Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

3003 Tasman Drive, Santa Clara, CA 95054

www.svb.com


For release at 1:00 P.M. (Pacific Time)		Contact:
October 23, 2008		Meghan O’Leary
		Investor Relations
		(408) 654-6364

NASDAQ: SIVB

SVB FINANCIAL GROUP ANNOUNCES 2008 THIRD QUARTER FINANCIAL RESULTS

SANTA CLARA, Calif. — October 23, 2008 — SVB Financial Group (NASDAQ: SIVB) today announced financial results for the third quarter ended September 30, 2008.

Consolidated net income for the third quarter of 2008 was $27.0 million, or $0.80 per diluted common share, compared to $21.3 million, or $0.62 per diluted common share, for the second quarter of 2008, and $38.1 million, or $1.03 per diluted common share, for the third quarter of 2007. Consolidated net income for the second quarter of 2008 included a non-tax deductible loss of $3.9 million, related to our cash settlement of the conversion of certain zero-coupon convertible subordinated notes prior to the notes’ maturity (“Coco Loss”). Additionally, in the second quarter of 2008, we recorded an increase to stockholders’ equity of $3.9 million, representing a corresponding cash receipt pursuant to a call spread arrangement.

Consolidated net income for the nine months ended September 30, 2008 was $76.2 million, or $2.22 per diluted common share, compared to $89.4 million, or $2.41 per diluted common share for the comparable 2007 period. On a non-GAAP basis, excluding the $3.9 million Coco Loss, net income for the nine months ended September 30, 2008 was $80.1 million.

“We delivered another quarter of strong growth and solid credit quality, demonstrating the effectiveness of our strategy and discipline, in contrast to the continued, significant deterioration of the broader financial services market,” said Ken Wilcox, President and CEO of SVB Financial Group.

“Like every company, we are living with the impact of the global economic downturn, but our focus on meeting the needs of clients during these difficult times, and our continued credit and investment discipline are allowing us to weather the storm better than most.”

Third Quarter 2008 Summary


	Three months ended													Nine months ended
										% Change from
(Dollars in millions, except share data and ratios)	September 30, 2008			June 30, 2008			September 30, 2007			June 30, 2008		September 30, 2007		September 30, 2008			September 30, 2007			% Change
Income Statement:
Diluted EPS	$	0.80		$	0.62		$	1.03		29.0	%	(22.3	)%	$	2.22		$	2.41		(7.9	)%
Net income		27.0			21.3			38.1		26.8		(29.1	)		76.2			89.4		(14.8	)
Net interest income		95.1			87.9			95.7		8.2		(0.6	)		275.1			283.6		(3.0	)
Provision for loan losses		13.7			8.4			3.2		63.1		328.1			29.8			10.9		173.4
Noninterest income		41.7			43.9			65.0		(5.0	)	(35.8	)		127.2			168.2		(24.4	)
Noninterest expense		80.4			87.2			83.0		(7.8	)	(3.1	)		251.1			263.0		(4.5	)
Non-GAAP net income (A)		27.0			25.2			38.1		7.1		(29.1	)		80.1			99.6		(19.6	)
Non-GAAP noninterest expense, net of minority interest (A)		77.6			80.9			80.3		(4.1	)	(3.4	)		239.1			237.6		0.6
Fully Taxable Equivalent:
Net interest income (1)	$	95.7		$	88.4		$	96.0		8.3	%	(0.3	)%	$	276.8		$	284.6		(2.7	)%
Net interest margin		5.73	%		5.69	%		7.18	%	0.7		(20.2	)		5.91	%		7.38	%	(19.9	)
Shares Outstanding:
Common		32,735,732			32,252,367			33,448,121		1.5	%	(2.1	)%		32,735,732			33,448,121		(2.1	)%
Basic weighted average		32,534,613			32,053,749			34,028,704		1.5		(4.4	)		32,295,612			34,254,952		(5.7	)
Diluted weighted average		33,778,095			34,192,459			36,869,496		(1.2	)	(8.4	)		34,255,320			37,131,653		(7.7	)
Balance Sheet:
Average total assets	$	7,548.1		$	7,158.1		$	6,087.3		5.4	%	24.0	%	$	7,154.2		$	5,915.9		20.9	%
Average loans, net of unearned income		4,863.7			4,319.9			3,630.3		12.6		34.0			4,433.7			3,439.5		28.9
Average interest-earning investment securities		1,396.2			1,336.5			1,326.4		4.5		5.3			1,332.1			1,391.6		(4.3	)
Average noninterest-bearing demand deposits		2,826.3			2,833.0			2,867.8		(0.2	)	(1.4	)		2,852.9			2,838.2		0.5
Average interest-bearing deposits		1,994.0			1,815.9			1,068.8		9.8		86.6			1,782.5			1,041.7		71.1
Average total deposits		4,820.3			4,648.8			3,936.6		3.7		22.4			4,635.4			3,879.9		19.5
Average short-term borrowings		544.3			206.0			205.7		164.2		164.6			329.2			388.6		(15.3	)
Average long-term debt		976.8			1,099.8			847.2		(11.2	)	15.3			987.9			598.9		65.0
Period-end total assets		8,070.9			7,309.9			6,304.1		10.4		28.0			8,070.9			6,304.1		28.0
Period-end loans, net of unearned income		5,285.1			4,633.7			3,818.3		14.1		38.4			5,285.1			3,818.3		38.4
Period-end investment securities		1,780.0			1,788.0			1,571.6		(0.4	)	13.3			1,780.0			1,571.6		13.3
Period-end noninterest-bearing demand deposits		3,231.3			2,919.2			2,892.1		10.7		11.7			3,231.3			2,892.1		11.7
Period-end interest-bearing deposits		2,201.3			1,944.4			1,081.1		13.2		103.6			2,201.3			1,081.1		103.6
Period-end total deposits		5,432.6			4,863.6			3,973.2		11.7		36.7			5,432.6			3,973.2		36.7
Off-Balance Sheet:
Average total client investment funds	$	22,036.0		$	21,389.3		$	20,705.1		3.0	%	6.4	%	$	21,773.0		$	20,072.2		8.5	%
Period-end total client investment funds		21,533.8			21,877.9			20,360.8		(1.6	)	5.8			21,533.8			20,360.8		5.8
Total unfunded credit commitments		5,619.0			5,034.3			4,469.0		11.6		25.7			5,619.0			4,469.0		25.7
Earnings Ratios:
Return on average assets (2)		1.42	%		1.20	%		2.48	%	18.3	%	(42.7	)%		1.42	%		2.02	%	(29.7	)%
Return on average stockholders’ equity (2)		15.09			12.64			22.35		19.4		(32.5	)		14.70			17.96		(18.2	)
Asset Quality Ratios:
Allowance for loan losses as a percentage of total gross loans		1.13	%		1.13	%		1.15	%	—	%	(1.7	)%		1.13	%		1.15	%	(1.7	)%
Gross charge-offs as a percentage of total gross loans (annualized)		0.52			0.78			0.43		(33.3	)	20.9			0.56			0.51		9.8
Net charge-offs as a percentage of total gross loans (annualized)		0.47			0.44			0.24		6.8		95.8			0.42			0.33		27.3
Other Ratios:
Total risk-based capital ratio		14.33	%		15.10	%		17.64	%	(5.1	)%	(18.8	)%		14.33	%		17.64	%	(18.8	)%
Tangible common equity to tangible assets (3)		9.20			9.47			10.80		(2.9	)	(14.8	)		9.20			10.80		(14.8	)
Operating efficiency ratio (4)		58.51			65.86			51.52		(11.2	)	13.6			62.14			58.09		7.0
Average loans, net of unearned income-to-deposits		100.90			92.92			92.22		8.6		9.4			95.65			88.65		7.9
Non-GAAP Ratios: (A)
Non-GAAP return on average assets (5)		1.42	%		1.41	%		2.48	%	0.7	%	(42.7	)%		1.49	%		2.25	%	(33.8	)%
Non-GAAP return on average stockholders’ equity (5)		15.09			14.92			22.35		1.1		(32.5	)		15.44			20.01		(22.8	)
Non-GAAP operating efficiency ratio (6)		56.91			61.52			54.29		(7.5	)	4.8			59.28			56.85		4.3
Other Statistics:
Common stock repurchases	$	—		$	1.0		$	58.0		(100.0	)%	(100.0	)%	$	45.6		$	97.3		(53.1	)%
Period-end prime rate		5.00	%		5.00	%		7.75	%	—		(35.5	)		5.00	%		7.75	%	(35.5	)
Average SVB prime lending rate		5.00			5.08			8.19		(1.6	)	(38.9	)		5.44			8.23		(33.9	)
Period-end full-time equivalent employees		1,237			1,209			1,141		2.3	%	8.4	%		1,237			1,141		8.4	%

