13 | ) | $ | (24 | ) | |||
Noninterest income (1) | (202,138 | ) | (148,334 | ) | (23,288 | ) | ||||||
Noninterest expense (1) | 3,321 | 3,697 | 2,860 | |||||||||
Carried interest (2) | 15,420 | 10,501 | 798 | |||||||||
Net income attributable to noncontrolling interests | $ | (183,405 | ) | $ | (134,149 | ) | $ | (19,654 | ) |
(1) | Represents noncontrolling interests’ share in net interest income, noninterest income and noninterest expense. |
(2) | Represents the preferred allocation of income earned by us as the general partner of certain consolidated funds. |
• | Net gains on investment securities (including carried interest) attributable to noncontrolling interests of $186.6 million primarily from gains of $101.5 million from our managed funds of funds and $85.1 million from our managed direct venture funds. Carried interest included in these net gains increased $4.9 million to $15.4 million, primarily as a result of preferred allocations earned by us as the general partners of the managed funds of funds and managed direct venture funds and were primarily related to the gains in FireEye and unrealized valuation adjustments in our managed funds of funds. |
• | Noninterest expense of $3.3 million, primarily related to management fees paid by the noncontrolling interests to our subsidiaries that serve as the general partner. |
Current full year 2014 outlook compared to 2013 results (as of April 24, 2014) | Change in outlook compared to outlook reported as of January 23, 2014 | |
Average loan balances | Increase at a percentage rate in the high teens | Outlook increased from a percentage rate in the mid to high teens |
Average deposit balances | Increase at a percentage rate in the high twenties | Outlook increased from a percentage rate in the mid teens |
Net interest income (1) | Increase at a percentage rate in the high teens | Outlook increased from a percentage rate in the low teens |
Net interest margin (1) | Between 3.10% and 3.20% | Outlook decreased from between 3.20% and 3.30% |
Allowance for loan losses for total gross performing loans as a percentage of total gross performing loans | Comparable to 2013 levels | No change from previous outlook |
Net loan charge-offs | Between 0.30% and 0.50% of average total gross loans | No change from previous outlook |
Nonperforming loans as a percentage of total gross loans | Comparable to 2013 levels | No change from previous outlook |
Core fee income (foreign exchange fees, deposit service charges, credit card fees, lending related fees, client investment fees and letters of credit fees) (2) | Increase at a percentage rate in the low teens | Outlook increased from a percentage rate in the low double digits |
Noninterest expense (excluding expenses related to noncontrolling interests) (2) (3) | Increase at a percentage rate in the low double digits | Outlook increased from a percentage rate in the mid single digits |
(1) | Our outlook for net interest income and net interest margin is primarily based on management's current forecast of average deposit and loan balances and deployment of surplus cash into investment securities. 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 section "Forward Looking Statements" below. |
(2) | Non-GAAP |
(3) | Our outlook for noninterest expense is partly based on management's current forecast of performance-based incentive compensation expenses. Such forecasts are subject to change, and actual results may differ, based on our performance relative to our internal performance targets. |
Three months ended | ||||||||||||
