Continued Positive Trends in Commercial Banking Business; Company
Continuing to Complete Restatement Process Relating to Change in
Accounting Treatment for Warrants SANTA CLARA, Calif., Oct. 20
/PRNewswire-FirstCall/ -- SVB Financial Group (NASDAQ:SIVBE)
announced today selected preliminary financial results for the
third quarter of 2005. As described in further detail below, the
Company is currently in the process of changing its accounting
treatment for equity warrants held by the Company and restating its
consolidated financial statements for certain prior periods, and
will not be able to provide complete third quarter financial
results until that process is complete. As previously disclosed,
the Company plans to restate its consolidated financial statements
for the years 2001, 2002, 2003 and 2004, and the first quarter of
2005 due to a revision in the accounting treatment for its
portfolio of unexercised equity warrant securities in
privately-held client companies the Company has taken in connection
with credit facilities extended to such companies. An equity
warrant is a call option issued by a company which entitles the
holder to buy a specific number of shares of stock, at a specific
price over a specific time period. The Company is conducting an
in-depth review of its accounting policies and has implemented some
additional technical changes to its accounting practices. None of
these other changes are expected to have a material impact on the
Company's consolidated financial condition or results of
operations. A brief description of this review process and the
resulting accounting practice changes is provided at the end of
this release under "Accounting Review and Accounting Changes." The
Company intends to file with the Securities and Exchange Commission
amendments to its Annual Report on Form 10-K for the year ended
December 31, 2004 and to its Quarterly Report on Form 10-Q for the
quarter ended March 31, 2005, shortly before or simultaneously with
the filing of its Quarterly Report on Form 10-Q for the quarter
ended June 30, 2005. The Company is working diligently to file such
reports as quickly as practicable. Third Quarter Highlights This
release contains both selected third quarter financial information
that is not expected to be impacted by the revised accounting
treatment and the planned restatement, and some selected financial
information that is expected to be impacted. Unaffected items are
presented along with applicable comparison information for the
third quarter, second quarter, the nine-month period ended
September 30, 2005 and the comparable 2004 periods. Where possible,
estimates have been provided for items that are expected to be
impacted. In certain instances, these estimates are provided in the
form of a range of financial results within which management
expects that the final results will fall. While these estimates are
not accompanied by any comparison information and are preliminary
in nature and subject to change, the Company currently believes
that such estimates are reasonable. -- The Company estimates net
interest income to be at least $79.3 million in the third quarter
of 2005. -- Quarterly average gross loans at $2.5 billion in the
third quarter of 2005 were 8.7 percent higher than in the second
quarter of 2005, and represented the highest quarterly average in
the Company's history. -- Client investment fees for the third
quarter of 2005 totaled $8.7 million and were $0.9 million higher
than fees taken in the second quarter of 2005. -- In the third
quarter of 2005, the Company experienced net charge-offs of $3.0
million due to approximately $4.5 million in gross charge-offs and
$1.5 million in gross recoveries. This compares to gross charge-
offs of $2.1 million and gross recoveries of $1.9 million in the
second quarter of 2005. -- Nonperforming loans (NPLs) were 0.51
percent of total gross loans, a decrease from 0.65 percent in the
second quarter of 2005 and from 0.67 percent in the third quarter
of 2004. The allowance to cover probable loan losses was at 258.59
percent of NPLs at September 30, 2005, compared to 230.54 percent
at June 30, 2005 and 289.23 percent at September 30, 2004.
