x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 91-1962278 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3003 Tasman Drive, Santa Clara, California | 95054-1191 | |
(Address of principal executive offices) | (Zip Code) |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
(Dollars in thousands, except par value and share data) | June 30, 2015 | December 31, 2014 | ||||||
(Unaudited) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 2,625,550 | $ | 1,796,062 | ||||
Available-for-sale securities, at fair value (cost of $14,414,219 and $13,497,945, respectively) | 14,495,759 | 13,540,655 | ||||||
Held-to-maturity securities, at cost (fair value of $7,730,811 and $7,415,656, respectively) | 7,735,891 | 7,421,042 | ||||||
Non-marketable and other securities (1) | 645,506 | 1,728,140 | ||||||
Total investment securities | 22,877,156 | 22,689,837 | ||||||
Loans, net of unearned income | 14,261,430 | 14,384,276 | ||||||
Allowance for loan losses | (192,644 | ) | (165,359 | ) | ||||
Net loans | 14,068,786 | 14,218,917 | ||||||
Premises and equipment, net of accumulated depreciation and amortization | 88,284 | 79,845 | ||||||
Accrued interest receivable and other assets (1) | 576,342 | 555,289 | ||||||
Total assets | $ | 40,236,118 | $ | 39,339,950 | ||||
Liabilities and total equity | ||||||||
Liabilities: | ||||||||
Noninterest-bearing demand deposits | $ | 27,734,720 | $ | 24,583,682 | ||||
Interest-bearing deposits | 7,892,245 | 9,759,817 | ||||||
Total deposits | 35,626,965 | 34,343,499 | ||||||
Short-term borrowings | 2,537 | 7,781 | ||||||
Other liabilities | 614,690 | 483,493 | ||||||
Long-term debt | 802,454 | 453,443 | ||||||
Total liabilities | 37,046,646 | 35,288,216 | ||||||
Commitments and contingencies (Note 13 and Note 16) | ||||||||
SVBFG stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value, 20,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
Common stock, $0.001 par value, 150,000,000 shares authorized; 51,461,496 shares and 50,924,925 shares outstanding, respectively | 51 | 51 | ||||||
Additional paid-in capital | 1,162,508 | 1,120,350 | ||||||
Retained earnings (1) | 1,824,626 | 1,649,967 | ||||||
Accumulated other comprehensive income | 63,917 | 42,704 | ||||||
Total SVBFG stockholders’ equity | 3,051,102 | 2,813,072 | ||||||
Noncontrolling interests | 138,370 | 1,238,662 | ||||||
Total equity | 3,189,472 | 4,051,734 | ||||||
Total liabilities and total equity | $ | 40,236,118 | $ | 39,339,950 |
(1) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands, except per share amounts) | 2015 | 2014 | 2015 (2) | 2014 | ||||||||||||
Interest income: | ||||||||||||||||
Loans | $ | 167,252 | $ | 147,680 | $ | 332,753 | $ | 295,852 | ||||||||
Investment securities: | ||||||||||||||||
Taxable | 84,613 | 63,424 | 165,887 | 117,844 | ||||||||||||
Non-taxable | 741 | 794 | 1,513 | 1,590 | ||||||||||||
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities | 1,320 | 1,943 | 2,589 | 3,579 | ||||||||||||
Total interest income | 253,926 | 213,841 | 502,742 | 418,865 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 1,182 | 3,068 | 3,125 | 5,972 | ||||||||||||
Borrowings | 8,973 | 5,808 | 16,921 | 11,600 | ||||||||||||
Total interest expense | 10,155 | 8,876 | 20,046 | 17,572 | ||||||||||||
Net interest income | 243,771 | 204,965 | 482,696 | 401,293 | ||||||||||||
Provision for loan losses | 26,513 | 1,947 | 32,965 | 2,441 | ||||||||||||
Net interest income after provision for loan losses | 217,258 | 203,018 | 449,731 | 398,852 | ||||||||||||
Noninterest income: | ||||||||||||||||
Gains (losses) on investment securities, net | 24,975 | (57,320 | ) | 58,238 | 166,592 | |||||||||||
Gains on derivative instruments, net | 16,317 | 12,775 | 56,046 | 36,942 | ||||||||||||
Foreign exchange fees | 22,364 | 17,928 | 40,042 | 35,124 | ||||||||||||
Credit card fees | 14,215 | 10,249 | 26,305 | 20,531 | ||||||||||||
Deposit service charges | 11,301 | 9,611 | 22,037 | 19,218 | ||||||||||||
Lending related fees | 8,163 | 5,876 | 16,185 | 12,179 | ||||||||||||
Letters of credit and standby letters of credit fees | 4,772 | 2,810 | 9,974 | 6,950 | ||||||||||||
Client investment fees | 5,264 | 3,519 | 9,746 | 6,937 | ||||||||||||
Other | 18,916 | 8,762 | 11,238 | 19,962 | ||||||||||||
Total noninterest income | 126,287 | 14,210 | 249,811 | 324,435 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Compensation and benefits | 124,915 | 99,820 | 240,685 | 202,327 | ||||||||||||
Professional services | 18,950 | 21,113 | 37,697 | 42,302 | ||||||||||||
Premises and equipment | 11,787 | 12,053 | 24,444 | 23,635 | ||||||||||||
Business development and travel | 9,764 | 9,249 | 20,876 | 19,443 | ||||||||||||
Net occupancy | 8,149 | 7,680 | 15,462 | 15,000 | ||||||||||||
FDIC and state assessments | 5,962 | 4,945 | 11,751 | 9,073 | ||||||||||||
Correspondent bank fees | 3,337 | 3,274 | 6,705 | 6,477 | ||||||||||||
(Reduction of) provision for unfunded credit commitments | (3,061 | ) | 2,185 | (798 | ) | 3,308 | ||||||||||
Other (1) | 14,309 | 10,625 | 27,831 | 19,787 | ||||||||||||
Total noninterest expense (1) | 194,112 | 170,944 | 384,653 | 341,352 | ||||||||||||
Income before income tax expense (1) | 149,433 | 46,284 | 314,889 | 381,935 | ||||||||||||
Income tax expense (1) | 54,974 | 35,928 | 118,040 | 97,224 | ||||||||||||
Net income before noncontrolling interests (1) | 94,459 | 10,356 | 196,849 | 284,711 | ||||||||||||
Net (income) loss attributable to noncontrolling interests | (8,316 | ) | 40,597 | (22,190 | ) | (142,808 | ) | |||||||||
Net income available to common stockholders (1) | $ | 86,143 | $ | 50,953 | $ | 174,659 | $ | 141,903 | ||||||||
Earnings per common share—basic (1) | $ | 1.68 | $ | 1.06 | $ | 3.42 | $ | 3.02 | ||||||||
Earnings per common share—diluted | 1.66 | 1.04 | 3.37 | 2.96 |
(1) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(2) | Amounts for the six months ended June 30, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income before noncontrolling interests (1) (2) | $ | 94,459 | $ | 10,356 | $ | 196,849 | $ | 284,711 | ||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||
Change in cumulative translation gains: | ||||||||||||||||
Foreign currency translation gains | 529 | 157 | 2,690 | 1,621 | ||||||||||||
Related tax expense | (321 | ) | (76 | ) | (1,141 | ) | (654 | ) | ||||||||
Change in unrealized gains on available-for-sale securities: | ||||||||||||||||
Unrealized holding (losses) gains | (45,541 | ) | 82,064 | 41,566 | 111,393 | |||||||||||
Related tax benefit (expense) | 18,191 | (33,203 | ) | (17,024 | ) | (45,008 | ) | |||||||||
Reclassification adjustment for (gains) losses included in net income | (141 | ) | 16,480 | (2,737 | ) | 16,421 | ||||||||||
Related tax expense (benefit) | 57 | (6,653 | ) | 1,105 | (6,630 | ) | ||||||||||
Cumulative-effect adjustment for unrealized gains on securities transferred from available-for-sale to held-to-maturity | — | 36,653 | — | 36,653 | ||||||||||||
Related tax expense | — | (14,756 | ) | — | (14,756 | ) | ||||||||||
Amortization of unrealized gains on securities transferred from available-for-sale to held-to-maturity | (2,604 | ) | — | (5,432 | ) | — | ||||||||||
Related tax benefit | 1,047 | — | 2,186 | — | ||||||||||||
Other comprehensive (loss) income, net of tax | (28,783 | ) | 80,666 | 21,213 | 99,040 | |||||||||||
Comprehensive income | 65,676 | 91,022 | 218,062 | 383,751 | ||||||||||||
Comprehensive (income) loss attributable to noncontrolling interests (2) | (8,316 | ) | 40,597 | (22,190 | ) | (142,808 | ) | |||||||||
Comprehensive income attributable to SVBFG | $ | 57,360 | $ | 131,619 | $ | 195,872 | $ | 240,943 |
(1) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(2) | Amounts for the six months ended June 30, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total SVBFG Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||
(Dollars in thousands) | Shares | Amount | |||||||||||||||||||||||||||||
Balance at December 31, 2013 (As Reported) | 45,800,418 | $ | 46 | $ | 624,256 | $ | 1,390,732 | $ | (48,764 | ) | $ | 1,966,270 | $ | 1,113,058 | $ | 3,079,328 | |||||||||||||||
Cumulative effective of adopting ASU 2014-01 (1) | — | — | — | (4,635 | ) | — | (4,635 | ) | — | (4,635 | ) | ||||||||||||||||||||
Balance at December 31, 2013 (As Revised) | 45,800,418 | $ | 46 | $ | 624,256 | $ | 1,386,097 | $ | (48,764 | ) | $ | 1,961,635 | $ | 1,113,058 | $ | 3,074,693 | |||||||||||||||
Common stock issued under employee benefit plans, net of restricted stock cancellations | 379,026 | — | 8,127 | — | — | 8,127 | — | 8,127 | |||||||||||||||||||||||
Common stock issued under ESOP | 30,762 | — | 3,890 | — | — | 3,890 | — | 3,890 | |||||||||||||||||||||||
Income tax benefit from stock options exercised, vesting of restricted stock and other | — | — | 6,164 | — | — | 6,164 | — | 6,164 | |||||||||||||||||||||||
Net income (1) | — | — | — | 141,903 | — | 141,903 | 142,808 | 284,711 | |||||||||||||||||||||||
Capital calls and distributions, net | — | — | — | — | — | — | 6,419 | 6,419 | |||||||||||||||||||||||
Net change in unrealized gains and losses on available-for-sale securities, net of tax | — | — | — | — | 76,176 | 76,176 | — | 76,176 | |||||||||||||||||||||||
Cumulative-effect for unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax | — | — | — | — | 22,522 | 22,522 | — | 22,522 | |||||||||||||||||||||||
Amortization of unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax | — | — | — | — | (625 | ) | (625 | ) | — | (625 | ) | ||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | — | — | 967 | 967 | — | 967 | |||||||||||||||||||||||
Common stock issued in public offering | 4,485,000 | 5 | 434,861 | — | — | 434,866 | — | 434,866 | |||||||||||||||||||||||
Share-based compensation expense | — | — | 15,284 | — | — | 15,284 | $ | — | 15,284 | ||||||||||||||||||||||
Balance at June 30, 2014 (1) | 50,695,206 | $ | 51 | $ | 1,092,582 | $ | 1,528,000 | $ | 50,276 | $ | 2,670,909 | $ | 1,262,285 | $ | 3,933,194 | ||||||||||||||||
Balance at December 31, 2014 (1) | 50,924,925 | $ | 51 | $ | 1,120,350 | $ | 1,649,967 | $ | 42,704 | $ | 2,813,072 | $ | 1,238,662 | $ | 4,051,734 | ||||||||||||||||
Common stock issued under employee benefit plans, net of restricted stock cancellations | 509,146 | — | 13,582 | — | — | 13,582 | — | 13,582 | |||||||||||||||||||||||
Common stock issued under ESOP | 27,425 | — | 3,512 | — | — | 3,512 | — | 3,512 | |||||||||||||||||||||||
Income tax benefit from stock options exercised, vesting of restricted stock and other | — | — | 10,157 | — | — | 10,157 | — | 10,157 | |||||||||||||||||||||||
Deconsolidation of noncontrolling interest | — | — | — | — | — | — | (1,069,437 | ) | (1,069,437 | ) | |||||||||||||||||||||
Net income | — | — | — | 174,659 | — | 174,659 | 22,190 | 196,849 | |||||||||||||||||||||||
Capital calls and distributions, net | — | — | — | — | — | — | (53,045 | ) | (53,045 | ) | |||||||||||||||||||||
Net change in unrealized gains and losses on available-for-sale securities, net of tax | — | — | — | — | 22,910 | 22,910 | — | 22,910 | |||||||||||||||||||||||
Amortization of unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax | — | — | — | — | (3,246 | ) | (3,246 | ) | — | (3,246 | ) | ||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | — | — | 1,549 | 1,549 | — | 1,549 | |||||||||||||||||||||||
Share-based compensation expense | — | — | 14,907 | — | — | 14,907 | — | 14,907 | |||||||||||||||||||||||
Balance at June 30, 2015 | 51,461,496 | $ | 51 | $ | 1,162,508 | $ | 1,824,626 | $ | 63,917 | $ | 3,051,102 | $ | 138,370 | $ | 3,189,472 |
(1) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
Six months ended June 30, | ||||||||
(Dollars in thousands) | 2015 | 2014 | ||||||
Cash flows from operating activities: | ||||||||
Net income before noncontrolling interests (1) | $ | 196,849 | $ | 284,711 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Provision for loan losses | 32,965 | 2,441 | ||||||
(Reduction of) provision for unfunded credit commitments | (798 | ) | 3,308 | |||||
Changes in fair values of derivatives, net | (33,030 | ) | 14,566 | |||||
Gains on investment securities, net | (58,238 | ) | (166,592 | ) | ||||
Depreciation and amortization (1) | 19,753 | 19,181 | ||||||
Amortization of premiums and discounts on investment securities, net | 9,662 | 14,419 | ||||||
Amortization of share-based compensation | 15,986 | 14,765 | ||||||
Amortization of deferred loan fees | (43,194 | ) | (39,071 | ) | ||||
Pre-tax net gain on SVBIF sale transaction | (1,287 | ) | — | |||||
Deferred income tax benefit | 4,283 | 5,173 | ||||||
Changes in other assets and liabilities: | ||||||||
Accrued interest receivable and payable, net | 2,087 | (11,326 | ) | |||||
Accounts receivable and payable, net | (4,912 | ) | (3,303 | ) | ||||
Income tax payable and receivable, net (1) | 4,881 | 5,176 | ||||||
Accrued compensation | (30,579 | ) | (48,848 | ) | ||||
Foreign exchange spot contracts, net | 46,517 | 119,577 | ||||||
Other, net | 44,489 | 3,912 | ||||||
Net cash provided by operating activities | 205,434 | 218,089 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of available-for-sale securities | (1,711,333 | ) | (6,045,269 | ) | ||||
Proceeds from sales of available-for-sale securities | 6,674 | 23,708 | ||||||
Proceeds from maturities and pay downs of available-for-sale securities | 791,954 | 1,050,927 | ||||||
Purchases of held-to-maturity securities | (1,032,637 | ) | (120,426 | ) | ||||
Proceeds from maturities and pay downs of held-to-maturity securities | 734,606 | 74,236 | ||||||
Purchases of non-marketable and other securities (cost and equity method accounting) | (12,875 | ) | (30,354 | ) | ||||
Proceeds from sales and distributions of non-marketable and other securities (cost and equity method accounting) | 66,807 | 38,265 | ||||||
Purchases of non-marketable and other securities (fair value accounting) | (3,374 | ) | (126,907 | ) | ||||
Proceeds from sales and distributions of non-marketable and other securities (fair value accounting) | 67,929 | 146,509 | ||||||
Net decrease (increase) in loans | 146,753 | (440,780 | ) | |||||
Proceeds from recoveries of charged-off loans | 4,541 | 2,933 | ||||||
Effect of deconsolidation of noncontrolling interest | 15,995 | — | ||||||
Purchases of premises and equipment | (24,539 | ) | (18,744 | ) | ||||
Net proceeds from SVBIF sale transaction (2) | 39,284 | — | ||||||
Net cash used for investing activities | (910,215 | ) | (5,445,902 | ) | ||||
Cash flows from financing activities: | ||||||||
Net increase in deposits | 1,203,927 | 5,879,568 | ||||||
Decrease in short-term borrowings | (5,244 | ) | (170 | ) | ||||
Net (distributions to) capital contributions from noncontrolling interests | (53,045 | ) | 6,419 | |||||
Tax benefit from stock exercises | 10,157 | 6,164 | ||||||
Proceeds from issuance of common stock, ESPP, and ESOP | 17,091 | 12,018 | ||||||
Net proceeds from public equity offering | — | 434,866 | ||||||
Proceeds from issuance of 3.50% Senior Notes | 346,431 | — | ||||||
Net cash provided by financing activities | 1,519,317 | 6,338,865 | ||||||
Net increase in cash and cash equivalents | 814,536 | 1,111,052 | ||||||
Cash and cash equivalents at beginning of period (1) (2) | 1,811,014 | 1,538,779 | ||||||
Cash and cash equivalents at end of period (1) | $ | 2,625,550 | $ | 2,649,831 | ||||
Supplemental disclosures: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 24,848 | $ | 17,535 | ||||
Income taxes | 93,439 | 75,057 | ||||||
Noncash items during the period: | ||||||||
Changes in unrealized gains and losses on available-for-sale securities, net of tax | $ | 22,910 | $ | 76,176 | ||||
Distributions of stock from investments | 23,806 | 11,080 | ||||||
Transfers from available-for-sale securities to held-to-maturity | — | 5,418,572 |
(1) | Cash flows for the six months ended June 30, 2015 were revised to reflect the adoption of ASU 2015-02 as of January 1, 2015 and cash flows for the six months ended June 30, 2014 were revised to reflect the retrospective application of our adoption of ASU 2014-01. |
(2) | Cash and cash equivalents at December 31, 2014 included $15.0 million recognized in assets held-for-sale in conjunction with the SVBIF Sale Transaction. On April 13, 2015 we received net proceeds of $39.3 million consisting of the sales price of $48.6 million less $9.3 million of cash and cash equivalents held by SVBIF that were sold. |
1. | Basis of Presentation |
2. | Stockholders’ Equity and EPS |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
(Dollars in thousands) | Income Statement Location | 2015 | 2014 | 2015 | 2014 | |||||||||||||
Reclassification adjustment for (gains) losses included in net income | Gains (losses) on investment securities, net | $ | (141 | ) | $ | 16,480 | $ | (2,737 | ) | $ | 16,421 | |||||||
Related tax expense (benefit) | Income tax expense | 57 | (6,653 | ) | 1,105 | (6,630 | ) | |||||||||||
Total reclassification adjustment for (gains) losses included in net income, net of tax | $ | (84 | ) | $ | 9,827 | $ | (1,632 | ) | $ | 9,791 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars and shares in thousands, except per share amounts) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Numerator: | ||||||||||||||||
Net income available to common stockholders (1) | $ | 86,143 | $ | 50,953 | $ | 174,659 | $ | 141,903 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding-basic | 51,268 | 48,168 | 51,139 | 47,025 | ||||||||||||
Weighted average effect of dilutive securities: | ||||||||||||||||
Stock options and ESPP | 410 | 569 | 420 | 601 | ||||||||||||
Restricted stock units | 198 | 308 | 229 | 361 | ||||||||||||
Denominator for diluted calculation | 51,876 | 49,045 | 51,788 | 47,987 | ||||||||||||
Earnings per common share: | ||||||||||||||||
Basic (1) | $ | 1.68 | $ | 1.06 | $ | 3.42 | $ | 3.02 | ||||||||
Diluted | $ | 1.66 | $ | 1.04 | $ | 3.37 | $ | 2.96 |
(1) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
Three months ended June 30, | Six months ended June 30, | |||||||||||
(Shares in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||
Stock options | 99 | 167 | 146 | 90 | ||||||||
Restricted stock units | — | 2 | — | 1 | ||||||||
Total | 99 | 169 | 146 | 91 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Share-based compensation expense | $ | 8,215 | $ | 7,687 | $ | 15,986 | $ | 14,765 | ||||||||
Income tax benefit related to share-based compensation expense | (2,692 | ) | (2,515 | ) | (5,330 | ) | (4,675 | ) |
(Dollars in thousands) | Unrecognized Expense | Average Expected Recognition Period - in Years | ||||
Stock options | $ | 14,464 | 2.63 | |||
Restricted stock units | 46,877 | 2.81 | ||||
Total unrecognized share-based compensation expense | $ | 61,341 |
Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value of In-The- Money Options | ||||||||||
Outstanding at December 31, 2014 | 1,394,888 | $ | 66.03 | ||||||||||
Granted | 122,120 | 129.30 | |||||||||||
Exercised | (286,282 | ) | 51.34 | ||||||||||
Forfeited | (17,383 | ) | 86.09 | ||||||||||
Expired | (1,520 | ) | 48.76 | ||||||||||
Outstanding at June 30, 2015 | 1,211,823 | 75.61 | 4.22 | $ | 82,851,473 | ||||||||
Vested and expected to vest at June 30, 2015 | 1,168,962 | 74.62 | 4.17 | 81,084,324 | |||||||||
Exercisable at June 30, 2015 | 678,385 | 59.89 | 3.23 | 57,044,065 |
Shares | Weighted Average Grant Date Fair Value | ||||||
Nonvested at December 31, 2014 | 614,666 | $ | 79.92 | ||||
Granted | 230,120 | 129.15 | |||||
Vested | (208,257 | ) | 73.94 | ||||
Forfeited | (15,638 | ) | 85.25 | ||||
Nonvested at June 30, 2015 | 620,891 | 100.04 |
4. | Variable Interest Entities |
(Dollars in thousands) | Consolidated VIEs | Unconsolidated VIEs (1) | Maximum Exposure to Loss in Unconsolidated VIEs | |||||||||
June 30, 2015: | ||||||||||||
Assets: | ||||||||||||
Cash and cash equivalents | $ | 22,203 | $ | — | $ | — | ||||||
Non-marketable and other securities (2) | 200,695 | 340,972 | 340,972 | |||||||||
Accrued interest receivable and other assets | 659 | — | — | |||||||||
Total assets | $ | 223,557 | $ | 340,972 | $ | 340,972 | ||||||
Liabilities: | ||||||||||||
Other liabilities | 282 | — | — | |||||||||
Accrued expenses and other liabilities (2) | — | 63,637 | — | |||||||||
Total liabilities | $ | 282 | $ | 63,637 | $ | — |
(1) | During the second quarter of 2015 we adopted ASU 2015-02 and certain previously consolidated VIEs are no longer included in our Consolidated Balance Sheet. We applied the accounting guidance as of the beginning of the fiscal year of adoption, January 1, 2015. Upon adoption, we deconsolidated 16 entities, which reduced our total assets and total equity (which includes total SVBFG stockholders' equity plus noncontrolling interests) by $1.1 billion and $1.2 billion, respectively, primarily as a result of the reduction of our non-marketable and other securities and noncontrolling interests, respectively. SVB Financial continues to consolidate its interest in five SVB Capital funds that meet the new consolidated criteria. |
(2) | Included in our non-marketable and other securities portfolio are investments in qualified affordable housing projects of $122.5 million and related unfunded commitments of $63.6 million. |
5. | Cash and Cash Equivalents |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | ||||||
Cash and due from banks (1) | $ | 2,281,816 | $ | 1,694,329 | ||||
Securities purchased under agreements to resell (2) | 338,612 | 95,611 | ||||||
Other short-term investment securities | 5,122 | 6,122 | ||||||
Total cash and cash equivalents | $ | 2,625,550 | $ | 1,796,062 |
(1) | At June 30, 2015 and December 31, 2014, $1.4 billion and $861 million, respectively, of our cash and due from banks was deposited at the Federal Reserve Bank and was earning interest at the Federal Funds target rate, and interest-earning deposits in other financial institutions were $557 million and $440 million, respectively. |
(2) | At June 30, 2015 and December 31, 2014, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fair values of $345 million and $98 million, respectively. None of these securities received as collateral were sold or pledged as of June 30, 2015 or December 31, 2014. |
6. | Investment Securities |
