EX-99.1 2 q315earningsrelease_exhibi.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
          
3003 Tasman Drive, Santa Clara, CA 95054
 
 
 
 
 
 
 
Contact:
www.svb.com    
 
 
 
 
 
 
 
Meghan O'Leary
 
 
 
 
 
 
 
 
Investor Relations
For release at 1:00 P.M. (Pacific Time)
 
 
 
 
  
(408) 654-6364
October 22, 2015
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
  
 
NASDAQ: SIVB
 
 
 
 
 
 
  
 
SVB FINANCIAL GROUP ANNOUNCES 2015 THIRD QUARTER FINANCIAL RESULTS

SANTA CLARA, Calif. — October 22, 2015 — SVB Financial Group (NASDAQ: SIVB) today announced financial results for the third quarter ended September 30, 2015.

Consolidated net income available to common stockholders for the third quarter of 2015 was $81.7 million, or $1.57 per diluted common share, compared to $86.1 million, or $1.66 per diluted common share, for the second quarter of 2015, and $64.0 million, or $1.24 per diluted common share, for the third quarter of 2014. Consolidated net income available to common stockholders for the nine months ended September 30, 2015 was $256.4 million, or $4.94 per diluted common share, compared to $205.9 million, or $4.18 per diluted common share, for the comparable 2014 period.

"We delivered a solid quarter marked by healthy loan growth, robust client fund flows, strong core fee income and stable credit quality," said Greg Becker, President and CEO of SVB Financial Group. "Despite recent volatility in the stock markets, both domestically and globally, our clients continue to actively invest in and grow their businesses and demonstrate the growth and resilience that have become the hallmark of the innovation markets. SVB is on track to deliver a strong 2015 and we see solid opportunities for growth in 2016."

Highlights of our third quarter 2015 results (compared to second quarter 2015, unless otherwise noted) included:

Average loan balances (net of unearned income) of $14.9 billion, an increase of $596 million (or 4.2 percent).
Period-end loan balances (net of unearned income of $15.3 billion, an increase of $1.1 billion (or 7.4 percent).
Average investment securities, excluding non-marketable and other securities, of $22.9 billion, an increase of $1.5 billion (or 6.9 percent).
Period-end investment securities, excluding non-marketable and other securities of $23.6 billion, an increase of $1.4 billion (or 6.2 percent).
Average total client funds (consisting of both on-balance sheet deposits and off-balance sheet client investment funds) of $79.4 billion, an increase of $6.5 billion (or 9.0 percent) with average off-balance sheet client investment funds increasing by $4.1 billion (or 10.8 percent) and average on-balance sheet deposits increasing by $2.4 billion (or 6.9 percent).
Period-end total client funds (consisting of both on-balance sheet deposits and off-balance sheet client investment funds) of $80.6 billion, an increase of $4.9 billion (or 6.5 percent) with period-end off-balance sheet client investment funds increasing $3.5 billion (or 8.7 percent) and period-end on-balance sheet deposits increasing by $1.4 billion (or 4.0 percent).
Net interest income (fully taxable equivalent basis) of $255.0 million, an increase of $10.9 million (or 4.5 percent).
Net interest margin of 2.50 percent, a decrease of 8 basis points.
Provision for loan losses of $33.4 million, compared to $26.5 million.
Gains on investment securities of $18.8 million, compared to $25.0 million. Non-GAAP gains on investment securities, net of noncontrolling interests, were $12.7 million, compared to $15.9 million. (See non-GAAP reconciliation under the section “Use of Non-GAAP Financial Measures”.)
Gains on equity warrant assets of $10.7 million, compared to $23.6 million.
Non-GAAP core fee income increased $2.3 million (or 3.5 percent) to $68.4 million. (See non-GAAP reconciliation under the section “Use of Non-GAAP Financial Measures”.)
Noninterest expense of $184.8 million, a decrease of $9.4 million (or 4.8 percent).





Third Quarter 2015 Summary
(Dollars in millions, except share data, employees and ratios)
 
Three months ended
 
Nine months ended
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Income statement:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share (1)
 
$
1.57

 
$
1.66

 
$
1.71

 
$
1.13

 
$
1.24

 
$
4.94

 
$
4.18

Net income available to common stockholders (1)
 
81.7

 
86.1

 
88.5

 
58.0

 
64.0

 
256.4

 
205.9

Net interest income
 
254.7

 
243.8

 
238.9

 
234.7

 
220.6

 
737.4

 
621.9

Provision for loan losses
 
33.4

 
26.5

 
6.5

 
40.4

 
16.6

 
66.4

 
19.1

Noninterest income (2)
 
108.5

 
126.3

 
123.5

 
167.6

 
80.2

 
358.3

 
404.6

Noninterest expense (1) (2)
 
184.8

 
194.1

 
190.5

 
186.1

 
179.8

 
569.4

 
521.1

Non-GAAP net income available to common stockholders (1) (3)
 
81.7

 
86.1

 
88.5

 
69.4

 
64.0

 
256.4

 
205.9

Non-GAAP diluted earnings per common share (1) (3)
 
1.57

 
1.66

 
1.71

 
1.36

 
1.24

 
4.94

 
4.18

Non-GAAP core fee income (3)
 
68.4

 
66.1

 
58.2

 
55.3

 
53.3

 
192.7

 
154.3

Non-GAAP noninterest income, net of noncontrolling interests (1) (2) (3)
 
102.1

 
117.7

 
109.4

 
104.3

 
75.3

 
329.2

 
248.3

Non-GAAP noninterest expense, net of noncontrolling interests (1) (2) (3)
 
184.6

 
193.9

 
190.2

 
180.5

 
175.0

 
568.8

 
507.8

Fully taxable equivalent:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (4)
 
$
255.0

 
$
244.2

 
$
239.3

 
$
235.2

 
$
221.0

 
$
738.6

 
$
623.1

Net interest margin
 
2.50
%
 
2.58
%
 
2.65
%
 
2.66
%
 
2.73
%
 
2.57
%
 
2.87
%
Balance sheet:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average total assets (2)
 
$
42,019.2

 
$
39,442.8

 
$
38,221.3

 
$
37,588.1

 
$
34,596.1

 
$
39,911.5

 
$
31,403.0

Average loans, net of unearned income (2)
 
14,916.7

 
14,320.9

 
14,048.3

 
12,703.4

 
11,439.5

 
14,431.8

 
11,098.4

Average available-for-sale securities
 
15,035.1

 
13,797.7

 
13,571.2

 
13,526.5

 
12,446.8

 
14,140.0

 
12,698.4

Average held-to-maturity securities
 
7,879.0

 
7,639.8

 
7,569.8

 
7,115.3

 
5,775.6

 
7,697.3

 
2,544.3

Average noninterest-bearing demand deposits (2)
 
28,791.7

 
26,723.3

 
25,173.4

 
23,701.1

 
21,502.5

 
26,909.4

 
19,302.1

Average interest-bearing deposits
 
8,591.3

 
8,232.7

 
8,688.8

 
8,889.0

 
8,223.8

 
8,503.9

 
7,580.0

Average total deposits (2)
 
37,383.1

 
34,956.1

 
33,862.2

 
32,590.0

 
29,726.3

 
35,413.4

 
26,882.1

Average long-term debt
 
802.3

 
797.6

 
690.0

 
451.7

 
452.0

 
766.9

 
452.4

Period-end total assets (1) (2)
 
41,731.0

 
40,231.0

 
38,606.6

 
39,337.9

 
36,035.0

 
41,731.0

 
36,035.0

Period-end loans, net of unearned income (2)
 
15,314.6

 
14,261.4

 
14,447.7

 
14,384.3

 
12,017.2

 
15,314.6

 
12,017.2

Period-end available-for-sale securities
 
15,307.7

 
14,495.8

 
13,746.9

 
13,540.7

 
13,333.4

 
15,307.7

 
13,333.4

Period-end held-to-maturity securities
 
8,306.5

 
7,735.9

 
7,816.8

 
7,421.0

 
6,662.0

 
8,306.5

 
6,662.0

Period-end non-marketable and other securities (1) (2)
 
650.6

 
645.5

 
664.4

 
1,728.1

 
1,702.2

 
650.6

 
1,702.2

Period-end noninterest-bearing demand deposits (2)
 
28,659.0

 
27,734.7

 
25,796.1

 
24,583.7

 
22,461.1

 
28,659.0

 
22,461.1

Period-end interest-bearing deposits
 
8,390.5

 
7,892.2

 
8,135.0

 
9,759.8

 
8,662.1

 
8,390.5

 
8,662.1

Period-end total deposits (2)
 
37,049.4

 
35,627.0

 
33,931.1

 
34,343.5

 
31,123.1

 
37,049.4

 
31,123.1

Off-balance sheet:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average client investment funds
 
$
41,972.9

 
$
37,869.5

 
$
33,625.1

 
$
31,868.1

 
$
30,988.2

 
$
37,822.5

 
$
29,425.5

Period-end client investment funds
 
43,566.7

 
40,084.5

 
35,169.8

 
32,367.7

 
31,143.9

 
43,566.7

 
31,143.9

Total unfunded credit commitments
 
16,087.3

 
15,808.2

 
15,485.5

 
14,705.8

 
14,631.6

 
16,087.3

 
14,631.6

Earnings ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets (annualized) (1) (2) (5)
 
0.77
%
 
0.88
%
 
0.94
%
 
0.61
%
 
0.73
%
 
0.86
%
 
0.88
%
Non-GAAP return on average assets (annualized) (1) (2) (3)
 
0.77

 
0.88

 
0.94

 
0.73

 
0.73

 
0.86

 
0.88

Return on average SVBFG stockholders’ equity (annualized) (1) (6)
 
10.35

 
11.40

 
12.38

 
8.14

 
9.30

 
11.34

 
11.37

Non-GAAP return on average SVBFG stockholders’ equity (annualized) (1) (3)
 
10.35

 
11.40

 
12.38

 
9.74

 
9.30

 
11.34

 
11.37

Asset quality ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a % of total gross loans
 
1.28
%
 
1.34
%
 
1.15
%
 
1.14
%
 
1.07
%
 
1.28
%
 
1.07
%
Allowance for loan losses for performing loans as a % of total gross performing loans
 
0.99

 
0.99

 
0.99

 
1.04

 
1.05

 
0.99

 
1.05

Gross charge-offs as a % of average total gross loans (annualized)
 
0.77

 
0.13

 
0.16

 
0.15

 
0.37

 
0.36

 
0.46

Net charge-offs as a % of average total gross loans (annualized)
 
0.75

 
0.05

 
0.11

 
0.13

 
0.28

 
0.31

 
0.39

Other ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP operating efficiency ratio (1) (2) (7)
 
50.88
%
 
52.45
%
 
52.57
%
 
46.24
%
 
59.77
%
 
51.97
%
 
50.77
%
Non-GAAP operating efficiency ratio (1) (2) (3)
 
51.69

 
53.57

 
54.56

 
53.19

 
59.08

 
53.27

 
58.27

SVBFG CET 1 risk-based capital ratio (2) (8)
 
12.48

 
12.54

 
11.92

 

 

 
12.48

 

Bank CET 1 risk-based capital ratio (8)
 
12.79

 
12.87

 
12.36

 

 

 
12.79

 

SVBFG total risk-based capital ratio (2) (8)
 
14.05

 
14.15

 
13.46

 
13.92

 
14.97

 
14.05

 
14.97

Bank total risk-based capital ratio (8)
 
13.85

 
13.93

 
13.35

 
12.12

 
13.06

 
13.85

 
13.06

SVBFG tier 1 leverage ratio (2) (8)
 
7.67

 
7.95

 
7.92

 
7.74

 
8.22

 
7.67

 
8.22

Bank tier 1 leverage ratio (8)
 
7.13

 
7.39

 
7.43

 
6.64

 
7.05

 
7.13

 
7.05

Period-end loans, net of unearned income, to deposits ratio (2)
 
