EX-99.1 2 ex-99_1.txt EXHIBIT 99.1 Exhibit 99.1 [SILICON VALLEY LOGO] SILICON VALLEY BANCSHARES 3003 Tasman Drive Santa Clara, CA 95054 For immediate release Contact: July 20, 2000 Lisa Bertolet 4:00 p.m. (PDT) Investor Relations (408) 654-7282 Andrea McGhee Corporate Communications NASDAQ: SIVB (408) 654-3078 SILICON VALLEY BANCSHARES ANNOUNCES ------------------------------------ SECOND QUARTER RESULTS ---------------------- SANTA CLARA, CA -- Silicon Valley Bancshares (the "Company"), parent company of Silicon Valley Bank (the "Bank"), today announced net income of $33.7 million for the three months ended June 30, 2000, a $24.8 million, or 276.8%, increase from the $9.0 million earned in the second quarter of 1999. The increase in net income for the second quarter of 2000, versus the comparable prior year period, was attributable to increases in net interest income and noninterest income, partially offset by an increase in noninterest expense. Diluted earnings per share totaled $0.70 in the second quarter of 2000, a 233.3% increase from the $0.21 per diluted share earned in the comparable 1999 period. For the first six months of 2000, net income amounted to $88.4 million, or $1.85 per diluted share, an increase of 426.4% and 362.5%, respectively, versus $16.8 million, or $0.40 per diluted share, for the first six months of 1999. The Company's "operating" earnings per share, on a fully diluted basis, totaled $0.59 and $1.11 for the three and six-month periods ended June 30, 2000, respectively. The Company defines operating earnings as net income, excluding, on an after-tax basis, income from the disposition of client warrants, investment gains or losses, retention and warrant incentive plan expense, and provision for loan losses in excess of 1% of average loans on an annualized basis. Shares and per share amounts for all periods presented have been adjusted to give retroactive recognition to a two-for-one stock split distributed on May 15, 2000. "Our second quarter results are a continuation of the strong performance we reported for the first quarter of this year," said John C. Dean, President and Chief Executive Officer. "We had continued strong growth in our core operating earnings, and gains from our warrant and equity investment portfolios, though down from the record levels realized in the first quarter of 2000, remained at significant levels, totaling $19.0 million." Total assets were $5.4 billion at June 30, 2000, an increase of $1.3 billion, or 32.1%, compared to $4.1 billion at June 30, 1999. Total deposits increased $1.1 billion, or 27.8%, to $4.8 billion at June 30, 2000, from $3.8 billion at June 30, 1999. Loans, net of unearned income, were $1.6 billion at June 30, 2000, relatively unchanged from the same period in 1999. Off-balance sheet client funds totaled $10.2 billion at June 30, 2000, compared with $2.2 billion a year ago. Net interest income totaled $81.9 million for the second quarter of 2000, a $35.1 million, or 75.1%, increase compared to the $46.8 million total for the prior year second quarter. The increase in net interest income was the result of a $1.0 billion, or 27.0%, increase in average interest-earning assets over the same quarter last year, combined with an increase in the Company's net interest margin. The net interest margin was 7.0% for the second quarter of 2000, compared to 5.0% for the prior year second quarter. Noninterest income increased $28.1 million, or 435.7%, to a total of $34.6 million in the second quarter of 2000 versus $6.5 million in the prior year second quarter. The increase in noninterest income was largely due to increases in income from the disposition of client warrants, client investment fees and gains on venture capital fund investments. Income from the disposition of client warrants totaled $16.8 million in the second quarter of 2000 and resulted from the sale of warrants in 38 companies. Client investment fees increased $8.0 million to a total of $8.2 million in the second quarter of 2000, versus $0.2 million in the 1999 second quarter. Based on June 30, 2000 market valuations, the Company had potential pre-tax warrant gains totaling $37.8 million related to 46 companies. The Company is restricted from exercising many of these warrants until the third and fourth quarters of 2000. As of June 30, 2000, the Company held 1,082 warrants in 848 companies, and had made investments in 175 venture capital funds and direct equity investments in 40 companies. Many of these companies are non-public. Thus, for those companies for which a readily 2 determinable market value cannot be obtained, the Company values those equity instruments at cost less any identified impairment. Additionally, the Company is typically precluded from using any type of derivative instrument to secure the current unrealized gains associated with many of these equity instruments. Hence, the amount