SVB Financial : Report of unscheduled material events or corporate event Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 24, 2019

SVB Financial Group

(Exact name of registrant as specified in its charter)

Delaware

000-15637

91-1962278

(State or other jurisdiction of incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

3003 Tasman Drive, Santa Clara, CA 95054-1191

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: [phone]

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

• o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

• o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.142-12)

• o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

• o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company □

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

Item 2.02.

Results of Operations and Financial Condition.

O n January 24, 2019, SVB Financial Group (the "Company") announced its financial results for the fourth quarter and year ended December 31, 2018. A copy of the release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The information in this report shall not be treated as "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Securities Act of 1934, except as expressly stated by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Release, dated January 24, 2019, announcing the Company's financial results for the fourth quarter and year ended December 31,
2018.
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: January 24, 2019

SVB FINANCIAL GROUP

By:	/s/ KAMRAN HUSAIN
Name:	Kamran Husain
Title:	Chief Accounting Officer and Principal Accounting
Officer

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)	[phone]
January 24, 2019
NASDAQ: SIVB

SVB FINANCIAL GROUP ANNOUNCES 2018 FOURTH QUARTER AND FULL YEAR FINANCIAL RESULTS

SANTA CLARA, Calif. - January 24, 2019 - SVB Financial Group (NASDAQ: SIVB) today announced financial results for the fourth quarter and year ended December 31, 2018.

Consolidated net income available to common stockholders for the fourth quarter of 2018 was $266.3 million, or $4.96 per diluted common share, compared to $274.8 million, or $5.10 per diluted common share, for the third quarter of 2018 and $117.2 million, or $2.19 per diluted common share, for the fourth quarter of 2017. Consolidated net income available to common stockholders for the year ended December 31, 2018 was $973.8 million, or $18.11 per diluted common share, compared to $490.5 million, or $9.20 per diluted common share, for the comparable 2017 period. The fourth quarter, and full year, 2018 results included $8.5 million and $9.1 million, respectively, in noninterest expense consisting primarily of legal and consulting fees associated with the acquisition of Leerink Holdings LLC, now SVB Leerink Holdings LLC ("SVB Leerink"), which closed on January 4, 2019.

"Our fourth quarter performance represented a strong close to an outstanding year, during which we delivered double digit balance sheet growth, increased revenues by more than 30 percent and nearly doubled net income" said Greg Becker, President and CEO of SVB Financial Group. "Despite broader market volatility and uncertainty, we believe the current health and historical resilience of our clients; our investments in client experience, employee enablement and process transformation; and our continued effective execution of growth initiatives across the business will enable us to deliver strong performance in 2019."

Highlights of our fourth quarter 2018 results (compared to third quarter 2018, unless otherwise noted) included:

•	Average loan balances of $27.5 billion, an increase of $1.2 billion (or 4.4 percent).
•	Period-end loan balances of $28.3 billion, an increase of $0.8 billion (or 3.1 percent).
•	Average fixed income investment securities of $24.5 billion, a decrease of $1.0 billion (or 4.0 percent).
•	Period-end fixed income investment securities of $23.3 billion, a decrease of $1.7 billion (or 6.8 percent).
•	Average total client funds (on-balance sheet deposits and off-balance sheet client investment funds) increased $5.5 billion (or 4.3 percent) to
$134.1 billion.
•	Period-end total client funds increased $4.6 billion (or 3.5 percent) to $135.3 billion.
•	Net interest income (fully taxable equivalent basis) of $517.4 million, an increase of $21.3 million (or 4.3 percent).
•	Provision for credit losses of $13.6 million, compared to $17.2 million.
•	Net loan charge-offs of $13.9 million, or 20 basis points of average total gross loans (annualized), compared to $20.0 million, or 30 basis
points.
•	Net gains on investment securities, of $10.7 million, compared to $32.2 million. Non-GAAP net gains on investment securities, net of
noncontrolling interests, were $1.8 million, compared to $25.6 million. (See non-GAAP reconciliation under the section "Use of Non-GAAP
Financial Measures.")
•	Net gains on equity warrant assets of $16.7 million, compared to $34.1 million.
•	Noninterest income of $186.7 million, a decrease of $23.4 million (or 11.1 percent). Non-GAAP core fee income increased $14.3 million (or
10.9 percent) to $146.0 million. (See non-GAAP reconciliation under the section "Use of Non-GAAP Financial Measures.")
•	Noninterest expense of $307.6 million, a decrease of $1.8 million (or 0.6 percent).
•	Effective tax rate of 28.3 percent compared to 25.8 percent.
•	Repurchase and retirement of 715,207 shares of our common stock totaling $147.1 million.

