SVB Financial Group Q4 2022 Earnings Call Transcript

Participants

Corporate Executives

• Meghan O'Leary, Head of Investor Relations
• Greg Becker, President and Chief Executive Officer
• Mike Descheneaux, President, Silicon Valley Bank
• Daniel Beck, Chief Financial Officer
• Marc Cadieux, Chief Credit Officer

Analysts

• Ebrahim Poonawala, Bank of America Co.
• Casey Haire, Jefferies Financial Group Inc.
• Steven Alexopoulos, JPMorgan Chase & Co.
• Brody Preston, UBS Group AG
• Jared Shaw, Wells Fargo & Company
• Bill Carcache, Wolfe Research
• John Pancari, Evercore ISI
• Jennifer Demba, Truist Securities
• Chris Kotowski, Oppenheimer Holdings Inc.
• Andrew Liesch, Piper Sandler Companies
• David Smith, Autonomous Research
• Christopher McGratty, KBW

Presentation

[Operator]

Good day. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to SVB Financial Group Q4 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. Meghan O'Leary, Head of Investor Relations, you may begin your conference.

[Meghan O'Leary, Head of Investor Relations at SVB Financial Group]

Thank you, Emma, and thank you, everyone, for joining us today. Our President and CEO, Greg Becker; and our CFO, Dan Beck are here to talk about our fourth quarter and full year 2022 financial results, and our 2023 outlook and will be joined by other members of our management team for the Q&A. Our current earnings release, highlight slides, and CEO letter have been filed with the SEC and are available on the Investor Relations section of our website.

We will be making forward-looking statements during this call and actual results may differ materially. We encourage you to review the disclaimer in our earnings release dealing with forward-looking information, which applies equally to statements made in this call. In addition, some of our discussion may include references to non-GAAP financial measures. Information about those measures, including reconciliation to GAAP measures may be found in our SEC filings and in our earnings release. And now I will turn the call over to our President and CEO, Greg Becker.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Great. Thanks, Meghan and thanks everyone for joining us today. Before we go into questions, I just want to briefly comment on kind of our business and the market environment. First, I think it's important to set kind of context we continue to see strength and momentum in our business despite the broader market backdrop, which I'll talk about in a minute. We had healthy loan growth across the board driven by global funds, banking technology, and private banking, mortgage lending. We had record core fee income from improved client investment fee margins.

We saw healthy investment banking revenue driven by a foreign pharma deal activity, which was great to see. And we had more balanced in client fund flows as client cash burn in the pace of VC investment declined showed signs of moderation, which was obviously very important and welcomed. And we saw continued strong new client acquisition of approximately 1,600 clients in the quarter, which is higher than pre-COVID levels, which is notable. And credit remains solid, although our provision reflects higher net charge-offs and non-performing loans as well as our expectations for deteriorating economic conditions.

Now, the markets are still challenging, we admit that and they're likely to remain so throughout 2023. We don't expect any dramatic change from where we are right now. And in fact, even a little bit more pressure in the first couple quarters. So in other words, again, not expecting a dramatic improvement. Global market volatility is significantly reduced private and public investment. In public there's almost, there's a longest time that window has been effectively shut. And we don't really expect that to change until maybe put a big maybe in the latter half of the year. And there's still a lot of uncertainty over the direction of rates and inflation in the broader economy and we hear about it pretty much every day in the news and on media.

So what does it mean for us for '23? We expect these conditions will continue to put pressure on our growth in the first half of '23 with net interest income pressure, somewhat higher provision, although we still expect credit performance will remain good overall, and other headwinds that are kind of come on a daily basis. But in the second half, we expect continued momentum and balance between venture investment and cash burn. And it doesn't as important -- and it doesn't take much of improvement. In fact, no real improvement for where we are on the deployment of dollars. It's more about the cash burn which we again continue to -- continue to believe is going to be a pullback.

We expect the shift towards interest bearing deposits to stabilize and could see an inflection point in net interest income and NIM in the second half of the year. We believe that shift combined with progressive pay downs in our investment securities portfolio again roughly 3 billion a quarter, will provide meaningful revenue tailwinds that build throughout the year and we have enough visibility at this point to provide full year 2023 outlook despite the market uncertainty and those details during our Q4 '22 earnings deck filed earlier today.

We're prepared if those things don't improve, again, which is important. And even if the market challenges are prolonged or get worse, it's important to note we have a high quality, very liquid balance sheet which I know there'll be lots of questions about strong capital levels. A seasoned management team which we experienced navigating challenging markets and adding a lot of new people with deep experience as well. And a consistent focus on our long-term business strategy. So when you put all that together, we feel clearly better about the outlook than we did last quarter where there was more uncertainty and we certainly believe that the innovation economy is the best place to be and even if we're in this prolonged period of time, for longer, or even a little bit deeper or deeper we know we're going to weather that fine. So with that, I'm going to turn it back to the operator to open up to questions.

Questions and Answers

[Operator]

Thank you. [Operator Instructions]. Your first question today comes from the line of Ebrahim Poonawala with Bank of America. Your line is now open.

[Ebrahim Poonawala, Analyst at Bank of America]

Thank you. Good afternoon.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Hi, Ebrahim.

[Ebrahim Poonawala, Analyst at Bank of America]

Hi, Greg. So I guess, I mean, think it was good to see the 2023 guidance and just wanted to follow up on what you just mentioned around having enough visibility to provide that guidance. It sounds like you're feeling better today. And you look at the slide 10 in terms of the client fund, outflows obviously, cut in half quarter-over-quarter. If you don't mind, just give us a sense of this customer conversations that you are having with clients. What's added to the visibility today versus three months ago? And I understand all the things that can go wrong, I think, but what are you seeing in terms of green shoots of improvement? Would love to start there.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes, I'll start. And I'm sure that Mike will want to add even more color to my comments. Ebrahim, here's how I think about where the clarity is coming from is a couple places. One is, I would say, we were hoping we would have had seen more of this in the third quarter. And that's where I would say we're disappointed. And that's why we didn't give guidance, because it kind of didn't fit with what our expectations were and what we were hearing, which was the following. Companies realized that it's hard to raise money, the level of venture capital deployment is coming down. And we expected a more dramatic decrease in burn rates, that really didn't happen in Q3.

