Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2019	Jan. 31, 2020	Jun. 30, 2019
Entity Information [Line Items]
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2019
Entity File Number	000-15637
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Registrant Name	SVB FINANCIAL GROUP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	91-1962278
Entity Central Index Key	0000719739
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Amendment Flag	false
Entity Common Stock, Shares Outstanding		51,622,841
Entity Address, Address Line One	3003 Tasman Drive
Entity Address, City or Town	Santa Clara
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95054-1191
City Area Code	408
Local Phone Number	654-7400
Entity Public Float			$ 11,580,246,470
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	SIVB
Security Exchange Name	NASDAQ
Preferred Stock, Series A
Entity Information [Line Items]
Title of 12(b) Security	Depositary shares, each representing a 1/40th ownership interest in a share of 5.250% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series A
Trading Symbol	SIVBP
Security Exchange Name	NASDAQ

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 6,781,783	$ 3,571,539
Available-for-sale securities, at fair value (cost of $13,894,348 and $7,862,311, respectively)	14,014,919	7,790,043
Held-to-maturity securities, at cost (fair value of $14,115,272 and $15,188,236, respectively)	13,842,946	15,487,442
Non-marketable and other equity securities	1,213,829	941,104
Total investment securities	29,071,694	24,218,589
Loans, net of unearned income	33,164,636	28,338,280
Allowance for loan losses	(304,924)	(280,903)
Net loans	32,859,712	28,057,377
Premises and equipment, net of accumulated depreciation and amortization	161,876	129,213
Goodwill	137,823	0
Other intangible assets, net	49,417	0
Lease right-of-use assets	197,365	0
Accrued interest receivable and other assets	1,745,233	951,261
Total assets	71,004,903	56,927,979
Liabilities:
Noninterest-bearing demand deposits	40,841,570	39,103,422
Interest-bearing deposits	20,916,237	10,225,478
Total deposits	61,757,807	49,328,900
Short-term borrowings	17,430	631,412
Lease liabilities	218,847	0
Other liabilities	2,041,752	1,006,359
Long-term debt	347,987	696,465
Total liabilities	64,383,823	51,663,136
Commitments and contingencies (Note 22 and Note 28)
SVBFG stockholders’ equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized; 350,000 shares and no shares issued and outstanding, respectively	340,138	0
Common stock, $0.001 par value, 150,000,000 shares authorized; 51,655,607 shares and 52,586,498 shares issued and outstanding, respectively	52	53
Additional paid-in capital	1,470,071	1,378,438
Retained earnings	4,575,601	3,791,838
Accumulated other comprehensive income (loss)	84,445	(54,120)
Total SVBFG stockholders’ equity	6,470,307	5,116,209
Noncontrolling interests	150,773	148,634
Total equity	6,621,080	5,264,843
Total liabilities and total equity	$ 71,004,903	$ 56,927,979

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Available-for-sale securities, amortized cost	$ 13,894,348	$ 7,862,311
Held-to-maturity securities	$ 14,115,272	$ 15,188,236
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	350,000	0
Preferred stock, shares outstanding	350,000	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares, issued	51,655,607	52,586,498
Common stock, shares outstanding	51,655,607	52,586,498

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
Consolidated Statements of Income - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Interest income:
Loans	$ 1,599,165	$ 1,358,480	$ 1,025,788
Investment securities:
Taxable	568,851	541,605	412,133
Non-taxable	44,952	34,616	5,714
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities	96,440	35,208	21,505
Total interest income	2,309,408	1,969,909	1,465,140
Interest expense:
Deposits	177,672	29,306	8,676
Borrowings	35,135	46,615	36,095
Total interest expense	212,807	75,921	44,771
Net interest income	2,096,601	1,893,988	1,420,369
Provision for credit losses	106,416	87,870	92,304
Net interest income after provision for credit losses	1,990,185	1,806,118	1,328,065
Noninterest income:
Gains on investment securities, net	134,670	88,094	64,603
Gains on equity warrant assets, net	138,078	89,142	54,555
Client investment fees	182,068	130,360	56,136
Foreign exchange fees	159,262	138,812	115,760
Credit card fees	118,719	94,072	76,543
Deposit service charges	89,200	76,097	58,715
Lending related fees	49,920	41,949	43,265
Letters of credit and standby letters of credit fees	42,669	34,600	28,544
Investment banking revenue	195,177	0	0
Commissions	56,346	0	0
Other	55,370	51,858	59,110
Noninterest income	1,221,479	744,984	557,231
Noninterest expense:
Compensation and benefits	989,734	726,980	606,402
Professional services	205,479	158,835	121,935
Premises and equipment	96,770	77,918	71,753
Net occupancy	69,279	54,753	48,397
Business development and travel	68,912	48,180	41,978
FDIC and state assessments	18,509	34,276	35,069
Other	152,579	87,251	85,121
Total noninterest expense	1,601,262	1,188,193	1,010,655
Income before income tax expense	1,610,402	1,362,909	874,641
Income tax expense	425,685	351,561	355,463
Net income before noncontrolling interests	1,184,717	1,011,348	519,178
Net income attributable to noncontrolling interests	(47,861)	(37,508)	(28,672)
Net income available to common stockholders	$ 1,136,856	$ 973,840	$ 490,506
Earnings per common share—basic (usd per share)	$ 21.90	$ 18.35	$ 9.33
Earnings per common share—diluted (usd per share)	$ 21.73	$ 18.11	$ 9.20

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income before noncontrolling interests	$ 1,184,717	$ 1,011,348	$ 519,178
Change in foreign currency cumulative translation gains and losses:
Foreign currency translation gains (losses)	3,208	(5,999)	6,355
Related tax (expense) benefit	(889)	1,669	(2,587)
Change in unrealized gains and losses on available-for-sale securities:
Unrealized holding gains (losses)	189,813	(22,348)	(47,161)
Related tax (expense) benefit	(52,697)	6,315	19,282
Reclassification adjustment for losses included in net income	3,905	740	5,189
Related tax benefit	(1,087)	(205)	(2,098)
Reclassification of unrealized gains on equity securities to retained earnings for ASU 2016-01	0	(40,316)	0
Related tax expense	0	11,145	0
Amortization of unrealized gains on securities transferred from available-for-sale to held-to-maturity	(2,158)	(4,607)	(6,475)
Related tax benefit	600	1,277	2,593
Reclassification of stranded tax effect to retained earnings for ASU 2018-02	0	(319)	0
Change in unrealized gains and losses on cash flow hedges:
Unrealized losses	(8,305)	0	0
Related tax benefit	2,306	0	0
Reclassification adjustment for losses included in net income	5,358	0	0
Related tax benefit	(1,489)	0	0
Other comprehensive income (loss), net of tax	138,565	(52,648)	(24,902)
Comprehensive income	1,323,282	958,700	494,276
Comprehensive income attributable to noncontrolling interests	(47,861)	(37,508)	(28,672)
Comprehensive income attributable to SVBFG	$ 1,275,421	$ 921,192	$ 465,604

Consolidated Statements of Stockholders' Equity - USD ($)	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total SVBFG Stockholders’ Equity	Noncontrolling Interests
Balance (in shares) at Dec. 31, 2016			52,254,074
Balance, beginning of period, net of tax at Dec. 31, 2016	$ 3,777,037,000	$ 0	$ 52,000	$ 1,242,741,000	$ 2,376,331,000	$ 23,430,000	$ 3,642,554,000	$ 134,483,000
Common stock issued under employee benefit plans, net of restricted stock cancellations (in shares)			570,276
Common stock issued under employee benefit plans, net of restricted stock cancellations	24,909,000		$ 1,000	24,908,000			24,909,000
Common stock issued under ESOP (in shares)			10,838
Common stock issued under ESOP	2,094,000			2,094,000			2,094,000
Net income	519,178,000				490,506,000		490,506,000	28,672,000
Capital calls and distributions, net	(23,535,000)							(23,535,000)
Net change in unrealized gains and losses on AFS securities, net of tax	(24,788,000)					(24,788,000)	(24,788,000)
Amortization of unrealized gains on securities transferred from AFS to HTM, net of tax	(3,882,000)					(3,882,000)	(3,882,000)
Foreign currency translation adjustments, net of tax	3,768,000					3,768,000	3,768,000
Share-based compensation, net	44,634,000			44,634,000			44,634,000
Reclassification of stranded tax effect for ASU 2018-02	0
Balance (in shares) at Dec. 31, 2017			52,835,188
Balance, end of period, net of tax at Dec. 31, 2017	4,319,415,000	0	$ 53,000	1,314,377,000	2,866,837,000	(1,472,000)	4,179,795,000	139,620,000
Common stock issued under employee benefit plans, net of restricted stock cancellations (in shares)			456,845
Common stock issued under employee benefit plans, net of restricted stock cancellations	15,810,000		$ 1,000	15,809,000			15,810,000
Common stock issued under ESOP (in shares)			9,672
Common stock issued under ESOP	2,577,000			2,577,000			2,577,000
Net income	1,011,348,000				973,840,000		973,840,000	37,508,000
Capital calls and distributions, net	(28,494,000)							(28,494,000)
Net change in unrealized gains and losses on AFS securities, net of tax	(15,498,000)					(15,498,000)	(15,498,000)
Amortization of unrealized gains on securities transferred from AFS to HTM, net of tax	(3,330,000)					(3,330,000)	(3,330,000)
Foreign currency translation adjustments, net of tax	(4,330,000)					(4,330,000)	(4,330,000)
Share-based compensation, net	45,675,000			45,675,000			45,675,000
Reclassification of stranded tax effect for ASU 2018-02	319,000
Reclassification of stranded tax effect for ASU 2018-02 \| Accounting Standards Update 2018-02					319,000	(319,000)
Common stock repurchases (in shares)			(715,207)
Common stock repurchases	(147,123,000)		$ (1,000)		(147,122,000)		(147,123,000)
Balance (in shares) at Dec. 31, 2018			52,586,498
Balance, end of period, net of tax at Dec. 31, 2018	5,264,843,000	0	$ 53,000	1,378,438,000	3,791,838,000	(54,120,000)	5,116,209,000	148,634,000
Common stock issued under employee benefit plans, net of restricted stock cancellations (in shares)			586,877
Common stock issued under employee benefit plans, net of restricted stock cancellations	21,312,000		$ 0	21,312,000			21,312,000
Common stock issued under ESOP (in shares)			14,442
Common stock issued under ESOP	3,506,000			3,506,000			3,506,000
Net income	1,184,717,000				1,136,856,000		1,136,856,000	47,861,000
Capital calls and distributions, net	(50,978,000)							(50,978,000)
Net change in unrealized gains and losses on AFS securities, net of tax	139,934,000					139,934,000	139,934,000
Amortization of unrealized gains on securities transferred from AFS to HTM, net of tax	(1,558,000)					(1,558,000)	(1,558,000)
Foreign currency translation adjustments, net of tax	2,319,000					2,319,000	2,319,000
Share-based compensation, net	66,815,000			66,815,000			66,815,000
Reclassification of stranded tax effect for ASU 2018-02	0
Common stock repurchases (in shares)			(1,532,210)
Common stock repurchases	(352,511,000)		$ (1,000)		(352,510,000)		(352,511,000)
Acquisition of SVB Leerink	5,256,000							5,256,000
Issuance of Series A Preferred Stock	340,138,000	340,138,000					340,138,000
Net change in unrealized gains and losses on cash flow hedges, net of tax	(2,130,000)					(2,130,000)	(2,130,000)
Balance (in shares) at Dec. 31, 2019			51,655,607
Balance, end of period, net of tax at Dec. 31, 2019	$ 6,621,080,000	$ 340,138,000	$ 52,000	$ 1,470,071,000	$ 4,575,601,000	$ 84,445,000	$ 6,470,307,000	$ 150,773,000

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net income before noncontrolling interests	$ 1,184,717	$ 1,011,348	$ 519,178
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	106,416	87,870	92,304
Gains on investment securities, net	(134,670)	(88,094)	(45,547)
Distributions of earnings from non-marketable and other equity securities	95,131	72,015	45,867
Depreciation and amortization	82,717	57,906	56,123
Amortization of premiums and discounts on investment securities, net	15,513	(28)	2,530
Amortization of share-based compensation	66,815	45,675	36,900
Amortization of deferred loan fees	(155,429)	(128,077)	(111,738)
Deferred income tax (benefit) expense	(3,072)	(21,061)	25,187
Excess tax benefit from exercise of stock options and vesting of restricted shares	(9,588)	(17,989)	(18,014)
Losses from the write-off of premises and equipment	5,219	7,278	0
Other losses (gains)	8,959	0	(3,308)
Changes in other assets and liabilities:
Accrued interest receivable and payable, net	(24,189)	(55,834)	(31,372)
Accounts receivable and payable, net	(17,019)	(23,020)	3,481
Income tax receivable and payable, net	(11,630)	(5,820)	46,168
Accrued compensation	(15,253)	56,874	31,689
Foreign exchange spot contracts, net	59,998	24,018	(20,891)
Other, net	(74,240)	(54,039)	15,909
Net cash provided by operating activities	1,164,129	933,562	646,865
Cash flows from investing activities:
Purchases of available-for-sale securities	(9,872,095)	(668,264)	(2,420,741)
Proceeds from sales of available-for-sale securities	2,189,087	474,482	580,871
Proceeds from maturities and paydowns of available-for-sale securities	1,643,357	3,436,064	3,339,574
Purchases of held-to-maturity securities	(492,502)	(4,726,595)	(5,967,223)
Proceeds from maturities and paydowns of held-to-maturity securities	2,124,513	1,891,761	1,708,001
Purchases of non-marketable and other equity securities	(136,186)	(81,574)	(44,047)
Proceeds from sales and distributions of capital of non-marketable and other equity securities	113,526	95,025	51,052
Net increase in loans	(4,773,775)	(5,175,409)	(3,170,099)
Purchases of premises and equipment	(65,479)	(45,865)	(50,884)
Proceeds from sale of equity valuation services business	0	0	3,000
Acquisition of SVB Leerink	(102,328)	0	0
Net cash used for investing activities	(9,371,882)	(4,800,375)	(5,970,496)
Cash flows from financing activities:
Net increase in deposits	12,428,907	5,074,825	5,274,207
Net (decrease) increase in short-term borrowings	(613,982)	(402,318)	521,062
Principal payments of long-term debt	(358,395)	0	(97,781)
(Distributions to noncontrolling interests), net of contributions from noncontrolling interests	(50,978)	(28,494)	(23,535)
Net proceeds from the issuance of preferred stock	340,138	0	0
Common stock repurchase	(352,511)	(147,123)	0
Proceeds from issuance of common stock, ESPP and ESOP	24,818	18,387	27,003
Net cash provided by financing activities	11,417,997	4,515,277	5,700,956
Net increase in cash and cash equivalents	3,210,244	648,464	377,325
Cash and cash equivalents at beginning of period	3,571,539	2,923,075	2,545,750
Cash and cash equivalents at end of period	6,781,783	3,571,539	2,923,075
Cash paid during the period for:
Interest	217,961	75,601	45,592
Income taxes	422,346	376,425	277,823
Noncash items during the period:
Changes in unrealized gains and losses on available-for-sale securities, net of tax	139,934	(15,498)	(24,788)
Distributions of stock from investments	8,917	5,277	6,807
Equity warrant assets
Adjustments to reconcile net income to net cash provided by operating activities:
Changes in fair value of derivatives	2,240	(24,417)	(11,862)
Derivative
Adjustments to reconcile net income to net cash provided by operating activities:
Changes in fair value of derivatives	$ (18,506)	$ (11,043)	$ 14,261

Nature of Business	12 Months Ended
Nature of Business	Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business	Nature of Business SVB Financial Group is a diversified financial services company, as well as a bank holding company and a financial holding company. SVB Financial was incorporated in the state of Delaware in March 1999. Through our various subsidiaries and divisions, we offer a diverse set of banking and financial products and services to support our clients of all sizes and stages throughout their life cycles. In these notes to our consolidated financial statements, when we refer to “SVB Financial Group,” “SVBFG”, the “Company,” “we,” “our,” “us” or use similar words, we mean SVB Financial Group and all of its subsidiaries collectively, including Silicon Valley Bank (the “Bank”), unless the context requires otherwise. When we refer to “SVB Financial” or the “Parent” we are referring only to the parent company entity, SVB Financial Group (not including subsidiaries). We offer commercial banking products and services through our principal subsidiary, the Bank, which is a California-chartered bank founded in 1983 and a member of the Federal Reserve System. Through its subsidiaries, the Bank also offers asset management, private wealth management and other investment services. In addition, through SVB Financial's other subsidiaries and divisions, we offer investment banking and non-banking products and services, such as funds management and M&A advisory services. We primarily focus on serving corporate clients in the following niches: technology, life science/healthcare, private equity/venture capital and premium wine. Our corporate clients range widely in terms of size and stage of maturity. Additionally, we focus on cultivating strong relationships with firms within the venture capital and private equity community worldwide, many of which are also our clients and may invest in our corporate clients. Headquartered in Santa Clara, California, we operate in centers of innovation in the United States and around the world. For reporting purposes, SVB Financial Group has four operating segments for which we report financial information in this report: Global Commercial Bank, SVB Private Bank, SVB Capital and SVB Leerink. Financial information, results of operations and a description of the services provided by our operating segments are set forth in Note 25—“Segment Reporting” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates may change as new information is obtained. Significant items that are subject to such estimates include measurements of fair value, the valuation of non-marketable and other equity securities, the valuation of equity warrant assets and the adequacy of the allowance for loan losses and the allowance for unfunded credit commitments. The following discussion provides additional background on our significant accounting policies.

Principles of Consolidation and Presentation

Our consolidated financial statements include the accounts of SVB Financial Group and consolidated entities. We consolidate voting entities in which we have control through voting interests or entities through which we have a controlling financial interest in a variable interest entity ("VIE"). We determine whether we have a controlling financial interest in a VIE by determining if we have (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses or (c) the right to receive the expected returns of the entity. Generally, we have significant variable interests if our commitments to a limited partnership investment represent a significant amount of the total commitments to the entity. We also evaluate the impact of related parties on our determination of variable interests in our consolidation conclusions. We consolidate VIEs in which we are the primary beneficiary based on a controlling financial interest. If we are not the primary beneficiary of a VIE, we record our pro-rata interests based on our ownership percentage.

VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or equity investors and, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity or (c) the right to receive the expected returns of the entity. We assess VIEs to determine if we are the primary beneficiary of a VIE. A primary beneficiary is defined as a variable interest holder that has a controlling financial interest. A controlling financial interest requires both: (a) the power to direct the activities that most significantly impact the VIEs economic performance, and (b) the obligation to absorb losses or receive benefits of a VIE that could potentially be significant to a VIE. Under this analysis, we also evaluate kick-out rights and other participating rights, which could provide us a controlling financial interest. The primary beneficiary of a VIE is required to consolidate the VIE.

We also evaluate fees paid to managers of our limited partnership investments. We exclude those fee arrangements that are not deemed to be variable interests from the analysis of our interests in our investments in VIEs and the determination of a primary beneficiary, if any. Fee arrangements based on terms that are customary and commensurate with the services provided are deemed not to be variable interests and are, therefore, excluded.

All significant intercompany accounts and transactions with consolidated entities have been eliminated. We have not provided financial or other support during the periods presented to any VIE that we were not previously contractually required to provide.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, cash balances due from banks, interest-earning deposits, Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities. For the consolidated statements of cash flows, we consider cash equivalents to be investments that are readily convertible to known amounts of cash, so near to their maturity that they present an insignificant risk of change in fair value due to changes in market interest rates, and purchased in conjunction with our cash management activities.

Investment Securities

Available-for-Sale Securities

Our available-for-sale securities portfolio is a fixed income investment portfolio that is managed to earn an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and credit diversification and meeting our asset/liability management objectives. Unrealized gains and losses on available-for-sale securities, net of applicable taxes, are reported in accumulated other comprehensive income, which is a separate component of SVBFG's stockholders' equity, until realized.

We analyze available-for-sale securities for other-than-temporary impairment each quarter. Market valuations represent the current fair value of a security at a specified point in time and incorporates the risk of timing of interest due and the return of principal over the contractual life of each security. Gains and losses on securities are realized when there is a sale of the security prior to maturity. A credit downgrade represents an increased level of risk of other-than-temporary impairment, and as a part of our consideration of recording an other-than-temporary impairment we will assess the issuer's ability to service the debt and to repay the principal at contractual maturity.

We apply the other-than-temporary impairment standards of ASC 320, Investments-Debt and Equity Securities. For our debt securities, we have the intent and ability to hold these securities until we recover our cost less any credit-related loss. We separate the amount of the other-than-temporary impairment, if any, into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between a security's amortized cost basis and the present value of expected future cash flows discounted at the security's effective interest rate. The amount due to all other factors is recognized in other comprehensive income.

We consider numerous factors in determining whether a credit loss exists and the period over which the debt security is expected to recover. The following list is not meant to be all inclusive. All of the following factors are considered:


•	The length of time and the extent to which the fair value has been less than the amortized cost basis (severity and duration);


•	Adverse conditions specifically related to the security, an industry or geographic area; for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, changes in the financial condition of the underlying loan obligors. Examples of those changes include any of the following:


◦	Changes in technology;


◦	The discontinuance of a segment of the business that may affect the future earnings potential of the issuer or underlying loan obligors of the security; and


◦	Changes in the quality of the credit enhancement.


•	The historical and implied volatility of the fair value of the security;


•	The payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future;


•	Failure of the issuer of the security to make scheduled interest or principal payments;


•	Any changes to the rating of the security by a rating agency; and


•	Recoveries or additional declines in fair value after the balance sheet date.

In accordance with ASC 310-20, Receivables-Nonrefundable Fees and Other Costs, we use estimates of future principal prepayments, provided by third-party market-data vendors, in addition to actual principal prepayment experience to calculate the constant effective yield necessary to apply the effective interest method in the amortization of purchase discounts or premiums on mortgage-backed securities and fixed rate collateralized mortgage obligations. The accretion and amortization of discounts and premiums, respectively, are included in interest income over the contractual terms of the underlying securities replicating the effective interest method.

Held-to-Maturity Securities

Debt securities purchased in which we have the positive intent and ability to hold to its maturity are classified as held-to-maturity securities and are recorded at amortized cost.

Transfers of investment securities into the held-to-maturity category from the available-for-sale category are made at fair value at the date of transfer. The net unrealized gains, net of tax, are retained in other comprehensive income, and the carrying value of the held-to-maturity securities are amortized over the life of the securities in a manner consistent with the amortization of a premium or discount.

Non-Marketable and Other Equity Securities

Non-marketable and other equity securities include investments in venture capital and private equity funds, SPD-SVB, debt funds, private and public portfolio companies, including public equity securities held as a result of equity warrant assets exercised, and investments in qualified affordable housing projects. A majority of these investments are managed through our SVB Capital funds business in funds of funds and direct venture funds. Our accounting for investments in non-marketable and other equity securities depends on several factors, including the level of ownership, power to control and the legal structure of the subsidiary making the investment. As further described below, we base our accounting for such securities on: (i) fair value accounting, (ii) other investments without a readily determinable fair value, (iii) equity method accounting and (iv) the proportional amortization method which is used only for qualified affordable housing projects.

Fair Value Accounting

Our managed funds are investment companies under the AICPA Audit and Accounting Guide for Investment Companies (codified in ASC 946) and accordingly, these funds report their investments at estimated fair value, with unrealized gains and losses resulting from changes in fair value reflected as investment gains or losses in our consolidated statements of income. Our non-marketable and other equity securities recorded pursuant to fair value accounting consist of our investments through the following funds:


•	Funds of funds, which make investments in venture capital and private equity funds, and


•	Direct venture funds, which make equity investments in privately held companies.

A summary of our ownership interests in the investments held under fair value accounting as of December 31, 2019 is presented in the following table:



Limited partnership	Company Direct and Indirect Ownership in Limited Partnership
Managed funds of funds
Strategic Investors Fund, LP	12.6	%
Capital Preferred Return Fund, LP	20.0
Growth Partners, LP	33.0
Managed direct venture funds
CP I, LP	10.7

The general partner interests of these funds are controlled, and in some cases, owned by SVB Financial. The limited partners of these funds do not have substantive participating or kick-out rights. Therefore, these funds are consolidated and any gains or losses resulting from changes in the estimated fair value of the investments are recorded as investment gains or losses in our consolidated net income.

Under fair value accounting, investments are carried at their estimated fair value based on financial information obtained as the general partner of the fund or obtained from the funds' respective general partner. For direct private company investments, valuations are based upon consideration of a range of factors including, but not limited to, the price at which the investment was acquired, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies and financing transactions subsequent to the acquisition of the investment. For direct equity investments in public companies, valuations are based on quoted market prices less a discount if the securities are subject to certain sales restrictions. Sales restriction discounts generally range from ten percent to twenty percent depending on the sale restrictions which typically range from three to six months. The valuation of non-marketable securities in shares of private company capital stock and the valuation of other securities in shares of public company stock with certain sales restrictions is subject to significant judgment. The inherent uncertainty in the process of valuing securities for which a ready market does not exist may cause our estimated values of these securities to differ significantly from the values that would have been derived had a ready market for the securities existed, and those differences could be material.

For our fund investments, we utilize the net asset value as obtained from the general partners of the fund investments as the funds do not have a readily determinable fair value. The general partners of our fund investments prepare their financial statements using guidance consistent with fair value accounting. We account for differences between our measurement date and the date of the fund investment's net asset value by using the most recent available financial information from the investee general partner, for example September 30^th, for our December 31^st consolidated financial statements. We adjust the value of our investments for any contributions paid, distributions received from the investment and known significant fund transactions or market events about which we are aware through information provided by the fund managers or from publicly available transaction data during the reporting period.

Gains or losses resulting from changes in the estimated fair value of the investments and from distributions received are recorded as gains on investment securities, net, a component of noninterest income. The portion of any investment gains or losses attributable to the limited partners is reflected as net income attributable to noncontrolling interests and adjusts our net income to reflect its percentage ownership.

Other Investments without a Readily Determinable Fair Value

Effective January 1, 2018 we adopted ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities which eliminated the concept of cost method accounting and created an additional method of accounting, other investments without a readily determinable fair value. These investments include direct equity investments in private companies. The carrying value is based on the price at which the investment was acquired less any impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies, financing transactions subsequent to the acquisition of the investment and a discount for certain investments that have lock-up restrictions or other features that indicate a discount to fair value is warranted.

Equity Method

Our equity method non-marketable securities consist of investments in venture capital and private equity funds, privately-held companies, debt funds, and joint ventures. Our equity method non-marketable securities and related accounting policies are described as follows:


•	Equity securities, such as preferred or common stock in privately-held companies in which we hold a voting interest of at least 20 percent, or in which we have the ability to exercise significant influence over the investees' operating and financial policies through board involvement or other influence, are accounted for under the equity method,


•	Investments in limited partnerships in which we hold voting interests of more than 5 percent, or in which we have the ability to exercise significant influence over the partnerships' operating and financial policies, are accounted for using the equity method, and


•	Our China Joint Venture partnership, for which we have 50 percent ownership, is accounted for under the equity method.

We recognize our proportionate share of the results of operations of these equity method investees in our results of operations, based on the most current financial information available from the investee. We review our investments accounted for under the equity method at least quarterly for possible other-than-temporary impairment. Our review typically includes an analysis of facts and circumstances for each investment, the expectations of the investment's future cash flows and capital needs, variability of its business and the company's exit strategy. For our fund investments, we utilize the net asset value per share as provided by the general partners of the fund investments. We account for differences between our measurement date and the date of the fund investment's net asset value by using the most recent available financial information from the investee general partner, for example September 30^th, for our December 31^st consolidated financial statements. We adjust the value of our investments for any contributions paid, distributions received from the investment, and known significant fund transactions or market events about which we are aware through information provided by the fund managers or from publicly available transaction data during the reporting period.

We reduce our investment value when we consider declines in value to be other-than-temporary and recognize the estimated loss as a loss on investment securities, a component of noninterest income.

Proportional Amortization Method

In order to fulfill our responsibilities under the Community Reinvestment Act, we invest as a limited partner in low income housing partnerships that operate qualified affordable housing projects and generate tax benefits, including federal low income housing tax credits, for investors. The partnerships are deemed to be VIEs because they do not have sufficient equity investment at risk and are structured with non-substantive voting rights. We are not the primary beneficiary of the VIEs and do not consolidate them. Our investments in low income housing partnerships are recorded in non-marketable and other equity securities within our investment securities portfolio on the consolidated balance sheet. As a practical expedient, we amortize the investment in proportion to the allocated tax benefits under the proportional amortization method of accounting and present such benefits net of investment amortization in income tax expense.

Loans

Loans are reported at the principal amount outstanding, net of unearned loan fees. Unearned loan fees reflect unamortized deferred loan origination and commitment fees net of unamortized deferred loan origination costs. In addition to cash loan fees, we often obtain equity warrant assets that give us an option to purchase a position in a client company's stock in consideration for providing credit facilities. The grant date fair values of these equity warrant assets are deemed to be loan fees and are deferred as unearned income and recognized as an adjustment of loan yield through loan interest income. The net amount of unearned loan fees is amortized into loan interest income over the contractual terms of the underlying loans and commitments using the constant effective yield method, adjusted for actual loan prepayment experience, or the straight-line method, as applicable.