June 30, 2015 | ||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Carrying Value | ||||||||||||
Available-for-sale securities, at fair value: | ||||||||||||||||
U.S. treasury securities | $ | 8,952,703 | $ | 54,705 | $ | (5,442 | ) | $ | 9,001,966 | |||||||
U.S. agency debentures | 3,127,635 | 31,285 | (3,967 | ) | 3,154,953 | |||||||||||
Residential mortgage-backed securities: | ||||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 1,641,311 | 11,995 | (10,713 | ) | 1,642,593 | |||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 687,418 | 4,892 | (2 | ) | 692,308 | |||||||||||
Equity securities | 5,152 | 165 | (1,378 | ) | 3,939 | |||||||||||
Total available-for-sale securities | $ | 14,414,219 | $ | 103,042 | $ | (21,502 | ) | $ | 14,495,759 |
December 31, 2014 | ||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Carrying Value | ||||||||||||
Available-for-sale securities, at fair value: | ||||||||||||||||
U.S. treasury securities | $ | 7,289,135 | $ | 17,524 | $ | (4,386 | ) | $ | 7,302,273 | |||||||
U.S. agency debentures | 3,540,055 | 30,478 | (8,977 | ) | $ | 3,561,556 | ||||||||||
Residential mortgage-backed securities: | ||||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 1,884,450 | 14,851 | (14,458 | ) | 1,884,843 | |||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 779,103 | 5,372 | — | 784,475 | ||||||||||||
Equity securities | 5,202 | 2,628 | (322 | ) | 7,508 | |||||||||||
Total available-for-sale securities | $ | 13,497,945 | $ | 70,853 | $ | (28,143 | ) | $ | 13,540,655 |
June 30, 2015 | ||||||||||||||||||||||||
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 | ||||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||||||
U.S. treasury securities | $ | 552,547 | $ | (5,442 | ) | $ | — | $ | — | $ | 552,547 | $ | (5,442 | ) | ||||||||||
U.S. agency debentures | 511,643 | (3,967 | ) | — | — | 511,643 | (3,967 | ) | ||||||||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 375,854 | (1,213 | ) | 404,495 | (9,500 | ) | 780,349 | (10,713 | ) | |||||||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 933 | (2 | ) | — | — | 933 | (2 | ) | ||||||||||||||||
Equity securities | 2,719 | (1,378 | ) | — | — | 2,719 | (1,378 | ) | ||||||||||||||||
Total temporarily impaired securities: (1) | $ | 1,443,696 | $ | (12,002 | ) | $ | 404,495 | $ | (9,500 | ) | $ | 1,848,191 | $ | (21,502 | ) |
(1) | As of June 30, 2015, we identified a total of 94 investments that were in unrealized loss positions, of which 17 investments totaling $404.5 million with unrealized losses of $9.5 million have been in an impaired position for a period of time greater than 12 months. As of June 30, 2015, we do not intend to sell any impaired fixed income investment 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 June 30, 2015, 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. |
December 31, 2014 | ||||||||||||||||||||||||
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 | ||||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||||||
U.S. treasury securities | $ | 2,297,895 | $ | (4,386 | ) | $ | — | $ | — | $ | 2,297,895 | $ | (4,386 | ) | ||||||||||
U.S. agency debentures | 249,266 | (489 | ) | 507,385 | (8,488 | ) | 756,651 | (8,977 | ) | |||||||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 662,092 | (3,104 | ) | 453,801 | (11,354 | ) | 1,115,893 | (14,458 | ) | |||||||||||||||
Equity securities | 568 | (322 | ) | — | — | 568 | (322 | ) | ||||||||||||||||
Total temporarily impaired securities (1): | $ | 3,209,821 | $ | (8,301 | ) | $ | 961,186 | $ | (19,842 | ) | $ | 4,171,007 | $ | (28,143 | ) |
(1) | As of December 31, 2014, we identified a total of 115 investments that were in unrealized loss positions, of which 33 investments totaling $961.2 million with unrealized losses of $19.8 million have been in an impaired position for a period of time greater than 12 months. As of December 31, 2014, we do not intend to sell any impaired fixed income investment 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, 2014, 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. |
June 30, 2015 | |||||||||||||||||||||||||||||||||||
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 | $ | 9,001,966 | 1.07 | % | $ | 400,332 | 0.32 | % | $ | 7,866,030 | 1.14 | % | $ | 735,604 | 0.75 | % | $ | — | — | % | |||||||||||||||
U.S. agency debentures | 3,154,953 | 1.65 | 847,396 | 1.82 | 2,159,703 | 1.53 | 147,854 | 2.49 | — | — | |||||||||||||||||||||||||
Residential mortgage-backed securities: | |||||||||||||||||||||||||||||||||||
Agency-issued collateralized mortgage obligations - fixed rate | 1,642,593 | 1.98 | — | — | — | — | 598,642 | 2.55 | 1,043,951 | 1.65 | |||||||||||||||||||||||||
Agency-issued collateralized mortgage obligations - variable rate | 692,308 | 0.71 | — | — | — | — | — | — | 692,308 | 0.71 | |||||||||||||||||||||||||
Total | $ | 14,491,820 | 1.28 | $ | 1,247,728 | 1.34 | $ | 10,025,733 | 1.22 | $ | 1,482,100 | 1.65 | $ | 1,736,259 | 1.28 |
June 30, 2015 | ||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
Held-to-maturity securities, at cost: | ||||||||||||||||
U.S. agency debentures (1) | $ | 488,185 | $ | 7,049 | $ | (93 | ) | $ | 495,141 | |||||||
Residential mortgage-backed securities: | ||||||||||||||||
Agency-issued mortgage-backed securities | 2,590,151 | 2,280 | (4,829 | ) | 2,587,602 | |||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 3,527,554 | 6,194 | (18,767 | ) | 3,514,981 | |||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 117,109 | 285 | (1 | ) | 117,393 | |||||||||||
Agency-issued commercial mortgage-backed securities | 936,337 | 4,870 | (1,235 | ) | 939,972 | |||||||||||
Municipal bonds and notes | 76,555 | 8 | (841 | ) | 75,722 | |||||||||||
Total held-to-maturity securities | $ | 7,735,891 | $ | 20,686 | $ | (25,766 | ) | $ | 7,730,811 |
(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, 2014 | ||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
Held-to-maturity securities, at cost: | ||||||||||||||||
U.S. agency debentures (1) | $ | 405,899 | $ | 4,589 | $ | (38 | ) | $ | 410,450 | |||||||
Residential mortgage-backed securities: | ||||||||||||||||
Agency-issued mortgage-backed securities | 2,799,923 | 5,789 | (2,320 | ) | 2,803,392 | |||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 3,185,109 | 4,521 | (14,885 | ) | 3,174,745 | |||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 131,580 | 371 | — | 131,951 | ||||||||||||
Agency-issued commercial mortgage-backed securities | 814,589 | 1,026 | (3,800 | ) | 811,815 | |||||||||||
Municipal bonds and notes | 83,942 | 18 | (657 | ) | 83,303 | |||||||||||
Total held-to-maturity securities | $ | 7,421,042 | $ | 16,314 | $ | (21,700 | ) | $ | 7,415,656 |
(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. |
June 30, 2015 | ||||||||||||||||||||||||
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 | ||||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||||||
U.S. agency debentures | $ | 15,024 | $ | (93 | ) | $ | — | $ | — | $ | 15,024 | $ | (93 | ) | ||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||
Agency-issued mortgage-backed securities | 1,049,518 | (4,247 | ) | 21,869 | (582 | ) | 1,071,387 | (4,829 | ) | |||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 2,418,601 | (18,649 | ) | 10,441 | (118 | ) | 2,429,042 | (18,767 | ) | |||||||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 8,150 | (1 | ) | — | — | 8,150 | (1 | ) | ||||||||||||||||
Agency-issued commercial mortgage-backed securities | 218,784 | (671 | ) | 107,974 | (564 | ) | 326,758 | (1,235 | ) | |||||||||||||||
Municipal bonds and notes | 41,918 | (355 | ) | 27,070 | (486 | ) | 68,988 | (841 | ) | |||||||||||||||
Total temporarily impaired securities (1): | $ | 3,751,995 | $ | (24,016 | ) | $ | 167,354 | $ | (1,750 | ) | $ | 3,919,349 | $ | (25,766 | ) |
(1) | As of June 30, 2015, we identified a total of 280 investments that were in unrealized loss positions, 52 of which have been in an impaired position for a period of time greater than 12 months. As of June 30, 2015, we do not intend to sell any impaired fixed income investment 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 June 30, 2015, we deem all impairments to be temporary. Market valuations and impairment analyses on assets in the held-to-maturity securities portfolio are reviewed and monitored on a quarterly basis. |
December 31, 2014 | ||||||||||||||||||||||||
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 | $ | 48,335 | $ | (38 | ) | $ | — | $ | — | $ | 48,335 | $ | (38 | ) | ||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||
Agency-issued mortgage-backed securities | 999,230 | (2,320 | ) | — | — | 999,230 | (2,320 | ) | ||||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 1,682,348 | (9,705 | ) | 783,558 | (5,180 | ) | 2,465,906 | (14,885 | ) | |||||||||||||||
Agency-issued commercial mortgage-backed securities | 629,840 | (3,800 | ) | — | — | 629,840 | (3,800 | ) | ||||||||||||||||
Municipal bonds and notes | 79,141 | (657 | ) | — | — | 79,141 | (657 | ) | ||||||||||||||||
Total temporarily impaired securities (2): | $ | 3,438,894 | $ | (16,520 | ) | $ | 783,558 | $ | (5,180 | ) | $ | 4,222,452 | $ | (21,700 | ) |
(1) | Represents securities in an unrealized loss position for twelve months or longer in which the amortized cost basis was re-set for those securities re-designated from AFS to HTM effective June 1, 2014. |
(2) | As of December 31, 2014, we identified a total of 292 investments that were in unrealized loss positions, of which 26 investments totaling $783.6 million with unrealized losses of $5.2 million have been in an impaired position for a period of time greater than 12 months. As of December 31, 2014, we do not intend to sell any impaired fixed income investment 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, 2014, we deem all impairments to be temporary. Market valuations and impairment analyses on assets in the held-to-maturity securities portfolio are reviewed and monitored on a quarterly basis. |
June 30, 2015 | |||||||||||||||||||||||||||||||||||
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 | Weighted- Average Yield | Amortized Cost | Weighted- Average Yield | Amortized Cost | Weighted- Average Yield | Amortized Cost | Weighted- Average Yield | Amortized Cost | Weighted- Average Yield | |||||||||||||||||||||||||
U.S. agency debentures | $ | 488,185 | 2.68 | % | $ | — | — | % | $ | — | — | % | $ | 488,185 | 2.68 | % | $ | — | — | % | |||||||||||||||
Residential mortgage-backed securities: | |||||||||||||||||||||||||||||||||||
Agency-issued mortgage-backed securities | 2,590,151 | 2.43 | — | — | 40,936 | 2.38 | 733,723 | 2.21 | 1,815,492 | 2.52 | |||||||||||||||||||||||||
Agency-issued collateralized mortgage obligations - fixed rate | 3,527,554 | 1.65 | — | — | — | — | — | — | 3,527,554 | 1.65 | |||||||||||||||||||||||||
Agency-issued collateralized mortgage obligations - variable rate | 117,109 | 0.65 | — | — | — | — | — | — | 117,109 | 0.65 | |||||||||||||||||||||||||
Agency-issued commercial mortgage-backed securities | 936,337 | 2.16 | — | — | — | — | — | — | 936,337 | 2.16 | |||||||||||||||||||||||||
Municipal bonds and notes | 76,555 | 6.04 | 3,544 | 5.50 | 29,733 | 5.92 | 36,791 | 6.14 | 6,487 | 6.34 | |||||||||||||||||||||||||
Total | $ | 7,735,891 | 2.07 | $ | 3,544 | 5.50 | $ | 70,669 | 3.87 | $ | 1,258,699 | 2.50 | $ | 6,402,979 | 1.96 |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | ||||||
Non-marketable and other securities (1): | ||||||||
Non-marketable securities (fair value accounting): | ||||||||
Venture capital and private equity fund investments (2) | $ | 156,730 | $ | 1,130,882 | ||||
Other venture capital investments (3) | 3,390 | 71,204 | ||||||
Other securities (fair value accounting) (4) | 287 | 108,251 | ||||||
Non-marketable securities (equity method accounting) (5): | ||||||||
Venture capital and private equity fund investments | 78,574 | — | ||||||
Debt funds | 22,313 | 26,672 | ||||||
Other investments | 118,406 | 116,002 | ||||||
Non-marketable securities (cost method accounting): | ||||||||
Venture capital and private equity fund investments (6) | 127,073 | 140,551 | ||||||
Other investments (7) | 16,189 | 13,423 | ||||||
Investments in qualified affordable housing projects, net (7) | 122,544 | 121,155 | ||||||
Total non-marketable and other securities | $ | 645,506 | $ | 1,728,140 |
(1) | During the second quarter of 2015 we adopted new accounting guidance related to our consolidated variable interest entities (ASU 2015-02) under a modified retrospective approach. Periods prior to January 1, 2015 have not been revised. See Note 1— "Basis of Presentation” and Note 4— "Variable Interest Entities" of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details regarding our non-marketable and other securities. |
(2) | The following table shows the amounts of venture capital and private equity fund investments held by the following funds and our ownership percentage of each fund at June 30, 2015 and December 31, 2014 (fair value accounting): |
June 30, 2015 | December 31, 2014 | |||||||||||||
(Dollars in thousands) | Amount | Ownership % | Amount | Ownership % | ||||||||||
SVB Strategic Investors Fund, LP | $ | 23,283 | 12.6 | % | $ | 24,645 | 12.6 | % | ||||||
SVB Strategic Investors Fund II, LP (i) | — | — | 97,250 | 8.6 | ||||||||||
SVB Strategic Investors Fund III, LP (i) | — | — | 269,821 | 5.9 | ||||||||||
SVB Strategic Investors Fund IV, LP (i) | — | — | 291,291 | 5.0 | ||||||||||
Strategic Investors Fund V Funds (i) | — | — | 226,111 | Various | ||||||||||
Strategic Investors Fund VI Funds (i) | — | — | 89,605 | — | ||||||||||
SVB Capital Preferred Return Fund, LP | 62,901 | 20.0 | 62,110 | 20.0 | ||||||||||
SVB Capital—NT Growth Partners, LP | 63,728 | 33.0 | 61,973 | 33.0 | ||||||||||
SVB Capital Partners II, LP (i) | — | — | 302 | 5.1 | ||||||||||
Other private equity fund (ii) | 6,818 | 58.2 | 7,774 | 58.2 | ||||||||||
Total venture capital and private equity fund investments | $ | 156,730 | $ | 1,130,882 |
(i) | Funds were deconsolidated during the second quarter of 2015 upon adoption of ASU 2015-02 and are now reported under equity method accounting. Periods prior to January 1, 2015 have not been revised. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(ii) | At June 30, 2015, we had a direct ownership interest of 41.5 percent in other private equity funds and an indirect ownership interest of 12.6 percent through our ownership interest of SVB Capital—NT Growth Partners, LP and an indirect ownership interest of 4.1 percent through our ownership interest of SVB Capital Preferred Return Fund, LP. |
(3) | The following table shows the amounts of other venture capital investments held by the following funds and our ownership percentage of each fund at June 30, 2015 and December 31, 2014 (fair value accounting): |
June 30, 2015 | December 31, 2014 | |||||||||||||
(Dollars in thousands) | Amount | Ownership % | Amount | Ownership % | ||||||||||
Silicon Valley BancVentures, LP | $ | 3,390 | 10.7 | % | $ | 3,291 | 10.7 | % | ||||||
SVB Capital Partners II, LP (i) | — | — | 20,481 | 5.1 | ||||||||||
Capital Partners III, LP (i) | — | — | 41,055 | — | ||||||||||
SVB Capital Shanghai Yangpu Venture Capital Fund (i) | — | — | 6,377 | 6.8 | ||||||||||
Total other venture capital investments | $ | 3,390 | $ | 71,204 |
(i) | Funds were deconsolidated during the second quarter of 2015 upon adoption of ASU 2015-02 and are now reported under equity method accounting, within "Other venture capital and private equity fund investments". Periods prior to January 1, 2015 have not been revised. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(4) | Investments classified as other securities (fair value accounting) represent direct equity investments in public companies held by our consolidated funds. At December 31, 2014, the amount primarily included total unrealized gains in one public company, FireEye, Inc. ("FireEye") that were realized during the first quarter of 2015. Funds were deconsolidated during the second quarter of 2015 upon adoption of ASU 2015-02. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(5) | The following table shows the carrying value and our ownership percentage of each investment at June 30, 2015 and December 31, 2014 (equity method accounting): |
June 30, 2015 | December 31, 2014 | |||||||||||||
(Dollars in thousands) | Amount | Ownership % | Amount | Ownership % | ||||||||||
Venture capital and private equity fund investments: | ||||||||||||||
SVB Strategic Investors Fund II, LP (i) | $ | 11,516 | 8.6 | % | $ | — | — | % | ||||||
SVB Strategic Investors Fund III, LP (i) | 23,945 | 5.9 | — | — | ||||||||||
SVB Strategic Investors Fund IV, LP (i) | 25,465 | 5.0 | — | — | ||||||||||
Other venture capital and private equity fund investments (i) | 17,648 | Various | — | — | ||||||||||
Total venture capital and private equity fund investments | 78,574 | — | ||||||||||||
Debt funds: | ||||||||||||||
Gold Hill Capital 2008, LP (ii) | $ | 18,730 | 15.5 | $ | 21,294 | 15.5 | ||||||||
Other debt funds | 3,583 | Various | 5,378 | Various | ||||||||||
Total debt funds | 22,313 | 26,672 | ||||||||||||
Other investments: | ||||||||||||||
China Joint Venture investment | 79,740 | 50.0 | 79,569 | 50.0 | ||||||||||
Other investments | 38,666 | Various | 36,433 | Various | ||||||||||
Total other investments | $ | 118,406 | $ | 116,002 |
(i) | Represents funds previously consolidated and reported under fair value accounting in (2) above prior to adoption of ASU 2015-02 during the second quarter of 2015. Periods prior to January 1, 2015 have not been revised. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(ii) | At June 30, 2015, 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. |
(6) | Represents investments in 273 and 281 funds (primarily venture capital funds) at June 30, 2015 and December 31, 2014, 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. The carrying value, and estimated fair value, of these venture capital and private equity fund investments (cost method accounting) was $127 million and $236 million, respectively, as of June 30, 2015. The carrying value, and estimated fair value, |
(7) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | ||||||
Investments in qualified affordable housing projects, net | $ | 122,544 | $ | 121,155 | ||||
Accrued expenses and other liabilities | 63,637 | 65,921 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Tax credits and other tax benefits recognized | $ | 3,214 | $ | 3,113 | $ | 6,427 | $ | 6,225 | |||||||
Amortization expense included in provision for income taxes (i) | 2,741 | 2,347 | 5,538 | 4,725 |
(i) | All investments are amortized using the proportional amortization method and are included in provision for income taxes. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Gross gains on investment securities: | ||||||||||||||||
Available-for-sale securities, at fair value (1) | $ | 235 | $ | 224 | $ | 2,925 | $ | 597 | ||||||||
Non-marketable securities (fair value accounting): | ||||||||||||||||
Venture capital and private equity fund investments | 9,199 | 88,003 | 18,021 | 199,439 | ||||||||||||
Other venture capital investments | — | 1,973 | 183 | 4,555 | ||||||||||||
Other securities (fair value accounting) | 281 | 13,816 | 9,068 | 130,566 | ||||||||||||
Non-marketable securities (equity method accounting): | ||||||||||||||||
Venture capital and private equity fund investments | 6,624 | 630 | 14,456 | 1,009 | ||||||||||||
Debt funds | 183 | — | 1,688 | 3,039 | ||||||||||||
Other investments | — | 2,484 | 865 | 2,708 | ||||||||||||
Non-marketable securities (cost method accounting): | ||||||||||||||||
Venture capital and private equity fund investments | 10,644 | 1,762 | 15,477 | 5,065 | ||||||||||||
Other investments | 218 | 5,021 | 576 | 5,155 | ||||||||||||
Total gross gains on investment securities | 27,384 | 113,913 | 63,259 | 352,133 | ||||||||||||
Gross losses on investment securities: | ||||||||||||||||
Available-for-sale securities, at fair value (1) | (94 | ) | (16,704 | ) | (188 | ) | (17,017 | ) | ||||||||
Non-marketable securities (fair value accounting): | ||||||||||||||||
Venture capital and private equity fund investments | (599 | ) | (50,558 | ) | (1,547 | ) | (50,659 | ) | ||||||||
Other venture capital investments | — | (1,297 | ) | (52 | ) | (2,041 | ) | |||||||||
Other securities (fair value accounting) | (120 | ) | (101,014 | ) | (792 | ) | (113,787 | ) | ||||||||
Non-marketable securities (equity method accounting): | ||||||||||||||||
Venture capital and private equity fund investments | (409 | ) | (116 | ) | (437 | ) | (116 | ) | ||||||||
Debt funds | — | (356 | ) | (588 | ) | (393 | ) | |||||||||
Other investments | (1,010 | ) | (584 | ) | (1,010 | ) | (759 | ) | ||||||||
Non-marketable securities (cost method accounting): | ||||||||||||||||
Venture capital and private equity fund investments (2) | (174 | ) | (353 | ) | (398 | ) | (509 | ) | ||||||||
Other investments | (3 | ) | (251 | ) | (9 | ) | (260 | ) | ||||||||
Total gross losses on investment securities | (2,409 | ) | (171,233 | ) | (5,021 | ) | (185,541 | ) | ||||||||
Gains (losses) on investment securities, net | $ | 24,975 | $ | (57,320 | ) | $ | 58,238 | $ | 166,592 |
(1) | Includes realized gains (losses) on sales of available-for-sale equity securities that are recognized in the income statement. Unrealized gains (losses) on available-for-sale fixed income and equity securities are recognized in other comprehensive income. The cost basis of available-for-sale securities sold is determined on a specific identification basis. |
(2) | For the three months ended June 30, 2015 and 2014, includes OTTI losses of $0.2 million from the declines in value for 8 of the 273 investments and $0.3 million from the declines in value for 12 of the 282 investments, respectively. For the six months ended June 30, 2015 and 2014, includes OTTI losses of $0.3 million from the declines in value for 17 of the 273 investments and $0.4 million from the declines in value for 18 of the 282 investments, respectively. We concluded that any declines in value for the remaining investments were temporary, and as such, no OTTI was required to be recognized. |