41.34

 
40.03

 
42.58

 
41.88

 
38.61

 
41.34

 
38.61

Average loans, net of unearned income, to average deposits ratio
 
39.90

 
40.97

 
41.49

 
38.98

 
38.48

 
40.75

 
41.29

Book value per common share (1) (9)
 
$
61.66

 
$
59.29

 
$
58.16

 
$
55.24

 
$
53.48

 
$
61.66

 
$
53.48


2



Other statistics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average full-time equivalent employees
 
2,030

 
1,959

 
1,955

 
1,907

 
1,850

 
1,981

 
1,784

Period-end full-time equivalent employees
 
2,054

 
1,964

 
1,965

 
1,914

 
1,881

 
2,054

 
1,881

 
(1)
Amounts and ratios for periods prior to March 31, 2015 have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects ("ASU 2014-01").
(2)
Amounts and ratios as of and for the three months ended March 31, 2015 have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts and ratios prior to January 1, 2015 have not been revised for the adoption of this guidance.
(3)
To supplement our unaudited condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use certain non-GAAP measures. A reconciliation of these non-GAAP measures to GAAP is provided at the end of this release under the section “Use of Non-GAAP Financial Measures.”
(4)
Interest income on non-taxable investments is presented on a fully taxable equivalent basis using the federal statutory income tax rate of 35.0 percent. The taxable equivalent adjustments were $0.4 million for each of the quarters ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014, and September 30, 2014. The taxable equivalent adjustments were $1.2 million and $1.3 million for the nine month periods ended September 30, 2015 and 2014, respectively.
(5)
Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and year-to-date average assets.
(6)
Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and year-to-date average SVBFG stockholders’ equity.
(7)
Ratio is calculated by dividing noninterest expense by total net interest income plus noninterest income.
(8)
Ratios as of September 30, 2015, June 30, 2015 and March 31, 2015 reflect the adoption of the Basel III Capital Rules in effect beginning January 1, 2015. Ratios for prior periods represent the previous capital rules under Basel I.
(9)
Book value per common share is calculated by dividing total SVBFG stockholders’ equity by total outstanding common shares.

Net Interest Income and Margin

Net interest income, on a fully taxable equivalent basis, was $255.0 million for the third quarter of 2015, compared to $244.2 million for the second quarter of 2015 and $221.0 million for the third quarter of 2014. The following table provides a summary of changes in interest income and interest expense attributable to both volume and rate from the second quarter of 2015 to the third quarter of 2015. Changes that are not solely due to either volume or rate (principally changes in the number of days from quarter to quarter) are allocated in proportion to the percentage changes in average volume and average rate:
 
 
Q3'15 compared to Q2'15
 
 
Increase (decrease) due to change in
(Dollars in thousands)
 
Volume
 
Rate
 
Total
Interest income:
 
 
 
 
 
 
Short-term investment securities
 
$
285

 
$
(123
)
 
$
162

AFS / HTM investment securities
 
4,290

 
(1,348
)
 
2,942

Loans
 
8,560

 
(819
)
 
7,741

Increase (decrease) in interest income, net
 
13,135

 
(2,290
)
 
10,845

Interest expense:
 
 
 
 
 
 
Deposits
 
52

 
(76
)
 
(24
)
Short-term borrowings
 
(6
)
 
(4
)
 
(10
)
Long-term debt
 

 
10

 
10

Increase (decrease) in interest expense, net
 
46

 
(70
)
 
(24
)
Increase (decrease) in net interest income
 
$
13,089

 
$
(2,220
)
 
$
10,869


The increase in net interest income, on a fully taxable equivalent basis, from the second quarter of 2015 to the third quarter of 2015, was primarily attributable to the following:

An increase in interest income from loans of $7.7 million to $175.0 million for the third quarter of 2015. The increase was primarily reflective of the increase in average loan balances of $595.8 million as well as an increase in the number of days in the third quarter of 2015 (compared to the second quarter of 2015), offset by a decrease in loan yields. Our overall loan yields decreased by 3 basis points to 4.65 percent from 4.68 percent, consisting of a 2 basis point decrease in gross loan yields and a 1 basis point decrease in loan fee yields. The decrease in yields continues to reflect the overall low market rate environment and continued competition in the marketplace.

An increase in interest income from our fixed income securities in our available-for-sale ("AFS") and held-to-maturity ("HTM") portfolios of $2.9 million to $88.7 million for the third quarter of 2015. The increase was primarily reflective of the increase in average investment balances of $1.5 billion as a result of deposit growth.

3



The overall yield on our fixed income investment securities portfolio decreased 6 basis points to 1.54 percent, driven primarily by purchases of lower yielding U.S. Treasuries, as well as an increase in premium amortization expense, reflective of increases in prepayments. The remaining unamortized premium balance as of September 30, 2015 and June 30, 2015 was $21.9 million (net of discounts of $81.1 million) and $23.4 million (net of discounts of $82.1 million), respectively.

Net interest margin, on a fully taxable equivalent basis, was 2.50 percent for the third quarter of 2015, compared to 2.58 percent for the second quarter of 2015 and 2.73 percent for the third quarter of 2014. The decline in our net interest margin, from the second quarter of 2015 to the third quarter of 2015, is reflective of the $2.4 billion growth in average deposits, of which, on average, $1.5 billion was invested in lower-yielding fixed income investment securities as well as continued yield compression on our loan portfolio as noted above.

For the third quarter of 2015, 84.0 percent, or $12.8 billion, of our average outstanding gross loans were variable-rate loans that adjust at prescribed measurement dates upon a change in prime-lending rates or other variable-rate indices. This compares to 83.6 percent, or $12.1 billion, for the second quarter of 2015, and 80.6 percent, or $9.4 billion, for the third quarter of 2014.

Investment Securities

Our investment securities portfolio consists of: i) an available-for-sale portfolio and a held-to-maturity portfolio, both of which primarily represent interest-earning fixed income investment securities and are managed to earn an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and credit diversification as well as addressing our asset/liability management objectives; and (ii) a non-marketable and other securities portfolio, which primarily represents investments managed as part of our funds management business. Our total period-end fixed income investment securities portfolio increased by $1.4 billion, or 6.2 percent, to $23.6 billion at September 30, 2015. New investments of $2.2 billion included $1.2 billion in U.S. Treasuries and the remainder were primarily in Government National Mortgage Association ("GNMA") backed securities, as part of our continued focus on limiting our duration risk. The duration of our fixed income investment securities portfolio was 2.7 years at September 30, 2015 compared to 2.8 years at June 30, 2015. Non-marketable and other securities decreased by $5.1 million to $650.6 million ($521.1 million net of noncontrolling interests) at September 30, 2015.

Available-for-Sale Securities

Average AFS securities were $15.0 billion for the third quarter of 2015, compared to $13.8 billion for the second quarter of 2015, an increase of $1.2 billion. Average AFS securities were $12.4 billion for the third quarter of 2014. Period-end AFS securities were $15.3 billion at September 30, 2015, $14.5 billion at June 30, 2015 and $13.3 billion at September 30, 2014. The increase in period-end AFS securities balances from the second quarter of 2015 to the third quarter of 2015 was primarily due to purchases of $1.2 billion in fixed rate U.S. Treasury securities, partially offset by paydowns and maturities of $0.4 billion. A decrease in market interest rates at period-end resulted in an increase in the fair value of our AFS securities portfolio of $58.9 million. The $58.9 million increase in fair value is reflected as a $34.7 million (net of tax) increase in accumulated other comprehensive income. The duration of our available-for-sale securities portfolio was 2.4 years at September 30, 2015 compared to 2.5 years at June 30, 2015.

Held-to-Maturity Securities

Average HTM securities were $7.9 billion for the third quarter of 2015, compared to $7.6 billion for the second quarter of 2015 and $5.8 billion for the third quarter of 2014. Period-end HTM securities were $8.3 billion at September 30, 2015, $7.7 billion at June 30, 2015 and $6.7 billion at September 30, 2014. The increase in period-end HTM securities balances from the second quarter of 2015 to the third quarter of 2015 was primarily due to purchases of $0.9 billion in Government National Mortgage Association ("GNMA") backed securities, partially offset by paydowns and maturities of $0.4 billion. The duration of our held-to-maturity securities portfolio was 3.2 years at September 30, 2015 compared to 3.4 years at June 30, 2015.

Non-Marketable and Other Securities

Our non-marketable and other securities portfolio primarily represents investments in venture capital and private equity funds, debt funds and private and public portfolio companies.


4



Non-marketable and other securities increased by $5.1 million to $650.6 million ($521.1 million net of noncontrolling interests) at September 30, 2015, compared to $645.5 million ($517.0 million net of noncontrolling interests) at June 30, 2015 and $1.7 billion ($501.3 million net of noncontrolling interests) at September 30, 2014. The $5.1 million increase was primarily due to valuation increases in our managed funds of funds. Reconciliations of our non-GAAP non-marketable and other securities, net of noncontrolling interests, are provided under the section “Use of Non-GAAP Financial Measures."

Loans

Average loans (net of unearned income) increased by $0.6 billion to $14.9 billion for the third quarter of 2015, compared to $14.3 billion for the second quarter of 2015 and $11.4 billion for the third quarter of 2014. Period-end loans, (net of unearned income) increased by $1.0 billion to $15.3 billion at September 30, 2015, compared to $14.3 billion at June 30, 2015 and $12.0 billion at September 30, 2014. Period-end and average loan growth came primarily from our private equity/venture capital loan portfolio, as well as, growth in sponsored buyout loans within our software and internet loan portfolio.

Loans (individually or in the aggregate) to any single client, equal to or greater than $20 million increased by $0.8 billion, primarily attributable to our private equity/venture capital portfolio, and totaled $6.0 billion, $5.2 billion and $4.3 billion at September 30, 2015June 30, 2015 and September 30, 2014, respectively, which represents 38.6 percent, 36.3 percent and 35.7 percent of total gross loans, respectively. Further details are provided under the section “Loan Concentrations."

Credit Quality

The following table provides a summary of our allowance for loan losses:
 
 
Three months ended
 
Nine months ended
(Dollars in thousands, except ratios)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Allowance for loan losses, beginning balance
 
$
192,644

 
$
167,875

 
$
120,728

 
$
165,359

 
$
142,886

Provision for loan losses
 
33,403

 
26,513

 
16,610

 
66,368

 
19,051

Gross loan charge-offs
 
(29,118
)
 
(4,734
)
 
(10,657
)
 
(39,339
)
 
(38,189
)
Loan recoveries
 
578

 
2,990

 
2,380

 
5,119

 
5,313

Allowance for loan losses, ending balance
 
$
197,507

 
$
192,644

 
$
129,061

 
$
197,507

 
$
129,061

Provision for loan losses as a percentage of period-end total gross loans (annualized)
 
0.86
%
 
0.74
%
 
0.54
%
 
0.58
%
 
0.21
%
Gross loan charge-offs as a percentage of average total gross loans (annualized)
 
0.77

 
0.13

 
0.37

 
0.36

 
0.46

Net loan charge-offs as a percentage of average total gross loans (annualized)
 
0.75

 
0.05

 
0.28

 
0.31

 
0.39

Allowance for loan losses as a percentage of period-end total gross loans
 
1.28

 
1.34

 
1.07

 
1.28

 
1.07

Period-end total gross loans
 
$
15,429,941

 
$
14,370,930

 
$
12,112,474

 
$
15,429,941

 
$
12,112,474

Average total gross loans
 
15,026,206

 
14,427,039

 
11,528,172

 
14,537,874

 
11,184,840


Our provision for loan losses was $33.4 million for the third quarter of 2015, compared to $26.5 million for the second quarter of 2015. The provision of $33.4 million primarily consists of $17.8 million of additional specific reserves on two newly impaired loans, $10.4 million from the increase in period-end loan balances and an additional $3.8 million for the unreserved portion of a software and internet loan charge-off during the quarter.

Gross loan charge-offs of $29.1 million for the third quarter of 2015 included $21.7 million from one growth stage client loan within our software and internet loan portfolio, of which a total of $17.9 million was previously reserved for in prior quarters.