of income realized by the Company from these equity instruments in future periods may vary materially from the current unrealized amount due to fluctuations in the market prices of the underlying common stock of these companies. Furthermore, the Company may reinvest some or all of the income realized from the disposition of these equity instruments in pursuing its business strategies. Noninterest expense totaled $49.0 million in the second quarter of 2000, a $21.2 million, or 76.3%, increase over the $27.8 million incurred in the comparable 1999 period. The increase in noninterest expense was substantially due to increases in full-time equivalent employees as well as increases in performance-based compensation associated with the Company's retention, warrant and incentive compensation plans. The increases in the remaining noninterest expense items, when compared to the same period last year, were largely attributable to overall growth in the Company's business as well as several ongoing business initiatives. For the second quarter of 2000, return on average assets (ROA) was 2.7%, versus 0.9% for the second quarter of 1999. Return on average equity (ROE) was 33.1% in the second quarter of 2000, compared to 16.0% in the 1999 second quarter. For the first six months of 2000, ROA was 3.6% and ROE was 44.2%, versus 0.9% and 15.3%, respectively, for the first six months of 1999. The efficiency ratio is calculated by dividing the amount of noninterest expense, excluding costs associated with retention and warrant incentive plans and other real estate owned, by adjusted revenues, defined as the total of net interest income and noninterest income, excluding income from the disposition of client warrants and gains or losses related to sales of investment securities. The Company's efficiency ratio was 47.2% in the second quarter of 2000, down from 52.9% in the 1999 second quarter. The Company's efficiency ratio for the first six months of 2000 was 46.3%, compared to 53.7% for the first six months of 1999. Nonperforming loans totaled $26.9 million, or 1.7% of total loans, at June 30, 2000, compared to $47.4 million, or 3.0% of total loans, a year earlier. Total nonperforming loans at June 30, 2000 decreased $1.9 million , or 6.6%, from the $28.8 million total at March 31, 2000. Nonperforming loans at the end of the 2000 second quarter included two commercial credits totaling $14.8 million. The first credit, totaling $7.9 million, is in 3 the Company's Entertainment niche and was disclosed as having a higher than normal risk of becoming a nonperforming in the Company's 2000 first quarter Form 10-Q. The second credit, totaling $6.9 million, is in the Company's Healthcare Services niche and has been nonperforming since the 2000 first quarter. Management believes these credits are adequately secured with collateral and reserves, and that any future charge-offs associated with these loans will not have a material impact on the future net income of the Company. The allowance for loan losses totaled $73.8 million, or 4.6% of total loans and 274.6% of nonperforming loans, at June 30, 2000, compared to $71.8 million, or 4.4% of total loans and 252.3% of nonperforming loans, at December 31, 1999. The Company incurred $10.2 million in net charge-offs during the second quarter of 2000. Gross charge-offs for the 2000 second quarter totaled $11.3 million. Stockholders' equity totaled $436.2 million at June 30, 2000, an increase of $209.2 million, or 92.2%, compared to $227.0 million a year prior. Total stockholders' equity plus the allowance for loan losses amounted to $510.0 million at June 30, 2000, an increase of $226.7 million, or 80.0%, compared to $283.3 million a year earlier. This release includes "forward-looking statements" as that term is used in the securities laws. All statements regarding the Company's expected financial position, business and strategies are forward-looking statements. In addition, in this release the words "anticipates," "believes," "estimates," "seeks," "expects," "plans," "intends" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, and has based these expectations on the Company's beliefs as well as assumptions it has made, such expectations may prove to be incorrect. For information with respect to factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see the text under the caption "Risk Factors" included in our Report on Form S-3 filed with the Securities and Exchange Commission on July 13, 2000. The Company urges investors to consider these factors carefully in evaluating the forward-looking statements contained in this release. All subsequent written or oral forward-looking statements attributable to the Company or persons acting on the Company's behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this release are made only as of the date of this release. The Company does not intend, and undertakes no obligation, to update these forward-looking statements. 