"Completion of the restatement is, of course, a very high priority
for us. We are doing everything in our power to finalize our
results and bring this process to a successful conclusion," said
Ken Wilcox, president and CEO of SVB Financial Group. "Although the
restatement process is both time-consuming and extremely complex,
we have continued to focus successfully on execution of our
business strategy, delivering strong results. By offering a diverse
and comprehensive set of global financial solutions for companies
of all sizes, we continue to grow and strengthen our ongoing
relationships with existing clients and to win new ones." Selected
Third Quarter Financial Results Average Assets and Deposits The
Company estimates quarterly average assets to be at least $5.3
billion. Quarterly average gross loan balance increased $198.3
million to $2.5 billion in the third quarter of 2005 from $2.3
billion in the second quarter of 2005. The majority of the increase
was in commercial loans. Quarterly average investment securities
for the third quarter of 2005 were $2.1 billion essentially
unchanged from the second quarter of 2005 and the third quarter of
2004. Quarterly average deposit balances increased $104.0 million
to $4.2 billion in the third quarter of 2005 from $4.1 billion in
the second quarter of 2005. The average noninterest-bearing demand
deposit balance per client was $267.7 thousand at September 30,
2005, versus $276.5 thousand at June 30, 2005, and $270.2 thousand
at September 30, 2004. Quarter-End Assets and Deposits The Company
estimates total assets at September 30, 2005 to be at least $5.4
billion. Period-end total deposits of $4.3 billion at September 30,
2005 decreased $81.0 million from $4.4 billion at June 30, 2005,
and increased $254.5 million from $4.0 billion at September 30,
2004. Net Interest Income The Company estimates net interest income
for the third quarter of 2005 to be at least $79.3 million,
compared to net interest income of at least $73.4 million in the
second quarter of 2005. The Company increased it prime lending rate
by 25 basis points to 6.50 percent on August 10, 2005. Prior to
quarter end, the rate was increased by another 25 basis points to
6.75 percent on September 21, 2005. As of September 30, 2005,
approximately 74.8 percent, or $2.0 billion of the Company's
outstanding loans, were variable rate loans and would reprice with
any increases in the Company's prime lending rate. Selected
Noninterest Income Client Investment Fees Income For the three For
the nine months ended months ended (Dollars in Sept. 30, June 30,
Sept. 30, Sept. 30, Sept. 30, millions) 2005 2005 2004 2005 2004
Client Investment Fees $8.7 $7.8 $7.0 $23.9 $19.6 Client Investment
Funds and Deposits (Dollars in millions) At At At September 30,
June 30, September 30, 2005 2005 2004 Client Investment Funds (1):
Client Directed Investment Assets $8,419.3 $8,073.9 $7,210.6 Sweep
Money Market Funds 1,663.1 1,468.6 1,128.5 Client Investment Assets
Under Management 3,740.0 3,445.6 2,338.5 Total Client Investment
Funds 13,822.4 12,988.1 10,677.6 Deposits: Noninterest-Bearing
Demand $2,696.7 $2,728.6 $2,463.8 Negotiable Order of Withdrawal
(NOW) 35.6 38.4 22.8 Money Market 1,264.1 1,315.9 1,240.8 Time
295.7 290.2 310.2 Total Deposits 4,292.1 4,373.1 4,037.6 Total
Client Investment Funds and Deposits $18,114.5 $17,361.2 $14,715.2
(1) Client Funds invested through SVB Financial Group, maintained
at third party financial institutions. Average client directed
funds in investments, sweep money market products and assets under
management increased to $13.4 billion during the third quarter of
2005 from $12.3 billion during the second quarter of 2005.
Noninterest Expense Certain of the financial results presented
below are still subject to final application of changes in
accounting policies referenced in this release. In such instances,
the Company has presented an estimate of those results in the form
of a range of financial results within which management reasonably
expects that the final results will fall. While these estimates are
preliminary in nature and subject to change, the Company currently
believes that such estimates are reasonable. Noninterest expense is
expected to be in a range from $61.3 million to $62.4 million in
the third quarter of 2005, a decrease of approximately $4.0
million, or 6.0 percent, from the expected range of $65.3 million
to $66.4 million in the second quarter of 2005. The decrease in
noninterest expense was primarily due to decreases in compensation
and benefits of approximately $6.2 million, partially offset by an
increase of $0.7 million in professional service fees. The decrease
in compensation and benefits expense was primarily due to a
decrease in incentive compensation. Incentive compensation
associated with investment banking activities decreased by
approximately $2.3 million due to a decrease in the number of
successful deals closed. Severance expense also decreased relative
to the second quarter. The increase in professional services
expense was primarily due to costs associated with the Company's
financial restatement. Client Warrants and Other Investments During
the third quarter of 2005, the Company exercised 37 warrants and
realized $2.2 million in net cash proceeds. As of September 30,
2005, the Company directly held 1,865 warrants in 1,312 companies
and made investments through its managed investment funds, in 321
venture capital funds, 41 companies and 2 venture debt funds.