Allowance for Loan Losses

The allowance for loan losses considers credit risk and is established through a provision for loan losses charged to expense. Our allowance for loan losses is established for estimated loan losses that are probable and incurred but not yet realized. Our evaluation process is designed to determine that the allowance for loan losses is appropriate at the balance sheet date. The process of estimating loan losses is inherently imprecise.

We maintain a systematic process for the evaluation of individual loans and pools of loans for inherent risk of loan losses. At the time of approval, each loan in our portfolio is assigned a Credit Risk Rating and industry niche. Credit Risk Ratings are assigned on a scale of 1 to 10, with 1 representing loans with a low risk of nonpayment, 9 representing loans with the highest risk of nonpayment, and 10 representing loans which have been charged-off. The credit risk ratings for each loan are monitored and updated on an ongoing basis. This Credit Risk Rating process includes, but is not limited to, consideration of such factors as payment status, the financial condition and operating performance of the borrower, borrower compliance with loan covenants, underlying collateral values and performance trends, the degree of access to additional capital, the presence of credit enhancements such as third party guarantees (where applicable), the degree to which the borrower is sensitive to external factors, the depth and experience of the borrower's management team, potential loan concentrations, and general economic conditions. Our policies require a committee of senior management to review, at least quarterly, credit relationships with a credit risk rating of 5 through 9 that exceed specific dollar values. Our review process evaluates the appropriateness of the credit risk rating and allocation of the allowance for loan losses, as well as other account management functions. The allowance for loan losses is determined based on a qualitative analysis and a formula allocation for similarly risk-rated loans by portfolio segment and

individually for impaired loans. The formula allocation provides the average loan loss experience for each portfolio segment, which considers our quarterly historical loss experience since the year 2000, both by risk-rating category and client industry sector. The resulting loan loss factors for each risk-rating category and client industry sector are ultimately applied to the respective period-end client loan balances for each corresponding risk-rating category by client industry sector to provide an estimation of the allowance for loan losses. The probable loan loss experience for any one year period of time is reasonably expected to be greater or less than the average as determined by the loss factors. As such, management applies a qualitative allocation to the results of the aforementioned model to ascertain the total allowance for loan losses. This qualitative allocation is based on management's assessment of the risks that may lead to a loan loss experience different from our historical loan loss experience. Based on management's prediction or estimate of changing risks in the lending environment, the qualitative allocation may vary significantly from period to period and includes, but is not limited to, consideration of the following factors:


•	Changes in lending policies and procedures, including underwriting standards and collections, and charge-off and recovery practices;


•	Changes in national and local economic business conditions, including the market and economic condition of our clients' industry sectors;


•	Changes in the nature of our loan portfolio;


•	Changes in experience, ability, and depth of lending management and staff;


•	Changes in the trend of the volume and severity of past due and classified loans;


•	Changes in the trend of the volume of nonaccrual loans, troubled debt restructurings and other loan modifications;


•	Reserve floor for portfolio segments that would not draw a minimum reserve based on the lack of historical loan loss experience;


•	Reserve for large funded loan exposure;


•	Reserve for performing impaired loan exposure; and


•	Other factors as determined by management from time to time.

While the evaluation process of our allowance for loan losses uses historical and other objective information, the classification of loans and the establishment of the allowance for loan losses rely, to a great extent, on the judgment and experience of our management.

Allowance for Unfunded Credit Commitments

We record a liability for probable and estimable incurred losses associated with our unfunded credit commitments being funded and subsequently being charged off. Each quarter, every unfunded client credit commitment is allocated to a credit risk-rating in accordance with each client's credit risk rating and portfolio segment. We use the segment specific historical loan loss factors described under our allowance for loan losses to calculate the loan loss experience if unfunded credit commitments are funded. Separately, we use historical trends to calculate a probability of an unfunded credit commitment being funded. We apply the loan funding probability factor to risk-factor adjusted unfunded credit commitments by credit risk-rating and portfolio segment to derive the allowance for unfunded credit commitments, similar to funded loans. The allowance for unfunded credit commitments also includes certain qualitative allocations as deemed appropriate by management. We include the allowance for unfunded credit commitments in other liabilities and the related provision in our provision for credit losses.

Uncollectible Loans and Write-offs

Our charge-off policy applies to all loans, regardless of portfolio segment. Commercial loans are considered for a full or partial charge-off in the event that principal or interest is over 180 days past due and the loan lacks sufficient collateral and it is not in the process of collection, provided that a loss event has been defined and the charge-off is consistent with GAAP. Consumer loans are considered for a full or partial charge-off in the event that principal or interest is over 120 days past due and the loan lacks sufficient collateral and it is not in the process of collection, provided that a loss event has been defined and the charge-off is consistent with GAAP. We also consider writing off loans in the event of any of the following circumstances: 1) the loan, or a portion of the loan is deemed uncollectible due to: a) the borrower's inability to make recurring payments, b) material changes in the borrower's financial condition, or c) the expected sale of all or a portion of the borrower's business is insufficient to repay the loan in full, or 2) the loan has been identified for charge-off by regulatory authorities.

Troubled Debt Restructurings

A TDR arises from the modification of a loan where we have granted a concession to the borrower related to the borrower's financial difficulties that we would not have otherwise considered for economic or legal reasons. These concessions may include: (1) deferral of payment for more than an insignificant period of time that does not include sufficient offsetting borrower concessions; (2) interest rate reductions; (3) extension of the maturity date outside of ordinary course extension; (4) principal forgiveness; and/or (5) reduction of accrued interest.

We use the factors in ASC 310-40, Receivables, Troubled Debt Restructurings by Creditors, in analyzing when a borrower is experiencing financial difficulty, and when we have granted a concession, both of which must be present for a restructuring to meet the criteria of a TDR. If we determine that a TDR exists, we measure impairment based on the present value of expected future cash flows discounted at the loan's effective interest rate, except that as a practical expedient, we may also measure impairment based on a loan's observable market price, or the fair value of the collateral less selling costs if the loan is a collateral-dependent loan.

Impaired Loans

A loan is considered impaired when, based upon currently known information, it is deemed probable that we will be unable to collect all amounts due according to the contractual terms of the agreement. On a quarterly basis, we review our loan portfolio for impairment. Within each class of loans, we review individual loans for impairment based on credit risk ratings. Loans risk-rated 5 through 7 are performing loans; however, we consider them as demonstrating higher risk, which requires more frequent review of the individual exposures; these translate to an internal rating of "Performing (Criticized)" and could be classified as a performing impaired loan.

For each loan identified as impaired, we measure the impairment based upon the present value of expected future cash flows discounted at the loan's effective interest rate. In limited circumstances, we may measure impairment based on the loan's observable market price or the fair value of the collateral less selling costs if the loan is collateral dependent. Impaired collateral-dependent loans will have independent appraisals completed and accepted at least annually. The fair value of the collateral will be determined by the most recent appraisal, as adjusted to reflect a reasonable marketing period for the sale of the asset(s) and an estimate of reasonable selling expenses.

If it is determined that the value of an impaired loan is less than the recorded investment in the loan, net of previous charge-offs and payments collected, we recognize impairment through the allowance for loan losses as determined by our analysis.

Nonaccrual Loans

Loans are placed on nonaccrual status when they become 90 days past due as to principal or interest payments (unless the principal and interest are well secured and in the process of collection); or when we have determined, based upon currently known information, that the timely collection of principal or interest is not probable.

When a loan is placed on nonaccrual status, the accrued interest and fees are reversed against interest income and the loan is accounted for using the cost recovery method thereafter until qualifying for return to accrual status. For a loan to be returned to accrual status, all delinquent principal and interest must become current in accordance with the terms of the loan agreement and future collection of remaining principal and interest must be deemed probable. We apply a cost recovery method in which all cash received is applied to the loan principal until it has been collected. Under this approach, interest income is recognized after total cash flows received exceed the recorded investment at the date of initial nonaccrual. All of our nonaccrual loans have credit risk ratings of 8 or 9 and are classified under the nonperforming impaired category.

Premises and Equipment

Premises and equipment are reported at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the terms of the related leases, whichever is shorter. The maximum estimated useful lives by asset classification are as follows:



Leasehold improvements		Lesser of lease term or asset life
Furniture and equipment		7 years
Computer software		3-7 years
Computer hardware		3-5 years

We capitalize the costs of computer software developed or obtained for internal use, including costs related to developed software, purchased software licenses and certain implementation costs.

For property and equipment that is retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in noninterest expense in consolidated net income.

Lease Obligations

We have entered into leases for real estate and various equipment utilized for the business. At the inception of the lease, each lease is evaluated to determine whether the lease will be accounted for as an operating or finance lease. We had no finance lease obligations at December 31, 2019 and 2018. We have made an accounting policy election not to recognize right-of-use assets and lease liabilities that arise from short-term leases for any class of underlying asset. In addition to excluding short-term leases, we have implemented an accounting policy in which non-lease components are not separated from lease components in the measurement of right-of-use ("ROU") asset and lease liabilities for all lease contracts.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Business Combinations

Business combinations are accounted for under the acquisition method of accounting. Acquired assets, including separately identifiable intangible assets, and assumed liabilities are recorded at their acquisition-date estimated fair values. The excess of the cost of acquisition over these fair values is recognized as goodwill. During the measurement period, which cannot exceed one year from the acquisition date, changes to estimated fair values are recognized as an adjustment to goodwill. Certain transaction costs are expensed as incurred.

Goodwill and Other Intangible Assets

Goodwill is not amortized and is subject, at a minimum, to an annual impairment assessment. A quantitative assessment will be completed if we have not recently completed a fair value assessment of the associated reporting unit and compared the assessed fair value of that reporting unit with its carrying amount, including goodwill. Should we be required to calculate the fair value of the entity, we would generally apply a discounted cash flow analysis that uses forecasted performance estimates, and a discount rate leveraging a reporting unit specific capital asset pricing model, which in turn uses assumptions related to market performance and various macroeconomic and reporting unit specific risks. If this quantitative assessment was recently completed and if we deem the estimate to be current and reliable, we will not perform a full quantitative assessment of the reporting unit’s fair value for that reporting period. Instead, we will qualitatively determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. As part of this qualitative analysis we consider macroeconomic factors that might impact the entity’s performance, entity-specific financial performance of the reporting unit, changes in management or strategy and other factors. We will evaluate goodwill for impairment more frequently if circumstances indicate that the fair value of our reporting units is less than their carrying value, including goodwill.

Intangible assets with finite lives are amortized over their estimated useful lives and all intangible assets are subject to impairment if events or circumstances indicate that the fair value is less than the carrying amount.

Fair Value Measurements

Our available-for-sale securities, derivative instruments and certain non-marketable and other equity securities are financial instruments recorded at fair value on a recurring basis. We make estimates regarding valuation of assets and liabilities measured at fair value in preparing our consolidated financial statements.

Fair Value Measurement-Definition and Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (the “exit price”) in an orderly transaction between market participants at the measurement date. There is a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable and on the significance of those inputs in the fair value measurement. Observable inputs reflect market-derived or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data and views of market participants. The three levels for measuring fair value are based on the reliability of inputs and are as follows:

Level 1

Fair value measurements based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment. Assets utilizing Level 1 inputs include U.S. Treasury securities, foreign government debt securities, exchange-traded equity securities and certain marketable securities accounted for under fair value accounting.

Level 2

Fair value measurements based on quoted prices in markets that are not active or for which all significant inputs are observable, directly or indirectly. Valuations for the available-for-sale securities are provided by independent pricing service providers who have experience in valuing these securities and are compared to the average of quoted market prices obtained from independent brokers. We perform a monthly analysis on the values received from third parties to ensure that the prices represent a reasonable estimate of the fair value. The procedures include, but are not limited to, initial and ongoing review of third-party pricing methodologies, review of pricing trends and monitoring of trading volumes. Additional corroboration, such as obtaining a non-binding price from a broker, may be obtained depending on the frequency of trades of the security and the level of liquidity or depth of the market. We ensure prices received from independent brokers represent a reasonable estimate of the fair value through the use of observable market inputs including comparable trades, yield curve, spreads and, when available, market indices. If we determine that there is a more appropriate fair value based upon the available market data, the price received from the third party is adjusted accordingly. Below is a summary of the significant inputs used for each class of Level 2 assets and liabilities:

U.S. agency debentures: Fair value measurements of U.S. agency debentures are based on the characteristics specific to bonds held, such as issuer name, issuance date, coupon rate, maturity date and any applicable issuer call option features. Valuations are based on market spreads relative to similar term benchmark market interest rates, generally U.S. Treasury securities.

Agency-issued mortgage-backed securities: Agency-issued mortgage-backed securities are pools of individual conventional mortgage loans underwritten to U.S. agency standards with similar coupon rates, tenor, and other attributes such as geographic location, loan size and origination vintage. Fair value measurements of these securities are based on observable price adjustments relative to benchmark market interest rates taking into consideration estimated loan prepayment speeds.

Agency-issued collateralized mortgage obligations: Agency-issued collateralized mortgage obligations are structured into classes or tranches with defined cash flow characteristics and are collateralized by U.S. agency-issued mortgage pass-through securities. Fair value measurements of these securities incorporate similar characteristics of mortgage pass-through securities such as coupon rate, tenor, geographic location, loan size and origination vintage, in addition to incorporating the effect of estimated prepayment speeds on the cash flow structure of the class or tranche. These measurements incorporate observable market spreads over an estimated average life after considering the inputs listed above.

Agency-issued commercial mortgage-backed securities: Fair value measurements of these securities are based on spreads to benchmark market interest rates (usually U.S. Treasury rates or rates observable in the swaps market), prepayment speeds, loan default rate assumptions and loan loss severity assumptions on underlying loans.

Foreign exchange forward and option contract assets and liabilities: Fair value measurements of these assets and liabilities are priced based on spot and forward foreign currency rates and option volatility assumptions.

Interest rate derivative and interest rate swap assets and liabilities: Fair value measurements of interest rate derivatives and interest rate swaps are priced considering the coupon rate of the fixed leg of the contract and the variable coupon rate on the floating leg of the contract. Valuation is based on both spot and forward rates on the swap yield curve and the credit worthiness of the contract counterparty.

Other equity securities: Fair value measurements of equity securities of public companies are priced based on quoted market prices less a discount if the securities are subject to certain sales restrictions. Certain sales restriction discounts generally range from 10 percent to 20 percent depending on the duration of the sale restrictions which typically range from three to six months.

Equity warrant assets (public portfolio): Fair value measurements of equity warrant assets of publicly-traded portfolio companies are valued based on the Black-Scholes option pricing model. The model uses the price of publicly-traded companies (underlying stock price), stated strike prices, warrant expiration dates, the risk-free interest rate and market-observable option volatility assumptions.

Level 3

The fair value measurement is derived from valuation techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions we believe market participants would use in pricing the asset. The valuation techniques are consistent with the market approach, income approach and/or the cost approach used to measure fair value. Below is a summary of the valuation techniques used for each class of Level 3 assets:

Venture capital and private equity fund investments not measured at net asset value: Fair value measurements are based on consideration of a range of factors including, but not limited to, the price at which the investment was acquired, the term and nature of the investment, local market conditions, values for comparable securities, and as it relates to the private company, the current and projected operating performance, exit strategies and financing transactions subsequent to the acquisition of the investment. The significant unobservable inputs used in the fair value measurement include the information about each portfolio company, including actual and forecasted results, cash position, recent or planned transactions and market comparable companies. Significant changes to any one of these inputs in isolation could result in a significant change in the fair value measurement; however, we generally consider all factors available through ongoing communication with the portfolio companies and venture capital fund managers to determine whether there are changes to the portfolio company or the environment that indicate a change in the fair value measurement.

Equity warrant assets (public portfolio): Fair value measurements of equity warrant assets of publicly-traded portfolio companies are valued based on the Black-Scholes option pricing model. The model uses the price of publicly-traded companies (underlying stock price), stated strike prices, warrant expiration dates, the risk-free interest rate and market-observable option volatility assumptions. Modeled asset values are further adjusted by applying a discount of up to 20 percent for certain warrants that have certain sales restrictions or other features that indicate a discount to fair value is warranted. As sale restrictions are lifted, discounts are adjusted downward to zero once all restrictions expire or are removed.

Equity warrant assets (private portfolio): Fair value measurements of equity warrant assets of private portfolio companies are priced based on a Black-Scholes option pricing model to estimate the asset value by using stated strike prices, option expiration dates, risk-free interest rates and option volatility assumptions. Option volatility assumptions used in the Black-Scholes model are based on public market indices whose members operate in similar industries as companies in our private company portfolio. Option expiration dates are modified to account for estimates to actual life relative to stated expiration. Overall model asset values are further adjusted for a general lack of liquidity due to the private nature of the associated underlying company. There is a direct correlation between changes in the volatility and remaining life assumptions in isolation and the fair value measurement while there is an inverse correlation between changes in the liquidity discount assumption and the fair value measurement.

It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. When available, we use quoted market prices to measure fair value. If market prices are not available,

fair value measurement is based upon valuation approaches that use primarily market-based or independently-sourced market parameters, including interest rate yield curves, prepayment speeds, option volatilities and currency rates. Substantially all of our financial instruments use the foregoing methodologies, and are categorized as a Level 1 or Level 2 measurement in the fair value hierarchy. However, in certain cases, when market observable inputs for our valuation techniques may not be readily available, we are required to make judgments about assumptions we believe market participants would use in estimating the fair value of the financial instrument, and based on the significance of those judgments, the measurement may be determined to be a Level 3 fair value measurement.

The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not fully available, management judgment is necessary to estimate fair value. For inactive markets, there is little information, if any, to evaluate if individual transactions are orderly. Accordingly, we are required to estimate, based upon all available facts and circumstances, the degree to which orderly transactions are occurring and provide more weighting to price quotes that are based upon orderly transactions. In addition, changes in the market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. Therefore, when market data is not available, we use valuation techniques requiring more management judgment to estimate the appropriate fair value measurement. Accordingly, the degree of judgment exercised by management in determining fair value is greater for financial assets and liabilities categorized as Level 3.

Fee-based Services Revenue Recognition

Refer to Note 17—“Noninterest Income” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report for our fee-based services revenue recognition policies for our contracts with customers.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Our federal, state and foreign income tax provisions are based upon taxes payable for the current year, current year changes in deferred taxes related to temporary differences between the tax basis and financial statement balances of assets and liabilities, and a reserve for uncertain tax positions. Deferred tax assets and liabilities are included in the consolidated financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is provided, when it is determined based upon available evidence, that it is more likely than not that some portion of the deferred tax asset will not be realized. We file a consolidated federal income tax return, and consolidated, combined, or separate state income tax returns as appropriate. Our foreign incorporated subsidiaries file tax returns in the applicable foreign jurisdictions. We record interest and penalties related to unrecognized tax benefits in other noninterest expense, a component of consolidated net income.

Share-Based Compensation

For all stock-based awards granted, stock-based compensation expense is amortized on a straight-line basis over the requisite service period, including consideration of vesting conditions and anticipated forfeitures. The fair value of stock options are measured using the Black-Scholes option-pricing model and the fair value for restricted stock awards and restricted stock units are based on the quoted price of our common stock on the date of grant.

Earnings Per Share

Basic earnings per common share is computed using the weighted average number of common stock shares outstanding during the period. Diluted earnings per common share is computed using the weighted average number of common stock shares and potential common shares outstanding during the period. Potential common shares consist of stock options, ESPP shares and restricted stock units. Common stock equivalent shares are excluded from the computation if the effect is antidilutive.

Derivative Financial Instruments

All derivative instruments are recorded on the balance sheet at fair value. The accounting for changes in fair value of a derivative financial instrument depends on whether the derivative financial instrument is designated and qualifies as part of a hedging relationship and, if so, the nature of the hedging activity. Changes in fair value are recognized through earnings for derivatives that do not qualify for hedge accounting treatment, or that have not been designated in a hedging relationship.

Cash Flow Hedges

For derivative instruments that are designated and qualify as a cash flow hedge, changes in the fair value of the derivative are recorded in accumulated other comprehensive income and recognized in earnings as the hedged item affects earnings. Derivative amounts affecting earnings are recognized consistent with the classification of the hedged item in the line item "loans" as part of interest income, a component of consolidated net income. We assess hedge effectiveness under ASC 815, Derivatives and Hedging ("ASC 815"), on a quarterly basis to ensure all hedges remain highly effective to ensure hedge accounting under ASC 815 can be applied. If the hedging relationship no longer exists or no longer qualifies as a hedge per ASC 815, any amounts remaining as gain or loss in accumulated other comprehensive income are reclassified into earnings in the line item "loans" as part of interest income, a component of consolidated net income.

Equity Warrant Assets

In connection with negotiated credit facilities and certain other services, we may obtain equity warrant assets giving us the right to acquire stock in primarily private, venture-backed companies in the technology and life science/healthcare industries. We hold these assets for prospective investment gains. We do not use them to hedge any economic risks nor do we use other derivative instruments to hedge economic risks stemming from equity warrant assets.

We account for equity warrant assets in certain private and public client companies as derivatives when they contain net settlement terms and other qualifying criteria under ASC 815. In general, equity warrant assets entitle us to buy a specific number of shares of stock at a specific price within a specific time period. Certain equity warrant assets contain contingent provisions, which adjust the underlying number of shares or purchase price upon the occurrence of certain future events. Substantially all of our warrant agreements contain net share settlement provisions, which permit us to receive at exercise a share count equal to the intrinsic value of the warrant divided by the share price (otherwise known as a “cashless” exercise). These equity warrant assets are recorded at fair value and are classified as derivative assets, a component of other assets, on our consolidated balance sheet at the time they are obtained.

The grant date fair values of equity warrant assets received in connection with the issuance of a credit facility are deemed to be loan fees and recognized as an adjustment of loan yield through loan interest income. Similar to other loan fees, the yield adjustment related to grant date fair value of warrants is recognized over the life of that credit facility.

Any changes in fair value from the grant date fair value of equity warrant assets will be recognized as increases or decreases to other assets on our balance sheet and as net gains or losses on equity warrant assets, in noninterest income, a component of consolidated net income. We value our equity warrant assets using a Black-Scholes option pricing model, which incorporates the following significant inputs:


•	An underlying asset value, which is estimated based on current information available in valuation reports, including any information regarding subsequent rounds of funding or performance of a company.


•	Stated strike price, which can be adjusted for certain warrants upon the occurrence of subsequent funding rounds or other future events.

•

Price volatility or risk associated with possible changes in the warrant price. The volatility assumption is based on historical price volatility of publicly traded companies within indices similar in nature to the underlying client companies issuing the warrant. The actual volatility input is based on the mean and median volatility for an individual public company within an index for the past 16 quarters, from which an average volatility was derived.

•

Actual data on terminations and exercises of our warrants are utilized as the basis for determining the expected remaining life of the warrants in each financial reporting period. Warrants may be exercised in the event of acquisitions, mergers or IPOs, and cancelled due to events such as bankruptcies, restructuring activities or additional financings. These events cause the expected remaining life assumption to be shorter than the contractual term of the warrants.


•	The risk-free interest rate is derived from the Treasury yield curve and is calculated based on a weighted average of the risk-free interest rates that correspond closest to the expected remaining life of the warrant.


•	Other adjustments, including a marketability discount, are estimated based on management's judgment about the general industry environment.


•	Number of shares and contingencies associated with obtaining warrant positions such as the funding of associated loans.

When a portfolio company completes an IPO on a publicly reported market or is acquired, we may exercise these equity warrant assets for shares or cash. In the event of an exercise for common stock shares, the basis or value in the common stock shares is reclassified from other assets to investment securities on the balance sheet on the latter of the exercise date or corporate action date. The common stock of public companies are classified as non-marketable and other equity securities. Changes in the fair value of the common stock shares is recorded as gains or losses on investments securities, in noninterest income, a component of consolidated net income. The common stock of private companies are classified as non-marketable and other equity securities. We account for these securities under the methodology under ASU 2016-01, other investments without a readily determinable fair value. The carrying value in the private common stock without a readily determinable fair value is based on the price at which the investment was acquired plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments and are recorded as gains or losses on investments securities, in noninterest income, a component of consolidated net income.

Foreign Exchange Forwards and Foreign Currency Option Contracts

We enter into foreign exchange forward contracts and foreign currency option contracts with clients involved in international activities, either as the purchaser or seller, depending upon the clients' need. We also enter into an opposite-way forward or option contract with a correspondent bank to economically hedge client contracts to mitigate the fair value risk to us from fluctuations in currency rates. Settlement, credit and operational risks remain. We also enter into forward contracts with correspondent banks to economically hedge currency exposure risk related to certain foreign currency denominated assets and liabilities. These contracts are not designated as hedging instruments and are recorded at fair value in our consolidated balance sheets. The contracts generally have terms of one year or less, although we may have contracts extending for up to five years. Generally, we have not experienced nonperformance on these contracts, have not incurred credit losses and anticipate performance by all counterparties to such agreements. Changes in the fair value of these contracts are recognized in consolidated net income under other noninterest income, a component of noninterest income. Period-end gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities.

Interest Rate Contracts

We sell interest rate contracts to clients who wish to mitigate their interest rate exposure. We economically reduce the interest rate risk from this business by entering into opposite-way contracts with correspondent banks. We do not designate any of these contracts (which are derivative instruments) as qualifying for hedge accounting. Contracts in an asset position are included in other assets and contracts in a liability position are included in other liabilities. The net change in the fair value of these derivatives is recorded through other noninterest income, in noninterest income, a component of consolidated net income.

Adoption of New Accounting Standards

In February 2016, the FASB issued a new Accounting Standard Update (ASU 2016-02, Leases (Topic 842)), which requires for all operating leases the recognition of a right-of-use ("ROU") asset and a corresponding lease liability, in the statement of financial position. For short term leases (term of 12 months or less), a lessee is permitted to make an accounting election not to recognize lease assets and lease liabilities. The lease cost is allocated over the lease term on a straight-line basis. There were further amendments, including practical expedients, with the issuance of ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842” in January 2018. In July 2018 the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements", which provides us with the option to apply the new leasing standard to all open leases as of the adoption date, on a prospective basis.

On January 1, 2019, we adopted the new accounting standard ASU 2016-02, Leases (Topic 842) and all the related amendments ("new lease standard", "ASC 842" or "ASU 2016-02") utilizing the practical expedient to apply the new lease standard as of January 1, 2019 on a prospective basis. We also elected the "package of expedients" and elected as an accounting policy to exclude recording ROU assets and lease liabilities for leases that meet the definition of short-term leases. In addition to excluding short-term leases, we have implemented an accounting policy in which non-lease components are not separated from lease components in the measurement of ROU assets and lease liabilities for all lease contracts. The "package of expedients" allowed us to continue to account for existing leases for which the commencement date is before January 1, 2019, in accordance with

the previous guidance, Leases (Topic 840), throughout the lease term, including periods after adoption of the new guidance. We recognized $146 million in ROU assets and $178 million in lease liabilities as a result of applying the new lease standard as an adjustment to our opening consolidated balance sheet on January 1, 2019. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See Note 12—"Leases" of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report for additional disclosures related to our leases.

In March 2017, the FASB issued ASU No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain purchased callable debt securities held at a premium. The ASU requires entities to amortize premiums on debt securities by the first call date when the securities have fixed and determinable call dates and prices. The scope of the ASU includes all accounting premiums, such as purchase premiums and cumulative fair value hedge adjustments. The ASU does not change the accounting for discounts, which continue to be recognized over the contractual life of a security. Adoption of the ASU is on a modified retrospective basis through a cumulative effect adjustment to retained earnings as of the beginning of the year of adoption. Adoption of the ASU primarily affected our HTM portfolio of callable state and municipal debt securities. On January 1, 2019, we adopted the ASU and recognized a net reduction to retained earnings of $0.6 million.

Reclassifications

Certain prior period amounts related to presentation changes to our financial statement line items have been reclassified to conform to current period presentations.

Business Combination

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Business Combination

On January 4, 2019, we completed the acquisition of Leerink Holdings LLC, the Boston-based parent company of healthcare and life science investment bank Leerink Partners LLC, now SVB Leerink Holdings LLC ("SVB Leerink"). SVB Leerink is an investment bank specializing in equity and convertible capital markets, M&A, equity research and sales and trading for growth- and innovation-minded healthcare and life science companies and operates as a wholly-owned subsidiary of SVB Financial.

The acquisition was accounted for as a business combination and accordingly, the results of SVB Leerink's operations have been included in the Company's consolidated financial statements for the year ended December 31, 2019 from the date of acquisition. We acquired SVB Leerink for $273.2 million comprised of cash and share-based replacement award liabilities. In addition, we provided a retention pool for employees of $60.0 million to be paid over five years comprised of a mix of cash and equity issued under the Company's current Equity Incentive Plan. Refer to Note 5—“Share-Based Compensation” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report of this report for more information. The following table summarizes the allocation of the purchase price to the net assets of SVB Leerink as of January 4, 2019:



(Dollars in thousands)	January 4, 2019
Cash paid	$	265,601
Replacement award liabilities (1)	7,629
Total purchase consideration	$	273,230
Fair value of net assets acquired	135,407
Goodwill	$	137,823


(1)	The replacement award liabilities recognized as part of the total purchase consideration and the post-combination expenses of $9.1 million related to share-based replacement awards will be paid out in cash in accordance with SVB Leerink's original grant date vesting schedules.

