 February 15, 2012
February 15, 2012
INVESTOR DAY
INVESTOR DAY
SVB Financial Group
SVB Financial Group
Exhibit 99.1 |
 Overview and Strategy
Overview and Strategy
Greg Becker
President & CEO
February 15, 2012
2 |
 Safe
Harbor Disclosure Safe Harbor Disclosure
›
The presentations made at today’s meeting contain projections or other forward-
looking statements regarding management’s expectations about the future events or
the future financial performance of the Company, as well as future economic, market
and tax conditions. Forward-looking statements are statements that are not
historical facts. We wish to caution you that such statements are just predictions
and actual events or results may differ materially, due to changes in economic,
business and regulatory factors and trends. ›
We refer you to the documents the Company files from time to time with the
Securities and Exchange Commission, specifically the Company’s latest Annual
Report on Form 10-K for the year ended December 31, 2010, which was filed on
February 25, 2011, and our latest Quarterly Report on Form 10-Q. These
documents contain and identify important risk factors that could cause the
Company’s actual results to differ materially from those contained in our projections
or other forward-looking statements. All subsequent written or oral forward-looking
statements attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by these cautionary statements. All forward-looking
statements included in this presentation are made only as of today’s date and the
Company undertakes no obligation to update such forward-looking statements.
›
All financial results are for SVB Financial Group, the parent company of
Silicon Valley Bank, unless otherwise noted. |
 What We Will
Cover Today
4
4
What We Will
Cover Today |
 Who
we are and what we do Our recent financial
performance
Our growth strategy and
expectations
Summary and milestones for
2012 –
2015 |
 6
6
Other Things
We Will Cover
Other Things
We Will Cover |
 The
cool things our clients do Our Mission: “Increasing our
clients’
probability of success” |
 But
First, A Few
Introductions…
8
But First,
A Few
Introductions… |
 Greg
Becker President & CEO
Dave Jones
Chief Credit Officer
Joan Parsons
Head of U.S. Banking
Bruce Wallace
Chief Operations Officer
Mike Descheneaux
Chief Financial Officer
Who You Will Hear From Today |
 Marc
Verissimo Chief Risk Officer
Mary Dent
General Counsel
Brian Dennehy
Chief Marketing Officer
Chris Edmonds-Waters
Head of Human Resources
Harry Kellogg
Vice Chairman of
Silicon Valley Bank
John China
Head of Relationship
Management
Other Members of Our Team
Other Members of Our Team |
 A Mix
of SVB-Grown and A Mix of SVB-Grown and
Outside Talent
Outside Talent |
 About SVB
12
About SVB |
 Our Mission
13
Our Mission |
 To
increase our To increase our
clients’
clients’
probability of
probability of
success
success
Build Deep Relationships
Give Advice
Make It Easy To Do
Business With Us
Solve Problems
14 |
 Our
Vision 15
Our Vision |
 To
be the premier provider of financial
services and thought
leadership to
innovation companies,
of all sizes, and their
investors, world-wide |
 Implementing Our Vision
Implementing Our Vision
Right Touch
Value Added
Innovation
and
Thought
Leadership
Diversified
Product Set
Focus
Inception to
Infinity
Global
Network |
 What Sets Us
Apart?
18
What Sets Us
Apart? |
 Differentiated
Differentiated
Focus on “innovation”
markets
Mainly balance sheet
lender
Strong deposit franchise
Diversified revenue
streams
Global reach |
 THE
bank for innovation
companies
More than 600 venture/
PE firm clients
Global reputation
Leader
Leader |
 Established
Established
30 years of supporting
innovation
26 U.S. and 7
international offices
$20.0 billion in total
assets
$35.5 billion in total client
funds |
 A
Look Back A Look Back |
 Our
Balance Sheet Has Grown Our Balance Sheet Has Grown
|
 And
Our Bottom Line Has, Too And Our Bottom Line Has, Too
|
 We
Have Evolved… We Have Evolved…
Venture backed
Venture backed
startups
startups
Limited cash
Limited cash
management
management
Limited
Limited
“private client
“private client
services”
services”
Technology
Technology
Domestic commercial
Domestic commercial
banking
banking
2002 |
 From start-up to
From start-up to
$1B revenue
$1B revenue
Diversified
Diversified
Products &
Products &
Services
Services
Dedicated
Dedicated
Private Bank
Private Bank
Innovation
Innovation
Global Banking
Global Banking
2011
By Focusing on What We Do Well
By Focusing on What We Do Well |
 27 |
 Awards and Recognition
Awards and Recognition
Best Companies to Work For in the U.S.
FORTUNE –
2012
America’s 10 Best Banks
Forbes –
2009, 2010 and 2011
Lender of the Year
Export-Import Bank of the U.S. –
2011
First U.S. commercial bank granted approval
to open a Joint Venture bank in China
Second largest wine industry lender
North Bay Business Journal |
 Who
Are Our Clients?