(Dollars in thousands, except share data) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Interest income: | ||||||||||||
Loans | $ | 148,172 | $ | 146,988 | $ | 123,744 | ||||||
Available-for-sale securities: | ||||||||||||
Taxable | 54,420 | 46,149 | 45,752 | |||||||||
Non-taxable | 796 | 798 | 799 | |||||||||
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities | 1,636 | 1,449 | 719 | |||||||||
Total interest income | 205,024 | 195,384 | 171,014 | |||||||||
Interest expense: | ||||||||||||
Deposits | 2,904 | 2,595 | 2,051 | |||||||||
Borrowings | 5,792 | 5,791 | 5,794 | |||||||||
Total interest expense | 8,696 | 8,386 | 7,845 | |||||||||
Net interest income | 196,328 | 186,998 | 163,169 | |||||||||
Provision for loan losses | 494 | 28,670 | 5,813 | |||||||||
Net interest income after provision for loan losses | 195,834 | 158,328 | 157,356 | |||||||||
Noninterest income: | ||||||||||||
Gains on investment securities, net | 223,912 | 163,547 | 27,438 | |||||||||
Gains on derivative instruments, net | 24,167 | 14,382 | 10,292 | |||||||||
Foreign exchange fees | 17,196 | 15,882 | 14,196 | |||||||||
Credit card fees | 10,282 | 9,216 | 7,448 | |||||||||
Deposit service charges | 9,607 | 9,346 | 8,793 | |||||||||
Lending related fees | 6,303 | 7,145 | 3,974 | |||||||||
Letters of credit and standby letters of credit fees | 4,140 | 3,837 | 3,435 | |||||||||
Client investment fees | 3,418 | 3,567 | 3,475 | |||||||||
Other | 11,200 | 11,791 | (447 | ) | ||||||||
Total noninterest income | 310,225 | 238,713 | 78,604 | |||||||||
Noninterest expense: | ||||||||||||
Compensation and benefits | 102,507 | 96,486 | 88,704 | |||||||||
Professional services | 21,189 | 23,419 | 17,160 | |||||||||
Premises and equipment | 11,582 | 11,637 | 10,725 | |||||||||
Business development and travel | 10,194 | 9,901 | 8,272 | |||||||||
Net occupancy | 7,320 | 7,477 | 5,767 | |||||||||
FDIC assessments | 4,128 | 3,636 | 3,382 | |||||||||
Correspondent bank fees | 3,203 | 3,132 | 3,055 | |||||||||
Provision for unfunded credit commitments | 1,123 | 1,507 | 2,014 | |||||||||
Other | 11,190 | 11,655 | 9,935 | |||||||||
Total noninterest expense | 172,436 | 168,850 | 149,014 | |||||||||
Income before income tax expense | 333,623 | 228,191 | 86,946 | |||||||||
Income tax expense | 58,917 | 35,285 | 26,401 | |||||||||
Net income before noncontrolling interests | 274,706 | 192,906 | 60,545 | |||||||||
Net income attributable to noncontrolling interests | (183,405 | ) | (134,149 | ) | (19,654 | ) | ||||||
Net income available to common stockholders | $ | 91,301 | $ | 58,757 | $ | 40,891 | ||||||
Earnings per common share—basic | $ | 1.99 | $ | 1.29 | $ | 0.91 | ||||||
Earnings per common share—diluted | 1.95 | 1.27 | 0.90 | |||||||||
Weighted average common shares outstanding—basic | 45,866,387 | 45,701,224 | 44,801,590 | |||||||||
Weighted average common shares outstanding—diluted | 46,724,812 | 46,431,259 | 45,393,025 |
(Dollars in thousands, except par value and share data) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $ | 3,862,464 | $ | 1,538,779 | $ | 1,519,249 | ||||||
Available-for-sale securities | 12,843,099 | 11,986,821 | 10,908,163 | |||||||||
Non-marketable and other securities | 1,770,456 | 1,595,494 | 1,215,788 | |||||||||
Investment securities | 14,613,555 | 13,582,315 | 12,123,951 | |||||||||
Loans, net of unearned income | 10,833,908 | 10,906,386 | 8,844,890 | |||||||||
Allowance for loan losses | (123,542 | ) | (142,886 | ) | (112,205 | ) | ||||||
Net loans | 10,710,366 | 10,763,500 | 8,732,685 | |||||||||