7. | Loans and Allowance for Loan Losses |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | ||||||
Commercial loans: | ||||||||
Software and internet | $ | 4,980,553 | $ | 4,954,676 | ||||
Hardware | 1,048,848 | 1,131,006 | ||||||
Private equity/venture capital | 3,987,448 | 4,582,906 | ||||||
Life science & healthcare | 1,475,568 | 1,289,904 | ||||||
Premium wine | 190,997 | 187,568 | ||||||
Other | 254,084 | 234,551 | ||||||
Total commercial loans | 11,937,498 | 12,380,611 | ||||||
Real estate secured loans: | ||||||||
Premium wine (1) | 632,410 | 606,753 | ||||||
Consumer loans (2) | 1,340,316 | 1,118,115 | ||||||
Other | 33,279 | 39,651 | ||||||
Total real estate secured loans | 2,006,005 | 1,764,519 | ||||||
Construction loans | 91,207 | 78,626 | ||||||
Consumer loans | 226,720 | 160,520 | ||||||
Total loans, net of unearned income (3) | $ | 14,261,430 | $ | 14,384,276 |
(1) | Included in our premium wine portfolio are gross construction loans of $109 million and $112 million at June 30, 2015 and December 31, 2014, respectively. |
(2) | Consumer loans secured by real estate at June 30, 2015 and December 31, 2014 were comprised of the following: |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | ||||||
Loans for personal residence | $ | 1,124,238 | $ | 918,629 | ||||
Loans to eligible employees | 146,591 | 133,568 | ||||||
Home equity lines of credit | 69,487 | 65,918 | ||||||
Consumer loans secured by real estate | $ | 1,340,316 | $ | 1,118,115 |
(3) | Included within our total loan portfolio are credit card loans of $169 million and $131 million at June 30, 2015 and December 31, 2014, respectively. |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | ||||||
Commercial loans: | ||||||||
Software and internet | $ | 4,980,553 | $ | 4,954,676 | ||||
Hardware | 1,048,848 | 1,131,006 | ||||||
Private equity/venture capital | 3,987,448 | 4,582,906 | ||||||
Life science & healthcare | 1,475,568 | 1,289,904 | ||||||
Premium wine | 823,407 | 794,321 | ||||||
Other | 378,570 | 352,828 | ||||||
Total commercial loans | 12,694,394 | 13,105,641 | ||||||
Consumer loans: | ||||||||
Real estate secured loans | 1,340,316 | 1,118,115 | ||||||
Other consumer loans | 226,720 | 160,520 | ||||||
Total consumer loans | 1,567,036 | 1,278,635 | ||||||
Total loans, net of unearned income | $ | 14,261,430 | $ | 14,384,276 |
(Dollars in thousands) | 30 - 59 Days Past Due | 60 - 89 Days Past Due | Greater Than 90 Days Past Due | Total Past Due | Current | Loans Past Due 90 Days or More Still Accruing Interest | ||||||||||||||||||
June 30, 2015: | ||||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||
Software and internet | $ | 6,012 | $ | 7,593 | $ | 47 | $ | 13,652 | $ | 4,922,953 | $ | 47 | ||||||||||||
Hardware | 764 | 3,317 | — | 4,081 | 1,051,998 | — | ||||||||||||||||||
Private equity/venture capital | 18 | — | — | 18 | 4,023,814 | — | ||||||||||||||||||
Life science & healthcare | 379 | 652 | — | 1,031 | 1,485,591 | — | ||||||||||||||||||
Premium wine | 150 | 1,799 | — | 1,949 | 822,184 | — | ||||||||||||||||||
Other | — | 38 | — | 38 | 376,320 | — | ||||||||||||||||||
Total commercial loans | 7,323 | 13,399 | 47 | 20,769 | 12,682,860 | 47 | ||||||||||||||||||
Consumer loans: | ||||||||||||||||||||||||
Real estate secured loans | — | 279 | — | 279 | 1,339,655 | — | ||||||||||||||||||
Other consumer loans | 16 | — | — | 16 | 226,549 | — | ||||||||||||||||||
Total consumer loans | 16 | 279 | — | 295 | 1,566,204 | — | ||||||||||||||||||
Total gross loans excluding impaired loans | 7,339 | 13,678 | 47 | 21,064 | 14,249,064 | 47 | ||||||||||||||||||
Impaired loans | 27,525 | — | — | 27,525 | 73,277 | — | ||||||||||||||||||
Total gross loans | $ | 34,864 | $ | 13,678 | $ | 47 | $ | 48,589 | $ | 14,322,341 | $ | 47 | ||||||||||||
December 31, 2014: | ||||||||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||
Software and internet | $ | 10,989 | $ | 1,627 | $ | 52 | $ | 12,668 | $ | 4,950,291 | $ | 52 | ||||||||||||
Hardware | 13,424 | 126 | — | 13,550 | 1,124,423 | — | ||||||||||||||||||
Private equity/venture capital | 40,773 | — | — | 40,773 | 4,580,526 | — | ||||||||||||||||||
Life science & healthcare | 738 | 786 | — | 1,524 | 1,298,728 | — | ||||||||||||||||||
Premium wine | — | — | — | — | 795,345 | — | ||||||||||||||||||
Other | 178 | 3 | — | 181 | 354,939 | — | ||||||||||||||||||
Total commercial loans | 66,102 | 2,542 | 52 | 68,696 | 13,104,252 | 52 | ||||||||||||||||||
Consumer loans: | ||||||||||||||||||||||||
Real estate secured loans | 1,592 | 341 | 1,250 | 3,183 | 1,114,286 | 1,250 | ||||||||||||||||||
Other consumer loans | — | — | — | — | 160,212 | — | ||||||||||||||||||
Total consumer loans | 1,592 | 341 | 1,250 | 3,183 | 1,274,498 | 1,250 | ||||||||||||||||||
Total gross loans excluding impaired loans | 67,694 | 2,883 | 1,302 | 71,879 | 14,378,750 | 1,302 | ||||||||||||||||||
Impaired loans | 598 | 1,293 | 22,320 | 24,211 | 13,926 | — | ||||||||||||||||||
Total gross loans | $ | 68,292 | $ | 4,176 | $ | 23,622 | $ | 96,090 | $ | 14,392,676 | $ | 1,302 |
(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 | ||||||||||||
June 30, 2015: | ||||||||||||||||
Commercial loans: | ||||||||||||||||
Software and internet | $ | 89,471 | $ | — | $ | 89,471 | $ | 89,877 | ||||||||
Hardware | 2,357 | — | 2,357 | 2,385 | ||||||||||||
Private equity/venture capital | — | — | — | — | ||||||||||||
Life science & healthcare | 2,433 | — | 2,433 | 2,433 | ||||||||||||
Premium wine | — | 1,236 | 1,236 | 1,725 | ||||||||||||
Other | 5,066 | — | 5,066 | 5,195 | ||||||||||||
Total commercial loans | 99,327 | 1,236 | 100,563 | 101,615 | ||||||||||||
Consumer loans: | ||||||||||||||||
Real estate secured loans | — | 172 | 172 | 1,404 | ||||||||||||
Other consumer loans | 67 | — | 67 | 254 | ||||||||||||
Total consumer loans | 67 | 172 | 239 | 1,658 | ||||||||||||
Total | $ | 99,394 | $ | 1,408 | $ | 100,802 | $ | 103,273 | ||||||||
December 31, 2014: | ||||||||||||||||
Commercial loans: | ||||||||||||||||
Software and internet | $ | 33,287 | $ | — | $ | 33,287 | $ | 34,218 | ||||||||
Hardware | 1,403 | 1,118 | 2,521 | 2,535 | ||||||||||||
Private equity/venture capital | — | — | — | — | ||||||||||||
Life science & healthcare | 475 | — | 475 | 2,453 | ||||||||||||
Premium wine | — | 1,304 | 1,304 | 1,743 | ||||||||||||
Other | 233 | — | 233 | 233 | ||||||||||||
Total commercial loans | 35,398 | 2,422 | 37,820 | 41,182 | ||||||||||||
Consumer loans: | ||||||||||||||||
Real estate secured loans | — | 192 | 192 | 1,412 | ||||||||||||
Other consumer loans | 125 | — | 125 | 305 | ||||||||||||
Total consumer loans | 125 | 192 | 317 | 1,717 | ||||||||||||
Total | $ | 35,523 | $ | 2,614 | $ | 38,137 | $ | 42,899 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Average impaired loans: | ||||||||||||||||
Commercial loans: | ||||||||||||||||
Software and internet | $ | 52,747 | $ | 15,742 | $ | 43,236 | $ | 15,210 | ||||||||
Hardware | 1,393 | 6,860 | 1,518 | 11,440 | ||||||||||||
Life science & healthcare | 1,993 | 552 | 1,197 | 787 | ||||||||||||
Premium wine | 1,239 | 1,398 | 1,261 | 1,415 | ||||||||||||
Other | 5,222 | 1,699 | 3,681 | 1,738 | ||||||||||||
Total commercial loans | 62,594 | 26,251 | 50,893 | 30,590 | ||||||||||||
Consumer loans: | ||||||||||||||||
Real estate secured loans | 183 | 224 | 189 | 231 | ||||||||||||
Other consumer loans | 76 | 374 | 82 | 431 | ||||||||||||
Total consumer loans | 259 | 598 | 271 | 662 | ||||||||||||
Total average impaired loans | $ | 62,853 | $ | 26,849 | $ | 51,164 | $ | 31,252 |
Three months ended June 30, 2015 (dollars in thousands) | Beginning Balance March 31, 2015 | Charge-offs | Recoveries | Provision for (Reduction of) Loan Losses | Ending Balance June 30, 2015 | |||||||||||||||
Commercial loans: | ||||||||||||||||||||
Software and internet | $ | 82,092 | $ | (762 | ) | $ | 597 | $ | 24,801 | $ | 106,728 | |||||||||
Hardware | 21,258 | (839 | ) | 1,881 | (1,828 | ) | 20,472 | |||||||||||||
Private equity/venture capital | 30,837 | — | — | (1,561 | ) | 29,276 | ||||||||||||||
Life science & healthcare | 15,323 | (2,994 | ) | 45 | 4,859 | 17,233 | ||||||||||||||
Premium wine | 4,503 | — | 7 | (101 | ) | 4,409 | ||||||||||||||
Other | 6,151 | (139 | ) | 460 | (578 | ) | 5,894 | |||||||||||||
Total commercial loans | 160,164 | (4,734 | ) | 2,990 | 25,592 | 184,012 | ||||||||||||||
Consumer loans | 7,711 | — | — | 921 | 8,632 | |||||||||||||||
Total allowance for loan losses | $ | 167,875 | $ | (4,734 | ) | $ | 2,990 | $ | 26,513 | $ | 192,644 |
Three months ended June 30, 2014 (dollars in thousands) | Beginning Balance March 31, 2014 | Charge-offs | Recoveries | Provision for (Reduction of) Loan Losses | Ending Balance June 30, 2014 | |||||||||||||||
Commercial loans: | ||||||||||||||||||||
Software and internet | $ | 55,241 | $ | (4,015 | ) | $ | 119 | $ | 1,894 | $ | 53,239 | |||||||||
Hardware | 25,236 | (412 | ) | 1,182 | (1,226 | ) | 24,780 | |||||||||||||
Private equity/venture capital | 17,676 | — | — | 1,328 | 19,004 | |||||||||||||||
Life science & healthcare | 11,474 | (249 | ) | 190 | (818 | ) | 10,597 | |||||||||||||
Premium wine | 3,737 | — | 19 | (210 | ) | 3,546 | ||||||||||||||
Other | 4,041 | (1,706 | ) | 10 | 873 | 3,218 | ||||||||||||||
Total commercial loans | 117,405 | (6,382 | ) | 1,520 | 1,841 | 114,384 | ||||||||||||||
Consumer loans | 6,137 | — | 101 | 106 | 6,344 | |||||||||||||||
Total allowance for loan losses | $ | 123,542 | $ | (6,382 | ) | $ | 1,621 | $ | 1,947 | $ | 120,728 |
Six months ended June 30, 2015 (dollars in thousands) | Beginning Balance December 31, 2014 | Charge-offs | Recoveries | Provision for (Reduction of) Loan Losses | Ending Balance June 30, 2015 | |||||||||||||||
Commercial loans: | ||||||||||||||||||||
Software and internet | $ | 80,981 | $ | (2,165 | ) | $ | 1,044 | $ | 26,868 | $ | 106,728 | |||||||||
Hardware | 25,860 | (4,049 | ) | 2,809 | (4,148 | ) | 20,472 | |||||||||||||
Private equity/venture capital | 27,997 | — | — | 1,279 | 29,276 | |||||||||||||||
Life science & healthcare | 15,208 | (3,219 | ) | 79 | 5,165 | 17,233 | ||||||||||||||
Premium wine | 4,473 | — | 7 | (71 | ) | 4,409 | ||||||||||||||
Other | 3,253 | (788 | ) | 470 | 2,959 | 5,894 | ||||||||||||||
Total commercial loans | 157,772 | (10,221 | ) | 4,409 | 32,052 | 184,012 | ||||||||||||||
Consumer loans | 7,587 | — | 132 | 913 | 8,632 | |||||||||||||||
Total allowance for loan losses | $ | 165,359 | $ | (10,221 | ) | $ | 4,541 | $ | 32,965 | $ | 192,644 |
Six months ended June 30, 2014 (dollars in thousands) | Beginning Balance December 31, 2013 | Charge-offs | Recoveries | Provision for (Reduction of) Loan Losses | Ending Balance June 30, 2014 | |||||||||||||||
Commercial loans: | ||||||||||||||||||||
Software and internet | $ | 64,084 | $ | (12,025 | ) | $ | 233 | $ | 947 | $ | 53,239 | |||||||||
Hardware | 36,553 | (12,587 | ) | 1,957 | (1,143 | ) | 24,780 | |||||||||||||
Private equity/venture capital | 16,385 | — | — | 2,619 | 19,004 | |||||||||||||||
Life science & healthcare | 11,926 | (930 | ) | 288 | (687 | ) | 10,597 | |||||||||||||
Premium wine | 3,914 | — | 238 | (606 | ) | 3,546 | ||||||||||||||
Other | 3,680 | (1,990 | ) | 10 | 1,518 | 3,218 | ||||||||||||||
Total commercial loans | 136,542 | (27,532 | ) | 2,726 | 2,648 | 114,384 | ||||||||||||||
Consumer loans | 6,344 | — | 207 | (207 | ) | 6,344 | ||||||||||||||
Total allowance for loan losses | $ | 142,886 | $ | (27,532 | ) | $ | 2,933 | $ | 2,441 | $ | 120,728 |
June 30, 2015 | December 31, 2014 | |||||||||||||||||||||||||||||||
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 and internet | $ | 46,169 | $ | 89,471 | $ | 60,559 | $ | 4,891,082 | $ | 13,695 | $ | 33,287 | $ | 67,286 | $ | 4,921,389 | ||||||||||||||||
Hardware | 481 | 2,357 | 19,991 | 1,046,491 | 1,133 | 2,521 | 24,727 | 1,128,485 | ||||||||||||||||||||||||
Private equity/venture capital | — | — | 29,276 | 3,987,448 | — | — | 27,997 | 4,582,906 | ||||||||||||||||||||||||
Life science & healthcare | 1,616 | 2,433 | 15,617 | 1,473,135 | 121 | 475 | 15,087 | 1,289,429 | ||||||||||||||||||||||||
Premium wine | — | 1,236 | 4,409 | 822,171 | — | 1,304 | 4,473 | 793,017 | ||||||||||||||||||||||||
Other | 2,532 | 5,066 | 3,362 | 373,504 | 71 | 233 | 3,182 | 352,595 | ||||||||||||||||||||||||
Total commercial loans | 50,798 | 100,563 | 133,214 | 12,593,831 | 15,020 | 37,820 | 142,752 | 13,067,821 | ||||||||||||||||||||||||
Consumer loans | 67 | 239 | 8,565 | 1,566,797 | 31 | 317 | 7,556 | 1,278,318 | ||||||||||||||||||||||||
Total | $ | 50,865 | $ | 100,802 | $ | 141,779 | $ | 14,160,628 | $ | 15,051 | $ | 38,137 | $ | 150,308 | $ | 14,346,139 |
(Dollars in thousands) | Pass | Performing (Criticized) | Impaired | Total | ||||||||||||
June 30, 2015: | ||||||||||||||||
Commercial loans: | ||||||||||||||||
Software and internet | $ | 4,459,368 | $ | 477,237 | $ | 89,471 | $ | 5,026,076 | ||||||||
Hardware | 920,574 | 135,505 | 2,357 | 1,058,436 | ||||||||||||
Private equity/venture capital | 4,019,826 | 4,006 | — | 4,023,832 | ||||||||||||
Life science & healthcare | 1,375,174 | 111,448 | 2,433 | 1,489,055 | ||||||||||||
Premium wine | 806,346 | 17,787 | 1,236 | 825,369 | ||||||||||||
Other | 365,538 | 10,820 | 5,066 | 381,424 | ||||||||||||
Total commercial loans | 11,946,826 | 756,803 | 100,563 | 12,804,192 | ||||||||||||
Consumer loans: | ||||||||||||||||
Real estate secured loans | 1,329,834 | 10,100 | 172 | 1,340,106 | ||||||||||||
Other consumer loans | 222,397 | 4,168 | 67 | 226,632 | ||||||||||||
Total consumer loans | 1,552,231 | 14,268 | 239 | 1,566,738 | ||||||||||||
Total gross loans | $ | 13,499,057 | $ | 771,071 | $ | 100,802 | $ | 14,370,930 | ||||||||
December 31, 2014: | ||||||||||||||||
Commercial loans: | ||||||||||||||||
Software and internet | $ | 4,611,253 | $ | 351,706 | $ | 33,287 | $ | 4,996,246 | ||||||||
Hardware | 945,998 | 191,975 | 2,521 | 1,140,494 | ||||||||||||
Private equity/venture capital | 4,615,231 | 6,068 | — | 4,621,299 | ||||||||||||
Life science & healthcare | 1,165,266 | 134,986 | 475 | 1,300,727 | ||||||||||||
Premium wine | 774,962 | 20,383 | 1,304 | 796,649 | ||||||||||||
Other | 346,153 | 8,967 | 233 | 355,353 | ||||||||||||
Total commercial loans | 12,458,863 | 714,085 | 37,820 | 13,210,768 | ||||||||||||
Consumer loans: | ||||||||||||||||
Real estate secured loans | 1,112,396 | 5,073 | 192 | 1,117,661 | ||||||||||||
Other consumer loans | 158,162 | 2,050 | 125 | 160,337 | ||||||||||||
Total consumer loans | 1,270,558 | 7,123 | 317 | 1,277,998 | ||||||||||||
Total gross loans | $ | 13,729,421 | $ | 721,208 | $ | 38,137 | $ | 14,488,766 |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | ||||||
Loans modified in TDRs: | ||||||||
Commercial loans: | ||||||||
Software and internet | $ | 30,214 | $ | 3,784 | ||||
Hardware | 2,413 | 1,118 | ||||||
Premium wine | 1,236 | 1,891 | ||||||
Other | — | 233 | ||||||
Total commercial loans | 33,863 | 7,026 | ||||||
Consumer loans: | ||||||||
Other consumer loans | 33 | 125 | ||||||
Total consumer loans | 33 | 125 | ||||||
Total | $ | 33,896 | $ | 7,151 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Loans modified in TDRs during the period: | ||||||||||||||||
Commercial loans: | ||||||||||||||||
Software and internet | $ | 27,525 | $ | 455 | $ | 27,525 | $ | 12,816 | ||||||||
Hardware | — | — | 2,040 | — | ||||||||||||
Premium wine | — | — | — | 641 | ||||||||||||
Total loans modified in TDRs during the period (1) | $ | 27,525 | $ | 455 | $ | 29,565 | $ | 13,457 |
(1) | There were no partial charge-offs on loans classified as TDRs during the three and six months ended June 30, 2015 or June 31, 2014. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
TDRs modified within the previous 12 months that defaulted during the period: | ||||||||||||||||
Commercial loans: | ||||||||||||||||
Software and internet | $ | 27,525 | $ | 236 | $ | 27,525 | $ | 236 | ||||||||
Total TDRs modified within the previous 12 months that defaulted in the period | $ | 27,525 | $ | 236 | $ | 27,525 | $ | 236 |
8. | Disposal - Assets Held-for-Sale |
9. | Short-Term Borrowings and Long-Term Debt |
Carrying Value | ||||||||||||||
(Dollars in thousands) | Maturity | Principal value at June 30, 2015 | June 30, 2015 | December 31, 2014 | ||||||||||
Short-term borrowings: | ||||||||||||||
Other short-term borrowings | (1) | $ | 2,537 | $ | 2,537 | $ | 7,781 | |||||||
Total short-term borrowings | $ | 2,537 | $ | 7,781 | ||||||||||
Long-term debt: | ||||||||||||||
3.50% Senior Notes | January 29, 2025 | $ | 350,000 | $ | 349,716 | $ | — | |||||||
5.375% Senior Notes | September 15, 2020 | 350,000 | 348,554 | 348,436 | ||||||||||
6.05% Subordinated Notes (2) | June 1, 2017 | 45,964 | 49,426 | 50,162 | ||||||||||
7.0% Junior Subordinated Debentures | October 15, 2033 | 50,000 | 54,758 | 54,845 | ||||||||||
Total long-term debt | $ | 802,454 | $ | 453,443 |
(1) | Represents cash collateral received from certain counterparties in relation to market value exposures of derivative contracts in our favor. |
(2) | At June 30, 2015 and December 31, 2014, included in the carrying value of our 6.05% Subordinated Notes was an interest rate swap valued at $3.8 million and 4.6 million, respectively, related to hedge accounting associated with the notes. |
10. | Derivative Financial Instruments |
June 30, 2015 | December 31, 2014 | |||||||||||||||||||||||||||||||||
(Dollars in thousands) | Balance Sheet Location | Notional or Contractual Amount | Fair Value | Collateral (1) | Net Exposure (2) | Notional or Contractual Amount | Fair Value | Collateral (1) | Net Exposure (2) | |||||||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||||||||||
Interest rate risks: | ||||||||||||||||||||||||||||||||||
Interest rate swaps | Other assets | $ | 45,964 | $ | 3,828 | $ | — | $ | 3,828 | $ | 45,964 | $ | 4,609 | $ | 2,970 | $ | 1,639 | |||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||||||||||||
Currency exchange risks: | ||||||||||||||||||||||||||||||||||
Foreign exchange forwards | Other assets | 121,987 | 419 | — | 419 | 200,957 | 5,050 | 2,441 | 2,609 | |||||||||||||||||||||||||
Foreign exchange forwards | Other liabilities | 2,224 | (444 | ) | — | (444 | ) | 6,226 | (489 | ) | — | (489 | ) | |||||||||||||||||||||
Net exposure | (25 | ) | — | (25 | ) | 4,561 | 2,441 | 2,120 | ||||||||||||||||||||||||||
Other derivative instruments: | ||||||||||||||||||||||||||||||||||
Equity warrant assets | Other assets | 203,103 | 122,504 | — | 122,504 | 197,878 | 116,604 | — | 116,604 | |||||||||||||||||||||||||
Other derivatives: | ||||||||||||||||||||||||||||||||||
Client foreign exchange forwards | Other assets | 831,111 | 32,802 | 2,537 | 30,265 | 801,487 | 28,954 | 2,370 | 26,584 | |||||||||||||||||||||||||
Client foreign exchange forwards | Other liabilities | 716,529 | (29,819 | ) | — | (29,819 | ) | 774,355 | (27,647 | ) | — | (27,647 | ) | |||||||||||||||||||||
Client foreign currency options | Other assets | 41,917 | 765 | — | 765 | 34,926 | 227 | — | 227 | |||||||||||||||||||||||||
Client foreign currency options | Other liabilities | 41,917 | (765 | ) | — | (765 | ) | 34,926 | (227 | ) | — | (227 | ) | |||||||||||||||||||||
Client interest rate derivatives | Other assets | 370,799 | 2,087 | — | 2,087 | 387,410 | 2,546 | — | 2,546 | |||||||||||||||||||||||||
Client interest rate derivatives | Other liabilities | 370,799 | (2,247 | ) | — | (2,247 | ) | 387,410 | (2,748 | ) | — | (2,748 | ) | |||||||||||||||||||||
Net exposure | 2,823 | 2,537 | 286 | 1,105 | 2,370 | (1,265 | ) | |||||||||||||||||||||||||||
Net | $ | 129,130 | $ | 2,537 | $ | 126,593 | $ | 126,879 | $ | 7,781 | $ | 119,098 |
(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. |
(2) | Net exposure for contracts in a gain position reflects the replacement cost in the event of nonperformance by all such counterparties. The credit ratings of our institutional counterparties as of June 30, 2015 remain at investment grade or higher and there were no material changes in their credit ratings during the three and six months ended June 30, 2015. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
(Dollars in thousands) | Statement of income location | 2015 | 2014 | 2015 | 2014 | |||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||
Interest rate risks: | ||||||||||||||||||
Net cash benefit associated with interest rate swaps | Interest expense—borrowings | $ | 634 | $ | 638 | $ | 1,272 | $ | 1,277 | |||||||||
Changes in fair value of interest rate swaps | Net gains on derivative instruments | (11 | ) | (13 | ) | (14 | ) | (25 | ) | |||||||||
Net gains associated with interest rate risk derivatives | $ | 623 | $ | 625 | $ | 1,258 | $ | 1,252 | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||
Currency exchange risks: | ||||||||||||||||||
Gains (losses) on revaluations of foreign currency instruments | Other noninterest income | $ | 8,306 | $ | (685 | ) | $ | (11,853 | ) | $ | 293 | |||||||
(Losses) gains on internal foreign exchange forward contracts, net | Net gains on derivative instruments | (8,174 | ) | 538 | 11,844 | (491 | ) | |||||||||||
Net losses associated with currency risk | $ | 132 | $ | (147 | ) | $ | (9 | ) | $ | (198 | ) | |||||||
Other derivative instruments: | ||||||||||||||||||
Net gains on equity warrant assets | Net gains on derivative instruments | $ | 23,616 | $ | 12,329 | $ | 43,894 | $ | 37,702 | |||||||||
Gains on client foreign exchange forward contracts, net | Net gains on derivative instruments | $ | 787 | $ | 170 | $ | 280 | $ | 472 | |||||||||
Net losses on other derivatives (1) | Net gains on derivative instruments | $ | 99 | $ | (249 | ) | $ | 42 | $ | (716 | ) |
(1) | Primarily represents the change in fair value of loan conversion options. |
Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements | ||||||||||||||||||||||||
(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 | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
June 30, 2015 | ||||||||||||||||||||||||
Derivative Assets: | ||||||||||||||||||||||||
Interest rate swaps | $ | 3,828 | $ | — | $ | 3,828 | $ | (3,828 | ) | $ | — | $ | — | |||||||||||
Foreign exchange forwards | 33,221 | — | 33,221 | (21,778 | ) | (2,537 | ) | 8,906 | ||||||||||||||||