(And What Do They Do?)
29
Who Are Our
Clients?
(And What Do They Do?) |
 Networking
Software
Storage
Life Science |
 Web
and Social Venture Capital
and Private Equity |
 From
startup to standout
to global standard
~50%
Market Share
<15%
Market Share
< 10%
Market Share
32 |
 What
Do Our Clients Look Like? What Do Our Clients Look Like?
Accelerator
Growth
Corporate Finance
Revenue
Pre-
revenue to $5m
$5m
$75m
$75m +
Ownership
Private, Angel or VC
backing
transition to Public
Public or Private
Product
Pre
product, R&D
focus
Market entry,
continued
R&D
Global product rollout
Management
Founder + startup
team
Specialized
management and
workforce
management,
Risk Profile
Venture
risk
risk
Business risk
–
Private, VC-backed,
Venture risk & Business
-
Professional
fully staffed |
 How
Do We Support Our Clients? How Do We Support Our Clients?
Accelerator
Growth
Corporate Finance
Advice
Investors
Service Providers
Benchmarking
CEO Boot camp
Investors
Benchmarking
M&A
Networking
Global Expansion
M&A
Networking
Credit
Venture Debt
Working Capital
Growth Capital
Working Capital
Mezzanine Debt
M&A Financing
Growth Capital
Working Capital
Mezzanine Debt
M&A Financing
Products
& Services
Deposit Services
Investments
Cash Management
Cards
Deposit Services
F/X
Cash Management
Cards
Global
Investments
Global Cash
Management
Cards |
 Globally
Globally |
 SVB
Global Statistics SVB Global Statistics
>$300 million of loans
8% of total deposits
$24 billion of F/X trades
$31 billion of international wires |
 37 |
 What’s changing now
What’s changing now
Client Facing
Greater focus on “Mission”
Creating a truly “global”
organization
Greater focus on individuals as clients
Deeper cross-selling, increased “wallet share”
Investing in talent (specialized expertise) |
 What’s changing now
What’s changing now
Leveraging technology as a “true”
differentiator
Lowering base costs
(e.g. Tempe)
Adding and developing talent
Infrastructure/Support |
 Diversified Growth Across the Business
GLOBAL PLATFORM
New Global Core
Banking System
IT Backbone Upgrade
Enhanced Global
Payment System
Enhanced On-line/Mobile
Systems
PRODUCT LINES
Expanded Banking
Network
New Payment Solutions
New Products &
Services
Enhanced Credit
Solutions
CLIENT NEEDS
Client Experience
Corporate Finance
Segment
Growth Segment
Private Bank
Israel
India
UK and
Europe
China
GLOBAL MARKETS & REACH |
 Domestic Opportunity
Domestic Opportunity
Accelerator
Accelerator
Growth
Growth
Corp
Corp
Finance
Finance
VC/PE
VC/PE
Private
Private
Bank
Bank
Wine
Wine
Market
Direction
SVB
Opportunity
0-2 Years
SVB
Opportunity
3-5 Years
High
Medium
Low
Growing Market
Stable market |
 Global Opportunity
Global Opportunity
UK/
UK/
Europe
Europe
China
China
India
India
Israel
Israel
International
International
VC/PE
VC/PE
Market
Direction
SVB
Opportunity
0-2 Years
SVB
Opportunity
3-5 Years
High
Medium
Low
Growing Market
Stable market |
 Competitive
Advantage
43
Competitive
Advantage |
 SVB’s Competitive Advantages
SVB’s Competitive Advantages
Focus on our innovation sector
Reputation and long-term commitment
Innovation in products, services and
delivery
Remarkable client service and ease of
use
Ability to recruit, attract and retain the
best people |
 Financial
Performance
45
Financial
Performance |
 We
Have Performed Well Against Our Peers We Have Performed Well Against Our
Peers ROE
Source for median ROE: SNL Financial |
 Financial Goals 2012–2015
Financial Goals 2012–2015
*”Core”
excludes
gains/losses
on
investment
securities
and
gains/losses
on
equity
warrants
High-Performing Bank
~10%+ ROE in low rate environment
~15%+ in normal rate environment
High Growth
~15%+ Core* EPS growth rate per year
~20%+ with increasing rates
with flat rates |
 Takeaways
Takeaways
We are evolving into a global bank.
Our clients are innovative and high
growth.
Our model is unique and defensible.
We have significant growth prospects
and a plan for realizing them.