The following table summarizes the estimated fair value of assets acquired and liabilities assumed upon the finalization of the purchase:



(Dollars in thousands)	January 4, 2019
Assets acquired:
Cash and cash equivalents	$	163,273
Investment securities	33,644
Accounts receivable	36,538
Intangible assets	60,900
Other assets	35,128
Total assets acquired	329,483
Liabilities assumed:
Accrued compensation	137,206
Due to broker-dealers	18,483
Other liabilities	33,131
Noncontrolling interests	5,256
Total liabilities assumed	194,076
Fair value of net assets acquired	$	135,407

The Company recognized identifiable intangible assets of $60.9 million and goodwill of $137.8 million as a result of the acquisition. Intangible assets of $60.9 million are subject to amortization over their estimated useful lives. The goodwill recorded includes revenue generating synergies expected from collaboration between SVB Leerink and the Company. All reported goodwill amounts have been allocated to the SVB Leerink reporting segment and are expected to be deductible for tax purposes. The fair value of the noncontrolling interests in SVB Leerink Holdings LLC represents the noncontrolling ownership percentage for SVB Leerink's consolidated VIE investment securities which are measured at net asset value.

The following table summarizes the fair value and estimated useful lives of the other intangible assets at the date of acquisition:



(Dollars in thousands)	Estimated Fair Value		Weighted Average Estimated Useful Life - in Years
Other intangible assets:
Customer relationships	$	42,000	11.0
Other	18,900		9.9
Total other intangible assets	$	60,900

SVB Leerink's net income from January 4, 2019 through December 31, 2019 was approximately $9.5 million. Supplementary pro forma financial information related to the acquisition is not included because the impact to the Company's consolidated statements of income is not material. The following table represents the amount of revenue and earnings attributable to SVB Leerink that is included in our financial results for the year ended December 31, 2019:



(Dollars in thousands)	Year ended December 31, 2019
Net interest income	$	1,252
Noninterest income	265,841
Noninterest expense	252,678
Income before income tax expense	14,415
Income tax expense	3,566
Net income attributable to noncontrolling interests	1,325
Net income available to common stockholders	$	9,524

The following table shows the components of acquisition-related activities expense for the year ended December 31, 2019:



(Dollars in thousands)	Year ended December 31, 2019
Professional fees	$	919
Other	396
Total acquisition-related expenses	$	1,315

Stockholders' Equity and EPS

12 Months Ended

Dec. 31, 2019

Equity and Earnings Per Share [Abstract]

Stockholders' Equity and EPS

Accumulated Other Comprehensive Income

The following table summarizes the items reclassified out of accumulated other comprehensive income into the Consolidated Statements of Income for 2019, 2018 and 2017:



		Year ended December 31,
(Dollars in thousands)	Income Statement Location	2019			2018			2017
Reclassification adjustment for losses on available-for-sale securities included in net income	Gains on investment securities, net	$	3,905		$	740		$	5,189
Related tax benefit	Income tax expense	(1,087		)	(205		)	(2,098		)
Reclassification adjustment for losses on cash flow hedges included in net income	Net interest income	5,358			—			—
Related tax benefit	Income tax expense	(1,489		)	—			—
Total reclassification adjustment for losses included in net income, net of tax		$	6,687		$	535		$	3,091

The table below summarizes the activity relating to net gains and losses on our cash flow hedges included in accumulated other comprehensive income for 2019, 2018 and 2017. Over the next 12 months, we expect that approximately $3.2 million in accumulated other comprehensive income ("AOCI") at December 31, 2019, related to our cash flow hedges will be reclassified out of AOCI and recognized in net income.



	Year ended December 31,
(Dollars in thousands)	2019			2018		2017
Balance, beginning of period, net of tax	$	—		$	—	$	—
Net decrease in fair value, net of tax	(5,999		)	—		—
Net realized loss reclassified to net income, net of tax	3,869			—		—
Balance, end of period, net of tax	$	(2,130	)	$	—	$	—

EPS

Basic EPS is the amount of earnings available to each share of common stock outstanding during the reporting period. Diluted EPS is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issuable for stock option and restricted stock unit awards outstanding under our 2006 Equity Incentive Plan and our ESPP. Potentially dilutive common shares are excluded from the computation of dilutive EPS in periods in which the effect would be antidilutive. The following is a reconciliation of basic EPS to diluted EPS for 2019, 2018 and 2017:



	Year ended December 31,
(Dollars and shares in thousands, except per share amounts)	2019		2018		2017
Numerator:
Net income available to common stockholders	$	1,136,856	$	973,840	$	490,506
Denominator:
Weighted average common shares outstanding—basic	51,915		53,078		52,588
Weighted average effect of dilutive securities:
Stock options and ESPP	227		377		385
Restricted stock units	169		317		333
Weighted average common shares outstanding—diluted	52,311		53,772		53,306
Earnings per common share:
Basic	$	21.90	$	18.35	$	9.33
Diluted	21.73		18.11		9.20

The following table summarizes the weighted average common shares excluded from the diluted EPS calculation due to the antidilutive effect for 2019, 2018 and 2017:



	Year ended December 31,
(Shares in thousands)	2019	2018	2017
Stock options	167	59	73
Restricted stock units	250	85	1
Total	417	144	74

Stock Repurchase Programs

On November 13, 2018, the Company announced the Stock Repurchase Program to repurchase up to $500 million of our outstanding common stock. The program completed on July 1, 2019, after we repurchased 2.2 million shares of common stock for $499.6 million under the Stock Repurchase Program.

On October 24, 2019, our Board of Directors authorized a new stock repurchase program that enables us to repurchase up to $350 million of our outstanding common stock. This program expires on October 29, 2020. As of December 31, 2019, we have not repurchased any shares of our common stock under the new stock repurchase program.

Preferred Stock

On December 9, 2019, the Company issued depositary shares representing an ownership interest in 350,000 shares of Series A Preferred Stock with $0.001 par value and liquidation preference of $1,000 per share, or $25 per depositary share. All preferred shares were issued in the form of depositary shares, with each depositary share representing a 1/40th ownership interest in a share of the preferred stock. The Series A Preferred Stock has no stated maturity and is not subject to any sinking fund or other obligation of the Company. Dividends are approved by the Board of Directors and, if declared, are payable quarterly, in arrears, at a rate per annum equal to 5.25 percent. The Series A Preferred Stock is redeemable at the Company’s option, in whole or in part, on or after February 15, 2025. Prior to February 15, 2025, the Series A Preferred Stock is redeemable at the Company’s option, in whole and not in part, following any change in laws or regulations that would not allow the Company to treat the full

liquidation value of the Series A Preferred Stock as Tier 1 capital for purposes of the capital adequacy guidelines of the FRB. The redemption amount is computed at the per share liquidation preference plus any declared but unpaid dividends. Redemptions are subject to certain regulatory provisions, including approval of FRB.

As of December 31, 2019, there were 350,000 shares issued and outstanding of Series A Preferred Shares, which had a carrying value of $340.1 million and liquidation preference of $350.0 million.

The following table summarizes our preferred stock at December 31, 2019:



Series	Description	Amount outstanding (in millions)		Carrying value (in millions)		Shares issued and outstanding	Par Value		Ownership interest per depository share	Liquidation preference per depository share		2019 dividends paid per depository share
Series A	5.250% Fixed-Rate Non-Cumulative Perpetual Preferred Stock	$	350	$	340.1	350,000	$	0.001	1/40th	$	25	$	—

Share-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

Share-based compensation expense was recorded net of estimated forfeitures for 2019, 2018 and 2017, such that expense was recorded only for those share-based awards that are expected to vest. In 2019, 2018 and 2017, we recorded share-based compensation and related benefits as follows:



	Year ended December 31,
(Dollars in thousands)	2019			2018			2017
Share-based compensation expense	$	66,815		$	45,675		$	36,900
Income tax benefit related to share-based compensation expense	(16,152		)	(10,997		)	(12,845		)
Capitalized compensation costs	1,517			1,466			1,071

Equity Incentive Plan

Our 2006 Equity Incentive Plan (the “2006 Incentive Plan”) was adopted in May 2006, and is amended from time to time. The 2006 Incentive Plan provides for the grant of various types of incentive awards, of which the following have been granted: (i) stock options; (ii) restricted stock awards; (iii) restricted stock units (subject to either time-and/or performance-based vesting); and (iv) other cash or stock settled equity awards. Eligible participants in the 2006 Incentive Plan include directors, employees and consultants.

Subject to the provisions of Section 16 of the 2006 Incentive Plan, the maximum aggregate number of shares that may be awarded and sold thereunder is 12,028,505.

Restricted stock awards/units are counted against the available-for-issuance limits of the 2006 Incentive Plan as two shares for every one share awarded. Further, if shares acquired under any such award are forfeited, repurchased by SVB Financial, used to satisfy the tax withholding obligations related to an award or otherwise canceled and would otherwise return to the 2006 Incentive Plan, two times the number of such shares will return to the 2006 Incentive Plan and will again become available for issuance.

Under the terms of the 2006 Incentive Plan and subject to certain exceptions: (i) restricted stock awards/units are subject to a minimum of at least three years of annual vesting, and (ii) performance-based restricted stock awards/units and stock options are subject to a minimum of at least one year of vesting. Generally in practice, restricted stock awards/units vest annually over four years and require continued employment or other service through the vesting period. Performance-based restricted stock awards/units granted to executives generally vest upon meeting certain performance-based objectives over a three year period and, typically the passage of time, and require continued employment or other service through the vesting period. Stock options typically vest annually over four years, from the grant date based on continued employment or other service, and expire no later than seven years after the grant date.

Employee Stock Purchase Plan

We maintain the 1999 ESPP under which participating employees may annually contribute up to 10 percent of their gross compensation (not to exceed $25,000) to purchase shares of our common stock at 85 percent of its fair market value at either the beginning or end of each six-month offering period, whichever price is less. To be eligible to participate in the ESPP, an employee must, among other requirements, be employed by the Company on both the date of offering and date of purchase, and be employed customarily for at least 20 hours per week and at least five months per calendar year. We issued 161,410 shares and received $27.9 million in cash under the ESPP in 2019. At December 31, 2019, a total of 1,337,808 shares of our common stock were still available for future issuance under the ESPP.

Unrecognized Compensation Expense

As of December 31, 2019, unrecognized share-based compensation expense was as follows:



(Dollars in thousands)	Unrecognized Expense		Weighted Average Expected Recognition Period - in Years
Stock options	$	14,313	2.52
Restricted stock awards/units	101,310		2.66
Total unrecognized share-based compensation expense	$	115,623

Valuation Assumptions

The fair values of share-based awards for employee stock options and employee stock purchases made under our ESPP were estimated using the Black-Scholes option pricing model. The fair values of restricted stock units were based on our closing stock price on the date of grant. The following weighted average assumptions and fair values were used for our employee stock options and restricted stock units:



Equity Incentive Plan Awards	2019			2018			2017
Weighted average expected term of options - in years	4.6			4.8			4.9
Weighted average expected volatility of the Company's underlying common stock	35.5		%	34.7		%	33.7		%
Risk-free interest rate	2.26			2.82			1.81
Expected dividend yield	—			—			—
Weighted average grant date fair value - stock options	$	83.50		$	105.81		$	57.81
Weighted average grant date fair value - restricted stock units	243.65			294.50			181.23

The following weighted average assumptions and fair values were used for our ESPP:



ESPP	2019			2018			2017
Expected term in years	0.5			0.5			0.5
Weighted average expected volatility of the Company's underlying common stock	38.1		%	32.2		%	31.2		%
Risk-free interest rate	2.40			1.79			0.80
Expected dividend yield	—			—			—
Weighted average grant date fair value	$	52.90		$	62.76		$	41.70

The expected term is based on the implied term of the stock options using factors based on historical exercise behavior. The expected volatilities are based on a blended rate consisting of our historic volatility and our expected volatility over a five-year term which is an indicator of expected volatility and future stock price trends. For 2019, 2018 and 2017, expected volatilities for the ESPP were equal to the historical volatility for the previous six-month periods. The expected risk-free interest rates were based on the yields of U.S. Treasury securities, as reported by the Federal Reserve Bank of New York, with maturities equal to the expected terms of the employee stock options.

Share-Based Payment Award Activity

The table below provides stock option information related to the 2006 Equity Incentive Plan for the year ended December 31, 2019:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life - in Years	Aggregate Intrinsic Value of In-The-Money Options
Outstanding at December 31, 2018	679,659		$	137.19
Granted	126,945		249.15
Exercised	(154,897	)	86.96
Forfeited	(25,580	)	213.26
Expired	(720	)	64.37
Outstanding at December 31, 2019	625,407		169.33		3.63	$	55,364,613
Vested and expected to vest at December 31, 2019	609,849		167.31		3.58	55,128,404
Exercisable at December 31, 2019	361,503		124.70		2.35	46,760,360

The aggregate intrinsic value of outstanding options shown in the table above represents the pre-tax intrinsic value based on our closing stock price of $251.04 as of December 31, 2019. The following table summarizes information regarding stock options outstanding and exercisable as of December 31, 2019:



	Outstanding Options				Exercisable Options
Range of Exercise Prices	Shares	Weighted Average Remaining Contractual Life - in Years	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
$71.11 - 105.14	55,724	0.43	$	73.67	55,724	$	73.67
105.15 - 105.84	114,449	3.33	105.18		79,188	105.18
105.85 - 108.59	99,936	1.33	107.94		99,936	107.94
108.60 - 149.65	67,573	2.26	129.13		67,573	129.13
149.66 - 180.62	80,583	4.34	178.07		37,320	178.04
180.63 - 247.01	11,966	6.18	226.22		1,578	210.73
247.02 - 255.58	117,265	6.33	250.43		—	—
255.59 - 315.12	75,647	5.33	305.18		19,617	304.39
315.13 - 324.77	2,264	5.60	324.77		567	324.77
Total	625,407	3.63	169.33		361,503	124.70

We expect to satisfy the exercise of stock options by issuing shares under the 2006 Incentive Plan. All future awards of stock options and restricted stock units will be issued from the 2006 Incentive Plan. At December 31, 2019, 3,421,734 shares were available for future issuance.

The table below provides information for restricted stock units under the 2006 Equity Incentive Plan for the year ended December 31, 2019:



	Shares		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2018	597,296		$	194.48
Granted (1)	543,938		243.65
Vested	(227,707	)	154.96
Forfeited	(65,555	)	195.69
Nonvested at December 31, 2019	847,972		236.54


(1)	On February 1, 2019, we granted 125,160 restricted stock awards to SVB Leerink employees at a market price of $238.28 under the retention plan previously announced on November 13, 2018. The restricted stock awards will vest over a five-year period.

The following table summarizes information regarding stock option and restricted stock unit activity during 2019, 2018 and 2017:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Total intrinsic value of stock options exercised	$	23,088	$	40,681	$	36,173
Total grant date fair value of stock options vested	5,735		5,823		6,094
Total intrinsic value of restricted stock vested	56,101		63,917		40,925
Total grant date fair value of restricted stock vested	35,191		28,813		23,383

Variable Interest Entities

12 Months Ended

Dec. 31, 2019

Investments In Variable Interest Entities [Abstract]

Variable Interest Entities

Our involvement with VIEs includes our investments in venture capital and private equity funds, debt funds, private and public portfolio companies and our investments in qualified affordable housing projects.

The following table presents the carrying amounts and classification of significant variable interests in consolidated and unconsolidated VIEs as of December 31, 2019 and December 31, 2018:



(Dollars in thousands)	Consolidated VIEs		Unconsolidated VIEs		Maximum Exposure to Loss in Unconsolidated VIEs
December 31, 2019:
Assets:
Cash and cash equivalents	$	7,629	$	—	$	—
Non-marketable and other equity securities (1)	270,057		689,360		689,360
Accrued interest receivable and other assets	1,117		—		—
Total assets	$	278,803	$	689,360	$	689,360
Liabilities:
Other liabilities (1)	2,854		302,031		—
Total liabilities	$	2,854	$	302,031	$	—
December 31, 2018:
Assets:
Cash and cash equivalents	$	9,058	$	—	$	—
Non-marketable and other equity securities (1)	221,646		568,272		568,272
Accrued interest receivable and other assets	228		—		—
Total assets	$	230,932	$	568,272	$	568,272
Liabilities:
Other liabilities (1)	919		205,685		—
Total liabilities	$	919	$	205,685	$	—


(1)	Included in our unconsolidated non-marketable and other equity securities portfolio at December 31, 2019 and December 31, 2018 are investments in qualified affordable housing projects of $458.5 million and $318.6 million, respectively, and related other liabilities consisting of unfunded commitments of $302.0 million and $205.7 million, respectively.

Non-marketable and other equity securities

Our non-marketable and other equity securities portfolio primarily represents investments in venture capital and private equity funds, SPD-SVB, debt funds, private and public portfolio companies, including public equity securities held as a result of equity warrant assets exercised and investments in qualified affordable housing projects. A majority of these investments are through third-party funds held by SVB Financial in which we do not have controlling or significant variable interests. These investments represent our unconsolidated VIEs in the table above. Our non-marketable and other equity securities portfolio also includes investments from SVB Capital. SVB Capital is the funds management business of SVB Financial Group, which focuses primarily on venture capital investments. The SVB Capital family of funds is comprised of direct venture funds that invest in companies and funds of funds that invest in other venture capital funds. We have a controlling and significant variable interest in four of these SVB Capital funds and consolidate these funds for financial reporting purposes.

All investments are generally non-redeemable and distributions are expected to be received through the liquidation of the underlying investments throughout the life of the investment fund. Investments may only be sold or transferred subject to the notice and approval provisions of the underlying investment agreement. Subject to applicable regulatory requirements, including the Volcker Rule, we also make commitments to invest in venture capital and private equity funds. For additional details, see Note 22—“Off-Balance Sheet Arrangements, Guarantees and Other Commitments” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report.

The Bank also has variable interests in low income housing tax credit funds, in connection with fulfilling its responsibilities under the Community Reinvestment Act ("CRA"), that are designed to generate a return primarily through the realization of federal tax credits. These investments are typically limited partnerships in which the general partner, other than the Bank, holds the power over significant activities of the VIE; therefore, these investments are not consolidated. For additional information on our investments in qualified affordable housing projects see Note 9—“Investment Securities" of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report.

As of December 31, 2019, our exposure to loss with respect to the consolidated VIEs is limited to our net assets of $275.9 million and our exposure to loss for our unconsolidated VIEs is equal to our investment in these assets of $689.4 million.

Reserves on Deposit with the Federal Reserve Bank and Federal Bank Stock

12 Months Ended

Dec. 31, 2019

Federal Home Loan Bank Stock and Federal Reserve Bank Stock [Abstract]

Reserves on Deposit with the Federal Reserve Bank and Federal Bank Stock

The Bank is required to maintain reserves against customer deposits by keeping balances with the Federal Reserve. The cash balances at the Federal Reserve are classified as cash and cash equivalents. Additionally, as a member of the FHLB and FRB, we are required to hold shares of FHLB and FRB stock under the Bank's borrowing agreement. FHLB and FRB stock are recorded at cost as a component of other assets, and any cash dividends received are recorded as a component of other noninterest income.

The tables below provide information on the required reserve balances at the Federal Reserve, as well as shares held at the FHLB and FRB for the years ended and as of December 31, 2019 and 2018:



	Year ended December 31,
(Dollars in thousands)	2019		2018
Average required reserve balances at FRB San Francisco	$	315,784	$	455,866



	December 31,
(Dollars in thousands)	2019		2018
FHLB stock holdings	$	17,250	$	17,250
FRB stock holdings	43,008		41,628

Cash and Cash Equivalents

12 Months Ended

Dec. 31, 2019

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

The following table details our cash and cash equivalents at December 31, 2019 and December 31, 2018:



(Dollars in thousands)	December 31, 2019		December 31, 2018
Cash and due from banks (1)	$	6,492,443	$	3,444,971
Securities purchased under agreements to resell (2)	289,340		123,611
Other short-term investment securities	—		2,957
Total cash and cash equivalents	$	6,781,783	$	3,571,539


(1)	At December 31, 2019 and 2018, $3.7 billion and $1.7 billion, respectively, of our cash and due from banks was deposited at the FRB and was earning interest at the Federal Funds target rate, and interest-earning deposits in other financial institutions were $2.1 billion and $1.2 billion, respectively.


(2)	At December 31, 2019 and 2018, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fair values of $295 million and $126 million, respectively. None of these securities were sold or repledged as of December 31, 2019 and 2018.

Additional information regarding our securities purchased under agreements to resell for 2019 and 2018 are as follows:



	Year ended December 31,
(Dollars in thousands)	2019		2018
Average securities purchased under agreements to resell	$	166,205	$	132,938
Maximum amount outstanding at any month-end during the year	613,247		375,180

Investment Securities

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Our investment securities portfolio consists of (i) an available-for-sale securities portfolio and a held-to-maturity securities portfolio, both of which represent interest-earning investment securities; and (ii) a non-marketable and other equity securities portfolio, which primarily represents investments managed as part of our funds management business as well as public equity securities held as a result of equity warrant assets exercised.

Available-for-Sale Securities

The major components of our AFS investment securities portfolio at 2019 and 2018 are as follows:



	December 31, 2019
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value
Available-for-sale securities, at fair value:
U.S. Treasury securities	$	6,815,874	$	82,267	$	(4,131	)	6,894,010
U.S. agency debentures	100,000		—		(453		)	99,547
Foreign government debt securities	9,037		1		—			9,038
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	4,109,372		39,438		(19		)	4,148,791
Agency-issued collateralized mortgage obligations—fixed rate	1,520,414		17,929		—			1,538,343
Agency-issued commercial mortgage-backed securities	1,339,651		1,078		(15,539		)	1,325,190
Total available-for-sale securities	$	13,894,348	$	140,713	$	(20,142	)	$	14,014,919



	December 31, 2018
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value
Available-for-sale securities, at fair value:
U.S. Treasury securities	$	4,762,182	$	11,638	$	(35,562	)	$	4,738,258
U.S. agency debentures	1,090,426		61		(6,370		)	1,084,117
Foreign government debt securities	5,815		—		(3		)	5,812
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations—fixed rate	1,922,618		—		(42,400		)	1,880,218
Agency-issued collateralized mortgage obligations—variable rate	81,270		383		(15		)	81,638
Total available-for-sale securities	$	7,862,311	$	12,082	$	(84,350	)	$	7,790,043

The following table summarizes sale activity of available-for-sale securities as recorded in the line item “Gains on investment securities, net," a component of noninterest income:



	Year ended December 31,
(Dollars in thousands)	2019			2018			2017
Sales proceeds	$	2,189,087		$	474,482		$	580,871
Net realized gains and losses:
Gross realized gains	1,250			127			5,113
Gross realized losses	(5,155		)	(867		)	(10,302		)
Net realized losses	$	(3,905	)	$	(740	)	$	(5,189	)

The following tables summarize our unrealized losses on our AFS securities portfolio into categories of less than 12 months, or 12 months or longer as of December 31, 2019 and 2018:



	December 31, 2019
	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses
Available-for-sale securities:
U.S. Treasury securities	$	971,572	$	(3,996	)	$	449,850	$	(135	)	$	1,421,422	$	(4,131	)
U.S. agency debentures	99,547		(453		)	—		—			99,547		(453		)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	4,014		(19		)	—		—			4,014		(19		)
Agency-issued commercial mortgage-backed securities	1,027,232		(15,539		)	—		—			1,027,232		(15,539		)
Total temporarily impaired securities (1)	$	2,102,365	$	(20,007	)	$	449,850	$	(135	)	$	2,552,215	$	(20,142	)

(1)

As of December 31, 2019, we identified a total of 58 investments that were in unrealized loss positions, of which 12 investments totaling $0.4 billion with unrealized losses of $0.1 million have been in an impaired position for a period of time greater than 12 months. As of December 31, 2019, we do not intend to sell any of our impaired securities prior to recovery of our adjusted cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our adjusted cost basis. Based on our analysis as of December 31, 2019, we deem all impairments to be temporary, and therefore changes in value for our temporarily impaired securities as of the same date are included in other comprehensive income. Market valuations and impairment analyses on assets in the AFS securities portfolio are reviewed and monitored on a quarterly basis.



	December 31, 2018
	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses
Available-for-sale securities:
U.S. Treasury securities	$	494,287	$	(3,785	)	$	3,568,119	$	(31,777	)	$	4,062,406	$	(35,562	)
U.S. agency debentures	443,790		(1,602		)	591,216		(4,768		)	1,035,006		(6,370		)
Foreign government debt securities	5,812		(3		)	—		—			5,812		(3		)
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations—fixed rate	13,430		(22		)	1,866,788		(42,378		)	1,880,218		(42,400		)
Agency-issued collateralized mortgage obligations—variable rate	—		—			13,516		(15		)	13,516		(15		)
Total temporarily impaired securities (1)	$	957,319	$	(5,412	)	$	6,039,639	$	(78,938	)	$	6,996,958	$	(84,350	)


(1)	As of December 31, 2018, we identified a total of 200 investments that were in unrealized loss positions, of which 162 investments totaling $6.0 billion with unrealized losses of $78.9 million have been in an impaired position for a period of time greater than 12 months.

The following table summarizes the fixed income securities, carried at fair value, classified as AFS as of December 31, 2019 by the remaining contractual principal maturities. For U.S. Treasury securities, U.S. agency debentures and foreign government debt securities, the expected maturity is the actual contractual maturity of the notes. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as AFS typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower interest rate environments.



	December 31, 2019
(Dollars in thousands)	Total		One Year or Less		After One Year to Five Years		After Five Years to Ten Years		After Ten Years
U.S. Treasury securities	$	6,894,010	$	1,835,971	$	1,890,778	$	3,167,261	$	—
U.S. agency debentures	99,547		—		—		99,547		—
Foreign government debt securities	9,038		9,038		—		—		—
Residential mortgage-backed securities:
Agency-issued collateralized mortgage-backed securities	4,148,791		—		—		—		4,148,791
Agency-issued collateralized mortgage obligations—fixed rate	1,538,343		—		—		1,858		1,536,485
Agency -issued commercial mortgage-backed securities	1,325,190		—		—		743,874		581,316
Total	$	14,014,919	$	1,845,009	$	1,890,778	$	4,012,540	$	6,266,592

Held-to-Maturity Securities

The components of our HTM investment securities portfolio at December 31, 2019 and 2018 are as follows:



	December 31, 2019
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Held-to-maturity securities, at cost:
U.S. agency debentures (1)	$	518,728	$	6,640	$	(668	)	$	524,700
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	6,992,009		142,209		(2,066		)	7,132,152
Agency-issued collateralized mortgage obligations—fixed rate	1,608,032		592		(8,502		)	1,600,122
Agency-issued collateralized mortgage obligations—variable rate	178,611		94		(259		)	178,446
Agency-issued commercial mortgage-backed securities	2,759,615		56,914		(4,508		)	2,812,021
Municipal bonds and notes	1,785,951		83,314		(1,434		)	1,867,831
Total held-to-maturity securities	$	13,842,946	$	289,763	$	(17,437	)	$	14,115,272


(1)	Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States.



	December 31, 2018
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Held-to-maturity securities, at cost:
U.S. agency debentures (1)	$	640,990	$	2,148	$	(4,850	)	$	638,288
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	8,103,638		5,011		(157,767		)	7,950,882
Agency-issued collateralized mortgage obligations—fixed rate	2,183,204		—		(62,272		)	2,120,932
Agency-issued collateralized mortgage obligations—variable rate	214,483		608		(14		)	215,077
Agency-issued commercial mortgage-backed securities	2,769,706		6,969		(64,374		)	2,712,301
Municipal bonds and notes	1,575,421		2,304		(26,969		)	1,550,756
Total held-to-maturity securities	$	15,487,442	$	17,040	$	(316,246	)	$	15,188,236


(1)	Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States.

The following tables summarize our unrealized losses on our HTM securities portfolio into categories of less than 12 months and 12 months or longer as of December 31, 2019 and 2018:



	December 31, 2019
	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses
Held-to-maturity securities:
U.S. agency debentures	$	125,304	$	(668	)	$	—	$	—		$	125,304	$	(668	)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	132,042		(420		)	181,585		(1,646		)	313,627		(2,066		)
Agency-issued collateralized mortgage obligations—fixed rate	350,868		(1,131		)	872,527		(7,371		)	1,223,395		(8,502		)
Agency-issued collateralized mortgage obligations—variable rate	143,265		(256		)	4,615		(3		)	147,880		(259		)
Agency-issued commercial mortgage-backed securities	307,087		(1,818		)	310,229		(2,690		)	617,316		(4,508		)
Municipal bonds and notes	160,414		(1,434		)	—		—			160,414		(1,434		)
Total temporarily impaired securities (1)	$	1,218,980	$	(5,727	)	$	1,368,956	$	(11,710	)	$	2,587,936	$	(17,437	)

(1)

As of December 31, 2019, we identified a total of 266 investments that were in unrealized loss positions, of which 143 investments totaling $1.4 billion with unrealized losses of $11.7 million have been in an impaired position for a period of time greater than 12 months. As of December 31, 2019, we do not intend to sell any of our impaired securities prior to recovery of our adjusted cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our adjusted cost basis, which is consistent with our classification of these securities. Based on our analysis as of December 31, 2019, we deem all impairments to be temporary. Market valuations and impairment analyses on assets in the HTM securities portfolio are reviewed and monitored on a quarterly basis.



