SVB FINANCIAL GROUP 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
January 21, 2016 NASDAQ: SIVB
SVB FINANCIAL GROUP ANNOUNCES 2015 FOURTH QUARTER AND FULL-YEAR FINANCIAL RESULTS"Our strong fourth quarter capped a great year marked by healthy balance sheet growth, record core fee income, and stable credit quality, " said Greg Becker, President and CEO of SVB Financial Group. "Our clients' healthy growth and robust activity continue to translate into opportunities for us, regardless of ongoing shifts in broader market sentiments. Our results demonstrate that we are focused on the best of all possible markets and we plan to maintain our position as the leading bank for the innovation economy."
Highlights of our fourth quarter 2015 results (compared to third quarter 2015, unless otherwise noted) included:
Period-end loan balances of $16.7 billion, an increase of $1.4 billion (or 9.3 percent).
Average investment securities, excluding non-marketable and other securities, of $23.5 billion, an increase of $621 million (or 2.7 percent).
$1.6 billion (or 6.6 percent).
Average total client funds (consisting of both on-balance sheet deposits and off-balance sheet client investment funds) of $82.3 billion, an increase of $3.0 billion (or 3.8 percent) with average on-balance sheet deposits increasing by $1.5 billion (or 4.1 percent) and average off-balance sheet client investment funds increasing by $1.5 billion (or 3.5 percent).
Period-end total client funds (consisting of both on-balance sheet deposits and off-balance sheet client investment funds) of $83.1 billion, an increase of $2.5 billion (or 3.1 percent) with period-end on-balance sheet deposits increasing by $2.1 billion (or 5.7 percent) and period-end off-balance sheet client investment funds increasing
$425 million (or 1.0 percent).
Net interest income (fully taxable equivalent basis) of $269.4 million, an increase of $14.4 million (or 5.6 percent).
Net interest margin of 2.54 percent, an increase of 4 basis points.
Provision for loan losses of $31.3 million, compared to $33.4 million.
Gains on equity warrant assets of $16.4 million, compared to $10.7 million.
Non-GAAP core fee income increased $4.3 million (or 6.3 percent) to $72.7 million. (See non-GAAP reconciliation under the section "Use of Non-GAAP Financial Measures".)
Noninterest expense of $208.6 million, an increase of $23.9 million (or 12.9 percent).
Consolidated net income available to common stockholders for the year ended December 31, 2015 was $343.9 million, or $6.62 per diluted common share, compared to $263.9 million, or $5.31 per diluted common share, for the comparable 2014 period. Non-GAAP net income available to common stockholders for the year ended December 31, 2014 was
$275.3 million, or $5.54 per diluted common share. (See non-GAAP reconciliation under the section "Use of Non- GAAP Financial Measures".)
Three months ended Year ended
(Dollars in millions, except share data, employees and ratios) | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 |
Income statement: | |||||||
Diluted earnings per common share (1) | $ 1.68 | $ 1.57 | $ 1.66 | $ 1.71 | $ 1.13 | $ 6.62 | $ 5.31 |
Net income available to common stockholders (1) | 87.5 | 81.7 | 86.1 | 88.5 | 58.0 | 343.9 | 263.9 |
Net interest income | 269.1 | 254.7 | 243.8 | 238.9 | 234.7 | 1,006.4 | 856.6 |
Provision for loan losses | 31.3 | 33.4 | 26.5 | 6.5 | 40.4 | 97.6 | 59.5 |
Noninterest income (2) | 114.5 | 108.5 | 126.3 | 123.5 | 167.6 | 472.8 | 572.2 |
Noninterest expense (1) (2) | 208.6 | 184.8 | 194.1 | 190.5 | 186.1 | 778.0 | 707.2 |
Non-GAAP net income available to common stockholders (1) (3) | 87.5 | 81.7 | 86.1 | 88.5 | 69.4 | 343.9 | 275.3 |
Non-GAAP diluted earnings per common share (1) (3) | 1.68 | 1.57 | 1.66 | 1.71 | 1.36 | 6.62 | 5.54 |
Non-GAAP core fee income (3) | 72.7 | 68.4 | 66.1 | 58.2 | 55.3 | 265.4 | 209.6 |
Non-GAAP noninterest income, net of noncontrolling interests (1) (2) (3) | 111.8 | 102.1 | 117.7 | 109.4 | 104.3 | 441.1 | 352.5 |