Our allowance for loan losses as a percentage of total gross loans decreased to 1.28 percent at September 30, 2015, compared to 1.34 percent at June 30, 2015. The 6 basis point decrease in our allowance for loan losses as a percentage of total gross loans is a result of the decrease in our reserve for impaired loans largely due to the charge-off of the software and internet loan noted above. Our allowance for loan losses for total gross performing loans as a percentage of total gross performing loans remained unchanged at 0.99 percent at September 30, 2015.


5



Our impaired loans totaled $115.5 million at September 30, 2015, compared to $100.8 million at June 30, 2015. Our impaired loan balance increased $14.7 million, primarily as a result of $52.6 million in newly impaired loans, partially offset by $10.6 million in repayments and $27.4 million in charge-offs. Newly impaired loans included $41.3 million from two sponsored buyout clients in our life science & healthcare loan portfolio. The allowance for loan losses related to impaired loans was $46.3 million at September 30, 2015, compared to $50.9 million at June 30, 2015.

Client Funds

Our total client funds consist of both on-balance sheet deposits and off-balance sheet client investment funds. Average total client funds were $79.4 billion for the third quarter of 2015, compared to $72.8 billion for the second quarter of 2015 and $60.7 billion for the third quarter of 2014. Period-end total client funds were $80.6 billion at September 30, 2015, compared to $75.7 billion at June 30, 2015 and $62.3 billion at September 30, 2014.

Deposits

Average deposits were $37.4 billion for the third quarter of 2015, compared to $35.0 billion for the second quarter of 2015 and $29.7 billion for the third quarter of 2014. Period-end deposits were $37.0 billion at September 30, 2015, compared to $35.6 billion at June 30, 2015 and $31.1 billion at September 30, 2014. Both average and period-end noninterest-bearing demand deposits increased during the third quarter of 2015, primarily from our venture capital-backed early-stage and private equity/venture capital clients, resulting from strong equity funding rounds during the quarter. Approximately 13 percent of our average deposit growth was attributable to new client additions.

Off-Balance Sheet Client Investment Funds

Average off-balance sheet client investment funds were $42.0 billion for the third quarter of 2015, compared to $37.9 billion for the second quarter of 2015 and $31.0 billion for the third quarter of 2014. Period-end client investment funds were $43.6 billion at September 30, 2015, compared to $40.1 billion at June 30, 2015 and $31.1 billion at September 30, 2014. The increase in average and period-end off-balance sheet client investment funds from the second quarter of 2015 to the third quarter of 2015 was primarily attributable to our clients' utilization of our off-balance sheet product managed by SVB Asset Management, as well as, third-party sweep money market funds, reflective of the capital raising activity of our early-stage and mid-to-late-stage clients.

Noninterest Income

Noninterest income was $108.5 million for the third quarter of 2015, compared to $126.3 million for the second quarter of 2015 and $80.2 million for the third quarter of 2014. Non-GAAP noninterest income, net of noncontrolling interests was $102.1 million for the third quarter of 2015, compared to $117.7 million for the second quarter of 2015 and $75.3 million for the third quarter of 2014. (See reconciliations of non-GAAP measures used under the section "Use of Non-GAAP Financial Measures".)

The decrease of $17.8 million ($15.6 million net of noncontrolling interests) in noninterest income from the second quarter of 2015 to the third quarter of 2015 was primarily driven by a decrease in net gains on investment securities and net gains on our equity warrant assets.

Items impacting the change in noninterest income from the second quarter of 2015 to the third quarter of 2015 were as follows:

Gains on investment securities of $18.8 million for the third quarter of 2015, compared to gains of $25.0 million for the second quarter of 2015. Net of noncontrolling interests, non-GAAP net gains on investment securities were $12.7 million for the third quarter of 2015 compared to net gains of $15.9 million for the second quarter of 2015. The non-GAAP net gains, net of noncontrolling interests, of $12.7 million for the third quarter of 2015 were primarily driven by the following:
Gains of $6.8 million from our strategic and other investments, primarily driven by distribution gains from our strategic venture capital fund investments due to mergers and acquisition activity and unrealized valuation increases from certain investments.
Gains of $6.0 million from our managed funds of funds, primarily related to unrealized valuation increases.


6



As of September 30, 2015, we directly or indirectly (through 5 of our consolidated managed investment funds) held investments in 301 venture capital funds, 89 companies and 5 debt funds.
The following tables provide a summary of non-GAAP net gains on investment securities, net of noncontrolling interests for the three months ended September 30, 2015 and June 30, 2015, respectively:
 
 
 
Three months ended September 30, 2015
(Dollars in thousands)
 
Managed
Funds Of
Funds
 
Managed
Direct
Venture
Funds
 
Debt Funds
 
Available-
For-Sale
Securities
 
Strategic
and Other
Investments
 
Total
GAAP gains (losses) on investment securities, net
 
$
11,786

 
$
(186
)
 
$
378

 
$
14

 
$
6,776

 
$
18,768

Less: income (losses) attributable to noncontrolling interests, including carried interest
 
5,816

 
286

 

 

 

 
6,102

Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests
 
$
5,970

 
$
(472
)
 
$
378

 
$
14

 
$
6,776

 
$
12,666

 
 
 
Three months ended June 30, 2015
(Dollars in thousands)
 
Managed
Funds Of
Funds
 
Managed
Direct
Venture
Funds
 
Debt Funds
 
Available-
For-Sale
Securities
 
Strategic
and Other
Investments
 
Total
GAAP gains on investment securities, net
 
$
14,281

 
$
869

 
$
183

 
$
141

 
$
9,501

 
$
24,975

Less: income attributable to noncontrolling interests, including carried interest
 
8,913

 
123

 

 

 

 
9,036

Non-GAAP net gains on investment securities, net of noncontrolling interests
 
$
5,368

 
$
746

 
$
183

 
$
141

 
$
9,501

 
$
15,939


Net gains on derivative instruments were $10.2 million for the third quarter of 2015, compared to $16.3 million for the second quarter of 2015. The following table provides a summary of our net gains on derivative instruments:
  
 
Three months ended
 
Nine months ended
(Dollars in thousands)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Net gains on equity warrant assets
 
$
10,685

 
$
23,616

 
$
13,157

 
$
54,579

 
$
50,859

(Losses) gains on foreign exchange forward contracts, net:
 
 
 
 
 
 
 
 
 
 
Gains on client foreign exchange forward contracts, net
 
179

 
787

 
886

 
459

 
1,358

(Losses) gains on internal foreign exchange forward contracts, net (1)
 
(218
)
 
(8,174
)
 
12,529

 
11,626

 
12,038

Total (losses) gains on foreign exchange forward contracts, net
 
(39
)
 
(7,387
)
 
13,415

 
12,085

 
13,396

Net gains (losses) on other derivatives (2)
 
(402
)
 
88

 
(34
)
 
(374
)
 
(775
)
Total gains on derivative instruments, net
 
$
10,244

 
$
16,317

 
$
26,538

 
$
66,290

 
$
63,480

 
 
(1)
Represents the change in fair value of foreign exchange forward contracts used to economically reduce our foreign exchange exposure related to certain foreign currency denominated instruments. The change in fair value of our foreign exchange forward contracts is offset by the revaluation of foreign currency denominated instruments which are included in the line item "Other" within noninterest income.
(2)
Primarily represents the change in fair value of our client interest rate derivatives and our interest rate swaps.
Net gains of $10.2 million on derivative instruments for the third quarter of 2015 were primarily attributable to the following:

Net gains on equity warrant assets of $10.7 million resulted from the following:

Net gains of $8.9 million from changes in warrant valuations in the third quarter of 2015 compared to net gains of $9.1 million for the second quarter of 2015. The warrant valuation gains consisted primarily of valuation increases in software and internet companies from our private company warrant portfolio reflective of continued funding activity during the quarter.


7



Net gains of $2.2 million from the exercise of equity warrant assets, compared to net gains of $14.6 million for the second quarter of 2015. The net gains in the second quarter of 2015 were primarily reflective of $13.9 million in realized gains from one company in our public company warrant portfolio.

At September 30, 2015, we held warrants in 1,625 companies with a total value of $130.1 million. Of the 1,625 companies, 21 companies had values greater than $1.0 million and represented 33 percent of the fair value of the portfolio at September 30, 2015. The gains from our equity warrants that are from changes in warrant valuations are currently unrealized, and the extent such gains (or losses) will become realized is subject to a variety of factors, including among other things, performance of the underlying portfolio companies, investor demand for IPOs, fluctuations in the underlying valuation of these companies, levels of M&A activity, and legal and contractual restrictions on our ability to sell the underlying securities.

Net losses of $0.2 million on internal foreign exchange forward contracts used to economically reduce our foreign exchange exposure to foreign currency denominated instruments for the third quarter of 2015, compared to net losses of $8.2 million for the second quarter of 2015. The net losses of $0.2 million were partially offset by net gains of $0.2 million from the revaluation of foreign currency denominated instruments that are included in the line item "Other" within noninterest income.


Non-GAAP core fee income (foreign exchange fees, credit card fees, deposit service charges, lending related fees, letters of credit fees and client investment fees) increased $2.3 million to $68.4 million for the third quarter of 2015, compared to $66.1 million for the second quarter of 2015 and $53.3 million for the third quarter of 2014. Reconciliations of our non-GAAP noninterest income, non-GAAP core fee income and non-GAAP net gains on investment securities discussed in this section are provided under the section “Use of Non-GAAP Financial Measures.”
The following table provides a summary of our non-GAAP core fee income:
 
 
Three months ended
 
Nine months ended
(Dollars in thousands)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Non-GAAP core fee income:
 
 
 
 
 
 
 
 
 
 
Foreign exchange fees
 
$
22,995

 
$
22,364

 
$
17,911

 
$
63,037

 
$
53,035

Credit card fees
 
14,536

 
14,215

 
10,909

 
40,841

 
31,440

Deposit service charges
 
12,272

 
11,301

 
10,126

 
34,309

 
29,344

Lending related fees
 
7,561

 
8,163

 
6,029

 
23,746

 
18,208

Client investment fees
 
5,683

 
5,264

 
3,814

 
15,429

 
10,751

Letters of credit and standby letters of credit fees
 
5,341

 
4,772

 
4,557

 
15,315

 
11,507

Total Non-GAAP core fee income
 
$
68,388

 
$
66,079

 
$
53,346

 
$
192,677

 
$
154,285


The increase in non-GAAP core fee income from the second quarter of 2015 to the third quarter of 2015 was primarily a result of continued growth in deposits and increased transaction volumes from our foreign exchange and credit card product offerings, which had increased volumes of 22 percent and 11 percent, respectively. The increase in credit card and foreign exchange revenue from increased transaction volumes was partially offset by higher rebate/rewards expense and lower spreads from larger transactions, respectively.
 



8



Noninterest Expense

Noninterest expense was $184.8 million for the third quarter of 2015, compared to $194.1 million for the second quarter of 2015 and $179.8 million for the third quarter of 2014. The decrease of $9.3 million in noninterest expense is primarily driven by a $15.6 million decrease in compensation and benefits, partially offset by a $4.1 million increase in the provision for unfunded credit commitments. The provision for unfunded credit commitments increased primarily reflective of growth of $279 million in unfunded credit commitments.
 
The following table provides a summary of our compensation and benefits expense:
 
 
Three months ended
 
Nine months ended
(Dollars in thousands, except employees)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Compensation and benefits:
 
 
 
 
 
 
 
 
 
 
Salaries and wages
 
$
55,383

 
$
51,648

 
$
47,106

 
$
158,456

 
$
136,616

Incentive compensation plan
 
23,789

 
37,234

 
24,621

 
87,399

 
74,957

ESOP
 
1,660

 
2,635

 
1,540

 
6,462

 
5,398

Other employee incentives and benefits (1)
 
28,513

 
33,398

 
26,665

 
97,713

 
85,288

Total compensation and benefits
 
$
109,345

 
$
124,915

 
$
99,932

 
$
350,030

 
$
302,259

Period-end full-time equivalent employees
 
2,054

 
1,964

 
1,881

 
2,054

 
1,881

Average full-time equivalent employees
 
2,030

 
1,959

 
1,850

 
1,981

 
1,784

 
(1)
Other employee benefits expense includes employer payroll taxes, group health and life insurance, share-based compensation, 401(k), warrant and retention plans, agency fees and other employee-related expenses.

