Investment Securities (Tables)

9 Months Ended

Sep. 30, 2012

Major Components of Investment Securities Portfolio

The major components of our investment securities portfolio at September 30, 2012 and December 31, 2011 are as follows:



	September 30, 2012									December 31, 2011
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value
Available-for-sale securities, at fair value:
U.S. treasury securities	$	25,101	$	328	$	—		$	25,429	$	25,233	$	731	$	—		$	25,964
U.S. agency debentures	2,857,336		78,814		—			2,936,150		2,822,158		52,864		(90		)	2,874,932
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	1,535,934		54,648		—			1,590,582		1,529,466		34,926		(106		)	1,564,286
Agency-issued collateralized mortgage obligations—fixed rate	4,119,707		49,160		(742		)	4,168,125		3,317,285		56,546		(71		)	3,373,760
Agency-issued collateralized mortgage obligations—variable rate	1,928,853		10,951		(5		)	1,939,799		2,416,158		1,554		(4,334		)	2,413,378
Agency-issued commercial mortgage-backed securities	273,021		6,486		—			279,507		176,646		2,047		—			178,693
Municipal bonds and notes	91,643		8,578		—			100,221		92,241		8,257		—			100,498
Equity securities	3,941		4,265		(289		)	7,917		5,554		180		(1,199		)	4,535
Total available-for-sale securities	$	10,835,536	$	213,230	$	(1,036	)	$	11,047,730	$	10,384,741	$	157,105	$	(5,800	)	$	10,536,046
Non-marketable securities:
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments (1)								658,409									611,824
Other venture capital investments (2)								118,622									124,121
Other investments								—									987
Non-marketable securities (equity method accounting):
Other investments (3)								141,761									68,252
Low income housing tax credit funds								66,806									34,894
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments (4)								158,275									145,007
Other investments								19,942									19,355
Total non-marketable securities								1,163,815									1,004,440
Total investment securities								$	12,211,545								$	11,540,486


(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 September 30, 2012 and December 31, 2011 (fair value accounting):



	September 30, 2012				December 31, 2011
(Dollars in thousands)	Amount		Ownership %		Amount		Ownership %
SVB Strategic Investors Fund, LP	$	35,963	12.6	%	$	39,567	12.6	%
SVB Strategic Investors Fund II, LP	103,302		8.6		122,619		8.6
SVB Strategic Investors Fund III, LP	208,809		5.9		218,429		5.9
SVB Strategic Investors Fund IV, LP	161,082		5.0		122,076		5.0
Strategic Investors Fund V Funds	28,908		Various		8,838		0.3
SVB Capital Preferred Return Fund, LP	51,460		20.0		42,580		20.0
SVB Capital—NT Growth Partners, LP	61,253		33.0		43,958		33.0
SVB Capital Partners II, LP (i)	1,341		5.1		2,390		5.1
Other private equity fund (ii)	6,291		58.2		11,367		58.2
Total venture capital and private equity fund investments	$	658,409			$	611,824


(i)	At September 30, 2012, we had a direct ownership interest of 1.3 percent and an indirect ownership interest of 3.8 percent in the fund through our ownership interest of SVB Strategic Investors Fund II, LP.


(ii)	At September 30, 2012, we had a direct ownership interest of 41.5 percent and indirect ownership interests of 12.6 percent and 4.1 percent in the fund through our ownership interest of SVB Capital—NT Growth Partners, LP and SVB Capital Preferred Return Fund, LP, respectively.


(2)	The following table shows the amounts of other venture capital investments held by the following consolidated funds and our ownership percentage of each fund at September 30, 2012 and December 31, 2011 (fair value accounting):



	September 30, 2012				December 31, 2011
(Dollars in thousands)	Amount		Ownership %		Amount		Ownership %
Silicon Valley BancVentures, LP	$	16,737	10.7	%	$	17,878	10.7	%
SVB Capital Partners II, LP (i)	55,686		5.1		61,099		5.1
SVB India Capital Partners I, LP	42,713		14.4		42,832		14.4
SVB Capital Shanghai Yangpu Venture Capital Fund	3,486		6.8		2,312		6.8
Total other venture capital investments	$	118,622			$	124,121


(i)	At September 30, 2012, we had a direct ownership interest of 1.3 percent and an indirect ownership interest of 3.8 percent in the fund through our ownership of SVB Strategic Investors Fund II, LP.