Non-GAAP noninterest expense, net of noncontrolling interests (1) (2) (3) | 208.4 | 184.6 | 193.9 | 190.2 | 180.5 | 777.2 | 688.3 |
Fully taxable equivalent: | |||||||
Net interest income (4) | $ 269.4 | $ 255.0 | $ 244.2 | $ 239.3 | $ 235.2 | $ 1,008.0 | $ 858.3 |
Net interest margin | 2.54% | 2.50% | 2.58% | 2.65% | 2.66% | 2.57% | 2.81% |
Balance sheet: | |||||||
Average total assets (2) | $ 43,634.8 | $ 42,014.2 | $ 39,442.8 | $ 38,221.3 | $ 37,588.1 | $ 40,846.4 | $ 32,961.9 |
Average loans, net of unearned income (2) | 15,745.6 | 14,916.7 | 14,320.9 | 14,048.3 | 12,703.4 | 14,762.9 | 11,502.9 |
Average available-for-sale securities | 15,314.8 | 15,035.1 | 13,797.7 | 13,571.2 | 13,526.5 | 14,436.1 | 12,907.1 |
Average held-to-maturity securities | 8,220.5 | 7,879.0 | 7,639.8 | 7,569.8 | 7,115.3 | 7,829.2 | 3,696.4 |
Average noninterest-bearing demand deposits (2) | 30,531.1 | 28,791.7 | 26,723.3 | 25,173.4 | 23,701.1 | 27,822.3 | 20,410.9 |
Average interest-bearing deposits | 8,373.6 | 8,591.3 | 8,232.7 | 8,688.8 | 8,889.0 | 8,471.1 | 7,909.9 |
Average total deposits (2) | 38,904.7 | 37,383.1 | 34,956.1 | 33,862.2 | 32,590.0 | 36,293.4 | 28,320.8 |
Average long-term debt | 797.1 | 797.3 | 797.6 | 690.0 | 451.7 | 770.8 | 452.2 |
Period-end total assets (1) (2) | 44,686.7 | 41,731.0 | 40,231.0 | 38,606.6 | 39,337.9 | 44,686.7 | 39,337.9 |
Period-end loans, net of unearned income (2) | 16,742.1 | 15,314.6 | 14,261.4 | 14,447.7 | 14,384.3 | 16,742.1 | 14,384.3 |
Period-end available-for-sale securities | 16,380.7 | 15,307.7 | 14,495.8 | 13,746.9 | 13,540.7 | 16,380.7 | 13,540.7 |
Period-end held-to-maturity securities | 8,791.0 | 8,306.5 | 7,735.9 | 7,816.8 | 7,421.0 | 8,791.0 | 7,421.0 |
Period-end non-marketable and other securities (1) (2) | 674.9 | 650.6 | 645.5 | 664.4 | 1,728.1 | 674.9 | 1,728.1 |
Period-end noninterest-bearing demand deposits (2) | 30,867.5 | 28,659.0 | 27,734.7 | 25,796.1 | 24,583.7 | 30,867.5 | 24,583.7 |
Period-end interest-bearing deposits | 8,275.3 | 8,390.5 | 7,892.2 | 8,135.0 | 9,759.8 | 8,275.3 | 9,759.8 |
Period-end total deposits (2) | 39,142.8 | 37,049.4 | 35,627.0 | 33,931.1 | 34,343.5 | 39,142.8 | 34,343.5 |
Off-balance sheet: | |||||||
Average client investment funds | $ 43,436.2 | $ 41,972.9 | $ 37,869.5 | $ 33,625.1 | $ 31,868.1 | $ 39,225.9 | $ 30,036.1 |
Period-end client investment funds | 43,991.7 | 43,566.7 | 40,084.5 | 35,169.8 | 32,367.7 | 43,991.7 | 32,367.7 |
Total unfunded credit commitments | 15,614.4 | 16,087.3 | 15,808.2 | 15,485.5 | 14,705.8 | 15,614.4 | 14,705.8 |
Earnings ratios: | |||||||
Return on average assets (annualized) (1) (2) (5) 0.80% | 0.77% | 0.88% | 0.94% | 0.61% | 0.84% | 0.80% | |
Non-GAAP return on average assets (annualized) (1) (2) (3) 0.80 | 0.77 | 0.88 | 0.94 | 0.73 | 0.84 | 0.84 | |
Return on average SVBFG stockholders' equity (annualized) (1) (6) 10.74 | 10.35 | 11.40 | 12.38 | 8.14 | 11.18 | 10.46 | |
Non-GAAP return on average SVBFG stockholders' equity (annualized) (1) (3) 10.74 | 10.35 | 11.40 | 12.38 | 9.74 | 11.18 | 10.91 | |
Asset quality ratios: | |||||||
Allowance for loan losses as a % of total gross loans 1.29% | 1.28% | 1.34% | 1.15% | 1.14% | 1.29% | 1.14% | |
Allowance for loan losses for performing loans as a % of total gross performing loans 0.99 | 0.99 | 0.99 | 0.99 | 1.04 | 0.99 | 1.04 | |
Gross charge-offs as a % of average total gross loans (annualized) 0.29 | 0.77 | 0.13 | 0.16 | 0.15 | 0.34 | 0.37 | |
Net charge-offs as a % of average total gross loans (annualized) 0.28 | 0.75 | 0.05 | 0.11 | 0.13 | 0.31 | 0.32 | |
Other ratios: | |||||||
GAAP operating efficiency ratio (1) (2) (7) | 54.39% | 50.88% | 52.45% | 52.57% | 46.24% | 52.60% | 49.49% |
Non-GAAP operating efficiency ratio (1) (2) (3) | 54.67 | 51.69 | 53.57 | 54.56 | 53.19 | 53.63 | 56.85 |
SVBFG CET 1 risk-based capital ratio (2) (8) | 12.28 | 12.48 | 12.54 | 11.92 | - | 12.28 | - |
Bank CET 1 risk-based capital ratio (8) | 12.52 | 12.79 | 12.87 | 12.36 | - | 12.52 | - |
SVBFG total risk-based capital ratio (2) (8) | 13.84 | 14.05 | 14.15 | 13.46 | 13.92 | 13.84 | 13.92 |