The $15.6 million decrease in total compensation and benefits expense primarily consists of the following:

A decrease of $13.4 million in expense relating to incentive compensation plans, which reflects a slight change to our current expectations for our internal performance targets for full year 2015, and represents the cumulative amount on a year-to-date basis.
A decrease of $4.9 million in total other employee incentives and benefits, primarily related to a $3.0 million decrease in warrant incentive compensation expense due to lower warrant gains in the third quarter of 2015 compared to the second quarter of 2015, which included a large gain from a single warrant.
An increase of $3.7 million in salaries and wages expense, primarily due to an increase in the number of average full-time equivalent employees ("FTE"), which increased by 71 to 2,030 FTEs for the third quarter of 2015.
Non-GAAP noninterest expense, net of noncontrolling interests was $184.6 million for the third quarter of 2015, compared to $193.9 million for the second quarter of 2015 and $175.0 million for the third quarter of 2014. Reconciliations of our non-GAAP noninterest expense, net of noncontrolling interests, are provided under the section “Use of Non-GAAP Financial Measures.”

Income Tax Expense

Our effective tax rate was 41.1 percent for the third quarter of 2015, compared to 39.0 percent for the second quarter of 2015 and 38.6 percent for the third quarter of 2014.

The increase in our effective tax rate for the third quarter of 2015 was primarily a result of:

A one-time additional tax provision for changes in estimates in connection with the filing of the 2014 U.S. federal corporate income tax return resulting in a 76 basis point increase.

A decrease in the recognition of tax benefits from the second quarter of 2015 to the third quarter of 2015 from net operating loss carryforwards related to a previously disposed business line resulting in a 70 basis point increase, and:


9



An increase of 59 basis points in the third quarter of 2015 resulting from a decrease in our effective tax rate for the second quarter of 2015 due to a reduction in the unremitted earnings tax liability during the second quarter of 2015 upon completion of the sale of SVB India Finance Private Limited ("SVBIF").

For periods prior to January 1, 2015, pursuant to the adoption of ASU 2014-01, (i) amortization expense related to our low income housing tax credits was reclassified from Other noninterest expense to Income tax expense, (ii) additional amortization, net of the associated tax benefits, was recognized in Income tax expense as a result of our adoption of the proportional amortization method and (iii) net deferred tax assets, related to our low income housing tax investments, were written-off. The cumulative effect on retained earnings upon adoption of this guidance on January 1, 2015 was a reduction of $4.7 million. The adoption of this guidance did not have a material impact on net income or earnings per share for the three and nine months ended September 30, 2014.

Our effective tax rate is calculated by dividing income tax expense by the sum of income before income tax expense and net income attributable to noncontrolling interests.
 
Noncontrolling Interests

Included in net income is income and expense related to noncontrolling interests. The relevant amounts allocated to investors in our consolidated subsidiaries, other than us, are reflected under “Net (Income) Loss Attributable to Noncontrolling Interests” in our statements of income. The following table provides a summary of net income attributable to noncontrolling interests: 
 
 
Three months ended
 
Nine months ended
(Dollars in thousands)
 
September 30,
2015
 
June 30, 2015
 
September 30,
2014
 
September 30, 2015 (3)
 
September 30, 2014 (3)
Net interest income (1)
 
$
(2
)
 
$
(2
)
 
$
(9
)
 
$
(6
)
 
$
(12
)
Noninterest income (1)
 
(4,608
)
 
(7,382
)
 
(1,185
)
 
(26,043
)
 
(159,362
)
Noninterest expense (1)
 
116

 
242

 
4,743

 
650

 
13,331

Carried interest income (loss) (2)
 
(1,735
)
 
(1,174
)
 
(3,726
)
 
(3,020
)
 
3,058

Net income attributable to noncontrolling interests
 
$
(6,229
)
 
$
(8,316
)
 
$
(177
)
 
$
(28,419
)
 
$
(142,985
)
 
(1)
Represents noncontrolling interests’ share in net interest income, noninterest income and noninterest expense.
(2)
Represents the preferred allocation of income (or change in income) earned by us as the general partner of certain consolidated funds.
(3)
Amounts prior to January 1, 2015, do not reflect the application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02).

Net income attributable to noncontrolling interests was $6.2 million for the third quarter of 2015, compared to $8.3 million for the second quarter of 2015 and $0.2 million for the third quarter of 2014. Net income attributable to noncontrolling interests of $6.2 million for the third quarter of 2015 was primarily a result of $6.1 million of net gains on investments (including carried interests) attributable to noncontrolling interests. These gains are primarily from net gains of $5.8 million from our managed funds of funds mainly due to valuation increases.

SVBFG Stockholders’ Equity

Total SVBFG stockholders’ equity increased by $123.8 million to $3.2 billion at September 30, 2015, primarily due to net income of $81.7 million and an increase in additional paid-in capital of $9.1 million attributable to amortization of share-based compensation and stock option exercises during the quarter. Additionally, the increase in the net balance of our accumulated other comprehensive income from $63.9 million to $97.1 million at September 30, 2015, was primarily driven by the $58.9 million increase in the fair value of our available-for-sale securities portfolio ($34.7 million, net of tax).

Capital Ratios

Both SVB Financial’s and Silicon Valley Bank’s (the “Bank”) capital ratios (CET 1, tier 1 and total risk-based capital and tier 1 leverage) decreased as of September 30, 2015, compared to the same ratios as of June 30, 2015. The decreases are a result of the increase in risk-weighted and average assets relative to increased capital during the third quarter of 2015. The growth in risk-weighted assets was primarily from loan growth during the quarter. The increase in average assets primarily came from both investment and loan growth during the quarter driven by the growth in deposits. Increased capital is primarily reflective of quarterly earnings.

10




All of our reported capital ratios remain above the levels considered to be “well capitalized” under applicable banking regulations. See the "SVB Financial and Bank Capital Ratios" section, at the end of this release, for all capital ratios.

Outlook for the Year Ending December 31, 2015 and Preliminary 2016 Outlook for Selected Items

Our outlook for the year ending December 31, 2015, and our preliminary outlook for selected items for the year ending December 31, 2016, are provided below on a GAAP basis, unless otherwise noted. We have provided our current outlook for the expected full year results of our significant forecasted activities. Except for the items noted below, we do not provide our outlook for certain items (such as gains (losses) from warrants and investment securities) where the timing or financial impact are uncertain and/or subject to market or other conditions beyond our control (such as the level of IPO, M&A or general financing activity), or for potential unusual or non-recurring items. The outlook and the underlying assumptions presented below are, by their nature, forward-looking statements and are subject to substantial risks and uncertainties, which are discussed below under the section “Forward-Looking Statements.”

For the year ending December 31, 2015, compared to our 2014 results, we currently expect the following outlook:
 
Current full year 2015 outlook compared to 2014 results (as of October 22, 2015)
Change in outlook compared to outlook reported as of July 23, 2015
Average loan balances
Increase at a percentage rate in the high twenties
Outlook increased from a percentage rate in the mid-twenties
Average deposit balances
Increase at a percentage rate in the high twenties
No change from previous outlook
Net interest income (1)
Increase at a percentage rate in the high teens
No change from previous outlook
Net interest margin (1)
Between 2.40% and 2.60%
No change from previous outlook
Allowance for loan losses for total gross performing loans as a percentage of total gross performing loans
Comparable to 2014 levels
No change from previous outlook
Net loan charge-offs
Between 0.30% and 0.50% of average total gross loans
No change from previous outlook
Nonperforming loans as a percentage of total gross loans
Between 0.60% and 1.00% of total gross loans
No change from previous outlook
Core fee income (foreign exchange fees, deposit service charges, credit card fees, lending related fees, client investment fees and letters of credit fees) (2)
Increase at a percentage rate in the mid-twenties
Outlook increased from a percentage rate in the low twenties
Noninterest expense (excluding expenses related to noncontrolling interests) (2) (3)
Increase at a percentage rate in the low double digits
No change from previous outlook
 
(1)
Our outlook for net interest income and net interest margin is primarily based on management's current forecast of average deposit and loan balances and deployment of surplus cash into investment securities. Such forecasts are subject to change, and actual results may differ, based on market conditions, actual prepayment rates and other factors described under the section "Forward-Looking Statements" below.
(2)
These are non-GAAP measures. See "Use of Non-GAAP Financial Measures" at the end of this release for further information regarding the calculation and limitations of these measures.

11



(3)
Our outlook for noninterest expense is partly based on management's current forecast of performance-based incentive compensation expenses. Such forecasts are subject to change, and actual results may differ, based on our performance relative to our internal performance targets.

Preliminary 2016 Outlook for Selected Items

Our preliminary full year 2016 outlook provided below is based on various management assumptions, including: (a) no increase in market interest rates, and (b) no material deterioration in the overall economy. For the full year ending December 31, 2016 compared to our full year 2015 expected results, we currently expect the following percentage rate increases: (1) average loan growth in the low double digits, (2) average deposit balance growth in the low double digits, (3) net interest income growth in the low double digits (assuming no federal reserve rate increases), (4) net loan charge-offs between 0.30% and 0.50% of average total gross loans, (5) non-GAAP core fee income growth in the mid-teens, and (6) non-GAAP noninterest expense growth (excluding expenses related to noncontrolling interests) in the high single digits. Our 2016 outlook is preliminary and subject to change.


12



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 subject to known and unknown risks and uncertainties, many of which may be beyond our control. 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 addition, forward-looking statements generally can be identified by the use of such words as “becoming,” “may,” “will,” “should,” “could,” “would,” “predict,” “potential,” “continue,” “anticipate,” “believe,” “estimate,” “seek,” “expect,” “plan,” “intend,” the negative of such words or comparable terminology. In this release, including our CEO's statement and in the section “Outlook for the Year Ending December 31, 2015 and Preliminary 2016 Outlook for Selected Items” above, we make forward-looking statements discussing management’s expectations about, among other things, economic conditions; opportunities in the market; the outlook on our clients' performance; our financial, credit, and business performance, including potential investment gains; loan growth, loan mix and loan yields; expense levels; and financial results (and the components of such results) for certain quarters in, and for the full years 2015 and 2016.

Although we believe that the expectations reflected in our forward-looking statements are reasonable, we have based these expectations on our current beliefs as well as our assumptions, and such expectations may not prove to be correct. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside our control. Our actual results of operations and financial performance could differ significantly from those expressed in or implied by our management’s forward-looking statements. Important factors that could cause our actual results and financial condition to differ from the expectations stated in the forward-looking statements include, among others: (i) deterioration, weaker than expected improvement, or other changes in the state of the economy or the markets in which we conduct business or are served by us (including the levels of IPOs and M&A activities); (ii) changes in the volume and credit quality of our loans; (iii)  the impact of changes in interest rates or market levels or factors affecting or affected by them, especially on our loan and investment portfolios; (iv) changes in our deposit levels; (v) changes in the performance or equity valuations of funds or companies in which we have invested or hold derivative instruments or equity warrant assets; (vi) variations from our expectations as to factors impacting our cost structure; (vii) changes in our assessment of the creditworthiness or liquidity of our clients or unanticipated effects of credit concentration risks which create or exacerbate deterioration of such creditworthiness or liquidity; (viii) accounting changes, as required by GAAP; and (ix) regulatory or legal changes or their impact on us, including the impact of the Volcker Rule. For additional information about these and other factors, please refer to our public reports filed with the U.S. Securities and Exchange Commission, including under the caption "Risk Factors" in our most recent Annual Report filed on Form 10-K. 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 22, 2015, we will host a conference call at 3:00 p.m. (Pacific Time) to discuss the financial results for the quarter ended September 30, 2015. The conference call can be accessed by dialing (888) 424-8151 or (847) 585-4422, and entering the passcode “5883913.” 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 5:30 p.m. (Pacific Time) on Thursday, October 22, 2015, through 11:59 p.m. (Pacific Time) on November 21, 2015, and may be accessed by dialing (888) 843-7419 or (630) 652-3042 and entering the passcode “5883913.” A replay of the audio webcast will also be available on www.svb.com for 12 months beginning Thursday, October 22, 2015.

