PUBLIC DISCLOSURE February 22, 2010
COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION
Silicon Valley Bank RSSD #802866
3003 Tasman Drive Santa Clara, California 95054
Federal Reserve Bank of San Francisco 101 Market Street San Francisco, California 94105
NOTE: This document is an evaluation of this institution’s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of this institution. The rating assigned to this institution does not represent an analysis, conclusion or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution.
SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
TABLE OF CONTENTS INSTITUTION RATING ................................................................................................................. 1 Institution’s CRA Rating. ......................................................................................................... 1 Scope of Examination.............................................................................................................. 1 Conclusions ............................................................................................................................... 1 Fair Lending or Other Illegal Credit Practices Review ....................................................... 1 INSTITUTION ................................................................................................................................. 2 Description of Institution .......................................................................................................... 2 Description of Assessment Area............................................................................................ 3 CONCLUSIONS WITH RESPECT TO PERFORMANCE CRITERIA ............................................ 8 Lending Test ............................................................................................................................. 8 Investment Test ...................................................................................................................... 10 Service Test ............................................................................................................................ 11 APPENDICES Appendix A: Glossary of Terms Appendix B: Scope of Examination
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SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
INSTITUTION RATING Institution’s CRA Rating. Silicon Valley Bank is rated satisfactory.
Scope of Examination Silicon Valley Bank (SVB) was evaluated under the Interagency Strategic Plan Community Reinvestment Act (CRA) Examination Procedures. The bank developed a CRA strategic plan that was approved by the Board of Governors of the Federal Reserve System. The plan outlines measurable goals for a satisfactory rating under the lending, investment, and service tests. Annual goals are defined for both 2008 and 2009. No goals were established for an outstanding rating. The bank’s performance under the three tests was evaluated against the strategic plan goals for both 2008 and 2009 to derive the overall rating. The examination also involved discussions with members of the bank’s local communities and bank management as well as a review of relevant information and data to help provide context for the bank’s performance. The previous CRA examination was conducted using the Interagency Large Institutions CRA Examination Procedures, and the sample period for review was January 1, 2005 to December 31, 2006. As a result, this examination also included a review of the bank’s 2007 lending and community development activities to determine if performance was consistent with the goals outlined in the 2008-2009 CRA strategic plan and with the bank’s actual performance in 2008-2009.
Conclusions SVB met or exceeded the requirements for a satisfactory rating for the lending, investment and service tests as measured against its approved CRA strategic plan. Performance in 2007 was consistent with performance in 2008-2009.
Fair Lending or Other Illegal Credit Practices Review The bank is in compliance with the substantive provisions of the anti-discrimination laws and regulations. The fair lending review performed concurrently with this examination did not evidence any type of discriminatory or other illegal lending practices.
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SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
INSTITUTION Description of Institution SVB, headquartered in Santa Clara, California, is a wholly owned subsidiary of SVB Financial Group and had assets totaling $12.2 billion as of December 31, 2009. Established on October 17, 1983, the bank’s strategic focus is to offer diversified loan and depository products and services to the technology, life science, private equity, and premium wine industries and to the venture capital community and corporate clients in each of the above listed industries. SVB currently operates four full-service branches in Santa Clara, Menlo Park, Palo Alto and St. Helena, California. SVB also operates 23 loan production offices (LPOs) situated in 14 states across the continental United States. SVB offers a range of commercial credit facilities, including term loans, commercial construction, asset-based loans, lines of credit, venture fund capital call loans and bridge loans. Additional services such as cash management, investment and international services are available to the bank’s business customers and the bank also offers a limited number of consumer products. Consistent with the bank’s historic focus, commercial loans represent a substantial majority of the loan portfolio, as data from the December 31, 2009, Consolidated Reports of Condition and Income indicate in the table below. EXHIBIT 1
LOANS AND LEASES AS OF DECEMBER 31, 2009 Loan Type Commercial/Industrial & Non-Farm Non-Residential Real Estate All Other Farmland and Agriculture Secured by 1-4 Family Residential Real Estate Consumer Loans & Credit Cards Construction & Land Development Total (Gross)
$ (‘000s)
%
3,199,600 568,628 275,572 241,745 191,172 76,508 4,553,225
70.3 12.5 6.05 5.3 4.2 1.7 100.0
The bank received a satisfactory rating at its previous CRA examination conducted as of August 20, 2007. The impact of the financial crisis on the bank's target markets has resulted in an increase in the bank's total assets and a decrease total lending as businesses conservatively save more of their available funds in deposit accounts and decrease their borrowings in response to economic uncertainty. As a result, the bank faces no legal or financial impediments that would prevent it from helping to meet the credit needs of its assessment areas consistent with its business strategy, size, financial capacity and local economic conditions.