(A)	A reconciliation of non-GAAP calculations to GAAP is provided in the schedules attached.

(1)

Interest income on non-taxable investments is presented on a fully tax-equivalent basis using the federal statutory income tax rate of 35.0 percent. The tax-equivalent adjustments were $0.6 million, $0.6 million and $0.3 million for the quarters ended September 30, 2008, June 30, 2008 and September 30, 2007, respectively. The tax-equivalent adjustments were $1.7 million and $0.9 million for the nine months ended September 30, 2008 and 2007, respectively.

(2)	Ratios represent annualized consolidated net income divided by quarterly average assets/equity and year-to-date average assets/equity, respectively.

(3)

Tangible common equity consists of total stockholders’ equity (excluding unrealized gains and losses from our fixed income investments) less acquired intangibles and goodwill. Tangible assets represent total assets (excluding unrealized gains and losses from our fixed income investments) less acquired intangibles and goodwill.

(4)	The operating efficiency ratio is calculated by dividing noninterest expense by total taxable-equivalent income.

(5)

Ratios represent non-GAAP annualized consolidated net income (excluding the non-tax deductible $3.9 million Coco Loss recorded in the second quarter of 2008, and goodwill impairment charges of $10.2 million, net of tax, recorded in the second quarter of 2007) divided by quarterly average assets/equity and year-to-date average assets/equity, respectively.

(6)

The non-GAAP operating efficiency ratio is calculated by dividing noninterest expense (excluding (i) the non-tax deductible $3.9 million Coco Loss, (ii) goodwill impairment charges of $17.2 million recorded in the second quarter of 2007 and (iii) the portion of noninterest expense attributable to minority interests of $2.9 million, $2.5 million and $2.7 million for the quarters ended September 30, 2008, June 30, 2008 and September 30, 2007, respectively and $8.1 million and $8.2 million for the nine months ended September 30, 2008 and 2007, respectively) by total taxable-equivalent income (excluding taxable-equivalent income attributable to minority interests of $1.2 million, $0.9 million and $13.1 million for the quarters ended September 30, 2008, June 30, 2008 and September 30, 2007, respectively and $0.6 million and $34.8 million for the nine months ended September 30, 2008 and 2007, respectively).

Net Interest Income and Margin

Net interest income was $95.1 million for the third quarter of 2008, compared to $87.9 million for the second quarter of 2008 and $95.7 million for the third quarter of 2007. Net interest income, on a fully tax-equivalent basis, was $95.7 million for the third quarter of 2008, compared to $88.4 million for the second quarter of 2008 and $96.0 million for the third quarter of 2007. The increase in net interest income, on a fully tax-equivalent basis, from the second to the third quarter of 2008, was primarily attributable to the following:

•

A net increase in interest income of $9.7 million from our loan portfolio, primarily related to growth in our average loan portfolio balances, which increased interest income by $10.4 million in the third quarter of 2008. Additionally, the third quarter of 2008 had one more day compared to the second quarter of 2008, which increased interest income by $1.0 million. These increases in interest income were partially offset by the full quarter effect of the 25 basis points reduction in our prime-lending rate during the second quarter of 2008. Our average prime-lending rate was 5.00 percent for the third quarter of 2008, compared to 5.08 percent for the second quarter of 2008.

•

An increase in interest income of $0.8 million for our interest-earning investment securities portfolio, primarily related to growth in average balances of our mortgage-backed securities portfolio.

•

A net decrease in interest expense of $0.6 million from our long-term debt, primarily due to a $0.5 million decrease in interest expense from the interest rate swap agreements associated with our 5.70% senior and 6.05% subordinated notes, due to lower London Interbank Offered Rates (LIBOR).

•

An increase in interest expense of $1.9 million from our short-term borrowings, primarily related to increases in average balances. Short-term borrowings were used to partially fund growth in our loan portfolio.

•

A decrease in interest income of $1.0 million from our short-term investment portfolio primarily related to decreases in average balances. In the second quarter of 2008, our average short-term investment portfolio included net proceeds from our issuance of $250 million of 3.875% convertible senior notes, a portion of which was subsequently used to settle the conversion of our zero-coupon convertible subordinated notes, which matured on June 15, 2008.

•

An increase in interest expense of $0.9 million from total interest-bearing deposits, primarily due to growth in the average balances of our money market deposit for early stage clients and our Eurodollar sweep deposit products.

Our net interest margin, on a fully tax-equivalent basis, was 5.73 percent for the third quarter of 2008, compared to 5.69 percent for the second quarter of 2008 and 7.18 percent for the third quarter of 2007. The increase from the second to the third quarter of 2008 was primarily due to the change in mix of interest-earning assets with a higher concentration of loans, resulting from our recent 2008 loan growth. The increase in our net interest margin was partially offset by the full quarter effect of the 25 basis points reduction in our prime-lending rate during the second quarter of 2008, which we lowered in response to a Federal Reserve rate cut, and an increase in our funding costs due to growth in interest-bearing deposits and short-term borrowings to support our loan growth.

Net interest income, on a fully tax-equivalent basis, was $276.8 million and $284.6 million for the nine months ended September 30, 2008 and 2007, respectively. Net interest margin, on a fully tax-equivalent basis, was 5.91 percent for the nine months ended September 30, 2008, compared to 7.38 percent for the comparable 2007 period.