Premises and equipment, net of accumulated depreciation and amortization | 66,123 | 67,485 | 65,713 | |||||||||
Accrued interest receivable and other assets | 458,531 | 465,110 | 354,402 | |||||||||
Total assets | $ | 29,711,039 | $ | 26,417,189 | $ | 22,796,000 | ||||||
Liabilities and total equity: | ||||||||||||
Liabilities: | ||||||||||||
Noninterest-bearing demand deposits | $ | 18,314,830 | $ | 15,894,360 | $ | 14,038,587 | ||||||
Interest-bearing deposits | 7,162,075 | 6,578,619 | 5,271,321 | |||||||||
Total deposits | 25,476,905 | 22,472,979 | 19,309,908 | |||||||||
Short-term borrowings | 4,810 | 5,080 | 7,460 | |||||||||
Other liabilities | 407,573 | 404,586 | 359,380 | |||||||||
Long-term debt | 454,770 | 455,216 | 457,194 | |||||||||
Total liabilities | 26,344,058 | 23,337,861 | 20,133,942 | |||||||||
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; 45,934,521 shares, 45,800,418 shares and 44,970,402 shares outstanding, respectively | 46 | 46 | 45 | |||||||||
Additional paid-in capital | 642,311 | 624,256 | 570,789 | |||||||||
Retained earnings | 1,482,033 | 1,390,732 | 1,215,770 | |||||||||
Accumulated other comprehensive (loss) income | (30,390 | ) | (48,764 | ) | 95,615 | |||||||
Total SVBFG stockholders’ equity | 2,094,000 | 1,966,270 | 1,882,219 | |||||||||
Noncontrolling interests | 1,272,981 | 1,113,058 | 779,839 | |||||||||
Total equity | 3,366,981 | 3,079,328 | 2,662,058 | |||||||||
Total liabilities and total equity | $ | 29,711,039 | $ | 26,417,189 | $ | 22,796,000 |
Three months ended | |||||||||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||||||||||||||||||||||||
(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) | $ | 2,482,190 | $ | 1,636 | 0.27 | % | $ | 2,110,066 | $ | 1,449 | 0.27 | % | $ | 822,418 | $ | 719 | 0.35 | % | |||||||||||||||
Available-for-sale securities: (2) | |||||||||||||||||||||||||||||||||
Taxable | 12,167,143 | 54,420 | 1.81 | 10,922,312 | 46,149 | 1.68 | 10,803,735 | 45,752 | 1.72 | ||||||||||||||||||||||||
Non-taxable (3) | 81,782 | 1,225 | 6.07 | 82,034 | 1,228 | 5.94 | 83,811 | 1,229 | 5.95 | ||||||||||||||||||||||||
Total loans, net of unearned income (4) (5) | 10,767,684 | 148,172 | 5.58 | 10,138,328 | 146,988 | 5.75 | 8,680,917 | 123,744 | 5.78 | ||||||||||||||||||||||||
Total interest-earning assets | 25,498,799 | 205,453 | 3.27 | 23,252,740 | 195,814 | 3.34 | 20,390,881 | 171,444 | 3.41 | ||||||||||||||||||||||||
Cash and due from banks | 264,478 | 265,045 | 279,179 | ||||||||||||||||||||||||||||||
Allowance for loan losses | (141,073 | ) | (131,386 | ) | (115,486 | ) | |||||||||||||||||||||||||||
Other assets (6) | 2,145,429 | 1,945,008 | 1,759,985 | ||||||||||||||||||||||||||||||
Total assets | $ | 27,767,633 | $ | 25,331,407 | $ | 22,314,559 | |||||||||||||||||||||||||||
Funding sources: | |||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||
NOW deposits | $ | 150,737 | $ | 136 | 0.37 | % | $ | 131,686 | $ | 121 | 0.36 | % | $ | 135,436 | $ | 117 | 0.35 | % | |||||||||||||||
Money market deposits | 4,582,863 | 2,412 | 0.21 | 4,104,509 | 2,081 | 0.20 | 3,043,021 | 1,495 | 0.20 | ||||||||||||||||||||||||
Money market deposits in foreign offices | 191,715 | 46 | 0.10 | 193,940 | 48 | 0.10 | 115,659 | 28 | 0.10 | ||||||||||||||||||||||||
Time deposits | 168,050 | 100 | 0.24 | 155,658 | 135 | 0.34 | 172,401 | 173 | 0.41 | ||||||||||||||||||||||||
Sweep deposits in foreign offices | 1,702,563 | 210 | 0.05 | 1,661,669 | 210 | 0.05 | 1,932,495 | 238 | 0.05 | ||||||||||||||||||||||||
Total interest-bearing deposits | 6,795,928 | 2,904 | 0.17 | 6,247,462 | 2,595 | 0.16 | 5,399,012 | 2,051 | 0.15 | ||||||||||||||||||||||||