We expect to deliver “high performing”
financial results. |
 |
 Financial Performance
and Outlook
Financial Performance
and Outlook
Mike Descheneaux
Chief Financial Officer
February 15, 2012 |
 Overview
Overview
Recap of historical financial
performance
Insight into capital
management
SVB’s Outlook vs. The Street |
 All-Time Highs/Bests in 2011
All-Time Highs/Bests in 2011
Assets
Loans
Available-For-Sale
Investment Securities
Deposits |
 All-Time Highs/Bests in 2011
All-Time Highs/Bests in 2011
Net Income
Earnings Per Share
Net Interest Income
Foreign Exchange Fees
Credit Card Fees
Net Charge-offs
Expenses |
 Historical
Financial
Performance
Historical
Financial
Performance |
 Assets at All-Time High
Assets at All-Time High |
 Loans
at All-Time High Loans at All-Time High |
 AFS
Securities at All-Time High AFS Securities at All-Time High
Yield |
 Deposits at All-Time High
Deposits at All-Time High |
 Strong Deposit (and Client Funds) Franchise
Strong Deposit (and Client Funds) Franchise
Billions |
 Strong Deposit (and Client Funds) Franchise
Strong Deposit (and Client Funds) Franchise
Organic Factors
Highly liquid clients
Clients performing well
New client acquisition
Other Factors
Safety of the balance sheet
(unlimited FDIC insurance)
Low rate environment |
 Balance Sheet at 12/31/11
Balance Sheet at 12/31/11
Assets: $20.0B
$10.5B
AFS Securities
$1.0B
Non-Marketable
Securities
(VC Investments)
*
$6.9B
Net Loans
$0.4B
Other Assets
$1.1B Cash & Cash
Equivalents
* Net of non-controlling interests, non-marketable
securities were $357 million. Non-GAAP Number.
Please see our most recent financial releases for
more information. |
 Balance Sheet at 12/31/11
Balance Sheet at 12/31/11
Liabilities: $17.7B
$11.9B
Non-Interest-Bearing
Deposits
$4.8B
Interest-Bearing
Deposits
$0.6B
Long-Term
Debt
$0.4B
Other Liabilities |
 Net
Income at All-Time High Net Income at All-Time High
0.0%
5.0%
10.0%
15.0%
20.0%
$0
$50
$100
$150
$200
2007
2008
2009
2010
Net Income
ROE
Millions
2011
$120.3
$171.9 |
 Net
Interest Income At All-Time High Net Interest Income At All-Time
High 0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
$0
$100
$200
$300
$400
$500
$600
2007
2008
2009
2010
Net interest Income
Net Interest Margin
Millions
2011 |
 EPS
at All-Time High EPS at All-Time High
$3.28
$3.94
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
2007
2008
2009
2010
2011 |
 Warrant Income Highest Since 2000
Warrant Income Highest Since 2000
$23.5
$37.4
$0
$10
$20
$30
$40
2007
2008
2009
2010
2011
Millions |
 Warrant Income Vs. the Nasdaq
Warrant Income Vs. the Nasdaq
Millions
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
1,000
1,400
1,800
2,200
2,600
3,000
2007
2008
2009
2010
2011
Warrant Income
Nasdaq |
 F/X
Fee Income at All-Time High F/X Fee Income at All-Time High
$0
$10
$20
$30
$40
$50
2007
2008
2009
2010
2011
Millions
2011 FX Volumes = $24 Billion
$25.8
$43.9 |
 Credit Card Fee Income at All-Time High
Credit Card Fee Income at All-Time High
$5.8
$18.7
$0
$10
$20
2007
2008
2009
2010
2011
Millions |
 Net
Charge-offs At Very Low Levels Net Charge-offs At Very Low Levels
Millions
$12.3
$40.6
$125.1
$34.5
$1.2
($20)
$30
$80
$130
2007
2008
2009
2010
2011
- |
 $318.6
$492.2
1,145
0
400
800
1200
1600
$0
$250
$500
2007
2008
2009
2010
2011
Millions
FTE
1,451
Expenses at All-Time High
Expenses at All-Time High
* Non-GAAP number. Please see our most recent financial releases for more
information Non-Interest Expense*
FTE |
 Operating Efficiency Ratio
Operating Efficiency Ratio
* Non-GAAP number. Please refer to our most recent financial releases for more
information |
 2007
2008
2009
2010
2011
Diluted Earnings Per
Share
$3.28
$2.16
$0.66
$2.24
$3.94
Net Income Available to
Common Stockholders
$120.3M
$73.6M
$22.7M
$95.0M
$171.9M
Average Loans
(Change)
$3.5B
(+22.2%)
$4.6B
(+31.5%)
$4.7B
(+1.4%)
$4.4B
(-5.6%)
$5.8B
(+31.1%)
Average Deposits
(Change)
$4.0B
(+1.03%)
$4.9B
(+23.6%)
$8.8B
(+79.6%)
$12.0B
(+36.8%)
$15.6B
(+29.4%)
Average AFS Securities
