SVB Financial Group
Apr 24, 2008

SVB Financial Group Announces 2008 First Quarter Financial Results

SANTA CLARA, Calif., April 24 /PRNewswire-FirstCall/ -- SVB Financial Group (Nasdaq: SIVB) today announced financial results for the first quarter ended March 31, 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20060213/SFM027LOGO)

Consolidated net income for the first quarter of 2008 was $27.9 million, or $0.81 per diluted common share, compared to $34.3 million, or $0.96 per diluted common share, for the fourth quarter of 2007, and $28.4 million, or $0.76 per diluted common share, for the first quarter of 2007.

"I am proud of what we accomplished in this first quarter: growth rates of 9.2% in average loans and 5.4% in average deposits," said Ken Wilcox, President and CEO of SVB Financial Group. "Moreover, we continue to do well with respect to both credit quality and expense control. These are troubled times, and our success speaks to both the viability of our model and the strength of our execution.

"Further, I am happy with the direction we are going. We are investing in our future, to the benefit of our shareholders. By putting some portion of our earnings back into the corporation, through improvements to infrastructure, expansion of our product set, key hires, and growth of market share, we are positioning SVB to take full advantage of the recovery when it comes, and it will come."



    First Quarter 2008 Summary

                                          Three months ended
                                                            % Change from
                            March       December    March    December  March
                          31, 2008      31, 2007   31, 2007  31,2007  31, 2007
    (Dollars in millions, except per share amounts and ratios)
    Income Statement:
    Diluted EPS              $0.81       $0.96       $0.76   (15.6)%     6.6 %
    Net income                27.9        34.3        28.4   (18.7)     (1.8)
    Net interest income       92.1        97.3        93.4    (5.3)     (1.4)
    Provision for
     (recovery of)
     loan losses               7.7         6.0        (0.4)   28.3         -
    Noninterest income        41.6        53.2        47.5   (21.8)    (12.4)
    Noninterest expense       83.4        83.5        82.1    (0.1)      1.6
    Fully Taxable Equivalent:
      Net interest
       income (1)            $92.6       $97.6       $93.7    (5.1)     (1.2)
      Net interest
       margin                 6.36 %      7.04 %      7.58 %  (9.7)    (16.1)

    Balance Sheet:
    Average total assets  $6,752.0    $6,329.3    $5,722.5     6.7      18.0
    Average loans,
     net of unearned
     income                4,112.9     3,768.0     3,257.5     9.2      26.3
    Average interest-
     earning investment
     securities            1,263.1     1,284.0     1,459.0    (1.6)    (13.4)
    Average noninterest-
     bearing demand
     deposits              2,899.6     2,941.2     2,818.0    (1.4)      2.9
    Average interest-
     bearing deposits      1,535.4     1,265.6     1,033.1    21.3      48.6
    Average total
     deposits              4,435.0     4,206.8     3,851.0     5.4      15.2
    Average short-
     term borrowings         234.9       116.9       548.8   100.9     (57.2)
    Average long-
     term debt               887.3       863.4       352.4     2.8     151.8

    Period end
     total assets         $6,897.3    $6,692.5    $5,847.9     3.1      17.9
    Period end
     loans, net of
     unearned income       4,349.2     4,151.7     3,358.4     4.8      29.5
    Period end
     investment
     securities            1,618.5     1,602.6     1,657.5     1.0      (2.4)
    Period end
     noninterest-
     bearing demand
     deposits              3,034.9     3,226.9     2,863.4    (5.9)      6.0
    Period end
     interest-
     bearing deposits      1,734.3     1,384.3     1,011.8    25.3      71.4
    Period end
     total deposits        4,769.2     4,611.2     3,875.2     3.4      23.1

    Off-Balance Sheet:
    Average total
     client investment
     funds               $21,894.5   $21,520.4   $19,468.0     1.7      12.5
    Period end total
     client investment
     funds                20,966.9    22,192.1    19,326.6    (5.5)      8.5
    Total unfunded
     credit commitments    4,860.7     4,938.6     4,292.1    (1.6)     13.2

    Ratios and Other Statistics:
    Return on average
     assets (2)                1.7 %       2.1 %       2.0 % (19.0)    (15.0)
    Return on average
     stockholders'
     equity (2)               16.3        19.9        17.8   (18.1)     (8.4)
    Total risk-based
     capital ratio           15.54       16.02       14.56    (3.0)      6.7
    Tangible common
     equity to tangible
     assets (3)               9.76       10.12       11.05    (3.6)    (11.7)
    Operating efficiency
     ratio (4)               59.49 %     55.32 %     62.13 %   7.5      (4.2)
    Common stock
     repurchases             $44.6       $49.4       $19.1    (9.7)    133.5
    Allowance for
     loan losses as a
     percentage of
     total gross loans        1.13 %      1.13 %      1.19 %     -      (5.0)
    Net charge-offs
     as a percentage
     of total gross
     loans (annualized)       0.49        0.28        0.25    75.0      96.0
    Period end
     prime rate               5.25        7.25        8.25   (27.6)    (36.4)
    Average SVB
     prime lending
     rate                     6.26 %      7.54 %      8.25 % (17.0)    (24.1)
    Full-time
     equivalent
     employees               1,190       1,141       1,169     4.3 %     1.8 %

    (1)  Interest income on non-taxable investments is presented on a fully
         tax-equivalent basis using the federal statutory income tax rate of
         35.0 percent. The tax-equivalent adjustments were $0.5 million, $0.3
         million and $0.3 million for the quarters ended March 31, 2008,
         December 31, 2007 and March 31, 2007, respectively.
    (2)  Ratios represent annualized consolidated net income divided by
         quarterly average assets/equity.
    (3)  Tangible common equity consists of total stockholders' equity
         (excluding unrealized gains and losses on investments) less acquired
         intangibles and goodwill. Tangible assets represent total assets
         (excluding unrealized gains and losses on investments) less acquired
         intangibles and goodwill.
    (4)  The operating efficiency ratio is calculated by dividing noninterest
         expense (excluding noninterest expense attributable to minority
         interests of $2.8 million, $2.5 million and $2.3 million for the
         quarters ended March 31, 2008, December 31, 2007 and March 31, 2007,
         respectively) by total taxable-equivalent (losses) revenue (excluding
         taxable-equivalent (losses) revenue attributable to minority
         interests of $(1.5) million, $4.4 million and $12.6 million for the
         quarters ended March 31, 2008, December 31, 2007 and March 31, 2007,
         respectively).