Credit Quality NPLs totaled $13.5 million, or 0.51 percent of total
gross loans, at September 30, 2005, compared to $15.8 million, or
0.65 percent of gross loans, at June 30, 2005 and $15.0 million, or
0.67 percent at September 30, 2004. The Company's allowance for
loan losses was $34.9 million, or 1.31 percent, of total gross
loans and 258.59 percent of NPLs, at September 30, 2005. This
compares to an allowance for loan losses of $36.4 million, or 1.49
percent, of total gross loans and 230.54 percent of NPLs, at June
30, 2005. At September 30, 2004, the allowance for loan losses
totaled $43.4 million, or 1.93 percent of total gross loans and
289.23 percent of NPLs. The Company realized $4.5 million in gross
charge-offs and $1.5 million in gross recoveries during the third
quarter of 2005. This compares to gross charge-offs of $2.1 million
and gross recoveries of $1.9 million in the second quarter of 2005.
The Company's allowance for unfunded credit commitments was $16.4
million at September 30, 2005, a $1.3 million or 8.4 percent
increase, from the balance at September 30, 2004. Stock Repurchase
Program and Capital Ratios Under the Company's Stock Repurchase
Program, which was approved by its Board of Directors in May 2003,
the Company repurchased 90,000 shares for a total cost of $4.5
million early in the third quarter of 2005 pursuant to a
non-discretionary 10b-5-1 plan established during the second
quarter. No shares have been repurchased subsequent to the
expiration of the 10b-5-1 plan. To date the Company has repurchased
a total of 6.5 million shares for a total cost of $203.5 million.
Approximately $31.5 million remains available for repurchase under
the current approved program. Both SVB Financial Group's and
Silicon Valley Bank's capital ratios are expected to be in excess
of regulatory guidelines for classification, as a well-capitalized
depository institution as of September 30, 2005. Allowance for Loan
and Lease Losses Prior to the fourth quarter of 2004, the Company
aggregated its allowance for loan and lease losses and its
allowance for unfunded credit commitments and reflected the
aggregate allowance in its Allowance for Loan and Lease Losses
(ALLL) balance. Beginning with the fourth quarter of 2004, the
Company reflected its allowance for loan losses in its ALLL balance
and its allowance for unfunded credit commitments as "Other
Liabilities." These reclassifications were also made to prior
periods' balance sheets to conform to current period's
presentations. Additionally, the Company reclassified expense
related to the ALLL to provision for loan and lease losses and
expense related to changes in the allowance for unfunded credit
commitments into noninterest expense for all periods presented.
Such reclassifications had no effect on the Company's results of
operations or stockholders' equity but have had the effect of
lowering the Company's ALLL to total gross loans and ALLL to
nonperforming loans ratios. See Credit Quality table at the end of
this release. Outlook for Fourth Quarter 2005 The Company is unable
to provide at this time earnings per share guidance for the fourth
quarter of 2005 due to the pending accounting changes and the
restatement. However, the Company expects for the fourth quarter of
2005, two additional Federal Fund rate increases of 25 bps, the
total allowance for funded and unfunded commitments to be
comparable to the third quarter, and somewhat higher noninterest
expense due to higher variable and equity compensation costs than
in the third quarter. The Company also expects average loan growth
consistent with the second quarter, unchanged deposit balances in
the fourth quarter compared to the third quarter, and noninterest
income higher than the third quarter. The preceding statements
regarding the Company's expectations of rate increases, commitment
allowances, noninterest expense, loan growth, deposit balances and
noninterest income for the fourth quarter of 2005 are forward
looking statements. Actual results may differ. Accounting Review
and Accounting Changes As previously disclosed, the decision to
change the Company's accounting for equity its warrant portfolio
and to restate its prior consolidated financial statements was made
as a result of the Company becoming aware that its accounting for
equity warrants should conform to a 2001 interpretation of the
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" (SFAS No. 133)
as amended. Accordingly, the Company's accounting for warrants with
net share settlement provisions, received in connection with client
credit facilities and other business services is being revised
beginning as of the third quarter of 2001. An equity warrant is a
call option issued by a company which entitles the holder to buy a
specific number of shares of stock, at a specific price over a
specific time period. Under the revised accounting treatment,
equity warrants in privately-held companies with net share
settlement provisions held by the Company will be recorded at fair
value as an asset on the Company's balance sheet at the time they
are issued and marked to fair value for each subsequent reporting
period in which they remain outstanding. Additionally, the grant
date fair value of equity warrants obtained in connection with
client credit facilities will be recognized in interest income as
an adjustment of loan yield as prescribed by SFAS No. 91,
"Accounting for Nonrefundable Fees and Costs Associated with
