SVB Quarterly News Digest - Winter 2010

Company news  |  February 17, 2010

SVB has fully repaid TARP

Almost exactly a year ago, SVB Financial Group participated in the Treasury's TARP Capital Purchase Program. This was back in the good old days, when participating in the CPP was a sign that a bank was strong and intended to keep lending, despite the downturn. We're pleased to let you know that in mid-December Treasury approved our request to repay the TARP CPP funds and that we repaid the entire amount by the end of the year. This really was a win-win situation:

· Taxpayers won: Treasury and U.S. taxpayers not only are getting back 100% of the $235 million they invested in SVB. We also paid more than $10 million in dividends to Treasury under the program. And Treasury still holds a warrant for common shares in SVB, which we expect to repurchase in early 2010.

· Our clients won: The CPP investment helped us remain confident in our capital reserves and continue to lend in an unstable environment. In the last year, we've made loans to more than 400 new borrowers and increased our market share, particularly among high-growth, early-stage companies.

· The economy won: By being there for our clients, we helped ensure they'd continue to grow and thrive for the longer term. This translates into future jobs, future economic growth, and future technological leadership for the United States.

· SVB and its shareholders won: When capital and liquidity were key, TARP strengthened our balance sheet and helped us continue to be "Open for Business" and operate from a position of strength.

We've been listed as the #5 bank in America

Silicon Valley Bank was recognized by Forbes magazine this year as the fifth best of the 100 largest banks in America. To drill deeper into the health of these banks and thrifts, Forbes looked at eight financial measures that gauge asset quality, capital adequacy and profitability. The size of the banks Forbes looked at range from Harleysville National with assets of $5.2 billion to behemoth Bank of America and its $2.3 trillion of assets. Forbes cited SVB's strengths in loan performance and healthy reserves in addition to the fact that more than 500 venture capital firms are SVB clients. They noted that SVB played an important role in the early days of companies including Cisco Systems, Electronic Arts, and Intuit.

SVB delivers another solid quarter

The close of our fourth quarter gives us an opportunity to look back at 2009 and consider what we've accomplished in the past year. Despite the challenges placed on all businesses by the economic downturn, we remained confident in our ability to grow and to serve our customers. Our results tell us that our confidence was justified. We remained profitable, improved our credit quality, and added liquidity through deposit growth. We also strengthened our position through an equity raise, repaid TARP, and gained market share. If you consider our financial results without the effect of the $11.4 million charge for TARP, we earned net income of $17.5 million and earnings per share of $0.47 for the fourth quarter of 2009. We're excited about continuing these positive trends and we remain optimistic even as we prepare for the continued headwinds of the broader economy's slow recovery.

Ken Wilcox re-elected to the Federal Reserve Bank of San Francisco

In December, Federal Reserve Bank of San Francisco announced the re-election of Ken Wilcox to its board of directors for a second three-year term. Each of the nation's 12 Federal Reserve Banks has a nine-member board of directors, three of whom are appointed by the Board of Governors of the Federal Reserve System and six of whom are elected by the District's member banks. The board of directors of the Federal Reserve Bank of San Francisco contributes to the formulation of U.S. monetary policy through the industry and regional economic information they provide the bank's president. Ken travels frequently around the country to meet with CEOs and hear their perspectives on business and US policy; he brings this unique perspective to his role on the board and improves the Fed's understanding of how its policies affect the nation's innovation sector. ho

We're increasing our loan commitment to US exporters

The Export-Import Bank of the United States (Ex-Im Bank) fosters U.S. exports and job creation by filling the gap in working capital financing and helping to level the playing field for U.S. exporters. As an Ex-Im Bank Super-Delegated Authority Lender, we provide Ex-Im Bank-guaranteed financing on an expedited basis, speeding the process of securing bank financing for small businesses. In 2009, we grew working capital loan commitments with Ex-Im Bank guarantees by 74 percent. As of December 31, these commitments reached an all time high of $174 million. U.S. businesses using these facilities are expected to generate $895 million in U.S. export sales to 35 different countries and support nearly 4,500 new and existing U.S. jobs and we're excited to be part of that success.

How do they do it?

We're pleased to announce the release of an educational video called "How Venture Capital Works" that describes how Venture Capital helps build companies, create jobs, and deliver risk-adjusted returns to investors. It features ­­a panel discussion about the dynamics of the venture capital process, including how money flows and emerging companies are developed. Segments in the video include the role of the venture capitalist and the limited partner, the return on investment expectations of investors, the fundraising process and finding venture capital from the right partners, characteristics of the best investors, how equity compares to debt, exits, and how profits get distributed, among many other topics. "Venture capital is a critical component to maintaining the United States' leadership in innovation," said Bryan Roberts, a partner with Venrock featured in the video. Other participants include John Mendlein, chairman of Fate Therapeutics, Judith Elsea, managing director of Weathergage Capital, and Silicon Valley Bank's Michael Hanewich.

We're proud to be funding microlender Grameen America

SVB's Community Development Finance Group has committed $1 million in debt financing over the next three years to Grameen America, a not-for-profit microfinance organization that makes small loans to entrepreneurs living below the poverty line. The Grameen Bank was founded by Muhammad Yunus in Bangladesh in 1976. Yunus gained recognition worldwide when he and the Grameen Bank jointly received the 2006 Nobel Peace Prize. Grameen America launched in the U.S. in 2008 with a mission to alleviate poverty and spur entrepreneurship by providing small loans, savings programs, credit establishment, and financial education to people living below the poverty line in the United States. Today, Grameen America has more than 1,800 borrowers and expects to bring its unique model of microlending to the Bay Area in 2010.