About SVB Financial Group

For more than 30 years, SVB Financial Group (NASDAQ: SIVB) and its subsidiaries have helped innovative companies and their investors move bold ideas forward, fast. SVB Financial Group serves companies in technology-related, life science & healthcare, private equity/venture capital, and premium wine industries. Along with commercial banking products and services provided by Silicon Valley Bank, the company offers investment advisory, asset management, private wealth management and brokerage services. We also offer non-banking products and services, such as funds management, private equity/venture capital investment and business valuation services, through our other subsidiaries and divisions. Headquartered in Santa Clara, Calif., SVB Financial Group operates in centers of innovation in the U.S. and around the world. Learn more at svb.com.


13



Banking services are provided by Silicon Valley Bank, Member FDIC. SVB Financial Group and Silicon Valley Bank are members of the Federal Reserve System.



14



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,
2015
 
June 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Interest income:
 
 
 
 
 
 
 
 
 
 
Loans (1)
 
$
174,993

 
$
167,252

 
$
153,292

 
$
507,746

 
$
449,144

Investment securities:
 
 
 
 
 
 
 
 
 
 
Taxable
 
87,609

 
84,613

 
73,540

 
253,496

 
191,384

Non-taxable
 
707

 
741

 
772

 
2,220

 
2,362

Federal funds sold, securities purchased under agreements to resell and other short-term investment securities
 
1,482

 
1,320

 
1,722

 
4,071

 
5,301

Total interest income
 
264,791

 
253,926

 
229,326

 
767,533

 
648,191

Interest expense:
 
 
 
 
 
 
 
 
 
 
Deposits
 
1,158

 
1,182

 
2,961

 
4,283

 
8,933

Borrowings (1)
 
8,973

 
8,973

 
5,800

 
25,894

 
17,400

Total interest expense
 
10,131

 
10,155

 
8,761

 
30,177

 
26,333

Net interest income
 
254,660

 
243,771

 
220,565

 
737,356

 
621,858

Provision for loan losses
 
33,403

 
26,513

 
16,610

 
66,368

 
19,051

Net interest income after provision for loan losses
 
221,257

 
217,258

 
203,955

 
670,988

 
602,807

Noninterest income:
 
 
 
 
 
 
 
 
 
 
Gains on investment securities, net (1)
 
18,768

 
24,975

 
5,644

 
77,006

 
172,236

Gains on derivative instruments, net
 
10,244

 
16,317

 
26,538

 
66,290

 
63,480

Foreign exchange fees
 
22,995

 
22,364

 
17,911

 
63,037

 
53,035

Credit card fees
 
14,536

 
14,215

 
10,909

 
40,841

 
31,440

Deposit service charges
 
12,272

 
11,301

 
10,126

 
34,309

 
29,344

Lending related fees
 
7,561

 
8,163

 
6,029

 
23,746

 
18,208

Client investment fees
 
5,683

 
5,264

 
3,814

 
15,429

 
10,751

Letters of credit and standby letters of credit fees
 
5,341

 
4,772

 
4,557

 
15,315

 
11,507

Other (1)
 
11,077

 
18,916

 
(5,361
)
 
22,315

 
14,601

Total noninterest income
 
108,477

 
126,287

 
80,167

 
358,288

 
404,602

Noninterest expense:
 

 
 
 
 
 
 
 
 
Compensation and benefits
 
109,345

 
124,915

 
99,932

 
350,030

 
302,259

Professional services (1)
 
21,137

 
18,950

 
26,081

 
58,834

 
68,383

Premises and equipment
 
12,356

 
11,787

 
12,631

 
36,800

 
36,267

Business development and travel
 
8,028

 
9,764

 
10,022

 
28,904

 
29,465

Net occupancy
 
8,548

 
8,149

 
7,437

 
24,010

 
22,436

FDIC and state assessments
 
6,954

 
5,962

 
4,587

 
18,705

 
13,660

Correspondent bank fees (1)
 
3,070

 
3,337

 
3,278

 
9,775

 
9,755

Provision for (reduction of) unfunded credit commitments
 
1,047

 
(3,061
)
 
2,225

 
249

 
5,533

Other (1) (2)
 
14,270

 
14,309

 
13,568

 
42,101

 
33,355

Total noninterest expense
 
184,755

 
194,112

 
179,761

 
569,408

 
521,113

Income before income tax expense
 
144,979

 
149,433

 
104,361

 
459,868

 
486,296

Income tax expense (2)
 
57,017

 
54,974

 
40,207

 
175,057

 
137,431

Net income before noncontrolling interests
 
87,962

 
94,459

 
64,154

 
284,811

 
348,865

Net income attributable to noncontrolling interests (1)
 
(6,229
)
 
(8,316
)
 
(177
)
 
(28,419
)
 
(142,985
)
Net income available to common stockholders
 
$
81,733

 
$
86,143

 
$
63,977

 
$
256,392

 
$
205,880

Earnings per common share—basic (2)
 
$
1.59

 
$
1.68

 
$
1.26

 
$
5.00

 
$
4.26

Earnings per common share—diluted (2)
 
1.57

 
1.66

 
1.24

 
4.94

 
4.18

Weighted average common shares outstanding—basic
 
51,479,026

 
51,268,197

 
50,751,633

 
51,253,758

 
48,280,664

Weighted average common shares outstanding—diluted
 
52,048,331

 
51,875,715

 
51,570,771

 
51,878,170

 
49,200,163

 
(1)
Amounts prior to January 1, 2015, do not reflect the application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02).
(2)
Amounts for the three and nine months ended September 30, 2014 have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01).

15



SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited) 

(Dollars in thousands, except par value and share data)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
Assets:
 
 
 
 
 
 
Cash and cash equivalents (1)
 
$
1,674,145

 
$
2,625,550

 
$
1,872,537

Available-for-sale securities, at fair value (cost $15,167,233, $14,414,219, and $13,322,059, respectively)
 
15,307,661

 
14,495,759

 
13,333,436

Held-to-maturity securities, at cost (fair value $8,367,003, $7,730,811 and $6,6613,890, respectively)
 
8,306,526

 
7,735,891

 
6,662,025

Non-marketable and other securities (1) (2)
 
650,555

 
645,506

 
1,702,218

Investment securities
 
24,264,742

 
22,877,156

 
21,697,679

Loans, net of unearned income (1)
 
15,314,580

 
14,261,430

 
12,017,181

Allowance for loan losses
 
(197,507
)
 
(192,644
)
 
(129,061
)
Net loans
 
15,117,073

 
14,068,786

 
11,888,120

Premises and equipment, net of accumulated depreciation and amortization
 
94,652

 
88,284

 
74,375

Accrued interest receivable and other assets (1) (2)
 
580,370

 
571,231

 
502,283

Total assets
 
$
41,730,982

 
$
40,231,007

 
$
36,034,994

Liabilities and total equity:
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
Noninterest-bearing demand deposits (1)
 
$
28,658,963

 
$
27,734,720

 
$
22,461,068

Interest-bearing deposits
 
8,390,454

 
7,892,245

 
8,662,067

Total deposits
 
37,049,417

 
35,626,965

 
31,123,135

Short-term borrowings
 
3,756

 
2,537

 
6,630

Other liabilities (1)
 
566,370

 
614,690

 
517,462

Long-term debt
 
797,211

 
797,343

 
451,599

Total liabilities
 
38,416,754

 
37,041,535

 
32,098,826

SVBFG stockholders’ equity:
 
 
 
 
 
 
Preferred stock, $0.001 par value, 20,000,000 shares authorized; no shares issued and outstanding
 

 

 

Common stock, $0.001 par value, 150,000,000 shares authorized; 51,488,985 shares, 51,461,496 shares and 50,820,946 shares outstanding, respectively
 
51

 
51

 
51

Additional paid-in capital (1)
 
1,171,649

 
1,162,508

 
1,107,337

Retained earnings (2)
 
1,906,135

 
1,824,626

 
1,591,977

Accumulated other comprehensive income (1)
 
97,064

 
63,917

 
18,744

Total SVBFG stockholders’ equity
 
3,174,899

 
3,051,102

 
2,718,109

Noncontrolling interests (1)
 
139,329

 
138,370

 
1,218,059

Total equity
 
3,314,228

 
3,189,472

 
3,936,168

Total liabilities and total equity
 
$
41,730,982

 
$
40,231,007

 
$
36,034,994

 
(1)
Amounts prior to January 1, 2015, do not reflect the application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02).
(2)
Amounts as of September 30, 2014 have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01).

16



SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM AVERAGE BALANCES, RATES AND YIELDS
(Unaudited)
 
 
Three months ended
 
 
September 30, 2015
 
June 30, 2015
 
September 30, 2014
(Dollars in thousands, except yield/rate and ratios)
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1)
 
$
2,618,582

 
$
1,482

 
0.22
%
 
$
2,128,460

 
$
1,320

 
0.25
%
 
$
2,472,205

 
$
1,722

 
0.28
%
Investment securities: (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
15,035,114

 
49,027

 
1.29

 
13,797,718

 
46,698

 
1.36

 
12,446,821

 
43,519

 
1.39

Non-taxable (3)
 

 

 

 

 

 

 

 

 

Held-to-maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
7,803,045

 
38,582

 
1.96

 
7,558,646

 
37,915

 
2.01

 
5,691,201

 
30,021

 
2.09

Non-taxable (3)
 
75,918

 
1,087

 
5.68

 
81,144

 
1,141

 
5.64

 
84,401

 
1,188

 
5.58

Total loans, net of unearned income (4) (5)
 
14,916,652

 
174,993

 
4.65

 
14,320,875

 
167,252

 
4.68

 
11,439,521

 
153,292

 
5.32

Total interest-earning assets
 
40,449,311

 
265,171

 
2.60

 
37,886,843

 
254,326

 
2.69

 
32,134,149

 
229,742

 
2.84

Cash and due from banks
 
349,072

 
 
 
 
 
316,577

 
 
 
 
 
299,964

 
 
 
 
Allowance for loan losses
 
(200,683
)
 
 
 
 
 
(180,130
)
 
 
 
 
 
(128,598
)
 
 
 
 
Other assets (6)
 
1,421,524

 
 
 
 
 
1,419,533

 
 
 
 
 
2,290,550

 
 
 
 
Total assets
 
$
42,019,224

 
 
 
 
 
$
39,442,823

 
 
 
 
 
$
34,596,065

 
 
 
 
Funding sources:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOW deposits
 
$
258,127

 
$
54

 
0.08
%
 
$
230,891

 
$
48

 
0.08
%
 
$
161,793

 
$
279

 
0.68
%
Money market deposits
 
6,109,030

 
867

 
0.06

 
6,034,187

 
909

 
0.06

 
5,649,971

 
2,332

 
0.16

Money market deposits in foreign offices
 
192,859

 
20

 
0.04

 
188,399

 
18

 
0.04

 
228,142

 
26

 
0.05

Time deposits
 
68,875

 
28

 
0.16

 
93,387

 
38

 
0.16

 
162,182

 
96

 
0.23

Sweep deposits in foreign offices
 
1,962,448

 
189

 
0.04

 
1,685,870

 
169

 
0.04

 
2,021,727

 
228

 
0.04

Total interest-bearing deposits
 
8,591,339

 
1,158

 
0.05

 
8,232,734

 
1,182

 
0.06

 
8,223,815

 
2,961

 
0.14

Short-term borrowings
 
6,956

 
3

 
0.17

 
26,345

 
13

 
0.20

 
5,538

 

 

3.50% Senior Notes
 
349,684

 
3,138

 
3.56

 
346,479

 
3,137

 
3.63

 