    Net Interest Income and Margin

Net interest income was $92.1 million for the first quarter of 2008, compared to $97.3 million for the fourth quarter of 2007 and $93.4 million for the first quarter of 2007. Net interest income, on a fully tax-equivalent basis, was $92.6 million for the first quarter of 2008, compared to $97.6 million for the fourth quarter of 2007 and $93.7 million for the first quarter of 2007. The decrease in net interest income, on a fully tax-equivalent basis, in the first quarter of 2008, compared to the fourth quarter of 2007, was primarily attributable to the following:


    -- A net decrease in income from our loan portfolio of $4.6 million,
       largely due to decreases totaling 200 basis points in our prime-lending
       rate during the first quarter of 2008 and to decreases in our
       prime-lending rate during the fourth quarter of 2007, as well as a
       decrease in loan fee income of $1.9 million due mainly to lower loan
       prepayments. The decreases in our prime-lending rate were in response
       to Federal Reserve rate decreases, which reduced our average
       prime-lending rate to 6.26 percent for the first quarter of 2008,
       compared to 7.54 percent for the fourth quarter of 2007. These
       decreases were partially offset by increases in interest income related
       to growth in our average loan portfolio balances, which increased
       interest income by $7.6 million;

    -- A decrease in interest income of $1.0 million from our short-term
       investment portfolio, primarily driven by declining short-term market
       interest rates;

    -- An increase in interest expense of $0.5 million due to increases in the
       average balance of our Eurodollar sweep deposit product introduced in
       late October 2007; and

    -- A decrease in interest expense of $1.4 million related to our senior
       and subordinated notes and other long-term debt primarily due to lower
       short-term London Inter-bank Offered Rates (LIBOR) rates. This decrease
       was offset by an increase in interest expense of $0.4 million due to an
       increase in average balance of our short-term borrowings, which were
       used to fund loan growth.

Our net interest margin, on a fully tax-equivalent basis, was 6.36 percent for the first quarter of 2008, compared to 7.04 percent for the fourth quarter of 2007 and 7.58 percent for the first quarter of 2007. The decrease in the first quarter of 2008, compared to the fourth quarter of 2007, was primarily due to reductions in our prime-lending rate during the fourth quarter of 2007 and the first quarter of 2008, as well as lower loan fee income recognized due to lower loan prepayments. The decrease in our net interest margin was also attributable to an increase in interest expense from increases in our short- term borrowing balances and increases in our average interest-bearing deposit balances. These reductions were partially offset by a decrease in interest expense from our long-term debt.

As of March 31, 2008, 71.7 percent, or $3.14 billion, of our outstanding gross loans were variable-rate loans that adjust at a prescribed measurement date upon a change in our prime-lending rate or other variable indices, compared to 73.0 percent, or $3.05 billion, as of December 31, 2007 and 71.0 percent, or $2.39 billion, as of March 31, 2007.

Loan Growth

Average loans, net of unearned income, were $4.11 billion for the first quarter of 2008, compared to $3.77 billion for the fourth quarter of 2007 and $3.26 billion for the first quarter of 2007. The increase in average loan balances in the first quarter of 2008, compared to the fourth quarter of 2007, came from all our client industry segments, with particularly strong growth in loans to technology clients. Period end loans, net of unearned income, were $4.35 billion at March 31, 2008, compared to $4.15 billion at December 31, 2007 and $3.36 billion at March 31, 2007.

Deposit Growth

Average deposits were $4.44 billion for the first quarter of 2008, compared to $4.21 billion for the fourth quarter of 2007 and $3.85 billion for the first quarter of 2007. The increase in average deposit balances for the first quarter of 2008, compared to the fourth quarter of 2007, reflects an increase in deposit activity in late 2007, primarily from our private equity clients as well as an increase in balances of our money market deposit product for early stage clients introduced in the second quarter of 2007 and our Eurodollar sweep deposit product introduced in the fourth quarter of 2007. The period end and average balances of our early stage money market deposit product were $381.0 million and $406.4 million, respectively, for the first quarter of 2008, compared to $389.3 million and $302.2 million, respectively, for the fourth quarter of 2007. The period end and average balances of our Eurodollar sweep deposit product were $267.4 million and $144.3 million, respectively, for the first quarter of 2008, compared to $72.1 million and $33.0 million, respectively, for the fourth quarter of 2007. Total deposits were $4.77 billion at March 31, 2008, compared to $4.61 billion at December 31, 2007 and $3.88 billion at March 31, 2007.

Investment Portfolio

Total investment securities were $1.62 billion at March 31, 2008, compared to $1.60 billion at December 31, 2007 and $1.66 billion at March 31, 2007. The increase in investment securities in the first quarter of 2008, compared to the fourth quarter of 2007, was primarily due to increases in the balances of our non-marketable securities, primarily from investments during the first quarter of 2008 in our funds of funds, partially offset by a decrease in fixed income investment portfolio, due primarily to principal prepayments on our mortgage-backed securities and collateralized mortgage obligations.

Average interest-earning investment securities were $1.26 billion for the first quarter of 2008, compared to $1.28 billion for the fourth quarter of 2007 and $1.46 billion for the first quarter of 2007. The decrease in average interest-earning investment securities in the first quarter of 2008, compared to the fourth quarter of 2007, was primarily due to regular principal prepayments on our mortgage-backed securities portfolio, partially offset by an increase in investments within our municipal bonds and notes portfolio.