We saw clearly much more of that in Q4. And I think you're going to see more of it in Q1 and you will hear about it, because when you're having conversations with companies, they're talking about, gosh, we hired a bunch in the last couple years. And now we're going to pull back on some of that. So we're going to cut back 10%, 15%, 20%, or whatever that is. And we're going to look to cut costs in other areas. And only reason I don't think it happened as quickly as we thought it was going to, is that companies had a lot more cash than they had in other cycles. And so that was just a prolonged period. So we know that venture capital declined pretty significantly in the third quarter, continued in the fourth quarter. But again, what our expectations are, is that you're actually going to see a little bit more of a decline in the first two quarters, and then start to see a little bit of improvement in the second half year.

So our forecast isn't a rosier Q1 and Q2 with higher levels of venture capital deployment, in fact, it's the opposite, a little bit more of a decline. And then you're going to see, again, this continuation of client burn or cash burn pullback. So that's the narrative that all -- when we talk to clients, and again, not all clients are the same, as you know, we have some that are still spending more money. They're raising money still. And that's going to happen, but that narrative is shaping our outlook in the first kind of two periods first half versus the second half. So Mike, turn it over to you to add any color to that.

[Mike Descheneaux, President, Silicon Valley Bank at SVB Financial Group]

Sure. Great. Thanks a lot Greg. Ebrahim, there's a few data points, I think where investors are going to start to get even more clarity, right. When we think about inflation reports and whether or not the rising rates are having an impact on inflation. We just had a January 12 report, and we had the February 14 inflation report coming up. So we're starting to see that rates are starting to have an impact on inflation. I think that's really important for investors looking for clarity what's happening, the COVID impact of the zero COVID policy in China. We're starting to see that go through China and we'll know here end of January or February about whether or not that actually is gone through and then supply chains can start to come out, again, having impact on inflation. The energy impact in Europe, we're going to get to that and see some more data points about the impact of inflation. But perhaps most importantly, is the valuations, right? I think you have the auditors that are in at the various companies here that are looking at the valuations. And you're going to start with these audit reports that start to come up. And there'll be some valuation adjustments between the companies who have been holding off in terms of readjusting the valuation. So I think that's really helpful.

And so right now, obviously, the investors are still holding off on investments. They're slowing the pace but there's still a lot of good companies out there. There's still a lot of opportunities. They're still investing in early stage. But they have to prioritize their investments here. And they know they're probably going to have to hold on to these investments a little bit longer than anticipated, because there's just not a whole lot of exits as you know. There's just no IPOs, there's not a whole lot going on out there. But again, I think, there's obviously a lot of dry powder, I think that's very helpful. Now, when you shift to the lens of the entrepreneur, as Greg mentioned, they have had a lot of cash. They've been sitting on that, but we are starting to see where they are resetting their spin levels, right.

The layoffs, you're starting to see that in news, which there's the good news and the bad news. Obviously, the bad news is the layoff. But the good news is, they're really starting to focus on their cash burn, because they know they need to hold on to their cash for a lot longer. Advertising spends have been coming down over the last several months. And so that's been a big thing that we're seeing here. So they're all getting back to focusing on client acquisition costs and profitability. So again, growth or just for growth sake is no longer the thing to do. So economics do absolutely matter. So they've been very, I would say, very focused on valuations, they've been holding off in terms of taking more investments, but eventually the cash starts to run out, eventually, they start to reset their expectations on valuations. And so we believe we're starting to see some of that breaks through. And again, I think over the next couple of months, I think that's when you would start to see as Greg describing a little bit more stabilization there, and perhaps as a platform here for the second half of the year to start to see some of those shoots that you were talking about.

[Ebrahim Poonawala, Analyst at Bank of America]

Understood. And I guess maybe a separate question for Dan. When we think about, from a balance sheet management perspective, on the asset side, available for sale securities, about $25 billion, $26 billion. Give us a sense, is there any view of like pulling forward some of those maturities and locking in higher interest rates today, given one, the COVID is already inverted? Who knows where it might be six months from now? Just give us a thought process around any piecemeal restructuring of the AFS book that we should think about?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes, Abraham. Good question. In the quarter, for example, we did billion dollars sale out of the Treasury portfolio for AFS to be very clear. And the rationale behind that is, we look at the payback period on that sale was roughly nine months. So that's really the way for us to look at, from a tangible book value perspective, that payback period and opportunity. So I wouldn't say there's any desire for a wholesale change in the available for sale portfolio. But periodically with an opportunistic lens on payback period, we can do these small sales that you know to some degree can be offset by warrant gains and things along those lines. So thinking about it from a tangible book value perspective, but at the same time, looking opportunistically at payback period.

[Ebrahim Poonawala, Analyst at Bank of America]

Got it. Thanks for taking my questions.

[Operator]

Your next question comes from the line of Casey Haire with Jefferies. Your line is now open.

[Casey Haire, Analyst at Jefferies Financial Group]

Thanks, good evening everyone. Couple of questions on Slide 12. First off, so the non-interest-bearing mix, high 30s by fourth quarter '23. That's obviously very difficult to sort of handicap. Just what's giving you confidence around that number?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes, Casey, it's Dan, I'll start. Mike might want to add as well. There are two things that we're looking at that give us a little bit more confidence on where that non-interest-bearing mix is going to bottom-out. First and foremost, the teams have spent a lot more time getting into the detail across our different segments on where operating dollars lie versus excess dollars in these deposit accounts. So exactly how much from a deposit perspective is available to be transferred. Now that analysis is never perfect but allows us to start to get a sense of where we think that non-interest-bearing piece is going to lie.

And then secondly, when we take a big step back, we've talked about this before. And when we look at the total client funds of the company, and you start to think about non-interest-bearing bottoming out in the high 30% range. And looking at the fact that total client funds is close to the $340 billion range, that high 30s is really when you compare it to other banks that don't have off balance sheet in that, mid-teens to high-teens range, which we think no route relative to our historical experience is a bottom and is a low. So we've got the individual assessment that we've done plus just our historical experience, on where that would bottom-out, in comparison to peer banks. Now, it's not perfect for sure. And we're encouraged by the slowdown and the pace of that change here in the fourth quarter. And we expect that to continue throughout 2023.