$1.4B
$1.3B
$2.3B
$5.3B
$9.4B
Net Interest Margin
7.19%
5.72%
3.73%
3.08%
3.08%
Net Interest Income
$375.8
$368.6M
$382.2M
$418.1M
$526.3M
Non-Interest Income
$221.0M
$152.4M
$97.7M
$247.5M
$382.3M
Net Charge-Offs
(Recoveries)/ Total
Average Gross Loans
0.35%
0.87%
2.64%
0.77%
(0.02%)
Non-Interest Expense
$346.5M
$312.9M
$343.9M
$422.8M
$500.6M
Financial Highlights: 2007 -
Financial Highlights: 2007 -
2011
2011 |
 Q4
2010 Q1 2011
Q2 2011
Q3 2011
Q4 2011
Diluted Earnings Per
Share
$0.41
$0.76
$1.50
(1)(2)
$0.86
$0.81
Net Income Available to
Common Stockholders
$17.5M
$33.0M
$65.8M
(1)(2)
$37.6M
$35.6M
Average Loans
(Change)
$5.0B
(+11.3%)
$5.3B
(+6.1%)
$5.5B
(+4.2%)
$6.0B
(+8.6%)
$6.4B
(+6.5%)
Average Deposits
(Change)
$13.3B
(+11.6%)
$14.7B
(+10.3%)
$15.3B
(+4.1%)
$15.8B
(+3.5%)
$16.5B
(+4.5%)
Net Interest Margin
2.74%
2.96%
3.13%
3.13%
3.10%
Net Interest Income
$104.5M
$120.3M
$130.5M
$135.5M
$140.1M
Non-Interest Income
$71.9M
$90.0M
$123.7M
(1)
$95.6M
$73.1M
Net Charge-Offs
(Recoveries) /Total
Average Gross Loans
0.57%
(0.19%)
(5)
0.00%
(4)
(0.15%)
(3)
0.22%
Non-Interest Expense
$115.9M
$117.4M
$121.0M
(2)
$127.5M
$134.7M
Recent Quarterly Results
Recent Quarterly Results
(3)
Represents net recoveries of $2.3M.
(4)
Represents net charge-offs of $30K.
(5)
Represents net recoveries of $2.5M.
(1)
Includes gains of $0.51/share or $22.5M (net of tax) from sales of AFS securities.
(2)
Includes gains of $0.04/share or $1.9M (net of tax) from the early extinguishment
of debt and the termination of corresponding interest rate swaps.
|
 Capital
Capital |
 Solid
Capital Ratios Solid Capital Ratios
•
TCE/TA and TCE/RWA are non-GAAP numbers; please refer our most recent financial
releases for more information. |
 Solid
Capital Ratios Solid Capital Ratios
1)
All ratios, except TCE/TA and TCE/RWA are as reported in our most recent Bank Call
Reports. Bank TCE/TA and TCE/RWA ratios are as reported in our most
recent financial releases. 2)
TCE/TA and TCE/RWA are non-GAAP numbers; please refer our most recent financial
releases for more information. 2)
2) |
 Asset
Growth Drove Bank Leverage Ratio in 2011 Asset Growth Drove Bank Leverage Ratio
in 2011 6.00%
6.50%
7.00%
$0
$5
$10
$15
$20
Q410
Q111
Q211
Q311
Q411
Billions
Average Assets (Bank Only)
Bank Tier 1 Leverage Ratio
6.82%
$18.30
$15.40
6.87% |
 Solid
Earnings Stabilized the Ratio Solid Earnings Stabilized the Ratio
Q410
Q111
Q211
Q311
Q411
Bank Quarterly Earnings
Quarterly earnings
$25.0M
$37.0M |
 Capital Management Levers
Capital Management Levers
Continued earnings growth
Targeted off-balance sheet initiatives
Use of cash and investments at holding
company
Sales of AFS securities
Debt issuance at holding company
Equity issuance at holding company |
 SVB’s
Outlook SVB’s Outlook
vs. The Street
vs. The Street |
 Street
Estimates: EPS and ROE* Street Estimates: EPS and ROE*
* Based on published reports providing estimates as of 02/01/12. Certain
estimates and adjustments have been made where necessary. Please refer to analyst reports
before forming any conclusions. |
 Business Driver
Business Driver
2012 outlook
*
Average loans
Mid twenties percent increase
Average deposits
Low teens percent increase
Net interest income
High teens percent increase
Net interest margin
Between 3.20% and 3.30%
Our 2012 Outlook
Our 2012 Outlook
* Outlook is for the full year 2012 as compared to the full year 2011. Please see our most recent
financial releases for more information. |
 Business Driver
Business Driver
2012 outlook
1)
Allowance for loan
losses
2)
Comparable to 2011 levels of
1.23%
Net loan charge-offs
Between 0.40% and 0.70% of
average total gross loans
Non-performing
loans
3)
Lower than 2011 levels of 0.52%
“Core”
Fees
4)
Mid teens percent increase
Non-Interest Expense
5)
High single digit percent increase
Our 2012 Outlook
Our 2012 Outlook
1)
Outlook is for the full year 2012 as compared to the full year 2011. Please see our most
recent financial releases for more information.
