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SVB Financial Group (SIVB) Misses Q4 EPS by 69c

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January 19, 2023 4:42 PM EST

SVB Financial Group (NASDAQ: SIVB) reported Q4 EPS of $4.62, $0.69 worse than the analyst estimate of $5.31.

Financial Outlook for the Year Ending December 31, 2023 and the First Quarter of 2023
Our outlook for the year ending December 31, 2023 and the first quarter of 2023 is provided below on a GAAP basis, unless otherwise noted. We have provided our current outlook for the expected full year 2023 and first quarter of 2023 results of our significant forecasted activities based on management's assumptions and current expectations. Except for the items noted below, we do not provide an outlook for certain items (such as gains or losses from warrants and investment securities) where the timing or financial impact are particularly uncertain and/or subject to market or other conditions beyond our control (such as the level of IPO, SPAC, M&A or general financing activity), or for potential unusual or non-recurring items. The outlook and the underlying assumptions presented are, by their nature, forward-looking statements and are subject to substantial risks and uncertainties, including risks and uncertainties related to a material deterioration in the overall economy, the COVID-19 pandemic and related government actions, geopolitical instability, and other factors which are discussed below under the section “Forward-Looking Statements.” Actual results may differ. (For additional information about our financial outlook, please refer to Q4 2022 Earnings Slides. See "Additional Information" below.)
For the full year ending December 31, 2023 compared to our full year 2022 and first quarter of 2023 results, we currently expect the following outlook (please note that the outlook below does not include and/or take into account: (i) changes to to interest rates other than expected Federal Reserve rate increases in February and March, (ii) regulatory/policy changes under the current U.S. government administration, or (iii) adverse developments with respect to U.S. or global economic or geopolitical conditions):
Current full year 2023 outlook compared to 2022 results (1)First quarter 2023 expectations (1) (2)
Average loan balancesLow double digits growth$74.0 billion — $76.0 billion
Average deposit balancesMid-single digits decline$171.0 billion — $175.0 billion
Net interest income (3)High teens decline$925 million — $955 million
Net interest margin (3)1.75% — 1.85%1.85% — 1.95%
Net loan charge-offs0.15% — 0.35% of average loans0.15% — 0.35% of average loans
Core fee income (client investment fees, wealth management and trust fees, foreign exchange fees, credit card fees, deposit service charges, lending related fees and letters of credit fees) (4)Low teens growth$325 million — $350 million
SVB Securities revenue (4)$540 million — $590 million$125 million — $150 million
Noninterest expense excluding merger-related charges (5) (6)Low single digits growth$910 million — $940 million
Effective tax rate (7)26% — 28%26% — 28%
(1)Our outlook incorporates changes in interest rates implied by the January 9, 2023 forward curve (implies Fed Funds rate of 4.75% in February and 5.00% in March).
(2)Due to continued market uncertainty, we are including first quarter 2023 expectations to supplement our full year 2023 outlook. We do not regularly provide quarterly expectations but may do so from time to time, as needed.
(3)Our outlook for net interest income and net interest margin is based primarily on management's current forecast of average deposit and loan balances. Such forecasts are subject to change, and actual results may differ, based on market conditions, a material deterioration in the overall economy, COVID-19 pandemic and its effects on the economic and business environments in which we operate, actual prepayment rates, geopolitical instability and other factors described under the section "Forward-Looking Statements" below.
(4)Core fee income and SVB Securities revenue are each non-GAAP measures, which collectively represent noninterest income, but exclude certain line items where performance is typically subject to market or other conditions beyond our control. As we are unable to quantify such line items that would be required to be included in the comparable GAAP financial measure for the future period presented without unreasonable efforts, no reconciliation for the outlook of non-GAAP core fee income and non-GAAP SVB Securities revenue to GAAP noninterest income for fiscal year ending 2022 is included in this release, as we believe such reconciliation would imply a degree of precision that would be confusing or misleading to investors. See "Use of Non-GAAP Financial Measures" at the end of this release for further information regarding the calculation and limitations of this measure. Core fee income does not include SVB Securities revenue. SVB Securities revenue represents investment banking revenue and commissions.
(5)Our outlook for noninterest expense is partly based on management's current forecast of performance-based incentive compensation expenses. Such forecasts are subject to change, and actual results may differ, based on our performance relative to our internal performance targets.
(6)Excludes pre-tax merger-related charges related to the acquisition of Boston Private ($50 million incurred during 2022 with an estimated $5 million to $10 million in the first quarter of 2023 and $10 million to $15 million for 2023).
(7)Our outlook for our effective tax rate is based on management's current assumptions with respect to, among other things, SVB Financial Group's earnings, state income tax levels, tax deductions and estimated performance-based compensation activity and does not include assumptions for potential future tax rate changes.

For earnings history and earnings-related data on SVB Financial Group (SIVB) click here.


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