Noninterest Income

Noninterest income was $41.6 million for the first quarter of 2008, compared to $53.2 million for the fourth quarter of 2007 and $47.5 million for the first quarter of 2007. The decrease in noninterest income in the first quarter of 2008, compared to the fourth quarter of 2007, was primarily attributable to the following:


    -- Net losses on investment securities of $6.1 million for the first
       quarter of 2008, compared to net gains of $6.1 million for the fourth
       quarter of 2007. The decrease of $12.2 million was primarily due to
       losses related to lower valuations as well as lower distributions. Net
       losses on investment securities of $6.1 million in the first quarter of
       2008 were mainly attributable to gains and losses from the following
       investment activity:

         o  Net losses from our sponsored debt funds of $8.0 million. Included
            in the $8.0 million in net losses from our sponsored debt funds
            are $7.8 million of net losses from the valuations mainly
            attributable to a decrease in the share price of one investment,
            which was subject to transfer restrictions;
         o  Net gains from our managed funds of funds of $2.8 million, which
            include $1.9 million of net gains from distributions and $0.9
            million of net gains from an increase in valuations; and
         o  Net losses of $0.8 million from the sale of certain equity
            securities, which are publicly-traded shares acquired upon
            exercise of equity warrant assets.

       As of March 31, 2008, we held investments, either directly or through
       our managed investment funds, in 408 private equity funds, 64 companies
       and three sponsored debt funds.

    -- A decrease in net gains on derivative instruments of $5.8 million,
       primarily due to lower gains on exercises of equity warrant assets and
       net losses from foreign exchange forward contracts. The net gains from
       exercised warrants of $4.5 million in the first quarter of 2008 were
       primarily from the sale of one warrant position. Net losses from
       foreign exchange forward contracts include $3.1 million in net losses
       from changes in fair value of foreign exchange forward contracts, used
       to offset gains/losses from revaluation of our foreign currency
       denominated loans, which are included in other noninterest income;

    -- An increase in other noninterest income of $4.6 million, primarily due
       to an increase of $5.0 million from revaluations of foreign currency
       denominated loans due to the continued weakening of the U.S. dollar in
       the first quarter of 2008;

    -- An increase in deposit service charges of $1.0 million, primarily
       attributable to a decrease in our earnings credit rate obtained by
       clients to offset deposit service charges, which was directly related
       to decreases in short-term market interest rates; and

    -- An increase in corporate finance fees of $1.0 million due to the
       completion of all remaining client transactions at SVB Alliant. We
       ceased operations at SVB Alliant as of March 31, 2008.

Non-GAAP noninterest income, net of minority interest, was $43.3 million for the first quarter of 2008, compared to $49.0 million for the fourth quarter of 2007 and $35.3 million for the first quarter of 2007. Refer to tables in the back of this release for summaries and a description of non-GAAP noninterest income, net of minority interest, non-GAAP net gains on investment securities, net of minority interest and non-GAAP net gains on derivative instruments, net of minority interest.

Noninterest Expense

Noninterest expense was $83.4 million for the first quarter of 2008, compared to $83.5 million for the fourth quarter of 2007 and $82.1 million for the first quarter of 2007. The decrease in noninterest expense in the first quarter of 2008, compared to the fourth quarter of 2007, was primarily attributable to the following:


    -- A decrease in the provision for unfunded credit commitments of $1.8
       million. We recorded a (reduction of) provision for unfunded credit
       commitments of ($0.2) million for the first quarter of 2008, compared
       to a provision of $1.6 million for the fourth quarter of 2007. The
       reduction of provision for unfunded credit commitments for the first
       quarter of 2008 reflects a slight decrease in the balance of our total
       unfunded credit commitments compared to the fourth quarter of 2007. We
       recorded a provision of $1.6 million in the fourth quarter of 2007,
       primarily due to the growth in our portfolio of unfunded credit
       commitments, which grew by $469.6 million to $4.94 billion at December
       31, 2007, compared to $4.47 billion at September 30, 2007. Total
       unfunded credit commitments were $4.86 billion at March 31, 2008,
       compared to $4.94 billion at December 31, 2007 and $4.29 billion at
       March 31, 2007.

    -- An increase in compensation and benefits expense of $1.7 million,
       primarily attributable to the following:

         o  An increase of $2.0 million related to additional 401(k) employer
            matching contributions made as a result of 2007 incentive
            compensation payouts received by employees during the first
            quarter of 2008;
         o  An increase of $1.8 million in salaries and wages expense,
            primarily attributable to the increase in the number of average
            full-time equivalent ("FTE") employees, which increased by 35 to
            an average of 1,174 FTEs for the first quarter of 2008 from an
            average of 1,139 FTEs for the fourth quarter of 2007;
         o  An increase of $1.4 million in employer payroll taxes, primarily
            attributable to lower employer payroll taxes paid during the
            fourth quarter of 2007 as maximum taxation levels were reached for
            certain employees; and
         o  A decrease of $3.4 million in compensation costs related to our
            incentive compensation plan, retention program and warrant
            incentive program, primarily due to higher compensation costs
            recorded during the fourth quarter of 2007.

Non-GAAP noninterest expense, net of minority interest, was $80.7 million for the first quarter of 2008, compared to $81.0 million for the fourth quarter of 2007 and $79.9 million for the first quarter of 2007. Refer to table in the back of this release for a summary and description of non-GAAP noninterest expense, net of minority interest.

Income Tax Expense

Our effective tax rate was 40.26 percent for the first quarter of 2008, compared to 41.99 percent for the fourth quarter of 2007 and 41.77 percent for the first quarter of 2007. The decrease in the tax rate in the first quarter of 2008, compared to the fourth quarter of 2007, was primarily attributable to a higher impact of tax-advantaged investments on our overall pre-tax income and to the tax impact of lower non-deductible officers' compensation expense on our overall pre-tax income.



    Credit Quality

                                             Three months ended
                                    March           December         March
    (Dollars in thousands)         31, 2008         31, 2007        31, 2007
    Allowance for loan losses,
     beginning balance              $47,293           $44,225        $42,747
    Provision for (recovery of)
     loan losses                      7,723             5,971           (407)
    Gross loan charge-offs           (6,208)           (4,664)        (4,350)
    Loan recoveries                     828             1,761          2,266
    Allowance for loan losses,
     ending balance                 $49,636           $47,293        $40,256
    Provision (recovery) as a
     percentage of total
     gross loans (annualized)          0.71 %            0.57 %        (0.05)%
    Gross charge-offs as a
     percentage of total
     gross loans (annualized)          0.57              0.44           0.52
    Net charge-offs as a
     percentage of total
     gross loans (annualized)          0.49              0.28           0.25
    Allowance for loan losses
     as a percentage of total
     gross loans                       1.13 %            1.13 %         1.19 %
    Total gross loans            $4,377,498        $4,178,098     $3,381,144


Our provision for loan losses increased by $1.8 million for the first quarter of 2008, compared to the fourth quarter of 2007, primarily due to an increase in gross charge-offs of $1.5 million and a decrease in net recoveries of $0.9 million.