Foreign currency options | 861 | (96 | ) | 765 | (751 | ) | — | 14 | ||||||||||||||||
Client interest rate derivatives | 2,087 | — | 2,087 | (2,087 | ) | — | — | |||||||||||||||||
Total derivative assets: | 39,997 | (96 | ) | 39,901 | (28,444 | ) | (2,537 | ) | 8,920 | |||||||||||||||
Reverse repurchase, securities borrowing, and similar arrangements | 338,612 | — | 338,612 | (338,612 | ) | — | — | |||||||||||||||||
Total | $ | 378,609 | $ | (96 | ) | $ | 378,513 | $ | (367,056 | ) | $ | (2,537 | ) | $ | 8,920 | |||||||||
December 31, 2014 | ||||||||||||||||||||||||
Derivative Assets: | ||||||||||||||||||||||||
Interest rate swaps | $ | 4,609 | $ | — | $ | 4,609 | $ | (1,639 | ) | $ | (2,970 | ) | $ | — | ||||||||||
Foreign exchange forwards | 34,004 | — | 34,004 | (17,843 | ) | (4,811 | ) | 11,350 | ||||||||||||||||
Foreign currency options | 501 | (274 | ) | 227 | (144 | ) | — | 83 | ||||||||||||||||
Client interest rate derivatives | 2,546 | — | 2,546 | (2,546 | ) | — | — | |||||||||||||||||
Total derivative assets: | 41,660 | (274 | ) | 41,386 | (22,172 | ) | (7,781 | ) | 11,433 | |||||||||||||||
Reverse repurchase, securities borrowing, and similar arrangements | 95,611 | — | 95,611 | (95,611 | ) | — | — | |||||||||||||||||
Total | $ | 137,271 | $ | (274 | ) | $ | 136,997 | $ | (117,783 | ) | $ | (7,781 | ) | $ | 11,433 |
Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements | ||||||||||||||||||||||||
(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 | Financial Instruments | Cash Collateral Pledged | Net Amount | ||||||||||||||||||
June 30, 2015 | ||||||||||||||||||||||||
Derivative Liabilities: | ||||||||||||||||||||||||
Foreign exchange forwards | $ | 30,263 | $ | — | $ | 30,263 | $ | (13,705 | ) | $ | — | $ | 16,558 | |||||||||||
Foreign currency options | 861 | (96 | ) | 765 | (14 | ) | — | 751 | ||||||||||||||||
Client interest rate derivatives | 2,247 | — | 2,247 | (2,247 | ) | — | — | |||||||||||||||||
Total derivative liabilities: | 33,371 | (96 | ) | 33,275 | (15,966 | ) | — | 17,309 | ||||||||||||||||
Repurchase, securities lending, and similar arrangements | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 33,371 | $ | (96 | ) | $ | 33,275 | $ | (15,966 | ) | $ | — | $ | 17,309 | ||||||||||
December 31, 2014 | ||||||||||||||||||||||||
Derivative Liabilities: | ||||||||||||||||||||||||
Foreign exchange forwards | $ | 28,136 | $ | — | $ | 28,136 | $ | (16,808 | ) | $ | — | $ | 11,328 | |||||||||||
Foreign currency options | 501 | (274 | ) | 227 | (83 | ) | — | 144 | ||||||||||||||||
Client interest rate derivatives | 2,748 | — | 2,748 | (2,748 | ) | — | — | |||||||||||||||||
Total derivative liabilities: | 31,385 | (274 | ) | 31,111 | (19,639 | ) | — | 11,472 | ||||||||||||||||
Repurchase, securities lending, and similar arrangements | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 31,385 | $ | (274 | ) | $ | 31,111 | $ | (19,639 | ) | $ | — | $ | 11,472 |
11. | Other Noninterest Income and Other Noninterest Expense |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Fund management fees | $ | 3,861 | $ | 3,559 | $ | 7,583 | $ | 6,314 | ||||||||
Service-based fee income | 2,413 | 2,252 | 4,519 | 4,279 | ||||||||||||
Gains (losses) on revaluation of foreign currency instruments (1) | 8,306 | (685 | ) | (11,853 | ) | 293 | ||||||||||
Other (2) (3) | 4,336 | 3,636 | 10,989 | 9,076 | ||||||||||||
Total other noninterest income | $ | 18,916 | $ | 8,762 | $ | 11,238 | $ | 19,962 |
(1) | Represents the revaluation of foreign currency denominated financial instruments issued and held by us, primarily loans, deposits and cash. |
(2) | Includes dividends on FHLB/FRB stock, correspondent bank rebate income and other fee income. |
(3) | Amount for the six months ended June 30, 2015 has been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amount prior to January 1, 2015 has not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Lending and other client related processing costs | $ | 3,704 | $ | 2,586 | $ | 7,253 | $ | 4,945 | ||||||||
Telephone | 2,544 | 1,538 | 4,503 | 3,286 | ||||||||||||
Data processing services | 1,358 | 2,041 | 3,191 | 4,268 | ||||||||||||
Postage and supplies | 727 | 716 | 1,492 | 1,485 | ||||||||||||
Dues and publications | 697 | 636 | 1,282 | 1,133 | ||||||||||||
Other (1) | 5,279 | 3,108 | 10,110 | 4,670 | ||||||||||||
Total other noninterest expense (2) | $ | 14,309 | $ | 10,625 | $ | 27,831 | $ | 19,787 |
(1) | Amount for the six months ended June 30, 2015 has been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amount prior to January 1, 2015 has not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(2) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
12. | Segment Reporting |
• | 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 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, global treasury management, foreign exchange, global trade finance, and other services. It serves clients within the United States, 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 Private Equity Division provides banking products and services primarily to our private equity and venture capital clients. |
◦ | Our Wine practice provides banking products and services to our premium wine industry clients, including vineyard development loans. |
◦ | SVB Analytics provides equity valuation services to companies and private equity/venture capital firms. |
◦ | 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, as well as cash and wealth management services. |
• | SVB Capital is the venture capital investment arm of SVBFG, which focuses primarily on funds management. 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) and management fees. |
(Dollars in thousands) | Global Commercial Bank (1) | SVB Private Bank | SVB Capital (1) | Other Items (2) | Total | |||||||||||||||
Three months ended June 30, 2015 | ||||||||||||||||||||
Net interest income | $ | 203,945 | $ | 11,109 | $ | 1 | $ | 28,716 | $ | 243,771 | ||||||||||
Provision for loan losses | (25,592 | ) | (921 | ) | — | — | (26,513 | ) | ||||||||||||
Noninterest income | 66,031 | 595 | 19,909 | 39,752 | 126,287 | |||||||||||||||
Noninterest expense (3) | (143,459 | ) | (3,139 | ) | (3,704 | ) | (43,810 | ) | (194,112 | ) | ||||||||||
Income before income tax expense (4) | $ | 100,925 | $ | 7,644 | $ | 16,206 | $ | 24,658 | $ | 149,433 | ||||||||||
Total average loans, net of unearned income | $ | 12,824,661 | $ | 1,542,046 | $ | — | $ | (45,832 | ) | $ | 14,320,875 | |||||||||
Total average assets (5) | 37,544,170 | 2,216,622 | 330,016 | (642,785 | ) | 39,448,023 | ||||||||||||||
Total average deposits | 33,714,023 | 1,084,632 | — | 157,412 | 34,956,067 | |||||||||||||||
Three months ended June 30, 2014 | ||||||||||||||||||||
Net interest income | $ | 178,046 | $ | 9,293 | $ | 29 | $ | 17,597 | $ | 204,965 | ||||||||||
Provision for loan losses | (1,841 | ) | (106 | ) | — | — | (1,947 | ) | ||||||||||||
Noninterest income | 53,027 | 356 | (3,119 | ) | (36,054 | ) | 14,210 | |||||||||||||
Noninterest expense (3) | (121,827 | ) | (2,640 | ) | (3,144 | ) | (43,333 | ) | (170,944 | ) | ||||||||||
Income before income tax expense (4) | $ | 107,405 | $ | 6,903 | $ | (6,234 | ) | $ | (61,790 | ) | $ | 46,284 | ||||||||
Total average loans, net of unearned income | $ | 9,874,780 | $ | 1,119,503 | $ | — | $ | 86,319 | $ | 11,080,602 | ||||||||||
Total average assets (5) | 29,214,978 | 986,392 | 342,924 | 1,201,336 | 31,745,630 | |||||||||||||||
Total average deposits | 26,323,795 | 791,261 | — | 62,069 | 27,177,125 | |||||||||||||||
Six months ended June 30, 2015 | ||||||||||||||||||||
Net interest income | $ | 407,753 | $ | 20,832 | $ | 2 | $ | 54,109 | $ | 482,696 | ||||||||||
Provision for loan losses | (32,052 | ) | (913 | ) | — | — | (32,965 | ) | ||||||||||||
Noninterest income | 130,720 | 992 | 40,587 | 77,512 | 249,811 | |||||||||||||||
Noninterest expense (3) | (279,741 | ) | (5,886 | ) | (7,190 | ) | (91,836 | ) | (384,653 | ) | ||||||||||
Income before income tax expense (4) | $ | 226,680 | $ | 15,025 | $ | 33,399 | $ | 39,785 | $ | 314,889 | ||||||||||
Total average loans, net of unearned income | $ | 12,777,409 | $ | 1,458,581 | $ | — | $ | (50,657 | ) | $ | 14,185,333 | |||||||||
Total average assets (5) | 36,813,121 | 2,069,903 | 335,690 | (378,506 | ) | 38,840,208 | ||||||||||||||
Total average deposits | 33,096,854 | 1,167,823 | — | 147,496 | 34,412,173 | |||||||||||||||
Six months ended June 30, 2014 | ||||||||||||||||||||
Net interest income | $ | 353,349 | $ | 16,185 | $ | 43 | $ | 31,716 | $ | 401,293 | ||||||||||
(Provision for) reduction of loan losses | (2,648 | ) | 207 | — | — | (2,441 | ) | |||||||||||||
Noninterest income | 111,662 | 630 | 34,553 | 177,590 | 324,435 | |||||||||||||||
Noninterest expense (3) | (242,533 | ) | (5,135 | ) | (5,779 | ) | (87,905 | ) | (341,352 | ) | ||||||||||
Income before income tax expense (4) | $ | 219,830 | $ | 11,887 | $ | 28,817 | $ | 121,401 | $ | 381,935 | ||||||||||
Total average loans, net of unearned income | $ | 9,776,913 | $ | 1,084,894 | $ | — | $ | 63,200 | $ | 10,925,007 | ||||||||||
Total average assets (5) | 27,403,905 | 975,740 | 342,451 | 1,045,525 | 29,767,621 | |||||||||||||||
Total average deposits | 24,610,326 | 768,300 | — | 57,831 | 25,436,457 |
(1) | Global Commercial Bank’s and SVB Capital’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. Noninterest income is primarily attributable to noncontrolling interests and gains on equity warrant assets. Noninterest expense primarily consists 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 $4.6 million and $5.1 million for the three months June 30, 2015 and 2014, respectively, and $9.7 million and $10.0 million for the six months ended June 30, 2015 and 2014, 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 which contributes to the negative balances reported in "Other Items" to reconcile the results to the consolidated financial statements prepared in conformity with GAAP. |
13. | Off-Balance Sheet Arrangements, Guarantees and Other Commitments |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | ||||||
Loan commitments available for funding: (1) | ||||||||
Fixed interest rate commitments | $ | 1,618,035 | $ | 1,591,408 | ||||
Variable interest rate commitments | 12,873,716 | 11,860,039 | ||||||
Total loan commitments available for funding | 14,491,751 | 13,451,447 | ||||||
Commercial and standby letters of credit (2) | 1,316,458 | 1,254,338 | ||||||
Total unfunded credit commitments | $ | 15,808,209 | $ | 14,705,785 | ||||
Commitments unavailable for funding (3) | $ | 2,269,117 | $ | 1,868,489 | ||||
Maximum lending limits for accounts receivable factoring arrangements (4) | 1,029,131 | 1,044,548 | ||||||
Reserve for unfunded credit commitments (5) | 35,617 | 36,419 |
(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) | We extend credit under accounts receivable factoring arrangements when our clients’ sales invoices are deemed creditworthy under existing underwriting practices. |
(5) | Our reserve for unfunded credit commitments includes an allowance for both our unfunded loan commitments and our letters of credit. |
(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 | $ | 1,176,681 | $ | 68,629 | $ | 1,245,310 | $ | 1,245,310 | ||||||||
Performance standby letters of credit | 47,756 | 11,790 | 59,546 | 59,546 | ||||||||||||
Commercial letters of credit | 11,602 | — | 11,602 | 11,602 | ||||||||||||
Total | $ | 1,236,039 | $ | 80,419 | $ | 1,316,458 | $ | 1,316,458 |
Our Ownership in Venture Capital and Private Equity Funds (Dollars in thousands) | SVBFG Capital Commitments | SVBFG Unfunded Commitments | SVBFG Ownership of each Fund (4) | ||||||||
Silicon Valley BancVentures, LP | $ | 6,000 | $ | 270 | 10.7 | % | |||||
SVB Capital Partners II, LP (1) | 1,200 | 162 | 5.1 | ||||||||
SVB Capital Shanghai Yangpu Venture Capital Fund | 935 | — | 6.8 | ||||||||
SVB Strategic Investors Fund, LP | 15,300 | 688 | 12.6 | ||||||||
SVB Strategic Investors Fund II, LP | 15,000 | 1,050 | 8.6 | ||||||||
SVB Strategic Investors Fund III, LP | 15,000 | 1,275 | 5.9 | ||||||||
SVB Strategic Investors Fund IV, LP | 12,239 | 2,325 | 5.0 | ||||||||
Strategic Investors Fund V Funds | 515 | 178 | Various | ||||||||
SVB Capital Preferred Return Fund, LP | 12,688 | — | 20.0 | ||||||||
SVB Capital—NT Growth Partners, LP | 24,670 | 1,340 | 33.0 | ||||||||
Other private equity fund (2) | 9,338 | — | 58.2 | ||||||||
Debt funds | 73,807 | — | Various | ||||||||
Other fund investments (3) | 301,011 | 18,439 | Various | ||||||||
Total | $ | 487,703 | $ | 25,727 |
(1) | Our ownership includes direct ownership of 1.3 percent and indirect ownership interest of 3.8 percent through our investment in SVB Strategic Investors Fund II, LP. |
(2) | Our ownership includes direct ownership 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. |
(3) | Represents commitments to 276 funds (primarily venture capital funds) where our ownership interest is generally less than 5 percent of the voting interests of each such fund. |
(4) | 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 Item 1 of Part I of our 2014 Form 10-K. |
Limited Partnership (Dollars in thousands) | Unfunded Commitments | |||
SVB Strategic Investors Fund, LP | $ | 2,250 | ||
SVB Capital Preferred Return Fund, LP | 4,673 | |||
SVB Capital—NT Growth Partners, LP | 3,949 | |||
Other private equity fund | 77 | |||
Total | $ | 10,949 |
14. | Income Taxes |
15. | Fair Value of Financial Instruments |
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Balance at June 30, 2015 | ||||||||||||
Assets | ||||||||||||||||
Available-for-sale securities: | ||||||||||||||||
U.S. treasury securities | $ | 9,001,966 | $ | — | $ | — | $ | 9,001,966 | ||||||||
U.S. agency debentures | — | 3,154,953 | — | 3,154,953 | ||||||||||||
Residential mortgage-backed securities: | ||||||||||||||||
Agency-issued collateralized mortgage obligations - fixed rate | — | 1,642,593 | — | 1,642,593 | ||||||||||||
Agency-issued collateralized mortgage obligations - variable rate | — | 692,308 | — | 692,308 | ||||||||||||
Equity securities | 1,753 | 2,186 | — | 3,939 | ||||||||||||
Total available-for-sale securities | 9,003,719 | 5,492,040 | — | 14,495,759 | ||||||||||||
Non-marketable and other securities (fair value accounting): | ||||||||||||||||
Non-marketable securities: | ||||||||||||||||
Venture capital and private equity fund investments measured at net asset value (1) | — | — | — | 156,730 | ||||||||||||
Other venture capital investments | — | — | 3,390 | 3,390 | ||||||||||||
Other securities | 287 | — | — | 287 | ||||||||||||
Total non-marketable and other securities (fair value accounting) | 287 | — | 3,390 | 160,407 | ||||||||||||
Other assets: | ||||||||||||||||
Interest rate swaps | — | 3,828 | — | 3,828 | ||||||||||||
Foreign exchange forward and option contracts | — | 33,986 | — | 33,986 | ||||||||||||
Equity warrant assets | — | 2,467 | 120,037 | 122,504 | ||||||||||||
Client interest rate derivatives | — | 2,087 | — | 2,087 | ||||||||||||
Total assets (2) | $ | 9,004,006 | $ | 5,534,408 | $ | 123,427 | $ | 14,818,571 | ||||||||
Liabilities | ||||||||||||||||
Foreign exchange forward and option contracts | $ | — | $ | 31,028 | $ | — | $ | 31,028 | ||||||||
Client interest rate derivatives | — | 2,247 | — | 2,247 | ||||||||||||
Total liabilities | $ | — | $ | 33,275 | $ | — | $ | 33,275 |
(1) | In accordance with the accounting standard (ASU 2015-07, Fair Value Measurement (Topic 820)), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified |
(2) | Included in Level 1 and Level 3 assets are $0.2 million and $3 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests. |
(Dollars in thousands) | Level 1 | Level 2 | Level 3 | Balance at December 31, 2014 | ||||||||||||
Assets | ||||||||||||||||
Available-for-sale securities: | ||||||||||||||||
U.S. treasury securities | $ | 7,302,273 | $ | — | $ | — | $ | 7,302,273 | ||||||||
U.S. agency debentures | — | 3,561,556 | — | 3,561,556 | ||||||||||||
Residential mortgage-backed securities: | ||||||||||||||||
Agency-issued collateralized mortgage obligations - fixed rate | — | 1,884,843 | — | 1,884,843 | ||||||||||||
Agency-issued collateralized mortgage obligations - variable rate | — | 784,475 | — | 784,475 | ||||||||||||
Equity securities | 4,290 | 3,218 | — | 7,508 | ||||||||||||
Total available-for-sale securities | 7,306,563 | 6,234,092 | — | 13,540,655 | ||||||||||||
Non-marketable and other securities (fair value accounting): | ||||||||||||||||
Non-marketable securities: | ||||||||||||||||
Venture capital and private equity fund investments measured at net asset value (1) | — | — | — | 1,130,882 | ||||||||||||
Other venture capital investments | — | — | 71,204 | 71,204 | ||||||||||||
Other securities | 108,251 | — | — | 108,251 | ||||||||||||
Total non-marketable and other securities (fair value accounting) | 108,251 | — | 71,204 | 1,310,337 | ||||||||||||
Other assets: | ||||||||||||||||
Interest rate swaps | — | 4,609 | — | 4,609 | ||||||||||||
Foreign exchange forward and option contracts | — | 34,231 | — | 34,231 | ||||||||||||
Equity warrant assets | — | 1,906 | 114,698 | 116,604 | ||||||||||||
Client interest rate derivatives | — | 2,546 | — | 2,546 | ||||||||||||
Total assets (2) | $ | 7,414,814 | $ | 6,277,384 | $ | 185,902 | $ | 15,008,982 | ||||||||
Liabilities | ||||||||||||||||
Foreign exchange forward and option contracts | $ | — | $ | 28,363 | $ | — | $ | 28,363 | ||||||||
Client interest rate derivatives | — | 2,748 | — | 2,748 | ||||||||||||
Total liabilities | $ | — | $ | 31,111 | $ | — | $ | 31,111 |
(1) | In accordance with the accounting standard (ASU 2015-07, Fair Value Measurement (Topic 820)), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(2) | Included in Level 1 and Level 3 assets are $100 million and $69 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests. |
(Dollars in thousands) | Beginning Balance | Total Realized and Unrealized Gains Included in Income | Purchases | Sales | Issuances | Distributions and Other Settlements | Transfers Out of Level 3 | Ending Balance | ||||||||||||||||||||||||
Three months ended June 30, 2015 | ||||||||||||||||||||||||||||||||
Non-marketable and other securities (fair value accounting): | ||||||||||||||||||||||||||||||||
Other venture capital investments (3) | $ | 3,390 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,390 | ||||||||||||||||
Total non-marketable and other securities (fair value accounting) (1) | 3,390 | — | — | — | — | — | — | 3,390 | ||||||||||||||||||||||||
Other assets: | ||||||||||||||||||||||||||||||||
Equity warrant assets (2) | 122,261 | 23,249 | — | (27,393 | ) | 2,467 | 344 | (891 | ) | 120,037 | ||||||||||||||||||||||
Total assets | $ | 125,651 | $ | 23,249 | $ | — | $ | (27,393 | ) | $ | 2,467 | $ | 344 | $ | (891 | ) | $ | 123,427 | ||||||||||||||
Three months ended June 30, 2014 | ||||||||||||||||||||||||||||||||
Non-marketable and other securities (fair value accounting): | ||||||||||||||||||||||||||||||||
Other venture capital investments | $ | 28,306 | $ | 676 | $ | 15,826 | $ | (925 | ) | $ | — | $ | (10 | ) | $ | (126 | ) | $ | 43,747 | |||||||||||||
Other securities (fair value accounting) | 362,487 | 1,616 | — | — | — | — | (358,295 | ) | 5,808 | |||||||||||||||||||||||
Total non-marketable and other securities (fair value accounting) (1) | 390,793 | 2,292 | 15,826 | (925 | ) | — | (10 | ) | (358,421 | ) | 49,555 | |||||||||||||||||||||
Other assets: | ||||||||||||||||||||||||||||||||
Equity warrant assets (2) | 87,642 | 13,141 | — | (16,644 | ) | 2,749 | 583 | (320 | ) | 87,151 | ||||||||||||||||||||||
Total assets | $ | 478,435 | $ | 15,433 | $ | 15,826 | $ | (17,569 | ) | $ | 2,749 | $ | 573 | $ | (358,741 | ) | $ | 136,706 | ||||||||||||||
Six months ended June 30, 2015 | ||||||||||||||||||||||||||||||||
Non-marketable and other securities (fair value accounting): | ||||||||||||||||||||||||||||||||
Other venture capital investments (3) | $ | 3,291 | $ | 131 | $ | — | $ | (32 | ) | $ | — | $ | — | $ | — | $ | 3,390 | |||||||||||||||
Total non-marketable and other securities (fair value accounting) (1) | 3,291 | 131 | — | (32 | ) | — | — | — | 3,390 | |||||||||||||||||||||||
Other assets: | ||||||||||||||||||||||||||||||||
Equity warrant assets (2) | 114,698 | 43,333 | — | (42,158 | ) | 4,550 | 748 | (1,134 | ) | 120,037 | ||||||||||||||||||||||
Total assets | $ | 117,989 | $ | 43,464 | $ | — | $ | (42,190 | ) | $ | 4,550 | $ | 748 | $ | (1,134 | ) | $ | 123,427 | ||||||||||||||
Six months ended June 30, 2014 | ||||||||||||||||||||||||||||||||
Non-marketable and other securities (fair value accounting): | ||||||||||||||||||||||||||||||||
Other venture capital investments | $ | 32,839 | $ | 2,514 | $ | 16,496 | $ | (4,439 | ) | $ | — | $ | (3,537 | ) | $ | (126 | ) | $ | 43,747 | |||||||||||||
Other securities (fair value accounting) | 319,249 | 104,310 | — | (46,840 | ) | — | 3,417 | (374,328 | ) | 5,808 | ||||||||||||||||||||||
Total non-marketable and other securities (fair value accounting) (1) | 352,088 | 106,824 | 16,496 | (51,279 | ) | — | (120 | ) | (374,454 | ) | 49,555 | |||||||||||||||||||||
Other assets: | ||||||||||||||||||||||||||||||||
Equity warrant assets (2) | 99,891 | 37,519 | — | (56,637 | ) | 6,166 | 1,209 | (997 | ) | 87,151 | ||||||||||||||||||||||
Total assets | $ | 451,979 | $ | 144,343 | $ | 16,496 | $ | (107,916 | ) | $ | 6,166 | $ | 1,089 | $ | (375,451 | ) | $ | 136,706 |
(1) | Realized and unrealized gains (losses) are recorded in the line items “gains on investment securities, net” a component of noninterest income. |
(2) | Realized and unrealized gains (losses) are recorded in the line item “gains on derivative instruments, net”, a component of noninterest income. |
(3) | Beginning balance was adjusted to conform with our adoption of the new accounting standard (ASU 2015-02), Amendments to the Consolidation Analysis (Topic 820). |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Non-marketable and other securities (fair value accounting): | ||||||||||||||||
Other venture capital investments | 53 | 1,324 | 141 | 1,310 | ||||||||||||
Other securities | — | 1,615 | — | 80,583 | ||||||||||||