[Casey Haire, Analyst at Jefferies Financial Group]

Very good, thank you. And then in the letter you guys talk about, you don't need to see VC deployment return to 2021 levels, which were obviously very strong. Can you provide some color as to why that is? Because that comes up a lot, because that was such obviously a monster year for deposits. And it's obviously flowing out now. And so it makes sense, the push back that it's going to be very hard to replace what was a banner year?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes, Casey. I'll just go to the results of the fourth quarter as an indicator of why that statement makes sense. We're looking at venture deployment in the quarter, 35 billion or so think of that is kind of an annualized runrate 120 billion to 140 billion venture deployment in the quarter, from a balance sheet perspective on balance sheet. While we did see the decline in deposits, it was much lower than what we saw in the third quarter. And the reason for that gets to what Greg mentioned, as well as Mike, where we're seeing that lower level of cash burn. So even on a much slower venture deployment number, call it in the mid $30 billion range, we started to see that on balance sheet deposit when we look at cash burn versus the inflows get to a much more normalized level. So that I think is an indicator with cash burn continuing to slow based on what Mike and Greg just said, that we can get back without going to the 2021 deployment level, to not just deposit being at the same level, but the potential for deposit growth.

[Casey Haire, Analyst at Jefferies Financial Group]

Got you. Okay. Just last one for me, the premium amortization that you guys talked about for the first quarter here, you have it down a little bit. But it's predicated on a 375 tenure, which is, tenure, obviously a little bit lower today. With incremental pressure on that number, if the tenure finishes 50 bps lower, can you just provide some color on the premium amortization because this does create a lot of, I think confusion.

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes. So we would still anticipate the premium amortization to decline here in the first quarter. And the reason for that is that mortgage spreads continue to come in. Now, after the first quarter, to the extent that we continue to see the tenure come down, we do have the sensitivity to an increase in premium amortization from that quarter, but just from the fourth quarter to the first quarter, consider that it's going to continue to come down just because of the decrease in mortgage spreads in the quarter.

[Casey Haire, Analyst at Jefferies Financial Group]

Okay. Thank you.

[Operator]

Your next question comes from the line of Steven Alexopoulos with JPMorgan. Your line is now open.

[Steven Alexopoulos, Analyst at JPMorgan Chase & Co.]

Hi, everyone.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Hi, Steve.

[Steven Alexopoulos, Analyst at JPMorgan Chase & Co.]

So to follow up with the pace of cash burn now slowing, has the amount of cash on hand and the burn levels are those both what you guys would consider a normal level right now or those each still elevated?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes. It's Greg. I'll start. Trying to say what normal is, is really difficult for a variety of different ways. When you go back and the one thing you go back, five or six, seven years and try to say well, is that more of a normal period? Our portfolio, we have a lot more mature companies in the portfolio. So you going to think about they tend to keep a lot more cash. And so we don't have quite the same level of experience. I think towards the end of this year, my sense is like, we're going to get more to what I'll call more of a normal cash balance level, because you're going to see the cash burn rates are still be elevated from the first half, they're going to be reducing, but they'll still be higher. And so we'll get to this more I'll call normal level.

And I think, again, when you get to 24, we expect a modest increase in venture capital deployment. But one more thing that gets factored in is, which has been zero for almost all of '22 and in first part of '23. And most of '23 we don't expect a big impact is private market -- public markets. And, again, this is the longest time that they have hadn't really been any IPOs. And as we spend more time with our late-stage clients, there's many of them that are doing really well. And when that market opens up, that we certainly believe that we're going to be in a really good position to do two things, one, help them go public, number one, and number two, be the beneficiaries of that cash when it comes in. And so all those things are factored in, which makes it, it's just hard to predict exactly how it will, "settle out to a normal level".

[Steven Alexopoulos, Analyst at JPMorgan Chase & Co.]

Okay. That's fair. And I know it's not one-for-one, but very roughly, what type of year would you need from a VC investment level? To get to this 2023 guidance? Like what is this roughly based on?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes. I'll start and Dan or Mike may want to add. I tried to kind of give a little bit of color in my opening comments, but the way to think about it is that we still expect in the first half of '23, that you're going to see kind of a 10% to 20%, roughly decline in venture capital. And then, you're going to kind of pick back up in the -- from those low points in the first half. And pick up that but not a lot. So you're probably looking at, again, if you annualize the fourth quarter, you're at about 144 billion, I think we're in that, roughly 130 billion-ish for the year. Again, rough estimates, because you factor everything in, you got to think about burn rates and everything else. But the point is that the run rate for the fourth quarter, our forecast for '23 is actually slightly lower than that, when you aggregate it, it's just more front end loaded the negative. And we'll see a little bit of a benefit in the second half.

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes. Steve just add to what Greg is saying it doesn't increase very much in the back half. So we're in no way shape, or form being aggressive, thinking that the market is going to come back with significant amounts of deployment, the back half of the year. So you're not talking about material shift in Q3 and Q4 in investment levels. But what we do see in Q3 and Q4, with the guidance that we're going to see the slowdown in the decline in non-interest bearing deposits, plus the securities pay down each quarter that you kind of -- you get to a normalization of net interest income and margin, right around the midpoint of the year, and then can start to see some growth into the fourth quarter, just with those factors alone. So small increase in venture deployment, a stabilization in the non-interest-bearing levels that happened towards the back of 2023 plus the securities pay down starts to build momentum for net interest income.

[Steven Alexopoulos, Analyst at JPMorgan Chase & Co.]

Got it. Okay. Finally, just to clarify, you mentioned high 30%. As the bottom, you said this a couple of times the bottom in the non-interest-bearing mix, but then I thought you said that deposits might bottom the midpoint of the year and then grow in the second half. So if you actually expect that interest bearing deposits to bottom below the high 30s in the first half of the year and then grow to the high 30% level? Thanks.

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

No, Steve. The expectation is that we're going to continue to see some mix shift, non-interest bearing into interest bearing really throughout all of 2023. And we would expect as we get into the fourth quarter that's where we're really going to see that bottom out from a non-interest bearing to total deposit perspective. At the same time, what we can see in the back half of 2023 is with a small increase in venture deployment and the slowdown in cash burn that we expect to continue and small improvement in the overall deposit bubble. So they are really two different things.