Minority Interest in Consolidated Affiliates

Minority interest in net loss (income) of consolidated affiliates is primarily related to the minority interest holders' portion of investment gains or losses and management fees paid by our managed funds. Minority interest in net loss of consolidated affiliates was $4.2 million for the first quarter of 2008, compared to net income of $2.0 million for the fourth quarter of 2007 and net income of $10.4 million for the first quarter of 2007. Minority interest in net loss of consolidated affiliates of $4.2 million for the first quarter of 2008 was primarily due to $4.4 million in net investment losses and carried interest from one of our sponsored debt funds and noninterest expense of $2.8 million primarily related to management fees paid by our managed funds to the general partners at SVB Capital for funds management. These net losses were partially offset by $2.6 million in net investment gains from our funds of funds.

Minority interest in capital of consolidated affiliates increased by $32.6 million for the first quarter of 2008, compared to the fourth quarter of 2007, due to equity transactions, which included paid capital calls of $36.9 million made by our consolidated affiliates, partially offset by $4.2 million of net losses and carried interest from consolidated affiliates, primarily from one of our sponsored debt funds.

Capital



We repurchased 979,628 shares of our common stock during the first quarter of 2008 at an aggregate cost of $44.6 million. On July 26, 2007, our Board of Directors approved a stock repurchase program authorizing us to purchase up to $250.0 million of our common stock, which expires on July 31, 2008. At March 31, 2008, $105.1 million of our shares remain authorized for repurchase under our stock repurchase program.

Weighted-average diluted common shares outstanding decreased by 1,155,302 shares in the first quarter of 2008, compared to the fourth quarter of 2007, primarily due to the full quarter effect of our share repurchase activity during the fourth quarter of 2007, share repurchase activity during the first quarter of 2008, and a decrease in the dilutive impact of our contingently convertible debt resulting from a decrease in our average share price in the first quarter of 2008.

Recent Developments

In April 2008, we issued $250 million of 3.875% convertible senior notes, due in 2011. The notes will be initially convertible, subject to certain conditions, into cash up to the principal amount of notes and, with respect to any excess conversion value, into shares of our common stock or cash or a combination, at our option. The notes will have an initial conversion rate of 18.8525 shares of common stock per $1,000 principal amount of notes, which represents an initial effective conversion price of $53.04 per share. We will use approximately $150 million of the net proceeds to cash settle that portion of our conversion obligation due upon conversion of our $150 million zero- coupon convertible subordinated notes due in June 2008. We used $20.6 million of the net proceeds to cover the net cost of entering into a convertible note hedge and a warrant agreement with respect to our common stock. These hedge and warrant transactions are separate contracts entered into by the applicable counterparties, are not part of the terms of the notes and will not affect the rights of the holders of the notes. With respect to us, they are intended to generally have the effect of increasing the conversion price of the notes to $64.43 per share of common stock. Remaining proceeds will be used for general corporate purposes.

Effective January 1, 2008, we adopted the provisions of SFAS No. 157, Fair Value Measurements. The adoption of this standard did not have a material impact on our consolidated financial position or results of operations for the first quarter of 2008.

Outlook for the Year Ending December 31, 2008



Our outlook for 2008 is provided below on a GAAP basis, unless otherwise noted. We have provided our current outlook for the expected results of our significant forecasted activities. However, we do not provide our outlook on selected items where the timing and financial impact is particularly uncertain, as well as certain potential unusual or one-time items. The outlook observation presented below are, by their nature, forward looking statements and are subject to substantial risks and uncertainties which are discussed below under the caption "Forward Looking Statements".


    For the year ending December 31, 2008, compared to 2007 results, we
currently expect the following outlook based on our first quarter 2008
results:



                                     Current outlook compared to 2007 results
                                             (as of April 24, 2008)

    Average loan balance              increase at a percentage rate in the low
                                      twenties range

    Average deposit balance           increase at a percentage rate in the low
     (majority of growth from         double digit range
     interest-bearing deposits)

    Average off-balance sheet         increase at a percentage rate in the low
     client fund balance              teens range

    Net interest margin               decline based on expected federal
                                      reserve rate cuts and from actual
                                      decreases in late 2007 and early 2008

    Fees for deposit services,        increase at a percentage rate in the mid
     letters of credit and foreign    twenties range
     exchange, in aggregate

    Client investment fees            increase at a percentage rate in the
                                      high single digit range

    Allowance for loan losses as      remain flat
     a percentage of gross loans

    Noninterest expense (excluding    increase at a percentage rate in the mid
     expenses related to minority     single digit range
     interest and goodwill
     impairment)


                                     Change in outlook compared to outlook
                                         reported as of January 24, 2008

    Average loan balance              outlook improved from low to mid teens
                                      range

    Average deposit balance
     (majority of growth from         no change from previous outlook
     interest-bearing deposits)

    Average off-balance sheet         no change from previous outlook
     client fund balance

    Net interest margin               no change from previous outlook

    Fees for deposit services,
     letters of credit and foreign    outlook improved from mid teens range
     exchange, in aggregate

    Client investment fees            outlook decreased from low teens range

    Allowance for loan losses as      no change from previous outlook
     a percentage of gross loans

    Noninterest expense (excluding    no change from previous outlook
     expenses related to minority
     interest and goodwill
     impairment)


    Forward Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts, such as forecasts of our future financial results and condition, expectations for our operations and business, and our underlying assumptions of such forecasts and expectations. In this release, particularly in the section "Outlook for the Year Ending December 31, 2008" above, we make forward-looking statements discussing management's expectations about economic conditions, and our financial and credit performance and financial results (and the components of such results) for the year 2008.