2)
Allowance for total gross performing loans as a percent of total gross performing loans. 3)
Non-performing loans as a percentage of total gross loans. 4)
“Core fees include fees for deposit services, letters of credit, credit card, client
investment, and foreign exchange, in aggregate.
5)
Non-interest expense outlook excludes expenses related to non-controlling
interests.
|
 22.1%
35.9%
10.0%
20.0%
30.0%
40.0%
SVB’s 2012
Outlook:
Mid 20%
Growth
SVB’s Outlook
* Based on published reports providing estimates as of 02/01/12. Certain
estimates and adjustments have been made where necessary. Please refer to analyst reports
before forming any conclusions.
Street Estimates vs. SVB: Average Loans* |
 Our
Assumptions Upside
Downside
pre-recession levels
growth
in
2012
among our clients
spending
markets
Drivers: Average Loans
Drivers: Average Loans
Modest
economic
Continued strength
Continued healthy tech
Stabilizing IPO/M&A
Stabilizing VC
investment
Strong economic growth
Strong IPO/M&A markets
VC investment returns to
Lethargic economic
recovery
Decreased technology
spending
Deleveraging by clients
Adverse global events |
 10.8%
17.4%
5.0%
10.0%
15.0%
20.0%
SVB’s 2012
Outlook:
Low
teens
% Growth
SVB’s Outlook
* Based on published reports providing estimates as of 02/01/12. Certain
estimates and adjustments have been made where necessary. Please refer to analyst reports
before forming any conclusions.
Street Estimates vs. SVB: Average Deposits* |
 Our
Assumptions Modest economic growth
in 2012
VC Investment improves
but remains low
Strong tech spending
Success of initiatives to
increase off-balance
sheet funds
Drivers: Average Deposits
Higher Deposit Drivers
Strong economic growth
Increased VC Fundraising
Increased IPO activity
Continued low interest rates
New client acquisition
Lower Deposit Drivers
Strong client adoption of
off-balance sheet products
Continued economic
malaise or downturn
Decrease in tech spending
Increased interest rates
Slowdown in formation of
start-up companies and
their acquisition by SVB |
 14.8%
26.2%
0.0%
10.0%
20.0%
30.0%
SVB’s 2012
Outlook:
High
teens
% Growth
Outlook
* Based on published reports providing estimates as of 02/01/12. Certain
estimates and adjustments have been made where necessary. Please refer to analyst reports
before forming any conclusions.
SVB’s
Street Estimates vs. SVB: Net Interest Income* |
 Our
Assumptions No increase in Fed
Funds rate in 2012
Slower deposit growth
Steady investment
rates and duration
Mid-20s% loan growth
Success in moving
funds off the balance
sheet
Drivers: Net Interest Income
Drivers: Net Interest Income
Upside
Rising rate environment
Continued strong deposit
growth
Strong loan growth
Downside
Movements from demand
deposits to interest-bearing
accounts
Declining loan balances |
 SVB’s
Outlook
SVB’s 2012
Outlook:
Between
3.20% and
3.30%
* Based on published reports providing estimates as of 02/01/12. Certain
estimates and adjustments have been made where necessary. Please refer to analyst reports
before forming any conclusions.
3.16%
3.27%
3.34%
3.10%
3.20%
3.30%
3.40%
Street Estimates vs. SVB: Net Interest Margin* |
 No
increase in Fed Funds rate in 2012
Slower deposit growth
overall
Steady investment rates and
duration
Modest extension of
investment portfolio
duration
Mid-20s% loan growth
Success in moving funds
off the balance sheet
Drivers: Net Interest Margin
Rising rate environment
Demand deposit growth that
outpaces total deposit growth
Strong loan growth
Movements from demand
deposits to interest-bearing
accounts
Declining loan balances
Our Assumptions
Upside
Downside |
 SVB’s 2012
Outlook:
Mid teens
% Growth
•
“Core”
is defined as fees for deposit services, letters of credit, business credit card,
client investment, and foreign exchange, in aggregate. Based on published reports
providing estimates as of 02/01/12. Certain estimates and adjustments have been
made where necessary. Please refer to analyst reports before forming any conclusions.