Bank total risk-based capital ratio (8) | 13.60 | 13.85 | 13.93 | 13.35 | 12.12 | 13.60 | 12.12 |
SVBFG tier 1 leverage ratio (2) (8) | 7.63 | 7.67 | 7.95 | 7.92 | 7.74 | 7.63 | 7.74 |
Bank tier 1 leverage ratio (8) | 7.09 | 7.13 | 7.39 | 7.43 | 6.64 | 7.09 | 6.64 |
Period-end loans, net of unearned income, to deposits ratio (2) | 42.77 | 41.34 | 40.03 | 42.58 | 41.88 | 42.77 | 41.88 |
Average loans, net of unearned income, to average deposits ratio | 40.47 | 39.90 | 40.97 | 41.49 | 38.98 | 40.68 | 40.62 |
Book value per common share (1) (9) | $ 61.97 | $ 61.66 | $ 59.29 | $ 58.16 | $ 55.24 | $ 61.97 | $ 55.24 |
Other statistics:
Average full-time equivalent employees | 2,073 | 2,030 | 1,959 | 1,955 | 1,907 | 2,004 | 1,815 |
Period-end full-time equivalent employees | 2,089 | 2,054 | 1,964 | 1,965 | 1,914 | 2,089 | 1,914 |
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).
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.
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."
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 December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, and December 31, 2014. The taxable equivalent adjustments were $1.6 million and $1.7 million for the years ended December 31, 2015 and 2014, respectively.
Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and year-to-date average assets.
Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and year-to-date average SVBFG stockholders' equity.
Ratio is calculated by dividing noninterest expense by total net interest income plus noninterest income.
Ratios as of December 31, 2015, 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.
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 $269.4 million for the fourth quarter of 2015, compared to $255.0 million for the third quarter of 2015 and $235.2 million for the fourth 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 third quarter of 2015 to the fourth 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:
Q4'15 compared to Q3'15 Increase (decrease) due to change in(Dollars in thousands)
Volume
Rate
Total
Interest income:
Short-term investment securities
$ 134
$ 380
$ 514
AFS / HTM fixed income investment securities
1,882
1,625
3,507
Loans
9,762
646
10,408
Increase in interest income, net
11,778
2,651
14,429
Interest expense:
Deposits
(23)
29
6
Short-term borrowings
6
5
11
Long-term debt
(56)
71
15
Increase (decrease) in interest expense, net
(73)
105
32
Increase in net interest income
$ 11,851
$ 2,546
$ 14,397
The increase in net interest income, on a fully taxable equivalent basis, from the third quarter of 2015 to the fourth quarter of 2015, was primarily attributable to the following:
An increase in interest income from loans of $10.4 million to $185.4 million for the fourth quarter of 2015. The increase was primarily reflective of an $829 million increase in average loan balances as well as an increase in loan yields. While gross loan yields remained flat, our overall loan yields increased by 2 basis points to 4.67 percent from 4.65 percent, primarily reflective of an increase in fees associated with early payoffs during the fourth quarter of 2015.
An increase in interest income from our fixed income investment securities in our available-for-sale ("AFS") and held-to-maturity ("HTM") portfolios of $3.5 million to $92.2 million for the fourth quarter of 2015. The increase was primarily reflective of the increase in average investment balances of $621 million as a result of continued deposit growth. The overall yield on our fixed income investment securities portfolio increased 1 basis point to 1.55 percent. This increase was driven primarily by a decrease in premium amortization expense
SVB Financial Group issued this content on 2016-01-21 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-21 22:01:07 UTC
Original Document: http://ir.svb.com/common/download/download.cfm?CompanyID=SIVB&FileID=871125&FileKey=C3D863F5-67D9-4179-89C5-6B94FAE764DE&FileName=Q415_Earnings_Release_FINAL.pdf