Although management believes that the expectations reflected in our forward-looking statements are reasonable and has based these expectations on our beliefs and assumptions, such expectations are not guarantees and may prove to be incorrect. Actual results could differ significantly. Factors that may cause the outlook for the year 2008 and other forward-looking statements herein to change include, among others, the following: (i) accounting changes, as required by U.S. generally accepted accounting principles, (ii) changes in the state of the economy or the markets in which we conduct business or are served by us, (iii) changes in credit quality of our loan portfolio, (iv) changes in interest rates or market levels or factors affecting them, (v) changes in the performance or equity valuation of companies in which we have invested or hold derivative instruments or equity warrants assets, and (vi) variations from our expectations as to factors impacting our cost structure. For additional information about these factors, please refer to our public reports filed with the U.S. Securities and Exchange Commission, including our most recently-filed quarterly or annual report. The forward-looking statements included in this release are made only as of the date of this release. We do not intend, and undertake no obligation, to update these forward-looking statements.

Earnings Conference Call

On April 24, 2008, we will host a conference call at 2:00 p.m. (Pacific Time) to discuss the financial results for the first quarter ended March 31, 2008. The conference call can be accessed by dialing (866) 916-4782 or (706) 902-0678, and referencing the conference ID "39808166". A live webcast of the audio portion of the call can be accessed on the Investor Relations section of our website at http://www.svb.com. A digitized replay of the conference call will be available beginning at approximately 6:00 p.m. (Pacific Time) on Thursday, April 24, 2008, through midnight on Sunday, May 27, 2008, by dialing (800) 642-1687 or (706) 645-9291 and referencing conference ID number "39808166." A replay of the audio webcast will also be available on http://www.svb.com for 12 months beginning Thursday, April 24, 2008.

About SVB Financial Group

For 25 years, SVB Financial Group and its subsidiaries, including SVB Silicon Valley Bank, have 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. Offering diversified financial services through SVB Silicon Valley Bank, SVB Analytics, SVB Capital, SVB Global and SVB Private Client Services, 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. Headquartered in Santa Clara, Calif., SVB Financial Group operates through 27 offices in the U.S. and five internationally in China, India, Israel and United Kingdom. More information on the Company can be found at http://www.svb.com.

Disclaimer:

SVB Silicon Valley Bank refers to Silicon Valley Bank, the California bank subsidiary and the commercial banking operation of SVB Financial Group. Banking services are provided by Silicon Valley Bank, a member of the FDIC and the Federal Reserve. SVB Private Client Services is a division of Silicon Valley Bank. SVB Financial Group is also a member of the Federal Reserve.




                       SVB FINANCIAL GROUP AND SUBSIDIARIES
                    INTERIM CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                  Three months ended
    (Dollars in thousands, except share
    data)                                    March 31,  December 31, March 31,
                                               2008        2007        2007
    Interest income:
       Loans                                 $89,759     $94,377     $85,232
       Investment securities:
       Taxable                                13,770      14,313      16,293
       Non-taxable                               937         672         607
       Federal funds sold, securities
        purchased under agreement to
        resell
        and other short-
        term investment securities             4,117       5,156       3,834
    Total interest income                    108,583     114,518     105,966
    Interest expense:
     Deposits                                  5,269       4,957       2,188
     Borrowings                               11,233      12,276      10,414
    Total interest expense                    16,502      17,233      12,602
    Net interest income                       92,081      97,285      93,364
    Provision for (recovery of) loan
     losses                                    7,723       5,971        (407)
    Net interest income after provision
     for (recovery of) loan losses            84,358      91,314      93,771
    Noninterest income:
     Client investment fees                   13,722      13,981      12,034
     Foreign exchange fees                     7,844       7,972       5,259
     Deposit service charges                   5,891       4,843       3,211
     Corporate finance fees                    3,640       2,631       2,915
     Letter of credit and standby letter
      of credit income                         2,946       2,752       2,931
     Gains on derivative instruments, net      2,599       8,421       1,973
     (Losses) gains on investment
      securities, net                         (6,112)      6,113      12,251
     Other                                    11,035       6,476       6,887
    Total noninterest income                  41,565      53,189      47,461
    Noninterest expense:
     Compensation and benefits (1)            53,781      52,115      53,360
     Professional services                     8,801       9,232       9,150
     Premises and equipment                    5,188       4,936       5,142
     Net occupancy                             4,348       4,591       4,804
     Business development and travel           3,422       3,516       2,915
     Correspondent bank fees                   1,506       1,342       1,549
     Telephone                                 1,152       1,370       1,433
     Data processing services                  1,077         901       1,028
     (Reduction of) provision for unfunded
      credit commitments                        (165)      1,571      (1,109)
     Other                                     4,327       3,903       3,845
    Total noninterest expense                 83,437      83,477      82,117
    Income before minority interest in
     net loss (income) of consolidated
     affiliates and income tax expense        42,486      61,026      59,115
    Minority interest in net loss
     (income) of consolidated affiliates       4,218      (1,957)    (10,356)
    Income before income tax expense          46,704      59,069      48,759
    Income tax expense                        18,801      24,803      20,368
    Net income                               $27,903     $34,266     $28,391
    Earnings per common share - basic          $0.86       $1.04       $0.82
    Earnings per common share - diluted        $0.81       $0.96       $0.76
    Weighted average shares
     outstanding - basic                  32,279,892  33,043,715  34,421,882
    Weighted average shares
     outstanding - diluted                34,582,568  35,737,870  37,162,832

    (1)  Compensation and benefits included share-based payments of $3.5
         million, $2.9 million and $3.8 million for the quarters ended March
         31, 2008, December 31, 2007 and March 31, 2007, respectively.