On an average basis, for the third quarter of 2008, 73.4 percent, or $3.72 billion, of our outstanding gross loans were variable-rate loans that adjust at a prescribed measurement date upon a change in our prime-lending rate or other variable indices. This compares to 73.1 percent, or $3.23 billion, for the second quarter of 2008 and 72.6 percent, or $2.71 billion, for the third quarter of 2007.

Loans

Average loans, net of unearned income, were $4.86 billion for the third quarter of 2008, compared to $4.32 billion for the second quarter of 2008 and $3.63 billion for the third quarter of 2007. The increase in average loan balances from the second to the third quarter of 2008 came from all our client industry segments, with particularly strong growth in loans to venture capital funds for capital calls, and from hardware and software industry clients. Period-end loans, net of unearned income, were $5.29 billion at September 30, 2008, compared to $4.63 billion at June 30, 2008 and $3.82 billion at September 30, 2007.

Deposits

Average deposits were $4.82 billion for the third quarter of 2008, compared to $4.65 billion for the second quarter of 2008 and $3.94 billion for the third quarter of 2007. The increase in average deposit balances from the second to the third quarter of 2008 reflects an increase in average balances of our money market deposit product for early stage clients and our Eurodollar sweep deposit product. The average balances of our early stage money market deposit product were $560.5 million for the third quarter of 2008, compared to $425.5 million for the second quarter of 2008 and $144.9 million for the third quarter of 2007. The average balances of our Eurodollar sweep deposit product were $389.2 million for the third quarter of 2008, compared to $322.4 million for the second quarter of 2008. Period-end deposits were $5.43 billion at September 30, 2008, compared to $4.86 billion at June 30, 2008 and $3.97 billion at September 30, 2007.

Investment Securities Portfolio

Our investment securities portfolio consists of both a fixed income investment portfolio, which primarily represents interest-earning securities, and a non-marketable securities portfolio, which primarily represents investments managed by SVB Capital as part of our funds management business. Total investment securities were $1.78 billion at September 30, 2008, compared to $1.79 billion at June 30, 2008 and $1.57 billion at September 30, 2007.

Average interest-earning investment securities were $1.40 billion for the third quarter of 2008, compared to $1.34 billion for the second quarter of 2008 and $1.33 billion for the third quarter of 2007. The increase in average interest-earning investment securities from the second to the third quarter of 2008 was primarily due to purchases of mortgage-backed securities during the later half of the second quarter of 2008.

Noninterest Income

Noninterest income was $41.7 million for the third quarter of 2008, compared to $43.9 million for the second quarter of 2008 and $65.0 million for the third quarter of 2007. The decrease in noninterest income from the second to the third quarter of 2008 was primarily driven by the following factors:

•

Net losses on investment securities of $0.9 million for the third quarter of 2008, compared to net gains of $2.0 million for the second quarter of 2008. Net losses on investment securities of $0.9 million for the third quarter of 2008 were comprised of the following:

•

Net unrealized losses of $5.4 million due to lower valuations of investments within our Managed Funds of Funds and Sponsored Debt Funds

•

Realized losses of $2.0 million principally from the sale of our marketable equity securities comprised of publicly traded shares acquired upon exercise of equity warrant assets

•

Unrealized gains of $4.7 million in our Managed Co-Investment Funds as a result of higher valuations of investments, and

•

Realized gains of $1.5 million in our Managed Funds of Funds due to net gains from distributions.


	Three months ended
	September 30, 2008														June 30, 2008
(Dollars in thousands)	Managed Co-Investment Funds		Managed Funds Of Funds			Sponsored Debt Funds			Other			Total			Total
Unrealized gains (losses)	$	4,669	$	(3,386	)	$	(2,004	)	$	—		$	(721	)	$	(5,081	)
Realized gains (losses)		—		1,525			364			(2,044	)		(155	)		7,120

Total gains (losses) on investment securities, net	$	4,669	$	(1,861	)	$	(1,640	)	$	(2,044	)	$	(876	)	$	2,039

As of September 30, 2008, we held investments, either directly or through seven of our managed investment funds, in 433 private equity funds, 73 companies and four sponsored debt funds.

•

A decrease in other noninterest income of $2.0 million primarily due to net losses from revaluations of foreign currency denominated loans of $4.7 million for the third quarter of 2008, compared to $2.0 million for the second quarter of 2008. The net losses of $4.7 million were primarily due to the strengthening of the U.S. dollar in the third quarter of 2008.

•

An increase in net gains on derivative instruments of $2.1 million, primarily due to net gains from changes in the fair value of foreign exchange forward contracts, partially offset by lower net gains from changes in the fair value of an interest rate swap and lower net gains from our equity warrant assets, primarily due to lower valuations in the third quarter of 2008 compared to valuations in the second quarter of 2008. Net gains from foreign exchange forward contracts included $4.5 million in net gains from changes in fair value of foreign exchange forward contracts used to offset net losses of $4.7 million from revaluation of our foreign currency denominated loans, which are included in other noninterest income.

•

An increase in foreign exchange fee income of $0.7 million, primarily due to an increase in foreign exchange activity by our clients.

Non-GAAP noninterest income, net of minority interest, was $40.7 million for the third quarter of 2008, compared to $43.1 million for the second quarter of 2008 and $52.3 million for the third quarter of 2007. Reconciliations of our non-GAAP noninterest income, non-GAAP net (losses) gains on investment securities and non-GAAP net gains on derivative instruments, all of which exclude minority interests, are provided under the section “Use of Non-GAAP Financial Measures.”

Noninterest Expense

Noninterest expense was $80.4 million for the third quarter of 2008, compared to $87.2 million for the second quarter of 2008 and $83.0 million for the third quarter of 2007. The decrease in noninterest expense from the second to the third quarter of 2008 was primarily attributable to the following:

•

Coco Loss of $3.9 million (non-tax deductible) recorded during the second quarter of 2008, related to our cash settlement of the early conversion of certain zero-coupon convertible subordinated notes. In connection with this early conversion settlement payment, we exercised call options pursuant to our call-spread arrangement and received a corresponding cash payment of $3.9 million from the counterparty. As a result, this loss had no net impact on our total stockholders’ equity for the second quarter of 2008.

•

A decrease in the provision for unfunded credit commitments of $1.8 million. We recorded a reduction of the provision for unfunded credit commitments of $1.0 million for the third quarter of 2008, compared to a provision of $0.8 million for the second quarter of 2008. The reduction of the provision for unfunded credit commitments of $1.0 million for the third quarter of 2008 was primarily due to lower utilization of unfunded commitments.

Non-GAAP noninterest expense, net of minority interest, was $77.6 million for the third quarter of 2008, compared to $80.9 million excluding the $3.9 million Coco Loss, net of minority interest, for the second quarter of 2008 and $80.3 million for the third quarter of 2007. Reconciliations of our non-GAAP noninterest expense, excluding the $3.9 million Coco Loss, goodwill impairment charges, and net of minority interest, are provided under the section “Use of Non-GAAP Financial Measures.”

Income Tax Expense

Our effective tax rate was 39.25 percent for the third quarter of 2008, compared to 43.66 percent for the second quarter of 2008 and 40.60 percent for the third quarter of 2007. The decrease in the tax rate from the second to the third quarter of 2008 was primarily attributable to the $3.9 million non-tax deductible Coco Loss.