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SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
Description of Assessment Area Since the prior CRA examination, SVB combined the San Francisco Bay Area and the North Bay Area into one assessment area, and expanded it by adding Marin and Contra Costa Counties. The new assessment area includes eight of the nine counties that comprise the San Francisco Bay Area.
The San Francisco-Oakland-Fremont metropolitan statistical area (MSA) encompasses two metropolitan divisions (MDs): The San Francisco-San Mateo-Redwood City MD (San Francisco MD), and the Oakland-Fremont, Hayward MD (Oakland MD). Together these cover Alameda, Contra Costa, Marin, San Francisco, and San Mateo counties. Santa Clara County is included in the San Jose-Sunnyvale-Santa Clara MSA; Napa County is within the Napa MSA; and Sonoma County is within the Santa Rosa-Petaluma MSA (Santa Rosa MSA).
In addition to SVB’s four branches, the bank operates five LPOs within its assessment area; they are located in Palo Alto, Pleasanton, San Francisco, Santa Clara and Santa Rosa. As of June 30, 2009, the bank’s four branches held $7.1 billion in deposits, representing 2.52 percent of the market share in the assessment area, and ranking 9th out of 114 FDIC-insured financial institutions.1 Primary competitors include three large national institutions that collectively held 59.4 percent of the deposit market share.2 In 2008, SVB ranked 37th out of 172 lenders reporting small business loans pursuant to the CRA with a 0.04 percent market share; however, CRA reportable lenders represent only a small portion of the overall market. Given the large number of institutions that operated in this market, competition for lending and deposit products as well as community development loans and investments was significant. Exhibit 2 below presents key demographic and business information obtained from the 2000 Decennial Census and 2008 Dunn & Bradstreet records used to help develop a performance context for the assessment area.
1
Federal Deposit Insurance Corporation, Institution Directory, Summary of Deposits, June 30, 2009; available at http:www2.fdic.gov/sod/ 2 Ibid. 3
SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
EXHIBIT 2
ASSESSMENT AREA DEMOGRAPHICS Income Categories Low-income Moderate-income Middle-income Upper-income Tract not reported Total AA Income Categories Low-income Moderate-income Middle-income Upper-income Tract not reported Total AA Income Categories Low-income Moderate-income Middle-income Upper-income Tract not reported Total AA
Families < Poverty Families by Level as % of Family Income Families by Tract # % # % # % # % 94 7.1 76,142 5.0 17,724 23.3 307,356 20.3 276 20.8 272,819 18.1 29,496 10.8 266,535 17.6 578 43.6 699,975 46.3 29,041 4.1 319,926 21.2 374 28.2 462,441 30.6 9,597 2.1 617,560 40.9 3 0.2 0 0.0 0 0.0 0 0.0 1,325 100.0 1,511,377 100.0 85,858 5.7 1,511,377 100.0 Housing Types by Tract Housing Units by Owner-occupied Rental Vacant Tract # %-tract %-units # % # % 149,433 27,430 2.0 18.4 113,840 76.2 8,163 5.5 457,609 175,842 13.1 38.4 264,526 57.8 17,241 3.8 1,122,658 640,744 47.9 57.1 445,379 39.7 36,535 3.3 688,144 494,983 37.0 71.9 172,827 25.1 20,334 3.0 45 28 0.0 62.2 17 37.8 0 0.0 2,417,889 1,339,027 100.0 55.4 996,589 41.2 82,273 3.4 Businesses by Tract & Revenue Size Total Businesses Less Than or Equal Greater than Revenue Not by Tract to $1 Million $1 Million Reported # % # % # % # % 29,743 9.2 25,529 8.9 3,313 11.8 901 12.9 61,554 19.0 54,017 18.8 5,764 20.5 1,773 25.3 136,588 42.3 122,843 42.6 10,920 38.9 2,825 40.4 95,111 29.4 85,561 29.7 8,056 28.7 1,494 21.3 152 0.0 122 0.0 25 0.1 5 0.1 323,148 100.0 288,072 100.0 28,078 100.0 6,998 100.0 Tract Distribution
Families by Tract Income
Percentage of Total Businesses: 2004 Median Family Income: Santa Clara County San Francisco MD Oakland MD Santa Rosa MSA Napa MSA
2009 HUD Adjusted Median Family Income: Santa Clara County San Francisco MD Oakland MD Santa Rosa MSA Napa MSA
$80,198 $75,188 $68,346 $61,922 $61,203
89.1 8.7 December 2009 Median Housing Value:3 Santa Clara County Contra Costa County San Francisco County San Mateo County Marin County Alameda County Sonoma County Napa County
$102,500 $96,800 $89,300 $80,200 $81,800
December 2009 Unemployment Rate:4 Santa Clara County San Francisco MD Oakland MD Santa Rosa MSA Napa MSA
3