(3)	The following table shows the carrying value and our ownership percentage of each investment at September 30, 2012 and December 31, 2011 (equity method accounting):



	September 30, 2012				December 31, 2011
(Dollars in thousands)	Amount		Ownership %		Amount		Ownership %
Gold Hill Venture Lending 03, LP (i)	$	9,187	9.3	%	$	16,072	9.3	%
Gold Hill Capital 2008, LP (ii)	20,491		15.5		19,328		15.5
Partners for Growth II, LP	3,199		24.2		3,785		24.2
China Joint Venture investment (iii)	78,484		50.0		—		—
Other investments	30,400		N/A		29,067		N/A
Total other investments (equity method accounting)	$	141,761			$	68,252


(i)	At September 30, 2012, we had a direct ownership interest of 4.8 percent in the fund and an indirect interest in the fund through our investment in Gold Hill Venture Lending Partners 3, LLC (“GHLLC”) of 4.5 percent.


(ii)	At September 30, 2012, we had a 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.


(iii)	On May 3, 2012, we contributed $79.7 million to SPD Silicon Valley Bank Co., Ltd. ("SPD-SVB"), our joint venture bank in China.

(4)

Represents investments in 325 and 329 funds (primarily venture capital funds) at September 30, 2012 and December 31, 2011, respectively, where our ownership interest is 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. For the three months ended September 30, 2012, we recognized OTTI losses of $0.4 million resulting from other-than-temporary declines in value for 17 of the 325 investments. For the nine months ended September 30, 2012, we recognized OTTI losses of $0.9 million resulting from other-than-temporary declines in value for 43 of the 325 investments. The OTTI losses are included in net gains on investment securities, a component of noninterest income. We concluded that any declines in value for the remaining investments were temporary and as such, no OTTI was required to be recognized. At September 30, 2012, the carrying value of these venture capital and private equity fund investments (cost method accounting) was $158.3 million, and the estimated fair value was $190.0 million.

Summary of Unrealized Losses on Available for Sale Securities

The following table summarizes our unrealized losses on our available-for-sale securities portfolio into categories of less than 12 months, or 12 months or longer as of September 30, 2012:



	September 30, 2012
	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations—fixed rate	$	205,942	$	(742	)	$	—	$	—		$	205,942	$	(742	)
Agency-issued collateralized mortgage obligations—variable rate	10,611		(5		)	—		—			10,611		(5		)
Equity securities	1,551		(95		)	250		(194		)	1,801		(289		)
Total temporarily impaired securities (1)	$	218,104	$	(842	)	$	250	$	(194	)	$	218,354	$	(1,036	)

(1)

As of September 30, 2012, we identified a total of 10 investments that were in unrealized loss positions, of which three investments totaling $0.3 million with unrealized losses of $0.2 million have been in an impaired position for a period of time greater than 12 months. As of September 30, 2012, we do not intend to sell any impaired debt or equity 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 September 30, 2012, 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 available-for-sale securities portfolio are reviewed and monitored on a quarterly basis.

The following table summarizes our unrealized losses on our available-for-sale securities portfolio into categories of less than 12 months, or 12 months or longer as of December 31, 2011:



	December 31, 2011
	Less than 12 months					12 months or longer				Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses		Fair Value of Investments		Unrealized Losses
U.S. agency debentures	$	50,994	$	(90	)	$	—	$	—	$	50,994	$	(90	)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	54,588		(106		)	—		—		54,588		(106		)
Agency-issued collateralized mortgage obligations—fixed rate	50,125		(71		)	—		—		50,125		(71		)
Agency-issued collateralized mortgage obligations—variable rate	1,521,589		(4,334		)	—		—		1,521,589		(4,334		)
Equity securities	3,831		(1,199		)	—		—		3,831		(1,199		)
Total temporarily impaired securities	$	1,681,127	$	(5,800	)	$	—	$	—	$	1,681,127	$	(5,800	)