Our effective tax rate for the nine months ended September 30, 2008 was 40.90 percent, compared to 40.95 percent for the comparable 2007 period. The decrease in the tax rate was primarily attributable to the tax impact of lower non-deductible share-based compensation expense and the effect of more tax-advantaged investments on our overall pre-tax income. These decreases were partially offset by an increase in the tax rate from the $3.9 million non-tax deductible Coco Loss.

Credit Quality


	Three months ended									Nine months ended
(Dollars in thousands)	September 30, 2008			June 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007
Allowance for loan losses, beginning balance	$	52,888		$	49,636		$	43,352		$	47,293		$	42,747
Provision for loan losses		13,682			8,351			3,155			29,756			10,865
Gross loan charge-offs		(7,000	)		(9,098	)		(4,138	)		(22,306	)		(14,754	)
Loan recoveries		720			3,999			1,856			5,547			5,367

Allowance for loan losses, ending balance	$	60,290		$	52,888		$	44,225		$	60,290		$	44,225

Provision as a percentage of total gross loans (annualized)		1.02	%		0.72	%		0.33	%		0.75	%		0.38	%
Gross charge-offs as a percentage of total gross loans (annualized)		0.52			0.78			0.43			0.56			0.51
Net charge-offs as a percentage of total gross loans (annualized)		0.47			0.44			0.24			0.42			0.33
Allowance for loan losses as a percentage of total gross loans		1.13	%		1.13	%		1.15	%		1.13	%		1.15	%
Total gross loans	$	5,323,323		$	4,666,989		$	3,844,185		$	5,323,323		$	3,844,185

Our provision for loan losses increased by $5.3 million for the third quarter of 2008, compared to the second quarter of 2008, primarily due to growth in our loan portfolio and a decrease in loan recoveries of $3.3 million, partially offset by a decrease in gross loan charge-offs of $2.1 million. Gross loan charge-offs of $7.0 million and loan recoveries of $0.7 million for the third quarter of 2008 primarily came from our early-stage client loan portfolio.

Minority Interest in Consolidated Affiliates

Minority interest in net losses of consolidated affiliates was $1.7 million for the third quarter of 2008, compared to a net loss of $1.5 million for the second quarter of 2008 and net income of $10.5 million for the third quarter of 2007. Minority interest in net losses of consolidated affiliates of $1.7 million for the third quarter of 2008 was primarily attributable to the following:

•

Noninterest expense of $2.9 million, principally related to management fees paid by our managed funds to the general partners at SVB Capital for funds management.

•

Net investment losses and carried interest of $1.9 million from our funds of funds and net investment losses and carried interest of $1.1 million from our sponsored debt funds.

•

Net investment gains from our managed co-investment funds of $4.1 million.

Minority interest in capital of consolidated affiliates increased by $33.6 million for the third quarter of 2008, compared to the second quarter of 2008, due to equity transactions, which included paid capital calls of $39.2 million made to our consolidated affiliates, partially offset by $3.9 million in distributions to the minority interest holders.

Capital

We did not repurchase any shares of our common stock during the third quarter of 2008. This compares to repurchases of 25,000 shares for $1.0 million during the second quarter of 2008 and 1,140,700 shares for $58.0 million during the third quarter of 2007. We repurchased 1,004,628 shares of our common stock during the nine months ended September 30, 2008 at an aggregate cost of $45.6 million, compared to 1,926,693 shares for the nine months ended September 30, 2007 at an aggregate cost of $97.3 million. On July 24, 2008, our Board of Directors approved a stock repurchase program authorizing us to purchase up to $150 million of our common stock, which expires on December 31, 2009. At September 30, 2008, $150 million of repurchases remain authorized under our stock repurchase program.

Weighted-average diluted common shares outstanding decreased by 414,364 shares from the second to the third quarter of 2008, primarily due to the maturity of our zero-coupon convertible subordinated notes issued in June 2008. This decrease was partially offset by an increase in stock option exercises during the third quarter of 2008 and the dilutive impact from our $250 million of 3.875% convertible senior notes in April 2008 as the average market price of our common stock was higher than the conversion price for the third quarter of 2008.

Additional paid-in-capital increased by $23.8 million from the second to the third quarter of 2008, primarily due to higher stock option exercises.

Outlook for the Year Ending December 31, 2008

Our outlook for the year ending December 31, 2008 is provided below on a GAAP basis, unless otherwise noted. We have provided our current outlook for the expected results of our significant forecasted activities. However, we do not provide our outlook for selected items where the timing and financial impact is particularly uncertain, or for certain potential unusual or one-time items. The outlook observations presented below are, by their nature, forward-looking statements and are subject to substantial risks and uncertainties which are discussed below under the caption “Forward-Looking Statements”.

For the year ending December 31, 2008, compared to our 2007 results, we currently expect the following outlook:


	Current outlook compared to 2007 results (as of October 23, 2008)	Change in outlook compared to outlook reported as of July 24, 2008
Average loan balance	increase at a percentage rate in the mid thirties range	outlook increased from high twenties range

Average deposit balance (majority of growth from interest-bearing deposits)	increase at a percentage rate in the low twenties range	outlook increased from high teens range

Net interest margin	we expect our net interest margin to range from 5.60% to 5.80% for 2008	outlook changed to include federal reserve rate cuts through the date of this release

Fees for deposit services, letters of credit and foreign exchange, in aggregate	increase at a percentage rate in the low thirties range	outlook increased from mid twenties range

Client investment fees	increase at a percentage rate in the mid single digit range	no change from previous outlook

Allowance for loan losses as a percentage of gross loans	remain flat	no change from previous outlook

Noninterest expense* (excluding expenses related to minority interest, Coco Loss, and goodwill impairment)	increase at a percentage rate in the low single digit range	outlook decreased from mid single digit range

non-GAAP

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts, such as forecasts of our future financial results and condition, expectations for our operations and business, and our underlying assumptions of such forecasts and expectations. In this release, particularly in the section “Outlook for the Year Ending December 31, 2008” above, we make forward-looking statements discussing management’s expectations about economic conditions, opportunities in the market, and our financial and credit performance and financial results (and the components of such results) for the year 2008.

Although management believes that the expectations reflected in our forward-looking statements are reasonable and has based these expectations on our beliefs and assumptions, such expectations are not guarantees and may prove to be incorrect. Actual results could differ significantly. Factors that may cause the outlook for the year 2008 and other forward-looking statements herein to change include, among others, the following: (i) accounting changes, as required by U.S. generally accepted accounting principles, (ii) changes in the state of the economy or the markets in which we conduct business or are served by us, (iii) changes in credit quality of our loan portfolio, (iv) changes in interest rates or market levels or factors affecting them, (v) changes in the performance or equity valuations of companies in which we have invested or hold derivative instruments or equity warrant assets, and (vi) variations from our expectations as to factors impacting our cost structure. For additional information about these factors, please refer to our public reports filed with the U.S. Securities and Exchange Commission, including our most recently-filed quarterly or annual report. The forward-looking statements included in this release are made only as of the date of this release. We do not intend, and undertake no obligation, to update these forward-looking statements.