2.2 $475,500 $285,000 $650,000 $570,000 $637,500 $335,000 $329,500 $355,000
11.2% 8.9% 10.9% 10.1% 10.2%
California Association of Realtors®, Trends in California Real Estate, Volume 31, Number 1, January 2010 except for San Mateo and Alameda County data: Volume 31, Number 2, February 2010. 4 Monthly Unemployment Rates, available from www.labormarketinfo.edd.ca.gov/ (accessed on 3/1/2010). 4
SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
The San Francisco Bay Area encompasses five metropolitan statistical areas and nearly 7.4 million people.5 It has an economy of $400 billion and is ranked 18th in the world when compared to national economies.6 The region is at the cutting edge of global technology, and high-tech employment is 9.5 percent of total Bay Area employment.7 Major industries include computers and electronics, telecommunications, bioscience and biotechnology, health services, banking and financial services, business services, visitor and tourism, retail and wholesale trade, and agribusiness and food processing.8 The Bay Area is also home to the highest density of venture capital firms, with 35 percent of total 2006 U.S. venture capital funding invested in local companies.9 In addition, in 2008, 43 percent of all U.S. venture capital was invested in Bay Area companies.10 In 2008-2009, the global economy descended into a deep recession and the Bay Area was critically affected.11 Total Bay Area employment peaked in late 2007,12 but by March 2009 unemployment reached 9.9 percent for the Bay Area, compared with 8.5 percent for the U.S. as a whole.13 In the San Francisco metropolitan area (comprised of the San Francisco-San MateoRedwood City and the Oakland-Fremont-Hayward Metropolitan Divisions, which each make up approximately 50 percent of local area employment) the professional and business services sector experienced the largest employment loss, down 23,000 from January 2009.14 While the Bay Area is home to more Fortune 500 companies than anywhere in the country except New York, it is also home to a large portion of small businesses.15 As noted in Exhibit 2 above, 89.1 percent of the 323,148 businesses in the region had revenues of less than or equal to $1.0 million, making small businesses a major segment of the local economy. These small businesses are particularly vulnerable in what has become the toughest economic climate since the Great Depression, and many small companies are finding that loans remain exceedingly difficult to secure, limiting their ability to expand and hire. As noted by federal bank regulators, total small-business lending fell 1.8 percent between June 30, 2008, and June 30, 2009.16 In 5
Bay Area Economic Forecast 2009-2010, A Report by Beacon Economics and The Bay Area Council Economic Institute, November 2009, page 4. Available at http://www.bayeconfor.org/media/files/pdf/2009BAeconForecastFinalWeb.pdf (accessed February 10, 2010). 6 Bay Area Economic Institute, Sustaining the Bay Area’s Competitiveness in a Globalizing World 2008, page 2. Available at http://www.bayeconfor.org/media/files/pdf/BayAreaProfile2008.pdf (accessed April 5, 2010). 7 Economy.com’s Precis Metro, San Francisco, August 2009 (accessed February 2, 2010). 8 Bay Area Marketing Partnership, “Bay Area Demographics.” Available at http://www.bayareafirst.org/demographics.html (accessed April 5, 2010). 9 Sustaining the Bay Area’s Competitiveness in a Globalizing World 2008, page 4. 10 Grunwald, Michael. (October 26, 2009). The End of California? Dream On! TIME. 11 Managing Recession, A Bay Area Council Economic Institute report, July 2009, page 1. Available at http://www.bayeconfor.org/media/files/pdf/ManagingRecessionFinalWeb.pdf (accessed February 10, 2010). 12 Bay Area Economic Forecast 2009-2010, A Report by Beacon Economics and The Bay Area Council Economic Institute, November 2009, page 7. Available at http://www.bayeconfor.org/media/files/pdf/2009BAeconForecastFinalWeb.pdf (accessed February 10, 2010). 13 Managing Recession, page 1. 14 San Francisco Area Employment: January 2010, Bureau of Labor Statistics, available from http://www.bls.gov/ro9/cessanf.htm (accessed April 5, 2010). 15 Bay Area Council Economic Institute, Key Issues: Business Development. Available at http://www.bayeconfor.org/keybusdev.html ( accessed February 10, 2010). 16 Sloan, Steven. (February 8, 2010). Agencies Urge Loans to Small Businesses. American Banker. 5
SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
addition, according to the Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending Practices, the number of banks that tightened credit standards for small businesses in 2009 reached the highest level in 20 years.17 As a result, there is a serious and critical need for small business credit to support working capital for business start-up and expansion, which is ultimately vital to the health of small businesses as well as the broader local economy. The median home price in the San Francisco Bay Area was $350,000 in May 2009, nearly half the peak median of $665,000 in July 2007.18 The earlier price increase was driven, in part, by the availability of higher-risk mortgage products such as adjustable rate loans, and borrowers’ confidence that increasing mortgage payments could be managed through loan refinancing.19 Home sales began to decline in 2004, however, followed by several years of rising mortgage loan defaults, reduced lending, and ultimately a steep drop in home prices beginning in late 2007.20 The inability of borrowers to refinance during this period also resulted in a rise in foreclosures. By the end of 2007, Bay Area home sales had fallen to the lowest point in 20 years,21 and by mid2009, declines in median single-family home price ranged from 22 percent in San Francisco County to 65 percent in Contra Costa County.22 Overall, homes in the nine-county Bay Area lost $233.1 billion in value in 2008, a 15.7 percent drop from 2007, and $38.1 billion in the first 11 months of 2009, a 3.0 percent drop from 2008.23 Several Bay Area counties saw less significant changes in 2009, however, such as San Francisco County, which lost $197.7 million in value, or only 0.1 percent from 2008, and San Mateo County which was down only 1.3 percent.24 Four of the Bay Area’s metropolitan areas fall into the nation’s top 20 areas ranked by median household income.25 Nevertheless, even before the current housing crisis, the cost of homeownership relative to income was high for Bay Area residents as compared with other areas. Renters spent approximately the same amount in the Bay Area as they do in comparable regions—between 25 and 30 percent of their post-tax income,26 however, home ownership is substantially more expensive. The ratio of the median house price to median income — a standard measure of home affordability — is higher in the Bay Area than it is in New York or Boston.27 In addition, there is a significant shortage of affordable housing in the Bay Area,28 and according to the 6th Annual Demographia International Housing Affordability Survey, San Francisco was ranked as one of two of the least affordable major markets in the U.S.,29 while San 17
Crittendon, Michael. (February 6, 2010). Regulators to Banks: Loan to Small Firms. Wall Street Journal. Perkins, Broderick. (June 30, 2009). The cost of living in a San Francisco Bay Area home. San Francisco Examiner. Available from http://www.examiner.com/x-1303-Real-Estate-News-Examiner~y2009m6d30-Thecost-of-living-in-a-San-Francisco-Bay-Area-home (accessed February 18, 2010). 19 Bay Area Economic Forecast 2009-2010, page 6. 20 Ibid. 21 Ibid. 22 Ibid, page 7. 23 Said, Carolina. (December 9, 2009). Decline in home values levels off. San Francisco Chronicle. Available at http://articles.sfgate.com/2009-12-09/news/17182665_1_home-values-housing-market-real-estate (accessed April 5, 2010). 24 Ibid. 25 Bay Area Economic Forecast 2009-2010, page 12. 26 Sustaining the Bay Area’s Competitiveness in a Globalizing World 2008, page 11. 27 Ibid. 28 Bay Area Economic Forecast 2009-2010, page 9. 29 6th Annual Demographia International Housing Affordability Survey: 2010, page 17. Available from http://www.demographia.com/dhi.pdf (accessed on February 4, 2010). 18
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SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
Jose ranked as one of several severely unaffordable major markets.30 Compounding these concerns, the current economic recession and resulting loss of jobs, homes and wealth have increased homelessness and the need for affordable housing and shelters. In addition, the increased unemployment rate has resulted in significant demands for public assistance and safety net services provided by community-based nonprofit organizations.31 Even before the current recession, more than 440,000 Bay Area households were struggling to make ends meet, according to analysis conducted by United Way of the Bay Area.32 That amounts to 22.1 percent of the households in the Bay Area.33