Short-term borrowings | 4,984 | — | — | 3,806 | 5 | 0.52 | 74,939 | 28 | 0.15 | ||||||||||||||||||||||||
5.375% Senior Notes | 348,229 | 4,828 | 5.62 | 348,174 | 4,826 | 5.50 | 348,013 | 4,821 | 5.62 | ||||||||||||||||||||||||
Junior Subordinated Debentures | 55,005 | 839 | 6.19 | 55,049 | 836 | 6.03 | 55,181 | 832 | 6.11 | ||||||||||||||||||||||||
6.05% Subordinated Notes | 51,968 | 125 | 0.98 | 52,528 | 124 | 0.94 | 54,282 | 113 | 0.84 | ||||||||||||||||||||||||
Total interest-bearing liabilities | 7,256,114 | 8,696 | 0.49 | 6,707,019 | 8,386 | 0.50 | 5,931,427 | 7,845 | 0.54 | ||||||||||||||||||||||||
Portion of noninterest-bearing funding sources | 18,242,685 | 16,545,721 | 14,459,454 | ||||||||||||||||||||||||||||||
Total funding sources | 25,498,799 | 8,696 | 0.14 | 23,252,740 | 8,386 | 0.14 | 20,390,881 | 7,845 | 0.16 | ||||||||||||||||||||||||
Noninterest-bearing funding sources: | |||||||||||||||||||||||||||||||||
Demand deposits | 16,880,520 | 15,240,694 | 13,386,501 | ||||||||||||||||||||||||||||||
Other liabilities | 396,203 | 376,801 | 359,913 | ||||||||||||||||||||||||||||||
SVBFG stockholders’ equity | 2,099,819 | 2,010,440 | 1,866,310 | ||||||||||||||||||||||||||||||
Noncontrolling interests | 1,134,977 | 996,453 | 770,408 | ||||||||||||||||||||||||||||||
Portion used to fund interest-earning assets | (18,242,685 | ) | (16,545,721 | ) | (14,459,454 | ) | |||||||||||||||||||||||||||
Total liabilities and total equity | $ | 27,767,633 | $ | 25,331,407 | $ | 22,314,559 | |||||||||||||||||||||||||||
Net interest income and margin | $ | 196,757 | 3.13 | % | $ | 187,428 | 3.20 | % | $ | 163,599 | 3.25 | % | |||||||||||||||||||||
Total deposits | $ | 23,676,448 | $ | 21,488,156 | $ | 18,785,513 | |||||||||||||||||||||||||||
Average SVBFG stockholders’ equity as a percentage of average assets | 7.56 | % | 7.94 | % | 8.36 | % | |||||||||||||||||||||||||||
Reconciliation to reported net interest income: | |||||||||||||||||||||||||||||||||
Adjustments for taxable equivalent basis | (429 | ) | (430 | ) | (430 | ) | |||||||||||||||||||||||||||
Net interest income, as reported | $ | 196,328 | $ | 186,998 | $ | 163,169 |
(1) | Includes average interest-earning deposits in other financial institutions of $317 million, $238 million and $176 million for the quarters ended March 31, 2014, December 31, 2013 and March 31, 2013, respectively. For the quarters ended March 31, 2014, December 31, 2013 and March 31, 2013, balance also includes $2.0 billion, $1.7 billion and $0.4 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 $24.3 million, $24.2 million and $16.8 million for the quarters ended March 31, 2014, December 31, 2013 and March 31, 2013, respectively. |
(6) | Average investment securities of $1.6 billion, $1.2 billion and $1.4 billion for the quarters ended March 31, 2014, December 31, 2013 and March 31, 2013, respectively, were classified as other assets as they are noninterest-earning assets. These investments primarily consisted of non-marketable and other securities. |
Three months ended | ||||||||||||
(Dollars in thousands) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Equity warrant assets (1): | ||||||||||||
Gains on exercises, net | $ | 18,402 | $ | 1,833 | $ | 814 | ||||||
Cancellations and expirations | (87 | ) | (79 | ) | (104 | ) | ||||||
Changes in fair value | 7,058 | 14,872 | 2,795 | |||||||||
Total net gains on equity warrant assets (2) | $ | 25,373 | $ | 16,626 | $ | 3,505 |