[Steven Alexopoulos, Analyst at JPMorgan Chase & Co.]

Okay. But it's an interest-bearing deposit where you're looking for that benefit in the second half?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

That's right.

[Steven Alexopoulos, Analyst at JPMorgan Chase & Co.]

Okay. Thanks for taking my questions.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Thanks, Steve.

[Operator]

Your next question comes from the line of Brody Preston with UBS. Your line is now open.

[Brody Preston, Analyst at UBS Group]

Hi, good evening everybody.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Hi, Brody.

[Brody Preston, Analyst at UBS Group]

Hi. I just wanted to maybe just follow up in a line of questioning on the non-interest bearing. I just wanted to get a sense for, is there like a natural kind of level of non-interest-bearing deposits, from an account level perspective that need to be -- these companies need to keep on hand. I just asked just because you guys have actually done a pretty good job of actually maintaining account growth over the last couple of quarters. And so I just wanted to get a sense for, if non-interest-bearing account levels, if there's an average account level where these things kind of naturally bottom out.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes. Brody, it's Greg, I'm going to start at a high level, and Dan, or Mike may want to add some color commentary to it. The challenge of the answer your question is that there is not any more an average client, because it really depends upon early stage, mid stage, late stage, publicly traded, all those things. Here's one way to think about it again, why, again, Dan made the comment about kind of this bottoming out. It was said, but I'll repeat. When you look at that high 30s, kind of bottoming out of the non-interest-bearing accounts, you have to think about it and look at the totality of all the total client funds. Right now we're at about 24% of all total client funds. But if you factor in this high 30s, as a bottom, you're going to be in that mid to high teens against that total client funds. We believe historically, that would be low. And when you factor in all the types of clients, that that seems with all the data and information, we have to be where we'd be bottoming out. Obviously, it can change, our assumptions can be wrong, but that's the analysis that we've done. So think about it in the mid to high teens of total client funds, not just this 23%, 24% kind of at the end of the year. I don't know, Dan, or Mike, if you guys would add anything to that?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes, Greg, it really gets back to the same thing. If you look at most commercial banks, you think of total non-interest-bearing deposits, even in these rates, cycles being in the high teens, become a low watermark on non-interest bearing. And that's effectively where that on balance sheet, high 30% non-interest-bearing range turns out to be if you consider the totality of client funds. So that's one marker plus, like Greg said, the analysis that we do internally. So I think when we look at those things, yes, it's subject to change that at the same time, it gives us confidence in the outlook.

[Operator]

Your next question comes from the line of Jared Shaw with Wells Fargo. Your line is now open.

[Jared Shaw, Analyst at Wells Fargo & Company]

Hi, guys. Thank you.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Hi, Jared.

[Jared Shaw, Analyst at Wells Fargo & Company]

[Technical issue] just a little bit over to the loan side and the growth you saw in, and they are going to be talking about clients favoring debt over capital here. Have you changed underwriting? Or have you seen any better terms on loans that are being originated now versus earlier in the cycle for these early and mid-stage companies?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes. This is Greg. I'll start and Marc and Mike probably both will want to have share a perspective on that. It's -- the growth has been, again, in the three years that we talked about, it's the technology side of the portfolio. It's been in the global funds banking, and then a little bit with the mortgages as well. And on the technology side, we've seen price some of the best growth we've had in many, many, many years, clearly on an absolute dollar volume basis, and even on a percentage basis. And that's one, it's just kind of a simple discussion. We were competing, and we've said this on many conference calls.

We're competing as much with equity dollars and anything else. These companies you'd sit back and go, we would love to lend money to you because of all the great fundamentals you have, but they just raised $200 million. So why would they want to borrow $20 million, $30 million. And so obviously, it's gotten harder. Not that they couldn't raise money, it's that they're choosing not to because of the valuation, that they would like to see, those are great opportunities for us. So the team is doing a great job of winning, really some great, great business on the technology side. In the global funds banking, you've got, again, we've been doing this longer than anybody else. So we've got a great experience. That's the term sheets, and the new business is still in very, very strong demand and we've seen some people pull out of the market. And so that allows us to, in some cases get a little bit higher margin. But I'd say it's as much getting -- making sure we have the highest quality clients that we're bringing on board to the platform. So it's still competitive. But we're able to bring in some great clients, and we're able to see some nice outstandings in this environment. So I don't know, Marc or Mike?

[Marc Cadieux, Chief Credit Officer at SVB Financial Group]

So I'll just comment, specifically on underwriting that was part of your question. Generally speaking, we try to keep our underwriting standards consistent. And what that will mean generally, in times when the environment is getting worse is fewer clients clearing the bar. At the same time, as Greg mentioned, that has been offset by more demand. And so we are continuing to see some great opportunities to grow loans, really across the segments, including the core tech and healthcare. Mike anything you want to add?

[Mike Descheneaux, President, Silicon Valley Bank at SVB Financial Group]

Yes. The only thing I would add is, I mean, clearly, we're very cognizant of the economic environment that we're operating in. So when we're looking at underwriting, we're very conscientious of business models that are relying on the consumer as the consumer might be hit with inflation, starting to think about interest rates and how they might impact the business models as well, or their amount of financing. So all these things are coming into factor. But as Marc said, right, we're very consistent in underwriting standards, which has served us well for many, many years.

[Jared Shaw, Analyst at Wells Fargo & Company]

Okay, thanks. And then, I guess a corollary of that you look at the credit, expectations and the growth in the allowance looks like, inside[phonetic] 30 of -- you're nearly at peak stage losses or very close to it for coverage. How much higher do you think we can see the allowances or ratio go with sort of your broader credit expectation backdrop for normalizing losses?

[Marc Cadieux, Chief Credit Officer at SVB Financial Group]

This is Marc, I'll start, Dan or others may wish to chime in. So certainly, there's a fair bit of reserve build, as you pointed out in '22, because the reserves go higher in '23. As I think you probably know, economic forecasts can drive the reserve as it did for us, this particular quarter. So that's one factor. We could, as we've noted, see higher levels of non-performing loans that could drive higher specific reserves. And so there is that potential for the reserves to go higher, again, recognizing that we have a fair bit of reserve built behind us in 2022.

