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 deposits.
• Net interest margin (NIM) decreased 6 basis points to 3.26%, reflecting lower asset yields and higher deposit costs.
• Noninterest income decreased 9% to $635 million, driven by declines in fair value adjustments and gains on sales.
• Noninterest expense decreased 2% to $1.49 billion, with lower acquisition-related 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 net interest income.
• Loans grew 1.9% to $38.6 billion, primarily in technology, media, telecommunications, and healthcare.
• Deposits declined 14.5% to $3.0 billion as customers drew down balances.

SVB Commercial

• Net income decreased 8% to $166 million, mainly from lower net interest income.
• Loans grew 1.2% to $37.8 billion, with growth in the global fund banking portfolio offset by declines in investor-dependent loans.
• Deposits increased 1.4% to $37.0 billion, with growth in noninterest-bearing and money market accounts.

Rail

• Net income decreased 29% to $22 million, due to lower gains on equipment sales and net rental income.
• The rail fleet remained highly utilized at 97.0%.

Balance Sheet Analysis

Interest-Earning Assets

• Interest-earning deposits at banks increased 16% to $24.7 billion, providing liquidity.
• Investment securities grew 1% to $44.3 billion, as purchases offset maturities and sales.
• Loans and leases increased 1% to $141.4 billion, driven by growth in commercial and SVB loans.

Interest-Bearing Liabilities

• Total deposits grew 3% to $159.3 billion, with increases in the Direct Bank, Branch Network, and SVB Commercial segments.
• 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.

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 allowance for loan and lease losses (ALLL) increased slightly to $1.68 billion, or 1.19% of total loans.
• The ALLL estimate considers macroeconomic forecasts, with scenarios ranging from $1.42 billion to $2.17 billion.
• Commercial loans are assigned risk ratings based on probability of default and loss given default. Consumer loans are evaluated using credit profiles and payment history.

Other Risks

• The company is assessing the potential impacts of trade policies, tariffs, and economic uncertainty on its business and customers.
• Operational risks, such as cybersecurity, are also closely monitored.
• Capital and liquidity levels are maintained consistent with regulatory expectations and the company’s risk appetite.

Overall, the company’s financial performance in the first quarter of 2025 reflected lower profitability compared to the prior quarter, driven by compression in net interest margin, declines in noninterest income, and higher income tax expense. The company continues to navigate a challenging economic environment while maintaining a strong balance sheet and risk management practices.