Total non-marketable and other securities (fair value accounting) (1) | 53 | 2,939 | 141 | 81,893 | ||||||||||||
Other assets: | ||||||||||||||||
Equity warrant assets (2) | 6,437 | 9,578 | 14,809 | 11,971 | ||||||||||||
Total unrealized gains, net | $ | 6,490 | $ | 12,517 | $ | 14,950 | $ | 93,864 | ||||||||
Unrealized gains attributable to noncontrolling interests | $ | 1,297 | $ | 38,791 | $ | 1,385 | $ | 148,151 |
(1) | Unrealized gains (losses) are recorded in the line items “gains on investment securities, net”, a component of noninterest income. |
(2) | Unrealized gains (losses) are recorded in the line item “gains on derivative instruments, net”, a component of noninterest income. |
(Dollars in thousands) | Fair value | Valuation Technique | Significant Unobservable Inputs | Weighted Average | |||||||
June 30, 2015: | |||||||||||
Other venture capital investments (fair value accounting) | $ | 3,390 | Private company equity pricing | (1) | (1 | ) | |||||
Equity warrant assets (public portfolio) | 4,440 | Modified Black-Scholes option pricing model | Volatility | 38.4 | % | ||||||
Risk-Free interest rate | 1.9 | % | |||||||||
Sales restrictions discount (2) | 18.5 | % | |||||||||
Equity warrant assets (private portfolio) | 115,597 | Modified Black-Scholes option pricing model | Volatility | 37.9 | % | ||||||
Risk-Free interest rate | 0.8 | % | |||||||||
Marketability discount (3) | 17.8 | % | |||||||||
Remaining life assumption (4) | 45.0 | % | |||||||||
December 31, 2014: | |||||||||||
Other venture capital investments (fair value accounting) | $ | 71,204 | Private company equity pricing | (1) | (1 | ) | |||||
Equity warrant assets (public portfolio) | 1,681 | Modified Black-Scholes option pricing model | Volatility | 42.6 | % | ||||||
Risk-Free interest rate | 1.7 | % | |||||||||
Sales restrictions discount (2) | 17.8 | % | |||||||||
Equity warrant assets (private portfolio) | 113,017 | Modified Black-Scholes option pricing model | Volatility | 38.3 | % | ||||||
Risk-Free interest rate | 0.9 | % | |||||||||
Marketability discount (3) | 20.0 | % | |||||||||
Remaining life assumption (4) | 45.0 | % |
(1) | In determining the fair value of our other venture capital investment portfolio, 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. 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% to 20% depending on the duration of the sales restrictions, which typically range from 3 to 6 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 cancellations and exercises. At June 30, 2015, the weighted average contractual remaining term was 5.79 years, compared to our estimated remaining life of 2.60 years. On a quarterly basis, a sensitivity analysis is performed on our remaining life assumption. |
Estimated Fair Value | ||||||||||||||||||||
(Dollars in thousands) | Carrying Amount | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||
June 30, 2015: | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 2,625,550 | $ | 2,625,550 | $ | 2,625,550 | $ | — | $ | — | ||||||||||
Held-to-maturity securities | 7,735,891 | 7,730,811 | — | 7,730,811 | — | |||||||||||||||
Non-marketable securities (cost and equity method accounting) not measured at net asset value | 111,890 | 114,598 | — | — | 114,598 | |||||||||||||||
Non-marketable securities (cost and equity method) accounting measured at net asset value (1) | 250,665 | 360,814 | — | — | — | |||||||||||||||
Net commercial loans | 12,510,382 | 12,633,349 | — | — | 12,633,349 | |||||||||||||||
Net consumer loans | 1,558,404 | 1,524,375 | — | — | 1,524,375 | |||||||||||||||
FHLB and Federal Reserve Bank stock | 46,116 | 46,116 | — | — | 46,116 | |||||||||||||||
Accrued interest receivable | 97,158 | 97,158 | — | 97,158 | — | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Other short-term borrowings | 2,537 | 2,537 | 2,537 | — | — | |||||||||||||||
Non-maturity deposits (2) | 35,559,302 | 35,559,302 | 35,559,302 | — | — | |||||||||||||||
Time deposits | 67,663 | 67,622 | — | 67,622 | — | |||||||||||||||
3.50% Senior Notes | 349,716 | 336,462 | — | 336,462 | — | |||||||||||||||
5.375% Senior Notes | 348,554 | 390,838 | — | 390,838 | — | |||||||||||||||
6.05% Subordinated Notes (3) | 49,426 | 52,340 | — | 52,340 | — | |||||||||||||||
7.0% Junior Subordinated Debentures | 54,758 | 53,093 | — | 53,093 | — | |||||||||||||||
Accrued interest payable | 12,096 | 12,096 | — | 12,096 | — | |||||||||||||||
Off-balance sheet financial assets: | ||||||||||||||||||||
Commitments to extend credit | — | 29,717 | — | — | 29,717 | |||||||||||||||
December 31, 2014: | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 1,796,062 | $ | 1,796,062 | $ | 1,796,062 | $ | — | $ | — | ||||||||||
Held-to-maturity securities | 7,421,042 | 7,415,656 | — | 7,415,656 | — | |||||||||||||||
Non-marketable securities (cost and equity method accounting) not measured at net asset value | 108,221 | 107,451 | — | — | 107,451 | |||||||||||||||
Non-marketable securities (cost and equity method) accounting measured at net asset value (1) | 188,427 | 283,119 | — | — | — | |||||||||||||||
Net commercial loans | 12,947,869 | 13,082,487 | — | — | 13,082,487 | |||||||||||||||
Net consumer loans | 1,271,048 | 1,247,336 | — | — | 1,247,336 | |||||||||||||||
FHLB and Federal Reserve Bank stock | 53,496 | 53,496 | — | — | 53,496 | |||||||||||||||
Accrued interest receivable | 94,180 | 94,180 | — | 94,180 | — | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Other short-term borrowings | 7,781 | 7,781 | 7,781 | — | — | |||||||||||||||
Non-maturity deposits (2) | 34,215,372 | 34,215,372 | 34,215,372 | — | — | |||||||||||||||
Time deposits | 128,127 | 128,107 | — | 128,107 | — | |||||||||||||||
5.375% Senior Notes | 348,436 | 392,616 | — | 392,616 | — | |||||||||||||||
6.05% Subordinated Notes (3) | 50,162 | 53,537 | — | 53,537 | — | |||||||||||||||
7.0% Junior Subordinated Debentures | 54,845 | 52,990 | — | 52,990 | — | |||||||||||||||
Accrued interest payable | 6,998 | 6,998 | — | 6,998 | — | |||||||||||||||
Off-balance sheet financial assets: | ||||||||||||||||||||
Commitments to extend credit | — | 29,097 | — | — | 29,097 |
(1) | In accordance with the accounting standard (ASU 2015-07, Fair Value Measurement (Topic 820)), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(2) | Includes noninterest-bearing demand deposits, interest-bearing checking accounts, money market accounts and interest-bearing sweep deposits. |
(3) | At June 30, 2015 and December 31, 2014, included in the carrying value and estimated fair value of our 6.05% Subordinated Notes was an interest rate swap valued at $3.8 million and $4.6 million, respectively, related to hedge accounting associated with the notes. |
(Dollars in thousands) | Carrying Amount | Fair Value | Unfunded Commitments | |||||||||
Non-marketable securities (fair value accounting): | ||||||||||||
Venture capital and private equity fund investments (1) | $ | 156,730 | $ | 156,730 | $ | 10,949 | ||||||
Non-marketable securities (equity method accounting): | ||||||||||||
Venture capital and private equity fund investments (2) | 78,574 | 78,574 | 4,990 | |||||||||
Debt funds (2) | 22,313 | 23,504 | — | |||||||||
Other investments (2) | 22,705 | 22,705 | 886 | |||||||||
Non-marketable securities (cost method accounting): | ||||||||||||
Venture capital and private equity fund investments (2) | 127,073 | 236,031 | 11,151 | |||||||||
Total | $ | 407,395 | $ | 517,544 | $ | 27,976 |
(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. These investments represent investments in venture capital and private equity funds that invest 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 $112 million and $8 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 and cost 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 10 to 13 years, depending on the age of the funds and any potential extensions of the terms of the funds. |
16. | Legal Matters |
17. | Related Parties |
▪ | Projections of our net interest income, noninterest income, earnings per share, noninterest expenses (including professional services, compliance, compensation and other costs), cash flows, balance sheet positions, capital expenditures, liquidity and capitalization or other financial items |
▪ | Descriptions of our strategic initiatives, plans or objectives for future operations, including pending sales or acquisitions |
▪ | Forecasts of private equity/venture capital funding and investment levels |
▪ | Forecasts of future interest rates, economic performance, and income from investments |
▪ | Forecasts of expected levels of provisions for loan losses, nonperforming loans, loan growth and client funds |
▪ | Descriptions of assumptions underlying or relating to any of the foregoing |
• | Market and economic conditions, including the interest rate environment, and the associated impact on us |
• | The credit profile and credit quality of our loan portfolio and volatility of our levels of nonperforming assets and charge-offs |
• | The adequacy of our allowance for loan losses and the need to make provisions for loan losses for any period |
• | The borrowing needs of our clients |
• | The sufficiency of our capital and liquidity positions |
• | The levels of loans, deposits and client investment fund balances |
• | The performance of our portfolio investments; the general condition of the public and private equity and mergers and acquisitions markets and their impact on our investments, including equity warrant assets, venture capital and private equity funds and direct equity investments |
• | Our overall investment plans and strategies; the realization, timing, valuation and performance of our equity or other investments |
• | The levels of public offerings, mergers and acquisitions and venture capital investment activity of our clients that may impact the borrowing needs of our clients |
• | The occurrence of fraudulent activity, including breaches of our information security or cyber security-related incidents |
• | Business disruptions and interruptions due to natural disasters and other external events |
• | The impact on our reputation and business from our interactions with business partners, counterparties, service providers and other third parties |
• | Expansion of our business internationally |
• | The impact of legal requirements and regulations limiting or restricting our activities or resulting in higher costs or increased compliance responsibilities, including the Volcker rule |
• | The impact of lawsuits and claims |
• | Changes in accounting standards |
• | The levels of equity capital available to our client or portfolio companies |
• | Our ability to maintain or increase our market share, including through successfully implementing our business strategy and undertaking new business initiatives |
• | Other factors as discussed in “Risk Factors” under Part I, Item 1A in our 2014 Form 10-K |
▪ | Continued strong growth in our lending business with average loan balances of $14.3 billion, an increase of $3.2 billion, or 29.2 percent. Period-end loan balances were $14.3 billion, an increase of $2.9 billion, or 25.7 percent. |
▪ | Average investment securities, excluding non-marketable and other securities, of $21.4 billion, an increase of $6.2 billion, or 41.1 percent. Period-end investment securities, excluding non-marketable and other securities, of $22.2 billion, an increase of $5.1 billion, or 29.7 percent. |
▪ | Average deposit balances of $35.0 billion, an increase of $7.8 billion, or 28.6 percent. Period-end deposit balances of $35.6 billion, an increase of $7.3 billion, or 25.7 percent. |
▪ | Average total client funds (comprised of on-balance sheet deposits and off-balance sheet client investment funds) were $72.8 billion, an increase of $15.5 billion, or 27.0 percent. Period-end total client funds were $75.7 billion, an increase of $17.0 billion, or 28.9 percent. |
▪ | Net interest income (fully taxable equivalent basis) of $244.2 million, an increase of $38.8 million, or 18.9 percent, primarily due to an increase in interest income from fixed income investment securities and loans, attributable to growth in average investment and loan balances of $6.2 billion and $3.2 billion, respectively, driven by the average deposit growth mentioned above. |
▪ | Net interest margin of 2.58 percent, compared to 2.79 percent, primarily due to a 67 basis point decrease in the overall yield of our loan portfolio and an 10 basis point decrease in our fixed income investment portfolio yield. These decreases are primarily a result of the shift in the mix of our overall loan portfolio into higher credit quality, lower yielding loans, the overall low rate market environment and increased competition in the marketplace. |
▪ | Provision for loan losses of $26.5 million, compared to $1.9 million. The provision of $26.5 million was primarily driven by an increase of $27.1 million in the reserve for impaired loans and $1.7 million in net charge-offs, offset by a $2.4 million reduction due to the decrease in period-end loan balances. |
▪ | Non-GAAP core fee income (deposit service charges, letters of credit fees, credit card fees, lending related fees, client investment fees, and foreign exchange fees) of $66.1 million, an increase of $16.1 million, or 32.2 percent, |
▪ | Net gains on investment securities of $25.0 million, compared to net losses of $57.3 million. [Non-GAAP net gains on investment securities, net of noncontrolling interests were $15.9 million, compared to net losses of $22.1 million (See non-GAAP reconciliation under the section "Results of Operations—Noninterest Income—Gains on Investment Securities, Net").] Net gains, net of noncontrolling interests, were primarily driven by $9.5 million gains from our strategic and other investments, reflective of strong distributions from our strategic venture capital fund investments and gains of $5.4 million from our managed fund of funds, primarily related to unrealized valuation adjustments. In the second quarter of 2014, we had losses associated with our FireEye related investments. Specifically, we had losses on investment securities related to FireEye of $98.9 million ($30.4 million net of noncontrolling interests) primarily from unrealized losses due to the decreased valuation of the remaining FireEye shares held by our managed direct venture funds during the second quarter of 2014. (See "Results of Operations—Noninterest Income—Gains on Investment Securities, Net"). |
▪ | Net gains on equity warrant assets of $23.6 million, an increase of $11.3 million, or 91.5 percent, compared to $12.3 million. The gains of $23.6 million included $13.9 million in realized gains relating to one company in our public company warrant portfolio. |
▪ | Noninterest expense of $194.1 million, an increase of $23.2 million, or 13.6 percent. This increase was primarily driven by a $25.1 million increase in compensation and benefits. The increase in compensation and benefits is primarily due to increased incentive compensation as well as an increase in warrant incentive plan expenses, which is reflective of our solid performance in the second quarter of 2015 and our current expectation that we will exceed our internal performance targets for 2015. In addition, salaries and wages contributed to the increase in compensation and benefits as a result of an increase in average FTEs. Average FTEs increased by 10.8 percent to 1,959 for the three months ended June 30, 2015, compared to 1,768 FTEs for the comparable 2014 period. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
(Dollars in thousands, except per share data, employees and ratios) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||||
Diluted earnings per common share (1) | $ | 1.66 | $ | 1.04 | 59.6 | % | $ | 3.37 | $ | 2.96 | 13.9 | % | ||||||||||||
Net income available to common stockholders (1) | 86,143 | 50,953 | 69.1 | 174,659 | 141,903 | 23.1 | ||||||||||||||||||
Net interest income | 243,771 | 204,965 | 18.9 | 482,696 | 401,293 | 20.3 | ||||||||||||||||||
Net interest margin | 2.58 | % | 2.79 | % | (21 | ) | bps | 2.61 | % | 2.95 | % | (34 | ) | bps | ||||||||||
Provision for loan losses | $ | 26,513 | $ | 1,947 | NM | $ | 32,965 | $ | 2,441 | NM | ||||||||||||||
Noninterest income (2) | 126,287 | 14,210 | NM | 249,811 | 324,435 | (23.0 | ) | % | ||||||||||||||||
Noninterest expense (1) (2) | 194,112 | 170,944 | 13.6 | % | 384,653 | 341,352 | 12.7 | |||||||||||||||||
Non-GAAP core fee income (3) | 66,079 | 49,993 | 32.2 | 124,289 | 100,939 | 23.1 | ||||||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests (1) (2) (3) | 117,731 | 49,535 | 137.7 | 227,091 | 173,042 | 31.2 | ||||||||||||||||||
Non-GAAP noninterest expense, net of noncontrolling interests (1) (2) (4) | 193,870 | 165,677 | 17.0 | 384,119 | 332,764 | 15.4 | ||||||||||||||||||
Balance Sheet: | ||||||||||||||||||||||||
Average available-for-sale securities | $ | 13,797,718 | $ | 13,397,265 | 3.0 | % | $ | 13,685,091 | $ | 12,826,267 | 6.7 | % | ||||||||||||
Average held-to-maturity securities (5) | 7,639,790 | 1,793,698 | NM | 7,604,966 | 901,804 | NM | ||||||||||||||||||
Average loans, net of unearned income (2) | 14,320,875 | 11,080,602 | 29.2 | 14,185,333 | 10,925,007 | 29.8 | ||||||||||||||||||
Average noninterest-bearing demand deposits (2) | 26,723,333 | 19,472,542 | 37.2 | 25,952,670 | 18,183,692 | 42.7 | ||||||||||||||||||
Average interest-bearing deposits | 8,232,734 | 7,704,583 | 6.9 | 8,459,503 | 7,252,765 | 16.6 | ||||||||||||||||||
Average total deposits | 34,956,067 | 27,177,125 | 28.6 | 34,412,173 | 25,436,457 | 35.3 | ||||||||||||||||||
Earnings Ratios: | ||||||||||||||||||||||||
Return on average assets (annualized) (1) (2) (6) | 0.88 | % | 0.64 | % | 37.5 | % | 0.91 | % | 0.96 | % | (5.2 | ) | % | |||||||||||
Return on average SVBFG stockholders’ equity (annualized) (1) (7) | 11.40 | 8.52 | 33.8 | 11.87 | 12.72 | (6.7 | ) | |||||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||||||
Allowance for loan losses as a % of total period-end gross loans | 1.34 | % | 1.06 | % | 28 | bps | 1.34 | % | 1.06 | % | 28 | bps | ||||||||||||
Allowance for loan losses for performing loans as a % of total gross performing loans | 0.99 | 1.02 | (3 | ) | 0.99 | 1.02 | (3 | ) | ||||||||||||||||
Gross loan charge-offs as a % of average total gross loans (annualized) | 0.13 | 0.23 | (10 | ) | 0.14 | 0.50 | (36 | ) | ||||||||||||||||
Net loan charge-offs as a % of average total gross loans (annualized) | 0.05 | 0.17 | (12 | ) | 0.08 | 0.45 | (37 | ) | ||||||||||||||||
Capital Ratios: | ||||||||||||||||||||||||
CET 1 risk-based capital ratio (8) | 12.54 | % | — | % | — | bps | 12.54 | % | — | % | — | bps | ||||||||||||
Tier 1 risk-based capital ratio (8) | 13.15 | 14.42 | (127 | ) | 13.15 | 14.42 | (127 | ) | ||||||||||||||||
Total risk-based capital ratio (8) | 14.15 | 15.36 | (121 | ) | 14.15 | 15.36 | (121 | ) | ||||||||||||||||
Tier 1 leverage ratio (8) | 7.95 | 8.74 | (79 | ) | 7.95 | 8.74 | (79 | ) | ||||||||||||||||
Tangible common equity to tangible assets (1) (9) | 7.58 | 8.02 | (44 | ) | 7.58 | 8.02 | (44 | ) | ||||||||||||||||
Tangible common equity to risk-weighted assets (1) (8) (9) | 12.81 | 14.49 | (168 | ) | 12.81 | 14.49 | (168 | ) | ||||||||||||||||
Bank CET 1 risk-based capital ratio (8) | 12.87 | — | — | 12.87 | — | — | ||||||||||||||||||
Bank tier 1 risk-based capital ratio (8) | 12.87 | 12.45 | 42 | 12.87 | 12.45 | 42 | ||||||||||||||||||
Bank total risk-based capital ratio (8) | 13.93 | 13.41 | 52 | 13.93 | 13.41 | 52 | ||||||||||||||||||
Bank tier 1 leverage ratio (8) | 7.39 | 7.51 | (12 | ) | 7.39 | 7.51 | (12 | ) | ||||||||||||||||
Bank tangible common equity to tangible assets (1) (9) | 7.40 | 7.21 | 19 | 7.40 | 7.21 | 19 | ||||||||||||||||||
Bank tangible common equity to risk-weighted assets (1) (8) (9) | 13.16 | 12.62 | 54 | 13.16 | 12.62 | 54 | ||||||||||||||||||
Other Ratios: | ||||||||||||||||||||||||
GAAP operating efficiency ratio (1) (10) | 52.45 | % | 77.99 | % | (32.7 | ) | % | 52.51 | % | 47.04 | % | 11.6 | % | |||||||||||
Non-GAAP operating efficiency ratio (1) (3) | 53.57 | 64.99 | (17.6 | ) | 54.06 | 57.85 | (6.6 | ) | ||||||||||||||||
Book value per common share (1) (11) | $ | 59.29 | $ | 52.69 | 12.5 | $ | 59.29 | $ | 52.69 | 12.5 | ||||||||||||||
Other Statistics: | ||||||||||||||||||||||||
Average full-time equivalent employees | 1,959 | 1,768 | 10.8 | % | 1,957 | 1,751 | 11.8 | % | ||||||||||||||||
Period-end full-time equivalent employees | 1,964 | 1,786 | 10.0 | 1,964 | 1,786 | 10.0 |
(1) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(2) | Effective January 1, 2015, we adopted new accounting guidance related to our consolidated variable interest entities (ASU 2015-02); amounts prior to the adoption have not been revised. See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(3) | See “Results of Operations–Noninterest Income” for a description and reconciliation of non-GAAP core fee income and noninterest income. |
(4) | See “Results of Operations–Noninterest Expense” for a description and reconciliation of non-GAAP noninterest expense and non-GAAP operating efficiency ratio. |
(5) | Effective June 1, 2014, we re-designated securities with a carrying value of $5.4 billion from available-for-sale to held-to-maturity. |
(6) | Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average assets. |
(7) | Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average SVBFG stockholders’ equity. |
(8) | Ratios as of June 30, 2015 reflect the adoption of the rules implementing the "Basel III" regulatory capital reforms and changes required by the Dodd-Frank Act ("Basel III Capital Rules") in effect beginning January 1, 2015. Ratios for prior periods represent the previous capital rules under Basel I. |
(9) | See “Capital Resources–Capital Ratios” for a reconciliation of non-GAAP tangible common equity to tangible assets and tangible common equity to risk-weighted assets. |
(10) | The operating efficiency ratio is calculated by dividing total noninterest expense by total taxable-equivalent net interest income plus noninterest income. |
(11) | Book value per common share is calculated by dividing total SVBFG stockholders’ equity by total outstanding common shares at period-end. |