[Jared Shaw, Analyst at Wells Fargo & Company]

Great. Thank you.

[Operator]

Your next question comes from the line of Bill Carcache with Wolfe Research. Your line is now open.

[Bill Carcache, Analyst at Wolfe Research]

Good afternoon. I wanted to follow up on the reopening of IPO markets being a clear positive for the business. From a timing perspective, would you expect that reopening to coincide with a Fed pause? Are we more likely to need to see rate cuts? Just curious for your high-level thoughts there?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes. I wish I had our SVB Securities team on the line right now. They're [indecipherable]. But as we talked about it, I think we don't have a lot of expectations for things, in '23, with a few exceptions, right. I think my view when you start to see the top off of rates, and so I don't think they need to go down. I think they need to be stable at whatever level they're at. And I think just some confidence that's where we're going to hold and we're not going to see a potential for another spike. So that's one data point. Second data point is, as I mentioned this earlier, I've been spending more time with some of our later stage clients that are -- they have a lot of the metrics that we would say they are in a position when the market opens up to go public. And I think there's when that stability happens, you're going to see some go out and test the waters. We need them to test the waters. And so I think could that happen in late Q3, Q4, the answer is yes. So I think if we see maybe a couple more rate hikes at 25 basis points and a quarter a little more than a quarter of flattening. Do I think that the market could open up for a few IPOs, the answer's yes.

Again, make one more point, even when it opens up, it's not going to be a flood, it'll be a trickle. Because it'll be the ones that have the highest potential to go public, and people are going to wait to see how they perform. So I would say, yes, maybe in the late third quarter and fourth quarter, you'll see an opening, but it's going to be a slow-paced opening when that happens.

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

The only thing I'd add to it, Greg is, and we saw it in the fourth quarter on the biopharma side, in particular, good deal flow, good deal activity there, has that if you think about that business, that's the normal flow of fund-raising activity for those types of clients. So we're not expecting, a substantially strong year on the biopharma side. But I think that can become more constant. And is embedded within our guidance expectations for 2023.

[Bill Carcache, Analyst at Wolfe Research]

That's helpful. Thank you. Separately, how would you characterize the current willingness of companies to take down funding rounds? And how would you say that compares to the appetite for dry powder deployment? Just curious, if you think we're in any way getting closer to those two sides coming together?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes, it's Greg. I'll start. It's exactly what you'd expect. We've seen this movie before. And you've got companies that are, and you can see this in the venture capital data that was released in the fourth quarter. Late-stage rounds, there were a lot fewer of them, but the valuation actually didn't drop a whole lot. And the reason for that is that investors looked at this as an opportunity to go in on a flat round, and some of the highest profile companies that had actually done really well since their last round, but they can still get in at it, what they would say is a decent valuation. And you have another group of companies that are there -- they're basically saying, hey, I'm going to take the lower valuation, I'm going to get it over with, those are fewer. But we're going to see more of it over the course of '23. And then the final one is, what I'll call the in between, it's the structure deal where it is, it looks like it's the same round valuation as the last round, but they have preferences and things like that, that you would say, when you really look through it isn't keeping it at the same valuation, there's structure involved. All those things are happening but you're going to see more my view, more down rounds occur in '23, you'll see some more structured deals.

So all three of those scenarios are played out, you're just going to see more activity happening. And again, as we talked about earlier, more in the second half of the year, than the first half of the year.

[Bill Carcache, Analyst at Wolfe Research]

That's very helpful. Thank you. If I could squeeze in one last one. Really wanted to follow up on your commentary around the non-interest-bearing deposit mix. I'm sorry to keep coming to that question about stabilizing the high 30% range. But the question is sort of around this broad concern around the banking system in general that we're hearing from a lot of investors that we could see the mix of non-interest-bearing deposits revert to pre GFC levels. But when we look to the pre-GFC era, your mix of non-interest-bearing deposits was in the mid to high 60% range, which is around where you were pre-COVID. So I appreciate your commentary around looking at non-interest bearing in relation to total client funds. But maybe like a broader question is, do you envision a scenario where we can sort of get back to that mid to high 60% non-interest-bearing mix as we look beyond some of these more near-term liquidity pressures that you're dealing with?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes. As people would say, hope is not a strategy. So while it would be great to be there. There certainly is nothing in our forecasts that would say we're getting back to that at all. And so, do we -- is there a scenario that we would see an uptick from the bottom that we think will happen later this year? The answer is yes. And we haven't come out with a guidance on what that would look like. But it's going to be well below our historical level of non-interest deposits. I know, Dan what you add to it.

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes. The other way to think about it is, when you go back to the history of pre-global financial crisis, just the size of the overall balance sheet, the types of companies that we bank are very, very different. And I think as a result of that change in client mix, we're not going to get back to those levels of non-interest-bearing deposits. That doesn't mean that we don't have the quality of the deposit franchise, it's just a different mix of clients, now versus then with close to $215 billion balance sheet.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

And maybe the only thing I would add on to what Dan said, thinking more about it is, there's, kind of -- the way you're describing, it's either -- its market interest bearing, or it's zero. And I think you can see scenarios. And Mike and team have done a great job, this is looking at different products and solutions. So you're going to see a whole different level on the interest-bearing deposits of different yields based on the profile of clients. So I think you have to understand that yes interest bearing is going to be a higher percentage, but the spread of yields on that will be varied.

[Bill Carcache, Analyst at Wolfe Research]

That's super helpful. Thank you for taking my questions.

[Operator]

Your next question comes from the line of John Pancari with Evercore. Your line is now open.

[John Pancari, Analyst at Evercore ISI]

Good afternoon.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Hi, John.

[John Pancari, Analyst at Evercore ISI]

On the off-balance sheet funds balance, I think it's about 168 billion, as of the end of the year. Can you just update us again, how much of that is available? Or you're able to bring on balance sheet and how much of that you expect to be used under your -- that's baked into your guidance here. And any other dynamics in terms of that could be impacting that balance? Thanks.