Summary of Remaining Contractual Principal Maturities and Fully Taxable Equivalent Yields on Debt Securities Classified as Available for Sale

The following table summarizes the remaining contractual principal maturities and fully taxable equivalent yields on debt securities classified as available-for-sale as of September 30, 2012. Interest income on certain municipal bonds and notes (non-taxable investments) are presented on a fully taxable equivalent basis using the federal statutory tax rate of 35.0 percent. The weighted average yield is computed using the amortized cost of debt securities, which are reported at fair value. For U.S. treasury securities, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for certain U.S. agency debentures may occur earlier than their contractual maturities because the note issuers have the right to call outstanding amounts ahead of their contractual maturity. 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 available-for-sale 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.



	September 30, 2012
	Total				One Year or Less				After One Year to Five Years				After Five Years to Ten Years				After Ten Years
(Dollars in thousands)	Carrying Value		Weighted- Average Yield		Carrying Value		Weighted- Average Yield		Carrying Value		Weighted- Average Yield		Carrying Value		Weighted- Average Yield		Carrying Value		Weighted- Average Yield
U.S. treasury securities	$	25,429	2.39	%	$	25,429	2.39	%	$	—	—	%	$	—	—	%	$	—	—	%
U.S. agency debentures	2,936,150		1.56		51,027		1.05		2,653,180		1.49		231,943		2.43		—		—
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	1,590,582		2.34		—		—		—		—		1,470,437		2.27		120,145		3.29
Agency-issued collateralized mortgage obligations - fixed rate	4,168,125		2.06		—		—		—		—		—		—		4,168,125		2.06
Agency-issued collateralized mortgage obligations - variable rate	1,939,799		0.70		—		—		—		—		—		—		1,939,799		0.70
Agency-issued commercial mortgage-backed securities	279,507		2.01		—		—		—		—		—		—		279,507		2.01
Municipal bonds and notes	100,221		4.99		933		5.20		17,333		5.60		49,532		6.02		32,423		6.24
Total	$	11,039,813	1.75		$	77,389	1.54		$	2,670,513	1.52		$	1,751,912	2.39		$	6,539,999	1.70

Components of Gains and Losses (Realized and Unrealized) on Investment Securities

The following table presents the components of gains and losses (realized and unrealized) on investment securities for the three and nine months ended September 30, 2012 and 2011:



	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2012			2011			2012			2011
Gross gains on investment securities:
Available-for-sale securities, at fair value (1)	$	20		$	5		$	5,363		$	37,382
Marketable securities (fair value accounting)	255			470			3,874			912
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	28,639			34,640			88,037			117,344
Other venture capital investments	2,515			22,058			5,848			29,077
Other investments	—			—			21			20
Non-marketable securities (equity method accounting):
Other investments	5,571			2,192			12,382			8,708
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments	694			735			1,639			1,791
Other investments	1,406			8			1,712			2,437
Total gross gains on investment securities	39,100			60,108			118,876			197,671
Gross losses on investment securities:
Available-for-sale securities, at fair value (1)	(121		)	—			(1,771		)	(94		)
Marketable securities (fair value accounting)	(553		)	(1,691		)	(1,307		)	(5,806		)
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	(16,557		)	(2,373		)	(49,090		)	(9,274		)
Other venture capital investments	(125		)	(3,351		)	(10,007		)	(5,015		)
Other investments	—			(16		)	—			(16		)
Non-marketable securities (equity method accounting):
Other investments	(1,091		)	(50		)	(1,794		)	(1,359		)
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments	(423		)	(365		)	(963		)	(797		)
Other investments	(2		)	—			(68		)	(31		)
Total gross losses on investment securities	(18,872		)	(7,846		)	(65,000		)	(22,392		)
Gains on investment securities, net	$	20,228		$	52,262		$	53,876		$	175,279
Gains attributable to noncontrolling interests, including carried interest	$	12,776		$	42,961		$	34,616		$	112,783


(1)	Includes realized gains on sales of available-for-sale securities that are recognized in the income statement. Unrealized gains on available-for-sale securities are recognized in other comprehensive income. The cost basis of available-for-sale securities sold is determined on a specific identification basis.