 

 

5.375% Senior Notes
 
348,556

 
4,839

 
5.51

 
346,654

 
4,837

 
5.60

 
346,262

 
4,832

 
5.54

Junior Subordinated Debentures
 
54,743

 
831

 
6.02

 
54,787

 
833

 
6.10

 
54,918

 
834

 
6.02

6.05% Subordinated Notes
 
49,298

 
162

 
1.30

 
49,651

 
153

 
1.24

 
50,796

 
134

 
1.05

Total interest-bearing liabilities
 
9,400,576

 
10,131

 
0.43

 
9,056,650

 
10,155

 
0.45

 
8,681,329

 
8,761

 
0.40

Portion of noninterest-bearing funding sources
 
31,048,735

 
 
 
 
 
28,830,193

 
 
 
 
 
23,452,820

 
 
 
 
Total funding sources
 
40,449,311

 
10,131

 
0.10

 
37,886,843

 
10,155

 
0.11

 
32,134,149

 
8,761

 
0.11

Noninterest-bearing funding sources:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
 
28,791,728

 
 
 
 
 
26,723,333

 
 
 
 
 
21,502,469

 
 
 
 
Other liabilities
 
556,935

 
 
 
 
 
490,847

 
 
 
 
 
402,231

 
 
 
 
SVBFG stockholders’ equity
 
3,131,687

 
 
 
 
 
3,031,699

 
 
 
 
 
2,729,862

 
 
 
 
Noncontrolling interests
 
138,298

 
 
 
 
 
140,294

 
 
 
 
 
1,280,174

 
 
 
 
Portion used to fund interest-earning assets
 
(31,048,735
)
 
 
 
 
 
(28,830,193
)
 
 
 
 
 
(23,452,820
)
 
 
 
 
Total liabilities and total equity
 
$
42,019,224

 
 
 
 
 
$
39,442,823

 
 
 
 
 
$
34,596,065

 
 
 
 
Net interest income and margin
 
 
 
$
255,040

 
2.50
%
 
 
 
$
244,171

 
2.58
%
 
 
 
$
220,981

 
2.73
%
Total deposits
 
$
37,383,067

 
 
 
 
 
$
34,956,067

 
 
 
 
 
$
29,726,284

 
 
 
 
Average SVBFG stockholders’ equity as a percentage of average assets
 
 
 
 
 
7.45
%
 
 
 
 
 
7.69
%
 
 
 
 
 
7.89
%
Reconciliation to reported net interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments for taxable equivalent basis
 
 
 
(380
)
 
 
 
 
 
(400
)
 
 
 
 
 
(416
)
 
 
Net interest income, as reported
 
 
 
$
254,660

 
 
 
 
 
$
243,771

 
 
 
 
 
$
220,565

 
 
 
(1)
Includes average interest-earning deposits in other financial institutions of $446 million, $445 million and $408 million; and $2.1 billion, $1.6 billion and $2.0 billion deposited at the Federal Reserve Bank, earning interest at the Fed Funds target rate, for the quarters ended September 30, 2015June 30, 2015 and September 30, 2014, respectively.
(2)
Yields on interest-earning investment securities do not give effect to changes in fair value that are reflected in other comprehensive income.
(3)
Interest income on non-taxable investment securities is presented on a fully taxable equivalent basis using the federal statutory tax rate of 35.0 percent for all periods presented.
(4)
Nonaccrual loans are reflected in the average balances of loans.
(5)
Interest income includes loan fees of $24.7 million, $23.7 million and $26.0 million for the quarters ended September 30, 2015June 30, 2015 and September 30, 2014, respectively.
(6)
Average investment securities of $0.7 billion, $0.8 billion and $1.8 billion for the quarters ended September 30, 2015June 30, 2015 and September 30, 2014, respectively, were classified as other assets as they are noninterest-earning assets. These investments primarily consist of non-marketable and other securities.

17



SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM AVERAGE BALANCES, RATES AND YIELDS
(Unaudited) 
 
 
Nine months ended
 
 
September 30, 2015
 
September 30, 2014
(Dollars in thousands, except yield/rate and ratios)
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1)
 
$
2,086,409

 
$
4,071

 
0.26
%
 
$
2,721,501

 
$
5,301

 
0.26
%
Investment securities: (2)
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
14,140,044

 
139,734

 
1.32

 
12,653,194

 
151,854

 
1.60

Non-taxable (3)
 

 

 

 
45,201

 
2,040

 
6.03

Held-to-maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
 
7,617,112

 
113,762

 
2.00

 
2,506,315

 
39,530

 
2.11

Non-taxable (3)
 
80,190

 
3,416

 
5.70

 
37,941

 
1,594

 
5.62

Total loans, net of unearned income (4) (5)
 
14,431,785

 
507,746

 
4.70

 
11,098,397

 
449,144

 
5.41

Total interest-earning assets
 
38,355,540

 
768,729

 
2.68

 
29,062,549

 
649,463

 
2.99

Cash and due from banks
 
302,251

 
 
 
 
 
208,502

 
 
 
 
Allowance for loan losses
 
(184,119
)
 
 
 
 
 
(132,667
)
 
 
 
 
Other assets (6)
 
1,437,853

 
 
 
 
 
2,264,568

 
 
 
 
Total assets
 
$
39,911,525

 
 
 
 
 
$
31,402,952

 
 
 
 
Funding sources:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
NOW deposits
 
$
239,292

 
$
226

 
0.13
%
 
$
157,322

 
$
570

 
0.48
%
Money market deposits
 
6,033,935

 
3,308

 
0.07

 
5,194,449

 
7,305

 
0.19

Money market deposits in foreign offices
 
196,200

 
58

 
0.04

 
207,359

 
110

 
0.07

Time deposits
 
90,939

 
126

 
0.19

 
160,300

 
288

 
0.24

Sweep deposits in foreign offices
 
1,943,565

 
565

 
0.04

 
1,860,576

 
660

 
0.05

Total interest-bearing deposits
 
8,503,931

 
4,283

 
0.07

 
7,580,006

 
8,933

 
0.16

Short-term borrowings
 
25,505

 
28

 
0.15

 
5,027

 

 

3.50% Senior Notes
 
313,834

 
8,401

 
4.69

 

 

 

5.375% Senior Notes
 
348,509

 
14,511

 
5.57

 
346,136

 
14,490

 
5.60

Junior Subordinated Debentures
 
54,786

 
2,496

 
6.09

 
54,962

 
2,521

 
6.13

6.05% Subordinated Notes
 
49,726

 
458

 
1.23

 
51,302

 
389

 
1.01

Total interest-bearing liabilities
 
9,296,291

 
30,177

 
0.43

 
8,037,433

 
26,333

 
0.44

Portion of noninterest-bearing funding sources
 
29,059,249

 
 
 
 
 
21,025,116

 
 
 
 
Total funding sources
 
38,355,540

 
30,177

 
0.11

 
29,062,549

 
26,333

 
0.12

Noninterest-bearing funding sources:
 
 
 
 
 
 
 
 
 
 
 
 
Demand deposits
 
26,909,422

 
 
 
 
 
19,302,107

 
 
 
 
Other liabilities
 
539,787

 
 
 
 
 
399,349

 
 
 
 
SVBFG stockholders’ equity
 
3,022,086

 
 
 
 
 
2,420,695

 
 
 
 
Noncontrolling interests
 
143,939

 
 
 
 
 
1,243,368

 
 
 
 
Portion used to fund interest-earning assets
 
(29,059,249
)
 
 
 
 
 
(21,025,116
)
 
 
 
 
Total liabilities and total equity
 
$
39,911,525

 
 
 
 
 
$
31,402,952

 
 
 
 
Net interest income and margin
 
 
 
$
738,552

 
2.57
%
 
 
 
$
623,130

 
2.87
%
Total deposits
 
$
35,413,353

 
 
 
 
 
$
26,882,113

 
 
 
 
Average SVBFG stockholders’ equity as a percentage of average assets
 
 
 
 
 
7.57
%
 
 
 
 
 
7.71
%
Reconciliation to reported net interest income:
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments for taxable equivalent basis
 
 
 
(1,196
)
 
 
 
 
 
(1,272
)
 
 
Net interest income, as reported
 
 
 
$
737,356

 
 
 
 
 
$
621,858

 
 
 
(1)
Includes average interest-earning deposits in other financial institutions of $467 million and $356 million for the nine months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015 and 2014, balance also includes $1.5 billion and $2.2 billion, respectively, deposited at the Federal Reserve Bank, earning interest at the Federal Funds target rate.
(2)
Yields on interest-earning investment securities do not give effect to changes in fair value that are reflected in other comprehensive income.
(3)
Interest income on non-taxable investment securities is presented on a fully taxable equivalent basis using the federal statutory tax rate of 35.0 percent for all periods presented.
(4)
Nonaccrual loans are reflected in the average balances of loans.
(5)
Interest income includes loan fees of $71.4 million and $71.6 million for the nine months ended September 30, 2015 and 2014, respectively.
(6)
Average investment securities of $0.8 billion and $1.8 billion for the nine months ended September 30, 2015 and 2014, respectively, were classified as other assets as they are noninterest-earning assets. These investments primarily consisted of non-marketable and other securities.


18



Gains on Equity Warrant Assets
 
 
Three months ended
 
Nine months ended
(Dollars in thousands)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Equity warrant assets (1):
 
 
 
 
 
 
 
 
 
 
Gains on exercises, net
 
$
2,173

 
$
14,584

 
$
6,788

 
$
26,363

 
$
28,743

Cancellations and expirations
 
(412
)
 
(114
)
 
(61
)
 
(818
)
 
(577
)
Changes in fair value, net
 
8,924

 
9,146

 
6,430

 
29,034

 
22,693

Total net gains on equity warrant assets (2)
 
$
10,685

 
$
23,616

 
$
13,157

 
$
54,579

 
$
50,859

 
(1)
At September 30, 2015, we held warrants in 1,625 companies, compared to 1,587 companies at June 30, 2015 and 1,415 companies at September 30, 2014. The total value of our warrant portfolio was $130 million at September 30, 2015 compared to $123 million at June 30, 2015, and $95 million at September 30, 2014. Of the 1,625 companies, 21 companies had values greater than $1.0 million and represented 33 percent of the fair value of the portfolio at September 30, 2015. 
(2)
Net gains on equity warrant assets are included in the line item “Gains on derivative instruments, net” as part of noninterest income.

Reconciliation of Basic and Diluted Weighted Average Common Shares Outstanding 
 
 
Three months ended
 
Nine months ended
(Shares in thousands)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Weighted average common shares outstanding—basic
 
51,479

 
51,268

 
50,752

 
51,254

 
48,281

Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
Stock options and employee stock purchase plan
 
382

 
410

 
534

 
411

 
580

Restricted stock units
 
187

 
198

 
285

 
213

 
339

Total effect of dilutive securities
 
569

 
608

 
819

 
624

 
919

Weighted average common shares outstanding—diluted
 
52,048

 
51,876

 
51,571

 
51,878

 
49,200

SVB Financial and Bank Capital Ratios
 
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
SVB Financial Group:
 
 
 
 
 
 
CET 1 risk-based capital ratio (1) (2)
 
12.48
%
 
12.54
%
 
%
Tier 1 risk-based capital ratio (2) (3)
 
13.07

 
13.15

 
14.03

Total risk-based capital ratio (2) (3)
 
14.05

 
14.15

 
14.97

Tier 1 leverage ratio (2) (3)
 
7.67

 
7.95

 
8.22

Tangible common equity to tangible assets ratio (2) (4)
 
7.61

 
7.58

 
7.54

Tangible common equity to risk-weighted assets ratio (2) (4)
 
12.87

 
12.81

 
13.95

Silicon Valley Bank:
 
 
 
 
 
 
CET 1 risk-based capital ratio (1)
 
12.79
%
 
12.87
%
 
%
Tier 1 risk-based capital ratio (3)
 
12.79

 
12.87

 
12.11

Total risk-based capital ratio (3)
 
13.85

 
13.93

 
13.06

Tier 1 leverage ratio (3)
 
7.13

 
7.39

 
7.05

Tangible common equity to tangible assets ratio (4)
 
7.42

 
7.40

 
6.75

Tangible common equity to risk-weighted assets ratio (4)
 
13.21

 
13.16

 
12.12

 
(1)
As of March 31, 2015, Common Equity Tier 1 ("CET 1") is a new ratio requirement under the Basel III Capital Rules and represents, common stock, plus related surplus and retained earnings, plus limited amounts of majority interest in the form of common stock, less certain regulatory deductions, divided by total risk-weighted assets.
(2)
Ratios prior to January 1, 2015, do not reflect the application of new accounting guidance adopted int he second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02).
(3)
Ratios as of September 30, 2015 and June 30, 2015 reflect the adoption of the Basel III Capital Rules in effect beginning January 1, 2015. Ratios for prior periods represent the previous capital rules under Basel I.
(4)
These are non-GAAP measures. A reconciliation of non-GAAP measures to GAAP is provided at the end of this release under the section “Use of Non-GAAP Financial Measures.”