Fourth Quarter and Full-Year 2018 Summary

(Dollars in millions, except share data, employees and ratios)

December 31, 2018

Income statement:

Diluted earnings per common share

Net income available to common s t oc k holders

Net interest income

Provision for credit losses

Noninterest income

Noninterest expense

Non-GAAP core fee income (1)

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

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

Fully taxable equivalent:

Net interest income (2)

Net interest margin

B al an ce sh eet:

Average total assets

Average loans, net of unearned income

Average available-for-sale securities

Average held-to-maturity securities

$

Average noninterest-bearing demand deposits

Average interest-bearing deposits

Average total deposits

Average short-term borrowings

Average long-term debt

Period-end total assets

Period-end loans, net of unearned income

Period-end available-for-sale securities

Period-end held-to-maturity securities

Period-end non-marketable and other equity s ec urit ies

Period-end noninterest-bearing demand depos it s

Period-end interest-bearing deposits

Period-end total deposits

Period-end short-term borrowings

Period-end long-term debt

Off-balance sheet:

Average client investment funds

Period-end client investment funds

Total unfunded credit commitments

Earnings ratios:

Return on average assets (annualized) (3)

Return on average SVBFG stockholders'

equity (annualized)(4)

Asset quality ratios:

Allowance for loan losses as a % of total gross loans

Allowance for loan losses for performing loans as a % of total gross performing loans