4 The Company will host a conference call at 7:00 a.m. (PDT), on Friday, July 21, 2000, to discuss the 2000 second quarter financial results. The conference call can be accessed by dialing (888) 955-3514 and referencing the passcode "Silicon Valley Bank." A digitized replay of this conference call will be available beginning at approximately 10:00 a.m. (PDT), on Friday, July 21, 2000, through 9:00 a.m. (PDT), on Friday, August 18, 2000, by dialing (888) 568-0906. An audio replay of this conference call will also be available on the World Wide Web at www.svb.com beginning Friday, July 21, 2000. Silicon Valley Bank serves emerging growth and middle-market companies in targeted niches, focusing on the technology and life sciences industries, while also identifying and capitalizing on opportunities to serve companies in other industries whose financial services needs the Bank believes are underserved. The Bank operates offices throughout the Silicon Valley: Santa Clara, Palo Alto and Sand Hill, the center of the venture capital community in California. Other regional offices within California include: Irvine, Los Angeles, Napa Valley, San Diego, San Francisco, Santa Barbara, and Sonoma. Office locations outside of California include: Phoenix, Arizona; Boulder, Colorado; Atlanta, Georgia; Chicago, Illinois; Boston, Massachusetts; Minneapolis, Minnesota; Durham, North Carolina; Portland, Oregon; Philadelphia, Pennsylvania; Austin, Texas; Dallas, Texas; Northern Virginia; and Seattle, Washington. ### 5 SILICON VALLEY BANCSHARES CONSOLIDATED FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- CONDENSED INCOME STATEMENTS --------------------------------------------------------------------------------
For the three months ended For the six months ended --------------------------- ---------------------------- JUNE 30, June 30, JUNE 30, June 30, 2000 1999 2000 1999 (Dollars in thousands, except per share amounts) ------------------------------------------------------------------------------------------------------------------- INTEREST INCOME: Loans $ 47,089 $ 39,527 $ 91,382 $ 77,059 Investment Securities: Taxable 27,291 20,779 50,403 38,360 Non-Taxable 1,813 1,471 3,257 2,734 Federal Funds Sold and Securities Purchased Under Agreement to Resell 18,873 6,947 34,900 12,925 ------------------------------------------------------------------------------------------------------------------- Total Interest Income 95,066 68,724 179,942 131,078 Interest Expense 13,168 21,952 26,544 42,904 ------------------------------------------------------------------------------------------------------------------- Net Interest Income 81,898 46,772 153,398 88,174 Provision for Loan Losses 11,058 10,802 23,630 18,770 ------------------------------------------------------------------------------------------------------------------- Net Interest Income After Provision for Loan Losses 70,840 35,970 129,768 69,404 NONINTEREST INCOME: Disposition of Client Warrants 16,755 1,688 56,109 2,510 Investment Gains (Losses) 2,245 (374) 32,133 (243) Client Investment Fees 8,237 246 13,856 478 Letter of Credit and Foreign Exchange Income 4,695 3,474 8,326 6,143 Deposit Service Charges 868 677 1,582 1,344 Other 1,795 747 3,723 1,479 ------------------------------------------------------------------------------------------------------------------- Total Noninterest Income 34,595 6,458 115,729 11,711 NONINTEREST EXPENSE: Compensation and Benefits 27,372 15,385 51,743 30,266 Retention and Warrant Incentive Plans 2,936 335 12,786 655 Professional Services 6,277 3,552 8,723 5,895 Furniture and Equipment 2,877 1,402 4,891 2,790 Business Development and Travel 2,292 1,524 4,735 2,855 Net Occupancy 2,142 1,569 4,046 3,038 Postage and Supplies 901 567 1,689 1,232 Trust Preferred Securities Distributions 825 825 1,650 1,650 Advertising and Promotion 803 734 1,302 1,334 Telephone 711 439 1,207 838 Cost of Other Real Estate Owned -- (5) -- 268 Other 1,864 1,470 3,747 2,513 ------------------------------------------------------------------------------------------------------------------- Total Noninterest Expense 49,000 27,797 96,519 53,334 ------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAX EXPENSE 56,435 14,631 148,978 27,781 INCOME TAX EXPENSE 22,700 5,678 60,588 10,991 ------------------------------------------------------------------------------------------------------------------- NET INCOME $ 33,735 $ 8,953 $ 88,390 $ 16,790 =================================================================================================================== BASIC EARNINGS PER SHARE $ 0.74 $ 0.22 $ 1.95 $ 0.41 DILUTED EARNINGS PER SHARE $ 0.70 $ 0.21 $ 1.85 $ 0.40 =================================================================================================================== RETURN ON AVERAGE ASSETS 2.7% 0.9% 3.6% 0.9% RETURN ON AVERAGE EQUITY 33.1% 16.0% 44.2% 15.3% EFFICIENCY RATIO 47.2% 52.9% 46.3% 53.7% WEIGHTED AVERAGE SHARES OUTSTANDING 45,585,846 41,025,168 45,417,022 41,000,942 WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING 47,978,984 41,813,832 47,763,062 41,715,654