Originating or Acquiring Loans and Initial Direct Costs of Leases"
over the life of the applicable credit facilities provided by the
Company to the client companies issuing such equity warrant
securities. Any changes from the initial fair value on the balance
sheet will be recognized in the Company's net income as a component
of non-interest income. Previously, the Company had recorded these
warrant securities on its balance sheet at a nominal value until
the date they became marketable, the date of expiration, or the
date the issuing company completed an initial public offering or
was acquired by a publicly traded company. As of the beginning of
the third quarter of 2001, this accounting change will cause the
Company to recognize a portion of the fair value of equity warrants
with associated outstanding loans as a yield adjustment over the
remaining life of the related loans. In accordance with the
implementation provisions of SFAS No. 133, the balance of the fair
value of the warrant portfolio will be reported as a cumulative
effect of a change in accounting principle. These changes are
expected to increase the Company's total income for all of the
restated periods taken as a whole, although it is possible that
income may be somewhat lower in some periods. They are also
expected to increase the Company's retained earnings in the
aggregate, resulting in an increase in total stockholders' equity.
Neither the accounting changes nor the restatement is expected to
have an impact on the Company's cash flows or cash position. In
addition, in connection with the restatement process, the Company
is conducting a review of its accounting policies and has
identified additional items that will be modified. However, none of
them are expected to have a material impact on the Company's
consolidated financial condition or results of operations. An
accounting change covers the recognition of revenue at SVB Alliant
related to initial engagement fees. The change will tend to delay
the recognition of initial non-refundable retainers as the Company
moves from recognizing this revenue based on when it was invoiced
to the "completed contract" method of revenue recognition. This
change is not expected to be material to the Company's consolidated
financial statements. Additionally, in connection with the
restatement process, the Company is re-evaluating the application
of consolidation accounting for several of the partnerships that
the Company has formed or been involved with over the past several
years and other related entities, primarily relating to the
Company's activities at SVB Capital and its funds business, under
FIN No. 46(R), "Consolidation of Variable Interest Entities". Any
changes coming from this effort are not expected to materially
affect the reported consolidated net income of the Company, either
historically or prospectively. It could, however, cause the Company
to "deconsolidate" one or more of the partnerships or entities that
the Company currently consolidates and/or potentially consolidate
others, thus somewhat reducing certain gross interest income,
noninterest income and noninterest expense numbers, as well as
certain balance sheet numbers. The Company is currently evaluating
the impact on the expected filing date of its amended Form 10-K and
other SEC required reports, due to its review of FIN No. 46 (R)
accounting and certain other accounting policies. Safe Harbor This
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including
without limitation, the statements made above under "Outlook for
Fourth Quarter 2005," statements concerning the expected impact of
the Company's application of SFAS No. 133 and FIN No. 46(R) to its
financial statements, the impact of the changes to the Company's
accounting policies and statements concerning the expected timing
of filings by the Company with the Securities and Exchange
Commission. Management has in the past and might in the future make
forward- looking statements orally to analysts, investors, the
media and others. Forward-looking statements are statements that
are not historical facts. Broadly speaking, forward-looking
statements include, without limitation: -- projections of the
Company's revenues, income, earnings per share, cash flows, balance
sheet, capital expenditures, capital structure or other financial
items; -- descriptions of strategic initiatives, plans or
objectives of management for future operations, including pending
acquisitions; -- statements about the efficacy of the Company's
strategy; -- forecasts of venture capital funding levels; --
forecasts of expected levels of provisions for loan losses; --
forecasts of future economic performance; -- forecasts of future
prevailing interest rates; -- forecasts of future recoveries on
currently held investments; -- statements about the estimated
impact of accounting changes; -- statements about the expected
timing of the completion of the restatement process and the filings
by the Company with the Securities and Exchange Commission; or --
descriptions of assumptions underlying or relating to any of the
foregoing. You can identify these and other forward-looking
statements by the use of words such as "becoming," "may," "will,"
"should," "predicts," "potential," "continue," "anticipates,"
"believes," "estimates," "seeks," "expects," "plans," "intends,"
the negative of such words, or comparable terminology. Although
management believes that the expectations reflected in these
forward- looking statements are reasonable, and it has based these