Earnings Conference Call

On October 23, 2008, we will host a conference call at 2:00 p.m. (Pacific Time) to discuss the financial results for the third quarter ended September 30, 2008. The conference call can be accessed by dialing (866) 916-4782 or (706) 902-0678, and referencing the conference ID “68187663”. A live webcast of the audio portion of the call can be accessed on the Investor Relations section of our website at www.svb.com. A replay of the conference call will be available beginning at approximately 6:00 p.m. (Pacific Time) on Thursday, October 23, 2008, through midnight on Thursday, November 6, 2008, by dialing (800) 642-1687 or (706) 645-9291 and referencing conference ID number “68187663.” A replay of the audio webcast will also be available on www.svb.com for 12 months beginning Thursday, October 23, 2008.

About SVB Financial Group

For 25 years, SVB Financial Group and its subsidiaries, including Silicon Valley Bank, have been dedicated to helping entrepreneurs succeed. SVB Financial Group is a financial holding company that serves companies in the technology, life science, venture capital/private equity and premium wine industries. Offering diversified financial services through Silicon Valley Bank, SVB Analytics, SVB Capital, SVB Global and SVB Private Client Services, SVB Financial Group provides clients with commercial, investment, international and private banking services. The Company also offers funds management, broker-dealer services, asset management and a wide range of financial services for companies of all sizes and stages, as well as the added value of its knowledge and networks worldwide. Headquartered in Santa Clara, California, SVB Financial Group operates through 27 offices in the U.S. and five internationally in China, India, Israel and the United Kingdom. More information on the Company can be found at www.svb.com.

Banking services are provided by Silicon Valley Bank, the California bank subsidiary and commercial banking operation of SVB Financial Group, and a member of the FDIC and the Federal Reserve. SVB Private Client Services is a division of Silicon Valley Bank. SVB Financial Group is also a member of the Federal Reserve.

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three months ended								Nine months ended
(Dollars in thousands, except share data)	September 30, 2008			June 30, 2008		September 30, 2007			September 30, 2008			September 30, 2007
Interest income:
Loans	$	94,256		$	84,515	$	93,243		$	268,530		$	267,526
Investment securities:
Taxable		15,321			14,586		14,915			43,677			46,990
Non-taxable		1,106			1,078		528			3,121			1,692
Federal funds sold, securities purchased under agreement to resell and other short-term investment securities		2,712			3,684		4,485			10,513			12,660

Total interest income		113,395			103,863		113,171			325,841			328,868

Interest expense:
Deposits		6,267			5,372		3,572			16,908			8,328
Borrowings		11,999			10,627		13,891			33,859			36,892

Total interest expense		18,266			15,999		17,463			50,767			45,220

Net interest income		95,129			87,864		95,708			275,074			283,648
Provision for loan losses		13,682			8,351		3,155			29,756			10,865

Net interest income after provision for loan losses		81,447			79,513		92,553			245,318			272,783

Noninterest income:
Client investment fees		13,636			13,648		13,127			41,006			37,813
Foreign exchange fees		8,641			7,961		6,714			24,446			17,778
Deposit service charges		6,129			6,056		3,933			18,076			10,711
Gains on derivative instruments, net		6,472			4,408		8,790			13,479			15,514
Letter of credit and standby letter of credit income		3,050			3,142		2,671			9,138			8,363
Corporate finance fees		—			—		5,166			3,640			11,568
(Losses) gains on investment securities, net		(876	)		2,039		14,719			(4,949	)		40,611
Other		4,695			6,683		9,914			22,413			25,837

Total noninterest income		41,747			43,937		65,034			127,249			168,195

Noninterest expense:
Compensation and benefits (1)		49,598			50,059		56,460			153,438			161,777
Professional services		9,623			9,132		7,847			27,556			23,673
Premises and equipment		5,781			5,455		4,567			16,424			14,820
Net occupancy		4,135			4,342		5,149			12,825			16,238
Business development and travel		3,389			3,764		2,429			10,575			8,747
Correspondent bank fees		1,689			1,816		1,511			5,011			4,371
Telephone		1,373			1,345		1,178			3,870			4,034
Loss from cash settlement of conversion premium of zero-coupon convertible subordinated notes		—			3,858		—			3,858			—
Data processing services		1,082			1,116		1,054			3,275			2,940
(Reduction of) provision for unfunded credit commitments		(990	)		800		(973	)		(355	)		(2,778	)
Impairment of goodwill		—			—		—			—			17,204
Other		4,751			5,502		3,737			14,580			11,966

Total noninterest expense		80,431			87,189		82,959			251,057			262,992

Income before minority interest in net loss (income) of consolidated affiliates and income tax expense		42,763			36,261		74,628			121,510			177,986
Minority interest in net loss (income) of consolidated affiliates		1,693			1,534		(10,458	)		7,445			(26,639	)

Income before income tax expense		44,456			37,795		64,170			128,955			151,347
Income tax expense		17,448			16,500		26,054			52,749			61,975

Net income	$	27,008		$	21,295	$	38,116		$	76,206		$	89,372

Earnings per common share — basic	$	0.83		$	0.66	$	1.12		$	2.36		$	2.61
Earnings per common share — diluted	$	0.80		$	0.62	$	1.03		$	2.22		$	2.41
Weighted average shares outstanding — basic		32,534,613			32,053,749		34,028,704			32,295,612			34,254,952
Weighted average shares outstanding — diluted		33,778,095			34,192,459		36,869,496			34,255,320			37,131,653

(1)

Compensation and benefits included share-based payments of $3.5 million, $3.9 million and $3.8 million for the quarters ended September 30, 2008, June 30, 2008 and September 30, 2007, respectively, and $10.9 million and $12.0 million for the nine months ended September 30, 2008 and 2007, respectively.

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

(Unaudited)


(Dollars in thousands, except par value, share data and ratios)	September 30, 2008			June 30, 2008			September 30, 2007
Assets:
Cash and due from banks	$	373,510		$	305,142		$	356,742
Securities purchased under agreement to resell and other short-term investment securities		379,088			325,723			302,377
Investment securities		1,779,978			1,787,996			1,571,619
Loans, net of unearned income		5,285,101			4,633,701			3,818,268
Allowance for loan losses		(60,290	)		(52,888	)		(44,225	)

Net loans		5,224,811			4,580,813			3,774,043

Premises and equipment, net of accumulated depreciation and amortization		32,344			34,787			39,016
Goodwill		4,092			4,092			4,092
Accrued interest receivable and other assets		277,122			271,318			256,199

Total assets	$	8,070,945		$	7,309,871		$	6,304,088

Liabilities, Minority Interest and Stockholders’ Equity:
Liabilities:
Deposits:
Noninterest-bearing demand	$	3,231,281		$	2,919,205		$	2,892,102
Negotiable order of withdrawal (NOW)		57,231			48,032			23,099
Money market		1,334,393			1,131,154			723,369
Time		387,236			410,591			334,670
Sweep		422,468			354,598			—

Total deposits		5,432,609			4,863,580			3,973,240

Short-term borrowings		425,000			330,000			370,000
Other liabilities		175,740			163,911			196,713
Long-term debt		981,946			975,878			855,370

