HOW BANKS EARN
MONEY? By Franz Dolegeal

QUICK HISTORY
OF BANKING
ITALY
Italy was the trading center of Europe in the
11th century (Banco means Bench = Bank).
TODAY
Over 30,000 banks in the world.
TOP BANKS
The top 10 banks account for roughly $25 trillion.
The top 5 ones are:
• Industrial and Commercial Bank Of China Ltd. (IDCBY)
• China Construction Bank Corp. (CICHY)
• JPMorgan Chase & Co. ( JPM)
• Bank of America Corp. (BAC)
• Wells Fargo & Co. ( WFC)
• Citigroup Inc. (C)
By Franz Dolegeal

US BANK
FAILURE
WHO’S TO BLAME?
SVB FINANCIAL
GROUP 10K
https://youtu.be/YDwDMF_f5rM
https://youtu.be/YDwDMF_f5rM
https://d18rn0p25nwr6d.cloudfront.net/CIK-
0000719739/f36fc4d7-9459-41d7-9e3d-
2c468971b386.pdf
By Franz Dolegeal

SVB lends money to individuals and
businesses. Interests charged in loans are
higher than the paid deposit. Banks earn a
profit on the spread.
Interest Income
SVB generates revenue from fees charged
for various services, such as account
maintenance, ATM usage, wire transfers,
and credit card transactions.
Fee Income
SVB invest their own capital in various
financial instruments to generate additional
income.
Investment income
SVB’s BUSINESS MODEL
SVB engages in trading activities, such as
buying and selling stocks, bonds,
currencies, and other financial assets, in
order to profits
Trading Income
SVB manages the risks associated with its
lending and investment activities, such as
credit risk, market risk, and operational risk
Risk Management
Make a big impact with our professional slides and
charts
By Franz Dolegeal

These are the fees:
• Commission fees
• Lending related fees
• Foreign exchange fees
• Credit card fees
• Deposit service charges
• Credit fees
NON-INTEREST
INCOME
$1778
INTEREST
INCOME
$5673
NON-INTEREST
EXPENSE
INTEREST
EXPENSE
$1188
$3621
SVB’s INTERESTS INCOME AND EXPENSE
• Loans
Lending related fees:
• Taxable
• Non-Taxable
• Short term investment
securities
• Federal funds sold
• Credit fees
• Compensation and
Benefit
• Professional services
• Premises & equipment
• Net occupancy
• Business dev. & Travel
• FDIC
• Merger related charges
• Deposits
• Borrowings
Visible in the Consolidated Income Statement (page 96 of SVB’s 10K))
By Franz Dolegeal

SVB’s % INTERESTS INCOME AND EXPENSE
FROM THE INCOME STATEMENT ON PAGE 96
NON-INTEREST
INCOME
INTEREST
INCOME
75%
NON-INTEREST
EXPENSE
INTEREST
EXPENSE
By Franz Dolegeal

NET INTEREST INCOME
$5,673 billion
TOTAL INTEREST
$1,188 billion
SVB’s SPREAD
Refers to the difference between the interest rate a bank pays on deposits and the interest rate it charges on loans.
SPREAD 21%
SPREAD = Total Interest Income $5,673 Billion – Total Interest Expense $1,188 Billion
By Franz Dolegeal

LOANS
$74,250
INVESTMENTS
SECURITIES
OTHER
ALOWANCE
$(636)
$3,082
• Available for sale securities
• Taxable
• Held to Maturity Security
• Intangible
• Goodwill
• Accrued interest
receivable
• Premises and Equipment
• Depreciation and
amortization
• Credit loss on loans
$120,054
SVB’s ASSETS
FROM THE BALANCE SHEET PAGE 95
By Franz Dolegeal
INVESTMENT
INCOME
(Hedging)

LOANS (2022): $3,208 M - 63%
$1,966 M (2021) – 29%
$1,520 M (2020)
SECURITIES (2022): $2,465 M – 86%
$1,323 M (2021) – 83%
$722 M (2020)
SVB’s HEDGING: SECURITIES
FROM THE INCOME STATEMENT ON PAGE 96
By Franz Dolegeal

$150 Million
CREDIT CARD FEES 2022
$131 Million
CREDIT CARD FEES 2021
$98 Million
CREDIT CARD FEES 2021
FROM THE INCOME STATEMENT ON PAGE 96
CREDIT CARD FEES
14.5%
33.7%
By Franz Dolegeal

REVENUES
1. Interest Income
2. Non-Interest income
3. Trading Income
4. Foreign Exchange Income
EXPENSES
1. Salaries and benefits
2. Occupancy Expenses
3. Technology Expenses
4. Marketing and advertising
5. Loan Loss Provision
6. Legal and Reg. Expenses
7. Other Expenses
SVB’s NET INCOME
Refers to the difference between the interest rate a bank pays on deposits and the interest rate it charges on loans.
Net Income
(Revenue – Expense)
By Franz Dolegeal

NET INTEREST INCOME
$4,485 M
AVERAGE EARNING
ASSETS
$194,405 M
SVB’s NET INTEREST MARGIN
Refers to the difference between the interest rate a bank pays on deposits and the interest rate it charges on loans.
NET INTEREST
MARGIN (NIM) 2.31%
Nim = (Investment Income – Interest Expenses) / Average Earning Assets

$3,082 Million
2022
$1,791 Million
2021
FROM THE BALANCE SHEET PAGE 95
SVB’s INTERESTS RECEIVABLE
72%
By Franz Dolegeal

Do you have
questions?
By Franz Dolegeal

THANK YOU!
By Franz Dolegeal