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SVB Financial Group: Strong Results With a Few Challenges

By Matthew Frankel, CFP® – Apr 25, 2019 at 9:33PM

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SVB Financial Group posted generally strong numbers, but there are a few areas that can be improved on.

SVB Financial Group (SIVB -0.91%) has been growing at a breathtaking pace in recent years. Now that the bank's first-quarter results are out, it appears that the growth story is set to continue. Here's a rundown of the key numbers, what could be improved on, and what to watch going forward.

SVB results: The raw numbers


Q1 2019

Q1 2018

Year-Over-Year Change

Net interest income

$512.9 million

$419.9 million


Noninterest income

$280.4 million

$155.5 million


Net Income

$288.7 million

$195.0 million


Earnings per share




Data source: SVB earnings press release. Chart by author.

Bank vault with door slightly open and light coming from inside.

Image source: Getty Images.

What happened with SVB this quarter?

The headline earnings numbers never tell the full story of how a company is doing. So looking beyond the headlines, here are some of the key points investors need to know about SVB's first quarter. Most of the news was good:

  • Average loan balances grew by 19.2% year over year, and deposits grew by 7.8%.
  • Net interest margin was 3.81% for the quarter. This is a 12 basis-point improvement over the fourth quarter and a 43 basis-point improvement from the first quarter of 2018.
  • Asset quality is very strong, with a net charge-off rate of 0.11%.
  • Total assets grew by nearly 10% year over year, to $57.5 billion.
  • SVB generated a 2.04% return on assets during the quarter, more than double the 1% industry benchmark. The same can be said for SVB's 22.2% return on equity.
  • SVB's book value per share at the end of the quarter was $102.11. This is an increase from $97.29 at the end of 2018 and $83.43 a year ago.

While SVB's results look quite strong all around, there were some areas of concern:

  • Net interest income declined by 0.3% from the fourth quarter, as interest expense on deposit products increased.
  • SVB's efficiency ratio got a bit worse, rising from 43.9% during the fourth quarter to 46.1%. Noninterest expense increased by nearly 19%, and this is likely the reason for it. Even so, an efficiency ratio below 50% puts SVB among the most efficient banks.

What management had to say

SVB Financial Group CEO Greg Becker was mostly pleased with the results, saying, "We delivered strong first quarter results marked by healthy balance sheet growth, stable credit quality, robust core fee income and notable market gains." However, Becker said that the institution experienced higher interest expense, which pressured income and margins. "While net interest income and net interest margin were pressured by strong demand for our interest-bearing deposit products, our liquidity and core business, as well as the health of our clients, remain strong," he said.

Looking forward

So far, it looks like SVB is hitting or exceeding most of its targets for 2019. The bank called for loan balances and net interest income to increase at a "percentage rate in the mid-teens," and the year-over-year results in the first quarter exceed this rate. However, while the bank's 3.81% net interest margin is between 3.8% and 3.9%, as projected, it's certainly on the lower end. And noninterest expense increased by 19% year over year, above the "mid-teens" rate SVB projected.

In short, while SVB is growing impressively, its first-quarter results are somewhat of a mixed bag. Investors will be keeping an eye on expenses and margins going forward. If both improve as the year goes on, 2019 could turn out to be a great one for SVB.

SVB Financial provides credit and banking services to The Motley Fool. Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends SVB Financial Group. The Motley Fool has a disclosure policy.

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