Total liabilities		7,015,295			6,333,369			5,395,323

Minority interest in capital of consolidated affiliates		324,998			291,375			236,131
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; 32,735,732 shares, 32,252,367 shares and 33,448,121 shares outstanding, respectively		33			32			33
Additional paid-in capital		23,816			—			—
Retained earnings		725,737			698,729			687,350
Accumulated other comprehensive loss		(18,934	)		(13,634	)		(14,749	)

Total stockholders’ equity		730,652			685,127			672,634

Total liabilities, minority interest and stockholders’ equity	$	8,070,945		$	7,309,871		$	6,304,088

Capital Ratios:
Total risk-based capital ratio		14.33	%		15.10	%		17.64	%
Tier 1 risk-based capital ratio		10.00			10.43			12.38
Tier 1 leverage ratio		10.85			10.72			12.40
Other Period-End Statistics:
Tangible common equity to tangible assets ratio		9.20			9.47			10.80
Loans, net of unearned income-to-deposits ratio		97.28	%		95.27	%		96.10	%
Book value per share	$	22.32		$	21.24		$	20.11
Full-time equivalent employees		1,237			1,209			1,141

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM AVERAGE BALANCES, RATES AND YIELDS

(Unaudited)


	Three months ended
	September 30, 2008							June 30, 2008							September 30, 2007
(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 funds sold, securities purchased under agreement to resell and other short-term investment securities (1)	$	383,009		$	2,712	2.82	%	$	597,673		$	3,684	2.48	%	$	350,833		$	4,485	5.07	%
Investment securities:
Taxable		1,288,039			15,321	4.73			1,233,490			14,586	4.76			1,277,910			14,915	4.63
Non-taxable (2)		108,115			1,701	6.26			102,989			1,659	6.48			48,486			813	6.65
Total loans, net of unearned income		4,863,706			94,256	7.71			4,319,897			84,515	7.87			3,630,279			93,243	10.19

Total interest-earning assets		6,642,869			113,990	6.82			6,254,049			104,444	6.72			5,307,508			113,456	8.48

Cash and due from banks		243,621							249,074							283,711
Allowance for loan losses		(55,998	)						(52,776	)						(45,174	)
Goodwill		4,092							4,092							4,092
Other assets (3)		713,487							703,651							537,179

Total assets	$	7,548,071						$	7,158,090						$	6,087,316

Funding sources:
Interest-bearing liabilities:
NOW deposits	$	42,538		$	53	0.50	%	$	51,992		$	71	0.55	%	$	30,647		$	31	0.40	%
Regular money market deposits		139,210			530	1.51			152,707			533	1.40			149,580			513	1.36
Bonus money market deposits		1,027,018			3,089	1.20			900,767			2,467	1.10			567,345			2,283	1.60
Time deposits		395,970			898	0.90			387,981			920	0.95			321,243			745	0.92
Sweep deposits		389,231			1,697	1.73			322,420			1,381	1.72			—			—	—

Total interest-bearing deposits		1,993,967			6,267	1.25			1,815,867			5,372	1.19			1,068,815			3,572	1.33
Short-term borrowings		544,301			3,042	2.22			205,983			1,104	2.16			205,715			2,701	5.21
Zero-coupon convertible subordinated notes		—			—	—			134,158			234	0.70			149,011			232	0.62
3.875% convertible senior notes		250,000			2,972	4.73			229,121			2,723	4.78			—			—	—
Junior subordinated debentures		52,502			514	3.89			53,090			540	4.09			49,798			853	6.80
Senior and subordinated notes		522,302			4,381	3.34			531,086			4,874	3.69			495,771			7,992	6.40
Other long-term debt		151,998			1,090	2.85			152,386			1,152	3.04			152,669			2,113	5.49

Total interest-bearing liabilities		3,515,070			18,266	2.07			3,121,691			15,999	2.06			2,121,779			17,463	3.27
Portion of noninterest-bearing funding sources		3,127,799							3,132,358							3,185,729

Total funding sources		6,642,869			18,266	1.09			6,254,049			15,999	1.03			5,307,508			17,463	1.30

Noninterest-bearing funding sources:
Demand deposits		2,826,289							2,832,956							2,867,812
Other liabilities		194,426							243,316							193,955
Minority interest in capital of consolidated affiliates		300,305							282,285							227,072
Stockholders’ equity		711,981							677,842							676,698
Portion used to fund interest-earning assets		(3,127,799	)						(3,132,358	)						(3,185,729	)

Total liabilities, minority interest and stockholders’ equity	$	7,548,071						$	7,158,090						$	6,087,316

Net interest income and margin				$	95,724	5.73	%				$	88,445	5.69	%				$	95,993	7.18	%

Total deposits	$	4,820,256						$	4,648,823						$	3,936,627

Average stockholders’ equity as a percentage of average assets						9.43	%						9.47	%						11.12	%

(1)	Includes average interest-bearing deposits in other financial institutions of $90.0 million, $99.2 million and $59.4 million for the quarters ended September 30, 2008, June 30, 2008 and September 30, 2007, respectively.

(2)

Interest income on non-taxable investments is presented on a fully tax-equivalent basis using the federal statutory income tax rate of 35.0 percent. The tax equivalent adjustments were $0.6 million, $0.6 million and $0.3 million for the quarters ended September 30, 2008, June 30, 2008 and September 30, 2007, respectively.

(3)

Average investment securities of $388.2 million, $373.3 million and $250.3 million for the quarters ended September 30, 2008, June 30, 2008 and September 30, 2007, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable securities.

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM AVERAGE BALANCES, RATES AND YIELDS

(Unaudited)


	Nine months ended September 30,
	2008							2007
(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 agreement to resell and other short-term investment securities (1)	$	484,892		$	10,513	2.90	%	$	326,761		$	12,660	5.18	%
Investment securities:
Taxable		1,231,948			43,677	4.74			1,340,953			46,990	4.69
Non-taxable (2)		100,184			4,801	6.40			50,618			2,603	6.88
Total loans, net of unearned income		4,433,731			268,530	8.09			3,439,524			267,526	10.40

Total interest-earning assets		6,250,755			327,521	7.00			5,157,856			329,779	8.55

Cash and due from banks		256,343							276,202
Allowance for loan losses		(52,363	)						(42,979	)
Goodwill		4,092							15,435
Other assets (3)		695,343							509,414

Total assets	$	7,154,170						$	5,915,928

Funding sources:
Interest-bearing liabilities:
NOW deposits	$	43,888		$	161	0.49	%	$	36,114		$	107	0.40	%
Regular money market deposits		142,787			1,487	1.39			161,748			1,414	1.17
Bonus money market deposits		934,253			8,791	1.26			523,636			4,548	1.16
Time deposits		375,914			2,584	0.92			320,180			2,259	0.94
Sweep deposits		285,681			3,885	1.82			—			—	—