                       SVB FINANCIAL GROUP AND SUBSIDIARIES
                       INTERIM CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

    (Dollars in thousands, except
    par value, share data and
    ratios)                        March 31,       December 31,    March 31,
                                      2008             2007           2007
    Assets:
    Cash and due from banks          $303,973         $325,399     $309,933
    Securities purchased under
     agreement to resell and
     other short-term investment
     securities                       372,159          358,664      254,941
    Investment securities           1,618,542        1,602,574    1,657,539
    Loans, net of unearned income   4,349,238        4,151,730    3,358,390
    Allowance for loan losses         (49,636)         (47,293)     (40,256)
    Net loans                       4,299,602        4,104,437    3,318,134
    Premises and equipment, net of
     accumulated depreciation and
     amortization                      36,725           38,628       37,868
    Goodwill                            4,092            4,092       21,296
    Accrued interest receivable
     and other assets                 262,210          258,662      248,145
    Total assets                   $6,897,303       $6,692,456   $5,847,856

    Liabilities, Minority Interest
     and Stockholders' Equity:
    Liabilities:
      Deposits:
        Noninterest-bearing
         demand                    $3,034,885       $3,226,859   $2,863,399
        Negotiable order of
         withdrawal (NOW)              71,440           35,909       32,325
        Money market                1,009,226          941,242      652,741
        Time                          386,213          335,110      326,734
        Foreign sweep                 267,449           72,083            -
      Total deposits                4,769,213        4,611,203    3,875,199
      Short-term borrowings           120,000           90,000      583,901
      Other liabilities               167,016          199,243      187,147
      Long-term debt                  893,189          875,254      353,151
    Total liabilities               5,949,418        5,775,700    4,999,398

    Minority interest in capital
     of consolidated affiliates       272,729          240,102      194,993

    Stockholders' equity:
      Preferred stock, $0.001 par
       value, 20,000,000 shares
       authorized; no shares
       issued and outstanding               -                -            -
      Common stock, $0.001 par
       value, 150,000,000 shares
       authorized; 31,879,622
       shares, 32,670,557 shares and
       34,229,797 shares outstanding,
       respectively                        32               33           34
      Retained earnings               678,078          682,911      668,486
      Accumulated other
       comprehensive loss              (2,954)          (6,290)     (15,055)
    Total stockholders' equity        675,156          676,654      653,465
    Total liabilities, minority
     interest and stockholders'
     equity                        $6,897,303       $6,692,456   $5,847,856

    Capital Ratios:
    Total risk-based capital ratio      15.54 %          16.02 %      14.56 %
    Tier 1 risk-based capital
     ratio                              10.61            11.07        12.98
    Tier 1 leverage ratio               11.06            11.91        12.55

    Other Period-End Statistics:
    Tangible common equity to
     tangible assets ratio               9.76            10.12        11.05
    Loans, net of unearned income-
     to-deposits ratio                  91.19 %          90.04 %      86.66 %
    Book value per share               $21.18           $20.71       $19.09
    Full-time equivalent employees      1,190            1,141        1,169



                     SVB FINANCIAL GROUP AND SUBSIDIARIES
                  INTERIM AVERAGE BALANCES, RATES AND YIELDS
                                 (Unaudited)

                                          Three months ended
                                            March 31, 2008
                                                  Interest
                                   Average         Income/           Yield/
                                   Balance         Expense            Rate
    Interest-earning assets:
    (Dollars in thousands)
    Federal funds sold,
     securities purchased under
     agreement to resell
     and other short-term
     investment securities (1)     $475,112          $4,117          3.49 %
    Investment securities:
      Taxable                     1,173,698          13,770          4.72
      Non-taxable (2)                89,360           1,442          6.49
    Loans:
      Commercial                  3,515,060          80,383          9.20
      Real estate
       construction
       and term                     287,611           4,467          6.25
      Consumer and other            310,194           4,909          6.37
    Total loans, net of
     unearned income              4,112,865          89,759          8.78
    Total interest-earning
     assets                       5,851,035         109,088          7.50
    Cash and due from banks         276,471
    Allowance for loan losses       (48,276)
    Goodwill                          4,092
    Other assets (3)                668,697
    Total assets                 $6,752,019

    Funding sources:
    Interest-bearing
     liabilities:
      NOW deposits                  $37,148             $37          0.40 %
      Regular money market
       deposits                     136,485             425          1.25
      Bonus money market
       deposits                     873,954           3,234          1.49
      Time deposits                 343,571             766          0.90
      Foreign sweep deposits        144,256             807          2.25
    Total interest-bearing
     deposits                     1,535,414           5,269          1.38
      Short-term borrowings         234,945           1,811          3.10
      Contingently convertible
       debt                         149,314             239          0.64
      Junior subordinated
       debentures                    52,969             725          5.50
      Senior and
       subordinated notes           532,376           6,854          5.18
      Other long-term debt          152,636           1,604          4.23
    Total interest-bearing
     liabilities                  2,657,654          16,502          2.50
    Portion of noninterest
     -bearing funding sources     3,193,381
    Total funding sources         5,851,035          16,502          1.14

    Noninterest-bearing
     funding sources:
      Demand deposits             2,899,599
      Other liabilities             245,506
      Minority interest in
       capital of consolidated
       affiliates                   261,664
      Stockholders' equity          687,596
      Portion used to fund
       interest-earning
       assets                    (3,193,381)
    Total liabilities, minority
     interest and stockholders'
     equity                      $6,752,019
    Net interest income and
     margin                                         $92,586          6.36 %
    Total deposits               $4,435,013
    Average stockholders'
     equity as a percentage
     of average assets                                              10.18 %


                                            Three months ended
                                             December 31, 2007
                                                  Interest
                                   Average        Income/        Yield/
                                   Balance        Expense        Rate
    Interest-earning assets:
    (Dollars in thousands)
    Federal funds sold,
     securities purchased under
     agreement to resell
     and other short-term
     investment securities (1)     $449,400          $5,156          4.55 %
    Investment securities:
      Taxable                     1,220,511          14,313          4.65
      Non-taxable (2)                63,503           1,034          6.46
    Loans:
      Commercial                  3,190,854          84,170         10.47
      Real estate
       construction
       and term                     281,243           4,585          6.47
      Consumer and other            295,935           5,622          7.54
    Total loans, net of
     unearned income              3,768,032          94,377          9.94
    Total interest-earning
     assets                       5,501,446         114,880          8.28
    Cash and due from banks         276,798
    Allowance for loan losses       (45,654)
    Goodwill                          4,092
    Other assets (3)                592,606
    Total assets                 $6,329,288