	December 31, 2018
	Less than 12 months					12 months or longer (1)					Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses
Held-to-maturity securities:
U.S. agency debentures	$	291,432	$	(2,915	)	$	66,624	$	(1,935	)	$	358,056	$	(4,850	)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	2,493,156		(34,956		)	3,972,690		(122,811		)	6,465,846		(157,767		)
Agency-issued collateralized mortgage obligations—fixed rate	16,952		(109		)	2,103,980		(62,163		)	2,120,932		(62,272		)
Agency-issued collateralized mortgage obligations—variable rate	3,364		(1		)	8,101		(13		)	11,465		(14		)
Agency-issued commercial mortgage-backed securities	177,697		(1,580		)	1,600,277		(62,794		)	1,777,974		(64,374		)
Municipal bonds and notes	868,751		(17,075		)	340,413		(9,894		)	1,209,164		(26,969		)
Total temporarily impaired securities (1)	$	3,851,352	$	(56,636	)	$	8,092,085	$	(259,610	)	$	11,943,437	$	(316,246	)

(1)

As of December 31, 2018, we identified a total of 1,244 investments that were in unrealized loss positions, of which 695 investments totaling $8.1 billion with unrealized losses of $259.6 million have been in an impaired position for a period of time greater than 12 months.

The following table summarizes the remaining contractual principal maturities on fixed income investment securities classified as HTM as of December 31, 2019. For U.S. agency debentures, the expected maturity is the actual contractual maturity of the notes. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as HTM typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower interest rate environments.



	December 31, 2019
	Total				One Year or Less				After One Year to Five Years				After Five Years to Ten Years				After Ten Years
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. agency debentures	$	518,728	$	524,700	$	—	$	—	$	123,100	$	123,969	$	395,628	$	400,731	$	—	$	—
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	6,992,009		7,132,152		2,066		2,117		76,759		76,956		726,422		725,854		6,186,762		6,327,225
Agency-issued collateralized mortgage obligations - fixed rate	1,608,032		1,600,122		—		—		—		—		624,128		619,180		983,904		980,942
Agency-issued collateralized mortgage obligations - variable rate	178,611		178,446		—		—		—		—		—		—		178,611		178,446
Agency-issued commercial mortgage-backed securities	2,759,615		2,812,021		—		—		—		—		102,633		110,836		2,656,982		2,701,185
Municipal bonds and notes	1,785,951		1,867,831		13,973		13,984		83,368		84,773		387,278		403,736		1,301,332		1,365,338
Total	$	13,842,946	$	14,115,272	$	16,039	$	16,101	$	283,227	$	285,698	$	2,236,089	$	2,260,337	$	11,307,591	$	11,553,136

Non-marketable and Other Equity Securities

The major components of our non-marketable and other equity securities portfolio at December 31, 2019 and 2018 are as follows:



(Dollars in thousands)	December 31, 2019		December 31, 2018
Non-marketable and other equity securities:
Non-marketable securities (fair value accounting):
Consolidated venture capital and private equity fund investments (1)	$	87,180	$	118,333
Unconsolidated venture capital and private equity fund investments (2)	178,217		201,098
Other investments without a readily determinable fair value (3)	55,255		25,668
Other equity securities in public companies (fair value accounting) (4)	59,200		20,398
Non-marketable securities (equity method accounting) (5):
Venture capital and private equity fund investments	215,367		129,485
Debt funds	7,271		5,826
Other investments	152,863		121,721
Investments in qualified affordable housing projects, net (6)	458,476		318,575
Total non-marketable and other equity securities	$	1,213,829	$	941,104


(1)	The following table shows the amounts of venture capital and private equity fund investments held by the following consolidated funds and our ownership percentage of each fund at December 31, 2019 and 2018 (fair value accounting):



	December 31, 2019				December 31, 2018
(Dollars in thousands)	Amount		Ownership %		Amount		Ownership %
Strategic Investors Fund, LP	$	5,729	12.6	%	$	12,452	12.6	%
Capital Preferred Return Fund, LP	45,341		20.0		53,957		20.0
Growth Partners, LP	35,976		33.0		50,845		33.0
CP I, LP	134		10.7		1,079		10.7
Total consolidated venture capital and private equity fund investments	$	87,180			$	118,333

(2)

The carrying value represents investments in 205 and 213 funds (primarily venture capital funds) at December 31, 2019 and December 31, 2018, respectively, where our ownership interest is typically less than 5% of the voting interests of each such fund and in which we do not have the ability to exercise significant influence over the partnerships operating activities and financial policies. We carry our unconsolidated venture capital and private equity fund investments at fair value based on the fund investments' net asset values per share as obtained from the general partners of the investments. For each fund investment, we adjust the net asset value per share for differences between our measurement date and the date of the fund investment’s net asset value by using the most recently available financial information from the investee general partner, for example September 30^th for our December 31^st consolidated financial statements, adjusted for any contributions paid, distributions received from the investment, and significant fund transactions or market events during the reporting period.

(3)

These investments include direct equity investments in private companies. The carrying value is based on the price at which the investment was acquired plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies, financing transactions subsequent to the acquisition of the investment and a discount for certain investments that have lock-up restrictions or other features that indicate a discount to fair value is warranted.

The following table shows the carrying amount of other investments without a readily determinable fair value at December 31, 2019, and the amounts recognized in earnings for the year ended December 31, 2019 and on a cumulative basis:



(Dollars in thousands)	Year ended December 31, 2019			Cumulative Adjustments
Measurement alternative:
Carrying value at December 31, 2019	$	55,255
Carrying value adjustments:
Impairment	$	(460	)	$	(460	)
Upward changes for observable prices	1,929			2,348
Downward changes for observable prices	(3,511		)	(5,030		)


(4)	Investments classified as other equity securities (fair value accounting) represent shares held in public companies as a result of exercising public equity warrant assets, direct equity investments in public companies held by our consolidated funds, and exchange traded funds held by SVB Leerink. Changes in equity securities measured at fair value are recognized through net income.


(5)	The following table shows the carrying value and our ownership percentage of each investment at December 31, 2019 and 2018 (equity method accounting):



	December 31, 2019				December 31, 2018
(Dollars in thousands)	Amount		Ownership %		Amount		Ownership %
Venture capital and private equity fund investments:
Strategic Investors Fund II, LP	$	3,612	8.6	%	$	4,670	8.6	%
Strategic Investors Fund III, LP	15,668		5.9		17,396		5.9
Strategic Investors Fund IV, LP	27,064		5.0		28,974		5.0
Strategic Investors Fund V funds	46,830		Various		28,189		Various
CP II, LP (i)	5,907		5.1		7,122		5.1
Other venture capital and private equity fund investments	116,286		Various		43,134		Various
Total venture capital and private equity fund investments	$	215,367			$	129,485
Debt funds:
Gold Hill Capital 2008, LP (ii)	$	5,525	15.5	%	$	3,901	15.5	%
Other debt funds	1,746		Various		1,925		Various
Total debt funds	$	7,271			$	5,826
Other investments:
SPD Silicon Valley Bank Co., Ltd.	$	74,190	50.0	%	$	76,412	50.0	%
Other investments	78,673		Various		45,309		Various
Total other investments	$	152,863			$	121,721


(i)	Our ownership includes direct ownership interest of 1.3 percent and indirect ownership interest of 3.8 percent through our investments in Strategic Investors Fund II, LP.


(ii)	Our ownership includes direct ownership interest of 11.5 percent in the fund and an indirect interest in the fund through our investment in Gold Hill Capital 2008, LLC of 4.0 percent.


(6)	The following table presents the balances of our investments in qualified affordable housing projects and related unfunded commitments included as a component of "other liabilities" on our consolidated balance sheets at December 31, 2019 and 2018:



(Dollars in thousands)	December 31, 2019		December 31, 2018
Investments in qualified affordable housing projects, net	$	458,476	$	318,575
Other liabilities	302,031		205,685

The following table presents other information relating to our investments in qualified affordable housing projects for the years ended December 31, 2019, 2018 and 2017:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Tax credits and other tax benefits recognized	$	35,037	$	24,047	$	17,296
Amortization expense included in provision for income taxes (i)	28,267		18,876		17,362

(i)

All investments are amortized using the proportional amortization method and amortization expense is included in the provision for income taxes. Included in amortization expense for the year ended December 31, 2017 is a one-time cumulative effect adjustment of $3.8 million due to the decrease in value of deductions in the 2018 tax year and going forward, due to the TCJ Act federal corporate income tax rate reduction.

The following table presents the net gains and losses on non-marketable and other equity securities in 2019, 2018 and 2017 as recorded in the line item “Gains on investment securities, net," a component of noninterest income:



	Year ended December 31,
(Dollars in thousands)	2019			2018			2017
Net gains (losses) on non-marketable and other equity securities:
Non-marketable securities (fair value accounting):
Consolidated venture capital and private equity fund investments	$	22,507		$	20,999		$	27,186
Unconsolidated venture capital and private equity fund investments (1)	31,482			39,075			21,377
Other investments without a readily determinable fair value (1)	2,742			3,206			3,842
Other equity securities in public companies (fair value accounting) (1)	7,772			(25,483		)	241
Non-marketable securities (equity method accounting):
Venture capital and private equity fund investments	73,813			49,341			14,472
Debt funds	1,647			541			8,950
Other investments	(1,388		)	1,155			(6,276		)
Total net gains on non-marketable and other equity securities	$	138,575		$	88,834		$	69,792
Less: Realized net gains (losses) on the sales and OTTI of non-marketable and other equity securities (2)	4,744			(26,097		)	(355		)
Net gains on non-marketable and other equity securities still held	$	133,831		$	114,931		$	70,147


(1)	Presentation for year-ended December 31, 2017 amounts are not determined in a manner consistent with the December 31, 2018 and 2019 presentation due to the adoption of ASU 2016-01.

(2)

Realized gains and losses include sales and OTTI of non-marketable and other equity securities. Includes gains of $5.2 million on sales and $0.4 million of OTTI for the period ended December 31, 2019. Includes losses of $20.8 million and gains of $3.8 million on sales and $5.3 million and $4.2 million of OTTI for the periods ended December 31, 2018 and 2017, respectively.

Loans, Allowance for Loan Losses and Allowance for Unfunded Credit Commitments

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Loans, Allowance for Loan Losses and Allowance for Unfunded Credit Commitments

We serve a variety of commercial clients in the technology, life science/healthcare, private equity/venture capital and premium wine industries. Our technology clients generally tend to be in the industries of hardware (semiconductors, communications, data, storage and electronics), software/internet (such as infrastructure software, applications, software services, digital content and advertising technology), and energy and resource innovation ("ERI"). Because of the diverse nature of ERI products and services, for our loan-related reporting purposes, ERI-related loans are reported under our hardware, software/internet, life science/healthcare and other commercial loan categories, as applicable. Our life science/healthcare clients primarily tend to be in the industries of biotechnology, medical devices, healthcare information technology and healthcare services. Loans made to private equity/venture capital firm clients typically enable them to fund investments prior to their receipt of funds from capital calls. Loans to the premium wine industry focus on vineyards and wineries that produce grapes and wines of high quality.

In addition to commercial loans, we make consumer loans through SVB Private Bank and provide real estate secured loans to eligible employees through our EHOP. Our private banking clients are primarily private equity/venture capital professionals and executive leaders in the innovation companies they support. These products and services include real estate secured home equity lines of credit, which may be used to finance real estate investments and loans used to purchase, renovate or refinance personal residences. These products and services also include restricted stock purchase loans and capital call lines of credit.

We also provide community development loans made as part of our responsibilities under the Community Reinvestment Act. These loans are included within “Construction loans” below and are primarily secured by real estate.

The composition of loans, net of unearned income of $163 million and $173 million at December 31, 2019 and 2018, respectively, is presented in the following table:



	December 31,
(Dollars in thousands)	2019		2018
Commercial loans:
Software/internet	$	6,199,548	$	6,154,755
Hardware	1,371,159		1,234,557
Private equity/venture capital	17,801,324		14,110,560
Life science/healthcare	2,368,048		2,385,612
Premium wine	267,487		249,266
Other	420,555		321,978
Total commercial loans	28,428,121		24,456,728
Real estate secured loans:
Premium wine (1)	820,730		710,397
Consumer loans (2)	3,286,737		2,612,971
Other	38,880		40,435
Total real estate secured loans	4,146,347		3,363,803
Construction loans	100,219		97,077
Consumer loans	489,949		420,672
Total loans, net of unearned income (3)	$	33,164,636	$	28,338,280


(1)	Included in our premium wine portfolio are gross construction loans of $83 million and $99 million at December 31, 2019 and 2018, respectively.


(2)	Consumer loans secured by real estate at December 31, 2019 and 2018 were comprised of the following:



	December 31,
(Dollars in thousands)	2019		2018
Loans for personal residence	$	2,829,880	$	2,251,292
Loans to eligible employees	401,396		290,194
Home equity lines of credit	55,461		71,485
Consumer loans secured by real estate	$	3,286,737	$	2,612,971


(3)	Included within our total loan portfolio are credit card loans of $395 million and $335 million at December 31, 2019 and 2018, respectively.

Credit Quality

The composition of loans, net of unearned income of $163 million and $173 million at December 31, 2019 and 2018, respectively, broken out by portfolio segment and class of financing receivable, is as follows:



	December 31,
(Dollars in thousands)	2019		2018
Commercial loans:
Software/internet	$	6,199,548	$	6,154,755
Hardware	1,371,159		1,234,557
Private equity/venture capital	17,801,324		14,110,560
Life science/healthcare	2,368,048		2,385,612
Premium wine	1,088,217		959,663
Other	559,654		459,490
Total commercial loans	29,387,950		25,304,637
Consumer loans:
Real estate secured loans	3,286,737		2,612,971
Other consumer loans	489,949		420,672
Total consumer loans	3,776,686		3,033,643
Total loans, net of unearned income	$	33,164,636	$	28,338,280

The following table summarizes the aging of our gross loans, broken out by portfolio segment and class of financing receivable as of December 31, 2019 and 2018:



(Dollars in thousands)	30 - 59 Days Past Due		60 - 89 Days Past Due		Equal to or Greater Than 90 Days Past Due		Total Past Due		Current		Loans Past Due 90 Days or More Still Accruing Interest
December 31, 2019:
Commercial loans:
Software/internet	$	19,839	$	4,225	$	—	$	24,064	$	6,136,230	$	—
Hardware	104		18,084		—		18,188		1,357,379		—
Private equity/venture capital	97,893		383		3,150		101,426		17,715,964		3,150
Life science/healthcare	445		8,420		—		8,865		2,387,203		—
Premium wine	7,543		—		—		7,543		1,070,111		—
Other	9		24		—		33		579,446		—
Total commercial loans	125,833		31,136		3,150		160,119		29,246,333		3,150
Consumer loans:
Real estate secured loans	6,282		—		365		6,647		3,271,318		365
Other consumer loans	164		283		—		447		489,831		—
Total consumer loans	6,446		283		365		7,094		3,761,149		365
Total gross loans excluding impaired loans	132,279		31,419		3,515		167,213		33,007,482		3,515
Impaired loans	5,096		6,805		12,473		24,374		128,635		—
Total gross loans	$	137,375	$	38,224	$	15,988	$	191,587	$	33,136,117	$	3,515
December 31, 2018:
Commercial loans:
Software/internet	$	28,134	$	6,944	$	378	$	35,456	$	6,059,672	$	378
Hardware	300		34		4		338		1,233,956		4
Private equity/venture capital	59,481		11		—		59,492		14,054,940		—
Life science/healthcare	16,082		817		19		16,918		2,410,091		19
Premium wine	2,953		14		—		2,967		956,285		—
Other	7,391		163		1		7,555		477,442		1
Total commercial loans	114,341		7,983		402		122,726		25,192,386		402
Consumer loans:
Real estate secured loans	3,598		1,750		1,562		6,910		2,598,496		1,562
Other consumer loans	361		—		—		361		420,359		—
Total consumer loans	3,959		1,750		1,562		7,271		3,018,855		1,562
Total gross loans excluding impaired loans	118,300		9,733		1,964		129,997		28,211,241		1,964
Impaired loans	2,843		1,181		25,092		29,116		140,958		—
Total gross loans	$	121,143	$	10,914	$	27,056	$	159,113	$	28,352,199	$	1,964

The following table summarizes our impaired loans as they relate to our allowance for loan losses, broken out by portfolio segment and class of financing receivable for the years ended December 31, 2019 and 2018:



(Dollars in thousands)	Impaired loans for which there is a related allowance for loan losses		Impaired loans for which there is no related allowance for loan losses		Total carrying value of impaired loans		Total unpaid principal of impaired loans
December 31, 2019:
Commercial loans:
Software/internet	$	64,100	$	31,472	$	95,572	$	109,736
Hardware	2,143		3,315		5,458		10,049
Private equity/venture capital	—		—		—		—
Life science/healthcare	25,941		5,671		31,612		70,600
Premium wine	204		11,718		11,922		12,010
Other	1,284		1,681		2,965		3,114
Total commercial loans	93,672		53,857		147,529		205,509
Consumer loans:
Real estate secured loans	1,766		3,714		5,480		8,527
Total consumer loans	1,766		3,714		5,480		8,527
Total	$	95,438	$	57,571	$	153,009	$	214,036
December 31, 2018:
Commercial loans:
Software/internet	$	49,625	$	65,225	$	114,850	$	131,858
Hardware	1,256		10,250		11,506		12,159
Private equity/venture capital	—		3,700		3,700		3,700
Life science/healthcare	17,791		16,276		34,067		44,446
Premium wine	—		1,301		1,301		1,365
Other	411		—		411		411
Total commercial loans	69,083		96,752		165,835		193,939
Consumer loans:
Real estate secured loans	3,919		320		4,239		5,969
Total consumer loans	3,919		320		4,239		5,969
Total	$	73,002	$	97,072	$	170,074	$	199,908

The following table summarizes our average impaired loans and interest income recognized on impaired loans, broken out by portfolio segment and class of financing receivable during 2019, 2018 and 2017:



Year ended December 31, (Dollars in thousands)	Average impaired loans						Interest income recognized on impaired loans
Year ended December 31, (Dollars in thousands)	2019		2018		2017		2019		2018		2017
Commercial loans:
Software/internet	$	88,628	$	112,493	$	119,557	$	2,813	$	1,513	$	2,263
Hardware	12,500		28,540		35,022		464		312		1,061
Private equity/venture capital	2,264		1,327		556		—		—		—
Life science/healthcare	44,827		30,144		30,842		919		756		90
Premium wine	2,912		2,605		3,249		311		68		152
Other	2,050		171		576		21		—		—
Total commercial loans	153,181		175,280		189,802		4,528		2,649		3,566
Consumer loans:
Real estate secured loans	7,159		4,028		1,514		54		15		—
Other consumer loans	7		358		1,804		—		—		—
Total consumer loans	7,166		4,386		3,318		54		15		—
Total average impaired loans	$	160,347	$	179,666	$	193,120	$	4,582	$	2,664	$	3,566

The following tables summarize the activity relating to our allowance for loan losses for 2019, 2018 and 2017 broken out by portfolio segment:



Year ended December 31, 2019 (Dollars in thousands)	Beginning Balance December 31, 2018		Charge-offs			Recoveries		Provision for Loan Losses		Foreign Currency Translation Adjustments			Ending Balance December 31, 2019
Year ended December 31, 2019 (Dollars in thousands)	Beginning Balance December 31, 2018		Charge-offs			Recoveries		Provision for Loan Losses		Foreign Currency Translation Adjustments			Ending Balance December 31, 2019
Commercial loans:
Software/internet	$	103,567	$	(46,930	)	$	11,363	$	31,766	$	457		$	100,223
Hardware	19,725		(10,056		)	7,069		2,740		166			19,644
Private equity/venture capital	98,581		(2,047		)	2,047		16,989		235			115,805
Life science/healthcare	32,180		(31,950		)	267		38,178		570			39,245
Premium wine	3,355		(174		)	—		1,813		154			5,148
Other	3,558		(415		)	36		328		(154		)	3,353
Total commercial loans	260,966		(91,572		)	20,782		91,814		1,428			283,418
Consumer loans	19,937		(1,031		)	256		2,369		(25		)	21,506
Total allowance for loan losses	$	280,903	$	(92,603	)	$	21,038	$	94,183	$	1,403		$	304,924



Year ended December 31, 2018 (Dollars in thousands)	Beginning Balance December 31, 2017		Charge-offs			Recoveries		Provision for (Reduction of) Loan Losses			Foreign Currency Translation Adjustments			Ending Balance December 31, 2018
Year ended December 31, 2018 (Dollars in thousands)	Beginning Balance December 31, 2017		Charge-offs			Recoveries		Provision for (Reduction of) Loan Losses			Foreign Currency Translation Adjustments			Ending Balance December 31, 2018
Commercial loans:
Software/internet	$	96,104	$	(42,315	)	$	5,664	$	45,068		$	(954	)	$	103,567
Hardware	27,614		(16,148		)	1,849		6,555			(145		)	19,725
Private equity/venture capital	82,468		(112		)	13		16,485			(273		)	98,581
Life science/healthcare	24,924		(6,662		)	348		14,347			(777		)	32,180
Premium wine	3,532		—			—		(182		)	5			3,355
Other	3,941		(2,391		)	3,275		(1,320		)	53			3,558
Total commercial loans	238,583		(67,628		)	11,149		80,953			(2,091		)	260,966
Consumer loans	16,441		(289		)	487		3,339			(41		)	19,937
Total allowance for loan losses	$	255,024	$	(67,917	)	$	11,636	$	84,292		$	(2,132	)	$	280,903



Year ended December 31, 2017 (Dollars in thousands)	Beginning Balance December 31, 2016		Charge-offs			Recoveries		Provision for (Reduction of) Loan Losses			Foreign Currency Translation Adjustments			Ending Balance December 31, 2017
Year ended December 31, 2017 (Dollars in thousands)	Beginning Balance December 31, 2016		Charge-offs			Recoveries		Provision for (Reduction of) Loan Losses			Foreign Currency Translation Adjustments			Ending Balance December 31, 2017
Commercial loans:
Software/internet	$	97,388	$	(45,012	)	$	4,649	$	38,462		$	617		$	96,104
Hardware	31,166		(10,414		)	487		6,051			324			27,614
Private equity/venture capital	50,299		(323		)	—		31,625			867			82,468
Life science/healthcare	25,446		(8,210		)	189		7,414			85			24,924
Premium wine	4,115		—			—		(540		)	(43		)	3,532
Other	4,768		(1,156		)	1,850		(1,459		)	(62		)	3,941
Total commercial loans	213,182		(65,115		)	7,175		81,553			1,788			238,583
Consumer loans	12,184		(1,567		)	1,363		4,386			75			16,441
Total allowance for loan losses	$	225,366	$	(66,682	)	$	8,538	$	85,939		$	1,863		$	255,024

The following table summarizes the activity relating to our allowance for unfunded credit commitments for 2019, 2018 and 2017:



	Year ended December 31,
(Dollars in thousands)	2019		2018			2017
Allowance for unfunded credit commitments, beginning balance	$	55,183	$	51,770		$	45,265
Provision for unfunded credit commitments	12,233		3,578			6,365
Foreign currency translation adjustments	240		(165		)	140
Allowance for unfunded credit commitments, ending balance (1)	$	67,656	$	55,183		$	51,770


(1)	The “allowance for unfunded credit commitments” is included as a component of “other liabilities” on our consolidated balance sheets. See Note 22—“Off-Balance Sheet Arrangements, Guarantees and Other Commitments” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report for additional disclosures related to our commitments to extend credit.

The following table summarizes the allowance for loan losses individually and collectively evaluated for impairment as of December 31, 2019 and 2018, broken out by portfolio segment:



	December 31, 2019								December 31, 2018
	Individually Evaluated for Impairment				Collectively Evaluated for Impairment				Individually Evaluated for Impairment				Collectively Evaluated for Impairment
(Dollars in thousands)	Allowance for loan losses		Recorded investment in loans		Allowance for loan losses		Recorded investment in loans		Allowance for loan losses		Recorded investment in loans		Allowance for loan losses		Recorded investment in loans
Commercial loans:
Software/internet	$	26,613	$	95,572	$	73,610	$	6,103,976	$	28,527	$	114,850	$	75,040	$	6,039,905
Hardware	1,214		5,458		18,430		1,365,701		1,253		11,506		18,472		1,223,051
Private equity/venture capital	—		—		115,805		17,801,324		—		3,700		98,581		14,106,860
Life science/healthcare	16,414		31,612		22,831		2,336,436		7,484		34,067		24,696		2,351,545
Premium wine	204		11,922		4,944		1,076,295		—		1,301		3,355		958,362
Other	203		2,965		3,150		556,689		411		411		3,147		459,079
Total commercial loans	44,648		147,529		238,770		29,240,421		37,675		165,835		223,291		25,138,802
Total consumer loans	211		5,480		21,295		3,771,206		266		4,239		19,671		3,029,404
Total	$	44,859	$	153,009	$	260,065	$	33,011,627	$	37,941	$	170,074	$	242,962	$	28,168,206

Credit Quality Indicators

For each individual client, we establish an internal credit risk rating for that loan, which is used for assessing and monitoring credit risk as well as performance of the loan and the overall portfolio. Our internal credit risk ratings are also used to summarize the risk of loss due to failure by an individual borrower to repay the loan. For our internal credit risk ratings, each individual loan is given a risk rating of 1 through 10. Loans risk-rated 1 through 4 are performing loans and translate to an internal rating of “Pass,” with loans risk-rated 1 being cash secured. Loans risk-rated 5 through 7 are performing loans; however, we consider them as demonstrating higher risk, which requires more frequent review of the individual exposures; these translate to an internal rating of “Performing (Criticized).” When full repayment of a criticized loan has been deemed improbable under the original contractual terms but full repayment remains probable overall, the loan is considered to be a “Performing Impaired (Criticized)” loan. All of our nonaccrual loans are risk-rated 8 or 9 and are classified under the nonperforming impaired category. (For a further description of nonaccrual loans, refer to Note 2—“Summary of Significant Accounting Policies” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report). Loans rated 10 are charged-off and are not included as part of our loan portfolio balance. We review our credit quality indicators for performance and appropriateness of risk ratings as part of our evaluation process for our allowance for loan losses.

The following table summarizes the credit quality indicators, broken out by portfolio segment and class of financing receivables as of December 31, 2019 and 2018:



(Dollars in thousands)	Pass		Performing (Criticized)		Performing Impaired (Criticized)		Nonperforming Impaired (Nonaccrual)		Total
December 31, 2019:
Commercial loans:
Software/internet	$	5,704,283	$	456,011	$	28,417	$	67,155	$	6,255,866
Hardware	1,266,077		109,490		3,315		2,143		1,381,025
Private equity/venture capital	17,813,128		4,262		—		—		17,817,390
Life science/healthcare	2,197,679		198,389		5,211		26,401		2,427,680
Premium wine	1,053,021		24,633		11,717		205		1,089,576
Other	571,040		8,439		1,680		1,285		582,444
Total commercial loans	28,605,228		801,224		50,340		97,189		29,553,981
Consumer loans:
Real estate secured loans	3,266,748		11,217		—		5,480		3,283,445
Other consumer loans	489,903		375		—		—		490,278
Total consumer loans	3,756,651		11,592		—		5,480		3,773,723
Total gross loans	$	32,361,879	$	812,816	$	50,340	$	102,669	$	33,327,704
December 31, 2018:
Commercial loans:
Software/internet	$	5,574,332	$	520,796	$	48,069	$	66,781	$	6,209,978
Hardware	1,146,985		87,309		10,250		1,256		1,245,800
Private equity/venture capital	14,098,281		16,151		—		3,700		14,118,132
Life science/healthcare	2,291,356		135,653		16,276		17,791		2,461,076
Premium wine	909,965		49,287		1,017		284		960,553
Other	467,653		17,344		—		411		485,408
Total commercial loans	24,488,572		826,540		75,612		90,223		25,480,947
Consumer loans:
Real estate secured loans	2,584,261		21,145		320		3,919		2,609,645
Other consumer loans	419,771		949		—		—		420,720
Total consumer loans	3,004,032		22,094		320		3,919		3,030,365
Total gross loans	$	27,492,604	$	848,634	$	75,932	$	94,142	$	28,511,312

Troubled Debt Restructurings

As of December 31, 2019 we had 23 TDRs with a total carrying value of $109.0 million where concessions have been granted to borrowers experiencing financial difficulties, in an attempt to maximize collection. This compares to 17 TDRs with a total carrying value of $83.7 million as of December 31, 2018. There were unfunded commitments available for funding of $0.8 million to the clients associated with these TDRs as of December 31, 2019. The following table summarizes our loans modified in TDRs, broken out by portfolio segment and class of financing receivables at December 31, 2019 and 2018:



	December 31,
(Dollars in thousands)	2019		2018
Loans modified in TDRs:
Commercial loans:
Software/internet	$	71,136	$	58,089
Hardware	1,685		9,665
Life science/healthcare	20,600		12,738
Premium wine	13,457		2,883
Total commercial loans	106,878		83,375
Consumer loans:
Other consumer loans	2,104		320
Total loans modified in TDRs	$	108,982	$	83,695

The following table summarizes the recorded investment in loans modified in TDRs, broken out by portfolio segment and class of financing receivable, for modifications made during 2019, 2018 and 2017:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Loans modified in TDRs during the period:
Commercial loans:
Software/internet	$	62,367	$	30,429	$	42,184
Hardware	1,685		9,665		51,132
Private equity/venture capital	—		—		350
Life science/healthcare	13,309		660		—
Premium wine	11,017		—		177
Total commercial loans	88,378		40,754		93,843
Consumer loans:
Other consumer loans	1,793		320		—
Total loans modified in TDRs during the period (1)	$	90,171	$	41,074	$	93,843


(1)	There were $11.3 million, $4.6 million and $3.0 million of partial charge-offs during 2019, 2018 and 2017, respectively.