(1) | At March 31, 2014, we held warrants in 1,343 companies, compared to 1,320 companies at December 31, 2013 and 1,282 companies at March 31, 2013. The total value of our warrant portfolio was $91 million at March 31, 2014, compared to $103 million at December 31, 2013 and $72 million at March 31, 2013. Equity warrant assets decreased by $12 million to $91 million at March 31, 2014, compared to $103 million at December 31, 2013. The decrease is primarily reflective of the conversion of our FireEye warrant to common stock in early March 2014, which represented $12.1 million of our equity warrant asset portfolio at December 31, 2013. |
(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 | |||||||||
(Shares in thousands) | March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||
Weighted average common shares outstanding—basic | 45,866 | 45,701 | 44,802 | ||||||
Effect of dilutive securities: | |||||||||
Stock options and employee stock purchase plan | 566 | 476 | 402 | ||||||
Restricted stock units | 293 | 254 | 189 | ||||||
Total effect of dilutive securities | 859 | 730 | 591 | ||||||
Weighted average common shares outstanding—diluted | 46,725 | 46,431 | 45,393 |
March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||
SVB Financial Group: | |||||||||
Total risk-based capital ratio | 13.41 | % | 13.13 | % | 14.59 | % | |||
Tier 1 risk-based capital ratio | 12.35 | 11.94 | 13.30 | ||||||
Tier 1 leverage ratio | 7.99 | 8.31 | 8.39 | ||||||
Tangible common equity to tangible assets ratio (1) | 7.05 | 7.44 | 8.26 | ||||||
Tangible common equity to risk-weighted assets ratio (1) | 12.17 | 11.63 | 13.94 | ||||||
Silicon Valley Bank: | |||||||||
Total risk-based capital ratio | 11.47 | 11.32 | % | 13.01 | % | ||||
Tier 1 risk-based capital ratio | 10.39 | 10.11 | 11.70 | ||||||
Tier 1 leverage ratio | 6.72 | 7.04 | 7.35 | ||||||
Tangible common equity to tangible assets ratio (1) | 6.20 | 6.59 | 7.62 | ||||||
Tangible common equity to risk-weighted assets ratio (1) | 10.29 | 9.87 | 12.45 |
(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) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Loans (individually or in the aggregate) to any single client, equal to or greater than $20 million | ||||||||||||
Commercial loans: | ||||||||||||
Software | $ | 1,578,092 | $ | 1,557,304 | $ | 1,216,843 | ||||||
Hardware | 562,523 | 550,841 | 545,643 | |||||||||
Venture capital/private equity | 1,136,554 | 1,459,586 | 584,508 | |||||||||
Life science | 339,634 | 336,106 | 341,897 | |||||||||
Premium wine (1) | 25,512 | 24,347 | 22,667 | |||||||||
Other | 106,085 | 111,581 | 120,012 | |||||||||
Total commercial loans | 3,748,400 | 4,039,765 | 2,831,570 | |||||||||
Real estate secured loans: | ||||||||||||
Premium wine (1) | 103,369 | 104,464 | 108,845 | |||||||||
Consumer (2) | 20,000 | 20,000 | — | |||||||||
Other | 23,333 | 23,533 | — | |||||||||
Total real estate secured loans | 146,702 | 147,997 | 108,845 | |||||||||
Consumer loans (2) | 32,350 | 33,002 | 42,000 | |||||||||
Total loans individually equal to or greater than $20 million | $ | 3,927,452 | $ | 4,220,764 | $ | 2,982,415 | ||||||
Loans (individually or in the aggregate) to any single client, less than $20 million | ||||||||||||
Commercial loans: | ||||||||||||
Software | $ | 2,586,343 | $ | 2,584,054 | $ | 2,274,120 | ||||||
Hardware | 641,827 | 673,639 | 687,538 | |||||||||
Venture capital/private equity | 1,085,218 | 948,840 | 751,053 | |||||||||
Life science | 842,585 | 845,160 | 686,378 | |||||||||
Premium wine | 137,182 | 126,908 | 117,772 | |||||||||
Other | 190,260 | 180,049 | 225,618 | |||||||||