2015 Compared to 2014 | 2015 Compared to 2014 | |||||||||||||||||||||||
Three months ended June 30, increase (decrease) due to change in | Six months ended June 30, increase (decrease) due to change in | |||||||||||||||||||||||
(Dollars in thousands) | Volume | Rate | Total | Volume | Rate | Total | ||||||||||||||||||
Interest income: | ||||||||||||||||||||||||
Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell, trade receivables purchased and other short-term investment securities | $ | (671 | ) | $ | 48 | $ | (623 | ) | $ | (1,472 | ) | $ | 482 | $ | (990 | ) | ||||||||
Fixed income investment portfolio (taxable) | 20,417 | 772 | 21,189 | 48,657 | (614 | ) | 48,043 | |||||||||||||||||
Fixed income investment portfolio (non-taxable) | (28 | ) | (52 | ) | (80 | ) | (3 | ) | (114 | ) | (117 | ) | ||||||||||||
Loans, net of unearned income | 37,843 | (18,271 | ) | 19,572 | 76,479 | (39,578 | ) | 36,901 | ||||||||||||||||
Increase (decrease) in interest income, net | 57,561 | (17,503 | ) | 40,058 | 123,661 | (39,824 | ) | 83,837 | ||||||||||||||||
Interest expense: | ||||||||||||||||||||||||
NOW deposits | 16 | (123 | ) | (107 | ) | 56 | (175 | ) | (119 | ) | ||||||||||||||
Money market deposits | 103 | (1,755 | ) | (1,652 | ) | 421 | (2,953 | ) | (2,532 | ) | ||||||||||||||
Money market deposits in foreign offices | (2 | ) | (18 | ) | (20 | ) | — | (46 | ) | (46 | ) | |||||||||||||
Time deposits | (23 | ) | (31 | ) | (54 | ) | (55 | ) | (39 | ) | (94 | ) | ||||||||||||
Sweep deposits in foreign offices | (17 | ) | (36 | ) | (53 | ) | 30 | (86 | ) | (56 | ) | |||||||||||||
Total increase (decrease) in deposits expense | 77 | (1,963 | ) | (1,886 | ) | 452 | (3,299 | ) | (2,847 | ) | ||||||||||||||
Short-term borrowings | 13 | — | 13 | 25 | — | 25 | ||||||||||||||||||
3.50% Senior Notes | 3,137 | — | 3,137 | 5,263 | — | 5,263 | ||||||||||||||||||
5.375% Senior Notes | 2 | 5 | 7 | 6 | 8 | 14 | ||||||||||||||||||
Junior Subordinated Debentures | (2 | ) | (13 | ) | (15 | ) | (5 | ) | (17 | ) | (22 | ) | ||||||||||||
6.05% Subordinated Notes | (4 | ) | 27 | 23 | (9 | ) | 50 | 41 | ||||||||||||||||
Total increase in borrowings expense | 3,146 | 19 | 3,165 | 5,280 | 41 | 5,321 | ||||||||||||||||||
Increase (decrease) in interest expense, net | 3,223 | (1,944 | ) | 1,279 | 5,732 | (3,258 | ) | 2,474 | ||||||||||||||||
Increase (decrease) in net interest income | $ | 54,338 | $ | (15,559 | ) | $ | 38,779 | $ | 117,929 | $ | (36,566 | ) | $ | 81,363 |
• | Interest income for the three months ended June 30, 2015 increased by $40.1 million primarily due to: |
◦ | A $21.1 million increase in interest income on investment securities to $85.8 million for the three months ended June 30, 2015, compared to $64.6 million for the comparable 2014 period. The increase was reflective of an increase in average investment securities balances of $6.2 billion as a result of deposit growth, as well as through reinvestments of maturing fixed income investments. |
◦ | A $19.6 million increase in interest income on loans to $167.3 million for the three months ended June 30, 2015, compared to $147.7 million for the comparable 2014 period. This increase was reflective of an increase in average loan balances of $3.2 billion, partially offset by a decrease in both gross loan and loan fee yields. Gross loan yields, excluding loan interest recoveries and loan fees, decreased to 4.01 percent from 4.49 percent, |
• | Interest expense for the three months ended June 30, 2015 increased to $10.2 million, compared to $8.9 million for the comparable 2014 period. The increase in interest expense was primarily attributable to the increase in long-term debt interest expense of $3.1 million reflective of the $350.0 million issuance of our 3.50% Senior Notes in late January 2015, partially offset by a decrease of $1.9 million in interest paid on our interest-bearing deposits as a result of market rate adjustments. |
• | Interest income for the six months ended June 30, 2015 increased by $83.8 million primarily due to: |
◦ | A $47.9 million increase in interest income on investment securities with the majority of the increase due to a $7.6 billion increase in average balances due to strong deposit growth. Interest income was offset by a decrease in the overall yield of our fixed income investment portfolio, which decreased 18 basis points to 1.59 percent. The decrease in the fixed income investment portfolio yield was offset by a 11 basis point benefit from lower premium amortization expense, driven by a slowdown in prepayments as a result of increases in market rates. |
◦ | A $36.9 million increase in interest income on loans, primarily due to an increase in average loan balances of $3.3 billion. These increases were partially offset by a decrease in both gross loan and loan fee yields. Gross loan yields, excluding loan interest recoveries and loan fees, decreased to 4.05 percent from 4.53 percent, reflective of a shift in the mix of our overall loan portfolio from the first half of 2014. This shift primarily includes increased growth in private equity/venture capital and private bank loans, which tend to be higher credit quality, lower yielding loans. The overall low market rate environment and increased competition also continued to put pressure on loan yields. Loan fee yields decreased 18 basis points to 66 basis points, from 84 basis points in the comparable 2014 period. This decrease was a result of lower amortizing fee income as a percentage of our overall loan portfolio, primarily reflective of the growth of our private equity/venture capital and private bank loans which tend to have lower fees. |
• | Interest expense for the six months ended June 30, 2015 increased by $2.5 million primarily due to: |
◦ | An increase in interest expense of $5.3 million related to our long-term debt, reflective of the $350.0 million issuance of our 3.50% Senior Notes in late January 2015. |
◦ | A decrease in interest expense from interest-bearing deposits of $2.8 million, primarily due to decreases in rates paid on interest-bearing money market deposits as a result of market rate adjustments. |
Three months ended June 30, | ||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income/ Expense | Yield/ Rate | Average Balance | Interest Income/ Expense | Yield/ Rate | ||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1) | $ | 2,128,460 | $ | 1,320 | 0.25 | % | $ | 3,210,218 | $ | 1,943 | 0.24 | % | ||||||||||
Investment securities: | ||||||||||||||||||||||
Available-for-sale securities: (2) | ||||||||||||||||||||||
Taxable | 13,797,718 | 46,698 | 1.36 | 13,342,544 | 53,915 | 1.62 | ||||||||||||||||
Non-taxable (3) | — | — | — | 54,721 | 815 | 5.97 | ||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||||
Taxable | 7,558,646 | 37,915 | 2.01 | 1,765,204 | 9,509 | 2.16 | ||||||||||||||||
Non-taxable (3) | 81,144 | 1,141 | 5.64 | 28,494 | 406 | 5.72 | ||||||||||||||||
Total loans, net of unearned income (4) (5) | 14,320,875 | 167,252 | 4.68 | 11,080,602 | 147,680 | 5.35 | ||||||||||||||||
Total interest-earning assets | 37,886,843 | 254,326 | 2.69 | 29,481,783 | 214,268 | 2.91 | ||||||||||||||||
Cash and due from banks | 316,577 | 60,373 | ||||||||||||||||||||
Allowance for loan losses | (180,130 | ) | (128,465 | ) | ||||||||||||||||||
Other assets (6) | 1,424,733 | 2,331,939 | ||||||||||||||||||||
Total assets | $ | 39,448,023 | $ | 31,745,630 | ||||||||||||||||||
Funding sources: | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
NOW deposits | $ | 230,891 | $ | 48 | 0.08 | % | $ | 159,316 | $ | 155 | 0.39 | % | ||||||||||
Money market deposits | 6,034,187 | 909 | 0.06 | 5,338,785 | 2,561 | 0.19 | ||||||||||||||||
Money market deposits in foreign offices | 188,399 | 18 | 0.04 | 201,821 | 38 | 0.08 | ||||||||||||||||
Time deposits | 93,387 | 38 | 0.16 | 150,731 | 92 | 0.24 | ||||||||||||||||
Sweep deposits in foreign offices | 1,685,870 | 169 | 0.04 | 1,853,930 | 222 | 0.05 | ||||||||||||||||
Total interest-bearing deposits | 8,232,734 | 1,182 | 0.06 | 7,704,583 | 3,068 | 0.16 | ||||||||||||||||
Short-term borrowings | 26,345 | 13 | 0.20 | 4,554 | — | — | ||||||||||||||||
3.50% Senior Notes | 349,712 | 3,137 | 3.60 | — | — | — | ||||||||||||||||
5.375% Senior Notes | 348,515 | 4,837 | 5.57 | 348,284 | 4,830 | 5.56 | ||||||||||||||||
Junior Subordinated Debentures | 54,787 | 833 | 6.10 | 54,962 | 848 | 6.19 | ||||||||||||||||
6.05% Subordinated Notes | 49,757 | 153 | 1.23 | 51,470 | 130 | 1.01 | ||||||||||||||||
Total interest-bearing liabilities | 9,061,850 | 10,155 | 0.45 | 8,163,853 | 8,876 | 0.44 | ||||||||||||||||
Portion of noninterest-bearing funding sources | 28,824,993 | 21,317,930 | ||||||||||||||||||||
Total funding sources | 37,886,843 | 10,155 | 0.11 | 29,481,783 | 8,876 | 0.12 | ||||||||||||||||
Noninterest-bearing funding sources: | ||||||||||||||||||||||
Demand deposits | 26,723,333 | 19,472,542 | ||||||||||||||||||||
Other liabilities | 490,847 | 398,492 | ||||||||||||||||||||
SVBFG stockholders’ equity | 3,031,699 | 2,397,386 | ||||||||||||||||||||
Noncontrolling interests | 140,294 | 1,313,357 | ||||||||||||||||||||
Portion used to fund interest-earning assets | (28,824,993 | ) | (21,317,930 | ) | ||||||||||||||||||
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity | $ | 39,448,023 | $ | 31,745,630 | ||||||||||||||||||
Net interest income and margin | $ | 244,171 | 2.58 | % | $ | 205,392 | 2.79 | % | ||||||||||||||
Total deposits | $ | 34,956,067 | $ | 27,177,125 | ||||||||||||||||||
Reconciliation to reported net interest income: | ||||||||||||||||||||||
Adjustments for taxable equivalent basis | (400 | ) | (427 | ) | ||||||||||||||||||
Net interest income, as reported | $ | 243,771 | $ | 204,965 |
(1) | Includes average interest-earning deposits in other financial institutions of $445 million and $342 million for the three months ended June 30, 2015 and 2014, respectively. For the three months ended June 30, 2015 and 2014, balances also include $1.6 billion and $2.5 billion, respectively, deposited at the Federal Reserve Bank, earning interest at the Federal Funds target rate. |
(2) | Yields on available-for-sale securities are based on amortized cost, and therefore do not give effect to unrealized changes in fair value that are reflected in other comprehensive income. |
(3) | Interest income on non-taxable investment securities are presented on a fully taxable-equivalent basis using the federal statutory income tax rate of 35.0 percent for all periods presented. |
(4) | Nonaccrual loans are reflected in the average balances of loans. |
(5) | Interest income includes loan fees of $23.7 million and $21.3 million for the three months ended June 30, 2015 and 2014, respectively. |
(6) | Average investment securities of $0.8 billion and $1.8 billion for the three months ended June 30, 2015 and 2014, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable and other securities. During the second quarter of 2015 we adopted new accounting guidance related to our consolidated variable interest entities (ASU 2015-02) under a modified retrospective approach. Periods prior to January 1, 2015 have not been revised. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
Six months ended June 30, | ||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income/ Expense | Yield/ Rate | Average Balance | Interest Income/ Expense | Yield/ Rate | ||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1) | $ | 1,815,912 | $ | 2,589 | 0.29 | % | $ | 2,848,215 | $ | 3,579 | 0.25 | % | ||||||||||
Available-for-sale securities: (2) | ||||||||||||||||||||||
Taxable | 13,685,091 | 90,707 | 1.34 | 12,758,090 | 108,335 | 1.71 | ||||||||||||||||
Non-taxable (3) | — | — | — | 68,177 | 2,040 | 6.03 | ||||||||||||||||
Held-to-maturity securities: | ||||||||||||||||||||||
Taxable | 7,522,605 | 75,180 | 2.02 | 887,478 | 9,509 | 2.16 | ||||||||||||||||
Non-taxable (3) | 82,361 | 2,329 | 5.70 | 14,326 | 406 | 5.71 | ||||||||||||||||
Total loans, net of unearned income (4) (5) | 14,185,333 | 332,753 | 4.73 | 10,925,007 | 295,852 | 5.46 | ||||||||||||||||
Total interest-earning assets | 37,291,302 | 503,558 | 2.72 | 27,501,293 | 419,721 | 3.08 | ||||||||||||||||
Cash and due from banks | 278,453 | 161,862 | ||||||||||||||||||||
Allowance for loan losses | (175,700 | ) | (134,734 | ) | ||||||||||||||||||
Other assets (5) | 1,446,153 | 2,239,200 | ||||||||||||||||||||
Total assets | $ | 38,840,208 | $ | 29,767,621 | ||||||||||||||||||
Funding sources: | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
NOW deposits | $ | 229,718 | $ | 172 | 0.15 | % | $ | 155,050 | $ | 291 | 0.38 | % | ||||||||||
Money market deposits | 5,995,766 | 2,441 | 0.08 | 4,962,911 | 4,973 | 0.20 | ||||||||||||||||
Money market deposits in foreign offices | 197,898 | 38 | 0.04 | 196,796 | 84 | 0.09 | ||||||||||||||||
Time deposits | 102,154 | 98 | 0.19 | 159,343 | 192 | 0.24 | ||||||||||||||||
Sweep deposits in foreign offices | 1,933,967 | 376 | 0.04 | 1,778,665 | 432 | 0.05 | ||||||||||||||||
Total interest-bearing deposits | 8,459,503 | 3,125 | 0.07 | 7,252,765 | 5,972 | 0.17 | ||||||||||||||||
Short-term borrowings | 34,934 | 25 | 0.14 | 4,768 | — | — | ||||||||||||||||
3.5% Senior Notes | 295,611 | 5,263 | 3.59 | — | — | — | ||||||||||||||||
5.375% Senior Notes | 348,486 | 9,672 | 5.60 | 348,256 | 9,658 | 5.59 | ||||||||||||||||
Junior Subordinated Debentures | 54,808 | 1,665 | 6.13 | 54,984 | 1,687 | 6.19 | ||||||||||||||||
6.05% Subordinated Notes | 49,944 | 296 | 1.20 | 51,717 | 255 | 0.99 | ||||||||||||||||
Total interest-bearing liabilities | 9,243,286 | 20,046 | 0.44 | 7,712,490 | 17,572 | 0.46 | ||||||||||||||||
Portion of noninterest-bearing funding sources | 28,048,016 | 19,788,803 | ||||||||||||||||||||
Total funding sources | 37,291,302 | 20,046 | 0.11 | 27,501,293 | 17,572 | 0.13 | ||||||||||||||||
Noninterest-bearing funding sources: | ||||||||||||||||||||||
Demand deposits | 25,952,670 | 18,183,692 | ||||||||||||||||||||
Other liabilities | 531,067 | 397,354 | ||||||||||||||||||||
SVBFG stockholders’ equity | 2,966,378 | 2,249,425 | ||||||||||||||||||||
Noncontrolling interests | 146,807 | 1,224,660 | ||||||||||||||||||||
Portion used to fund interest-earning assets | (28,048,016 | ) | (19,788,803 | ) | ||||||||||||||||||
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity | $ | 38,840,208 | $ | 29,767,621 | ||||||||||||||||||
Net interest income and margin | $ | 483,512 | 2.61 | % | $ | 402,149 | 2.95 | % | ||||||||||||||
Total deposits | $ | 34,412,173 | $ | 25,436,457 | ||||||||||||||||||
Reconciliation to reported net interest income: | ||||||||||||||||||||||
Adjustments for taxable equivalent basis | (816 | ) | (856 | ) | ||||||||||||||||||
Net interest income, as reported | $ | 482,696 | $ | 401,293 |
(1) | Includes average interest-earning deposits in other financial institutions of $477 million and $330 million for the six months ended June 30, 2015 and 2014, respectively. For the six months ended June 30, 2015 and 2014, balances also include $1.3 billion and $2.3 billion, respectively, deposited at the FRB, earning interest at the Federal Funds target rate. |
(2) | Yields on available-for-sale securities are based on amortized cost, and therefore do not give effect to unrealized changes in fair value that are reflected in other comprehensive income. |
(3) | Interest income on non-taxable available-for-sale securities is presented on a fully taxable-equivalent basis using the federal statutory income tax rate of 35.0 percent for all periods presented. |
(4) | Nonaccrual loans are reflected in the average balances of loans. |
(5) | Interest income includes loan fees of $46.7 million and $45.6 million for the six months ended June 30, 2015 and 2014, respectively. |
(6) | Average investment securities of $1.2 billion and $1.7 billion for the six months ended June 30, 2015 and 2014, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable securities. During the second quarter of 2015 we adopted new accounting guidance related to our consolidated variable interest entities (ASU 2015-02) under a modified retrospective approach. Periods prior to January 1, 2015 have not been revised. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Allowance for loan losses, beginning balance | $ | 167,875 | $ | 123,542 | $ | 165,359 | $ | 142,886 | ||||||||
Provision for loan losses | 26,513 | 1,947 | 32,965 | 2,441 | ||||||||||||
Gross loan charge-offs | (4,734 | ) | (6,382 | ) | (10,221 | ) | (27,532 | ) | ||||||||
Loan recoveries | 2,990 | 1,621 | 4,541 | 2,933 | ||||||||||||
Allowance for loan losses, ending balance | $ | 192,644 | $ | 120,728 | $ | 192,644 | $ | 120,728 | ||||||||
Provision for loan losses as a percentage of period-end total gross loans (annualized) | 0.74 | % | 0.07 | % | 0.46 | % | 0.04 | % | ||||||||
Gross loan charge-offs as a percentage of average total gross loans (annualized) | 0.13 | 0.23 | 0.14 | 0.50 | ||||||||||||
Net loan charge-offs as a percentage of average total gross loans (annualized) | 0.05 | 0.17 | 0.08 | 0.45 | ||||||||||||
Allowance for loan losses as a percentage of period-end total gross loans | 1.34 | 1.06 | 1.34 | 1.06 | ||||||||||||
Period-end total gross loans | $ | 14,370,930 | $ | 11,437,300 | $ | 14,370,930 | $ | 11,437,300 | ||||||||
Average total gross loans | 14,427,039 | 11,166,021 | 14,289,662 | 11,010,328 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Non-GAAP core fee income (1): | ||||||||||||||||||||||
Foreign exchange fees | $ | 22,364 | $ | 17,928 | 24.7 | % | $ | 40,042 | $ | 35,124 | 14.0 | % | ||||||||||
Credit card fees | 14,215 | 10,249 | 38.7 | 26,305 | 20,531 | 28.1 | ||||||||||||||||
Deposit service charges | 11,301 | 9,611 | 17.6 | 22,037 | 19,218 | 14.7 | ||||||||||||||||
Lending related fees | 8,163 | 5,876 | 38.9 | 16,185 | 12,179 | 32.9 | ||||||||||||||||
Letters of credit and standby letters of credit fees | 4,772 | 2,810 | 69.8 | 9,974 | 6,950 | 43.5 | ||||||||||||||||
Client investment fees | 5,264 | 3,519 | 49.6 | 9,746 | 6,937 | 40.5 | ||||||||||||||||
Total non-GAAP core fee income | 66,079 | 49,993 | 32.2 | 124,289 | 100,939 | 23.1 | ||||||||||||||||
Gains (losses) on investment securities, net (2) | 24,975 | (57,320 | ) | (143.6 | ) | 58,238 | 166,592 | (65.0 | ) | |||||||||||||
Gains on derivative instruments, net | 16,317 | 12,775 | 27.7 | 56,046 | 36,942 | 51.7 | ||||||||||||||||
Other | 18,916 | 8,762 | 115.9 | 11,238 | 19,962 | (43.7 | ) | |||||||||||||||
GAAP noninterest income | $ | 126,287 | $ | 14,210 | NM | $ | 249,811 | $ | 324,435 | (23.0 | ) |
(1) | This non-GAAP measure represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control. |
(2) | Amount for the six months ended June 30, 2015, has been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amount prior to January 1, 2015 has not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests (Dollars in thousands) | 2015 | 2014 | % Change | 2015 (1) | 2014 | % Change | ||||||||||||||||
GAAP noninterest income (as reported) | $ | 126,287 | $ | 14,210 | NM | $ | 249,811 | $ | 324,435 | (23.0 | )% | |||||||||||
Less: income (loss) attributable to noncontrolling interests, including carried interest | 8,556 | (35,325 | ) | (124.2 | ) | 22,720 | 151,393 | (85.0 | ) | |||||||||||||
Non-GAAP noninterest income, net of noncontrolling interests | $ | 117,731 | $ | 49,535 | 137.7 | $ | 227,091 | $ | 173,042 | 31.2 |
(1) | Amounts for the six months ended June 30, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
• | Gains of $9.5 million from our strategic and other investments, primarily driven by strong distributions from our strategic venture capital fund investments; and |
• | Gains of $5.4 million from our managed funds of funds, primarily related to unrealized valuation adjustments. |
• | Gains of $16.9 million from our strategic and other investments, primarily driven by distributions from strategic venture capital fund investments; |
• | Gains of $8.9 million from our managed funds of funds, primarily related to unrealized valuation increases; and |
• | Gains of $5.4 million from our managed direct venture funds, primarily related to realized gains from distributions of investments, including the remaining shares held in FireEye, Inc. ("FireEye"), as well as unrealized valuation increases. |
(Dollars in thousands) | Managed Funds of Funds | Managed Direct Venture Funds | Debt Funds | Available- For-Sale Securities | Strategic and Other Investments | Total | ||||||||||||||||||
Three months ended June 30, 2015 | ||||||||||||||||||||||||
Total gains on investment securities, net | $ | 14,281 | $ | 869 | $ | 183 | $ | 141 | $ | 9,501 | $ | 24,975 | ||||||||||||
Less: income attributable to noncontrolling interests, including carried interest | 8,913 | 123 | — | — | — | 9,036 | ||||||||||||||||||
Non-GAAP net gains on investment securities, net of noncontrolling interests | $ | 5,368 | $ | 746 | $ | 183 | $ | 141 | $ | 9,501 | $ | 15,939 | ||||||||||||
Three months ended June 30, 2014 | ||||||||||||||||||||||||
Total (losses) gains on investment securities, net | $ | 38,478 | $ | (87,548 | ) | $ | (356 | ) | $ | (16,480 | ) | $ | 8,586 | $ | (57,320 | ) | ||||||||
Less: (losses) income attributable to noncontrolling interests, including carried interest | 35,507 | (70,746 | ) | (1 | ) | — | — | (35,240 | ) | |||||||||||||||
Non-GAAP net (loss) gains on investment securities, net of noncontrolling interests | $ | 2,971 | $ | (16,802 | ) | $ | (355 | ) | $ | (16,480 | ) | $ | 8,586 | $ | (22,080 | ) | ||||||||
Six months ended June 30, 2015 (1) | ||||||||||||||||||||||||
Total gains on investment securities, net | $ | 24,940 | $ | 12,538 | $ | 1,099 | $ | 2,737 | $ | 16,924 | $ | 58,238 | ||||||||||||
Less: income attributable to noncontrolling interests, including carried interest | 16,052 | 7,155 | — | — | — | 23,207 | ||||||||||||||||||
Non-GAAP net gains on investment securities, net of noncontrolling interests | $ | 8,888 | $ | 5,383 | $ | 1,099 | $ | 2,737 | $ | 16,924 | $ | 35,031 | ||||||||||||
Six months ended June 30, 2014 | ||||||||||||||||||||||||
Total gains (losses) on investment securities, net | $ | 149,926 | $ | 18,154 | $ | 2,645 | $ | (16,420 | ) | $ | 12,287 | $ | 166,592 | |||||||||||
