SVB's profits jump on stronger venture lending, wider margins

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Profits soared at SVB Financial Group in Santa Clara, Calif., thanks to a a 17% boost to margins and solid growth in loans to the tech industry.

The $50.8 billion-asset holding company for Silicon Valley Bank said Thursday that it earned $117.2 million, or 18% more than a year earlier. Earnings per share were $2.19, or 34 cents short of the estimate compiled by FactSet Research Systems.

CEO Greg Becker, in a news release, predicted additional “tailwinds” in the year ahead from a mix of higher interest rates, lower taxes and “the potential for some regulatory relief.”

Net interest income climbed 33% to $393.7 million. The net interest margin jumped 47 basis points to 3.20%. Total loans climbed 16% to $22.9 billion, boosted by stronger lending to software, venture capital and private-equity firms.

Noninterest income jumped 34% to $152.3 million, on higher client investment fees, as well as a spike in gains on investment securities and equity warrant assets.

SVB holds approximately 1.7 million shares of Roku, and recognized a total gain of $10.3 million during the quarter on its investment. Roku went public on Sept. 28. Since then, shares of the company have increased 41% to $44.10.

As of Dec. 31, SVB held warrants in 1,868 companies with a total fair value of $123.8 million. Gains from valuation changes in that portfolio are currently unrealized.

Noninterest expenses rose 12% to $264 million, largely on higher compensation costs.

Separately, SVB recorded a one-time, $37.6 million expense tied to the revaluation of its deferred-tax asset, following the enactment of the tax law.

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