$

4. 96

266. 3

514. 5

13. 6

186. 7

307. 6

146. 0

177. 9

307. 4

$

517. 4

3. 69%

57, 592. 3$

27, 477. 0

8, 793. 7

15, 691. 1

40, 106. 9

8, 980. 3

49, 087. 2

1, 580. 0

696. 3

56, 928. 0

28, 338. 3

7, 790. 0

15, 487. 4

941. 1

39, 103. 4

10, 225. 5

49, 328. 9

631. 4

696. 5

$

85, 038. 8$ 85, 983. 8

18, 913. 0

1. 83%20. 61

Three months endedSeptember 30, 2018

$

5. 10

274. 8

493. 2

17. 2

210. 1

309. 4

131. 7

203. 4

309. 3

$

496. 1

3. 62%

56, 465. 0$

26, 331. 4

9, 589. 9

15, 916. 7

40, 625. 8

8, 466. 5

49, 092. 2

745. 2

696. 1

58, 139. 7

27, 494. 9

9, 087. 6

15, 899. 7

896. 2

40, 473. 8

8, 122. 3

48, 596. 1

2, 631. 3

696. 2

79, 560. 8$ 82, 085. 0

18, 539. 5

1. 93%22. 46

June 30, 2018

March 31, 2018

Year endedDecember 31, 2017

December 31, 2018

December 31, 2017

$

4. 42

$

3. 63

237. 8

195. 0

466. 4

$

2. 19

117. 2

419. 9

29. 1

28. 0

192. 7

$

18. 11

973. 8

393. 7

22. 2

155. 5

305. 7

265. 4

123. 1

$

9. 20

490. 5

1, 894. 0

87. 9

152. 3

264. 0

115. 0

183. 2

142. 5

305. 5

1, 420. 4

92. 3

745. 0

1, 188. 2

106. 4

144. 5

265. 4

557. 2

1, 010. 7

515. 9

707. 0

263. 7

1, 187. 7

379. 0

527. 8

1, 009. 8

$

468. 5

$

421. 2

3. 59%

3. 38%

54, 420. 6$

52, 367. 2$

24, 858. 5

$

395. 3

3. 20%

50, 799. 4$

23, 807. 2

10, 048. 4

10, 748. 5

15, 112. 2

$

1, 903. 2

3. 57%

55, 229. 1$

22, 444. 1

12, 081. 0

13, 234. 3

39, 814. 5

37, 950. 8

8, 157. 5

$

1, 423. 4

3. 05%

48, 380. 3

25, 630. 5

9, 789. 2

11, 703. 0

36, 962. 0

8, 155. 3

47, 972. 0

46, 106. 1

121. 1

21, 159. 4

12, 424. 1

14, 997. 8

39, 633. 1

7, 811. 4

44, 773. 4

112. 1

695. 8

695. 6

55, 867. 7

9, 984. 6

35, 235. 2

8, 442. 2

48, 075. 3

75. 2

743. 2

53, 500. 8

25, 996. 2

24, 587. 9

9, 593. 4

7, 509. 9

42, 745. 1

643. 9

695. 9

51, 214. 5

23, 106. 3

10, 080. 4

15, 898. 3

14, 548. 9

852. 5

48. 5

766. 9

56, 928. 0

28, 338. 3

11, 120. 7

12, 663. 5

824. 9

40, 593. 3

37, 515. 4

8, 294. 0

51, 214. 5

23, 106. 3

7, 790. 0

15, 487. 4

651. 1

36, 655. 5

8, 421. 2

48, 887. 3

45, 936. 5

417. 2

11, 120. 7

12, 663. 5

941. 1

39, 103. 4

7, 598. 6

44, 254. 1

1, 102. 1

696. 0

695. 7

71, 311. 5$ 75, 773. 7

64, 377. 7$ 67, 739. 2

18, 728. 4

17, 170. 8

1. 75%20. 82

1. 51%18. 12

651. 1

36, 655. 5

10, 225. 5

49, 328. 9

1, 033. 7

695. 5

57, 589. 1$ 60, 329. 7

17, 462. 5

0. 92%11. 09

7, 598. 6

44, 254. 1

631. 4

696. 5

• 75, 072. 2$

• 85, 983. 8

18, 913. 0

1. 76%20. 57

1, 033. 7

695. 5

51, 525. 5

60, 329. 7

17, 462. 5

1. 01% 12. 38

0. 99%

1. 03%

1. 10%

1. 11%

1. 10%

0. 99%

1. 10%

0. 86

0. 86

0. 90

0. 93

0. 92

0. 86

0. 92

2

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

0. 28

0. 33

0. 25

0. 18

0. 27

0. 26

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

0. 20

0. 30

0. 22

0. 15

0. 23

0. 22

0. 31 0. 27

Other ratios:

GAAP operating efficiency ratio (5)

43. 87%

44. 00%

46. 39%

46. 13%

48. 36%

45. 02%

51. 11%

Non-GAAP operating efficiency ratio (1)

44. 22

44. 22

46. 88

47. 09

48. 85

45. 50

51. 76

Non-GAAP core operating efficiency ratio (1)

45. 66

48. 58

50. 62

48. 51

50. 96

48. 27

54. 38

SVBFG CET 1 risk-based capital ratio

13. 41

13. 28

12. 92

12. 87

12. 78

13. 41

12. 78

Bank CET 1 risk-based capital ratio

12. 41

11. 98

11. 76

11. 90

12. 06

12. 41

12. 06

SVBFG total risk-based capital ratio

14. 45

14. 34

14. 03

13. 99

13. 96

14. 45

13. 96

Bank total risk-based capital ratio

13. 32

12. 91

12. 72

12. 88

13. 04

13. 32

13. 04

SVBFG tier 1 leverage ratio

9. 06

8. 99

8. 81

8. 67

8. 34

9. 06

8. 34

Bank tier 1 leverage ratio

8. 10

7. 82

7. 72

7. 69

7. 56

8. 10

7. 56

Period-end loans, net of unearned income, to deposits ratio

57. 45

56. 58

53. 18

53. 53

52. 21

57. 45

52. 21

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

55. 98

53. 64

51. 82

51. 64

50. 13

53. 31

49. 50

Book value per common share (6)

$

97. 29

$

92. 48

$

87. 53

$

83. 43

$

79. 11

$

97. 29

$

79. 11

Other statistics:

Average full-time equivalent ("FTE") employees

2, 873

2, 778

2, 591

2, 498

2, 433

2, 685

Period-end full-time equivalent ("FTE")

em ploy ees

2, 900

2, 836

2, 626

2, 512

2, 438

2, 900

2, 396 2, 438

• (1) 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."

• (2) 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 for 2018 and 35.0 percent for 2017. The taxable equivalent adjustments were $3.0 million for the quarter ended December 31, 2018, $2.9 million for the quarter ended September 30, 2018, $2.0 million for the quarter ended June 30, 2018, $1.4 million for the quarter ended March 31, 2018 and $1.6 million for the quarter ended December 31, 2017. The taxable equivalent adjustments were $9.2 million and $3.1 million for the years ended December 31, 2018 and December 31, 2017, respectively.

• (3) Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average assets.

• (4) Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average SVB Financial Group ("SVBFG") stockholders' equity.

• (5) Ratio is calculated by dividing noninterest expense by total net interest income plus noninterest income.

• (6) 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 $517.4 million for the fourth quarter of 2018, compared to $496.1 million for the third quarter of 2018. The $21.3 million increase from the third quarter of 2018 to the fourth quarter of 2018, was attributable primarily to the following:

• • An increase in interest income from loans of $26.4 million to $378.8 million for the fourth quarter of 2018. The increase was reflective primarily of the impact of $1.2 billion in average loan growth, higher interest rates compared to the third quarter of 2018, and higher loan fee income. Overall loan yields increased 16 basis points, to 5.47 percent. Gross loan yields, excluding loan interest recoveries and loan fees, increased 15 basis points to 4.96 percent, as compared to 4.81 percent for the third quarter of 2018, reflective primarily of the full-quarter effect of the Federal Funds target rate increase in September 2018 as well as higher LIBOR rates. Benefits from the rate increases on our gross loan yields in the fourth quarter of 2018 continue to be impacted by pricing competition. Loan fee yields increased 1 basis point, or $2.7 million, primarily due to higher fee income from increased levels of loan prepayments in the quarter,

• • An increase of $7.0 million in interest income from short-term investment securities reflective primarily of a $1.1 billion increase in average interest-earning Federal Reserve cash balances and higher market rates,

• • A decrease in interest income from our fixed income investment securities of $3.7 million to $152.0 million for the fourth quarter of 2018. The decrease was reflective of lower average fixed income securities of $1.0 billion

3