19



Loan Concentrations
(Dollars in thousands, except ratios and client data)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
Loans (individually or in the aggregate) to any single client, equal to or greater than $20 million
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
Software and internet
 
$
1,895,605

 
$
1,643,110

 
$
1,600,284

Hardware
 
338,720

 
524,983

 
403,383

Private equity/venture capital
 
2,897,115

 
2,093,557

 
1,692,560

Life science & healthcare
 
527,259

 
585,608

 
429,207

Premium wine (1)
 
16,701

 
30,182

 
28,425

Other
 
99,825

 
97,920

 
35,000

Total commercial loans
 
5,775,225

 
4,975,360

 
4,188,859

Real estate secured loans:
 
 
 
 
 
 
Premium wine (1)
 
65,101

 
96,935

 
81,464

Consumer (2)
 

 

 

Other
 
22,133

 
22,333

 
22,933

Total real estate secured loans
 
87,234

 
119,268

 
104,397

Consumer loans (2)
 
97,501

 
115,000

 
30,000

Total loans individually equal to or greater than $20 million
 
$
5,959,960

 
$
5,209,628

 
$
4,323,256

Loans (individually or in the aggregate) to any single client, less than $20 million
 
 
 
 
 
 
Commercial loans:
 
 
 
 
 
 
Software and internet
 
$
3,424,451

 
$
3,382,966

 
$
2,945,040

Hardware
 
632,195

 
533,453

 
678,707

Private equity/venture capital (3)
 
1,714,838

 
1,930,275

 
1,255,775

Life science & healthcare
 
1,085,421

 
903,447

 
827,923

Premium wine
 
178,747

 
162,561

 
159,990

Other
 
198,373

 
158,485

 
209,067

Total commercial loans
 
7,234,025

 
7,071,187

 
6,076,502

Real estate secured loans:
 
 
 
 
 
 
Premium wine
 
568,656

 
535,691

 
482,191

Consumer
 
1,443,170

 
1,340,106

 
1,047,487

Other
 
16,250

 
11,250

 
7,500

Total real estate secured loans
 
2,028,076

 
1,887,047

 
1,537,178

Construction loans
 
92,729

 
91,436

 
80,273

Consumer loans
 
115,151

 
111,632

 
95,265

Total loans individually less than $20 million
 
$
9,469,981

 
$
9,161,302

 
$
7,789,218

Total gross loans
 
$
15,429,941

 
$
14,370,930

 
$
12,112,474

Loans individually equal to or greater than $20 million as a percentage of total gross loans
 
38.6
%
 
36.3
%
 
35.7
%
Total clients with loans individually equal to or greater than $20 million
 
165

 
155

 
127

Loans individually equal to or greater than $20 million on nonaccrual status
 
$
84,588

 
$
63,310

 
$

 
(1)
Premium wine clients can have loan balances included in both commercial loans and real estate secured loans, the combination of which are equal to or greater than $20 million.
(2)
Consumer loan clients can have loan balances included in both real estate secured loans and other consumer loans, the combination of which are equal to or greater than $20 million.
(3)
Amounts prior to January 1, 2015, do not reflect the application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02).



20



Credit Quality
(Dollars in thousands, except ratios)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
Gross nonperforming, past due, and restructured loans:
 
 
 
 
 
 
Impaired loans
 
$
115,461

 
$
100,802

 
$
11,687

Loans past due 90 days or more still accruing interest
 
169

 
47

 
125

Total nonperforming loans
 
$
115,630

 
$
100,849

 
$
11,812

OREO and other foreclosed assets
 

 

 
561

Total nonperforming assets
 
$
115,630

 
$
100,849

 
$
12,373

Nonperforming loans as a percentage of total gross loans
 
0.75
%
 
0.70
%
 
0.10
%
Nonperforming assets as a percentage of total assets
 
0.28

 
0.25

 
0.03

Allowance for loan losses
 
$
197,507

 
$
192,644

 
$
129,061

As a percentage of total gross loans
 
1.28
%
 
1.34
%
 
1.07
%
As a percentage of total gross nonperforming loans
 
170.81

 
191.02

 
NM

Allowance for loan losses for impaired loans
 
$
46,256

 
$
50,865

 
$
2,325

As a percentage of total gross loans
 
0.30
%
 
0.35
%
 
0.02
%
As a percentage of total gross nonperforming loans
 
40.00

 
50.44

 
19.68

Allowance for loan losses for total gross performing loans
 
$
151,251

 
$
141,779

 
$
126,736

As a percentage of total gross loans
 
0.98
%
 
0.99
%
 
1.05
%
As a percentage of total gross performing loans
 
0.99

 
0.99

 
1.05

Total gross loans (1)
 
$
15,429,941

 
$
14,370,930

 
$
12,112,474

Total gross performing loans (1)
 
15,314,311

 
14,270,081

 
12,100,662

Reserve for unfunded credit commitments (2)
 
36,631

 
35,617

 
35,489

As a percentage of total unfunded credit commitments
 
0.23
%
 
0.23
%
 
0.24
%
Total unfunded credit commitments (3)
 
$
16,087,307

 
$
15,808,209

 
$
14,631,637

 
(1)
Amounts prior to January 1, 2015, do not reflect the application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02).
(2)
The “reserve for unfunded credit commitments” is included as a component of “other liabilities.”
(3)
Includes unfunded loan commitments and letters of credit.

Average Off-Balance Sheet Client Investment Funds(1) 
 
 
Three months ended
 
Nine months ended
(Dollars in millions)
 
September 30,
2015
 
June 30,
2015
 
September 30,
2014
 
September 30,
2015
 
September 30,
2014
Client directed investment assets
 
$
8,392

 
$
7,847

 
$
7,168

 
$
7,752

 
$
7,288

Client investment assets under management (2)
 
20,943

 
19,261

 
17,050

 
19,305

 
15,574

Sweep money market funds
 
12,638

 
10,761

 
6,770

 
10,765

 
6,564

Total average client investment funds
 
$
41,973

 
$
37,869

 
$
30,988

 
$
37,822

 
$
29,426


Period-end Off-Balance Sheet Client Investment Funds(1) 
 
 
Period-end balances at
(Dollars in millions)
 
September 30,
2015
 
June 30,
2015
 
March 31,
2015
 
December 31,
2014
 
September 30,
2014
Client directed investment assets
 
$
8,487

 
$
8,047

 
$
7,344

 
$
6,158

 
$
6,491

Client investment assets under management (2)
 
21,823

 
20,394

 
17,956

 
18,253

 
17,423

Sweep money market funds
 
13,257

 
11,643

 
9,870

 
7,957

 
7,230

Total period-end client investment funds
 
$
43,567

 
$
40,084

 
$
35,170

 
$
32,368

 
$
31,144

 
(1)
Off-Balance sheet client investment funds are maintained at third-party financial institutions.
(2)
These funds represent investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.



21



Use of Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures (including, but not limited to, non-GAAP net income, non-GAAP core fee income, non-GAAP noninterest income, non-GAAP net gains on investment securities, non-GAAP non-marketable and other securities, non-GAAP noninterest expense and non-GAAP financial ratios) of financial performance. These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures by other companies in our industry. 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. A non-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirement.

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures (as applicable), provide meaningful supplemental information regarding our performance by: (i) excluding amounts attributable to noncontrolling interests for which we effectively do not receive the economic benefit or cost of, where indicated, or (ii) providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. 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. We believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. 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 tables below, we have provided a reconciliation of, where applicable, the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release, or a reconciliation of the non-GAAP calculation of the financial measure.

In particular, in this press release, we use certain non-GAAP measures that exclude the following from net income and certain other financial line items in certain periods:

Income and expense attributable to noncontrolling interests — As part of our funds management business, we recognize the entire income or loss from certain funds where we own less than 100 percent. We are required under GAAP to consolidate 100 percent of the results of certain SVB Capital funds. We adopted the new accounting guidance related to our consolidated variable interest entities (ASU 2015-02) effective January 1, 2015. The relevant amounts attributable to investors other than us are reflected under “Net Income Attributable to Noncontrolling Interests.” Our net income available to common stockholders/certain financial line items include only the portion of income or loss related to our ownership interest.

Pre-tax net losses for the fourth quarter of 2014 of $13.9 million ($11.4 million, net of tax) from the pending sale of SVBIF at December 31, 2014.

In addition, in this press release, we use certain non-GAAP financial ratios and measures that are not required by GAAP or exclude certain financial items from their calculations that are otherwise required under GAAP, including:

Tangible common equity to tangible assets ratio; tangible common equity to risk-weighted assets ratio — These ratios are not required by GAAP or applicable bank regulatory requirements, and are used by management to evaluate the adequacy of our capital levels. Risk-based capital guidelines require minimum level of capital as a percentage of risk-weighted assets. Risk-weighted assets are calculated by assigning assets and off-balance sheet items to broad risk categories. Our ratios are calculated by dividing total SVBFG stockholders’ equity, by total assets or total risk-weighted assets, as applicable, after reducing amounts by acquired intangibles, if any.

Non-GAAP return on average assets ratio; Non-GAAP return on average SVBFG stockholders’ equity ratio — These ratios exclude certain financial items that are otherwise required under GAAP. Our ratios are calculated by dividing non-GAAP net income available to common stockholders (annualized) by average assets or average SVBFG stockholders’ equity, as applicable.

Non-GAAP operating efficiency ratio — This ratio excludes certain financial items that are otherwise required under GAAP. It is calculated by dividing noninterest expense by total revenue, after adjusting both amounts by

22



income and expense attributable to noncontrolling interests, adjustments to net interest income for a taxable equivalent basis and the losses noted above for applicable periods.

Non-GAAP core fee income — This measure represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control. We do not provide our outlook for the expected full year results for these excluded items, which include gains on investment securities, net, gains on derivative instruments, net, and other noninterest income items.

  
 
Three months ended
 
Nine months ended
Non-GAAP net income and earnings per share (Dollars in thousands, except share data)
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
Net income available to common stockholders (1)
 
$
81,733

 
$
86,143

 
$
88,516

 
$
57,990

 
$
63,977

 
$
256,392

 
$
205,880

Less: net losses on SVBIF Sale Transaction (2)
 

 

 

 
13,934

 

 

 

Tax impact from net losses on SVBIF Sale Transaction
 

 

 

 
(5,398
)
 

 

 

Tax impact of undistributed earnings of SVBIF
 

 

 

 
2,900

 

 

 

Non-GAAP net income available to common stockholders (1)
 
$
81,733


$
86,143


$
88,516


$
69,426


$
63,977


$
256,392


$
205,880

GAAP earnings per common share — diluted (1)
 
$
1.57

 
$
1.66

 
$
1.71

 
$
1.13

 
$
1.24

 
$
4.94

 
$
4.18

Less: net losses on SVBIF Sale Transaction (2)
 

 

 

 
0.28

 

 

 

Tax impact from net losses on SVBIF Sale Transaction
 

 

 

 
(0.11
)
 

 

 

Tax impact of undistributed earnings of SVBIF
 

 

 

 
0.06

 

 

 

Non-GAAP earnings per common share — diluted (1)
 
$
1.57


$
1.66


$
1.71


$
1.36


$
1.24


$
4.94


$
4.18

Weighted average diluted common shares outstanding
 
52,048,331

 
51,875,715

 
51,719,086

 
51,528,150

 
51,570,771

 
51,878,170

 
49,200,163

 
(1)
Amounts for periods prior to March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01).
(2)
Pre-tax net losses of $13.9 million on the pending sale of SVBIF are included in other noninterest income at December 31, 2014.