6 SILICON VALLEY BANCSHARES ------------------------- CONSOLIDATED FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- CONDENSED STATEMENTS OF COMPREHENSIVE INCOME --------------------------------------------------------------------------------
For the three months ended For the six months ended -------------------------- -------------------------- JUNE 30, June 30, JUNE 30, June 30, 2000 1999 2000 1999 (Dollars in thousands) ------------------------------------------------------------------------------------------------------------- NET INCOME $ 33,735 $ 8,953 $ 88,390 $ 16,790 OTHER COMPREHENSIVE LOSS, NET OF TAX: Change in Unrealized Gains (Losses) on Available-for-Sale Investments: Unrealized Holding Gains (Losses) 5,262 (6,227) 7,651 (6,929) Less: Reclassification Adjustment for Gains Included in Net Income (11,358) (789) (52,354) (1,360) ------------------------------------------------------------------------------------------------------------- OTHER COMPREHENSIVE LOSS (6,096) (7,016) (44,703) (8,289) ------------------------------------------------------------------------------------------------------------- COMPREHENSIVE INCOME $ 27,639 $ 1,937 $ 43,687 $ 8,501 =============================================================================================================
7 SILICON VALLEY BANCSHARES ------------------------- CONSOLIDATED FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- CONDENSED BALANCE SHEETS --------------------------------------------------------------------------------
JUNE 30, December 31, June 30, 2000 1999 1999 (Dollars in thousands, except par value and per share amounts) ----------------------------------------------------------------------------------------------------------------------- ASSETS: Cash and Due from Banks $ 346,108 $ 278,061 $ 131,250 Federal Funds Sold and Securities Purchased Under Agreement to Resell 1,203,779 898,041 752,664 Investment Securities, at Fair Value 2,184,348 1,747,408 1,593,836 Loans: Gross Loans 1,610,351 1,631,572 1,584,775 Unearned Income on Loans (11,817) (8,567) (8,560) ----------------------------------------------------------------------------------------------------------------------- Loans, Net of Unearned Income 1,598,534 1,623,005 1,576,215 Allowance for Loan Losses (73,800) (71,800) (56,300) ----------------------------------------------------------------------------------------------------------------------- Net Loans 1,524,734 1,551,205 1,519,915 Premises and Equipment 10,008 10,742 11,699 Accrued Interest Receivable and Other Assets 124,248 110,941 72,062 ----------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 5,393,225 $ 4,596,398 $ 4,081,426 ======================================================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities: Deposits: Noninterest-Bearing Demand $ 2,536,821 $ 1,928,100 $ 1,163,928 NOW 62,022 43,643 34,898 Money Market 1,615,289 1,845,377 2,376,407 Time 631,090 292,285 215,741 ----------------------------------------------------------------------------------------------------------------------- Total Deposits 4,845,222 4,109,405 3,790,974 Other Liabilities 73,257 79,606 24,974 ----------------------------------------------------------------------------------------------------------------------- Total Liabilities 4,918,479 4,189,011 3,815,948 ----------------------------------------------------------------------------------------------------------------------- Company Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures (Trust Preferred Securities) 38,563 38,537 38,511 Stockholders' Equity: Common Stock, $0.001 Par Value 46 45 42 Additional Paid-In Capital 178,457 153,440 95,875 Retained Earnings 264,420 176,030 140,624 Unearned Compensation (3,699) (2,327) (3,357) Accumulated Other Comprehensive Income: Net Unrealized Gains (Losses) on Available-for-Sale Investments (3,041) 41,662 (6,217) ----------------------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 436,183 368,850 226,967 ----------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,393,225 $ 4,596,398 $ 4,081,426 ======================================================================================================================= CAPITAL RATIOS: Total Risk-Based Capital Ratio 15.7% 15.5% 12.9% Tier 1 Risk-Based Capital Ratio 14.4% 14.3% 11.6% Tier 1 Leverage Ratio 9.4% 8.8% 6.9% Average Stockholders' Equity as a Percentage of Average Assets (1) 8.1% 6.7% 5.7% OTHER PERIOD END STATISTICS: Book Value per Share $ 9.42 $ 8.23 $ 5.44 Full-Time Equivalent Employees 841 700 625 Shares Outstanding 46,283,012 44,800,736 41,702,896