During 2019, $86.9 million of new TDRs were modified through payment deferrals granted to our clients and $3.3 million were modified through partial forgiveness of principal. During 2018, all new TDRs of $41.1 million were modified through payment deferrals granted to our clients. During 2017, $93.5 million of new TDRs were modified through payment deferrals granted to our clients and $0.3 million were modified through partial forgiveness of principal.

The related allowance for loan losses for the majority of our TDRs is determined on an individual basis by comparing the carrying value of the loan to the present value of the estimated future cash flows, discounted at the pre-modification contractual interest rate. For certain TDRs, the related allowance for loan losses is determined based on the fair value of the collateral if the loan is collateral dependent.

The following table summarizes the recorded investment in loans modified in TDRs within the previous 12 months that subsequently defaulted during their respective periods, broken out by portfolio segment and class of financing receivable, during 2019, 2018 and 2017:



	December 31,
(Dollars in thousands)	2019		2018		2017
TDRs modified within the previous 12 months that defaulted during the period:
Commercial loans:
Software/internet	$	37,294	$	—	$	—
Life science/healthcare	10,639		—		—
Total TDRs modified within the previous 12 months that defaulted in the period	$	47,933	$	—	$	—

Charge-offs and defaults on previously restructured loans are evaluated to determine the impact to the allowance for loan losses, if any. The evaluation of these defaults may impact the assumptions used in calculating the reserve on other TDRs and impaired loans as well as management’s overall outlook of macroeconomic factors that affect the reserve on the loan portfolio as a whole. After evaluating the charge-offs and defaults experienced on our TDRs we determined that no change to our reserving methodology for TDRs was necessary to determine the allowance for loan losses as of December 31, 2019.

Premises and Equipment

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Premises and Equipment

Premises and equipment at December 31, 2019 and 2018 consisted of the following:



	December 31,
(Dollars in thousands)	2019			2018
Computer software	$	261,643		$	217,017
Computer hardware	82,643			70,247
Leasehold improvements	121,907			98,237
Furniture and equipment	46,300			42,319
Total	512,493			427,820
Accumulated depreciation and amortization	(350,617		)	(298,607		)
Premises and equipment, net	$	161,876		$	129,213

Depreciation and amortization expense for premises and equipment was $42.0 million, $38.1 million and $38.0 million for the years ended 2019, 2018 and 2017, respectively.

Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

We have operating leases for our corporate offices, data centers and certain equipment utilized at those properties. We are obligated under a number of noncancelable operating leases for premises and equipment that expire at various dates, through 2030, and in most instances, include options to renew or extend at market rates and terms. Such leases may provide for periodic adjustments of rentals during the term of the lease based on changes in various economic indicators.

On January 1, 2019, we adopted the new lease standard ASC 842 and all the related amendments. There were no significant assumptions or judgments required upon applying the new lease standard. We have no leases that meet the definition of a finance lease under ASC 842 and our lessor accounting treatment for subleases is not material. The comparative information below has not been restated and continues to be reported under the accounting standards in effect for those periods.

Total recorded balances for the lease assets and liabilities are as follows:



(Dollars in thousands)	December 31, 2019
Assets:
Right-of-use assets - operating leases (1)	$	197,365
Liabilities:
Lease liabilities - operating leases (1)	218,847


(1)	Included in these amounts are $21.7 million and $30.0 million of ROU assets and lease liabilities, respectively, attributable to the inclusion of SVB Leerink in our financial results at December 31, 2019.

The components of our lease cost and supplemental cash flow information related to leases for the year ended December 31, 2019 were as follows:



(Dollars in thousands)	2019
Operating lease cost	$	41,049
Short-term lease cost	1,823
Variable lease cost	3,477
Less: sublease income	(4,492		)
Total lease expense, net	$	41,857
Supplemental cash flows information:
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for operating leases	$	44,976
Noncash items during the period:
Lease obligations in exchange for obtaining right-of-use assets:
Operating leases	$	33,167

The table below presents additional information related to the Company's leases as of December 31, 2019:



	December 31, 2019
Weighted-average remaining term (in years) - operating leases	6.29
Weighted-average discount rate - operating leases (1)	2.92	%

(1)

The incremental borrowing rate used to calculate the lease liability was determined based on the facts and circumstances of the economic environment and the Company’s credit standing as of the effective date of ASC 842. Additionally, the total lease term and total lease payments were also considered in determining the rate. Based on these considerations the Company identified credit terms available under its existing credit lines which represent a collateralized borrowing rate that has varying credit terms that could be matched to total lease terms and total lease payments in ultimately determining the implied borrowing rate in each lease contract.

The following table presents our undiscounted future cash payments for our operating lease liabilities as of December 31, 2019:



Years ended December 31, (Dollars in thousands)	Operating Leases
2020	$	44,791
2021	42,683
2022	37,669
2023	36,914
2024	26,602
2025 and thereafter	52,128
Total lease payments (1)	$	240,787
Less: imputed interest	(21,940		)
Total lease liabilities	$	218,847


(1)	As of December 31, 2019, we have additional leases that have not yet commenced. We estimate that we will record additional lease liabilities of $29.1 million upon commencement. These leases will commence in 2020 with lease terms of two to five years.

The following table presents minimum future payments under noncancelable operating leases under ASC 840 as of December 31, 2018:



(Dollars in thousands)	Amount
2019	$	38,609
2020	37,575
2021	35,854
2022	31,659
2023	30,904
2024 and thereafter	49,071
Total minimum future payments	$	223,672

Rent expense for premises and equipment leased under operating leases, under ASC 840 totaled $34.6 million and $31.3 million in 2018 and 2017, respectively.

Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill

On January 4, 2019, we completed the acquisition of Leerink Holdings LLC, now SVB Leerink. We recognized identifiable intangible assets of $60.9 million and goodwill of $137.8 million as a result of the acquisition. For additional information, refer to Note 3—“Business Combination” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report. The goodwill of $137.8 million includes revenue generating synergies expected from collaboration between SVB Leerink and the Company.

The changes in goodwill were as follows for the year ended December 31, 2019:



(Dollars in thousands)	Goodwill
Beginning balance at December 31, 2018	$	—
Acquisitions (1)	137,823
Ending balance at December 31, 2019	$	137,823


(1)	All reported goodwill amounts have been allocated to the SVB Leerink reporting segment and are expected to be deductible for tax purposes. Refer to Note 25—“Segment Reporting” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report for additional information.

During 2019, we completed our annual goodwill impairment test as of September 30, 2019. As a result, we determined there was no impairment as of December 31, 2019. For more information on our annual impairment policies, see Note 2—“Summary of Significant Accounting Policies” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report.

Other Intangible Assets

The components of net other intangible assets related to the acquisition of SVB Leerink were as follows:



	December 31, 2019
(Dollars in thousands)	Gross Amount		Accumulated Amortization		Net Carrying Amount
Other intangible assets:
Customer relationships	$	42,000	$	3,818	$	38,182
Other	18,900		7,665		11,235
Total other intangible assets	$	60,900	$	11,483	$	49,417

For the year ended December 31, 2019, we recorded amortization expense of $11.5 million. Assuming no future impairments of other intangible assets or additional acquisitions or dispositions, the following table presents the Company's future expected amortization expense for other intangible assets that will continue to be amortized as of December 31, 2019:



Years ended December 31, (Dollars in thousands)	Other Intangible Assets
2020	$	5,382
2021	4,732
2022	4,732
2023	4,732
2024	4,732
2025 and thereafter	25,107
Total future amortization expense	$	49,417

Deposits

12 Months Ended

Dec. 31, 2019

Deposits [Abstract]

Deposits

The following table presents the composition of our deposits at December 31, 2019 and 2018:



	December 31,
(Dollars in thousands)	2019		2018
Noninterest-bearing demand	$	40,841,570	$	39,103,422
Interest-bearing checking and savings accounts	568,256		648,468
Money market	17,749,736		7,498,205
Money market deposits in foreign offices	352,437		152,781
Sweep deposits in foreign offices	2,057,715		1,875,298
Time	188,093		50,726
Total deposits	$	61,757,807	$	49,328,900

The aggregate amount of time deposit accounts individually equal to or greater than $250,000 totaled $180 million and $42 million at December 31, 2019 and 2018, respectively. At December 31, 2019, time deposit accounts individually equal to or greater than $250,000 totaling $177 million were scheduled to mature within one year.

Short-Term Borrowings and Long-Term Debt

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Short-Term Borrowings and Long-Term Debt

The following table represents outstanding short-term borrowings and long-term debt at December 31, 2019 and 2018:



				Carrying Value
(Dollars in thousands)	Maturity	Principal value at December 31, 2019		December 31, 2019		December 31, 2018
Short-term borrowings:
Short-term FHLB advances				$	—	$	300,000
Securities sold under agreement to repurchase	(1)			—		319,414
Other short-term borrowings	(2)	$	17,430	17,430		11,998
Total short-term borrowings				$	17,430	$	631,412
Long-term debt:
3.50% Senior Notes	January 29, 2025	$	350,000	$	347,987	$	347,639
5.375% Senior Notes				—		348,826
Total long-term debt				$	347,987	$	696,465


(1)	Securities sold under repurchase agreements are effectively short-term borrowings collateralized by U.S. Treasury securities.


(2)	Represents cash collateral received from certain counterparties in relation to market value exposures of derivative contracts in our favor.

The aggregate annual maturities of long-term debt obligations as of December 31, 2019 are as follows:



Year ended December 31, (Dollars in thousands)	Amount
2020	$	—
2021	—
2022	—
2023	—
2024	—
2025 and thereafter	347,987
Total	$	347,987

Interest expense related to short-term borrowings and long-term debt was $35.1 million, $46.6 million and $36.1 million in 2019, 2018 and 2017, respectively. For the year ended December 31, 2017, interest expense is net of the hedge accounting impact from our interest rate swap agreements related to our 6.05% Subordinated Notes. The weighted average interest rate associated with our short-term borrowings was 2.62 percent as of December 31, 2018. There were no overnight short-term borrowings as of December 31, 2019.

3.50% Senior Notes

In January 2015, SVB Financial issued $350 million of 3.50% Senior Notes due in January 2025. We received net proceeds of approximately $346.4 million after deducting underwriting discounts and commissions and issuance costs. The balance of our 3.50% Senior Notes at December 31, 2019 was $348.0 million, which is reflective of $1.8 million of debt issuance costs and a $0.2 million discount.

5.375% Senior Notes

In September 2010, SVB Financial issued $350 million of 5.375% Senior Notes due in September 2020. We received net proceeds of $345 million after deducting underwriting discounts and commissions and other expenses. We used approximately $250 million of the net proceeds from the sale of the notes to meet obligations due on our 3.875% Convertible Notes, which matured in April 2011. The remaining net proceeds were used for general corporate purposes, including working capital. On December 20, 2019, we redeemed in full the outstanding aggregate principle amount of our $350 million 5.375% Senior Notes due 2020 at a redemption price of $358.4 million. The amount paid in excess of the principal amount of the 5.375% Senior Notes represented a $9.0 million premium due to holders upon early redemption and was recorded as a loss in other noninterest income.

Short-term Borrowings

We have certain facilities in place to enable us to access short-term borrowings on a secured and unsecured basis. Our secured facilities include collateral pledged to the FHLB of San Francisco and the discount window at the FRB (using both fixed income securities and loans as collateral). Our unsecured facility consists of our uncommitted federal funds lines. As of December 31, 2019, collateral pledged to the FHLB of San Francisco was comprised primarily of fixed income investment securities and loans and had a carrying value of $4.7 billion, of which $4.3 billion was available to support additional borrowings. As of December 31, 2019, collateral pledged to the discount window at the FRB was comprised of fixed income investment securities and had a carrying value of $1.0 billion, all of which was unused and available to support additional borrowings. Our total unused and available borrowing capacity for our uncommitted federal funds lines totaled $1.9 billion at December 31, 2019. Our total unused and available borrowing capacity under our master repurchase agreements with various financial institutions totaled $3.3 billion at December 31, 2019.

Derivative Financial Instruments

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

We primarily use derivative financial instruments to manage interest rate risk, currency exchange rate risk and to assist customers with their risk management objectives, which may include currency exchange rate risks and interest rate risks. Also, in connection with negotiating credit facilities and certain other services, we often obtain equity warrant assets giving us the right to acquire stock in private, venture-backed companies in the technology and life science/healthcare industries.

Interest Rate Risk

Interest rate risk is our primary market risk and can result from timing and volume differences in the repricing of our interest rate sensitive assets and liabilities and changes in market interest rates. To manage interest rate risk on our variable-interest rate loan portfolio, we enter into interest rate swap contracts to hedge against future changes in interest rates by using hedging instruments to lock in future cash inflows that would otherwise be impacted by movements in the market interest rates. We designate these interest rate swap contracts as cash flow hedges that qualify for hedge accounting under ASC 815, Derivatives and Hedging ("ASC 815"), and record them in other assets and other liabilities. For qualifying cash flow hedges, changes in the fair value of the derivative are recorded in accumulated other comprehensive income and recognized in earnings as the hedged item affects earnings. Derivative amounts affecting earnings are recognized consistent with the classification of the hedged item in the line item "loans" as part of interest income, a component of consolidated net income.

We assess hedge effectiveness under ASC 815 on a quarterly basis to ensure all hedges remain highly effective to ensure hedge accounting under ASC 815 can be applied. If the hedging relationship no longer exists or no longer qualifies as a hedge per ASC 815, any amounts remaining as gain or loss in accumulated other comprehensive income are reclassified into earnings in the line item "loans" as part of interest income, a component of consolidated net income. As of December 31, 2019, no derivatives classified as hedges were terminated or were disqualified for hedge accounting. The maximum length of time over which the forecasted transactions are hedged is approximately five years.

Currency Exchange Risk

We enter into foreign exchange forward contracts to economically reduce our foreign exchange exposure risk associated with the net difference between foreign currency denominated assets and liabilities. We do not designate any foreign exchange forward contracts as derivative instruments that qualify for hedge accounting. Gains or losses from changes in currency rates on foreign currency denominated instruments are recorded in the line item "other" as part of noninterest income, a component of consolidated net income. We may experience ineffectiveness in the economic hedging relationship, because the instruments are revalued based upon changes in the currency’s spot rate on the principal value, while the forwards are revalued on a discounted cash flow basis. We record forward agreements in gain positions in other assets and loss positions in other liabilities, while net changes in fair value are recorded in the line item "other" as part of noninterest income, a component of consolidated net income.

Other Derivative Instruments

Also included in our derivative instruments are equity warrant assets and client forward and option contracts, and client interest rate contracts. For further description of these other derivative instruments, refer to Note 2—“Summary of Significant Accounting Policies” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report.

Counterparty Credit Risk

We are exposed to credit risk if counterparties to our derivative contracts do not perform as expected. We mitigate counterparty credit risk through credit approvals, limits, monitoring procedures and obtaining collateral, as appropriate. With respect to measuring counterparty credit risk for derivative instruments, we measure the fair value of a group of financial assets and financial liabilities on a net risk basis by counterparty portfolio.

The total notional or contractual amounts and fair value of our derivative financial instruments at December 31, 2019 and 2018 were as follows:



	December 31, 2019						December 31, 2018
	Notional or Contractual Amount		Fair Value				Notional or Contractual Amount		Fair Value
(Dollars in thousands)	Notional or Contractual Amount		Derivative Assets (1)		Derivative Liabilities (1)		Notional or Contractual Amount		Derivative Assets (1)		Derivative Liabilities (1)
Derivatives designated as hedging instruments:
Interest rate risks:
Interest rate swaps	$	1,915,000	$	22,676	$	—	$	—	$	—	$	—
Interest rate swaps	3,085,000		—		25,623		—		—		—
Derivatives not designated as hedging instruments:
Currency exchange risks:
Foreign exchange forwards	—		—		—		263,733		4,767		—
Foreign exchange forwards	300,250		—		2,154		178,310		—		1,094
Other derivative instruments:
Equity warrant assets	225,893		165,473		—		223,532		149,238		—
Client foreign exchange forwards	4,661,517		114,546		—		2,759,878		93,876		—
Client foreign exchange forwards	4,326,059		—		94,745		2,568,085		—		85,706
Client foreign currency options	154,985		1,308		—		93,556		1,759		—
Client foreign currency options	154,985		—		1,308		93,579		—		1,759
Client interest rate derivatives (2)	1,275,190		28,811		—		1,020,416		8,499		—
Client interest rate derivatives (2)	1,372,914		—		14,154		1,337,328		—		9,491
Total Derivatives not designated as hedging instruments			310,138		112,361				258,139		98,050
Total derivatives			$	332,814	$	137,984			$	258,139	$	98,050


(1)	Derivative assets and liabilities are included in "accrued interest receivable and other assets" and "other liabilities", respectively, on our consolidated balance sheets.


(2)	The amount reported reflects reductions of approximately $17.4 million of derivative liabilities and $0.4 million of derivative assets at December 31, 2019 and 2018, respectively, reflecting variation margin treated as settlement of the related derivative fair values for legal and accounting purposes as required by central clearing houses.

A summary of our derivative activity and the related impact on our consolidated statements of income for 2019, 2018 and 2017 is as follows:



		Year ended December 31,
(Dollars in thousands)	Statement of income location	2019			2018			2017
Derivatives designated as hedging instruments:
Interest rate risks:
Amounts reclassified from accumulated other comprehensive income into income	Interest income—loans	$	(5,358	)	$	—		$	—
Net cash benefit associated with interest rate swaps	Interest expense—borrowings	—			—			1,053
Changes in fair value of interest rate swaps	Other noninterest income	—			—			(7		)
Net (losses) gains associated with interest rate risk derivatives		$	(5,358	)	$	—		$	1,046
Derivatives not designated as hedging instruments:
Currency exchange risks:
Gains (losses) on revaluations of internal foreign currency instruments, net	Other noninterest income	$	1,444		$	(373	)	$	33,161
(Losses) gains on internal foreign exchange forward contracts, net	Other noninterest income	(1,853		)	52			(32,286		)
Net (losses) gains associated with internal currency risk		$	(409	)	$	(321	)	$	875
Other derivative instruments:
(Losses) gains on revaluations of client foreign currency instruments, net	Other noninterest income	$	(15,146	)	$	4,998		$	10,882
Gains (losses) on client foreign exchange forward contracts, net	Other noninterest income	15,900			(4,011		)	(9,969		)
Net gains associated with client currency risk		$	754		$	987		$	913
Net gains on equity warrant assets	Gains on equity warrant assets, net	$	138,078		$	89,142		$	54,555
Net losses on other derivatives	Other noninterest income	$	(1,190	)	$	(179	)	$	(564	)

Balance Sheet Offsetting

Certain of our derivative and other financial instruments are subject to enforceable master netting arrangements with our counterparties. These agreements provide for the net settlement of multiple contracts with a single counterparty through a single payment, in a single currency, in the event of default on or termination of any one contract. The following table summarizes our assets subject to enforceable master netting arrangements as of December 31, 2019 and 2018:



(Dollars in thousands)	Gross Amounts of Recognized Assets		Gross Amounts offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements						Net Amount
(Dollars in thousands)	Gross Amounts of Recognized Assets		Gross Amounts offset in the Statement of Financial Position				Financial Instruments			Cash Collateral Received (1)			Net Amount
December 31, 2019:
Derivative Assets:
Interest rate swaps	$	22,676	$	—	$	22,676	$	(22,598	)	$	—		$	78
Foreign exchange forwards	114,546		—		114,546		(36,855		)	(17,095		)	60,596
Foreign currency options	1,308		—		1,308		(848		)	(335		)	125
Client interest rate derivatives	28,811		—		28,811		(28,811		)	—			—
Total derivative assets:	167,341		—		167,341		(89,112		)	(17,430		)	60,799
Reverse repurchase, securities borrowing, and similar arrangements	289,340		—		289,340		(289,340		)	—			—
Total	$	456,681	$	—	$	456,681	$	(378,452	)	$	(17,430	)	$	60,799
December 31, 2018:
Derivative Assets:
Foreign exchange forwards	$	98,643	$	—	$	98,643	$	(38,213	)	$	(11,825	)	$	48,605
Foreign currency options	1,759		—		1,759		(613		)	(90		)	1,056
Client interest rate derivatives	8,499		—		8,499		(8,416		)	(83		)	—
Total derivative assets:	108,901		—		108,901		(47,242		)	(11,998		)	49,661
Reverse repurchase, securities borrowing, and similar arrangements	123,611		—		123,611		(123,611		)	—			—
Total	$	232,512	$	—	$	232,512	$	(170,853	)	$	(11,998	)	$	49,661


(1)	Cash collateral received from our counterparties in relation to market value exposures of derivative contracts in our favor is recorded as a component of “short-term borrowings” on our consolidated balance sheets.

The following table summarizes our liabilities subject to enforceable master netting arrangements as of December 31, 2019 and 2018:



(Dollars in thousands)	Gross Amounts of Recognized Liabilities		Gross Amounts offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements						Net Amount
(Dollars in thousands)	Gross Amounts of Recognized Liabilities		Gross Amounts offset in the Statement of Financial Position				Financial Instruments			Cash Collateral Pledged (1)			Net Amount
December 31, 2019:
Derivative Liabilities:
Interest rate swaps	$	25,623	$	—	$	25,623	$	(22,676	)	$	(2,947	)	$	—
Foreign exchange forwards	96,899		—		96,899		(33,314		)	(22,030		)	41,555
Foreign currency options	1,308		—		1,308		(531		)	—			777
Client interest rate derivatives	14,154		—		14,154		—			(13,936		)	218
Total derivative liabilities:	137,984		—		137,984		(56,521		)	(38,913		)	42,550
Repurchase, securities lending, and similar arrangements	—		—		—		—			—			—
Total	$	137,984	$	—	$	137,984	$	(56,521	)	$	(38,913	)	$	42,550
December 31, 2018:
Derivative Liabilities:
Foreign exchange forwards	$	86,800	$	—	$	86,800	$	(24,778	)	$	(20,732	)	$	41,290
Foreign currency options	1,759		—		1,759		(1,054		)	—			705
Client interest rate derivatives	9,491		—		9,491		—			(9,207		)	284
Total derivative liabilities:	98,050		—		98,050		(25,832		)	(29,939		)	42,279
Repurchase, securities lending, and similar arrangements	319,414		—		319,414		—			—			319,414
Total	$	417,464	$	—	$	417,464	$	(25,832	)	$	(29,939	)	$	361,693

(1)

Cash collateral pledged to our counterparties in relation to market value exposures of derivative contracts in a liability position and repurchase agreements are recorded as a component of “cash and cash equivalents" on our consolidated balance sheets.

Noninterest Income

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Noninterest Income

On January 1, 2018, we adopted accounting standard ASU 2014-09, Revenue from Contracts with Customers and all the related amendments ("ASC 606" or "ASU 2014-09"). Results for the reporting periods ended December 31, 2019 and 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our previous accounting methodology under ASC 605. A summary of noninterest income for the years ended December 31, 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Noninterest income:
Gains on investment securities, net	$	134,670	$	88,094	$	64,603
Gains on equity warrant assets, net	138,078		89,142		54,555
Client investment fees	182,068		130,360		56,136
Foreign exchange fees	159,262		138,812		115,760
Credit card fees	118,719		94,072		76,543
Deposit service charges	89,200		76,097		58,715
Lending related fees	49,920		41,949		43,265
Letters of credit and standby letters of credit fees	42,669		34,600		28,544
Investment banking revenue	195,177		—		—
Commissions	56,346		—		—
Other	55,370		51,858		59,110
Total noninterest income	$	1,221,479	$	744,984	$	557,231

Gains on investment securities, net

Net gains on investment securities include both gains and losses from our non-marketable and other equity securities, gains and losses from sales of our AFS debt securities portfolio, when applicable, and carried interest.

Our non-marketable and other equity securities portfolio primarily represents investments in venture capital and private equity funds, our China Joint Venture, debt funds, private and public portfolio companies, which include public equity securities held as a result of exercised equity warrant assets, and investments in qualified affordable housing projects. We experience variability in the performance of our non-marketable and other equity securities from period to period, which results in net gains or losses on investment securities (both realized and unrealized). This variability is due to a number of factors, including unrealized changes in the values of our investments, changes in the amount of realized gains from distributions, changes in liquidity events and general economic and market conditions. Unrealized gains from non-marketable and other equity securities for any single period are typically driven by valuation changes.

The extent to which any unrealized gains or losses will become realized is subject to a variety of factors, including, among other things, the expiration of certain sales restrictions to which these equity securities may be subject to (i.e., lock-up agreements), changes in prevailing market prices, market conditions, the actual sales or distributions of securities, and the timing of such actual sales or distributions, which, to the extent such securities are managed by our managed funds, are subject to our funds' separate discretionary sales/distributions and governance processes.

Carried interest is comprised of preferential allocations of profits recognizable when the return on assets of our individual managed fund of funds and direct venture funds exceeds certain performance targets and is payable to us, as the general partners of the managed funds. The carried interest we earn is often shared with employees, who are also members of the general partner entities. We record carried interest on a quarterly basis by measuring fund performance to date versus the performance target. For our unconsolidated managed funds, carried interest is recorded as gains on investment securities, net. For our consolidated managed funds, it is recorded as a component of net income attributable to noncontrolling interests. Carried interest allocated to others is recorded as a component of net income attributable to noncontrolling interests. Any carried interest paid to us (or our employees) may be subject to reversal to the extent fund performance declines to a level where inception to date carried interest is lower than actual payments made by the funds. The limited partnership agreements for our funds provide that carried interest is generally not paid to the general partners until the funds have provided a full return of contributed capital to the limited partners. Accrued, but unpaid carried interest may be subject to reversal to the extent that the fund performance declines to a level where inception-to-date carried interest is less than prior amounts recognized. Carried interest income is accounted for under an ownership model based on ASC 323 — Equity Method of Accounting and ASC 810 — Consolidation.

Our available-for-sale securities portfolio is a fixed income investment portfolio that is managed with the objective of earning an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and credit diversification as well as addressing our asset/liability management objectives. Though infrequent, sales of debt securities in our AFS securities portfolio

may result in net gains or losses and are conducted pursuant to the guidelines of our investment policy related to the management of our liquidity position and interest rate risk.

Gains on investment securities are recognized outside of the scope of the new revenue standard as it explicitly excludes noninterest income earned from our investment-related activities. A summary of gains and losses on investment securities for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019			2018			2017
Gains on non-marketable and other equity securities, net	$	138,575		$	88,834		$	69,792
Losses on sales of available-for-sale debt securities, net	(3,905		)	(740		)	(5,189		)
Total gains on investment securities, net	$	134,670		$	88,094		$	64,603

Gains on equity warrant assets, net

In connection with negotiating credit facilities and certain other services, we often obtain rights to acquire stock in the form of equity warrant assets in primarily private, venture-backed companies in the technology and life science/healthcare industries. Any changes in fair value from the grant date fair value of equity warrant assets will be recognized as increases or decreases to other assets on our balance sheet and as net gains or losses on equity warrant assets, in noninterest income, a component of consolidated net income.

Gains on equity warrant assets are recognized outside of the scope of the new revenue standard as it explicitly excludes noninterest income earned from our derivative-related activities. A summary of net gains on equity warrant assets for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019			2018			2017
Equity warrant assets:
Gains on exercises, net	$	107,168		$	58,186		$	48,275
Terminations	(3,502		)	(5,964		)	(4,422		)
Changes in fair value, net	34,412			36,920			10,702
Total net gains on equity warrant assets	$	138,078		$	89,142		$	54,555

Client investment fees

Client investment fees include fees earned from discretionary investment management services for substantially all clients, managing clients’ portfolios based on their investment policies, strategies and objectives and investment advisory fees. Revenue is recognized on a monthly basis upon completion of our performance obligation and consideration is typically received in the subsequent month. Included in our sweep money market fees are Rule 12(b)-1 fees, revenue sharing and customer transactional-based fees. Rule 12(b)-1 fees and revenue sharing are recognized as earned based on client funds that are invested in the period, typically monthly. Transactional based fees are earned and recognized on fixed income securities when the transaction is executed on the clients' behalf. Amounts paid to third-party service providers are predominantly expensed, such that client investment fees are recorded gross of payments made to third parties. A summary of client investment fees by instrument type for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Client investment fees by type:
Sweep money market fees	$	104,236	$	75,654	$	28,485
Asset management fees (1)	28,665		23,882		16,831
Repurchase agreement fees	49,167		30,824		10,820
Total client investment fees (2)	$	182,068	$	130,360	$	56,136


(1)	Represents fees earned from investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.