 
 
Three months ended
 
Nine months ended
Non-GAAP return on average assets (annualized) and average SVBFG stockholders' equity (annualized) (Dollars in thousands, except ratios)
 
September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014

September 30, 2015

September 30, 2014
Net income available to common stockholders (1)
 
$
81,733

 
$
86,143

 
$
88,516

 
$
57,990

 
$
63,977

 
$
256,392

 
$
205,880

Non-GAAP net income available to common stockholders (1)
 
$
81,733

 
$
86,143

 
$
88,516

 
$
69,426

 
$
63,977

 
$
256,392

 
$
205,880

Average Assets (2)
 
$
42,019,224

 
$
39,442,823

 
$
38,221,341

 
$
37,588,050

 
$
34,596,065

 
$
39,911,525

 
$
31,402,952

Return on average assets (annualized) (1) (2)
 
0.77
%
 
0.88
%
 
0.94
%
 
0.61
%
 
0.73
%
 
0.86
%
 
0.88
%
Non-GAAP return on average assets (annualized) (1) (2)
 
0.77

 
0.88

 
0.94

 
0.73

 
0.73

 
0.86

 
0.88

Average SVBFG stockholders' equity (annualized) (2)
 
$
3,131,687

 
$
3,031,699

 
$
2,900,330

 
$
2,827,512

 
$
2,729,862

 
$
3,022,086

 
$
2,420,695

Return on average SVBFG stockholders' equity (annualized) (1)
 
10.35
%
 
11.40
%
 
12.38
%
 
8.14
%
 
9.30
%
 
11.34
%
 
11.37
%
Non-GAAP return on average SVBFG stockholders' equity (annualized) (1)
 
10.35

 
11.40

 
12.38

 
9.74

 
9.30

 
11.34

 
11.37

 
(1)
Amounts and ratios for periods prior to March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01).
(2)
Amounts and ratios for the three months ended March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised for the adoption of this guidance.


23



 
 
Three months ended

Nine months ended
Non-GAAP noninterest income, net of noncontrolling interests (Dollars in thousands)
 
September 30, 2015

June 30, 2015

March 31, 2015

December 31, 2014

September 30, 2014
 
September 30, 2015
 
September 30, 2014
GAAP noninterest income (1)
 
$
108,477

 
$
126,287

 
$
123,524

 
$
167,637

 
$
80,167

 
$
358,288

 
$
404,602

Less: income (losses) attributable to noncontrolling interests, including carried interest (1)
 
6,343

 
8,556

 
14,164

 
77,320

 
4,911

 
29,063

 
156,304

Non-GAAP noninterest income, net of noncontrolling interests (1)
 
$
102,134

 
$
117,731

 
$
109,360

 
$
90,317

 
$
75,256

 
$
329,225

 
$
248,298

Less: net losses on SVBIF Sale Transaction
 

 

 

 
13,934

 

 

 

Non-GAAP noninterest income, net of noncontrolling interests and excluding net losses on SVBIF Sale Transaction (1)
 
$
102,134

 
$
117,731

 
$
109,360

 
$
104,251

 
$
75,256

 
$
329,225

 
$
248,298

 
(1)
Amounts as of and for the three months ended March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised.
 
 
Three months ended
 
Nine months ended
Non-GAAP core fee income (Dollars in thousands)
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
GAAP noninterest income (1)
 
$
108,477


$
126,287


$
123,524

 
$
167,637


$
80,167


$
358,288


$
404,602

Less: gains on investment securities, net (1)
 
18,768

 
24,975

 
33,263

 
94,787

 
5,644

 
77,006

 
172,236

Less: gains on derivative instruments, net
 
10,244

 
16,317

 
39,729

 
33,365

 
26,538

 
66,290

 
63,480

Less: other noninterest income (losses) (1)
 
11,077

 
18,916

 
(7,678
)
 
(15,861
)
 
(5,361
)
 
22,315

 
14,601

Non-GAAP core fee income
 
$
68,388


$
66,079


$
58,210


$
55,346


$
53,346

 
$
192,677

 
$
154,285

 
 
(1)
Amounts for the three months ended March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised.
 
 
Three months ended
 
Nine months ended
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests (Dollars in thousands)
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
GAAP net gains on investment securities (1)
 
$
18,768

 
$
24,975

 
$
33,263

 
$
94,787

 
$
5,644

 
$
77,006

 
$
172,236

Less: income attributable to noncontrolling interests, including carried interest (1)
 
6,102

 
9,036

 
14,171

 
78,225

 
6,757

 
29,309

 
158,069

Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests (1)
 
$
12,666

 
$
15,939

 
$
19,092

 
$
16,562

 
$
(1,113
)
 
$
47,697

 
$
14,167

 
(1)
Amounts for the three months ended March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised.


24



  
 
Three months ended
 
Nine months ended
Non-GAAP operating efficiency ratio, net of noncontrolling interests (Dollars in thousands, except ratios)
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
 
September 30, 2015
 
September 30, 2014
GAAP noninterest expense (1) (2)
 
$
184,755

 
$
194,112

 
$
190,541

 
$
186,067

 
$
179,761

 
$
569,408

 
$
521,113

Less: expense attributable to noncontrolling interests (2)
 
116

 
242

 
292

 
5,536

 
4,743

 
650

 
13,331

Non-GAAP noninterest expense, net of noncontrolling interests (1) (2)
 
$
184,639

 
$
193,870

 
$
190,249

 
$
180,531

 
$
175,018

 
$
568,758

 
$
507,782

GAAP net interest income (2)
 
$
254,660

 
$
243,771

 
$
238,925

 
$
234,737

 
$
220,565

 
$
737,356

 
$
621,858

Adjustments for taxable equivalent basis
 
380

 
400

 
416

 
417

 
416

 
1,196

 
1,272

Non-GAAP taxable equivalent net interest income (2)
 
$
255,040

 
$
244,171

 
$
239,341

 
$
235,154

 
$
220,981

 
$
738,552

 
$
623,130

Less: income (losses) attributable to noncontrolling interests (2)
 
2

 
2

 
2

 
21

 
9

 
6

 
12

Non-GAAP taxable equivalent net interest income, net of noncontrolling interests (2)
 
$
255,038

 
$
244,169

 
$
239,339

 
$
235,133

 
$
220,972

 
$
738,546

 
$
623,118

GAAP noninterest income (2)
 
$
108,477

 
$
126,287

 
$
123,524

 
$
167,637

 
$
80,167

 
$
358,288

 
$
404,602

Non-GAAP noninterest income, net of noncontrolling interests and excluding net losses on SVBIF Sale Transaction (2)
 
102,134

 
117,731

 
109,360

 
104,251

 
75,256

 
329,225

 
248,298

GAAP total revenue (2)
 
$
363,137

 
$
370,058

 
$
362,449

 
$
402,374

 
$
300,732

 
$
1,095,644

 
$
1,026,460

Non-GAAP taxable equivalent revenue, net of noncontrolling interests and excluding net losses on SVBIF Sale Transaction (2)
 
$
357,172

 
$
361,900

 
$
348,699

 
$
339,384

 
$
296,228

 
$
1,067,771

 
$
871,416

GAAP operating efficiency ratio (2)
 
50.88
%
 
52.45
%
 
52.57
%
 
46.24
%
 
59.77
%
 
51.97
%
 
50.77
%
Non-GAAP, net of noncontrolling interests and excluding net losses on SVBIF Sale Transaction operating efficiency ratio (2)
 
51.69

 
53.57

 
54.56

 
53.19

 
59.08

 
53.27

 
58.27

 
(1)
Amounts for periods prior to March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01).
(2)
Amounts and ratios for the three months ended March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts and ratios prior to January 1, 2015 have not been revised for the adoption of this guidance.

Non-GAAP non-marketable and other securities, net of noncontrolling interests (Dollars in thousands)
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
GAAP non-marketable and other securities (1) (2)
 
$
650,555

 
$
645,506

 
$
664,388

 
$
1,728,140

 
$
1,702,218

Less: amounts attributable to noncontrolling interests (2)
 
129,417

 
128,539

 
129,921

 
1,216,344

 
1,200,903

Non-GAAP non-marketable and other securities, net of noncontrolling interests (2)
 
$
521,138

 
$
516,967

 
$
534,467

 
$
511,796

 
$
501,315

 
(1)
Amounts for periods prior to March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01).
(2)
Amounts as of March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02).
SVB Financial Group tangible common equity, tangible assets and risk-weighted assets (Dollars in thousands, except ratios)
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
(Revised)(3)
 
December 31, 2014
 
September 30, 2014
GAAP SVBFG stockholders’ equity (1)
 
$
3,174,899

 
$
3,051,102

 
$
2,971,692

 
$
2,813,072

 
$
2,718,109

Tangible common equity (1)
 
$
3,174,899

 
$
3,051,102

 
$
2,971,692

 
$
2,813,072

 
$
2,718,109

GAAP total assets (1)
 
$
41,730,982

 
$
40,231,007

 
$
38,606,610

 
$
39,337,869

 
$
36,034,994

Tangible assets (1)
 
$
41,730,982

 
$
40,231,007

 
$
38,606,610

 
$
39,337,869

 
$
36,034,994

Risk-weighted assets (2)
 
$
24,666,658

 
$
23,815,512

 
$
24,151,737

 
$
21,755,091

 
$
19,482,333

Tangible common equity to tangible assets (1)
 
7.61
%
 
7.58
%
 
7.70
%
 
7.15
%
 
7.54
%
Tangible common equity to risk-weighted assets (1) (2)
 
12.87

 
12.81

 
12.30

 
12.93

 
13.95

 

25



(1)
Amounts for periods prior to March 31, 2015, and ratios have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01).
(2)
Amounts and ratios as of September 30, June 30, 2015 and March 31, 2015 reflect the adoption of the Basel III Capital Rules in effect beginning January 1, 2015. Amounts and ratios for prior periods represent the previous capital rules under Basel I.
(3)
Amounts and ratios as of March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts and ratios prior to January 1, 2015 have not been revised for the adoption of this guidance.

Silicon Valley Bank tangible common equity, tangible assets and risk-weighted assets (Dollars in thousands, except ratios)
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
September 30, 2014
Tangible common equity (1) (3)
 
$
3,048,933

 
$
2,930,554

 
$
2,886,173

 
$
2,399,411

 
$
2,320,613

Tangible assets (1) (3)
 
$
41,073,120

 
$
39,612,481

 
$
37,974,587

 
$
37,607,973

 
$
34,359,839

Risk-weighted assets (2)
 
$
23,072,656

 
$
22,277,020

 
$
22,602,065

 
$
21,450,480

 
$
19,144,527

Tangible common equity to tangible assets (1) (3)
 
7.42
%
 
7.40
%
 
7.60
%
 
6.38
%
 
6.75
%
Tangible common equity to risk-weighted assets (1) (2) (3)
 
13.21

 
13.16

 
12.77

 
11.19

 
12.12

 
(1)
Amounts for periods prior to March 31, 2015, and ratios have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01).
(2)
Amounts and ratios as of September 30, June 30, 2015 and March 31, 2015 reflect the adoption of the Basel III Capital Rules in effect beginning January 1, 2015. Amounts and ratios for prior periods represent the previous capital rules under Basel I.
(3)
Amounts and ratios as of March 31, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts and ratios prior to January 1, 2015 have not been revised for the adoption of this guidance.


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