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

John, it's Dan. And we have talked about it in the past, that we believe that there's still access, obviously doing the right things for clients, to roughly half of that off balance sheet balance, so, sitting where we are, that still leaves, a sizable opportunity across what's classified as sweep. And what's classified as repo. So that's a substantial opportunity for us. In terms of how much we're including in the forecast, we're still expecting to see some of that move onto the balance sheet, but the pace of that is expected to continue to slow into 2023. And that's all included in our net interest income guidance and the interest-bearing deposit beta guidance.

[John Pancari, Analyst at Evercore ISI]

Okay. Got it. All right. And then any actions considered for your available for sale securities portfolio at this point?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes, John. It's Dan again. Very clear that we're only talking about available for sale. In the quarter, we did opportunistically sell a billion worth of Treasury securities at a very short payback period with limited impacts to tangible book value considering that we also had some warrant gains in the quarter. So I think what you're going to see from us is less of a broad review across available for sale and actions there. But you'll see us opportunistically where the rate environment, the payback period makes sense. And also protecting tangible book value, we take some of those actions to effectively accelerate the pay downs of that book. Again, that's opportunistic, that's for net interest income generation purposes, more than anything else. And again, we did a billion of that in the quarter.

[John Pancari, Analyst at Evercore ISI]

Right. So, but nothing immediately planned beyond that billion but [Multiple speakers]?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

No, and again, anything we're talking about is within available for sale, and it's opportunistic, and protective of tangible book value.

[John Pancari, Analyst at Evercore ISI]

Got it. Okay. Thanks. And then, separately, on the credit front, just because they'll feel the fair amount of incoming from investors regarding potentially under appreciating credit risk in your story. Is there, where are you seeing stress in materializing that worth learning where you expect to losses materialize and go against some of the reserve buildings, you've already put up. What are one of the most noteworthy areas where you're beginning to see some of that stress.

[Marc Cadieux, Chief Credit Officer at SVB Financial Group]

Yes. It's Marc. I'll start. Dan or Mike may wish to contribute. But it is consistent with our historical experience. It's the early-stage venture backed investor dependent cohort where we have and would expect to continue to see the most stressed.

[John Pancari, Analyst at Evercore ISI]

Okay, thanks. And then, lastly, for me, it's just the capital markets investment banking pipeline. If you could just comment there what you are saying, sorry, if you've already touched on it. But just wondering if you can talk a little bit about what you're seeing here in terms of deal opportunities, as you look out into 2023?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes. It's Greg. We don't -- we haven't talked about pipeline, we did give guidance on what we expect the outlook to be from a revenue perspective, which is an uptick from where we saw it in '22. And maybe just to kind of walk like, why would we show an improvement. If you're called back, you've got, there's kind of three parts -- actually four parts of the business. You got the biopharma business, which is really what we brought on board, an incredible franchise with limited partners. When we added healthcare services, we added technology. And they had -- the team had sales and trading and they had research. But now then, with the addition of MoffettNathanson, you have to look at the entire platform. So now you've got M&A capability, full ECM capability across all three verticals, you have strong sales and trading. And you have actually, I would say incredible research when you look across the entire platform, so you have a full stack platform. And it's actually, people are in the saddles and they're productive. And so even though the market is going to be a challenge, we look across that whole portfolio of opportunities and actually feel very good. I feel very good about the team, the strategy and their ability to execute. This is going to be a tough year, our outlook shows, it's going to be a tough year. But I'm actually really excited about '24 and '25. And having that team be on the platform longer and really take advantage of an improving market at some point. But it's going to be a tough market, but still an uptick in revenue from what we saw in '22.

[John Pancari, Analyst at Evercore ISI]

Got it. Okay. Thanks, Greg. Appreciate it.

[Operator]

Your next question comes from the line of Jennifer Demba with Truist Securities. Your line is now open.

[Jennifer Demba, Analyst at Truist Securities]

Thank you. Good afternoon.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Hi, Jennifer.

[Jennifer Demba, Analyst at Truist Securities]

Question on credit quality. I know you have a very small commercial real estate portfolio. But I wonder if you could just kind of give us a characterization of what's in there. And if you have any concerns about any piece of it. I know it's really small. But a lot of banks have been talking about concern about commercial real estate in a tougher environment?

[Marc Cadieux, Chief Credit Officer at SVB Financial Group]

Hi, it's Marc. And that is a segment certainly bears watching, particularly if there is a recession in the offing. But generally speaking, as you pointed out, it's 3% of total loan, it's reasonably well diversified across several different categories. And probably what's most important, is that it's on average, well margins, relative to the underlying real estate collateral. And so that was certainly going back to the Boston Private acquisition. It was a portfolio we were more concerned about, in part because it was -- we were in the depths of COVID at the time, and it has continued to really outperform my expectations.

[Jennifer Demba, Analyst at Truist Securities]

Great. Is there any office exposure in there?

[Marc Cadieux, Chief Credit Officer at SVB Financial Group]

There is some office exposure, it is not an enormous part of that 3% but significant again, so far has continued to outperform expectations.

[Jennifer Demba, Analyst at Truist Securities]

Thank you.

[Marc Cadieux, Chief Credit Officer at SVB Financial Group]

You are welcome.

[Operator]

Your next question comes from the line of Chris Kotowski with Oppenheimer. Your line is now open.

[Chris Kotowski, Analyst at Oppenheimer]

Yes. Good evening. Thank you. It's a question, I guess, mainly for Dan. And I hear you and I understand exactly why you're saying the only securities restructuring would be in the available for sale portfolio. But I wonder as you're looking at that held to maturities portfolio, I'm looking at your average balance sheet, there's like the $85 billion taxable hold to maturities portfolio. I wonder, just if you can highlight a few of the dynamics of the run-off there. And the first thing I'd say is, I noticed like the yield went down from, like 192 to 172 from the third quarter to the fourth quarter. Presumably that's the $50 million of amortization. But I'm wondering, what's the go forward? I mean, was the third quarter a $50 million, good guy or is the fourth quarter $50 million bad guy, I guess? That's the first thing, you know, should we expect something like with a 170 handle or a 190 handle?