Total commercial loans | 5,483,415 | 5,358,650 | 4,742,479 | |||||||||
Real estate secured loans: | ||||||||||||
Premium wine | 437,715 | 411,478 | 357,102 | |||||||||
Consumer | 896,779 | 853,070 | 718,521 | |||||||||
Other | 7,500 | 7,500 | 6,328 | |||||||||
Total real estate secured loans | 1,341,994 | 1,272,048 | 1,081,951 | |||||||||
Construction loans | 98,606 | 77,165 | 58,726 | |||||||||
Consumer loans | 69,015 | 66,641 | 57,258 | |||||||||
Total loans individually less than $20 million | $ | 6,993,030 | $ | 6,774,504 | $ | 5,940,414 | ||||||
Total gross loans | $ | 10,920,482 | $ | 10,995,268 | $ | 8,922,829 | ||||||
Loans individually equal to or greater than $20 million as a percentage of total gross loans | 36.0 | % | 38.4 | % | 33.4 | % | ||||||
Total clients with loans individually equal to or greater than $20 million | 124 | 122 | 99 | |||||||||
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) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Nonperforming and past due loans: | ||||||||||||
Loans past due 90 days or more still accruing interest | $ | 99 | $ | 99 | $ | 36 | ||||||
Impaired loans | 24,989 | 51,649 | 44,346 | |||||||||
Nonperforming loans as a percentage of total gross loans | 0.23 | % | 0.47 | % | 0.50 | % | ||||||
Nonperforming loans as a percentage of total assets | 0.08 | 0.20 | 0.19 | |||||||||
Allowance for loan losses | $ | 123,542 | $ | 142,886 | $ | 112,205 | ||||||
As a percentage of total gross loans | 1.13 | % | 1.30 | % | 1.26 | % | ||||||
As a percentage of total gross nonperforming loans | 494.39 | 276.65 | 253.02 | |||||||||
Allowance for loan losses for impaired loans | $ | 6,776 | $ | 21,277 | $ | 7,728 | ||||||
As a percentage of total gross loans | 0.06 | % | 0.19 | % | 0.09 | % | ||||||
As a percentage of total gross nonperforming loans | 27.12 | 41.20 | 17.43 | |||||||||
Allowance for loan losses for total gross performing loans | $ | 116,766 | $ | 121,609 | $ | 104,477 | ||||||
As a percentage of total gross loans | 1.07 | % | 1.11 | % | 1.17 | % | ||||||
As a percentage of total gross performing loans | 1.07 | 1.11 | 1.18 | |||||||||
Total gross loans | $ | 10,920,482 | $ | 10,995,268 | $ | 8,922,829 | ||||||
Total gross performing loans | 10,895,493 | 10,943,619 | 8,878,483 | |||||||||
Reserve for unfunded credit commitments (1) | 31,110 | 29,983 | 24,300 | |||||||||
As a percentage of total unfunded credit commitments | 0.25 | % | 0.26 | % | 0.26 | % | ||||||
Total unfunded credit commitments (2) | $ | 12,371,296 | $ | 11,470,722 | $ | 9,170,337 |
(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 | ||||||||||||
(Dollars in millions) | March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||
Client directed investment assets | $ | 7,182 | $ | 7,672 | $ | 6,898 | ||||||
Client investment assets under management (2) | 13,513 | 12,355 | 11,309 | |||||||||
Sweep money market funds | 6,440 | 6,198 | 4,283 | |||||||||
Total average client investment funds | $ | 27,135 | $ | 26,225 | $ | 22,490 |
Period-end balances at | ||||||||||||||||||||
(Dollars in millions) | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | |||||||||||||||
Client directed investment assets | $ | 7,395 | $ | 7,074 | $ | 7,319 | $ | 6,978 | $ | 6,943 | ||||||||||
Client investment assets under management (2) | 14,330 | 12,677 | 12,045 | 11,770 | 11,571 | |||||||||||||||
Sweep money market funds | 6,513 | 6,613 | 5,954 | 5,254 | 4,467 | |||||||||||||||
Total period-end client investment funds | $ | 28,238 | $ | 26,364 | $ | 25,318 | $ | 24,002 | $ | 22,981 |
