Recent Events

Debt Issuances In March 2025, the parent company issued $500 million in 5.231% Fixed-to-Floating Rate Senior Notes due 2031 and $750 million in 6.254% Fixed-to-Fixed Rate Subordinated Notes due 2040.

Termination of the Shared-Loss Agreement with the FDIC In April 2025, the bank terminated its agreement with the FDIC to share losses on certain acquired assets. This eliminated the bank’s reporting requirements and obligations related to the FDIC loss sharing program, as the likelihood of reaching the $5 billion loss threshold was deemed remote.

Share Repurchase Program In July 2024, the company’s board authorized a $3.5 billion share repurchase plan through 2025. During the first quarter of 2025, the company repurchased 302,683 shares for $613 million.

Changes to Reportable Segments The company updated its segment reporting, transferring certain components between the SVB Commercial, General Bank, and Commercial Bank segments. Segment disclosures for 2024 were recast to reflect these changes.

Recent Economic, Industry and Regulatory Developments The Federal Reserve maintained interest rates in early 2025, and the Trump administration’s trade policies continued to create uncertainty. The company is closely monitoring the impact of these developments on its business and customers.

Financial Performance Summary

The company’s net income for the first quarter of 2025 was $483 million, down 31% from the prior quarter. Earnings per diluted share were $34.47, compared to $49.21 in the prior quarter.

Key Highlights:

• Net interest income (NII) decreased 3% to $1.66 billion, mainly due to lower yields on loans and interest-earning deposits.
• Net interest margin (NIM) decreased 6 basis points to 3.26%, reflecting the decline in asset yields.
• Noninterest income decreased 9% to $635 million, driven by lower fair value adjustments and gains on sales.
• Noninterest expense decreased 2% to $1.49 billion, with lower acquisition-related costs and other expenses.
• Provision for credit losses was $154 million, relatively flat compared to the prior quarter.
• Income tax expense increased significantly to $168 million, compared to $36 million in the prior quarter, due to a change in the state tax rate.

Segment Performance

General Bank

• Net income decreased 11% to $253 million, driven by higher personnel costs and provision for credit losses, partially offset by higher net interest income.
• Deposits grew 1.9% to $74.3 billion, mainly in money market accounts.

Commercial Bank

• Net income decreased 51% to $43 million, due to lower noninterest income and higher provision for credit losses.
• Loans grew 1.9% to $38.6 billion, primarily in technology, media, and healthcare industries.

SVB Commercial

• Net income decreased 8% to $166 million, mainly from lower net interest income, partially offset by lower expenses.
• Loans grew 1.2% to $37.8 billion, with growth in the global fund banking portfolio.

Rail

• Net income decreased 29% to $22 million, driven by lower gains on equipment sales and net rental income.
• The rail fleet remained highly utilized at 97%.

Balance Sheet Analysis

Interest-Earning Assets

• Interest-earning deposits at banks increased 16% to $24.7 billion, providing liquidity and funding sources.
• Investment securities grew 1% to $44.3 billion, as the bank continued to deploy excess funds.
• Loans and leases increased 1% to $141.4 billion, with growth in commercial and SVB loan segments.

Interest-Bearing Liabilities

• Total deposits grew 3% to $159.3 billion, driven by growth in the Direct Bank and SVB Commercial segment.
• Uninsured deposits were 36.4% of total deposits, down from 38.3% in the prior quarter.
• Borrowings increased 4% to $38.4 billion, primarily due to the new debt issuances.

Allowance for Loan and Lease Losses (ALLL)

• The ALLL increased slightly to $1.68 billion, representing 1.19% of total loans.
• The increase was due to modest deterioration in the economic forecast and loan growth, partially offset by a shift in portfolio mix.
• Management utilizes multiple economic scenarios to determine the appropriate ALLL, which could range from $1.42 billion to $2.17 billion depending on the weighting of the scenarios.

Risk Management

The company maintains a moderate risk appetite and comprehensive risk management framework overseen by the Board’s Risk Committee. Key risks monitored include:

• Credit risk: The company employs credit rating systems and reviews for both commercial and consumer lending. The ALLL methodology incorporates macroeconomic forecasts and scenario analysis.
• Market risk: The company assesses the potential impacts of interest rate changes, trade policies, and economic conditions on its business.
• Operational risk: Assessments include risks associated with cybersecurity and reliance on third parties.
• Liquidity and capital risk: The company monitors and stress tests its capital and liquidity positions in line with regulatory expectations.

Overall, the company’s financial performance in the first quarter of 2025 reflected the impact of a more challenging operating environment, with lower net interest income, noninterest income, and higher income taxes. However, the company maintained a strong balance sheet with ample liquidity and capital.

Looking ahead, the company will need to navigate the evolving economic and regulatory landscape, including the potential for an economic slowdown, continued trade policy uncertainty, and rising interest rates. Prudent risk management and a diversified business model will be critical to weathering these headwinds and delivering sustainable performance for shareholders.