30
Ibid, page 18 . San Mateo County Comprehensive Annual Financial Report, page iv, June 30, 2009. Available from http://www.co.sanmateo.ca.us/Attachments/controller/Files/CAFR/2009CAFR.pdf (accessed February 8, 2010) 32 Abate, Tom. (December 9, 2009). 20% of families in Bay Area struggling. San Francisco Chronicle. 33 Ibid. 31
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SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
CONCLUSIONS WITH RESPECT TO PERFORMANCE CRITERIA Lending Test SVB’s lending performance in 2008 and 2009 exceeded the CRA strategic plan goals for a satisfactory rating. The following table provides information about the bank’s performance in meeting the lending test goals set forth in the CRA strategic plan. EXHIBIT 3
LENDING TEST STRATEGIC PLAN GOALS FOR A SATISFACTORY RATING AND SVB ACTUAL PERFORMANCE
Strategic Plan Goals and Interim Annual Goals
Actual Performance
$100 million in Community Development Loans
$177.3 million in Community Development Loans
2008
$40-60 million
2008
$102.8 million
2009
$40-60 million
2009
$74.5 million
100 Small Business Loans
305 Small Business Loans
2008
40-60 loans
2008
60
2009
40-60 loans
2009
245
$1 million to a Small Business Loan Pool
$1 million to a Small Business Loan Pool
2008
$100,000 - $500,000
2008
$200,000
2009
$500,000 - $900,000
2009
$800,000
As shown in Exhibit 3, SVB met or exceeded the requirements in both years for a satisfactory rating in each category of its lending goals. In addition, the bank consistently performs as a leader in making a high level of community development loans, which demonstrate excellent responsiveness to community credit needs in its assessment area. Specifically, 21 community development loans were made during the period that were designed to provide construction or permanent financing of more than 1,000 units of affordable housing for low- and moderateincome people. Many of these projects support special needs groups including seniors and physically disabled or formerly homeless individuals. Most of the bank’s community development loans were also complex as they involved the use of low-income housing tax credit subsidies and subsidies provided by the Federal Home Loan Bank under its Affordable Housing Program.
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SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
Some of the more notable projects financed included:
Two loans totaling $5.5 million to provide permanent financing for 80 units of senior housing in Berkeley; 40 units carry Section 8 rental housing assistance.
Two loans totaling $13.7 million for the construction and permanent financing of a mixeduse 61-unit senior project in Oakland for those earning less than 55 percent of area median income. The project includes an in-house social service coordinator who provides general counseling and referral services for residents.
A $4.0 million construction loan for a 78-unit project in Hayward that serves those earning less than 50 percent of area median income; the project includes a computer learning center for residents.
A $15.3 million construction loan for 56 units of transitional housing for formerly homeless adults in San Francisco. Ongoing operation of the project will be provided by the city’s Department of Human Services and Public Health.
A $10.1 million construction loan for 56 units of affordable senior housing in Palo Alto.
A $15.4 million construction loan for a 64-unit project in Healdsburg. The target population for this project is low- and moderate-income families, seniors, people living with physical or development disabilities or mental illness, the formerly homeless and first-time homebuyers.
A $4.7 million construction loan for a 25-unit family rental project in Yountville serving those earning less than 60 percent of area median income. The project includes a community room and office, laundry facilities and a children’s play area.
Three loans totaling $13 million to a non-profit loan consortium that provided financing for 3,500 units of affordable rental housing during the two-year period. These loans provided critically needed liquidity to the loan consortium, as the economy and bank mergers have resulted in membership decline.