14.8%
26.2%
10.0%
20.0%
30.0%
SVB’s Outlook
Street Estimates vs. SVB: “Core”
Fee Income* |
 Modest economic
growth in 2012
Continued strength
among our clients
Continued solid
demand for FX and
credit card products
Drivers: “Core”
Fee Income
Significant economic
improvement
Significantly stronger large
client acquisition
Significant increase in
demand for non-credit
products
Longer client retention
Continued economic
malaise or downturn
Decrease in tech spending
Adverse global events
Competitive pricing
pressures
Our Assumptions
Upside
Downside |
 SVB’s Outlook
Street Estimates vs. SVB: Non-interest Expense*
Street Estimates vs. SVB: Non-interest Expense*
SVB’s 2012
Outlook:
High single
digits %
growth
•
Excludes expenses related to non-controlling interests. Based on
published reports providing estimates as of 02/01/12. Certain estimates and adjustments have been
made where necessary. Please refer to analyst reports before forming any
conclusions. 8.0%
12.6%
15.4%
5.0%
10.0%
15.0%
20.0% |
 Drivers: Non-Interest Expense
Accelerators
Exceptional business
Rapid business/ headcount
Higher credit costs
Decelerators
Below target performance
Lack of business
performance
growth
development activity
Our Assumptions
Compensation at
Increased headcount
related to business
development
Building infrastructure
to service global needs
Impact of efficiency
measures (Tempe)
targeted levels |
 Street
Estimates vs. SVB: Net Charge-Offs* Street Estimates vs. SVB: Net
Charge-Offs* SVB’s 2012
Outlook:
Between
0.40% to
0.70% of
average total
gross loans
* Based on published reports providing estimates as of 02/01/12. Certain
estimates and adjustments have been made where necessary. Please refer to analyst reports
before forming any conclusions. |
 Modest economic
growth in 2012
Continued strength
among our clients
VC Investment improves
but remains low
Solid pace of M&A for
our clients
Drivers: NCOs/Loans
Drivers: NCOs/Loans
Strong economic
improvement
Significant increase in VC
investment
Significant increase in
M&A/IPO activity
Economic deterioration
Slowdown in tech spending
Significant slowdown in VC
investment
Significant slowdown in
liquidity events
Our Assumptions
Positive
Negative |
 Street
Estimates vs. SVB: ALLL* Street Estimates vs. SVB: ALLL*
SVB 2012
Outlook:
Comparable
to 2011
Levels of
1.23%
*SVB outlook is for ALLL for total gross performing loans as a percentage of total
gross performing loans. Based on published reports providing estimates as of 02/01/12.
Certain estimates and adjustments have been made where necessary. Please refer to
analyst reports before forming any conclusions. |
 Drivers: ALLL
Drivers: ALLL
Positive
Strong economic
improvement
Significant increase in
VC investment
Significant increase in
M&A/IPO activity
Negative
Economic deterioration
Slowdown in tech spending
Significant slowdown in
VC investment
Significant slowdown in
liquidity events
Strong client
performance
Modest economic
growth
VC Investment
improves but remains
low
Strong tech spending
Our Assumptions |
 Strong client
performance
Modest economic
growth
Modest improvement in
VC investment
Angels/Corporate
venture continue to
expand their role
Investment Securities and
Equity Warrant Drivers
Strong economic
improvement
Significant increase in VC
investment
Significant increase in
M&A/IPO activity
Economic deterioration
Slowdown in tech spending
Significant slowdown in VC
investment
Significant slowdown in
liquidity events
Notable decline in stock
market
Our Assumptions
Upside
Negative |
 Upside Drivers for ROE
Upside Drivers for ROE
Rising interest rates
Economic recovery
Loan growth
Non-credit income
Efficiency ratio (operating leverage)
Investments in the platform to support growth
Recovering M&A and IPO activity
Warrant gains
Private Equity & VC-related investments |
 Higher Loan Balances Will Benefit Us
Higher Loan Balances Will Benefit Us
Growth in
Growth in
Overall Loan
Overall Loan
Balances ($$)
Balances ($$)
Changes in
Changes in
Net Interest
Net Interest
Income
Income
(tax effected)
(tax effected)
Incremental
Incremental
EPS Effect
EPS Effect
Incremental
Incremental
ROE Effect
ROE Effect
Net Interest
Net Interest
Margin Effect
Margin Effect
+250 million
+$10.0M
$0.23
+0.5%
+0.09%
+500 million
+$20.0M
$0.46
+0.9%
+0.18%
+750 million
+$30.0M
$0.69
+1.4%
+0.27%
+1 billion
+$40.1M
$0.92
+1.8%
+0.36%
We expect each $250 million increase in loan volume to
We expect each $250 million increase in loan volume to
contribute approximately $0.23 to EPS*
contribute approximately $0.23 to EPS*
* Estimates are based on static balance sheet and assumptions as of 12/31/11 |
 Rate
Increases Will Benefit Us Significantly Rate Increases Will Benefit Us
Significantly Changes in
Changes in
Fed Funds
Fed Funds
Rate
Rate
(basis points)
(basis points)
Changes in
Changes in
Net Interest
Net Interest
Income
Income
(tax effected)
(tax effected)
Incremental
Incremental
EPS Effect
EPS Effect
Incremental
Incremental
ROE Effect
ROE Effect
Net Interest
Net Interest
Margin Effect
Margin Effect
+75
+$16.8M
$0.39
+0.8%
+0.15%
+100
+$26.4M
$0.61
+1.2%
+0.24%
+200
+$65.3M
$1.51
+3.0%
+0.59%
+300
+$104.4M
$2.41
+4.6%
+0.95%
* Tax-effected; estimates are based on static balance sheet and assumptions as of
12/31/11 We expect
We expect
each
each
25
25
bps
bps
increase
increase
in
in
the
the
Fed
Fed
Funds
Funds
rate
rate
to
to
contribute
contribute
approximately
approximately
$5
$5
–
–
$9
$9
million
million
to
to
Net
Net
Interest
Interest
Income*
Income* |
 Takeaways
Takeaways
Our earnings are primarily driven by core
banking activities
We have consistently performed well over the
long term
We remain focused on managing expense
growth
We expect solid growth in 2012
Longer term, we expect improved leverage
from
investments
in
our
platform |
 |
 Loans: What’s Driving
Loans: What’s Driving
Growth?