Total interest-bearing deposits		1,782,523			16,908	1.27			1,041,678			8,328	1.07
Short-term borrowings		329,198			5,957	2.42			388,622			15,556	5.35
Zero-coupon convertible subordinated notes		94,146			473	0.67			148,789			709	0.64
3.875% convertible senior notes		160,036			5,695	4.75			—			—	—
Junior subordinated debentures		52,853			1,779	4.50			50,704			2,563	6.76
Senior and subordinated notes		528,565			16,109	4.07			246,775			11,837	6.41
Other long-term debt		152,339			3,846	3.37			152,669			6,227	5.45

Total interest-bearing liabilities		3,099,660			50,767	2.19			2,029,237			45,220	2.98
Portion of noninterest-bearing funding sources		3,151,095							3,128,619

Total funding sources		6,250,755			50,767	1.09			5,157,856			45,220	1.17

Noninterest-bearing funding sources:
Demand deposits		2,852,851							2,838,187
Other liabilities		227,628							183,440
Minority interest in capital of consolidated affiliates		281,487							199,927
Stockholders’ equity		692,544							665,137
Portion used to fund interest-earning assets		(3,151,095	)						(3,128,619	)

Total liabilities, minority interest and stockholders’ equity	$	7,154,170						$	5,915,928

Net interest income and margin				$	276,754	5.91	%				$	284,559	7.38	%

Total deposits	$	4,635,374						$	3,879,865

Average stockholders’ equity as a percentage of average assets						9.68	%						11.24	%

(1)	Includes average interest-bearing deposits in other financial institutions of $90.7 million and $50.8 million for the nine months ended September 30, 2008 and 2007, respectively.

(2)	Interest income on non-taxable investments is presented on a fully tax-equivalent basis using the federal statutory income tax rate of 35.0 percent. The tax equivalent adjustments were $1.7 million and $0.9 million for the nine months ended September 30, 2008 and 2007, respectively.

(3)	Average investment securities of $369.0 million and $233.2 million for the nine months ended September 30, 2008 and 2007, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable securities.

Gains on Derivative Instruments, Net


	Three months ended													Nine months ended
										% Change
(Dollars in thousands)	September 30, 2008			June 30, 2008			September 30, 2007			June 30, 2008		September 30, 2007		September 30, 2008			September 30, 2007			% Change
Gains (losses) on foreign exchange forward contracts, net:
Gains on client foreign exchange forward contracts, net (1)	$	561		$	478		$	360		17.4	%	55.8	%	$	1,767		$	1,265		39.7	%
Gains (losses) on internal foreign exchange forward contracts, net (2)		4,452			624			(450	)	613.5		—			1,985			(884	)	(324.5	)

Total gains (losses) on foreign exchange forward contracts, net		5,013			1,102			(90	)	354.9		—			3,752			381		884.8
Change in fair value of interest rate swap (3)		(10	)		879			(338	)	(101.1	)	(97.0	)		376			(81	)	(564.2	)
Gains on covered call options, net (4)		24			377			—		(93.6	)	—			402			—		—
Equity warrant assets:
Gains on exercise, net		1,130			676			7,689		67.2		(85.3	)		6,321			11,555		(45.3	)
Change in fair value (5):
Cancellations and expirations		(950	)		(488	)		(514	)	94.7		84.8			(1,895	)		(1,981	)	(4.3	)
Other changes in fair value		1,265			1,862			2,043		(32.1	)	(38.1	)		4,523			5,640		(19.8	)

Total net gains on equity warrant assets (6)		1,445			2,050			9,218		(29.5	)	(84.3	)		8,949			15,214		(41.2	)

Total gains on derivative instruments, net	$	6,472		$	4,408		$	8,790		46.8	%	(26.4	)%	$	13,479		$	15,514		(13.1	)%

(1)	Represents the net gains for foreign exchange forward contracts executed on behalf of clients.

(2)

Represents the change in the fair value of foreign exchange forward contracts to economically reduce our foreign exchange exposure risk related to certain foreign currency denominated loans. Revaluations of foreign currency denominated loans are recorded on the line item “Other” as part of noninterest income, a component of consolidated net income.

(3)	Represents the change in the fair value hedge of the hedging relationship from the interest rate swap agreement related to our junior subordinated debentures.

(4)	Represents net gains on covered call options held by one of our sponsored debt funds.

(5)	At September 30, 2008, we held warrants in 1,258 companies, compared to 1,217 companies at June 30, 2008 and 1,206 companies at September 30, 2007.

(6)	Includes net gains on equity warrant assets held by consolidated investment affiliates. Relevant amounts attributable to minority interests are reflected in the interim consolidated statements of income under the caption “Minority Interest in Net Loss (Income) of Consolidated Affiliates”.

Minority Interest in Net Loss (Income) of Consolidated Affiliates


	Three months ended									Nine months ended
(Dollars in thousands)	September 30, 2008			June 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007
Net interest income (1)	$	(129	)	$	(106	)	$	(357	)	$	(492	)	$	(1,045	)
Noninterest income (1)		(1,393	)		(1,528	)		(12,429	)		(1,946	)		(30,995	)
Noninterest expense (1)		2,864			2,457			2,665			8,080			8,189
Carried interest (2)		351			711			(337	)		1,803			(2,788	)

Total minority interest in net loss (income) of consolidated affiliates	$	1,693		$	1,534		$	(10,458	)	$	7,445		$	(26,639	)

(1)	Represents minority interest share in net interest income, noninterest income, and noninterest expense of consolidated affiliates.

(2)	Represents the preferred allocation of income earned primarily by the general partners managing one of our sponsored debt funds and two of our managed funds of funds.

Reconciliation of Basic and Diluted Weighted Average Shares Outstanding


	Three months ended			Nine months ended
(Shares in thousands)	September 30, 2008	June 30, 2008	September 30, 2007	September 30, 2008	September 30, 2007
Weighted average shares outstanding-basic	32,535	32,054	34,029	32,296	34,255
Effect of dilutive securities:
Stock options	994	968	1,233	998	1,310
Restricted stock awards and units	106	87	63	93	83
Zero-coupon convertible subordinated notes (1)	—	1,083	1,540	868	1,484
Warrants associated with zero-coupon convertible subordinated notes (1)	—	—	4	—	—
3.875% convertible senior notes (2)	143	—	—	—	—
Warrants associated with 3.875% convertible senior notes (2)	—	—	—	—	—

Total effect of dilutive securities	1,243	2,138	2,840	1,959	2,877

Weighted average shares outstanding-diluted	33,778	34,192	36,869	34,255	37,132

(1)

The dilutive effect of our convertible subordinated notes was calculated using the treasury stock method based on our average share price and is dilutive at an average share price of $33.6277. The associated warrants were dilutive beginning at an average share price of $51.34. These notes and the associated warrants matured on June 15, 2008.

(2)	The dilutive effect of our convertible senior notes is calculated using the treasury stock method based on our average share price and is dilutive at an average share price of $53.04. The associated warrants are dilutive beginning at an average share price of $64.43.

