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) | IR@SVB.com |
January 20, 2022 | (408) 654-6364 |
NASDAQ: SIVB |
SVB FINANCIAL GROUP ANNOUNCES 2021 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS
Board of Directors declared a quarterly dividend on Series A, B, C, D and E Preferred Stock
SANTA CLARA, Calif. - January 20, 2022 - SVB Financial Group (NASDAQ: SIVB) today announced financial results for the fourth quarter and year ended December 31, 2021.
Consolidated net income available to common stockholders for the fourth quarter of 2021 was $371 million, or $6.22 per diluted common share, compared to $365 million, or $6.24 per diluted common share, for the third quarter of 2021 and $388 million, or $7.40 per diluted common share, for the fourth quarter of 2020. Consolidated net income available to common stockholders for the year ended December 31, 2021 was $1.8 billion, or $31.25 per diluted common share, compared to $1.2 billion, or $22.87 per diluted common share, for the comparable 2020 period. Included in the consolidated net income available to common stockholders for the three months and year ended December 31, 2021 are merger-related charges of $27 million and $129 million, or $0.34 and $1.68 per diluted common share, respectively. Net income available to common stockholders for the year ended December 31, 2021 also included a day one provision on non-purchased credit deteriorated loans and unfunded credit commitments acquired from Boston Private of $46 million, or $0.60 per diluted common share, incurred in the third quarter of 2021.
"Our fourth quarter was a strong finish to an exceptional year of growth driven by outstanding client liquidity, with continued robust balance sheet and core fee income growth, excellent credit quality, and healthy market-related gains," said Greg Becker, President and CEO of SVB Financial Group. "Against this backdrop, we are starting 2022 on strong footing: our client markets remain vibrant, despite ongoing pandemic-related challenges and concerns over rising inflation; we are firing on all cylinders in terms of client acquisition and execution of our strategy. If interest rate increases materialize as the markets predict, we would expect them to significantly add to our earnings on top of our already positive 2022 outlook, while opening up additional investment opportunities."
Highlights of our fourth quarter 2021 results (compared to third quarter 2021, unless otherwise noted) included:
- Average loans of $62.6 billion, an increase of $3.3 billion (or 5.5 percent).
- Period-endloans of $66.3 billion, an increase of $4.8 billion (or 7.8 percent).
- Average fixed income investment securities of $111.7 billion, an increase of $17.9 billion (or 19.1 percent).
- Period-endfixed income investment securities of $125.4 billion, an increase of $20.1 billion (or 19.0 percent).
- Average total client funds (on-balance sheet deposits and off-balance sheet client investment funds) increased $36.0 billion (or 10.1 percent) to $390.6 billion, which includes an increase in average on-balance sheet deposits of $19.7 billion (or 12.0 percent).
- Period-endtotal client funds increased $27.9 billion (or 7.5 percent) to $399.3 billion, which includes an increase in period-endon-balance sheet deposits of $18.0 billion (or 10.5 percent).
- Issuance of $1.0 billion in depositary shares representing ownership interests in shares of Series D Preferred Stock resulting in net proceeds of approximately $988 million.
- Issuance of $600 million in depositary shares representing ownership interests in shares of Series E Preferred Stock resulting in net proceeds of approximately $593 million.
- Issuance of $650 million of 1.800% Senior Notes due October 2026.
- Period-endPrivate Bank Assets Under Management ("AUM") of $19.6 billion, flat from the prior quarter.
- Net interest income (fully taxable equivalent basis) of $947 million, an increase of $88 million (or 10.2 percent).
- Provision for credit losses was $48 million, compared to $21 million.
- Net loan charge-offs of $1 million, or 1 basis point of average total loans (annualized) compared to $11 million, or 7 basis points.
- Noninterest income of $561 million, a decrease of $111 million (or 16.5 percent). Non-GAAP core fee income increased $12 million (or 5.9 percent) to $216 million. Non-GAAP SVB Leerink revenue increased $38 million (or 35.5 percent) to $145 million. (See non-GAAP reconciliation under the section "Use of Non-GAAP Financial Measures.")