    Funding sources:
    Interest-bearing
     liabilities:
      NOW deposits                  $31,773             $32          0.40 %
      Regular money market
       deposits                     125,257             382          1.21
      Bonus money market
       deposits                     739,230           3,454          1.85
      Time deposits                 336,327             805          0.95
      Foreign sweep deposits         32,968             284          3.42
    Total interest-bearing
     deposits                     1,265,555           4,957          1.55
      Short-term borrowings         116,881           1,366          4.64
      Contingently convertible
       debt                         149,136             232          0.62
      Junior subordinated
       debentures                    51,455             841          6.48
      Senior and
       subordinated notes           510,102           7,782          6.05
      Other long-term debt          152,669           2,055          5.34
    Total interest-bearing
     liabilities                  2,245,798          17,233          3.04
    Portion of noninterest
     -bearing funding sources     3,255,648
    Total funding sources         5,501,446          17,233          1.24

    Noninterest-bearing
     funding sources:
      Demand deposits             2,941,205
      Other liabilities             215,288
      Minority interest in
       capital of consolidated
       affiliates                   245,211
      Stockholders' equity          681,786
      Portion used to fund
       interest-earning
       assets                    (3,255,648)
    Total liabilities, minority
     interest and stockholders'
     equity                      $6,329,288
    Net interest income and
     margin                                          $97,647         7.04 %
    Total deposits               $4,206,760
    Average stockholders'
     equity as a percentage
     of average assets                                              10.77 %



                                            Three months ended
                                              March 31, 2007
                                                  Interest
                                   Average        Income/          Yield/
                                   Balance        Expense          Rate
    Interest-earning assets:
    Federal funds sold,
     securities purchased under
     agreement to resell
     and other short-term
     investment securities (1)     $293,574          $3,834          5.30 %
    Investment securities:
      Taxable                     1,405,006          16,293          4.70
      Non-taxable (2)                54,018             934          7.01
    Loans:
      Commercial                  2,730,868          75,321         11.19
      Real estate
       construction
       and term                     230,053           3,823          6.74
      Consumer and other            296,586           6,088          8.32
    Total loans, net of
     unearned income              3,257,507          85,232         10.61
    Total interest-earning
     assets                       5,010,105         106,293          8.60
    Cash and due from banks         277,025
    Allowance for loan losses       (43,611)
    Goodwill                         21,296
    Other assets (3)                457,653
    Total assets                 $5,722,468

    Funding sources:
    Interest-bearing
     liabilities:
      NOW deposits                  $37,275             $36          0.39 %
      Regular money market
       deposits                     167,973             395          0.95
      Bonus money market
       deposits                     515,162           1,061          0.84
      Time deposits                 312,646             696          0.90
      Foreign sweep deposits              -               -             -
    Total interest-bearing
     deposits                     1,033,056           2,188          0.86
      Short-term borrowings         548,829           7,295          5.39
      Contingently convertible
       debt                         148,560             232          0.63
      Junior subordinated
       debentures                    51,158             841          6.67
      Senior and
       subordinated notes                 -               -             -
      Other long-term debt          152,669           2,046          5.44
    Total interest-bearing
     liabilities                  1,934,272          12,602          2.64
    Portion of noninterest
     -bearing funding sources     3,075,833
    Total funding sources         5,010,105          12,602          1.02

    Noninterest-bearing
     funding sources:
      Demand deposits             2,817,960
      Other liabilities             152,129
      Minority interest in
       capital of consolidated
       affiliates                   171,282
      Stockholders' equity          646,825
      Portion used to fund
       interest-earning
       assets                    (3,075,833)
    Total liabilities, minority
     interest and stockholders'
     equity                      $5,722,468
    Net interest income and
     margin                                         $93,691          7.58 %
    Total deposits               $3,851,016
    Average stockholders'
     equity as a percentage
     of average assets                                              11.30 %

    (1)  Includes average interest-bearing deposits in other financial
         institutions of $82.9 million, $59.4 million and $41.8 million for
         the quarters ended March 31, 2008, December 31, 2007 and March 31,
         2007, respectively.
    (2)  Interest income on non-taxable investments is presented on a fully
         tax-equivalent basis using the federal statutory income tax rate of
         35.0 percent. The tax equivalent adjustments were $0.5 million, $0.3
         million and $0.3 million for the quarters ended March 31, 2008,
         December 31, 2007, and March 31, 2007, respectively.
    (3)  Average investment securities of $345.2 million, $303.0 million and
         $211.0 million for the quarters ended March 31, 2008, December 31,
         2007 and March 31, 2007, respectively, were classified as other
         assets as they were noninterest-earning assets.



    Gains on Derivative Instruments, Net

                                          Three months ended
                                                               % Change
    (Dollars in thousands)     March    December   March   December     March
                             31, 2008  31, 2007  31, 2007  31, 2007   31, 2007
    (Losses) gains on
     foreign exchange
     forward contracts,
     net (1)                  $(2,363)    $577    $892    (509.5)%    (364.9)%

    Change in fair value of
     interest rate swap (2)      (493)    (418)   (341)     17.9        44.6

    Equity warrant assets:
      Gains on exercise, net    4,516    7,136   2,983     (36.7)       51.4
      Change in fair value (3):
        Cancellations
         and expirations         (457)    (662)   (747)    (31.0)      (38.8)
        Other changes
         in fair value          1,396    1,788    (814)    (21.9)     (271.5)
    Total net gains
     on equity
     warrant assets (4)         5,455    8,262   1,422     (34.0)      283.6

    Total gains on
     derivative
     instruments, net          $2,599   $8,421  $1,973     (69.1)%      31.7 %

    (1)  Represents the change in the fair value of foreign exchange forward
         contracts executed on behalf of clients and contracts with
         correspondent banks to economically reduce our foreign exchange
         exposure risk related to certain foreign currency denominated loans.
    (2)  Represents the change in the fair value of the hedging relationship
         from the interest rate swap agreement related to our junior
         subordinated debentures.
    (3)  At March 31, 2008, we held warrants in 1,188 companies, compared to
         1,179 companies at December 31, 2007 and 1,232 companies at March 31,
         2007.
    (4)  Includes net gains on equity warrant assets held by consolidated
         investment affiliates. Relevant amounts attributable to minority
         interests are reflected in the interim consolidated statements of
         income under the caption "Minority Interest in Net Loss (Income) of
         Consolidated Affiliates".