Credit Quality


	Period end balances at
(Dollars in thousands)	September 30, 2008			June 30, 2008			September 30, 2007
Nonperforming loans and assets:
Nonperforming loans:
Loans past due 90 days or more	$	247		$	1,151		$	—
Nonaccrual loans		9,140			8,497			9,891

Total nonperforming loans		9,387			9,648			9,891
Other real estate owned		1,385			1,612			—

Total nonperforming assets	$	10,772		$	11,260		$	9,891

Nonperforming loans as a percentage of total gross loans		0.18	%		0.21	%		0.26	%
Nonperforming assets as a percentage of total assets		0.13	%		0.15	%		0.16	%
Allowance for loan losses	$	60,290		$	52,888		$	44,225
As a percentage of total gross loans		1.13	%		1.13	%		1.15	%
As a percentage of nonperforming loans		642.27	%		548.18	%		447.12	%
Reserve for unfunded credit commitments (1)	$	13,091		$	14,081		$	11,875
Total gross loans	$	5,323,323		$	4,666,989		$	3,844,185
Total unfunded credit commitments	$	5,619,021		$	5,034,283		$	4,468,992

(1)	The “Reserve for Unfunded Credit Commitments” is included as a component of “Other Liabilities”.

Average Client Investment Funds (1)


	Three months ended						Nine months ended
(Dollars in millions)	September 30, 2008		June 30, 2008		September 30, 2007		September 30, 2008		September 30, 2007
Client directed investment assets	$	12,948	$	12,734	$	12,557	$	12,819	$	12,226
Client investment assets under management		6,406		6,006		5,734		6,262		5,467
Sweep money market funds		2,682		2,649		2,414		2,692		2,379

Total average client investment funds	$	22,036	$	21,389	$	20,705	$	21,773	$	20,072

(1)	Client Investment Funds invested through SVB Financial Group are maintained at third party financial institutions.

Average client investment funds increased by $647.0 million to $22.0 billion for the third quarter of 2008, compared to $21.4 billion for the second quarter of 2008, primarily from our private equity and life science clients. Period-end total client investment funds were $21.5 billion at September 30, 2008, compared to $21.9 billion at June 30, 2008 and $20.4 billion at September 30, 2007.

Use of Non-GAAP Financial Measures

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 (non-GAAP net income, non-GAAP noninterest income, non-GAAP net (losses) gains on investment securities, non-GAAP net gains on derivative instruments and non-GAAP noninterest expense) of financial performance. Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

In particular, in this press release, we use certain non-GAAP measures which exclude from our GAAP net income in certain periods:

•

Income and expense that are attributable to minority interests - As part of our funds management business, we recognize the entire income or loss from funds where we own significantly less than 100%. We are required under GAAP to consolidate 100% of the results of the funds that we are deemed to control. Similarly, we are required under GAAP to consolidate the results of eProsper, of which we own 65%. The relevant amounts attributable to investors other than us are reflected under “Minority Interest in Net Loss (Income) of Consolidated Affiliates.” Our net income as reported in that section includes only the portion of income or loss that is attributable to our ownership interest.

•

Certain non-tax deductible noninterest expense related to the conversion settlement of certain zero-coupon convertible notes - included in our GAAP net income for the second quarter of 2008 is a non-tax deductible noninterest expense related to the conversion premium value of certain of our zero-coupon convertible notes that were converted prior to their maturity. In connection with these early conversion settlements, we exercised call options pursuant to our call-spread arrangement and received a corresponding cash payment which was reflected in stockholders’ equity as additional paid-in capital. As a result, the noninterest expense reflected in net income in these periods had no net impact on our total stockholders’ equity.

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding amounts attributable to minority interests, where indicated, or certain items that do not occur in every reporting period of our core business, operating results or future outlook. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate a comparison of our performance to prior periods. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, net income, or other financial measures prepared in accordance with GAAP. In the financial table below, we have provided a reconciliation of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release.

SVB FINANCIAL GROUP AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME

(Unaudited)


	Three months ended						Nine months ended
(Dollars in thousands except share amounts)	September 30, 2008		June 30, 2008		September 30, 2007		September 30, 2008		September 30, 2007
Net income	$	27,008	$	21,295	$	38,116	$	76,206	$	89,372
Impact of loss from conversion of certain zero-coupon convertible subordinated notes (1)		—		3,858		—		3,858		—
Impact of impairment of goodwill on income before income taxes (2)		—		—		—		—		17,204
Impact of impairment of goodwill on income tax benefit (3)		—		—		—		—		(7,010	)

Non-GAAP net income	$	27,008	$	25,153	$	38,116	$	80,064	$	99,566

Weighted average diluted shares outstanding		33,778,095		34,192,459		36,869,496		34,255,320		37,131,653

(1)

Represents the portion of the conversion payment that exceeded the principal amount related to a conversion of $7.8 million of our zero-coupon convertible subordinated notes, which we settled in cash in the second quarter of 2008. This non-tax deductible loss did not have any impact on our tax provision.

(2)	Goodwill impairment charge for SVB Alliant recognized in the second quarter of 2007.

(3)	Tax benefit recognized in the second quarter of 2007 from goodwill impairment at SVB Alliant tax rate.


	Three months ended									Nine months ended
Non-GAAP noninterest income, net of minority interest (Dollars in thousands)	September 30, 2008			June 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007
GAAP noninterest income	$	41,747		$	43,937		$	65,034		$	127,249		$	168,195
Less: income attributable to minority interests, including carried interest		(1,042	)		(817	)		(12,766	)		(143	)		(33,783	)

Non-GAAP noninterest income, net of minority interest	$	40,705		$	43,120		$	52,268		$	127,106		$	134,412


	Three months ended									Nine months ended
Non-GAAP net (losses) gains on investment securities, net of minority interest (Dollars in thousands)	September 30, 2008			June 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007
GAAP net (losses) gains on investment securities	$	(876	)	$	2,039		$	14,719		$	(4,949	)	$	40,611
Less: income attributable to minority interests, including carried interest		(1,220	)		(452	)		(11,885	)		227			(31,502	)

Non-GAAP net (losses) gains on investment securities, net of minority interest	$	(2,096	)	$	1,587		$	2,834		$	(4,722	)	$	9,109


	Three months ended									Nine months ended
Non-GAAP net gains on derivative instruments, net of minority interest (Dollars in thousands)	September 30, 2008			June 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007
GAAP net gains on derivative instruments	$	6,472		$	4,408		$	8,790		$	13,479		$	15,514
Less: income attributable to minority interests		(121	)		(171	)		(760	)		(246	)		(1,027	)

Non-GAAP net gains on derivative instruments, net of minority interest	$	6,351		$	4,237		$	8,030		$	13,233		$	14,487


	Three months ended									Nine months ended
Non-GAAP noninterest expense, net of minority interest (Dollars in thousands)	September 30, 2008			June 30, 2008			September 30, 2007			September 30, 2008			September 30, 2007
GAAP noninterest expense	$	80,431		$	87,189		$	82,959		$	251,057		$	262,992
Less: amounts attributable to minority interests		(2,864	)		(2,457	)		(2,665	)		(8,080	)		(8,189	)
Less: loss from conversion of convertible subordinated notes		—			(3,858	)		—			(3,858	)		—
Less: impact of impairment of goodwill		—			—			—			—			(17,204	)

Non-GAAP noninterest expense, net of minority interest	$	77,567		$	80,874		$	80,294		$	239,119		$	237,599