Less: income (losses) attributable to noncontrolling interests, including carried interest | 136,958 | 14,368 | (14 | ) | — | — | 151,312 | |||||||||||||||||
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests | $ | 12,968 | $ | 3,786 | $ | 2,659 | $ | (16,420 | ) | $ | 12,287 | $ | 15,280 |
(1) | Amounts for the six months ended June 30, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Equity warrant assets (1) | ||||||||||||||||||||||
Gains on exercises, net | $ | 14,584 | $ | 3,553 | NM | $ | 24,190 | $ | 21,955 | 10.2 | % | |||||||||||
Cancellations and expirations | (114 | ) | (429 | ) | (73.4 | ) | (406 | ) | (516 | ) | (21.3 | ) | ||||||||||
Changes in fair value | 9,146 | 9,205 | (0.6 | ) | 20,110 | 16,263 | 23.7 | |||||||||||||||
Net gains on equity warrant assets | 23,616 | 12,329 | 91.5 | 43,894 | 37,702 | 16.4 | ||||||||||||||||
(Losses) Gains on foreign exchange forward contracts, net: | ||||||||||||||||||||||
Gains on client foreign exchange forward contracts, net (2) | 787 | 170 | NM | 280 | 472 | (40.7 | ) | |||||||||||||||
(Losses) gains on internal foreign exchange forward contracts, net (3) | (8,174 | ) | 538 | NM | 11,844 | (491 | ) | NM | ||||||||||||||
Total (losses) gains on foreign exchange forward contracts, net | (7,387 | ) | 708 | NM | 12,124 | (19 | ) | NM | ||||||||||||||
Changes in fair value of interest rate swaps | (11 | ) | (13 | ) | (15.4 | ) | (14 | ) | (25 | ) | (44.0 | ) | ||||||||||
Net losses on other derivatives (4) | 99 | (249 | ) | (139.8 | ) | 42 | (716 | ) | (105.9 | ) | ||||||||||||
Gains on derivative instruments, net | $ | 16,317 | $ | 12,775 | 27.7 | $ | 56,046 | $ | 36,942 | 51.7 |
(1) | At June 30, 2015, we held warrants in 1,587 companies, compared to 1,383 companies at June 30, 2014. The total value of our warrant portfolio was $122.5 million at June 30, 2015 and $88.9 million at June 30, 2014. Of the 1,587 companies, 25 companies made up approximately 36 percent of the fair value of the portfolio at June 30, 2015. |
(2) | Represents the net gains for foreign exchange forward contracts executed on behalf of clients, excluding any spread or fees earned in connection with these trades. |
(3) | Represents the change in the fair value of foreign exchange forward contracts used to economically reduce our foreign exchange exposure related to certain foreign currency denominated instruments. Refer to revaluation of foreign currency instruments included in the line item "other" within noninterest income for the amount we were able to partially offset. |
(4) | Primarily represents the change in fair value of loan conversion options. |
• | Net gains on equity warrant assets of $23.6 million, which consisted of: |
• | Net gains of $14.6 million from the exercise of equity warrant assets for the three months ended June 30, 2015, compared to $3.6 million for the comparable 2014 period. The net gains of $14.6 million were primarily reflective of $13.9 million in gains from the exercise of one company in our public company warrant portfolio. |
• | Net gains of $9.1 million from changes in warrant valuations for the three months ended June 30, 2015, compared to $9.2 million for the comparable 2014 period. The warrant valuation gains were primarily from our private company warrant portfolio. |
• | Net losses of $8.2 million on internal foreign exchange forward contracts used to economically reduce our foreign exchange exposure to foreign currency denominated instruments for the three months ended June 30, 2015, compared to net gains of $0.5 million for the comparable 2014 period. The net losses of $8.2 million were offset by net gains of $8.3 million from the revaluation of foreign currency denominated instruments that are included in the line item "other" within noninterest income as noted below. |
• | Net gains on equity warrant assets of $43.9 million for the six months ended June 30, 2015, compared to $37.7 million for the comparable 2014 period. The $6.2 million increase was primarily due to net gains of $20.1 million from changes in warrant valuations, compared to $16.3 million for the comparable 2014 period, mainly attributable from our private company warrant portfolio. In addition, the $6.2 million increase came from the exercise of equity warrant assets of $24.2 million, compared to $22.0 million for the comparable 2014 period. |
• | Net gains of $11.8 million on foreign exchange forward contracts hedging certain of our foreign currency denominated instruments for the six months ended June 30, 2015, compared to net losses of $0.5 million for the comparable 2014 period. The gains recognized for the six months ended June 30, 2015 were primarily attributable to the strengthening of the U.S. Dollar against the Euro and Pound Sterling, however, the gains are offset by losses of $11.9 million from the revaluation of foreign currency denominated instruments that are included in the line item "other" within noninterest income as noted below. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in millions) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Client directed investment assets (1) | $ | 7,847 | $ | 7,513 | 4.4 | % | $ | 7,432 | $ | 7,347 | 1.2 | % | ||||||||||
Client investment assets under management (2) | 19,261 | 16,135 | 19.4 | 18,486 | 14,836 | 24.6 | ||||||||||||||||
Sweep money market funds | 10,761 | 6,504 | 65.5 | 9,829 | 6,461 | 52.1 | ||||||||||||||||
Total average client investment funds (3) | $ | 37,869 | $ | 30,152 | 25.6 | $ | 35,747 | $ | 28,644 | 24.8 |
(1) | Comprised of mutual funds and Repurchase Agreement Program assets. |
(2) | These funds represent investments in third party money market mutual funds and fixed-income securities managed by SVB Asset Management. |
(3) | Client investment funds are maintained at third party financial institutions and are not recorded on our balance sheet. |
(Dollars in millions) | June 30, 2015 | December 31, 2014 | % Change | ||||||||
Client directed investment assets | $ | 8,047 | $ | 6,158 | 30.7 | % | |||||
Client investment assets under management | 20,394 | 18,253 | 11.7 | ||||||||
Sweep money market funds | 11,643 | 7,957 | 46.3 | ||||||||
Total period-end client investment funds | $ | 40,084 | $ | 32,368 | 23.8 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Fund management fees | $ | 3,861 | $ | 3,559 | 8.5 | % | $ | 7,583 | $ | 6,314 | 20.1 | % | ||||||||||
Service-based fee income | 2,413 | 2,252 | 7.1 | 4,519 | 4,279 | 5.6 | ||||||||||||||||
Gains (losses) on revaluation of foreign currency instruments (1) | 8,306 | (685 | ) | NM | (11,853 | ) | 293 | NM | ||||||||||||||
Other (2) (3) | 4,336 | 3,636 | 19.3 | 10,989 | 9,076 | 21.1 | ||||||||||||||||
Total other noninterest income | $ | 18,916 | $ | 8,762 | 115.9 | $ | 11,238 | $ | 19,962 | (43.7 | ) |
(1) | Represents the revaluation of foreign currency denominated financial instruments issued and held by us, primarily loans, deposits and cash. These instruments partially offset the impact of changes in internal foreign exchange forward contracts. Refer to internal foreign exchange forward contracts, net included within gains on derivative instruments as noted above. |
(2) | Includes dividends on FHLB/FRB stock, correspondent bank rebate income and other fee income. |
(3) | Amount for the six months ended June 30, 2015, has been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amount prior to January 1, 2015 has not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Compensation and benefits | $ | 124,915 | $ | 99,820 | 25.1 | % | $ | 240,685 | $ | 202,327 | 19.0 | % | ||||||||||
Professional services | 18,950 | 21,113 | (10.2 | ) | 37,697 | 42,302 | (10.9 | ) | ||||||||||||||
Premises and equipment | 11,787 | 12,053 | (2.2 | ) | 24,444 | 23,635 | 3.4 | |||||||||||||||
Business development and travel | 9,764 | 9,249 | 5.6 | 20,876 | 19,443 | 7.4 | ||||||||||||||||
Net occupancy | 8,149 | 7,680 | 6.1 | 15,462 | 15,000 | 3.1 | ||||||||||||||||
FDIC and state assessments | 5,962 | 4,945 | 20.6 | 11,751 | 9,073 | 29.5 | ||||||||||||||||
Correspondent bank fees | 3,337 | 3,274 | 1.9 | 6,705 | 6,477 | 3.5 | ||||||||||||||||
(Reduction of) provision for unfunded credit commitments | (3,061 | ) | 2,185 | NM | (798 | ) | 3,308 | (124.1 | ) | |||||||||||||
Other (1) | 14,309 | 10,625 | 34.7 | 27,831 | 19,787 | 40.7 | ||||||||||||||||
Total noninterest expense (1) | $ | 194,112 | $ | 170,944 | 13.6 | $ | 384,653 | $ | 341,352 | 12.7 |
(1) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
Non-GAAP operating efficiency ratio, net of noncontrolling interests (Dollars in thousands, except ratios) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
GAAP noninterest expense (1) | $ | 194,112 | $ | 170,944 | 13.6 | % | $ | 384,653 | $ | 341,352 | 12.7 | % | ||||||||||
Less: amounts attributable to noncontrolling interests | 242 | 5,267 | (95.4 | ) | 534 | 8,588 | (93.8 | ) | ||||||||||||||
Non-GAAP noninterest expense, net of noncontrolling interests | $ | 193,870 | $ | 165,677 | 17.0 | $ | 384,119 | $ | 332,764 | 15.4 | ||||||||||||
GAAP net interest income | $ | 243,771 | $ | 204,965 | 18.9 | $ | 482,696 | $ | 401,293 | 20.3 | ||||||||||||
Adjustments for taxable equivalent basis | 400 | 427 | (6.3 | ) | 816 | 856 | (4.7 | ) | ||||||||||||||
Non-GAAP taxable equivalent net interest income | $ | 244,171 | $ | 205,392 | 18.9 | $ | 483,512 | $ | 402,149 | 20.2 | ||||||||||||
Less: income (losses) attributable to noncontrolling interests | 2 | (5 | ) | (140.0 | ) | 4 | 3 | 33.3 | ||||||||||||||
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests | $ | 244,169 | $ | 205,397 | 18.9 | $ | 483,508 | $ | 402,146 | 20.2 | ||||||||||||
GAAP noninterest income (2) | $ | 126,287 | $ | 14,210 | NM | $ | 249,811 | $ | 324,435 | (23.0 | ) | |||||||||||
Non-GAAP noninterest income, net of noncontrolling interests (2) | 117,731 | 49,535 | 137.7 | 227,091 | 173,042 | 31.2 | ||||||||||||||||
GAAP total revenue | $ | 370,058 | $ | 219,175 | 68.8 | $ | 732,507 | $ | 725,728 | 0.9 | ||||||||||||
Non-GAAP taxable equivalent revenue, net of noncontrolling interests | $ | 361,900 | $ | 254,932 | 42.0 | $ | 710,599 | $ | 575,188 | 23.5 | ||||||||||||
GAAP operating efficiency ratio | 52.45 | % | 77.99 | % | (32.7 | ) | 52.51 | % | 47.04 | % | 11.6 | |||||||||||
Non-GAAP operating efficiency ratio (3) | 53.57 | 64.99 | (17.6 | ) | 54.06 | % | 57.85 | % | (6.6 | ) |
(1) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1. |
(2) | Amounts for the six months ended June 30, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(3) | The non-GAAP operating efficiency ratio is calculated by dividing non-GAAP noninterest expense, net of noncontrolling interests, by non-GAAP taxable-equivalent revenue, net of noncontrolling interests. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Compensation and benefits | ||||||||||||||||||||||
Salaries and wages | $ | 51,648 | $ | 45,157 | 14.4 | % | $ | 103,073 | $ | 89,510 | 15.2 | % | ||||||||||
Incentive compensation & ESOP | 39,869 | 27,746 | 43.7 | 68,412 | 54,194 | 26.2 | ||||||||||||||||
Other employee benefits (1) | 33,398 | 26,917 | 24.1 | 69,200 | 58,623 | 18.0 | ||||||||||||||||
Total compensation and benefits | $ | 124,915 | $ | 99,820 | 25.1 | $ | 240,685 | $ | 202,327 | 19.0 | ||||||||||||
Period-end full-time equivalent employees | 1,964 | 1,786 | 10.0 | 1,964 | 1,786 | 10.0 | ||||||||||||||||
Average full-time equivalent employees | 1,959 | 1,768 | 10.8 | 1,957 | 1,751 | 11.8 |
(1) | Other employee benefits includes employer payroll taxes, group health and life insurance, share-based compensation, 401(k), warrant and retention program plans, agency fees and other employee related expenses. |
• | An increase of $12.1 million in incentive compensation and ESOP expense, primarily reflective of current expectations for our internal performance targets for 2015. |
• | An increase of $6.5 million in other employee benefits, primarily attributable to an increase of $3.9 million in the warrant incentive program plan expense resulting from gains recorded on our equity warrant assets during the second quarter of 2015. The remaining increases related to various other employee benefits. |
• | An increase of $6.5 million in salaries and wages, primarily due to an increase in the number of average full-time employees ("FTE") . Average FTEs increased by 191 to 1,959 FTEs for the three months ended June 30, 2015, compared to 1,768 FTEs for the comparable 2014 period. |
• | An increase of $14.2 million in incentive compensation and ESOP expense primarily reflective of current expectations for our internal performance targets for 2015. |
• | An increase of $13.6 million in salaries and wages expense, primarily due to an increase in the number of average FTEs, which increased by 206 to 1,957 average FTEs in the six months ended June 30, 2015, compared to 1,751 average FTEs for the comparable 2014 period. The increase in headcount was primarily to support our product development, operations, sales and advisory functions, as well as to support our commercial banking initiatives. |
• | An increase of $10.6 million in other employee benefits, primarily due to an increase of $5.2 million in the warrant incentive program plan expense resulting from gains recorded on our equity warrant assets during the first half of 2015. The remaining increases related to various other employee benefits, particularly employer payroll taxes, 401(k) expenses, and share-based plan expenses, which in total, contributed to a $5.6 million increase compared to the comparable 2014 period. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Lending and other client related processing costs | $ | 3,704 | $ | 2,586 | 43.2 | % | $ | 7,253 | $ | 4,945 | 46.7 | % | ||||||||||
Telephone | 2,544 | 1,538 | 65.4 | 4,503 | 3,286 | 37.0 | ||||||||||||||||
Data processing services | 1,358 | 2,041 | (33.5 | ) | 3,191 | 4,268 | (25.2 | ) | ||||||||||||||
Postage and supplies | 727 | 716 | 1.5 | 1,492 | 1,485 | 0.5 | ||||||||||||||||
Dues and publications | 697 | 636 | 9.6 | 1,282 | 1,133 | 13.2 | ||||||||||||||||
Other (1) | 5,279 | 3,108 | 69.9 | 10,110 | 4,670 | 116.5 | ||||||||||||||||
Total other noninterest expense (2) | $ | 14,309 | $ | 10,625 | 34.7 | $ | 27,831 | $ | 19,787 | 40.7 |
(1) | Amount for the six months ended June 30, 2015, has been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amount prior to January 1, 2015 has not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(2) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 (3) | 2014 | % Change | ||||||||||||||||
Net interest (income) loss (1) | $ | (2 | ) | $ | 5 | (140.0 | )% | $ | (4 | ) | $ | (3 | ) | 33.3 | % | |||||||
Noninterest (income) loss (1) | (7,382 | ) | 43,961 | (116.8 | ) | (21,435 | ) | (158,177 | ) | (86.4 | ) | |||||||||||
Noninterest expense (1) | 242 | 5,267 | (95.4 | ) | 534 | 8,588 | (93.8 | ) | ||||||||||||||
Carried interest (loss) income (2) | (1,174 | ) | (8,636 | ) | (86.4 | ) | (1,285 | ) | 6,784 | (118.9 | ) | |||||||||||
Net (income) loss attributable to noncontrolling interests | $ | (8,316 | ) | $ | 40,597 | (120.5 | ) | $ | (22,190 | ) | $ | (142,808 | ) | (84.5 | ) |
(1) | Represents noncontrolling interests’ share in net interest income, noninterest income and noninterest expense. |
(2) | Represents the preferred allocation of income (or change in income) earned by us as the general partner of certain consolidated funds. |
(3) | Amounts for the six months ended June 30, 2015, have been revised to reflect the retrospective application of new accounting guidance adopted in the second quarter of 2015 related to our consolidated variable interest entities (ASU 2015-02). Amounts prior to January 1, 2015 have not been revised for the adoption of this guidance. See Note 1— "Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
• | Net gains on investment securities (including carried interest) attributable to noncontrolling interests of $9.0 million primarily from gains of $8.9 million from our managed funds of funds mainly due to unrealized gains from valuation increases. See "Results of Operations—Noninterest Income—Gains on Investment Securities, Net". |
• | Noninterest expense of $0.2 million, primarily related to management fees paid by the noncontrolling interests to our subsidiaries that serve as the general partner. |
• | Net gains on investment securities (including carried interest) attributable to noncontrolling interests of $23.2 million primarily from gains of $16.0 million from our managed funds of funds and gains of $7.2 million from our managed direct venture funds primarily related to valuation increases. See "Results of Operations—Noninterest Income—Gains on Investment Securities, Net". |
• | Noninterest expense of $0.5 million, primarily related to management fees paid by the noncontrolling interests to our subsidiaries that serve as the general partner. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Net interest income | $ | 203,945 | $ | 178,046 | 14.5 | % | $ | 407,753 | $ | 353,349 | 15.4 | % | ||||||||||
Provision for loan losses | (25,592 | ) | (1,841 | ) | NM | (32,052 | ) | (2,648 | ) | NM | ||||||||||||
Noninterest income | 66,031 | 53,027 | 24.5 | 130,720 | 111,662 | 17.1 | ||||||||||||||||
Noninterest expense | (143,459 | ) | (121,827 | ) | 17.8 | (279,741 | ) | (242,533 | ) | 15.3 | ||||||||||||
Income before income tax expense | $ | 100,925 | $ | 107,405 | (6.0 | ) | $ | 226,680 | $ | 219,830 | 3.1 | |||||||||||
Total average loans, net of unearned income | $ | 12,824,661 | $ | 9,874,780 | 29.9 | $ | 12,777,409 | $ | 9,776,913 | 30.7 | ||||||||||||
Total average assets | 37,544,170 | 29,214,978 | 28.5 | 36,813,121 | 27,403,905 | 34.3 | ||||||||||||||||
Total average deposits | 33,714,023 | 26,323,795 | 28.1 | 33,096,854 | 24,610,326 | 34.5 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Net interest income | $ | 11,109 | $ | 9,293 | 19.5 | % | $ | 20,832 | $ | 16,185 | 28.7 | % | ||||||||||
(Provision for) reduction of loan losses | (921 | ) | (106 | ) | NM | (913 | ) | 207 | NM | |||||||||||||
Noninterest income | 595 | 356 | 67.1 | 992 | 630 | 57.5 | ||||||||||||||||
Noninterest expense | (3,139 | ) | (2,640 | ) | 18.9 | (5,886 | ) | (5,135 | ) | 14.6 | ||||||||||||
Income before income tax expense | $ | 7,644 | $ | 6,903 | 10.7 | $ | 15,025 | $ | 11,887 | 26.4 | ||||||||||||
Total average loans, net of unearned income | $ | 1,542,046 | $ | 1,119,503 | 37.7 | $ | 1,458,581 | $ | 1,084,894 | 34.4 | ||||||||||||
Total average assets | 2,216,622 | 986,392 | 124.7 | 2,069,903 | 975,740 | 112.1 | ||||||||||||||||
Total average deposits | 1,084,632 | 791,261 | 37.1 | 1,167,823 | 768,300 | 52.0 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Net interest income | $ | 1 | $ | 29 | (96.6 | )% | $ | 2 | $ | 43 | (95.3 | )% | ||||||||||
Noninterest income (loss) | 19,909 | (3,119 | ) | NM | 40,587 | 34,553 | 17.5 | |||||||||||||||
Noninterest expense | (3,704 | ) | (3,144 | ) | 17.8 | (7,190 | ) | (5,779 | ) | 24.4 | ||||||||||||
Income (loss) before income tax expense | $ | 16,206 | $ | (6,234 | ) | NM | $ | 33,399 | $ | 28,817 | 15.9 | |||||||||||
Total average assets | $ | 330,016 | $ | 342,924 | (3.8 | ) | $ | 335,690 | $ | 342,451 | (2.0 | ) |
• | Net gains on investment securities of $15.7 million for the three months ended June 30, 2015, compared to net losses of $6.8 million for the comparable 2014 period. The net gains on investment securities of $15.7 million for the three months ended June 30, 2015 were primarily driven by strong distributions from our strategic venture capital fund investments. |
• | Net gains on investment securities of $30.6 million for the six months ended June 30, 2015, compared to net gains of $27.5 million for the comparable 2014 period. The net gains on investment securities of $30.6 million for the six months ended June 30, 2015 were primarily driven by gains from distributions of investments, including the remaining shares of FireEye common stock in the first quarter of 2015, as well as unrealized valuation increases. |
• | Fund management fees of $7.6 million compared to $6.3 million for the comparable 2014 period. The increase is primarily due to the addition of the Strategic Investors Fund VII Funds in the first quarter of 2015 and Capital Partners III Fund in the second quarter of 2014. |
June 30, 2015 | December 31, 2014 | |||||||||||||||
(Dollars in thousands) | Carrying value (as reported) | Amount attributable to SVBFG | Carrying value (as reported) | Amount attributable to SVBFG | ||||||||||||
Non-marketable securities (fair value accounting) (1): | ||||||||||||||||
Venture capital and private equity fund investments (2) | $ | 156,730 | $ | 44,628 | $ | 1,130,882 | $ | 84,368 | ||||||||
Other venture capital investments (3) | 3,390 | 363 | 71,204 | 1,823 | ||||||||||||
Other securities (fair value accounting) (4) | 287 | 62 | 108,251 | 7,802 | ||||||||||||
Non-marketable securities (equity method accounting): | ||||||||||||||||
Venture capital and private equity fund investments | 78,574 | 65,389 | — | — | ||||||||||||
Debt funds | 22,313 | 22,313 | 26,672 | 26,672 | ||||||||||||
Other investments | 118,406 | 118,406 | 116,002 | 116,002 | ||||||||||||
Non-marketable securities (cost method accounting): | ||||||||||||||||
Venture capital and private equity fund investments | 127,073 | 127,073 | 140,551 | 140,551 | ||||||||||||
Other investments (5) | 16,189 | 16,189 | 13,423 | 13,423 | ||||||||||||
Investments in qualified affordable housing projects (5) | 122,544 | 122,544 | 121,155 | 121,155 | ||||||||||||
Total non-marketable and other securities | $ | 645,506 | $ | 516,967 | $ | 1,728,140 | $ | 511,796 |
(1) | During the second quarter of 2015 we adopted new accounting guidance related to our consolidated variable interest entities (ASU 2015-02) under a modified retrospective approach. Periods prior to January 1, 2015 have not been revised. See Note 1—”Basis of Presentation” and Note 4— "Variable Interest Entities"of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details regarding our non-marketable and other securities. |
(2) | The following table shows the amounts of venture capital and private equity fund investments held by the following funds and amounts attributable to SVBFG for each fund at June 30, 2015 and December 31, 2014: |