(2)	Represents fees earned on client investment funds which are maintained at third-party financial institutions and are not recorded on our balance sheet.

Foreign exchange fees

Foreign exchange fees represent the income differential between purchases and sales of foreign currency on behalf of our clients, primarily from spot contracts. Foreign exchange spot contract fees are recognized upon the completion of the single performance obligation, the execution of a spot trade in exchange for a fee. In line with customary business practice, the legal right transfers to the client upon execution of a foreign exchange contract on the trade date, and as such, we currently recognize our fees based on the trade date and are typically settled within two business days.

Forward contract and option premium fees are recognized outside of the scope of the new revenue standard as it explicitly excludes noninterest income earned from our derivative-related activities. A summary of foreign exchange fee income by instrument type for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Foreign exchange fees by instrument type:
Spot contract commissions	$	145,915	$	127,459	$	104,344
Forward contract commissions	13,068		10,940		10,934
Option premium fees	279		413		482
Total foreign exchange fees	$	159,262	$	138,812	$	115,760

Credit card fees

Credit card fees include interchange income from credit and debit cards and fees earned from processing transactions for merchants. Interchange income is earned after satisfying our performance obligation of providing nightly settlement services to a payment network. Costs related to rewards programs are recorded when the rewards are earned by the customer and presented as a reduction to interchange fee income. Rewards programs continue to be accounted for under ASC 310 - Receivables. Our performance obligations for merchant service fees are to transmit data and funds between the merchant and the payment network. Credit card interchange and merchant service fees are earned daily upon completion of transaction settlement services.

Annual card service fees are recognized on a straight-line basis over a 12-month period and continue to be accounted for under ASC 310 - Receivables. A summary of credit card fees by instrument type for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Credit card fees by instrument type:
Card interchange fees, net	$	93,553	$	74,381	$	60,224
Merchant service fees	18,355		14,420		11,584
Card service fees	6,811		5,271		4,735
Total credit card fees	$	118,719	$	94,072	$	76,543

Deposit service charges

Deposit service charges include fees earned from performing cash management activities and other deposit account services. Deposit services include, but are not limited to, the following: receivables services, which include merchant services, remote capture, lockbox, electronic deposit capture, and fraud control services. Payment and cash management products and services include wire transfer and automated clearing house payment services to enable clients to transfer funds more quickly, as well as business bill pay, business credit and debit cards, account analysis, and disbursement services. Deposit service charges

are recognized over the period in which the related performance obligation is provided, generally on a monthly basis, and are presented in the "Disaggregation of Revenue from Contracts with Customers" table below.

Lending related fees

Unused commitment fees, minimum finance fees and unused line fees are recognized as earned on a monthly basis. Fees that qualify for syndication treatment are recognized at the completion of the syndicated loan deal for which the fees were received.

Lending related fees are recognized outside of the scope of the new revenue standard as it explicitly excludes noninterest income earned from our lending-related activities. A summary of lending related fees by instrument type for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Lending related fees by instrument type:
Unused commitment fees	$	34,829	$	32,452	$	34,110
Other	15,091		9,497		9,155
Total lending related fees	$	49,920	$	41,949	$	43,265

Letters of credit and standby letters of credit fees

Commercial and standby letters of credit represent conditional commitments issued by us on behalf of a client to guarantee the performance of the client to a third party when certain specified future events have occurred. Fees generated from letters of credit and standby letters of credit are deferred as a component of other liabilities and recognized in noninterest income over the commitment period using the straight-line method, based on the likelihood that the commitment being drawn down will be remote. Letters of credit and standby letters of credit fees are recognized outside of the scope of the new revenue standard as it explicitly excludes noninterest income earned from our lending related activities.

Investment banking revenue

We earn investment banking revenue from clients for providing services related to securities underwriting, private placements and advisory services on strategic matters such as mergers and acquisitions. Underwriting fees are attributable to public and private offerings of equity and debt securities and are recognized at the point in time when the offering has been deemed to be completed by the lead manager of the underwriting group. Once the offering is completed, the performance obligation has been satisfied; we recognize the applicable management fee as well the underwriting fee, net of consideration payable to customers. Private placement fees are recognized at the point in time when the private placement is completed, which is generally when the client accepts capital from the fund raise. Advisory fees from mergers and acquisitions engagements are generally recognized at the point in time when the related transaction is completed. Expenses are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other deal-related expenses are expensed as incurred. We have determined that we act as principal in the majority of these transactions and therefore presents expenses gross within other operating expenses.

A summary of investment banking revenue by instrument type for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Investment banking revenue:
Underwriting fees	$	153,306	$	—	$	—
Advisory fees	37,846		—		—
Private placements and other	4,025		—		—
Total investment banking revenue	$	195,177	$	—	$	—

Commissions

Commissions include commissions received from clients for the execution of agency-based brokerage transactions in listed and over-the-counter equities. The execution of each trade order represents a distinct performance obligation and the transaction price is fixed at the point in time or trade order execution. Trade execution is satisfied at the point in time that the customer has control of the asset and as such, fees are recorded on a trade date basis. Commissions are presented in the "Disaggregation of revenue from contracts with customers" table below.

Other

Other noninterest income primarily includes income from fund management fees and service revenue. Fund management fees are comprised of fees charged directly to our managed funds of funds and direct venture funds. Fund management fees are based upon the contractual terms of the limited partnership agreements and are generally recognized as earned over the specified contract period, which is generally equal to the life of the individual fund. Fund management fees are calculated as a percentage of committed capital and collected in advance and are received quarterly. Fund management fees for certain of our limited partnership agreements are calculated as a percentage of distributions made by the funds and revenue is recorded only at the time of a distribution event. As distribution events are not predetermined for these certain funds, management fees are considered variable and constrained under the new revenue standard.

Other service revenue primarily consists of dividend income on FHLB/FRB stock, correspondent bank rebate income, incentive fees related to carried interest, gains or losses on early debt redemption and other fee income. We recognize revenue when our performance obligations are met and record revenues on a daily/monthly basis, quarterly, semi-annually or annual basis. For event driven revenue sources, we recognize revenue when: (i) persuasive evidence of an arrangement exists, (ii) we have performed the service, provided we have no other remaining obligations to the customer, (iii) the fee is fixed or determinable and (iv) collectability is probable.

A summary of other noninterest income by instrument type for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019			2018		2017
Other noninterest income by instrument type:
Fund management fees	$	32,522		$	23,016	$	21,214
Net gains on revaluation of foreign currency instruments, net of foreign exchange forward contracts (1)	345			666		1,788
(Losses) gains on extinguishment of debt	(8,960		)	—		2,731
Other service revenue	31,463			28,176		33,377
Total other noninterest income	$	55,370		$	51,858	$	59,110


(1)	Represents the net revaluation of client and internal foreign currency denominated financial instruments. We enter into foreign exchange forward contracts to economically reduce our foreign exchange exposure related to client and internal foreign currency denominated financial instruments.

Disaggregation of Revenue from Contracts with Customers

The following tables present our revenues from contracts with customers disaggregated by revenue source and segment for the years ended December 31, 2019 and 2018:



(Dollars in thousands)	Global Commercial Bank (2)		SVB Private Bank		SVB Capital (2)		SVB Leerink (2)		Other Income		Total
Revenue from contracts with customers:
Client investment fees	$	180,152	$	1,916	$	—	$	—	$	—	$	182,068
Spot contract commissions	144,930		510		—		—		475		145,915
Card interchange fees, gross	154,197		—		—		—		756		154,953
Merchant service fees	18,355		—		—		—		—		18,355
Deposit service charges	88,136		137		—		—		927		89,200
Investment banking revenue	—		—		—		195,177		—		195,177
Commissions	—		—		—		56,346		—		56,346
Fund management fees	—		—		26,850		5,672		—		32,522
Correspondent bank rebates	6,415		—		—		—		—		6,415
Total revenue from contracts with customers	$	592,185	$	2,563	$	26,850	$	257,195	$	2,158	$	880,951
Revenues outside the scope of ASC 606 (1)	45,737		803		95,544		7,321		191,123		340,528
Total noninterest income	$	637,922	$	3,366	$	122,394	$	264,516	$	193,281	$	1,221,479


(1)	Amounts are accounted for under separate guidance than ASC 606.


(2)	Global Commercial Bank’s, SVB Capital’s and SVB Leerink's components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."



(Dollars in thousands)	Global Commercial Bank (2)		SVB Private Bank			SVB Capital (2)		Other Income		Total
Revenue from contracts with customers:
Client investment fees (3)	$	128,834	$	1,526		$	—	$	—	$	130,360
Spot contract commissions	126,445		691			—		323		127,459
Card interchange fees, gross	134,074		—			—		428		134,502
Merchant service fees	14,415		4			—		1		14,420
Deposit service charges	74,348		108			—		1,641		76,097
Fund management fees	—		—			23,016		—		23,016
Correspondent bank rebates	5,802		—			—		—		5,802
Total revenue from contracts with customers	$	483,918	$	2,329		$	23,016	$	2,393	$	511,656
Revenues outside the scope of ASC 606 (1)	36,384		(48		)	78,165		118,827		233,328
Total noninterest income	$	520,302	$	2,281		$	101,181	$	121,220	$	744,984


(1)	Amounts are accounted for under separate guidance than ASC 606.


(2)	Global Commercial Bank’s and SVB Capital’s components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."

(3)

For the year ended December 31, 2018, the amount of client investment fees previously reported as "Other Items" has been correctly allocated to the reportable segment "Global Commercial Bank" to properly reflect the source of such revenue. The correction of this immaterial error had no impact on the "Total" amount of client investment fees.

Other Noninterest Expense

12 Months Ended

Dec. 31, 2019

Other Income and Expenses [Abstract]

Other Noninterest Expense

A summary of other noninterest expense for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Lending and other client related processing costs	$	28,491	$	24,237	$	23,768
Correspondent bank fees	14,503		13,713		12,976
Investment banking activities	13,733		—		—
Trade order execution costs	10,813		—		—
Data processing services	12,536		10,811		10,251
Telephone	9,861		9,404		10,647
Dues and publications	4,603		4,605		3,263
Postage and supplies	3,198		2,799		2,797
Other	54,841		21,682		21,419
Total other noninterest expense	$	152,579	$	87,251	$	85,121

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

We are subject to income tax in the U.S. federal jurisdiction and various state and foreign jurisdictions. The components of our provision for income taxes for 2019, 2018 and 2017 were as follows:



	Year ended December 31,
(Dollars in thousands)	2019			2018			2017
Current provision:
Federal	$	296,400		$	249,358		$	263,231
State	132,357			123,264			67,046
Deferred (benefit) expense:
Federal	(1,530		)	(11,777		)	24,654
State	(1,542		)	(9,284		)	532
Income tax expense	$	425,685		$	351,561		$	355,463

Our effective tax rate is calculated by dividing income tax expense by the sum of income before income tax expense and the net income attributable to noncontrolling interests. The reconciliation between the federal statutory income tax rate and our effective income tax rate for 2019, 2018 and 2017, is as follows:



	December 31,
(Dollars in thousands)	2019		2018		2017
Federal statutory income tax rate	21.0	%	21.0	%	35.0	%
State income taxes, net of the federal tax effect	7.0		7.2		5.8
Net deferred tax assets revaluation (TCJ Act)	—		—		4.3
Meals and entertainment	0.4		0.3		0.3
Disallowed officers' compensation	0.2		0.2		0.1
FDIC premiums	0.2		0.5		—
Share-based compensation expense on incentive stock options and ESPP	(0.6	)	(1.4	)	(2.1	)
Qualified affordable housing project tax credits	(0.3	)	(0.3	)	(0.4	)
Tax-exempt interest income	(0.6	)	(0.6	)	(0.3	)
Other, net	(0.1	)	(0.4	)	(0.7	)
Effective income tax rate	27.2	%	26.5	%	42.0	%

Deferred tax assets and liabilities at December 31, 2019 and 2018, consisted of the following:



	December 31,
(Dollars in thousands)	2019			2018
Deferred tax assets:
Allowance for loan losses	$	103,267		$	93,580
Net unrealized losses on AFS debt securities	—			19,704
Share-based compensation expense	14,233			10,642
State income taxes	16,097			13,854
Accrued compensation	22,578			8,291
Deferred rent	—			7,940
Lease liability	60,635			—
Other accruals	12,383			7,061
Net operating loss	6,386			2,447
Goodwill and intangibles	3,141			—
Other	7,923			11,339
Deferred tax assets	246,643			174,858
Valuation allowance	(5,919		)	(2,107		)
Net deferred tax assets after valuation allowance	240,724			172,751

Deferred tax liabilities:
Derivative equity warrant assets	(45,533		)	(32,861		)
Change in accounting method (section 481(a))	(1,841		)	(8,034		)
Net unrealized gains on AFS debt securities	(33,480		)	—
Non-marketable and other equity securities	(54,239		)	(45,759		)
Premises and equipment and other intangibles	(16,459		)	(10,284		)
Right-of-use asset and deferred rent assets	(50,493		)	—
Other	(10,246		)	(10,380		)
Deferred tax liabilities	(212,291		)	(107,318		)
Net deferred tax assets	$	28,433		$	65,433

Net Deferred Tax Assets

U.S. federal net operating loss carryforwards totaled $2.2 million for both December 31, 2019 and 2018. Our foreign net operating loss carryforwards totaled $20.8 million and $7.6 million at December 31, 2019 and 2018, respectively. These net operating loss carryforwards expire at various dates beginning in 2022.

Currently, we believe that it is more likely than not that the benefit from the foreign net operating loss carryforwards, which are associated with our Germany and Canada operations, will not be realized in the near term due to uncertainties in the timing of future profitability in the course of business. In recognition of this, our valuation allowance is $5.9 million on the deferred tax assets related to our German and Canadian net operating loss carryforwards as of December 31, 2019. We believe it is more likely than not that the remaining deferred tax assets will be realized through recovery of taxes previously paid and/or future taxable income. Therefore, no valuation allowance was provided for the remaining deferred tax assets.

We are subject to income tax in the U.S. federal jurisdiction and various state and foreign jurisdictions and have identified our federal and California tax returns as major tax filings. Our U.S. federal tax returns for 2016 and subsequent years remain open to full examination. Our California tax returns for 2015 and subsequent tax years remain open to full examination.

At December 31, 2019, our unrecognized tax benefit was $12.6 million, the recognition of which would reduce our income tax expense by $9.9 million. We do not expect that our unrecognized tax benefit will materially change in the next 12 months.

We recognize interest and penalties related to income tax matters as part of income before income taxes. Interest and penalties were not material for the years ended December 31, 2019, 2018 and 2017.

A summary of changes in our unrecognized tax benefit (including interest and penalties) for December 31, 2019, 2018 and 2017 is as follows:



(Dollars in thousands)	Reconciliation of Unrecognized Tax Benefit			Interest and Penalties			Total
Balance at December 31, 2016	$	5,269		$	442		$	5,711
Additions for tax positions for current year	3,141			—			3,141
Additions for tax positions for prior years	3,378			754			4,132
Reduction for tax positions for prior years	(223		)	(1		)	(224		)
Lapse of the applicable statute of limitations	(60		)	(17		)	(77		)
Balance at December 31, 2017	$	11,505		$	1,178		$	12,683
Additions for tax positions for current year	4,171			—			4,171
Additions for tax positions for prior years	631			823			1,454
Reduction for tax positions for prior years	(1,865		)	(243		)	(2,108		)
Lapse of the applicable statute of limitations	(435		)	(86		)	(521		)
Reduction as a result of settlement	(1,318		)	(222		)	(1,540		)
Balance at December 31, 2018	$	12,689		$	1,450		$	14,139
Additions for tax positions for current year	3,712			—			3,712
Additions for tax positions for prior years	63			826			889
Reduction for tax positions for prior years	(884		)	(524		)	(1,408		)
Lapse of the applicable statute of limitations	(1,826		)	(569		)	(2,395		)
Reduction as a result of settlement	(1,142		)	$	(17	)	$	(1,159	)
Balance at December 31, 2019	$	12,612		$	1,166		$	13,778

Employee Compensation and Benefit Plans

12 Months Ended

Dec. 31, 2019

Retirement Benefits [Abstract]

Employee Compensation and Benefit Plans

Our employee compensation and benefit plans include: (i) Incentive Compensation Plan; (ii) Direct Drive Incentive Compensation Plan; (iii) Retention Program; (iv) Warrant Incentive Plan; (v) Deferred Compensation Plan; (vi) 401(k) and ESOP; (vii) SVB Leerink Incentive Compensation Plan; (viii) SVB Leerink Retention Award; (ix) EHOP; (x) 2006 Incentive Plan; and (xi) ESPP.

The 2006 Incentive Plan and the ESPP are described in Note 5—“Share-Based Compensation” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report.

A summary of expenses incurred under certain employee compensation and benefit plans for 2019, 2018 and 2017 is as follows:



	Year ended December 31,
(Dollars in thousands)	2019		2018		2017
Incentive Compensation Plan	$	143,888	$	160,293	$	125,584
Direct Drive Incentive Compensation Plan	37,315		40,578		18,721
Retention Program	2,438		1,438		1,317
Warrant Incentive Plan	14,881		9,112		15,386
Deferred Compensation Plan	—		—		203
SVBFG 401(k) Plan	25,687		21,323		17,860
SVBFG ESOP	4,197		6,435		4,719
SVB Leerink Incentive Compensation Plan	106,871		—		—
SVB Leerink Retention Award	12,015		—		—

Incentive Compensation Plan

Our Incentive Compensation Plan (“ICP”) is an annual cash incentive plan that rewards performance based on our financial results and other performance criteria. Awards are made based on company performance, the employee's target bonus level and management's assessment of individual employee performance.

Direct Drive Incentive Compensation Plan

The Direct Drive Incentive Compensation Plan (“Direct Drive”) is an annual sales cash incentive program. Awards are based on sales teams' performance as to predetermined financial targets and other company/individual performance criteria. Actual awards for each sales team member under Direct Drive are based on: (i) the actual results and financial performance with respect to the incentive gross profit targets; (ii) the sales team payout targets; and (iii) the sales team member's sales position and team payout allocation.

Retention Program

The Retention Program (“RP”) is a long-term incentive plan that allows designated employees to share directly in our investment success. Plan participants were granted an interest in the distributions of gains from certain designated investments made by us during the applicable year. Specifically, participants share in: (i) returns from designated investments made by us, including investments in certain venture capital and private equity funds, debt funds and direct equity investments in companies; (ii) net income realized from the exercise of, and the subsequent sale of shares obtained through the exercise of, warrants held by us; and (iii) other designated amounts as determined by us. Since 2009, no new participants have been added and no new investments have been designated to the plan.

Warrant Incentive Plan

The Warrant Incentive Plan provides individual and team awards to those employees who negotiate warrants on our behalf. Designated participants, as determined by the Company, share in the cash proceeds received by the Company from the exercise of equity warrant assets.

Deferred Compensation Plan

Under the Deferred Compensation Plan (the “DC Plan”), eligible employees may elect to defer up to 50 percent of their base salary and/or up to 100 percent of any eligible bonus payment earned during the plan year. Any amounts deferred under the DC Plan will be invested and administered by us (or such person we designate). We generally do not match employee deferrals to the DC Plan. From time to time, we may also offer deferred special retention incentives and employer contributions under

this plan to key plan participants. The deferred incentives and employer contributions are eligible for investment in the DC Plan during the retention qualifying period or vesting period.

Voluntary deferrals under the DC Plan were $6.9 million in 2019 and $5.5 million in both 2018 and 2017. The DC Plan overall, had investment gains of $6.9 million, losses of $1.7 million and gains of $4.7 million in 2019, 2018 and 2017, respectively.

401(k) and ESOP

The 401(k) Plan and ESOP, collectively referred to as the “Plan”, is a combined 401(k) tax-deferred savings plan and employee stock ownership plan in which all regular U.S. employees are eligible to participate.

Employees participating in the 401(k) Plan are allowed to contribute up to 75 percent of their pre-tax pay as defined in the Plan, up to the maximum annual amount allowable under federal income tax regulations of $19,000 for 2019, $18,500 for 2018 and $18,000 for 2017. We match the employee's contributions dollar-for-dollar, up to five percent of the employee's pre-tax pay as defined in the Plan. Our matching contributions vest immediately. The amount of salary deferred, up to the allowed maximum, is not subject to federal or state income taxes at the time of deferral.

Discretionary ESOP contributions, based on our company performance, are made by us to all eligible individuals employed by us on the last day of the fiscal year. We may elect to contribute cash or our common stock (or a combination of cash and stock), in an amount not exceeding ten percent of the employee's eligible pay earned in the fiscal year. The ESOP contributions vest in equal annual increments over a participant's first five years of service (thereafter, all subsequent ESOP contributions are fully vested).

SVB Leerink Incentive Compensation Plan

Our SVB Leerink Incentive Compensation Plan is an annual cash incentive plan that rewards performance of SVB Leerink employees based on SVB Leerink's financial results. This plan requires employees who exceed certain compensation levels to defer a portion of their compensation, of which, 25% will be settled in the form of restricted stock awards and 75% will be settled in the form of cash. The deferred compensation vests over a period of up to five years.

SVB Leerink Retention Award

The SVB Leerink Retention Award is an incentive award that granted designated SVB Leerink employees restricted stock awards and cash after the close of the acquisition of SVB Leerink in January 2019. The aggregate amount of the awards was $60 million, of which 50% will be settled in the form of cash and 50% in the form of restricted stock awards. The awards vest in equal annual increments over five years.

EHOP Program

The EHOP is a benefit plan that provides for the issuance of mortgage loans at discounted interest rates to eligible employees. Eligible employees may apply for either an adjustable rate mortgage (ARM) or a fixed rate loan for their primary residence. The ARM is a 30 year loan and has an initial fixed interest rate for five, seven or ten years after which a floating rate will be set annually. The fixed rate loan program offers a 15 or 30 years loan and the interest rate is fixed for the life of the loan. Applicants must qualify for a loan through the normal mortgage review and approval process, which is typical of industry standards. The maximum loan amount generally cannot be greater than 85 percent of the lesser of the purchase price or the appraised value. The interest rate on the fixed-rate loan is written at a discount to SVB Private Bank client mortgage rates and determined at SVB's discretion. Floating rates applied at the end of the fixed-rate period will be reset annually at 12 month LIBOR plus two and one quarter percent. For additional details, see Note 10—“Loans, Allowance for Loan Losses and Allowance for Unfunded Credit Commitments” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report.

Related Parties	12 Months Ended
Related Parties	Dec. 31, 2019
Related Party Transactions [Abstract]
Related Parties	Related Parties We have no material related party transactions requiring disclosure. In the ordinary course of business, the Bank may extend credit to related parties, including executive officers, directors, principal shareholders and their related interests. Additionally, we also provide real estate secured loans to eligible employees through our EHOP. For additional details, see Note 20—“Employee Compensation and Benefit Plans” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report.

Off-Balance Sheet Arrangements, Guarantees and Other Commitments

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Off-Balance Sheet Arrangements, Guarantees and Other Commitments

In the normal course of business, we use financial instruments with off-balance sheet risk to meet the financing needs of our customers. These financial instruments include commitments to extend credit, commercial and standby letters of credit and commitments to invest in venture capital and private equity fund investments. These instruments involve, to varying degrees, elements of credit risk. Credit risk is defined as the possibility of sustaining a loss because other parties to the financial instrument fail to perform in accordance with the terms of the contract.

Commitments to Extend Credit

A commitment to extend credit is a formal agreement to lend funds to a client as long as there is no violation of any condition established in the agreement. Such commitments generally have fixed expiration dates, or other termination clauses, and usually require a fee paid by the client upon us issuing the commitment. The following table summarizes information related to our commitments to extend credit at December 31, 2019 and 2018, respectively:



	December 31,
(Dollars in thousands)	2019		2018
Loan commitments available for funding: (1)
Fixed interest rate commitments	$	2,434,042	$	1,839,190
Variable interest rate commitments	19,309,317		14,821,815
Total loan commitments available for funding	21,743,359		16,661,005
Commercial and standby letters of credit (2)	2,778,561		2,252,016
Total unfunded credit commitments	$	24,521,920	$	18,913,021
Commitments unavailable for funding (3)	$	3,051,075	$	2,723,835
Allowance for unfunded credit commitments (4)	67,656		55,183


(1)	Represents commitments which are available for funding, due to clients meeting all collateral, compliance and financial covenants required under loan commitment agreements.


(2)	See below for additional information on our commercial and standby letters of credit.


(3)	Represents commitments which are currently unavailable for funding due to clients failing to meet all collateral, compliance and financial covenants under loan commitment agreements.


(4)	Our allowance for unfunded credit commitments includes an allowance for both our unfunded loan commitments and our letters of credit.

Our potential exposure to credit loss for commitments to extend credit, in the event of nonperformance by the other party to the financial instrument, is the contractual amount of the available unused loan commitment. We use the same credit approval and monitoring process in extending credit commitments as we do in making loans. The actual liquidity needs and the credit risk that we have experienced have historically been lower than the contractual amount of commitments to extend credit because a significant portion of these commitments expire without being drawn upon. We evaluate each potential borrower and the necessary collateral on an individual basis. The type of collateral varies, but may include real property, intellectual property, bank deposits or business and personal assets. The credit risk associated with these commitments is considered in the allowance for unfunded credit commitments.

Commercial and Standby Letters of Credit

Commercial and standby letters of credit represent conditional commitments issued by us on behalf of a client to guarantee the performance of the client to a third party when certain specified future events have occurred. Commercial letters of credit are issued primarily for inventory purchases by a client and are typically short-term in nature. We provide two types of standby letters of credit: performance and financial standby letters of credit. Performance standby letters of credit are issued to guarantee the performance of a client to a third party when certain specified future events have occurred and are primarily used to support performance instruments such as bid bonds, performance bonds, lease obligations, repayment of loans and past due notices. Financial standby letters of credit are conditional commitments issued by us to guarantee the payment by a client to a third party (beneficiary) and are primarily used to support many types of domestic and international payments. These standby letters of credit have fixed expiration dates and generally require a fee to be paid by the client at the time we issue the commitment.

The credit risk involved in issuing letters of credit is essentially the same as that involved with extending credit commitments to clients, and accordingly, we use a credit evaluation process and collateral requirements similar to those for credit commitments. Our standby letters of credit often are cash secured by our clients. The actual liquidity needs and the credit risk that we have experienced historically have been lower than the contractual amount of letters of credit issued because a significant portion of these conditional commitments expire without being drawn upon.

The table below summarizes our commercial and standby letters of credit at December 31, 2019. The maximum potential amount of future payments represents the amount that could be remitted under letters of credit if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or from the collateral held or pledged.



(Dollars in thousands)	Expires In One Year or Less		Expires After One Year		Total Amount Outstanding		Maximum Amount of Future Payments
Financial standby letters of credit	$	2,566,623	$	79,207	$	2,645,830	$	2,645,830
Performance standby letters of credit	105,993		19,618		125,611		125,611
Commercial letters of credit	7,120		—		7,120		7,120
Total	$	2,679,736	$	98,825	$	2,778,561	$	2,778,561

Deferred fees related to financial and performance standby letters of credit were $17.2 million at December 31, 2019 and $14.1 million at December 31, 2018. At December 31, 2019, collateral in the form of cash of $1.6 billion was available to us to reimburse losses, if any, under financial and performance standby letters of credit.

Commitments to Invest in Venture Capital and Private Equity Funds

We make commitments to invest in venture capital and private equity funds, which generally makes investments in privately-held companies. Commitments to invest in these funds are generally made for a 10-year period from the inception of the fund. Although the limited partnership agreements governing these investments typically do not restrict the general partners from calling 100% of committed capital in one year, it is customary for these funds to call most of the capital commitments over 5 to 7 years, and in certain cases, the funds may not call 100% of committed capital. The actual timing of future cash requirements to fund these commitments is generally dependent upon the investment cycle, overall market conditions, and the nature and type of industry in which the privately held companies operate. The following table details our total capital commitments, unfunded capital commitments, and our ownership percentage in each fund at December 31, 2019:



(Dollars in thousands)	SVBFG Capital Commitments		SVBFG Unfunded Commitments		SVBFG Ownership of each Fund (3)
CP I, LP	$	6,000	$	270	10.7	%
CP II, LP (1)	1,200		162		5.1
Capital Preferred Return Fund, LP	12,688		—		20.0
Growth Partners, LP	24,670		1,340		33.0
Strategic Investors Fund, LP	15,300		688		12.6
Strategic Investors Fund II, LP	15,000		1,050		8.6
Strategic Investors Fund III, LP	15,000		1,275		5.9
Strategic Investors Fund IV, LP	12,239		2,325		5.0
Strategic Investors Fund V funds	515		131		Various
Other venture capital and private equity fund investments (equity method accounting)	21,801		5,732		Various
Debt funds (equity method accounting)	58,493		—		Various
Other fund investments (2)	284,758		6,119		Various
Total	$	467,664	$	19,092


(1)	Our ownership includes direct ownership of 1.3 percent and indirect ownership of 3.8 percent through our investment in Strategic Investors Fund II, LP.