(1) | Off-Balance sheet client investment funds are maintained at third party financial institutions. |
(2) | These funds represent investments in third party money market mutual funds and fixed-income securities managed by SVB Asset Management. |
• | 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/Certain financial line items include only the portion of income or loss related to our ownership interest. |
• | 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 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. |
• | Non-GAAP core fee income — This measure represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control. We do not provide our outlook for the expected full year results for these excluded items, which include gains on investment securities, net, gains on derivative instruments, net, and other noninterest income items. |
Three months ended | ||||||||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests (Dollars in thousands) | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | |||||||||||||||
GAAP noninterest income | $ | 310,225 | $ | 238,713 | $ | 257,650 | $ | 98,239 | $ | 78,604 | ||||||||||
Less: income attributable to noncontrolling interests, including carried interest | 186,718 | 137,833 | 151,830 | 30,751 | 22,490 | |||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests | 123,507 | 100,880 | 105,820 | 67,488 | 56,114 |
Three months ended | ||||||||||||||||||||
Non-GAAP core fee income (Dollars in thousands) | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | |||||||||||||||
GAAP noninterest income | $ | 310,225 | $ | 238,713 | $ | 257,650 | $ | 98,239 | $ | 78,604 | ||||||||||
Less: gains on investment securities, net | 223,912 | 163,547 | 187,862 | 40,561 | 27,438 | |||||||||||||||
Less: gains on derivative instruments, net | 24,167 | 14,382 | 9,422 | 8,087 | 10,292 | |||||||||||||||
Less: other noninterest income (loss) | 11,200 | 11,791 | 17,161 | 7,634 | (447 | ) | ||||||||||||||
Non-GAAP core fee income | $ | 50,946 | $ | 48,993 | $ | 43,205 | $ | 41,957 | $ | 41,321 |
Three months ended | ||||||||||||||||||||
Non-GAAP net gains on investment securities, net of noncontrolling interests (Dollars in thousands) | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | |||||||||||||||
GAAP net gains on investment securities | $ | 223,912 | $ | 163,547 | $ | 187,862 | $ | 40,561 | $ | 27,438 | ||||||||||
Less: income attributable to noncontrolling interests, including carried interest | 186,552 | 137,405 | 151,360 | 31,067 | 22,296 | |||||||||||||||
Non-GAAP net gains on investment securities, net of noncontrolling interests | 37,360 | 26,142 | 36,502 | 9,494 | 5,142 |
Three months ended | ||||||||||||||||||||
Non-GAAP operating efficiency ratio, net of noncontrolling interests (Dollars in thousands, except ratios) | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | |||||||||||||||
GAAP noninterest expense | $ | 172,436 | $ | 168,850 | $ | 160,524 | $ | 143,292 | $ | 149,014 | ||||||||||
Less: expense attributable to noncontrolling interests | 3,321 | 3,697 | 3,290 | 2,867 | 2,860 | |||||||||||||||
Non-GAAP noninterest expense, net of noncontrolling interests | $ | 169,115 | $ | 165,153 | $ | 157,234 | $ | 140,425 | $ | 146,154 | ||||||||||
GAAP taxable equivalent net interest income | $ | 196,757 | $ | 187,428 | $ | 177,525 | $ | 170,516 | $ | 163,599 | ||||||||||
Less: income attributable to noncontrolling interests | 8 | 13 | 19 | 20 | 24 | |||||||||||||||
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests | 196,749 | 187,415 | 177,506 | 170,496 | 163,575 | |||||||||||||||