Small business loans made during the period include new and renewed small business, business credit card and loans purchased to businesses with gross annual revenue less than or equal to $1 million. According to bank management, the volume of conventional small business loans – i.e., those loans that were not credit card loans – as a portion of overall small business lending decreased in 2009 from 2008, largely due to the effects of the financial crisis and ensuing recession on the bank’s target market of technology and life science companies. SVB provided two loans totaling $1 million loan to Opportunity Fund (formerly Lenders for Community Development), a non-profit certified Community Development Financial Institution that serves small business owners throughout the Bay Area who cannot qualify for traditional bank loans. The Fund provides small business loans in amounts from $1,000 to $100,000. As of December 2009, the Fund had extended 875 loans for over $10.5 million. 9
SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
Although the bank’s CRA strategic plan is based on an evaluation of 2008-2009 performance, lending performance was also reviewed for 2007. In 2007 the bank originated nine community development loans for $84.3 million and 63 small business loans. A prior loan to Opportunity Fund was repaid on December 31, 2006; no loans were made to the Fund in 2007. This performance is generally consistent with the bank’s performance in 2008-2009 and with the strategic plan goals for a satisfactory rating.
Investment Test SVB’s investment performance in 2008 and 2009 exceeded the CRA strategic plan goals for a satisfactory rating. The following table provides information about the bank’s performance in meeting the investment test goals set forth in the CRA strategic plan. EXHIBIT 4
INVESTMENT TEST STRATEGIC PLAN GOALS FOR A SATISFACTORY RATING AND SVB ACTUAL PERFORMANCE Strategic Plan Goals and Interim Annual Goals
Actual Performance
$18 million in Community Development Investments
$34.3 million in Community Development Investments
2008
$5 - $9 million
2008
$7.9 million
2009
$9 - $13 million
2009
$26.4 million
$450,000 in Grants and Donations
$574,604 in Grants and Donations
2008
$225,000
2008
$261,285
2009
$225,000
2009
$313,319
The bank provided a significant level of qualified investments and donations in relation to credit and development needs within the bank’s assessment area. Current period investments shown in Exhibit 4 include the purchase of targeted mortgage-backed securities for $20.5 million that support loans to 67 low- and moderate-income borrowers in the bank’s assessment area. Other new investments are $100,000 to capitalize a community loan fund and $526,316 disbursed from a $5 million commitment in a low-income housing tax credit fund. Both of these investments support a broader regional area that includes the bank’s assessment area. The bank also disbursed $13.2 million in low-income housing tax credit investments from commitments originated in prior years. Although not included in the investment test strategic plan goals, SVB continues to hold prior period investments of $19.4 million which consist of low-income housing tax credits, new markets tax credits, Small Business Investment Company investments and investments in two small business venture funds. Unfunded commitments of $6.2 million include low-income housing tax credits and a small business venture fund investment.
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SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
SVB provided 121 qualified donations for $574,604 during the period. Of the total, $463,894 was provided to organizations that directly benefit the assessment area and $110,710 was provided to organizations that serve a broader regional area that includes the bank’s assessment area. More notable community development donations made during the period include:
Two donations for $80,000 to support local charities providing housing, healthcare, education and youth services to low- and moderate-income residents in Napa County.
A total of 43 donations for $92,712 to non-profits that develop, rehabilitate or finance affordable housing and organizations that expand affordable housing opportunities through education, advocacy and coalition building among housing providers, business leaders, nonprofit organizations and government.
Two donations totaling $12,500 to a non-profit small business resource center that provides training, financing and support to low- and- moderate income individuals who wish to start and grow their own small businesses.
Five donations totaling $44,800 to an organization that provides financial education, mentoring and college scholarships to low-income students. Since its formation in June 2006, the organization has helped over 400 students through 14 partner schools and youth programs and expanded its services from East Palo Alto to San Jose, Milpitas, Redwood City, San Francisco, Oakland and San Leandro.
Eight donations totaling $51,500 to two organizations providing entrepreneurship education and mentoring programs to low- and moderate-income high school students.
Four grants totaling $25,950 to non-profit organizations providing food distribution to lowand moderate-income people in Sonoma, Santa Clara and San Mateo Counties. One such organization is the seventh largest food bank in the country and serves 176,000 people monthly; 67 percent are families with children and 12 percent are senior citizens.
In 2007, SVB committed $10 million in two low-income housing tax credit funds. In addition, the bank disbursed $1.8 million from new and prior period investments and provided 36 donations for $164,550 to non-profit organizations serving low- and moderate-income people or small businesses. While performance in 2007 is somewhat below the bank’s strategic plan goals and performance in 2008 and 2009, the total level of investments provided since the prior examination is consistent with a satisfactory rating.