    Minority Interest in Net (Loss) Income of Consolidated Affiliates


Included in net income is income/expense that is attributable to minority interests. As part of our funds management business, we recognize the entire income or loss from funds where we own significantly less than 100%. We are required under GAAP to consolidate 100% of the results of the funds that we are deemed to control. Similarly, we are required under GAAP to consolidate the results of eProsper, of which we own 65%. The relevant amounts attributable to investors other than us are reflected under "Minority Interest in Net Income of Consolidated Affiliates". Our net income includes only the portion of income or loss that is attributable to our ownership interest. The tables below present, as non-GAAP financial measures, our net income of consolidated affiliates, noninterest income, net gains on investment securities, net gains on derivative instruments, and noninterest expense, all of which exclude minority interest. We believe these non-GAAP financial measures provide investors with an enhanced understanding of certain income, gains and expenses that are attributable to our ownership interest.




                                                 Three months ended
                                            March 31,  December 31,  March 31,
    (Dollars in thousands)                     2008        2007         2007
    Net interest income (1)                     $257       $251         $420
    Noninterest income (1)                      (975)     4,509       11,256
    Noninterest expense (1)                   (2,759)    (2,492)      (2,255)
    Carried interest (2)                        (741)      (311)         935

    Total minority interest in
     net (loss) income of
     consolidated affiliates                 $(4,218)    $1,957     $10,356

    (1)  Represents minority interest share in net interest income,
         noninterest income, and noninterest expense of consolidated
         affiliates.
    (2)  Represents the preferred allocation of income earned primarily by the
         General Partner managing one of our consolidated funds.



    Summary of Non-GAAP Noninterest Income, Net of Minority Interest


                                                   Three months ended
    Non-GAAP noninterest income, net of
     minority interest                       March 31,  December 31, March 31,
    (Dollars in thousands)                     2008        2007        2007

    GAAP noninterest income                  $41,565     $53,189     $47,461
    Less: losses (income) amounts
     attributable to minority interests,
     including carried interest                1,716      (4,198)    (12,191)
    Non-GAAP noninterest income, net of
     minority interest                       $43,281     $48,991     $35,270



Summary of Non-GAAP Net Gains on Investment Securities, Net of Minority Interest



                                                   Three months ended
    Non-GAAP net gains on investment
     securities, net of minority                        December
     interest                                March 31,     31,      March 31,
    (Dollars in thousands)                     2008       2007        2007

    GAAP net (losses) gains on investment
     securities                              $(6,112)    $6,113     $12,251
    Less: losses (income) amounts
     attributable to minority interests,
     including carried interest                1,899     (3,947)    (10,822)
    Non-GAAP net gains on investment
     securities, net of minority
     interest                                $(4,213)    $2,166      $1,429




Summary of Non-GAAP Net Gains on Derivative Instruments, Net of Minority Interest



                                                  Three months ended
    Non-GAAP net gains on derivative
     instruments, net of minority
     interest                               March 31,  December 31, March 31,
    (Dollars in thousands)                    2008        2007        2007

    GAAP net gains on derivative
     instruments                              $2,599      $8,421      $1,973
    Less: losses (income) amounts
     attributable to minority interests           46         (43)       (590)
    Non-GAAP net gains on derivative
     instruments, net of minority
     interest                                 $2,645      $8,378      $1,383



    Summary of Non-GAAP Noninterest Expense, Net of Minority Interest


                                                   Three months ended
    Non-GAAP noninterest expense, net of
     minority interest                       March 31,  December 31, March 31,
    (Dollars in thousands)                     2008        2007        2007

    GAAP noninterest expense                 $83,437     $83,477     $82,117
    Less: amounts attributable to
     minority interests                       (2,759)     (2,492)     (2,255)
    Non-GAAP noninterest expense, net of
     minority interest                       $80,678     $80,985     $79,862



    Reconciliation of Basic and Diluted Weighted Average Shares Outstanding

                                                  Three months ended
                                          March 31,  December 31,    March 31,
    (Shares in thousands)                     2008        2007         2007
    Weighted average shares outstanding-
     basic                                    32,280      33,044      34,422
    Effect of dilutive securities:
         Stock options                         1,012       1,160       1,328
         Restricted stock awards and
          units                                   73          68          93
         Convertible debt (1)                  1,218       1,466       1,320
    Total effect of dilutive securities        2,303       2,694       2,741
    Weighted average shares outstanding-
     diluted                                  34,583      35,738      37,163

    (1)  The dilutive effect of convertible debt is calculated using the
         treasury stock method based on our average share price.



    Credit Quality

                                             Period end balances at
    (Dollars in thousands)             March 31,    December 31,   March 31,
                                          2008          2007          2007
    Nonperforming loans and assets:
    Total nonperforming loans            $7,606        $7,634       $10,920
    Other real estate owned               1,794         1,908         5,677
    Total nonperforming assets           $9,400        $9,542       $16,597

    Nonperforming loans as a
     percentage of total gross loans       0.17 %        0.18 %        0.32 %
    Nonperforming assets as a
     percentage of total assets            0.14 %        0.14 %        0.28 %

    Allowance for loan losses           $49,636       $47,293       $40,256
       As a percentage of total
        gross loans                        1.13 %        1.13 %        1.19 %
       As a percentage of
        nonperforming loans              652.59 %      619.50 %      368.64 %
    Reserve for unfunded credit
     commitments (1)                    $13,281       $13,446       $13,544
    Total gross loans                 4,377,498     4,178,098     3,381,144
    Total unfunded credit
     commitments                     $4,860,671    $4,938,625    $4,292,120

    (1)  The "Reserve for Unfunded Credit Commitments" is included as a
         component of "Other Liabilities".



    Average Client Investment Funds (1)

                                                 Three months ended
                                            March 31,  December 31,  March 31,
    (Dollars in millions)                     2008        2007         2007
    Client directed investment assets        $12,774     $12,746     $11,886
    Client investment assets under
     management                                6,375       6,202       5,190
    Sweep money market funds                   2,746       2,572       2,392
    Total client investment funds            $21,895     $21,520     $19,468

    (1)  Client Investment Funds invested through SVB Financial Group are
         maintained at third party financial institutions.

Period end total client investment funds were $21.0 billion at March 31, 2008, compared to $22.2 billion at December 31, 2007 and $19.3 billion at March 31, 2007.

SOURCE SVB Financial Group
CONTACT: Meghan O'Leary, Investor Relations of SVB Financial Group,
+1-408-654-6364
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