GAAP noninterest income | 310,225 | 238,713 | 257,650 | 98,239 | 78,604 | |||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests | 123,507 | 100,880 | 105,820 | 67,488 | 56,114 | |||||||||||||||
GAAP taxable equivalent revenue | $ | 506,982 | $ | 426,141 | $ | 435,175 | $ | 268,755 | $ | 242,203 | ||||||||||
Non-GAAP taxable equivalent revenue, net of noncontrolling interests | $ | 320,256 | $ | 288,295 | $ | 283,326 | $ | 237,984 | $ | 219,689 | ||||||||||
GAAP operating efficiency ratio | 34.01 | % | 39.62 | % | 36.89 | % | 53.32 | % | 61.52 | % | ||||||||||
Non-GAAP operating efficiency ratio | 52.81 | 57.29 | 55.50 | 59.01 | 66.53 |
Non-GAAP non-marketable and other securities, net of noncontrolling interests (Dollars in thousands) | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | |||||||||||||||
GAAP non-marketable and other securities | $ | 1,770,456 | $ | 1,595,494 | $ | 1,425,138 | $ | 1,255,425 | $ | 1,215,788 | ||||||||||
Less: amounts attributable to noncontrolling interests | 1,277,204 | 1,115,525 | 955,209 | 778,191 | 739,933 | |||||||||||||||
Non-GAAP non-marketable and other securities, net of noncontrolling interests | $ | 493,252 | $ | 479,969 | $ | 469,929 | $ | 477,234 | $ | 475,855 |
SVB Financial Group tangible common equity, tangible assets and risk-weighted assets (Dollars in thousands, except ratios) | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | |||||||||||||||
GAAP SVBFG stockholders’ equity | $ | 2,094,000 | $ | 1,966,270 | $ | 1,944,927 | $ | 1,847,956 | $ | 1,882,219 | ||||||||||
Less: intangible assets | — | — | — | — | — | |||||||||||||||
Tangible common equity | $ | 2,094,000 | $ | 1,966,270 | $ | 1,944,927 | $ | 1,847,956 | $ | 1,882,219 | ||||||||||
GAAP total assets | $ | 29,711,039 | $ | 26,417,189 | $ | 23,740,864 | $ | 22,153,901 | $ | 22,796,000 | ||||||||||
Less: intangible assets | — | — | — | — | — | |||||||||||||||
Tangible assets | $ | 29,711,039 | $ | 26,417,189 | $ | 23,740,864 | $ | 22,153,901 | $ | 22,796,000 | ||||||||||
Risk-weighted assets | $ | 17,199,987 | $ | 16,901,564 | $ | 15,004,072 | $ | 14,519,635 | $ | 13,501,072 | ||||||||||
Tangible common equity to tangible assets | 7.05 | % | 7.44 | % | 8.19 | % | 8.34 | % | 8.26 | % | ||||||||||
Tangible common equity to risk-weighted assets | 12.17 | 11.63 | 12.96 | 12.73 | 13.94 |
Silicon Valley Bank tangible common equity, tangible assets and risk-weighted assets (Dollars in thousands, except ratios) | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | |||||||||||||||
Tangible common equity | $ | 1,737,916 | $ | 1,639,024 | $ | 1,640,387 | $ | 1,585,117 | $ | 1,637,365 | ||||||||||
Tangible assets | $ | 28,012,627 | $ | 24,854,119 | $ | 22,337,190 | $ | 20,867,463 | $ | 21,487,859 | ||||||||||
Risk-weighted assets | $ | 16,895,389 | $ | 16,598,312 | $ | 14,679,608 | $ | 14,174,370 | $ | 13,147,423 | ||||||||||
Tangible common equity to tangible assets | 6.20 | % | 6.59 | % | 7.34 | % | 7.60 | % | 7.62 | % | ||||||||||
Tangible common equity to risk-weighted assets | 10.29 | 9.87 | 11.17 | 11.18 | 12.45 |
Non-GAAP losses on nonmarketable and other securities, net of noncontrolling interests related to FireEye (Dollars in millions) | April 1, 2014 through April 23, 2014 | |||
GAAP losses on certain nonmarketable and other securities | $ | 48 | ||
Less: losses attributable to noncontrolling interests, including carried interest | 39 | |||
Non-GAAP losses on certain nonmarketable and other securities, net of noncontrolling interests | $ | 9 |
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