Service Test SVB’s service performance in 2008 and 2009 exceeded the CRA strategic plan goals for a satisfactory rating. The following table provides information about the bank’s performance in meeting the service test goals set forth in the CRA strategic plan. 11
SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
EXHIBIT 5
SERVICE TEST STRATEGIC PLAN GOALS FOR A SATISFACTORY RATING AND SVB ACTUAL PERFORMANCE Strategic Plan Goals and Interim Annual Goals
Actual Performance
1,500 hours of Community Development Services
2,254 hours of Community Development Services
2008
750 hours
2008
989 hours
2009
750 hours
2009
1,265 hours
SVB provided a high level of community development services that addressed a variety of community development needs within its assessment areas. Bank employees provided qualified services to non-profit organizations and professional associations that helped promote affordable housing, economic development, revitalization and stabilization of low- and moderate-income areas, and provide community services targeted to low- and moderate-income individuals in the bank’s assessment area. In addition, 48 hours of service was provided to organizations serving a broader statewide or regional area, such as service on the board of directors of the California Community Reinvestment Corporation, a multi-bank loan consortium. The level and impact of qualified services provided during the period is significant considering the bank’s capacity and community needs. Notable community development services included a training session sponsored by the bank for non-profit housing developers with guest speakers representing national affordable housing initiatives, and technical assistance provided to non-profit community development organizations in obtaining grants of $17.7 million for affordable housing. Other activities included active participation in loan committees and on boards of affordable housing organizations, loan servicing for a non-profit loan fund, and presentations to business leaders on the low-income housing tax credit program. The bank provided 841 hours of community development service in 2007 which is consistent with the bank’s performance in 2008-2009 and with the strategic plan goals for a satisfactory rating.
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SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
APPENDIX A GLOSSARY OF TERMS Aggregate lending: The number of loans originated and purchased by all reporting lenders in specified income categories as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area. Census tract: A small subdivision of metropolitan and other densely populated counties. Census tract boundaries do not cross county lines; however, they may cross the boundaries of metropolitan statistical areas. Census tracts usually have between 2,500 and 8,000 persons, and their physical size varies widely depending upon population density. Census tracts are designed to be homogeneous with respect to population characteristics, economic status, and living conditions to allow for statistical comparisons. Community development: All Agencies have adopted the following language. Affordable housing (including multifamily rental housing) for low- or moderate-income individuals; community services targeted to low- or moderate-income individuals; activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration’s Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less; or, activities that revitalize or stabilize low- or moderate-income geographies. Effective September 1, 2005, the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have adopted the following additional language as part of the revitalize or stabilize definition of community development. Activities that revitalize or stabilize: (i) Low-or moderate-income geographies; (ii) Designated disaster areas; or (iii) Distressed or underserved nonmetropolitan middle-income geographies designated by the Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, based on: a. Rates of poverty, unemployment, and population loss; or b. Population size, density, and dispersion. Activities that revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals. Consumer loan(s): A loan(s) to one or more individuals for household, family, or other personal expenditures. A consumer loan does not include a home mortgage, small business, or small farm loan. This definition includes the following categories: motor vehicle loans, credit card loans, home equity loans, other secured consumer loans, and other unsecured consumer loans.