June 30, 2015 | December 31, 2014 | |||||||||||||||
(Dollars in thousands) | Carrying value (as reported) | Amount attributable to SVBFG | Carrying value (as reported) | Amount attributable to SVBFG | ||||||||||||
SVB Strategic Investors Fund, LP | $ | 23,283 | $ | 2,925 | $ | 24,645 | $ | 3,096 | ||||||||
SVB Strategic Investors Fund II, LP (i) | — | — | 97,250 | 8,336 | ||||||||||||
SVB Strategic Investors Fund III, LP (i) | — | — | 269,821 | 15,841 | ||||||||||||
SVB Strategic Investors Fund IV, LP (i) | — | — | 291,291 | 14,564 | ||||||||||||
Strategic Investors Fund V Funds (i) | — | — | 226,111 | 350 | ||||||||||||
Strategic Investors Fund VI Funds (i) | — | — | 89,605 | — | ||||||||||||
SVB Capital Preferred Return Fund, LP | 62,901 | 13,556 | 62,110 | 13,386 | ||||||||||||
SVB Capital—NT Growth Partners, LP | 63,728 | 21,330 | 61,973 | 21,006 | ||||||||||||
SVB Capital Partners II, LP (i) | — | — | 302 | 15 | ||||||||||||
Other private equity fund | 6,818 | 6,817 | 7,774 | 7,774 | ||||||||||||
Total venture capital and private equity fund investments | $ | 156,730 | $ | 44,628 | $ | 1,130,882 | $ | 84,368 |
(i) | Funds were deconsolidated during the second quarter of 2015 upon adoption of ASU 2015-02 and are now reported under equity method accounting. Periods prior to January 1, 2015 have not been revised. See Note 1—”Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(3) | The following table shows the amounts of other venture capital investments held by the following funds and amounts attributable to SVBFG for each fund at June 30, 2015 and December 31, 2014: |
June 30, 2015 | December 31, 2014 | |||||||||||||||
(Dollars in thousands) | Carrying value (as reported) | Amount attributable to SVBFG | Carrying value (as reported) | Amount attributable to SVBFG | ||||||||||||
Silicon Valley BancVentures, LP | $ | 3,390 | $ | 363 | $ | 3,291 | $ | 352 | ||||||||
SVB Capital Partners II, LP (i) | — | — | 20,481 | 1,040 | ||||||||||||
Capital Partners III, LP (i) | — | — | 41,055 | — | ||||||||||||
SVB Capital Shanghai Yangpu Venture Capital Fund (i) | — | — | 6,377 | 431 | ||||||||||||
Total other venture capital investments | $ | 3,390 | $ | 363 | $ | 71,204 | $ | 1,823 |
(i) | Funds were deconsolidated during the second quarter of 2015 upon adoption of ASU 2015-02 and are now reported under equity method accounting. Periods prior to January 1, 2015 have not been revised. See Note 1—”Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(4) | Investments classified as other securities (fair value accounting) represent direct equity investments in public companies held by our consolidated funds. At December 31, 2014, the amount primarily included total unrealized gains in one public company, FireEye, Inc. that were realized during the first quarter of 2015. Funds were deconsolidated during the second quarter of 2015 upon adoption of ASU 2015-02. See Note 1—”Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details. |
(5) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1 - "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
June 30, 2015 | December 31, 2014 | |||||||||||||
(Dollars in thousands) | Amount | Percentage | Amount | Percentage | ||||||||||
Commercial loans: | ||||||||||||||
Software and internet | $ | 5,026,076 | 35.0 | % | $ | 4,996,246 | 34.5 | % | ||||||
Hardware | 1,058,436 | 7.4 | 1,140,494 | 7.9 | ||||||||||
Private equity/venture capital | 4,023,832 | 28.0 | 4,621,299 | 31.9 | ||||||||||
Life science & healthcare | 1,489,055 | 10.4 | 1,300,727 | 9.0 | ||||||||||
Premium wine | 192,743 | 1.3 | 189,142 | 1.3 | ||||||||||
Other | 256,405 | 1.8 | 236,519 | 1.6 | ||||||||||
Total commercial loans | 12,046,547 | 83.9 | 12,484,427 | 86.2 | ||||||||||
Real estate secured loans: | ||||||||||||||
Premium wine | 632,626 | 4.4 | 607,507 | 4.2 | ||||||||||
Consumer | 1,340,106 | 9.3 | 1,117,661 | 7.7 | ||||||||||
Other | 33,583 | 0.2 | 39,983 | 0.3 | ||||||||||
Total real estate secured loans | 2,006,315 | 13.9 | 1,765,151 | 12.2 | ||||||||||
Construction loans | 91,436 | 0.6 | 78,851 | 0.5 | ||||||||||
Consumer loans | 226,632 | 1.6 | 160,337 | 1.1 | ||||||||||
Total gross loans | $ | 14,370,930 | 100.0 | $ | 14,488,766 | 100.0 |
June 30, 2015 | ||||||||||||||||||||||||
(Dollars in thousands) | Less than Five Million | Five to Ten Million | Ten to Twenty Million | Twenty to Thirty Million | Thirty Million or More | Total | ||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||
Software and internet | $ | 1,345,057 | $ | 724,562 | $ | 1,313,347 | $ | 903,331 | $ | 739,779 | $ | 5,026,076 | ||||||||||||
Hardware | 199,964 | 178,836 | 154,653 | 269,405 | 255,578 | 1,058,436 | ||||||||||||||||||
Private equity/venture capital | 490,766 | 484,195 | 955,314 | 472,906 | 1,620,651 | 4,023,832 | ||||||||||||||||||
Life science & healthcare | 345,996 | 303,706 | 253,745 | 403,044 | 182,564 | 1,489,055 | ||||||||||||||||||
Premium wine | 78,434 | 28,650 | 55,477 | 30,182 | — | 192,743 | ||||||||||||||||||
Other | 92,744 | 24,682 | 41,059 | 28,169 | 69,751 | 256,405 | ||||||||||||||||||
Commercial loans | 2,552,961 | 1,744,631 | 2,773,595 | 2,107,037 | 2,868,323 | 12,046,547 | ||||||||||||||||||
Real estate secured loans: | ||||||||||||||||||||||||
Premium wine | 156,914 | 168,652 | 210,125 | 96,935 | — | 632,626 | ||||||||||||||||||
Consumer | 1,152,024 | 161,226 | 26,856 | — | — | 1,340,106 | ||||||||||||||||||
Other | — | — | 11,250 | 22,333 | — | 33,583 | ||||||||||||||||||
Real estate secured loans | 1,308,938 | 329,878 | 248,231 | 119,268 | — | 2,006,315 | ||||||||||||||||||
Construction loans | 22,478 | 16,081 | 52,877 | — | — | 91,436 | ||||||||||||||||||
Consumer loans | 79,624 | 31,993 | 15 | 40,000 | 75,000 | 226,632 | ||||||||||||||||||
Total gross loans | $ | 3,964,001 | $ | 2,122,583 | $ | 3,074,718 | $ | 2,266,305 | $ | 2,943,323 | $ | 14,370,930 |
December 31, 2014 | ||||||||||||||||||||||||
(Dollars in thousands) | Less than Five Million | Five to Ten Million | Ten to Twenty Million | Twenty to Thirty Million | Thirty Million or More | Total | ||||||||||||||||||
Commercial loans: | ||||||||||||||||||||||||
Software and internet | $ | 1,214,082 | $ | 670,212 | $ | 1,174,410 | $ | 917,546 | $ | 1,019,996 | $ | 4,996,246 | ||||||||||||
Hardware | 204,513 | 226,135 | 240,039 | 146,826 | 322,981 | 1,140,494 | ||||||||||||||||||
Private equity/venture capital | 426,985 | 445,677 | 677,568 | 568,743 | 2,502,326 | 4,621,299 | ||||||||||||||||||
Life science & healthcare | 340,214 | 238,585 | 284,618 | 216,805 | 220,505 | 1,300,727 | ||||||||||||||||||
Premium wine (1) | 77,409 | 38,413 | 45,222 | 28,098 | — | 189,142 | ||||||||||||||||||
Other | 101,779 | 42,906 | 36,904 | 23,235 | 31,695 | 236,519 | ||||||||||||||||||
Commercial loans | 2,364,982 | 1,661,928 | 2,458,761 | 1,901,253 | 4,097,503 | 12,484,427 | ||||||||||||||||||
Real estate secured loans: | ||||||||||||||||||||||||
Premium wine (1) | 151,314 | 169,719 | 205,692 | 80,782 | — | 607,507 | ||||||||||||||||||
Consumer loans (2) | 977,747 | 139,914 | — | — | — | 1,117,661 | ||||||||||||||||||
Other | — | 6,000 | 11,250 | 22,733 | — | 39,983 | ||||||||||||||||||
Real estate secured loans | 1,129,061 | 315,633 | 216,942 | 103,515 | — | 1,765,151 | ||||||||||||||||||
Construction loans | 14,069 | 24,194 | 40,588 | — | — | 78,851 | ||||||||||||||||||
Consumer loans (2) | 65,326 | 22,593 | 16,418 | 20,000 | 36,000 | 160,337 | ||||||||||||||||||
Total gross loans | $ | 3,573,438 | $ | 2,024,348 | $ | 2,732,709 | $ | 2,024,768 | $ | 4,133,503 | $ | 14,488,766 |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | ||||||
Gross impaired, past due, and restructured loans: | ||||||||
Impaired loans | $ | 100,802 | $ | 38,137 | ||||
Loans past due 90 days or more still accruing interest | 47 | 1,302 | ||||||
Total nonperforming loans | 100,849 | 39,439 | ||||||
OREO and other foreclosed assets | — | 561 | ||||||
Total nonperforming assets | $ | 100,849 | $ | 40,000 | ||||
Performing TDRs | $ | 82 | $ | 587 | ||||
Nonperforming loans as a percentage of total gross loans | 0.70 | % | 0.27 | % | ||||
Nonperforming assets as a percentage of total assets | 0.25 | 0.10 | ||||||
Allowance for loan losses | $ | 192,644 | $ | 165,359 | ||||
As a percentage of total gross loans | 1.34 | % | 1.14 | % | ||||
As a percentage of total gross nonperforming loans | 191.02 | 419.28 | ||||||
Allowance for loan losses for impaired loans | $ | 50,865 | $ | 15,051 | ||||
As a percentage of total gross loans | 0.35 | % | 0.10 | % | ||||
As a percentage of total gross nonperforming loans | 50.44 | 38.16 | ||||||
Allowance for loan losses for total gross performing loans | $ | 141,779 | $ | 150,308 | ||||
As a percentage of total gross loans | 0.99 | % | 1.04 | % | ||||
As a percentage of total gross performing loans | 0.99 | 1.04 | ||||||
Total gross loans | $ | 14,370,930 | $ | 14,488,766 | ||||
Total gross performing loans | 14,270,081 | 14,449,327 | ||||||
Reserve for unfunded credit commitments (1) | 35,617 | 36,419 | ||||||
As a percentage of total unfunded credit commitments | 0.23 | % | 0.25 | % | ||||
Total unfunded credit commitments (2) | $ | 15,808,209 | $ | 14,705,785 |
(1) | The “Reserve for unfunded credit commitments” is included as a component of other liabilities. See “Provision for Unfunded Credit Commitments” above for a discussion of the changes to the reserve. |
(2) | Includes unfunded loan commitments and letters of credit. |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | % Change | ||||||||
Derivative assets, gross (1) | $ | 162,405 | $ | 157,990 | 2.8 | % | |||||
Foreign exchange spot contract assets, gross | 121,437 | 51,972 | 133.7 | ||||||||
Accrued interest receivable | 97,158 | 94,180 | 3.2 | ||||||||
FHLB and Federal Reserve Bank stock | 46,116 | 53,496 | (13.8 | ) | |||||||
Accounts receivable | 33,705 | 20,092 | 67.8 | ||||||||
Deferred tax assets (2) | 27,436 | 45,979 | (40.3 | ) | |||||||
Other assets | 88,085 | 131,580 | (33.1 | ) | |||||||
Total accrued interest receivable and other assets | $ | 576,342 | $ | 555,289 | 3.8 |
(1) | See “Derivatives” section below. |
(2) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted during the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1— "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | % Change | ||||||||
Assets: | |||||||||||
Equity warrant assets | $ | 122,504 | $ | 116,604 | 5.1 | % | |||||
Foreign exchange forward and option contracts | 33,986 | 34,231 | (0.7 | ) | |||||||
Interest rate swaps | 3,828 | 4,609 | (16.9 | ) | |||||||
Client interest rate derivatives | 2,087 | 2,546 | (18.0 | ) | |||||||
Total derivative assets | $ | 162,405 | $ | 157,990 | 2.8 | ||||||
Liabilities: | |||||||||||
Foreign exchange forward and option contracts | $ | (31,028 | ) | $ | (28,363 | ) | 9.4 | ||||
Client interest rate derivatives | (2,247 | ) | (2,748 | ) | (18.2 | ) | |||||
Total derivative liabilities | $ | (33,275 | ) | $ | (31,111 | ) | 7.0 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Balance, beginning of period | $ | 124,456 | $ | 91,135 | $ | 116,604 | $ | 103,513 | ||||||||
New equity warrant assets | 2,846 | 3,352 | 5,333 | 7,431 | ||||||||||||
Non-cash increases in fair value | 9,146 | 9,774 | 20,110 | 16,832 | ||||||||||||
Exercised equity warrant assets (1) | (13,830 | ) | (14,927 | ) | (19,137 | ) | (38,355 | ) | ||||||||
Terminated equity warrant assets | (114 | ) | (429 | ) | (406 | ) | (516 | ) | ||||||||
Balance, end of period | $ | 122,504 | $ | 88,905 | $ | 122,504 | $ | 88,905 |
(Dollars in thousands) | June 30, 2015 | December 31, 2014 | % Change | ||||||||
Foreign exchange spot contract liabilities, gross | $ | 210,981 | $ | 94,999 | 122.1 | % | |||||
Accrued compensation | 90,262 | 120,841 | (25.3 | ) | |||||||
Reserve for unfunded credit commitments | 35,617 | 36,419 | (2.2 | ) | |||||||
Derivative liabilities, gross (1) | 33,275 | 31,111 | 7.0 | ||||||||
Other | 244,555 | 200,123 | 22.2 | ||||||||
Total other liabilities | $ | 614,690 | $ | 483,493 | 27.1 |
(1) | See “Derivatives” section above. |
June 30, 2015 | December 31, 2014 | |||||||||||||||
(Dollars in thousands) | Total Balance | Level 3 | Total Balance | Level 3 | ||||||||||||
Assets carried at fair value | $ | 14,818,571 | $ | 123,427 | $ | 15,008,982 | $ | 185,902 | ||||||||
As a percentage of total assets | 36.8 | % | 0.3 | % | 38.2 | % | 0.5 | % | ||||||||
Liabilities carried at fair value | $ | 33,275 | $ | — | $ | 31,111 | $ | — | ||||||||
As a percentage of total liabilities | 0.1 | % | — | % | 0.1 | % | — | % | ||||||||
Level 1 and 2 | Level 3 | Level 1 and 2 | Level 3 | |||||||||||||
Percentage of assets measured at fair value | 99.2 | % | 0.8 | % | 98.8 | % | 1.2 | % |
Minimum Ratios under Applicable Regulatory Capital Adequacy Requirements | ||||||||||||
June 30, 2015 | December 31, 2014 | “Well Capitalized” | “Adequately Capitalized” | |||||||||
SVB Financial: (6) | ||||||||||||
CET 1 risk-based capital ratio (1) | 12.54 | % | — | % | 6.5 | % | 4.5 | % | ||||
Tier 1 risk-based capital ratio (2) | 13.15 | 12.91 | 8.0 | 6.0 | ||||||||
Total risk-based capital ratio (2) | 14.15 | 13.92 | 10.0 | 8.0 | ||||||||
Tier 1 leverage ratio (2) | 7.95 | 7.74 | N/A | 4.0 | ||||||||
Tangible common equity to tangible assets ratio (3)(4)(5) | 7.58 | 7.15 | N/A | N/A | ||||||||
Tangible common equity to risk-weighted assets ratio (3)(4)(5) | 12.81 | 12.93 | N/A | N/A | ||||||||
Bank: | ||||||||||||
CET 1 risk-based capital ratio (1) | 12.87 | % | — | % | 6.5 | % | 4.5 | % | ||||
Tier 1 risk-based capital ratio (2) | 12.87 | 11.09 | 8.0 | 6.0 | ||||||||
Total risk-based capital ratio (2) | 13.93 | 12.12 | 10.0 | 8.0 | ||||||||
Tier 1 leverage ratio (2) | 7.39 | 6.64 | 5.0 | 4.0 | ||||||||
Tangible common equity to tangible assets ratio (3)(4)(5) | 7.40 | 6.38 | N/A | N/A | ||||||||
Tangible common equity to risk-weighted assets ratio (2)(3)(4)(5) | 13.16 | 11.19 | N/A | N/A |
(1) | Effective January 1, 2015, CET 1 is a new ratio requirement under the Basel III Capital Rules and represents, common stock, plus related surplus and retained earnings, plus limited amounts of minority interest in the form of common stock, less certain regulatory deductions, divided by total risk-weighted assets. |
(2) | Ratios as of June 30, 2015 reflect the adoption of the Basel III Capital Rules in effect beginning January 1, 2015. Ratios for prior periods represent the previous capital rules under Basel I. |
(3) | See below for a reconciliation of non-GAAP tangible common equity to tangible assets and tangible common equity to risk-weighted assets. |
(4) | The Federal Reserve Bank has not issued any minimum guidelines for the tangible common equity to tangible assets ratio or the tangible common equity to risk-weighted assets ratio. However, we believe these ratios provide meaningful supplemental information regarding our capital levels and are therefore provided above. |
(5) | Prior period ratios have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1 - "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(6) | There were no material changes to any of SVB Financial’s previously-reported capital ratios (common equity tier 1 risk-based capital, tier 1 risk-based capital, total risk-based capital and tier 1 leverage ratios) as of March 31, 2015, after retrospective application of ASU 2015-02 and management's assessment of these ratios under the Basel III Capital Rules. These capital ratios for SVB Financial as of March 31, 2015 continued to exceed minimum regulatory requirements for a “well capitalized” institution. |
SVB Financial | Bank | |||||||||||||||
Non-GAAP tangible common equity and tangible assets (dollars in thousands, except ratios) | June 30, 2015 | December 31, 2014 | June 30, 2015 | December 31, 2014 | ||||||||||||
GAAP SVBFG stockholders’ equity (1) | $ | 3,051,102 | $ | 2,813,072 | $ | 2,930,554 | $ | 2,399,411 | ||||||||
Tangible common equity (1) | $ | 3,051,102 | $ | 2,813,072 | $ | 2,930,554 | $ | 2,399,411 | ||||||||
GAAP Total assets (1) | $ | 40,236,118 | $ | 39,339,950 | $ | 39,612,481 | $ | 37,607,973 | ||||||||
Tangible assets (1) | $ | 40,236,118 | $ | 39,339,950 | $ | 39,612,481 | $ | 37,607,973 | ||||||||
Risk-weighted assets (2) | $ | 23,815,512 | $ | 21,755,091 | $ | 22,277,020 | $ | 21,450,480 | ||||||||
Tangible common equity to tangible assets (1) | 7.58 | % | 7.15 | % | 7.40 | % | 6.38 | % | ||||||||
Tangible common equity to risk-weighted assets (1) (2) | 12.81 | 12.93 | 13.16 | 11.19 |
(1) | Prior period amounts have been revised to reflect the retrospective application of new accounting guidance adopted in the first quarter of 2015 related to our investments in qualified affordable housing projects (ASU 2014-01). See Note 1 - "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements" under Part I, Item 1 in this report. |
(2) | Amounts and ratios as of June 30, 2015 reflect the adoption of the Basel III Capital Rules in effect beginning January 1, 2015. Amounts and ratios for prior periods represent the previous capital rules under Basel I. |
Six months ended June 30, | ||||||||
(Dollars in thousands) | 2015 | 2014 | ||||||
Average cash and cash equivalents | $ | 2,094,365 | $ | 3,010,077 | ||||
Percentage of total average assets | 5.4 | % | 10.1 | % | ||||
Net cash provided by operating activities | $ | 205,434 | $ | 218,089 | ||||
Net cash used for investing activities | (910,215 | ) | (5,445,902 | ) | ||||
Net cash provided by financing activities | 1,519,317 | 6,338,865 | ||||||
Net increase in cash and cash equivalents | $ | 814,536 | $ | 1,111,052 |
Estimated | Estimated Increase/(Decrease) In EVE | Estimated | Estimated Increase/ (Decrease) In NII | |||||||||||||||||||
Change in interest rates (basis points) | EVE | Amount | Percent | NII | Amount | Percent | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
June 30, 2015: | ||||||||||||||||||||||
+200 | $ | 5,928,348 | $ | 1,460,202 | 32.7 | % | $ | 1,274,216 | $ | 245,158 | 23.8 | % | ||||||||||
+100 | 5,225,063 | 756,917 | 16.9 | 1,146,467 | 117,409 | 11.4 | ||||||||||||||||
— | 4,468,146 | — | — | 1,029,058 | — | — | ||||||||||||||||
-100 | 4,198,732 | (269,414 | ) | (6.0 | ) | 987,510 | (41,548 | ) | (4.0 | ) | ||||||||||||
-200 | 4,358,951 | (109,195 | ) | (2.4 | ) | 959,037 | (70,021 | ) | (6.8 | ) | ||||||||||||
December 31, 2014: | ||||||||||||||||||||||
+200 | $ | 6,201,773 | $ | 1,237,900 | 24.9 | % | $ | 1,242,321 | $ | 223,059 | 21.9 | % | ||||||||||
+100 | 5,598,887 | 635,014 | 12.8 | 1,124,643 | 105,381 | 10.3 | ||||||||||||||||
— | 4,963,873 | — | — | 1,019,262 | — | — | ||||||||||||||||
-100 | 4,927,749 | (36,124 | ) | (0.7 | ) | 979,982 | (39,280 | ) | (3.9 | ) | ||||||||||||
-200 | 5,119,636 | 155,763 | 3.1 | 953,556 | (65,706 | ) | (6.4 | ) |
SVB Financial Group | ||
Date: August 7, 2015 | /s/ MICHAEL DESCHENEAUX | |
Michael Descheneaux | ||
Chief Financial Officer | ||
(Principal Financial Officer) | ||
SVB Financial Group | ||
Date: August 7, 2015 | /s/ KAMRAN HUSAIN | |
Kamran Husain | ||
Chief Accounting Officer | ||
(Principal Accounting Officer) |
Exhibit Number | Exhibit Description | Incorporated by Reference | Filed Herewith | |||||||||
Form | File No. | Exhibit | Filing Date | |||||||||
31.1 | Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Executive Officer | X | ||||||||||
31.2 | Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Financial Officer | |||||||||||
32.1 | Section 1350 Certifications | * | ||||||||||
101.INS | XBRL Instance Document | X | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X |
* | Furnished herewith |
1. | I have reviewed this quarterly report on Form 10-Q of SVB Financial Group; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 7, 2015 | /s/ GREG BECKER | |
Greg Becker | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of SVB Financial Group; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 7, 2015 | /s/ MICHAEL DESCHENEAUX | |
Michael Descheneaux | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
Date: August 7, 2015 | /s/ GREG BECKER | |
Greg Becker | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
Date: August 7, 2015 | /s/ MICHAEL DESCHENEAUX | |
Michael Descheneaux | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
Basis of Presentation (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Accounting Standards Update 2014-01 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Cumulative effect on retained earnings upon adoption of new guidance | $ 4.7 | $ 4.6 |
Variable Interest Entities - Carrying Amounts and Classification of Significant Variable Interests (Details) - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
Jun. 30, 2014 |
Dec. 31, 2013 |
[1] | |||||
---|---|---|---|---|---|---|---|---|---|---|
Variable Interest Entity [Line Items] | ||||||||||
Cash and cash equivalents | $ 2,625,550 | $ 1,796,062 | $ 2,649,831 | $ 1,538,779 | ||||||
Non-marketable and other securities | [2] | 645,506 | 1,728,140 | |||||||
Accrued interest receivable and other assets | [2] | 576,342 | 555,289 | |||||||
Total assets | 40,236,118 | 39,339,950 | ||||||||
Other liabilities | 614,690 | 483,493 | ||||||||
Total liabilities | 37,046,646 | $ 35,288,216 | ||||||||
Maximum Exposure to Loss in Unconsolidated VIEs | 340,972 | |||||||||
Consolidated | ||||||||||
Variable Interest Entity [Line Items] | ||||||||||
Cash and cash equivalents | 22,203 | |||||||||
Non-marketable and other securities | 200,695 | |||||||||
Accrued interest receivable and other assets | 659 | |||||||||
Total assets | 223,557 | |||||||||
Other liabilities | 282 | |||||||||
Accrued expenses and other liabilities | 0 | |||||||||
Total liabilities | 282 | |||||||||
Maximum Exposure to Loss in Unconsolidated VIEs | 223,300 | |||||||||
Unconsolidated | ||||||||||
Variable Interest Entity [Line Items] | ||||||||||
Non-marketable and other securities | 340,972 | |||||||||
Total assets | 340,972 | |||||||||
Accrued expenses and other liabilities | 63,637 | |||||||||
Total liabilities | 63,637 | |||||||||
Maximum Exposure to Loss in Unconsolidated VIEs | $ 341,000 | |||||||||
|
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