(2)	Represents commitments to 211 funds (primarily venture capital funds) where our ownership interest is generally less than five percent of the voting interests of each such fund.


(3)	We are subject to the Volcker Rule which restricts or limits us from sponsoring or having ownership interests in “covered” funds including venture capital and private equity funds. See “Business - Supervision and Regulation” under Part I, Item 1 of this report.

The following table details the amounts of remaining unfunded commitments to venture capital and private equity funds by our consolidated managed funds of funds (including our interest and the noncontrolling interests) at December 31, 2019:



(Dollars in thousands)	Unfunded Commitments
Strategic Investors Fund, LP	$	1,338
Capital Preferred Return Fund, LP	1,540
Growth Partners, LP	2,468
Total	$	5,346

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value Measurements

Our available-for-sale securities, derivative instruments and certain non-marketable and other equity securities are financial instruments recorded at fair value on a recurring basis. We make estimates regarding valuation of assets and liabilities measured at fair value in preparing our consolidated financial statements. We disclose our method and approach for fair value measurements of assets and liabilities in Note 2—“Summary of Significant Accounting Policies” of the “Notes to the Consolidated Financial Statements” under Part II, Item 8 of this report.

The following fair value hierarchy table presents information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2019:



(Dollars in thousands)	Level 1		Level 2		Level 3		Balance at December 31, 2019
Assets
Available-for-sale securities:
U.S. Treasury securities	$	6,894,010	$	—	$	—	$	6,894,010
U.S. agency debentures	—		99,547		—		99,547
Foreign government debt securities	9,038		—		—		9,038
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	—		4,148,791		—		4,148,791
Agency-issued collateralized mortgage obligations— fixed rate	—		1,538,343		—		1,538,343
Agency-issued commercial mortgage-backed securities	—		1,325,190		—		1,325,190
Total available-for-sale securities	6,903,048		7,111,871		—		14,014,919
Non-marketable and other equity securities (fair value accounting):
Non-marketable securities:
Venture capital and private equity fund investments measured at net asset value	—		—		—		265,263
Venture capital and private equity fund investments not measured at net asset value (1)	—		—		134		134
Other equity securities in public companies	17,290		41,910		—		59,200
Total non-marketable and other equity securities (fair value accounting)	17,290		41,910		134		324,597
Other assets:
Foreign exchange forward and option contracts	—		115,854		—		115,854
Equity warrant assets	—		4,435		161,038		165,473
Interest rate swaps	—		22,676		—		22,676
Client interest rate derivatives	—		28,811		—		28,811
Total assets	$	6,920,338	$	7,325,557	$	161,172	$	14,672,330
Liabilities
Foreign exchange forward and option contracts	$	—	$	98,207	$	—	$	98,207
Interest rate swaps	—		25,623		—		25,623
Client interest rate derivatives	—		14,154		—		14,154
Total liabilities	$	—	$	137,984	$	—	$	137,984


(1)	Included in Level 3 assets is $120 thousand attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

The following fair value hierarchy table presents information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2018:



(Dollars in thousands)	Level 1		Level 2		Level 3		Balance at December 31, 2018
Assets
Available-for-sale securities:
U.S. Treasury securities	$	4,738,258	$	—	$	—	$	4,738,258
U.S. agency debentures	—		1,084,117		—		1,084,117
Foreign government debt securities	5,812		—		—		5,812
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations— fixed rate	—		1,880,218		—		1,880,218
Agency-issued collateralized mortgage obligations— variable rate	—		81,638		—		81,638
Total available-for-sale securities	4,744,070		3,045,973		—		7,790,043
Non-marketable and other equity securities (fair value accounting):
Non-marketable securities:
Venture capital and private equity fund investments measured at net asset value	—		—		—		318,352
Venture capital and private equity fund investments not measured at net asset value (1)	—		—		1,079		1,079
Other equity securities in public companies (1)	1,181		19,217		—		20,398
Total non-marketable and other equity securities (fair value accounting)	1,181		19,217		1,079		339,829
Other assets:
Foreign exchange forward and option contracts	—		100,402		—		100,402
Equity warrant assets	—		4,039		145,199		149,238
Client interest rate derivatives	—		8,499		—		8,499
Total assets	$	4,745,251	$	3,178,130	$	146,278	$	8,388,011
Liabilities
Foreign exchange forward and option contracts	$	—	$	88,559	$	—	$	88,559
Client interest rate derivatives	—		9,491		—		9,491
Total liabilities	$	—	$	98,050	$	—	$	98,050

(1)

Included in Level 3 assets is $964 thousand attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for 2019, 2018 and 2017, respectively:



(Dollars in thousands)	Beginning Balance		Total Realized and Unrealized Gains, net Included in Income		Purchases		Sales/Exits			Issuances		Distributions and Other Settlements			Transfers Out of Level 3			Ending Balance
Year ended December 31, 2019:
Non-marketable and other equity securities (fair value accounting):
Venture capital and private equity fund investments not measured at net asset value (1)	$	1,079	$	12	$	—	$	(960	)	$	—	$	3		$	—		$	134
Other assets:
Equity warrant assets (2)	145,199		133,910		575		(130,392		)	16,453		—			(4,707		)	161,038
Total assets	$	146,278	$	133,922	$	575	$	(131,352	)	$	16,453	$	3		$	(4,707	)	$	161,172
Year ended December 31, 2018:
Non-marketable and other equity securities (fair value accounting):
Venture capital and private equity fund investments not measured at net asset value (1)	$	919	$	457	$	—	$	—		$	—	$	(297	)	$	—		$	1,079
Other assets:
Equity warrant assets (2)	121,331		87,982		—		(78,752		)	17,941		—			(3,303		)	145,199
Total assets	$	122,250	$	88,439	$	—	$	(78,752	)	$	17,941	$	(297	)	$	(3,303	)	$	146,278
Year ended December 31, 2017:
Non-marketable and other equity securities (fair value accounting):
Venture capital and private equity fund investments not measured at net asset value (1)	$	2,040	$	971	$	—	$	(2,092	)	$	—	$	—		$	—		$	919
Other assets:
Equity warrant assets (2)	128,813		54,263		—		(74,769		)	14,537		—			(1,513		)	121,331
Total assets	$	130,853	$	55,234	$	—	$	(76,861	)	$	14,537	$	—		$	(1,513	)	$	122,250


(1)	Realized and unrealized gains (losses) are recorded in the line item “Gains on investment securities, net,” a component of noninterest income.

(2)

Realized and unrealized gains (losses) are recorded in the line item “Gains on equity warrant assets, net,” a component of noninterest income.

The following table presents the amount of unrealized gains (losses) included in earnings (which is inclusive of noncontrolling interest) attributable to Level 3 assets still held at December 31, 2019 and 2018, respectively:



	Year ended December 31,
(Dollars in thousands)	2019			2018
Non-marketable and other equity securities (fair value accounting):
Venture capital and private equity fund investments not measured at net asset value (1)	$	(222	)	$	160
Other assets:
Equity warrant assets (2)	34,691			37,564
Total unrealized gains, net	$	34,469		$	37,724
Unrealized (losses) gains attributable to noncontrolling interests (1)	$	(199	)	$	143


(1)	Unrealized gains are recorded in the line item “Gains on investment securities, net,” a component of noninterest income.


(2)	Unrealized gains are recorded in the line item “Gains on equity warrant assets, net,” a component of noninterest income.

The extent to which any unrealized gains or losses will become realized is subject to a variety of factors, including, among other things, the expiration of current sales restrictions to which these securities are subject, the actual sales of securities and the timing of such actual sales.

The following table presents quantitative information about the significant unobservable inputs used for certain of our Level 3 fair value measurements at December 31, 2019 and 2018. We have not included in this table our venture capital and private equity fund investments (fair value accounting) as we use net asset value per share (as obtained from the general partners of the investments) as a practical expedient to determine fair value.



(Dollars in thousands)	Fair Value		Valuation Technique	Significant Unobservable Inputs	Weighted Average
December 31, 2019:
Venture capital and private equity fund investments (fair value accounting)	$	134	Private company equity pricing	(1)	(1)
Equity warrant assets (public portfolio)	346		Black-Scholes option pricing model	Volatility	50.7	%
				Risk-Free interest rate	1.9
				Sales restrictions discount (2)	13.6
Equity warrant assets (private portfolio)	160,692		Black-Scholes option pricing model	Volatility	38.2
				Risk-Free interest rate	1.6
				Marketability discount (3)	17.5
				Remaining life assumption (4)	45.0
December 31, 2018:
Venture capital and private equity fund investments (fair value accounting)	$	1,079	Private company equity pricing	(1)	(1)
Equity warrant assets (public portfolio)	2,757		Black-Scholes option pricing model	Volatility	54.7	%
				Risk-Free interest rate	2.6
				Sales restrictions discount (2)	18.5
Equity warrant assets (private portfolio)	142,442		Black-Scholes option pricing model	Volatility	38.5
				Risk-Free interest rate	2.5
				Marketability discount (3)	17.7
				Remaining life assumption (4)	45.0

(1)

In determining the fair value of our venture capital and private equity fund investment portfolio (not measured at net asset value), we evaluate a variety of factors related to each underlying private portfolio company including, but not limited to, actual and forecasted results, cash position, recent or planned transactions and market comparable companies. Additionally, we have ongoing communication with the portfolio companies and venture capital fund managers, to determine whether there is a material change in fair value. We use company provided valuation reports, if available, to support our valuation

assumptions. These factors are specific to each portfolio company and a weighted average or range of values of the unobservable inputs is not meaningful.


(2)	We adjust quoted market prices of public companies, which are subject to certain sales restrictions. Sales restriction discounts generally range from 10 percent to 20 percent depending on the duration of the sales restrictions which typically range from three to six months.


(3)	Our marketability discount is applied to all private company warrants to account for a general lack of liquidity due to the private nature of the associated underlying company. The quantitative measure used is based upon various option-pricing models. On a quarterly basis, a sensitivity analysis is performed on our marketability discount.

(4)

We adjust the contractual remaining term of private company warrants based on our estimate of the actual remaining life, which we determine by utilizing historical data on terminations and exercises. At December 31, 2019, the weighted average contractual remaining term was 6.1 years, compared to our estimated remaining life of 2.8 years. On a quarterly basis, a sensitivity analysis is performed on our remaining life assumption.

During 2019, 2018 and 2017, we did not have any transfers between Level 2 and Level 1 or transfers between Level 3 and Level 1. All other transfers from Level 3 to Level 2 during 2019, 2018 and 2017 were due to the transfer of equity warrant assets from our private portfolio to our public portfolio (see our Level 3 reconciliation above). All amounts reported as transfers represent the fair value as of the date of the change in circumstances that caused the transfer.

Financial Instruments not Carried at Fair Value

FASB guidance over financial instruments requires that we disclose estimated fair values for our financial instruments not carried at fair value. The following fair value hierarchy table presents the estimated fair values of our financial instruments that are not carried at fair value at December 31, 2019 and 2018:



			Estimated Fair Value
(Dollars in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
December 31, 2019:
Financial assets:
Cash and cash equivalents	$	6,781,783	$	6,781,783	$	6,781,783	$	—	$	—
Held-to-maturity securities	13,842,946		14,115,272		—		14,115,272		—
Non-marketable securities not measured at net asset value	195,405		195,405		—		—		195,405
Non-marketable securities measured at net asset value	235,351		235,351		—		—		—
Net commercial loans	29,104,532		29,615,176		—		—		29,615,176
Net consumer loans	3,755,180		3,820,804		—		—		3,820,804
FHLB and Federal Reserve Bank stock	60,258		60,258		—		—		60,258
Financial liabilities:
Short-term borrowings	17,430		17,430		—		17,430		—
Non-maturity deposits (1)	61,569,714		61,569,714		61,569,714		—		—
Time deposits	188,093		187,980		—		187,980		—
3.50% Senior Notes	347,987		366,856		—		366,856		—
Off-balance sheet financial assets:
Commitments to extend credit	—		27,197		—		—		27,197
December 31, 2018:
Financial assets:
Cash and cash equivalents	$	3,571,539	$	3,571,539	$	3,571,539	$	—	$	—
Held-to-maturity securities	15,487,442		15,188,236		—		15,188,236		—
Non-marketable securities not measured at net asset value	131,453		131,453		—		—		131,453
Non-marketable securities measured at net asset value	151,247		151,247		—		—		—
Net commercial loans	25,043,671		25,463,968		—		—		25,463,968
Net consumer loans	3,013,706		3,064,093		—		—		3,064,093
FHLB and Federal Reserve Bank stock	58,878		58,878		—		—		58,878
Financial liabilities:
Short-term borrowings	631,412		631,412		—		631,412		—
Non-maturity deposits (1)	49,278,174		49,278,174		49,278,174		—		—
Time deposits	50,726		50,337		—		50,337		—
3.50% Senior Notes	347,639		336,088		—		336,088		—
5.375% Senior Notes	348,826		361,281		—		361,281		—
Off-balance sheet financial assets:
Commitments to extend credit	—		22,930		—		—		22,930


(1)	Includes noninterest-bearing demand deposits, interest-bearing checking accounts, money market accounts and interest-bearing sweep deposits.

Investments in Entities that Calculate Net Asset Value Per Share

FASB guidance over certain fund investments requires that we disclose the fair value of funds, significant investment strategies of the investees, redemption features of the investees, restrictions on the ability to sell investments, estimate of the period of time over which the underlying assets are expected to be liquidated by the investee, and unfunded commitments related to the investments.

Our investments in debt funds and venture capital and private equity fund investments generally cannot be redeemed. Alternatively, we expect distributions, if any, to be received primarily through IPOs and M&A activity of the underlying assets of the fund. Subject to applicable requirements under the Volcker Rule, we do not have any plans to sell any of these fund investments. If we decide to sell these investments in the future, the investee fund’s management must approve of the buyer before the sale of the investments can be completed. The fair values of the fund investments have been estimated using the net asset value per share of the investments, adjusted for any differences between our measurement date and the date of the fund investment’s net asset value by using the most recently available financial information from the investee general partner, for example September 30^th, for our December 31^st consolidated financial statements, adjusted for any contributions paid, distributions received from the investment, and significant fund transactions or market events during the reporting period.

The following table is a summary of the estimated fair values of these investments and remaining unfunded commitments for each major category of these investments as of December 31, 2019:



(Dollars in thousands)	Carrying Amount		Fair Value		Unfunded Commitments
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments (1)	$	265,263	$	265,263	$	10,579
Non-marketable securities (equity method accounting):
Venture capital and private equity fund investments (2)	215,367		215,367		10,675
Debt funds (2)	7,271		7,271		—
Other investments (2)	12,713		12,713		886
Total	$	500,614	$	500,614	$	22,140

(1)

Venture capital and private equity fund investments within non-marketable securities (fair value accounting) include investments made by our managed funds of funds and one of our direct venture funds (consolidated VIEs) and investments in venture capital and private equity fund investments (unconsolidated VIEs). Collectively, these investments in venture capital and private equity funds are primarily in U.S. and global technology and life science/healthcare companies. Included in the fair value and unfunded commitments of fund investments under fair value accounting are $64.6 million and $4.0 million, respectively, attributable to noncontrolling interests. It is estimated that we will receive distributions from the fund investments over the next 10 to 13 years, depending on the age of the funds and any potential extensions of terms of the funds.

(2)

Venture capital and private equity fund investments, debt funds and other fund investments within non-marketable securities (equity method accounting) include funds that invest in or lend money to primarily U.S. and global technology and life science/healthcare companies. It is estimated that we will receive distributions from the funds over the next 5 to 8 years, depending on the age of the funds and any potential extensions of the terms of the funds.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Regulatory Matters

12 Months Ended

Dec. 31, 2019

Banking and Thrift [Abstract]

Regulatory Matters

SVB Financial and the Bank are subject to various regulatory capital adequacy requirements administered by the Federal Reserve Board and the DBO. The Federal Deposit Insurance Corporation Improvement Act of 1991 required that the federal regulatory agencies adopt regulations defining five capital categories for banks: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.

In July 2013, the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency published final rules establishing a comprehensive capital framework for U.S. banking organizations (the “Capital Rules”), which implement the Basel III regulatory capital reforms and changes required by the Dodd-Frank Act. “Basel III” refers to the internationally agreed regulatory capital framework adopted by the Basel Committee.

There are three categories of capital under the new Basel III standards; CET 1, additional Tier 1 and Tier 2. CET 1 includes common stock plus related surplus and retained earnings, less certain deductions. Additional Tier 1 capital includes qualifying preferred stock and trust preferred securities, less certain deductions. Additional Tier 1, together with CET 1, equal total Tier 1 capital. Tier 2 capital includes primarily certain qualifying unsecured subordinated debt and qualifying allowances for loan and lease losses. Tier 1 capital together with Tier 2 capital equal total capital.

Under the Capital Rules, the minimum capital ratios applicable to SVB Financial and the Bank are as follows: 4.5% CET1 capital, 6.0% Tier 1 capital, 8.0% Total capital and 4.0% Tier 1 leverage. In addition, banking organizations must meet a 2.5% CET1 risk-based capital conservation buffer requirement in order to avoid constraints on capital distributions, such as dividends and equity repurchases, and certain bonus compensation for executive officers. The severity of the constraints would depend on the amount of the shortfall and the banking organization’s “eligible retained income” (that is, four-quarter trailing net income, net of distributions and tax effects not reflected in net income).

As of December 31, 2019, both SVB Financial and the Bank exceed the required ratios under the Capital Rules and were considered “well-capitalized” for regulatory purposes under existing capital guidelines as well. The following table presents the capital ratios for the Company and the Bank under federal regulatory guidelines, compared to the minimum regulatory capital requirements, as of December 31, 2019 and 2018:



	Capital Ratios					Capital Amounts
(Dollars in thousands)	Actual		Required Minimum (1)		Well Capitalized Minimum	Actual		Required Minimum (1)		Well Capitalized Minimum
December 31, 2019:
CET 1 risk-based capital:
SVB Financial	12.58	%	7.0	%	N/A	$	5,857,744	$	3,260,424	N/A
Bank	11.12		7.0		6.5	4,949,393		3,115,151		$	2,892,640
Tier 1 risk-based capital:
SVB Financial	13.43		8.5		6.0	6,257,442		3,959,086		2,794,649
Bank	11.12		8.5		8.0	4,949,393		3,782,683		3,560,172
Total risk-based capital:
SVB Financial	14.23		10.5		10.0	6,630,022		4,890,636		4,657,748
Bank	11.96		10.5		10.0	5,321,850		4,672,726		4,450,215
Tier 1 leverage:
SVB Financial	9.06		4.0		N/A	6,257,442		2,763,146		N/A
Bank	7.30		4.0		5.0	4,949,393		2,713,367		3,391,709
December 31, 2018:
CET 1 risk-based capital:
SVB Financial	13.41	%	6.4	%	N/A	$	5,167,270	$	2,456,151	N/A
Bank	12.41		6.4		6.5	4,604,689		2,365,385		$	2,411,765
Tier 1 risk-based capital:
SVB Financial	13.58		7.9		6.0	5,231,476		3,034,068		2,311,671
Bank	12.41		7.9		8.0	4,604,689		2,921,946		2,968,326
Total risk-based capital:
SVB Financial	14.45		9.9		10.0	5,567,562		3,804,625		3,852,785
Bank	13.32		9.9		10.0	4,940,776		3,664,028		3,710,408
Tier 1 leverage:
SVB Financial	9.06		4.0		N/A	5,231,476		2,308,592		N/A
Bank	8.10		4.0		5.0	4,604,689		2,272,912		2,841,139


N/A	"Well-Capitalized Minimum" CET 1 risk-based capital and Tier 1 leverage ratios are not formally defined under applicable banking regulations for bank holding companies.

(1)

The percentages as of December 31,2019 represent the minimum capital ratios plus, the fully phased-in 2.5% CET1 capital conservation buffer under the Capital Rules.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1C
-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958572-112826

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
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-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958570-112826

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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-Topic 942
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Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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+ Details

Segment Reporting

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Segment Reporting

We have four reportable segments for management reporting purposes: Global Commercial Bank, SVB Private Bank, SVB Capital and SVB Leerink. SVB Leerink is a new reportable segment and was created as a result of the acquisition of Leerink Holdings LLC effective January 4, 2019. The results of our operating segments are based on our internal management reporting process.

Our Global Commercial Bank and SVB Private Bank segments’ primary source of revenue is from net interest income, which is primarily the difference between interest earned on loans, net of funds transfer pricing ("FTP") and interest paid on deposits, net of FTP. Accordingly, these segments are reported using net interest income, net of FTP. FTP is an internal measurement framework designed to assess the financial impact of a financial institution’s sources and uses of funds. It is the mechanism by which an earnings credit is given for deposits raised, and an earnings charge is made for funded loans. FTP is calculated at an instrument level based on account characteristics.

We also evaluate performance based on provision for credit losses, noninterest income and noninterest expense, which are presented as components of segment operating profit or loss. In calculating each operating segment’s noninterest expense, we consider the direct costs incurred by the operating segment as well as certain allocated direct costs. As part of this review, we allocate certain corporate overhead costs to a corporate account. We do not allocate income tax expense or the provision for unfunded credit commitments (included in provision for credit losses) to our segments. Additionally, our management reporting model is predicated on average asset balances; therefore, period-end asset balances are not presented for segment reporting purposes. Changes in an individual client’s primary relationship designation have resulted, and in the future may result, in the inclusion of certain clients in different segments in different periods.

Unlike financial reporting, which benefits from the comprehensive structure provided by GAAP, our internal management reporting process is highly subjective, as there is no comprehensive, authoritative guidance for management reporting. Our management reporting process measures the performance of our operating segments based on our internal operating structure, which is subject to change from time to time, and is not necessarily comparable with similar information for other financial services companies. For reporting purposes, SVB Financial Group has four operating segments for which we report our financial information (for further description of these reportable segments, refer to "Business–Business Overview" under Part I, Item 1 of this report):


•	Global Commercial Bank is comprised of results from the following:

◦

Our Commercial Bank products and services are provided by the Bank and its subsidiaries to commercial clients primarily in the technology, life science/healthcare and private equity/venture capital industries. The Bank provides solutions to the financial needs of commercial clients through credit, treasury management, foreign exchange, trade finance and other services. We broadly serve clients within the U.S., as well as non-U.S. clients in key international innovation markets. In addition, the Bank and its subsidiaries offer a variety of investment services and solutions to its clients that enable them to effectively manage their assets.


◦	Our Global Funds Banking (formerly Private Equity) Division provides banking products and services primarily to our private equity and venture capital clients.


◦	SVB Wine provides banking products and services to our premium wine industry clients, including vineyard development loans.


◦	Debt Fund Investments is comprised of our investments in certain debt funds in which we are a strategic investor.

•

SVB Private Bank is the private banking division of the Bank, which provides a range of personal financial solutions for consumers. Our clients are primarily private equity/venture capital professionals and executive leaders of the innovation companies they support. We offer a customized suite of private banking services, including mortgages, home equity lines of credit, restricted stock purchase loans, capital call lines of credit and other secured and unsecured lending products, as well as cash and wealth management services.

•

SVB Capital is the funds management business of SVBFG, which focuses primarily on venture capital investments. SVB Capital manages funds (primarily venture capital funds) on behalf of third-party limited partners and, on a more limited basis, SVB Financial Group. The SVB Capital family of funds is comprised of direct venture funds that invest in companies and funds of funds that invest in other venture capital funds. SVB Capital generates income for the Company primarily from investment returns (including carried interest allocations) and management fees.


•	SVB Leerink is an investment bank specializing in the equity and convertible capital markets, mergers and acquisitions, equity research and sales and trading for growth and innovation-minded healthcare and life science companies and operates as a wholly-owned subsidiary of SVB Financial. SVB Leerink provides investment banking

services across all subsectors of healthcare including biotechnology, pharmaceuticals, medical devices, diagnostic and life science tools, healthcare services and digital health. SVB Leerink focuses on two primary lines of business: (i) investment banking focused on providing companies with capital-raising services, financial advice on mergers and acquisitions, sales and trading services and equity research, and (ii) sponsorship of private investment funds.

The summary financial results of our operating segments are presented along with a reconciliation to our consolidated results.

Our segment information for 2019, 2018 and 2017 is as follows:



(Dollars in thousands)	Global Commercial Bank (1)			SVB Private Bank			SVB Capital (1)			SVB Leerink (1)			Other Items (2)			Total
Year ended December 31, 2019
Net interest income	$	1,850,391		$	51,022		$	38		$	1,252		$	193,898		$	2,096,601
Provision for credit losses	(91,814		)	(2,369		)	—			—			(12,233		)	(106,416		)
Noninterest income	637,922			3,366			122,394			264,516			193,281			1,221,479
Noninterest expense (3)	(874,854		)	(40,151		)	(30,798		)	(252,678		)	(402,781		)	(1,601,262		)
Income (loss) before income tax expense (4)	$	1,521,645		$	11,868		$	91,634		$	13,090		$	(27,835	)	$	1,610,402
Total average loans, net of unearned income	$	26,031,284		$	3,341,188		$	—		$	—		$	543,735		$	29,916,207
Total average assets (5) (6)	56,043,321			3,371,052			405,152			397,650			2,994,455			63,211,630
Total average deposits	53,053,665			1,524,232			—			—			479,053			55,056,950
Year ended December 31, 2018
Net interest income	$	1,623,488		$	64,902		$	23		$	—		$	205,575		$	1,893,988
Provision for credit losses	(80,953		)	(3,339		)	—			—			(3,578		)	(87,870		)
Noninterest income (7)	520,302			2,281			101,181			—			121,220			744,984
Noninterest expense (3)	(793,159		)	(25,064		)	(22,792		)	—			(347,178		)	(1,188,193		)
Income (loss) before income tax expense (4)	$	1,269,678		$	38,780		$	78,412		$	—		$	(23,961	)	$	1,362,909
Total average loans, net of unearned income	$	22,354,305		$	2,850,271		$	—		$	—		$	425,944		$	25,630,520
Total average assets (5) (8)	48,854,416			2,871,743			380,543			—			3,122,358			55,229,060
Total average deposits	46,039,570			1,502,308			—			—			533,466			48,075,344
Year ended December 31, 2017
Net interest income	$	1,274,366		$	58,131		$	48		$	—		$	87,824		$	1,420,369
Provision for credit losses	(81,553		)	(4,386		)	—			—			(6,365		)	(92,304		)
Noninterest income (7)	392,101			2,175			58,992			—			103,963			557,231
Noninterest expense (3)	(707,666		)	(17,693		)	(19,340		)	—			(265,956		)	(1,010,655		)
Income (loss) before income tax expense (4)	$	877,248		$	38,227		$	39,700		$	—		$	(80,534	)	$	874,641
Total average loans, net of unearned income	$	18,479,793		$	2,423,078		$	—		$	—		$	256,523		$	21,159,394
Total average assets (5) (8)	43,704,667			2,445,220			325,939			—			1,904,446			48,380,272
Total average deposits	41,043,731			1,303,542			—			—			397,875			42,745,148


(1)	Global Commercial Bank’s, SVB Capital’s and SVB Leerink's components of net interest income, noninterest income, noninterest expense and total average assets are shown net of noncontrolling interests for all periods presented. Noncontrolling interest is included within "Other Items."


(2)	The "Other Items" column reflects the adjustments necessary to reconcile the results of the operating segments to the consolidated financial statements prepared in conformity with GAAP. Net interest income consists primarily of interest

earned from our fixed income investment portfolio, net of FTP. Noninterest income consists primarily of gains on equity warrant assets and gains or losses on the sale of fixed income investments and equity securities from exercised warrant assets. Noninterest expense consists primarily of expenses associated with corporate support functions such as finance, human resources, marketing, legal and other expenses.


(3)	The Global Commercial Bank segment includes direct depreciation and amortization of $20.4 million, $21.8 million and $25.3 million for 2019, 2018 and 2017, respectively.


(4)	The internal reporting model used by management to assess segment performance does not calculate income tax expense by segment. Our effective tax rate is a reasonable approximation of the segment rates.


(5)	Total average assets equal the greater of total average assets or the sum of total average liabilities and total average stockholders’ equity for each segment to reconcile the results to the consolidated financial statements prepared in conformity with GAAP.


(6)	Included in the total average assets for SVB Leerink is goodwill of $137.8 million for the year ended December 31, 2019 related to the acquisition effective January 4, 2019.


(7)	For the years ended December 31, 2018 and 2017, amounts of client investment fees included in the line item "Noninterest Income" previously reported as "Other Items" have been correctly allocated to our reportable segment "Global Commercial Bank" to properly reflect the source of such revenue. The correction of this immaterial error had no impact on the "Total" amount of noninterest income.