- Net gains on investment securities of $100 million compared to $189 million. Non-GAAP net gains on investment securities, net of noncontrolling interests, were $86 million, compared to $101 million. (See non- GAAP reconciliation under the section "Use of Non-GAAP Financial Measures.")
- Net gains on equity warrant assets of $69 million, compared to $147 million.
- Noninterest expense of $902 million, an increase of $23 million (or 2.6 percent).
- Operating efficiency ratio of 60.1 percent, compared to 57.7 percent. The decline in our operating efficiency is due to the increase in noninterest expense, driven primarily by higher compensation and benefits expense and the decrease in noninterest income, driven primarily by lower net gains on investment securities and net gains on equity warrant assets in the fourth quarter of 2021.
- Acquisition of MoffettNathanson LLC, a technology equity research firm, on December 10, 2021.
Coronavirus Disease 2019 ("COVID-19") Pandemic Update
During the fourth quarter of 2021, our overall credit trends remained stable, and our business and clients continued to demonstrate remarkable resilience and growth despite the continuing challenges of the COVID-19 pandemic, including the recent spread of the Omicron variant of COVID-19. We continue to carefully monitor the broader economic environment, which could be impacted by the continued spread of the Omicron variant, the emergence of new variants, vaccination mandates, delays in vaccination programs and the integration of vaccine booster shots into those programs, vaccination rates, potential government-imposed lockdowns, and related supply chain constraints and inflationary pressures. We continue to manage through these challenges with a focus on supporting our clients, employees and communities.
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Fourth Quarter and Full-Year 2021 Summary
Three months ended | Year ended | ||||||||||||||||||||
(Dollars in millions, except share data, | December | September | June 30, | March 31, | December | December | December | ||||||||||||||
employees and ratios) | 31, 2021 | 30, 2021 | 2021 | 2021 | 31, 2020 | 31, 2021 | 31, 2020 | ||||||||||||||
Income statement: | |||||||||||||||||||||
Diluted earnings per common share | $ | 6.22 | $ | 6.24 | $ | 9.09 | $ | 10.03 | $ | 7.40 | $ | 31.25 | $ | 22.87 | |||||||
Net income available to common stockholders | 371 | 365 | 502 | 532 | 388 | 1,770 | 1,191 | ||||||||||||||
Net interest income | 939 | 852 | 728 | 660 | 592 | 3,179 | 2,157 | ||||||||||||||
Provision (reduction) for credit losses (1) (2) | 48 | 21 | 35 | 19 | (38) | 123 | 220 | ||||||||||||||
Noninterest income | 561 | 672 | 761 | 744 | 622 | 2,738 | 1,840 | ||||||||||||||
Noninterest expense | 902 | 879 | 653 | 636 | 665 | 3,070 | 2,035 | ||||||||||||||
Non-GAAP core fee income (3) | 216 | 204 | 172 | 159 | 156 | 751 | 603 | ||||||||||||||
Non-GAAP core fee income plus SVB Leerink | 361 | 311 | 292 | 325 | 307 | 1,289 | 1,084 | ||||||||||||||
revenue (3) | |||||||||||||||||||||