A-1
SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
Family: Includes a householder and one or more other persons living in the same household who are related to the householder by birth, marriage, or adoption. The number of family households always equals the number of families; however, a family household may also include non-relatives living with the family. Families are classified by type as either a married-couple family or other family, which is further classified into ‘male householder’ (a family with a male householder and no wife present) or ‘female householder’ (a family with a female householder and no husband present). Full-scope review: Performance under the lending, investment, and service tests is analyzed considering performance context, quantitative factors (for example, geographic distribution, borrower distribution, and total number and dollar amount of investments), and qualitative factors (for example, responsiveness). Geography: A census tract delineated by the United States Bureau of the Census in the most recent decennial census. Home Mortgage Disclosure Act (HMDA): The statute that requires certain mortgage lenders that do business or have banking offices in a metropolitan statistical area to file annual summary reports of their mortgage lending activity. The reports include such data as the race, gender, and the income of applications, the amount of loan requested, and the disposition of the application (for example, approved, denied, and withdrawn). Home mortgage loans: Includes home purchase and home improvement loans as defined in the HMDA regulation. This definition also includes multifamily (five or more families) dwelling loans, loans for the purchase of manufactured homes and refinancings of home improvement and home purchase loans. Household: Includes all persons occupying a housing unit. Persons not living in households are classified as living in group quarters. In 100 percent tabulations, the count of households always equals the count of occupied housing units. Limited-scope review: Performance under the lending, investment, and service tests is analyzed using only quantitative factors (for example, geographic distribution, borrower distribution, total number and dollar amount of investments, and branch distribution). Low-income: Individual income that is less than 50 percent of the area median income, or a median family income that is less than 50 percent, in the case of a geography. Market share: The number of loans originated and purchased by the institution as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area. Metropolitan area (MA): A metropolitan statistical area (MSA) or a metropolitan division (MD) as defined by the Office of Management and Budget. A MSA is a core area containing at least one urbanized area of 50,000 or more inhabitants, together with adjacent communities having a high degree of economic and social integration with that core. A MD is a division of a MSA based on specific criteria including commuting patterns. Only a MSA that has a population of at least 2.5 million may be divided into MDs. A-2
SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
Middle-income: Individual income that is at least 80 percent and less than 120 percent of the area median income, or a median family income that is at least 80 percent and less than 120 percent, in the case of a geography. Moderate-income: Individual income that is at least 50 percent and less than 80 percent of the area median income, or a median family income that is at least 50 percent and less than 80 percent, in the case of a geography. Multifamily: Refers to a residential structure that contains five or more units. Other products: Includes any unreported optional category of loans for which the institution collects and maintains data for consideration during a CRA examination. Examples of such activity include consumer loans and other loan data an institution may provide concerning its lending performance. Owner-occupied units: Includes units occupied by the owner or co-owner, even if the unit has not been fully paid for or is mortgaged. Qualified investment: A qualified investment is defined as any lawful investment, deposit, membership share, or grant that has as its primary purpose community development. Rated area: A rated area is a state or multistate metropolitan area. For an institution with domestic branches in only one state, the institution’s CRA rating would be the state rating. If an institution maintains domestic branches in more than one state, the institution will receive a rating for each state in which those branches are located. If an institution maintains domestic branches in two or more states within a multistate metropolitan area, the institution will receive a rating for the multistate metropolitan area. Small loan(s) to business(es): A loan included in 'loans to small businesses' as defined in the Consolidated Report of Condition and Income (Call Report) and the Thrift Financial Reporting (TFR) instructions. These loans have original amounts of $1 million or less and typically are either secured by nonfarm or nonresidential real estate or are classified as commercial and industrial loans. However, thrift institutions may also exercise the option to report loans secured by nonfarm residential real estate as "small business loans" if the loans are reported on the TFR as nonmortgage, commercial loans. Small loan(s) to farm(s): A loan included in ‘loans to small farms’ as defined in the instructions for preparation of the Consolidated Report of Condition and Income (Call Report). These loans have original amounts of $500,000 or less and are either secured by farmland, or are classified as loans to finance agricultural production and other loans to farmers. Upper-income: Individual income that is more than 120 percent of the area median income, or a median family income that is more than 120 percent, in the case of a geography.
A-3
SILICON VALLEY BANK Santa Clara, California
CRA Public Evaluation February 22, 2010
APPENDIX B SCOPE OF EXAMINATION Please refer to page 1 of this report for a discussion of the examination scope. The following chart is a supplement to that discussion and serves to illustrate the scope of the various states and assessment areas. SCOPE OF EXAMINATION TIME PERIOD REVIEWED
January 1, 2008 – December 31, 2009
FINANCIAL INSTITUTION
PRODUCTS REVIEWED
Silicon Valley Bank, Santa Clara, CA
Small Business Community Development Loans Community Development Investments Community Development Services
AFFILIATE
AFFILIATE RELATIONSHIP
PRODUCTS REVIEWED
SVB Financial Group, Santa Clara, CA
Holding Company
Community Development Investments
LIST OF ASSESSMENT AREAS AND TYPE OF EXAMINATION Assessment Area
Type of Examination
Branches Visited
Full-scope review
1
SAN FRANCISCO BAY AREA
San Jose-San Francisco-Oakland, California Combined Statistical Area (CSA) consisting of the contiguous counties of Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara and Sonoma.
B-1
Other Information