(8)

For the years ended December 31, 2018 and 2017, amounts for average assets previously reported as "Other Items" have been correctly allocated to the reportable segments "Global Commercial Bank" and “SVB Private Bank” to properly reflect the greater of total average assets or the sum of total average liabilities and total average stockholders’ equity for “Global Commercial Bank” and “SVB Private Bank.” The correction of this immaterial error had no impact on the "Total" amount of average assets.

Parent Company Only Condensed Financial Information

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

Parent Company Only Condensed Financial Information

The condensed balance sheets of SVB Financial at December 31, 2019 and 2018, and the related condensed statements of income, comprehensive income and cash flows for 2019, 2018 and 2017, are presented below:

Condensed Balance Sheets



	December 31,
(Dollars in thousands)	2019		2018
Assets:
Cash and cash equivalents	$	800,926	$	553,049
Investment securities	474,842		510,836
Loans, net of unearned income	15,245		—
Lease right-of-use assets	71,847		—
Other assets	214,167		204,301
Investment in subsidiaries:
Bank subsidiary	5,034,095		4,554,813
Nonbank subsidiaries	432,073		116,968
Total assets	$	7,043,195	$	5,939,967

Liabilities and SVBFG stockholders’ equity:
3.50% Senior Notes	$	347,987	$	347,639
5.375% Senior Notes	—		348,826
Lease liabilities	87,999		—
Other liabilities	136,903		127,293
Total liabilities	$	572,889	$	823,758
SVBFG stockholders’ equity	6,470,306		5,116,209
Total liabilities and SVBFG stockholders’ equity	$	7,043,195	$	5,939,967

Condensed Statements of Income



	Year ended December 31,
(Dollars in thousands)	2019			2018			2017
Interest income	$	4,473		$	3,307		$	2,077
Interest expense	(31,666		)	(32,037		)	(34,932		)
Dividend income from bank subsidiary	733,000			140,000			90,000
Gains on equity warrant assets, net	138,078			89,142			54,555
Gains on investment securities, net	45,345			13,546			37,132
Fund management fees and other noninterest income	21,567			26,388			24,613
General and administrative expenses	(94,712		)	(70,976		)	(63,077		)
Income tax (expense) benefit	(40,218		)	(14,383		)	10,367
Income before net income of subsidiaries	775,867			154,987			120,735
Equity in undistributed net income of bank subsidiary	303,618			793,641			356,769
Equity in undistributed net income of nonbank subsidiaries	57,371			25,212			13,002
Net income available to common stockholders	$	1,136,856		$	973,840		$	490,506

Condensed Statements of Comprehensive Income



	Year ended December 31,
(Dollars in thousands)	2019			2018			2017
Net income available to common stockholders	$	1,136,856		$	973,840		$	490,506
Other comprehensive income (loss), net of tax:
Foreign currency translation gains (losses)	2,319			(4,107		)	3,769
Changes in fair value on cash flow hedges	(2,130		)	—			—
Changes in unrealized holding gains and losses on AFS securities	2,310			120			22,285
Equity in other comprehensive income (loss) of bank and nonbank subsidiaries	136,066			(19,171		)	(50,956		)
Reclassifications to retained earnings for the adoption of new accounting guidance	—			(29,490		)	—
Other comprehensive income (loss), net of tax	138,565			(52,648		)	(24,902		)
Total comprehensive income	$	1,275,421		$	921,192		$	465,604

Condensed Statements of Cash Flows



	Year ended December 31,
(Dollars in thousands)	2019			2018			2017
Cash flows from operating activities:
Net income available to common stockholders	$	1,136,856		$	973,840		$	490,506
Adjustments to reconcile net income to net cash provided by operating activities:
Gains on equity warrant assets, net	(138,078		)	(89,142		)	(54,555		)
Gains on investment securities, net	(45,345		)	(13,546		)	(17,060		)
Distributions of earnings from investment securities	49,776			47,596			14,015
Net income of bank subsidiary	(1,036,618		)	(933,641		)	(446,769		)
Net income on nonbank subsidiaries	(57,371		)	(25,212		)	(13,002		)
Cash dividends from bank subsidiary	733,000			140,000			90,000
Amortization of share-based compensation	66,815			45,675			36,900
Decrease in other assets	27,205			51,169			12,959
Increase in other liabilities	21,391			21,619			11,774
Other, net	8,084			(31,024		)	316
Net cash provided by operating activities	765,715			187,334			125,084

Cash flows from investing activities:
Net decrease (increase) in investment securities from purchases, sales and maturities	128,635			73,742			(152,015		)
Net (increase) decrease in loans	(15,245		)	—			13,337
Increase in investment in bank subsidiary	(42,952		)	(31,292		)	(38,927		)
Decrease (increase) in investment in nonbank subsidiaries	23,275			(5,323		)	34,374
Acquisition of SVB Leerink	(265,601		)	—			—
Net cash (used for) provided by investing activities	(171,888		)	37,127			(143,231		)

Cash flows from financing activities:
Principal payments of long-term debt	(358,395		)	—			(51,546		)
Proceeds from issuance of common stock, ESPP and ESOP	24,818			18,387			27,003
Net proceeds from the issuance of preferred stock	340,138			—			—
Common stock repurchase	(352,511		)	(147,123		)	—
Net cash (used for) by financing activities	(345,950		)	(128,736		)	(24,543		)
Net increase (decrease) in cash and cash equivalents	247,877			95,725			(42,690		)
Cash and cash equivalents at beginning of period	553,049			457,324			500,014
Cash and cash equivalents at end of period	$	800,926		$	553,049		$	457,324

Unaudited Quarterly Financial Data

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Unaudited Quarterly Financial Data

Our supplemental consolidated financial information for each three month period in 2019 and 2018 are as follows:



	Three months ended
(Dollars in thousands, except per share amounts)	March 31,			June 30,			September 30,			December 31,
2019:
Interest income	$	551,014		$	585,767		$	583,892		$	588,735
Interest expense	38,128			56,364			63,248			55,067
Net interest income	512,886			529,403			520,644			533,668
Provision for credit losses	28,551			23,946			36,536			17,383
Noninterest income	280,376			333,750			294,009			313,344
Noninterest expense	365,664			383,522			391,324			460,752
Income before income tax expense	399,047			455,685			386,793			368,877
Income tax expense	107,435			119,114			105,075			94,061
Net income before noncontrolling interests	291,612			336,571			281,718			274,816
Net income attributable to noncontrolling interests	(2,880		)	(18,584		)	(14,437		)	(11,960		)
Net income available to common stockholders	$	288,732		$	317,987		$	267,281		$	262,856
Earnings per common share—basic	$	5.49		$	6.12		$	5.19		$	5.10
Earnings per common share—diluted	5.44			6.08			5.15			5.06
2018:
Interest income	$	432,398		$	481,301		$	513,313		$	542,897
Interest expense	12,535			14,858			20,091			28,437
Net interest income	419,863			466,443			493,222			514,460
Provision for credit losses	27,972			29,080			17,174			13,644
Noninterest income	155,518			192,689			210,070			186,707
Noninterest expense	265,417			305,739			309,445			307,592
Income before income tax expense	281,992			324,313			376,673			379,931
Income tax expense	73,966			77,287			95,308			105,000
Net income before noncontrolling interests	208,026			247,026			281,365			274,931
Net income attributable to noncontrolling interests	(13,065		)	(9,228		)	(6,548		)	(8,667		)
Net income available to common stockholders	$	194,961		$	237,798		$	274,817		$	266,264
Earnings per common share—basic	$	3.69		$	4.48		$	5.16		$	5.01
Earnings per common share—diluted	3.63			4.42			5.10			4.96

Legal Matters	12 Months Ended
Legal Matters	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Legal Matters	Legal Matters Certain lawsuits and claims arising in the ordinary course of business have been filed or are pending against us and/or our affiliates, and we may from time to time be involved in other legal or regulatory proceedings. In accordance with applicable accounting guidance, we establish accruals for all such matters, including expected settlements, when we believe it is probable that a loss has been incurred and the amount of the loss is reasonably estimable. When a loss contingency is not both probable and estimable, we do not establish an accrual. Any such loss estimates are inherently uncertain, based on currently available information and are subject to management’s judgment and various assumptions. Due to the inherent subjectivity of these estimates and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate resolution of such matters. To the extent we believe any potential loss relating to such matters may have a material impact on our liquidity, consolidated financial position, results of operations and/or our business as a whole and is reasonably possible but not probable, we aim to disclose information relating to such potential loss. We also aim to disclose information relating to any material potential loss that is probable but not reasonably estimable. In such cases, where reasonably practicable, we aim to provide an estimate of loss or range of potential loss. No disclosures are generally made for any loss contingencies that are deemed to be remote. Based upon information available to us, our review of lawsuits and claims filed or pending against us to date and consultation with our outside legal counsel, we have not recognized a material liability for any such matters, nor do we currently expect that these matters will result in a material liability to the Company. However, the outcome of litigation and other legal and regulatory matters is inherently uncertain, and it is possible that one or more of such matters currently pending or threatened could have an unanticipated material adverse effect on our liquidity, consolidated financial position, results of operations and/or our business as a whole, in the future.

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates may change as new information is obtained. Significant items that are subject to such estimates include measurements of fair value, the valuation of non-marketable and other equity securities, the valuation of equity warrant assets and the adequacy of the allowance for loan losses and the allowance for unfunded credit commitments. The following discussion provides additional background on our significant accounting policies.

Principles of Consolidation and Presentation

Our consolidated financial statements include the accounts of SVB Financial Group and consolidated entities. We consolidate voting entities in which we have control through voting interests or entities through which we have a controlling financial interest in a variable interest entity ("VIE"). We determine whether we have a controlling financial interest in a VIE by determining if we have (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses or (c) the right to receive the expected returns of the entity. Generally, we have significant variable interests if our commitments to a limited partnership investment represent a significant amount of the total commitments to the entity. We also evaluate the impact of related parties on our determination of variable interests in our consolidation conclusions. We consolidate VIEs in which we are the primary beneficiary based on a controlling financial interest. If we are not the primary beneficiary of a VIE, we record our pro-rata interests based on our ownership percentage.

VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or equity investors and, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity or (c) the right to receive the expected returns of the entity. We assess VIEs to determine if we are the primary beneficiary of a VIE. A primary beneficiary is defined as a variable interest holder that has a controlling financial interest. A controlling financial interest requires both: (a) the power to direct the activities that most significantly impact the VIEs economic performance, and (b) the obligation to absorb losses or receive benefits of a VIE that could potentially be significant to a VIE. Under this analysis, we also evaluate kick-out rights and other participating rights, which could provide us a controlling financial interest. The primary beneficiary of a VIE is required to consolidate the VIE.

We also evaluate fees paid to managers of our limited partnership investments. We exclude those fee arrangements that are not deemed to be variable interests from the analysis of our interests in our investments in VIEs and the determination of a primary beneficiary, if any. Fee arrangements based on terms that are customary and commensurate with the services provided are deemed not to be variable interests and are, therefore, excluded.

All significant intercompany accounts and transactions with consolidated entities have been eliminated. We have not provided financial or other support during the periods presented to any VIE that we were not previously contractually required to provide.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, cash balances due from banks, interest-earning deposits, Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities. For the consolidated statements of cash flows, we consider cash equivalents to be investments that are readily convertible to known amounts of cash, so near to their maturity that they present an insignificant risk of change in fair value due to changes in market interest rates, and purchased in conjunction with our cash management activities.

Available-for-Sale and Held-to-Maturity Securities

Available-for-Sale Securities

Our available-for-sale securities portfolio is a fixed income investment portfolio that is managed to earn an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and credit diversification and meeting our asset/liability management objectives. Unrealized gains and losses on available-for-sale securities, net of applicable taxes, are reported in accumulated other comprehensive income, which is a separate component of SVBFG's stockholders' equity, until realized.

We analyze available-for-sale securities for other-than-temporary impairment each quarter. Market valuations represent the current fair value of a security at a specified point in time and incorporates the risk of timing of interest due and the return of principal over the contractual life of each security. Gains and losses on securities are realized when there is a sale of the security prior to maturity. A credit downgrade represents an increased level of risk of other-than-temporary impairment, and as a part of our consideration of recording an other-than-temporary impairment we will assess the issuer's ability to service the debt and to repay the principal at contractual maturity.

We apply the other-than-temporary impairment standards of ASC 320, Investments-Debt and Equity Securities. For our debt securities, we have the intent and ability to hold these securities until we recover our cost less any credit-related loss. We separate the amount of the other-than-temporary impairment, if any, into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between a security's amortized cost basis and the present value of expected future cash flows discounted at the security's effective interest rate. The amount due to all other factors is recognized in other comprehensive income.

We consider numerous factors in determining whether a credit loss exists and the period over which the debt security is expected to recover. The following list is not meant to be all inclusive. All of the following factors are considered:


•	The length of time and the extent to which the fair value has been less than the amortized cost basis (severity and duration);


•	Adverse conditions specifically related to the security, an industry or geographic area; for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, changes in the financial condition of the underlying loan obligors. Examples of those changes include any of the following:


◦	Changes in technology;


◦	The discontinuance of a segment of the business that may affect the future earnings potential of the issuer or underlying loan obligors of the security; and


◦	Changes in the quality of the credit enhancement.


•	The historical and implied volatility of the fair value of the security;


•	The payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future;


•	Failure of the issuer of the security to make scheduled interest or principal payments;


•	Any changes to the rating of the security by a rating agency; and


•	Recoveries or additional declines in fair value after the balance sheet date.

In accordance with ASC 310-20, Receivables-Nonrefundable Fees and Other Costs, we use estimates of future principal prepayments, provided by third-party market-data vendors, in addition to actual principal prepayment experience to calculate the constant effective yield necessary to apply the effective interest method in the amortization of purchase discounts or premiums on mortgage-backed securities and fixed rate collateralized mortgage obligations. The accretion and amortization of discounts and premiums, respectively, are included in interest income over the contractual terms of the underlying securities replicating the effective interest method.

Held-to-Maturity Securities

Debt securities purchased in which we have the positive intent and ability to hold to its maturity are classified as held-to-maturity securities and are recorded at amortized cost.

Transfers of investment securities into the held-to-maturity category from the available-for-sale category are made at fair value at the date of transfer. The net unrealized gains, net of tax, are retained in other comprehensive income, and the carrying value of the held-to-maturity securities are amortized over the life of the securities in a manner consistent with the amortization of a premium or discount.

Non-Marketable and Other Securities

Non-Marketable and Other Equity Securities

Non-marketable and other equity securities include investments in venture capital and private equity funds, SPD-SVB, debt funds, private and public portfolio companies, including public equity securities held as a result of equity warrant assets exercised, and investments in qualified affordable housing projects. A majority of these investments are managed through our SVB Capital funds business in funds of funds and direct venture funds. Our accounting for investments in non-marketable and other equity securities depends on several factors, including the level of ownership, power to control and the legal structure of the subsidiary making the investment. As further described below, we base our accounting for such securities on: (i) fair value accounting, (ii) other investments without a readily determinable fair value, (iii) equity method accounting and (iv) the proportional amortization method which is used only for qualified affordable housing projects.

Fair Value Accounting

The general partner interests of these funds are controlled, and in some cases, owned by SVB Financial. The limited partners of these funds do not have substantive participating or kick-out rights. Therefore, these funds are consolidated and any gains or losses resulting from changes in the estimated fair value of the investments are recorded as investment gains or losses in our consolidated net income.

Under fair value accounting, investments are carried at their estimated fair value based on financial information obtained as the general partner of the fund or obtained from the funds' respective general partner. For direct private company investments, valuations are based upon consideration of a range of factors including, but not limited to, the price at which the investment was acquired, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies and financing transactions subsequent to the acquisition of the investment. For direct equity investments in public companies, valuations are based on quoted market prices less a discount if the securities are subject to certain sales restrictions. Sales restriction discounts generally range from ten percent to twenty percent depending on the sale restrictions which typically range from three to six months. The valuation of non-marketable securities in shares of private company capital stock and the valuation of other securities in shares of public company stock with certain sales restrictions is subject to significant judgment. The inherent uncertainty in the process of valuing securities for which a ready market does not exist may cause our estimated values of these securities to differ significantly from the values that would have been derived had a ready market for the securities existed, and those differences could be material.

For our fund investments, we utilize the net asset value as obtained from the general partners of the fund investments as the funds do not have a readily determinable fair value. The general partners of our fund investments prepare their financial statements using guidance consistent with fair value accounting. We account for differences between our measurement date and the date of the fund investment's net asset value by using the most recent available financial information from the investee general partner, for example September 30^th, for our December 31^st consolidated financial statements. We adjust the value of our investments for any contributions paid, distributions received from the investment and known significant fund transactions or market events about which we are aware through information provided by the fund managers or from publicly available transaction data during the reporting period.

Gains or losses resulting from changes in the estimated fair value of the investments and from distributions received are recorded as gains on investment securities, net, a component of noninterest income. The portion of any investment gains or losses attributable to the limited partners is reflected as net income attributable to noncontrolling interests and adjusts our net income to reflect its percentage ownership.

Fair Value Accounting

Our managed funds are investment companies under the AICPA Audit and Accounting Guide for Investment Companies (codified in ASC 946) and accordingly, these funds report their investments at estimated fair value, with unrealized gains and losses resulting from changes in fair value reflected as investment gains or losses in our consolidated statements of income. Our non-marketable and other equity securities recorded pursuant to fair value accounting consist of our investments through the following funds:


•	Funds of funds, which make investments in venture capital and private equity funds, and

•

Direct venture funds, which make equity investments in privately held companies.

Other Investments without a Readily Determinable Fair Value

Effective January 1, 2018 we adopted ASU 2016-01 Recognition and Measurement of Financial Assets and Financial Liabilities which eliminated the concept of cost method accounting and created an additional method of accounting, other investments without a readily determinable fair value. These investments include direct equity investments in private companies. The carrying value is based on the price at which the investment was acquired less any impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies, financing transactions subsequent to the acquisition of the investment and a discount for certain investments that have lock-up restrictions or other features that indicate a discount to fair value is warranted.

Equity Method

Our equity method non-marketable securities consist of investments in venture capital and private equity funds, privately-held companies, debt funds, and joint ventures. Our equity method non-marketable securities and related accounting policies are described as follows:


•	Equity securities, such as preferred or common stock in privately-held companies in which we hold a voting interest of at least 20 percent, or in which we have the ability to exercise significant influence over the investees' operating and financial policies through board involvement or other influence, are accounted for under the equity method,


•	Investments in limited partnerships in which we hold voting interests of more than 5 percent, or in which we have the ability to exercise significant influence over the partnerships' operating and financial policies, are accounted for using the equity method, and


•	Our China Joint Venture partnership, for which we have 50 percent ownership, is accounted for under the equity method.

We recognize our proportionate share of the results of operations of these equity method investees in our results of operations, based on the most current financial information available from the investee. We review our investments accounted for under the equity method at least quarterly for possible other-than-temporary impairment. Our review typically includes an analysis of facts and circumstances for each investment, the expectations of the investment's future cash flows and capital needs, variability of its business and the company's exit strategy. For our fund investments, we utilize the net asset value per share as provided by the general partners of the fund investments. We account for differences between our measurement date and the date of the fund investment's net asset value by using the most recent available financial information from the investee general partner, for example September 30^th, for our December 31^st consolidated financial statements. We adjust the value of our investments for any contributions paid, distributions received from the investment, and known significant fund transactions or market events about which we are aware through information provided by the fund managers or from publicly available transaction data during the reporting period.

We reduce our investment value when we consider declines in value to be other-than-temporary and recognize the estimated loss as a loss on investment securities, a component of noninterest income.

Proportional Amortization Method

In order to fulfill our responsibilities under the Community Reinvestment Act, we invest as a limited partner in low income housing partnerships that operate qualified affordable housing projects and generate tax benefits, including federal low income housing tax credits, for investors. The partnerships are deemed to be VIEs because they do not have sufficient equity investment at risk and are structured with non-substantive voting rights. We are not the primary beneficiary of the VIEs and do not consolidate them. Our investments in low income housing partnerships are recorded in non-marketable and other equity securities within our investment securities portfolio on the consolidated balance sheet. As a practical expedient, we amortize the investment in proportion to the allocated tax benefits under the proportional amortization method of accounting and present such benefits net of investment amortization in income tax expense.

Loans

Loans are reported at the principal amount outstanding, net of unearned loan fees. Unearned loan fees reflect unamortized deferred loan origination and commitment fees net of unamortized deferred loan origination costs. In addition to cash loan fees, we often obtain equity warrant assets that give us an option to purchase a position in a client company's stock in consideration for providing credit facilities. The grant date fair values of these equity warrant assets are deemed to be loan fees and are deferred as unearned income and recognized as an adjustment of loan yield through loan interest income. The net amount of unearned loan fees is amortized into loan interest income over the contractual terms of the underlying loans and commitments using the constant effective yield method, adjusted for actual loan prepayment experience, or the straight-line method, as applicable.

Allowance for Loan Losses

The allowance for loan losses considers credit risk and is established through a provision for loan losses charged to expense. Our allowance for loan losses is established for estimated loan losses that are probable and incurred but not yet realized. Our evaluation process is designed to determine that the allowance for loan losses is appropriate at the balance sheet date. The process of estimating loan losses is inherently imprecise.

We maintain a systematic process for the evaluation of individual loans and pools of loans for inherent risk of loan losses. At the time of approval, each loan in our portfolio is assigned a Credit Risk Rating and industry niche. Credit Risk Ratings are assigned on a scale of 1 to 10, with 1 representing loans with a low risk of nonpayment, 9 representing loans with the highest risk of nonpayment, and 10 representing loans which have been charged-off. The credit risk ratings for each loan are monitored and updated on an ongoing basis. This Credit Risk Rating process includes, but is not limited to, consideration of such factors as payment status, the financial condition and operating performance of the borrower, borrower compliance with loan covenants, underlying collateral values and performance trends, the degree of access to additional capital, the presence of credit enhancements such as third party guarantees (where applicable), the degree to which the borrower is sensitive to external factors, the depth and experience of the borrower's management team, potential loan concentrations, and general economic conditions. Our policies require a committee of senior management to review, at least quarterly, credit relationships with a credit risk rating of 5 through 9 that exceed specific dollar values. Our review process evaluates the appropriateness of the credit risk rating and allocation of the allowance for loan losses, as well as other account management functions. The allowance for loan losses is determined based on a qualitative analysis and a formula allocation for similarly risk-rated loans by portfolio segment and

individually for impaired loans. The formula allocation provides the average loan loss experience for each portfolio segment, which considers our quarterly historical loss experience since the year 2000, both by risk-rating category and client industry sector. The resulting loan loss factors for each risk-rating category and client industry sector are ultimately applied to the respective period-end client loan balances for each corresponding risk-rating category by client industry sector to provide an estimation of the allowance for loan losses. The probable loan loss experience for any one year period of time is reasonably expected to be greater or less than the average as determined by the loss factors. As such, management applies a qualitative allocation to the results of the aforementioned model to ascertain the total allowance for loan losses. This qualitative allocation is based on management's assessment of the risks that may lead to a loan loss experience different from our historical loan loss experience. Based on management's prediction or estimate of changing risks in the lending environment, the qualitative allocation may vary significantly from period to period and includes, but is not limited to, consideration of the following factors:


•	Changes in lending policies and procedures, including underwriting standards and collections, and charge-off and recovery practices;


•	Changes in national and local economic business conditions, including the market and economic condition of our clients' industry sectors;


•	Changes in the nature of our loan portfolio;


•	Changes in experience, ability, and depth of lending management and staff;


•	Changes in the trend of the volume and severity of past due and classified loans;


•	Changes in the trend of the volume of nonaccrual loans, troubled debt restructurings and other loan modifications;


•	Reserve floor for portfolio segments that would not draw a minimum reserve based on the lack of historical loan loss experience;


•	Reserve for large funded loan exposure;


•	Reserve for performing impaired loan exposure; and


•	Other factors as determined by management from time to time.

While the evaluation process of our allowance for loan losses uses historical and other objective information, the classification of loans and the establishment of the allowance for loan losses rely, to a great extent, on the judgment and experience of our management.

Allowance for Unfunded Credit Commitments

We record a liability for probable and estimable incurred losses associated with our unfunded credit commitments being funded and subsequently being charged off. Each quarter, every unfunded client credit commitment is allocated to a credit risk-rating in accordance with each client's credit risk rating and portfolio segment. We use the segment specific historical loan loss factors described under our allowance for loan losses to calculate the loan loss experience if unfunded credit commitments are funded. Separately, we use historical trends to calculate a probability of an unfunded credit commitment being funded. We apply the loan funding probability factor to risk-factor adjusted unfunded credit commitments by credit risk-rating and portfolio segment to derive the allowance for unfunded credit commitments, similar to funded loans. The allowance for unfunded credit commitments also includes certain qualitative allocations as deemed appropriate by management. We include the allowance for unfunded credit commitments in other liabilities and the related provision in our provision for credit losses.

Uncollectible Loans and Write-offs

Our charge-off policy applies to all loans, regardless of portfolio segment. Commercial loans are considered for a full or partial charge-off in the event that principal or interest is over 180 days past due and the loan lacks sufficient collateral and it is not in the process of collection, provided that a loss event has been defined and the charge-off is consistent with GAAP. Consumer loans are considered for a full or partial charge-off in the event that principal or interest is over 120 days past due and the loan lacks sufficient collateral and it is not in the process of collection, provided that a loss event has been defined and the charge-off is consistent with GAAP. We also consider writing off loans in the event of any of the following circumstances: 1) the loan, or a portion of the loan is deemed uncollectible due to: a) the borrower's inability to make recurring payments, b) material changes in the borrower's financial condition, or c) the expected sale of all or a portion of the borrower's business is insufficient to repay the loan in full, or 2) the loan has been identified for charge-off by regulatory authorities.

Troubled Debt Restructurings (TDRs)

Troubled Debt Restructurings

A TDR arises from the modification of a loan where we have granted a concession to the borrower related to the borrower's financial difficulties that we would not have otherwise considered for economic or legal reasons. These concessions may include: (1) deferral of payment for more than an insignificant period of time that does not include sufficient offsetting borrower concessions; (2) interest rate reductions; (3) extension of the maturity date outside of ordinary course extension; (4) principal forgiveness; and/or (5) reduction of accrued interest.

We use the factors in ASC 310-40, Receivables, Troubled Debt Restructurings by Creditors, in analyzing when a borrower is experiencing financial difficulty, and when we have granted a concession, both of which must be present for a restructuring to meet the criteria of a TDR. If we determine that a TDR exists, we measure impairment based on the present value of expected future cash flows discounted at the loan's effective interest rate, except that as a practical expedient, we may also measure impairment based on a loan's observable market price, or the fair value of the collateral less selling costs if the loan is a collateral-dependent loan.

Impaired Loans

A loan is considered impaired when, based upon currently known information, it is deemed probable that we will be unable to collect all amounts due according to the contractual terms of the agreement. On a quarterly basis, we review our loan portfolio for impairment. Within each class of loans, we review individual loans for impairment based on credit risk ratings. Loans risk-rated 5 through 7 are performing loans; however, we consider them as demonstrating higher risk, which requires more frequent review of the individual exposures; these translate to an internal rating of "Performing (Criticized)" and could be classified as a performing impaired loan.

For each loan identified as impaired, we measure the impairment based upon the present value of expected future cash flows discounted at the loan's effective interest rate. In limited circumstances, we may measure impairment based on the loan's observable market price or the fair value of the collateral less selling costs if the loan is collateral dependent. Impaired collateral-dependent loans will have independent appraisals completed and accepted at least annually. The fair value of the collateral will be determined by the most recent appraisal, as adjusted to reflect a reasonable marketing period for the sale of the asset(s) and an estimate of reasonable selling expenses.

If it is determined that the value of an impaired loan is less than the recorded investment in the loan, net of previous charge-offs and payments collected, we recognize impairment through the allowance for loan losses as determined by our analysis.

Nonaccrual Loans

Loans are placed on nonaccrual status when they become 90 days past due as to principal or interest payments (unless the principal and interest are well secured and in the process of collection); or when we have determined, based upon currently known information, that the timely collection of principal or interest is not probable.

When a loan is placed on nonaccrual status, the accrued interest and fees are reversed against interest income and the loan is accounted for using the cost recovery method thereafter until qualifying for return to accrual status. For a loan to be returned to accrual status, all delinquent principal and interest must become current in accordance with the terms of the loan agreement and future collection of remaining principal and interest must be deemed probable. We apply a cost recovery method in which all cash received is applied to the loan principal until it has been collected. Under this approach, interest income is recognized after total cash flows received exceed the recorded investment at the date of initial nonaccrual. All of our nonaccrual loans have credit risk ratings of 8 or 9 and are classified under the nonperforming impaired category.

Premises and Equipment

Premises and equipment are reported at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the terms of the related leases, whichever is shorter. The maximum estimated useful lives by asset classification are as follows:



Leasehold improvements		Lesser of lease term or asset life
Furniture and equipment		7 years
Computer software		3-7 years
Computer hardware		3-5 years