Growth?
Dave Jones –
Chief Credit Officer
Joan Parsons –
Head of U.S. Banking
February 15, 2012 |
 Our
Loan Portfolio Reflects Our Focus Our Loan Portfolio Reflects Our Focus
|
 What’s Happened in 10 Years?
What’s Happened in 10 Years?
We have increased our share of larger,
more stable credit clients
Early stage loans have become a
smaller portion of the portfolio
Average loan size has increased from
$0.6M to $1.8M
Credit quality has become more stable |
 Focused but well diversified
within technology lending
Total
Loan
Portfolio
$7.0
Billion
as
of
12/31/11
A Diversified, Well-Performing Portfolio
A Diversified, Well-Performing Portfolio
Early Stage Loans
$487 Million (7% of Total Portfolio)
Technology
and
Life
Sciences
Portfolio
Only
$4.3
Billion
(62%
of
Total
Portfolio)
We have increased our share of
larger company clients |
 Loan Growth
Loan Growth
Drivers
Drivers
111 |
 Recent Loan Growth Drivers
Recent Loan Growth Drivers
SVB Growth Initiatives
Segmentation
Global expansion
Private Bank
Continued client activity and momentum |
 Larger Clients Are Driving Growth
Larger Clients Are Driving Growth |
 Loan
Growth Dynamics Loan Growth Dynamics
Increase in
average loan size
Higher utilization
of commitments
Change in client
mix |
 Larger Loans
Larger Loans
115 |
 Dynamic Larger Loan Balances
Dynamic Larger Loan Balances |
 Dynamic Larger Loan Balances
Dynamic Larger Loan Balances
*Average life over 20 quarters of loans larger than $20MM by Segment
|
 Dynamic Larger Loan Balances
Dynamic Larger Loan Balances |
 Dynamic Larger Loan Balances
Dynamic Larger Loan Balances
*Average life over 20 quarters of loans larger than $20MM
|
 Larger Clients Deliver Higher ROE
Larger Clients Deliver Higher ROE
Early Stage
Growth
Corporate
Finance
Average loan
size
$0.5 million
$2.3 million
$6.6 million
Use of
non-credit
products
Low
High
High
Global
activity
Low
High
High |
 Domestic Opportunity
Domestic Opportunity
Accelerator
Growth
Corp
Finance
VC/PE
Private
Bank
Wine
Market
Direction
SVB
Opportunity
0-2 Years
SVB
Opportunity
3-5 Years
High
Medium
Low
Growing Market
Stable market |
 Credit Quality
Credit Quality |
 Low
Historic Credit Costs Low Historic Credit Costs
1%
0%
1%
2%
3%
4%
5%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
NPLs as % of Total Gross Loans
NCOs as % of Total Average Gross Loans
NCOs:
Historical Average: 0.51%
Outlook:
0.40%
-
0.70%
NPLs:
Historical Average: 0.69%
Outlook: <0.52% |
 Positive Outlook for Credit Quality
Positive Outlook for Credit Quality
Outlook
Outlook
1)
Outlook is for the full year 2012 as compared to the full year 2011. Please
see our most recent financial releases for more information. 2)
Allowance
for
total
gross
performing
loans
as
a
percent
of
total
gross
performing
loans
3)
Non-performing loans as a percentage of total gross loans
Business Driver
2012 outlook
1)
Allowance for loan losses
2)
Comparable to 2011 levels of
1.23%
Net loan charge-offs
Between 0.40% and 0.70% of
average total gross loans
Nonperforming loans
3)
Lower than 2011 levels of
0.52% |
 Longer-Term Credit Drivers
Longer-Term Credit Drivers
Continued positive client performance
and strength in client industries
Gradual economic recovery
Solid pace of M&A for our clients
Continued early-stage investment |
 Takeaways
Takeaways
High-quality, diversified loan portfolio
Recent growth from larger loans to larger
clients
These clients typically have more stable
credit experiences and use more fee-
based products
Early-stage smaller, but remains strategic
Significant growth from segmentation
and global initiatives |
 Building a Scalable
Building a Scalable
Platform For Growth
Platform For Growth
Bruce Wallace
Chief Operations Officer
February 15, 2012 |
 Overview
Overview
Focus on key growth areas
What we’re doing to grow
Investing in people, products and
infrastructure
New global capabilities
How we’re working with clients
Results: today and in the future |
 Diversified Growth Across the Business
UK and
Europe
China
Israel
India
GLOBAL MARKETS & REACH
Growth Segment
Corporate Finance
Segment
Private Bank
Client Experience
CLIENT NEEDS
New Products &
Services
Enhanced Credit
Solutions
Expanded Banking
Network
New Payment Solutions
PRODUCT LINES
New Global Core
Banking System
Enhanced Global
Payment System
IT Backbone Upgrade