And then, secondly, I guess I'm wondering, I mean, from the disclosures in the 10-Q, it looks like that has a very long maturities profile. Is there like any significant runoff that would kind of on a natural basis, take that portfolio over, say, 3% yield handle anytime in the next, 12 to 24 months?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes. It's Dan. I think, first and foremost, the payoff profile there, we're getting off that book, anywhere between $2 billion to $3 billion, a quarter. So $10 to $12 billion, annualized, run down in that portfolio. And those assumptions were where 10-year rates were just a couple of weeks ago. So we now think about 10-year, 330, 340, you can pick up some pay down acceleration associated with that. We'll see how material that becomes and where the 10-year ultimately land. So I think you're going to continue to see some improvement. But in this kind of $2 billion to $3 billion, quarter like a clock just continues to pay down with the opportunity to accelerate if 10-year rates come down from there. We think about yields themselves, I think, as we look at Q1, we're still talking about in the high 170s to the mid-180 range, in that book, and a lot of that really comes down to where premium amortization comes in for the portfolio. So, those are really the factors, watch the 10-year yield, to the extent that that continues to come down, you could see an acceleration of payments on that book, which obviously, just make things go faster, faster there and get us closer to that inflection point of NII and NIM sooner, if that were to occur.

[Chris Kotowski, Analyst at Oppenheimer]

Okay. Thank you. That's it for me.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Thank you.

[Operator]

Your next question comes from the line of Andrew Liesch with Piper Sandler. Your line is now open.

[Andrew Liesch, Analyst at Piper Sandler Companies]

Thanks everyone. Thanks for taking the questions. Just curious if you'd look at the investor dependent cohort right now, how much cash runway do they have? Obviously, they've been trying to sell their cash burn. And that sounds like they've been successful at doing that. But how does their cash position stand looking out for the next year or so?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes. So we track remaining months of liquidity we call it otherwise referred to as runway, and the majority of that portfolio at last check, still had over a year's worth of cash on hand.

[Andrew Liesch, Analyst at Piper Sandler Companies]

Got it. All right. That's helpful. And then just shifting gears. On the funding side, when investment activity does come back, and client funds come in. How do you expect the mix to trend with respect to deposits versus off balance sheet funds?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes. This is Dan. I think, based on a potential recovery and investor deployment, again, we don't have a substantial pickup at all in the earnings guidance for 2023. But imagining that we do start to see a pickup there, I think we're going to continue to direct those funds on the balance sheet. We think about the composition of those funds as they come in, they'll likely be less expensive than what we've got from the off-balance sheet to on balance sheet product. So over time, to the extent that that accumulates, we'll look at over time, shifting more of those expensive deposits. That's one of the benefits of that product is that it's not a one-way door, we have the ability to shift that off balance sheet to accelerate the improvement in net interest income and net interest margin. So I think we'll for -- if you think of the switch and how we toggle the switch, the switch will be continued toggled on the balance sheet. As we drive some of those higher costing deposits off the balance sheet. And to be very clear, we don't expect this to come in is all non-interest bearing it'll certainly be more heavily weighted to interest bearing in this higher for longer environment, but still be cheaper than those off-balance sheet client funds.

[Andrew Liesch, Analyst at Piper Sandler Companies]

Got it. That covers my question. Thanks so much.

[Operator]

Your next question comes from the line of David Smith with Autonomous Research. Your line is now open.

[David Smith, Analyst at Autonomous Research]

Hi. On the capital [indecipherable] and global fund banking, could you just say a little bit about how much of the growth was driven by new lines of commitments versus any change in utilization?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

So, as far as the new client business, I mean, most of it was from utilization, the change from an outstanding perspective. So we did have some new, obviously new client fundings. But so, I'd say it varies from quarter-to-quarter. So it's probably not anything to make a -- have a dramatic change. So, I don't know Dan, if you would add anything to it?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes. I think when we look at the quarter from a funded perspective, we did have growth in capital call. And at the same time, that was off of lower utilization. So you've got some net new clients in there. I think more notable is the increase in the amount of term sheets and net new unfunded commitments, which over the next six to nine to 12 months, are really going to be a tailwind for us from a loan growth perspective. I think that's most notable also drove an element of the provision increase in the quarter.

[David Smith, Analyst at Autonomous Research]

Okay. So just to be clear, lines were up but utilization was down slightly, but on net to outstandings were higher?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

That's right.

[David Smith, Analyst at Autonomous Research]

Okay. And just unpacking the SVB Securities outlook a little bit more. It was largely biopharma driven in the fourth quarter, as I understand it. What kind of tech recovery is contemplated in the guide for 2023?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Very little, very little. Again, as I said, now, having the full platform and people in the saddle for longer and deeper relationships being built, it's really just -- able to pick up some market share. We just don't have a lot of new activity in there.

[David Smith, Analyst at Autonomous Research]

Okay. Is it fair to call it still largely a biopharma story for next year?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

No. I think it's clearly going to see more of a mix. Biopharma will do fine, but it's M&A in technology. It's M&A in healthcare services. So M&A is going to be the bigger part. So here's how to describe it. Biopharma is probably going to be still be a mix of ECM in M&A. Technology and healthcare services is going to be more driven for the year with M&A. And maybe towards the end of the year, you start to see a little bit of a pickup in ECM in the technology side.

[David Smith, Analyst at Autonomous Research]

Okay. Thank you.

[Operator]

Your next question comes from the line of Christopher McGratty with KBW. Your line is now open.

[Christopher McGratty, Analyst at KBW]

Greg, your balance sheet historically has been one of the more asset sensitive, we're going through a period of really big rate increases. So you've moved to the other side. If we look at the forward curve, which begins the pricing cuts, and I know your guidance doesn't factor in cuts. How do we think the margin will perform if the Fed funds rate gets cut? As we look into next year, should the balance sheet flip to being liability sensitive in that respect?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes, Chris. This is Dan. I think if you look at our disclosure of what we're talking about for potential rate increases, you start to see that that which is factored at least the next couple increases are factored into our guidance, you start to see that we could be liability sensitive associated with that. So in the case that the Fed starts to decrease rates, and again, we don't have any of that baked into our estimates, that could start to be a bit more of a tailwind from an NII perspective, reducing the overall pricing on some of those more expensive deposits faster than what we have incorporated in our model. So I think you can look to the asset sensitivity disclosure and look to the same potential for a reduction to the extent that rates come down.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

And maybe Chris just to add-on, because I think you've kind of had two questions. One is maybe short-term and long-term. And I think, when we settle out to find out kind of that kind of normalization. And then when you see, let's say, you got back to whatever that normal floor is, or flattening of rates at some points and lower level. And then at that point, I think if you saw some rate increases, modest ones, I think we'd be back into the more assets sensitive side. I think it's just right now, and you said it, we saw such a rapid increase in rates, which we've never seen before. And that's what kind of made the biggest change, in addition to this kind of construction of the balance sheet. Those two things, cause it to be kind of out of historical norm. And it's going to take a little while for us to get back to that place where we can eventually get back to a base level, although less level of asset sensitivity.