Non-GAAP SVB Leerink revenue (3) | 145 | 107 | 120 | 166 | 151 | 538 | 481 | ||||||||||||||
Fully taxable equivalent: | |||||||||||||||||||||
Net interest income (3) (4) | $ | 947 | $ | 859 | $ | 735 | $ | 665 | $ | 597 | $ | 3,207 | $ | 2,173 | |||||||
Net interest margin | 1.91 % | 1.95 % | 2.06 % | 2.29 % | 2.40 % | 2.02 % | 2.67 % | ||||||||||||||
Balance sheet: | |||||||||||||||||||||
Average total assets | $ | 204,760 | $ | 182,690 | $ | 150,717 | $ | 124,815 | $ | 103,754 | $ | 166,011 | $ | 85,792 | |||||||
Average loans, amortized cost | 62,573 | 59,291 | 49,812 | 46,281 | 41,525 | 54,547 | 37,266 | ||||||||||||||
Average available-for-sale securities | 24,154 | 23,290 | 24,358 | 28,248 | 28,114 | 24,996 | 18,653 | ||||||||||||||
Average held-to-maturity securities | 87,579 | 70,512 | 47,914 | 25,295 | 13,289 | 58,030 | 13,113 | ||||||||||||||
Average noninterest-bearing demand deposits | 122,789 | 109,638 | 91,530 | 73,233 | 61,663 | 99,461 | 50,193 | ||||||||||||||
Average interest-bearing deposits | 60,273 | 53,754 | 42,230 | 37,375 | 30,774 | 48,486 | 24,823 | ||||||||||||||
Average total deposits | 183,062 | 163,392 | 133,760 | 110,608 | 92,437 | 147,947 | 75,016 | ||||||||||||||
Average short-term borrowings | 145 | 99 | 39 | 12 | 10 | 74 | 401 | ||||||||||||||
Average long-term debt | 2,380 | 1,936 | 1,604 | 1,162 | 843 | 1,775 | 632 | ||||||||||||||
Period-end total assets | 211,478 | 190,996 | 163,399 | 142,347 | 115,511 | 211,478 | 115,511 | ||||||||||||||
Period-end loans, amortized cost | 66,276 | 61,487 | 50,754 | 47,675 | 45,181 | 66,276 | 45,181 | ||||||||||||||
Period-endavailable-for-sale securities | 27,221 | 22,984 | 23,876 | 25,986 | 30,913 | 27,221 | 30,913 | ||||||||||||||
Period-endheld-to-maturity securities | 98,195 | 82,365 | 59,992 | 41,165 | 16,592 | 98,195 | 16,592 | ||||||||||||||
Period-endnon-marketable and other equity | 2,543 | 2,485 | 1,943 | 1,858 | 1,802 | 2,543 | 1,802 | ||||||||||||||
securities | |||||||||||||||||||||
Period-endnoninterest-bearing demand deposits | 125,851 | 115,388 | 101,259 | 84,440 | 66,519 | 125,851 | 66,519 | ||||||||||||||
Period-endinterest-bearing deposits | 63,352 | 55,794 | 44,579 | 39,710 | 35,463 | 63,352 | 35,463 | ||||||||||||||
Period-end total deposits | 189,203 | 171,182 | 145,838 | 124,150 | 101,982 | 189,203 | 101,982 | ||||||||||||||
Period-endshort-term borrowings | 121 | 97 | 34 | 39 | 21 | 121 | 21 | ||||||||||||||
Period-endlong-term debt | 2,570 | 1,925 | 1,834 | 1,338 | 844 | 2,570 | 844 | ||||||||||||||
Off-balance sheet: | |||||||||||||||||||||
Average client investment funds | $ | 207,578 | $ | 191,286 | $ | 174,327 | $ | 151,579 | $ | 133,105 | $ | 181,193 | $ | 117,380 | |||||||
Period-end client investment funds | 210,086 | 200,234 | 183,167 | 163,882 | 141,053 | 210,086 | 141,053 | ||||||||||||||
Period-end assets under management | 19,646 | 19,565 | - | - | - | 19,646 | - | ||||||||||||||
Total unfunded credit commitments | 43,698 | 40,259 | 36,385 | 33,987 | 31,982 | 43,698 | 31,982 | ||||||||||||||
Earnings ratios: | |||||||||||||||||||||
