Noninterest Income

For the year ended December 31, 2017, noninterest income was $557.2 million, compared to $456.6 million and $472.8 million, for the comparable 2016 and 2015 periods.



	Year ended December 31,
(Dollars in thousands)	2017		2016		2015
Noninterest income:
Gains on investment securities, net	$	64,603	$	51,740	$	89,445
Gains on equity warrant assets, net	54,555		37,892		70,963
Foreign exchange fees	115,760		104,183		87,007
Credit card fees	76,543		68,205		56,657
Deposit service charges	58,715		52,524		46,683
Client investment fees	56,136		32,219		21,610
Lending related fees	43,265		33,395		32,536
Letters of credit and standby letters of credit fees	28,544		25,644		20,889
Other	59,110		50,750		47,004
Total noninterest income	$	557,231	$	456,552	$	472,794

Gains on investment securities, net

Net gains on investment securities include both gains and losses from our non-marketable and other securities, as well as gains and losses from sales of our AFS securities portfolio, when applicable.

Our non-marketable and other securities portfolio primarily represents investments in venture capital and private equity funds, our joint venture bank in China, debt funds, private and public portfolio companies and investments in qualified affordable housing projects.

Our AFS securities portfolio is primarily a fixed income investment portfolio that is managed with the objective of earning an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and credit diversification as well as addressing our asset/liability management objectives. Sales of equity securities held as a result of our exercised warrants, result in net gains or losses on investment securities.

A summary of gains and losses on investment securities for 2017, 2016 and 2015 is as follows:



	Year ended December 31,
(Dollars in thousands)	2017			2016		2015
Gains on non-marketable and other securities, net	$	69,792		$	39,545	$	88,244
(Losses) gains on sales of available-for-sale securities, net	(5,189		)	12,195		1,201
Gains on investment securities, net	$	64,603		$	51,740	$	89,445

Gains on equity warrant assets, net

In connection with negotiating credit facilities and certain other services, we often obtain rights to acquire stock in the form of equity warrant assets in primarily private, venture-backed companies in the technology and life science/healthcare industries. Any changes in fair value from the grant date fair value of equity warrant assets will be recognized as increases or decreases to other assets on our balance sheet and as net gains or losses on equity warrant assets, in noninterest income, a component of consolidated net income. A summary of gains on equity warrant assets, net, for 2017, 2016 and 2015 is as follows:



	Year ended December 31,
(Dollars in thousands)	2017			2016			2015
Equity warrant assets:
Gains on exercises, net	$	48,275		$	31,197		$	41,455
Cancellations and expirations	(4,422		)	(3,015		)	(1,040		)
Changes in fair value, net	10,702			9,710			30,548
Net gains on equity warrant assets	$	54,555		$	37,892		$	70,963

Foreign exchange fees

Foreign exchange fees represent the income differential between purchases and sales of foreign currency on behalf of our clients. Foreign exchange fees are recognized based on trade date and are typically settled within two business days. A summary of foreign exchange fee income by instrument type for 2017, 2016 and 2015 is as follows:



	Year ended December 31,
(Dollars in thousands)	2017		2016		2015
Foreign exchange fees by instrument type:
Spot contract commissions	$	104,344	$	89,354	$	80,564
Forward contract commissions	10,934		14,004		6,414
Option premium fees	482		825		29
Total foreign exchange fees	$	115,760	$	104,183	$	87,007

Credit card fees

Credit card fees include interchange income from credit and debit cards and fees earned from processing transactions for merchants. Credit card fees are earned daily upon completion of transaction settlement services. Costs related to rewards programs are recorded when the rewards are earned by the customer and presented as a reduction to interchange fee income. Annual card service fees and direct loan origination costs are deferred and recognized on a straight-line basis over a 12-month period. A summary of credit card fees by instrument type for 2017, 2016 and 2015 is as follows:



	Year ended December 31,
(Dollars in thousands)	2017		2016		2015
Credit card fees by instrument type:
Card interchange fees, net	$	60,224	$	51,513	$	46,185
Merchant service fees	11,584		12,783		7,346
Card service fees	4,735		3,909		3,126
Total credit card fees	$	76,543	$	68,205	$	56,657

Deposit service charges

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

Client investment fees

Client investment fees include fees earned from Rule 12(b)-1 fees, revenue sharing and from customer transactional based fees. Rule 12(b)-1 fees and revenue sharing are recognized as earned based on client funds that are invested in the period. Transactional based fees are earned and recognized on fixed income securities when the transaction is executed on the clients' behalf. Amounts paid to third-party service providers are predominantly expensed, such that client investment fees are recorded gross of payments made to third parties. A summary of client investment fees by instrument type for 2017, 2016 and 2015 is as follows:



	Year ended December 31,
(Dollars in thousands)	2017		2016		2015
Client investment fees by type:
Sweep money market fees	$	28,485	$	15,147	$	9,347
Asset management fees	16,831		15,389		12,263
Client directed investment fees	10,820		1,683		—
Total client investment fees	$	56,136	$	32,219	$	21,610

Lending related fees

Unused commitment fees, minimum finance fees and unused line fees are recognized as earned on a monthly basis. Fees that qualify for syndication treatment are recognized at the completion of the syndicated loan deal for which the fees were received. A summary of lending related fees by instrument type for 2017, 2016 and 2015 is as follows:



	Year ended December 31,
(Dollars in thousands)	2017		2016		2015
Lending related fees by instrument type:
Unused commitment fees	$	34,110	$	25,654	$	24,025
Other	9,155		7,741		8,511
Total lending related fees	$	43,265	$	33,395	$	32,536

Letters of credit and standby letters of credit fees

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

Other noninterest income

Other noninterest income primarily includes income from fund management fees, valuation service-based fee income and other service revenue. Fund management fees are comprised of fees charged directly to our managed funds of funds and direct venture funds. Fund management fees are based upon the contractual terms of the limited partnership agreements and are recognized as earned over the specified contract period, which is generally equal to the life of the individual fund. Other service revenue primarily includes revenue from dividends on FHLB/FRB stock, correspondent bank rebate income, incentive fees related to carried interest and other fee income. We recognize revenue when: (i) persuasive evidence of an arrangement exists, (ii) we have performed the service, provided we have no other remaining obligations to the customer, (iii) the fee is fixed or determinable and, (iv) collectability is probable. A summary of other noninterest income by instrument type for 2017, 2016 and 2015 is as follows:



	Year ended December 31,
(Dollars in thousands)	2017			2016			2015
Fund management fees	$	21,214		$	19,195		$	15,941
Valuation fee income	3,860			7,962			8,767
Gains on revaluation of client foreign currency instruments, net (1)	10,882			4,215			115
(Losses) gains on client foreign exchange forward contracts, net (1)	(9,969		)	(5,674		)	694
Gains (losses) on revaluation of internal foreign currency instruments, net (2)	33,161			(16,676		)	(12,735		)
(Losses) gains on internal foreign exchange forward contracts, net (2)	(32,286		)	16,136			12,377
Other service revenue	32,248			25,592			21,845
Total other noninterest income	$	59,110		$	50,750		$	47,004


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


(2)	Represents the net revaluation of foreign currency denominated financial instruments issued and held by us, primarily loans, deposits and cash. We enter into internal foreign exchange forward contracts to economically reduce our foreign exchange exposure related to these foreign currency denominated financial instruments issued and held by us.