expectations on its beliefs, as well as its assumptions, such
expectations may prove to be incorrect. Actual results of
operations and financial performance could differ significantly
from those expressed in or implied by management's forward- looking
statements. In this release, the Company makes forward-looking
statements discussing the Company's management's expectations about
the following: -- its financial results for the third quarter of
2005; -- its restated financial results for prior periods; --
future performance; -- future market interest rates; and -- future
economic conditions. Factors that may cause the fourth quarter 2005
outlook to change include the following: -- adjustments needed in
the closing process, or other accounting changes, as required by
generally accepted accounting principles in the United States of
America; -- changes in the state of the economy or the markets
served by the Company; -- changes in credit quality of the
Company's loan portfolio; -- changes in interest rates or market
levels; and/or -- changes in the performance or equity valuation of
companies it has invested in. Due to the changes in accounting
treatment and the pending restatement, the Company's selected
preliminary financial results for the quarter are subject to the
completion of review by the Company and its independent registered
public accounting firm. In addition, the timing and impact of the
Company's expected restatement and completion of its financial
statements for the second and third quarters of fiscal 2005 are
based on incomplete current information and could prove to be
inaccurate if unexpected difficulties are encountered in the
process of completing the restatement and completion of such
financial statements or if new facts come to light in the course of
such process that were not previously anticipated. For information
with respect to factors that could cause actual results to differ
from the expectations stated in forward-looking statements, also
please see the text under the caption "Factors That May Affect
Future Results" included under Item 7A of the Company's most
recently filed Form 10-K for the annual period ended December 31,
2004 and Item 3 of the Company's most recently filed Form 10-Q for
the quarter ended March 31, 2005. The Company urges investors to
consider all of these factors carefully in evaluating the
forward-looking statements contained in this discussion and
analysis. All subsequent written or oral forward-looking statements
attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by these cautionary
statements. The forward-looking statements included in this release
are made only as of the date of this release. The Company does not
intend, and undertakes no obligation, to update these
forward-looking statements. Certain reclassifications were made to
prior years' results to conform to 2005 presentations. Such
reclassifications had no effect on the Company's results of
operations or stockholders' equity. Conference Call On October 20,
2005, the Company will host a conference call at 2:00 p.m. (PDT) to
discuss the third quarter financial results and an update on the
restatement process. The conference call can be accessed by dialing
877-630-8512 and referencing the passcode "Silicon Valley Bank." A
listen- only live webcast can be accessed on the Investor Relations
page of the Company's website at http://www.svb.com/. A digitized
replay of this conference call will be available beginning at
approximately 4:30 p.m. (PDT), on Thursday, October 20, 2005,
through midnight (PDT), on Monday, November 21, 2005, by dialing
866-475-8047. A replay of the webcast will also be available on
http://www.svb.com/ for 12 months following the call. About SVB
Financial Group For more than twenty years, SVB Financial Group,
formerly Silicon Valley Bancshares, has been dedicated to helping
entrepreneurs succeed. SVB Financial Group is a financial holding
company that serves emerging growth and mature companies in the
technology, life science, private equity and premium wine
industries. Headquartered in Santa Clara, Calif., SVB Financial
Group provides clients with commercial, investment, international
and private banking services. The Company also offers funds
management, broker-dealer transactions, asset management and a full
range of services for private equity companies, as well as the
added value of its knowledge and networks worldwide. More
information on the Company can be found at http://www.svb.com/. SVB
FINANCIAL GROUP AND SUBSIDIARIES SELECTED STATEMENT OF INCOME LINE
ITEMS PRELIMINARY INTERIM SELECTED FINANCIAL DATA (Unaudited) The
following table includes selected line items from the Statements of
Income and is not intended to be indicative of complete financial
results prepared in accordance with accounting principles generally
accepted in the United States of America. Line items, categories
and subtotals that have been excluded from this table include: Loan
Interest Income; Total Interest Income; Net Interest Income;
Provision for/(Recovery of) Loan and Lease Losses, Net Interest
Income after Provision for/(Recovery of) Loan and Lease Losses;
Corporate Finance Fees, Income from Client Warrants; Investment
Gains (losses), Total Noninterest Income; Income Before Minority
Interest in Net (Gains)/Losses of Consolidated Affiliates and
Income Tax Expense; Income Before Income Tax Expense; Income Tax
Expense; Net Income; Earnings Per Common Share- Basic and Diluted.