Return on average assets (annualized) (5) | 0.72 % | 0.79 % | 1.34 % | 1.73 % | 1.49 % | 0.84 % | 1.39 % | ||||||||||||||
Return on average SVBFG common stockholders' | 11.80 | 12.47 | 21.69 | 27.04 | 20.23 | 17.10 | 16.83 | ||||||||||||||
equity (annualized) (6) | |||||||||||||||||||||
Asset quality ratios: | |||||||||||||||||||||
Allowance for credit losses for loans as a % of | 0.64 % | 0.65 % | 0.78 % | 0.82 % | 0.99 % | 0.64 % | 0.99 % | ||||||||||||||
total loans | |||||||||||||||||||||
Allowance for credit losses for performing loans | 0.58 | 0.59 | 0.71 | 0.74 | 0.87 | 0.58 | 0.87 | ||||||||||||||
as a % of total performing loans | |||||||||||||||||||||
Gross loan charge-offs as a % of average total | 0.06 | 0.13 | 0.12 | 0.83 | 0.22 | 0.25 | 0.28 | ||||||||||||||
loans (annualized) (2) | |||||||||||||||||||||
Net loan charge-offs as a % of average total loans | 0.01 | 0.07 | 0.10 | 0.79 | 0.09 | 0.21 | 0.20 | ||||||||||||||
(annualized) (2) | |||||||||||||||||||||
Other ratios: | |||||||||||||||||||||
Operating efficiency ratio (7) | 60.13 % | 57.68 % | 43.85 % | 45.31 % | 54.79 % | 51.88 % | 50.92 % | ||||||||||||||
Total cost of deposits (annualized) (8) | 0.04 | 0.05 | 0.04 | 0.04 | 0.04 | 0.04 | 0.08 | ||||||||||||||
SVBFG CET 1 risk-based capital ratio | 12.11 | 12.73 | 11.93 | 12.18 | 11.04 | 12.11 | 11.04 | ||||||||||||||
Bank CET 1 risk-based capital ratio | 14.92 | 14.68 | 13.66 | 12.93 | 10.70 | 14.92 | 10.70 | ||||||||||||||
SVBFG tier 1 risk-based capital ratio | 16.11 | 15.37 | 14.95 | 14.01 | 11.89 | 16.11 | 11.89 | ||||||||||||||
Bank tier 1 risk-based capital ratio | 14.92 | 14.68 | 13.66 | 12.93 | 10.70 | 14.92 | 10.70 | ||||||||||||||
SVBFG total risk-based capital ratio | 16.61 | 15.87 | 15.53 | 14.62 | 12.64 | 16.61 | 12.64 |
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Bank total risk-based capital ratio | 15.44 | 15.21 | 14.26 | 13.56 | 11.49 | 15.44 | 11.49 | |
SVBFG tier 1 leverage ratio | 7.93 | 7.77 | 7.77 | 8.01 | 7.45 | 7.93 | 7.45 | |
Bank tier 1 leverage ratio | 7.24 | 7.30 | 6.96 | 7.20 | 6.43 | 7.24 | 6.43 | |
Period-end loans, amortized cost, to deposits ratio | 35.03 | 35.92 | 34.80 | 38.40 | 44.30 | 35.03 | 44.30 | |
Average loans, amortized cost, to average | 34.18 | 36.29 | 37.24 | 41.84 | 44.92 | 36.87 | 49.68 | |
deposits ratio | ||||||||
Book value per common share (9) | $ 214.30 | $ 208.53 | $ 176.10 | $ 163.25 | $ 151.86 | $ 214.30 | $ 151.86 | |
Tangible book value per common share (3) (10) | 205.20 | 200.01 | 172.44 | 159.50 | 147.92 | 205.20 | 147.92 | |
Other statistics: | ||||||||
Average full-time equivalent ("FTE") employees | 6,431 | 6,024 | 4,808 | 4,601 | 4,419 | 5,466 | 4,040 | |
Period-endfull-time equivalent ("FTE") employees | 6,567 | 6,208 | 4,932 | 4,656 | 4,461 | 6,567 | 4,461 | |
- This metric for the quarter ended September 30, 2021 and year ended December 31, 2021 includes a post-combination provision of $46 million to record the allowance for credit losses for non-PCD loans and unfunded credit commitments acquired from Boston Private.