(1) Represents quarterly average balances for each respective period. 8 SILICON VALLEY BANCSHARES CONSOLIDATED FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- AVERAGE BALANCES, RATES AND YIELDS --------------------------------------------------------------------------------
For the three months ended June 30, --------------------------------------------------------------------------------- 2000 1999 ------------------------------------------------------------------------------------------------------------------------- AVERAGE AVERAGE Average Average (Dollars in thousands) BALANCE YIELD/RATE INTEREST Balance Yield/Rate Interest ------------------------------------------------------------------------------------------------------------------------- INTEREST-EARNING ASSETS: Federal Funds Sold and Securities Purchased Under Agreement to Resell $ 1,211,928 $ 18,873 6.3% $ 581,544 $ 6,947 4.8% Investment Securities: Taxable 1,799,231 27,291 6.1 1,433,357 20,779 5.8 Non-Taxable (1) 168,234 2,789 6.7 143,961 2,263 6.3 Loans: Commercial 1,377,250 41,831 12.2 1,380,428 34,620 10.1 Real Estate Construction and Term 124,773 3,372 10.9 137,807 3,472 10.1 Consumer and Other 76,785 1,886 9.9 68,662 1,435 8.4 --------------------------------------- -------------------------------------- ------------------------------- Total Loans 1,578,808 47,089 12.0 1,586,897 39,527 10.0 --------------------------------------- -------------------------------------- ------------------------------- Total Interest-Earning Assets 4,758,201 96,042 8.1 3,745,759 69,516 7.4 --------------------------------------- -------------------------------------- ------------------------------- Cash and Due from Banks 255,753 181,657 Allowance for Loan Losses (74,090) (51,658) Other Real Estate Owned -- 127 Other Assets 127,170 66,078 --------------------------------------- ----------- ---------- TOTAL ASSETS $ 5,067,034 $3,941,963 ======================================= =========== ========== FUNDING SOURCES: Interest-Bearing Liabilities: NOW Deposits $ 58,260 184 1.3 $ 21,896 85 1.5 Regular Money Market Deposits 391,291 1,788 1.8 346,161 2,328 2.7 Bonus Money Market Deposits 1,182,789 5,728 1.9 2,100,758 17,587 3.4 Time Deposits 538,768 5,468 4.1 188,866 1,952 4.1 --------------------------------------- -------------------------------------- ------------------------------- Total Interest-Bearing Liabilities 2,171,108 13,168 2.4 2,657,681 21,952 3.3 Portion of Noninterest-Bearing Funding Sources 2,587,093 1,088,078 --------------------------------------- -------------------------------------- ------------------------------- Total Funding Sources 4,758,201 13,168 1.1 3,745,759 21,952 2.4 --------------------------------------- -------------------------------------- ------------------------------- NONINTEREST-BEARING FUNDING SOURCES: 996,696 Demand Deposits 2,359,962 25,039 Other Liabilities 87,770 38,501 Trust Preferred Securities 38,552 224,046 Stockholders' Equity 409,642 Portion Used to Fund Interest-Earning Assets (2,587,093) (1,088,078) --------------------------------------- ----------- ---------- Total Liabilities and Stockholders' Equity $ 5,067,034 $3,941,963 ======================================= =========== ========== Net Interest Income $ 82,874 $ 47,564 =========== ========= Net Interest Margin 7.0% 5.0% === === Memorandum: Total Deposits $ 4,531,070 $3,654,377 ======================================= =========== ==========
(1) Interest income on non-taxable investments is presented on a fully taxable-equivalent basis. The tax equivalent adjustments were $976 and $792 for the three months ended June 30, 2000 and 1999, respectively. 9 SILICON VALLEY BANCSHARES CONSOLIDATED FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- CREDIT QUALITY --------------------------------------------------------------------------------
JUNE 30, December 31, June 30, 2000 1999 1999 (Dollars in thousands) ---------------------------------------------------------------------------------------- NONPERFORMING ASSETS: Loans Past Due 90 Days or More $ 62 $ 911 $ 678 Nonaccrual Loans 26,817 27,552 46,678 ---------------------------------------------------------------------------------------- Total Nonperforming Loans 26,879 28,463 47,356 Other Foreclosed Assets -- -- 750 ---------------------------------------------------------------------------------------- Total Nonperforming Assets $ 26,879 $ 28,463 $48,106 ======================================================================================== Nonperforming Loans as a Percentage of Total Loans 1.7% 1.7% 3.0% Nonperforming Assets as a Percentage of Total Assets 0.5% 0.6% 1.2% ALLOWANCE FOR LOAN LOSSES $ 73,800 $ 71,800 $56,300 As a Percentage of Total Loans 4.6% 4.4% 3.6% As a Percentage of Nonaccrual Loans 275.2% 260.6% 120.6% As a Percentage of Nonperforming Loans 274.6% 252.3% 118.9%
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