Selected Financial Data excluded are: Return on Average Assets;
Return on Average Equity; and Weighted Average Shares Outstanding
-- Diluted. Certain of the financial results customarily presented
in the table below are still subject to final application of
changes in accounting policies referenced in this release. In such
instances, the Company has presented an estimate of those results
in the form of a range of financial results within which management
reasonably expects that the final results will fall. While these
estimates are preliminary in nature and subject to change, the
Company currently believes that such estimates are reasonable. For
the three For the nine months ended months ended (Dollars in
thousands) September 30, June 30, September 30, 2005 2005 2005
Interest Income: Investment Securities: Taxable $21,976 $21,191
$64,141 Non-taxable 872 947 2,842 Federal Funds Sold, Securities
Purchased Under Agreement to Resell and Other Short Term
Investments (1) 1,584 - 2,284 1,872 - 2,205 6,003 - 7,268 Interest
Expense Deposits 3,141 2,848 8,251 Other Borrowings (1) 1,723 -
1,752 923 - 931 3,437 - 3,478 Total Interest Expense 4,864 - 4,893
3,771 - 3,779 11,688 - 11,729 Noninterest Income: Client Investment
Fees 8,700 7,805 23,901 Letter of Credit and Foreign Exchange Fee
Income 5,564 5,240 15,696 Deposit Service Charges 2,435 2,378 7,317
Other 3,365 4,113 10,790 Noninterest Expense: Compensation and
Benefits 38,234 44,463 123,372 Professional Services (1) 5,283 -
6,336 4,503 - 5,653 13, 596 - 17,059 Net Occupancy 3,633 4,137
12,350 Furniture and Equipment 3,278 3,300 9,297 Business
Development and Travel 2,748 2,702 7,538 - 7,540 Correspondent Bank
Fees 1,429 1,475 4,125 Data Processing Services 1,098 952 3,063
Telephone 894 1,061 2,844 (Recovery of)/Provision for unfunded
credit commitments 1,508 (1,074) 249 Other (1) 3,211 - 3,263 3,758
- 3,761 10,041 - 10,096 Total Noninterest Expense (1) 61, 316
-62,421 65,277 - 66,430 186,475 - 189,995 Minority Interest in Net
(Gains)/Losses of Consolidated Affiliates (1,151) - 0 0 - 372 (338)
- 0 Common Shares: Weighted Average Shares Outstanding - Basic
34,569,281 34,746,205 34,897,037 (1) For all lines where the
Company has presented a range of financial results, such ranges are
shown to encompass any potential change in consolidation practice,
and when combined, such changes will have no material impact on net
income. See "Accounting Review and Accounting Changes". SVB
FINANCIAL GROUP AND SUBSIDIARIES SELECTED BALANCE SHEET LINE ITEMS
PRELIMINARY INTERIM SELECTED FINANCIAL DATA (Unaudited) The
following table includes selected line items from the Balance
Sheets and is not intended to be indicative of complete financial
results prepared in accordance with accounting principles generally
accepted in the United States of America. Line items, categories
and subtotals that have been excluded from this table include:
Investments - Non-Marketable Securities (Derivatives Fair Value
Accounting), Unearned Loan Fee Income; Loans, Net of Unearned
Income; Accrued Interest Receivable and Other Assets; Total Assets;
Other Liabilities; Total Liabilities; Stockholders' Equity; Common
Stock; Additional Paid-In Capital; Retained Earnings; Unearned
Compensation; Accumulated Other Comprehensive Income; Total
Stockholders' Equity; Total Liabilities, Minority Interest and
Stockholders' Equity; Capital Ratios; Total Risk-Based Capital
Ratio, Tier 1 Risk-Based Capital Ratio; Tier 1 Leverage Ratio; Book
Value Per Share. Certain of the financial results customarily
presented in the table below are still subject to final application
of changes in accounting policies referenced in this release. In
such instances, the Company has presented an estimate of those
results in the form of a range of financial results within which
management reasonably expects that the final results will fall.