[Christopher McGratty, Analyst at KBW]

That's great. Thank you for that. If I could just follow it up. One of your competitors. Last week talked about deferring costs into the out year, given the environment, appreciating the low single digit guide for expense this year where certain project is pushed to next year, or is there, I know you talked about hiring slowing, but is there a natural ramp that comes back into the expense growth rate once environments get a little better?

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Yes. I'll talk about Chris philosophically how we've operated from an expense perspective over years and cycles. And then, more specifically about the guidance that you gave, and then Dan can add comments to it. And we've said this, when you go back and look at the pace of investment we made in digital infrastructure, and a whole variety of risk management, a lot of different things. We looked at it and said, look, when times are better, we are earning more money. We're going to we're going to kind of accelerate that investment level. Because we have an insatiable appetite for investment, because of our target market and the market overall, and where it's growing and how large it is. And so when you have times like this, that's just a more challenging, more uncertain market are more headwinds, you're going to take a look, and you're going to say, you're going to basically prioritize, and you're going to kind of optimize what you have. So does that mean slowing down some projects? Yes, it does. Does it mean potentially pushing things out into future years? It does. But we have that prioritized list.

And as things start to improve, we're going to start to put more money behind those projects. We have in the deck where we're making the investment focus, our prioritized list. So it's more in the private banking, wealth management going to go-to-market strategy. Secondly, in the commercial bank, kind of focus there and digital enhancements. Third is this one SVB collaboration, just making sure that we're working across the entire platform. And that's just really important to make sure that we leverage our investments, leverage our acquisitions, and really take care of our clients deliver for our clients in a meaningful way. And then the last one is risk management, which again, we continue to enhance, as we are in this LFI status, and both expectations, and just our own needs are increased. And so that's how we think about prioritization and so forth. So Dan, what would you add to that?

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes. I think as long as it's clear, we're going to continue to invest here, even in a more challenged 2023, across the elements that Greg mentioned that's key, I think, for us to emphasize, we're able to optimize that spend also, as we're looking at changing the mix between professional services, and cheaper, full-time employees. That's just another way for us to get optimization from a cost perspective. And we're doing that and that also helps us from a sustainability perspective. And then I think the last part of your question is, to the extent that the environment improves, are we going to go back, to that more traditional higher expense run rate. And I think that's going to be a balance. And I think for us the overall return, the profitability of the franchise is continuously important. So we'll have to continue to balance those investments, as our profitability returns to more normal levels.

[Christopher McGratty, Analyst at KBW]

That's great color. Thanks. And maybe just the last one, I know the environment is uncertain, but thoughts on a buyback over time given the valuation.

[Daniel Beck, Chief Financial Officer at SVB Financial Group]

Yes, Chris. I think we've said this in the past, we're always going to remain open to looking at our options from a capital perspective. Now, obviously 2023, we're not expecting a lot in terms of new major acceleration in deployment. But to the extent that deployment does come back and does come back quickly, you can start to see the balance sheet increase. And again, no more pressure from a Tier-1 leverage perspective. So we certainly don't have that now, but it's something that we need to continue to be cognizant of. So I think as we look ahead, we're just going to continue to keep our options open. But again, no, I think growth over the medium and long-term is the thing that we need to prepare for.

[Christopher McGratty, Analyst at KBW]

Great. Thanks for all the color. Appreciate it.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Thanks Chris.

[Operator]

There are no further questions at this time, I turn the call back over to Greg Becker for final remarks.

[Greg Becker, President and Chief Executive Officer at SVB Financial Group]

Great, thanks. Thanks, everyone, for joining us today. We tried to give as much detail, and again, I give a huge amount of credit to our IR team to put together a lot of information, a lot of detail on kind of what we're seeing the outlook, what are the key drivers. And so I think that's really helpful. And I think, again, just to reiterate, when you go back and look at fourth quarter, there's a lot of really healthy signs, whether it's loan growth, core fee income growth, nice growth in investment banking. And probably, maybe most importantly, this kind of stabilization of this inflow of venture with a pulling back or slowing down of cash burn. So that was great to see. That being said, look the market is still very, very choppy, there's still a lot of uncertainty out there, which is why we gave guidance in two ways.

One is the annual guidance and the second one is the quarterly guidance to make sure that you kind of really have a good sense of how we're feeling about the quarter. We talked about what it means for SVB. And again, just to go back, we think the first half is going to be -- it's going to be bumpy. We expect that you're going to see venture capital decline in the first half of '22, and then kind of '23 and then stabilized and start to improve. So our expectations are not for a big improvement from where we are right now. And that's just the outlook we think is realistic. And could there be some upside, certainly there could be some upside, but that's not what we have in our plan. And especially if it gets worse, as we went through and you can see in the deck, we have ample resources of liquidity and other ways to make sure we're taking care of our clients and still being there for them when they need us. So that's kind of our view.

Again, thanks, you guys for joining. As always, I want to thank our clients. It's one of my favorite parts of what I get to do is spending time with our clients and just hearing their stories about what they're doing. And they're still excited. And yes, they're making hard decisions. But they are well positioned. And quite honestly, I think markets like this, in many ways, as much as we don't like it, we don't enjoy it. It's actually healthy because it allows those companies to run more efficiently, run more effective and position themselves for growth. And then, finally, thanks to all of our employees, I can't thank them enough for what they have been doing to support our clients, what they're doing to support each other and look at the tough market. And so keeping that positive attitude and client-centric mentality is super important. So we appreciate that. So thanks, everybody. Thanks for joining us and have a great day. Thank you.

[Operator]

[Operator Closing Remarks]