Enhanced On-line/Mobile
Systems
GLOBAL PLATFORM |
 What We’re
What We’re
Doing to Grow
Doing to Grow
Investing in people
Developing new
products and
services
Enhancing our
infrastructure
…GLOBALLY |
 People
People |
 Investing in People
Investing in People
Global banking experience
Domain expertise
Global shared services model |
 Supporting Our Global Expansion
Supporting Our Global Expansion
New Senior Management
Positions
Head of Global Transaction Banking
Head of Product Development and
Head of Global Treasury Sales
Head of Global Payment Solutions
Channel Delivery |
 Products &
Products &
Services
Services |
 Products &
Products &
Services
Services |
 New
Products & New Products &
Services
Services
Mobile Merchant
Services
Enterprise Sweep
accounts
(off-balance sheet)
Smart Data Expense
Management |
 New
Products & New Products &
Services
Services
Smart Chip Payment
Solutions
Global Payment
Services
Offshore RMB
(Global Treasury
Services) |
 Enhancing Our Infrastructure
Enhancing Our Infrastructure |
 Enhancing Our Infrastructure
Enhancing Our Infrastructure
Global banking platform
Integrated channel delivery
solutions
Industry-leading client experience
Strengthening our IT and
information security |
 Enterprise
Infrastructure
Channel Delivery
Global Expansion
Investment in Our Growth
Investment in Our Growth
Other
47%
28%
19%
7%
Project Portfolio Spend = 15% of Total Operations and
Project Portfolio Spend = 15% of Total Operations and
IT Budget in 2011
IT Budget in 2011 |
 What
Do We Expect in 2012? What Do We Expect in 2012?
Projected Project Portfolio Spend = 19% of Total
Projected Project Portfolio Spend = 19% of Total
Operations and IT Budget in 2012
Operations and IT Budget in 2012
Other
59%
20%
16%
8%
Enterprise
Infrastructure
Global Expansion
Channel Delivery |
 How
It Translates into Our Capabilities How It Translates into Our
Capabilities CAGR 2009-2011 (Dollar volumes)
CAGR 2009-2011 (Dollar volumes)
Foreign Exchange Trades
35%
International Payments
75%
Global Treasury Accounts
40%
Multi-Currency Balances
62%
Card Transactions
73% |
 How
It Translates into Our Capabilities How It Translates into Our
Capabilities |
 How
We’re Working With Clients How We’re Working With Clients
|
 Our
Global Platform Is Driving Growth Our Global Platform Is Driving Growth
Global Treasury Management and Payment Services
continue to be critical to long-term earnings growth
$57
$106
$0
$20
$40
$60
$80
$100
$120
2007
2008
2009
2010
2011
Millions |
 Numbers Don’t Tell the Whole Story
Numbers Don’t Tell the Whole Story
Revenues and relationships we would not
have captured without global presence
Cross-border activity
Higher per-client use of international
products
Increased client activity enabled by a single
global platform
Our investments are generating
significant indirect revenues |
 Takeaways
Takeaways
We are investing in a scalable
infrastructure for growth
Our investments are enabling us to
provide global products and
services to clients
Client service and client experience
remain key competitive advantages
for us |
 |
 Summary and
Milestones
Summary
and
Milestones
Greg
Becker
-
President
&
Chief
Executive
Officer
Mike
Descheneaux
-
Chief
Financial
Officer
February 15, 2012 |
 What
We Covered Today What We Covered Today
Who we are and what we do
Our recent financial performance
Our growth strategy and
expectations
The cool things our clients do. |
 Financial Goals 2012–2015
Financial Goals 2012–2015
*
“Core”
excludes
gains/losses
on
investment
securities
and
gains/losses
on
equity
warrants
High-Performing Bank
~10%+ ROE in low rate environment
~15%+ in normal rate environment
High Growth
~15%+ Core * EPS growth rate per year
with flat rates
~20%+ with increasing rates |
 What
Else Do We Track? Net Promoter Score
Employee engagement
Revenue growth (excluding warrants
and securities)/expense growth
Product penetration
Market share |
 Summary
Summary
We are a differentiated global bank
with a long history of
outperformance
We have consistently made the right
decisions to foster long-term growth
Our focus on innovation markets
offers us a unique opportunity for
growth |
 Summary
Summary
Our experience, expertise and
capabilities give us a significant
competitive advantage
We have the ability and the means to
execute on our growth plans |
 |