While these estimates are preliminary in nature and subject to
change, the Company currently believes that such estimates are
reasonable. (Dollars in thousands) September 30, June 30, 2005 2005
Assets: Cash and Due from Banks (1) $238,280 - 241,263 $254,713 -
259,824 Federal Funds Sold, Securities Purchased Under Agreement to
Resell and Other Short Term Investments (1) 167,728 -177,428
270,671 - 278,421 Investments: Available-for-Sale Securities (1)
1,935,641 -1,953,641 2,022,852 - 2,042,852 Other Investment
Securities (1) 103,704 - 199,843 98,345 - 182,812 Loans: Gross
Loans 2,658,765 2,444,303 Allowance for Loan Losses (34,863)
(36,372) Premises and Equipment, net of Accumulated Depreciation
23,614 19,248 Goodwill 35,639 35,639 Liabilities and Minority
Interest: Liabilities: Deposits: Noninterest-Bearing Demand
$2,696,661 $2,728,646 Negotiable Order of Withdrawal (NOW) 35,650
38,446 Money Market 1,264,102 1,315,850 Time 295,726 290,177 Total
Deposits 4,292,139 4,373,119 Federal Fund Purchased and Securities
Sold Under Agreement to Repurchase 119,164 -- Contingently
Convertible Debt 147,413 147,195 Junior Subordinated Debentures
50,216 49,493 Other Borrowings 2,396 11,418 Minority Interest in
Capital of Consolidated Affiliates (1) 0 - 109,383 0 - 98,280 Other
Period-End Statistics: Full-Time Equivalent Employees 1,030 1,034
Common Stock Outstanding 35,122,829 35,097,064 (1) For all lines
where the Company has presented a range of financial results, such
ranges are shown to encompass any potential change in consolidation
practice, and when combined, such changes will have no material
impact on net income. See "Accounting Review and Accounting
Changes". SVB FINANCIAL GROUP AND SUBSIDIARIES SELECTED AVERAGE
BALANCE SHEET LINE ITEMS PRELIMINARY INTERIM SELECTED FINANCIAL
DATA (Unaudited) The following table includes selected line items
from the Average Balance Sheets and is not intended to be
indicative of complete financial results prepared in accordance
with accounting principles generally accepted in the United States
of America. Line items, categories and subtotals that have been
excluded from this table include: Unearned Loan Fee Income, Loans;
Yields for Loans; Total Loans, Net of Unearned Income; Total
Interest Earning Assets; Cash and Due From Banks; Allowance for
Loan and Lease Losses; Goodwill; Other Assets; Total Assets;
Portion of Noninterest-Bearing Funding Sources; Total Funding
Sources; Other Liabilities; Minority Interest in Capital of
Consolidated Affiliates, Stockholders' Equity; Portion Used to Fund
Interest- Earning Assets; Total Liabilities, Minority Interest and
Stockholders' Equity; Net Interest Income and Margin; and Average
Stockholders' Equity as a Percentage of Average Asset. Certain of
the financial results customarily presented in the table below are
still subject to final application of changes in accounting
policies referenced in this release. In such instances, the Company
has presented an estimate of those results in the form of a range
of financial results within which management reasonably expects
that the final results will fall. While these estimates are
preliminary in nature and subject to change, the Company currently
believes that such estimates are reasonable. For the three months