- This metric for the quarter ended March 31, 2021 and year ended December 31, 2021 includes the impact of an $80 million charge-off related to potentially fraudulent activity discussed in previous filings.
- 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 the most closely related GAAP measures 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 21.0 percent. The taxable equivalent adjustments were $8 million for the quarter ended December 31, 2021, $7 million for the quarter ended September 30, 2021, $7 million for the quarter ended June 30, 2021, $6 million for the quarter ended March 31, 2021 and $4 million for the quarter ended December 31, 2020. The taxable equivalent adjustments were $28 million and $16 million for the year ended December 31, 2021 and December 31, 2020, respectively.
- Ratio represents annualized consolidated net income available to common stockholders divided by average assets.
- Ratio represents annualized consolidated net income available to common stockholders divided by average SVB Financial Group ("SVBFG") common stockholders' equity.
- Ratio is calculated by dividing noninterest expense by total net interest income plus noninterest income.
- Ratio represents annualized total cost of deposits and is calculated by dividing interest expense from deposits by average total deposits.
- Book value per common share is calculated by dividing total SVBFG common stockholders' equity by total outstanding common shares.
- Tangible book value per common share is calculated by dividing tangible common equity by total outstanding common shares. Tangible common equity is a non-GAAP measure defined under the section "Use of Non-GAAP Financial Measures."
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Investment Securities
Our investment securities portfolio is comprised of: (i) our available-for-sale ("AFS") and held-to-maturity ("HTM") securities portfolios, each consisting of fixed income investments which are managed to earn an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and addressing our asset/liability management objectives; and (ii) our non-marketable and other equity securities portfolio, which represents investments managed as part of our funds management business as well as public equity securities held as a result of equity warrant assets exercised. Our total average fixed income investment securities portfolio increased $17.9 billion, or 19.1 percent, to $111.7 billion for the quarter ended December 31, 2021 compared to the third quarter of 2021. Our total period-end fixed income investment securities portfolio increased $20.1 billion, or 19.0 percent, to $125.4 billion at December 31, 2021. Our period-endnon-marketable and other equity securities portfolio was consistent with the prior quarter at $2.5 billion ($2.2 billion net of noncontrolling interests) at December 31, 2021, compared to the third quarter of 2021.
The weighted-average duration of our total fixed income securities portfolio was 4.0 years at December 31, 2021 and 4.5 years at September 30, 2021. The total notional value of our pay-fixed,receive-floating interest rate swap fair value hedge contracts for AFS securities was $10.7 billion as of December 31, 2021. The weighted-average duration of our total fixed income securities portfolio, including the impact of our fair value swaps, was 3.7 years at December 31, 2021 and 4.0 years at September 30, 2021.
AFS Securities
Average AFS securities were $24.2 billion for the fourth quarter of 2021 compared to $23.3 billion for the third quarter of 2021. Period-end AFS securities were $27.2 billion at December 31, 2021 compared to $23.0 billion at September 30, 2021. The increases in both average and period-end AFS securities were driven by purchases of $6.8 billion, partially offset by sales of AFS securities of $1.4 billion and paydowns and maturities of $877 million. The weighted-average duration of our AFS securities portfolio was 3.5 years at December 31, 2021 and 3.8 years at September 30, 2021. The weighted-average duration of AFS securities portfolio including the impact of our fair value swaps was 2.4 years at December 31, 2021 and 2.3 years at September 30, 2021.
HTM Securities
Average HTM securities were $87.6 billion for the fourth quarter of 2021, compared to $70.5 billion for the third quarter of 2021. Period-end HTM securities were $98.2 billion at December 31, 2021 compared to $82.4 billion at September 30, 2021. The increases in both average and period-end HTM securities were driven by purchases of $20.4 billion, partially offset by $4.4 billion in paydowns and maturities during the quarter. The weighted-average duration of our HTM securities portfolio was 4.1 years at December 31, 2021 and 4.7 years at September 30, 2021.
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SVB Financial Group published this content on 20 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 January 2022 21:20:47 UTC.