ended, September 30, 2005 June 30, 2005 Interest Interest Average
Income/ Yield/ Average Income/ Yield/ Balance Expense Rate(5)
Balance Expense Rate(5) (Dollars in thousands) Interest-Earning
Assets Federal Funds Sold, Securities Purchased Under Agreement to
Resell, and Other Short Term $258,000 - $280,000 - Investments
(1)(2) 268,827 $2,284 3.38% 289,546 $2,025 2.81% Investment
Securities: (3) Taxable 1,974,916 21,976 4.43 1,931,120 21,191 4.40
Non-Taxable (4) 80,624 1,342 6.62 86,194 1,457 6.78 Gross Loans:
Commercial $2,075,255 $1,872,921 Real Estate Construction and Term
156,940 158,578 Consumer and Other 238,069 240,514 Total Gross
Loans $2,470,264 47,406 $2,272,013 41,590 Funding Sources:
Interest-Bearing Liabilities: NOW Deposits $32,973 $33 0.41%
$38,486 $39 0.41% Regular Money Market Deposits 372,678 739 0.79
427,270 755 0.71 Bonus Money Market Deposits 882,815 1,906 0.86
823,503 1,593 0.78 Time Deposits 288,256 463 0.64 287,115 461 0.64
Federal Fund Purchased and Securities Sold Under Agreement to
Repurchase 88,099 802 3.61 7,912 63 3.19 Contingently Convertible
Debt 147,286 238 0.64 147,081 235 0.64 Junior Subordinated
Debentures 49,508 612 4.90 50,271 554 4.42 Other Borrowings 11,699
100 3.39 10,031 79 3.16 Total Interest- Bearing Liabilities
$1,873,314 $4,893 1.04% $1,791,669 $3,779 0.85% Noninterest-Bearing
Funding Sources: Demand Deposits $2,641,194 $2,537,520 Total
Deposits $4,217,916 $4,113,894 1) For all lines where the Company
has presented a range of financial results, such ranges are shown
to encompass any potential change in consolidation practice, and
when combined, such changes will have no material impact on net
income. See "Accounting Review and Accounting Changes". 2) Includes
average interest-bearing deposits in other financial institutions
of $19.5 million and $21.4 million for the third and second quarter
2005, respectively. 3) Average noninterest-earning investment
securities, primarily marketable and non-marketable equity
securities, are excluded from the average investment securities. 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 in 2005 and 2004. The tax equivalent
adjustments were $470.0 thousand and $510.0 thousand for the third
and second quarter 2005, respectively. 5) Calculated based on upper
end of the range presented. SVB FINANCIAL GROUP AND SUBSIDIARIES
CREDIT QUALITY PRELIMINARY INTERIM SELECTED FINANCIAL DATA
(Unaudited) (Dollars in thousands) September 30, June 30, September
30, 2005 2005 2004 Nonperforming Loans: Loans Past Due 90 Days or
More $-- $-- $30 Nonaccrual Loans 13,482 15,777 14,988 Total
Nonperforming Loans (1) $13,482 $15,777 $15,018 Nonperforming Loans
as a Percentage of Total Gross Loans 0.51% 0.65% 0.67% Allowance
for Loan Losses $34,863 $36,372 $43,436 As a Percentage of Total
Gross Loans 1.31% 1.49% 1.93% As a Percentage of Nonperforming
Loans 258.59% 230.54% 289.23% Allowance For Loan Loss Contingency
$16,437 $14,928 $15,164 Total Gross Loans $2,658,765 $2,444,303
$2,244,974 (1) Nonperforming loans equal nonperforming assets for
each respective period. DATASOURCE: SVB Financial Group CONTACT:
Lisa Bertolet, Investor Relations, +1-408-654-7282, or Meghan
O'Leary, Public Relations, +1-408-654-6364, both of SVB Financial
Group Web site: http://www.svb.com/
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