Variable Interest Entities

9 Months Ended

Sep. 30, 2021

Investments In Variable Interest Entities [Abstract]

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

The following table presents the carrying amounts and classification of variable interests in consolidated and unconsolidated VIEs as of September 30, 2021 and December 31, 2020:


(Dollars in millions)	Consolidated VIEs		Unconsolidated VIEs		Maximum Exposure to Loss in Unconsolidated VIEs
September 30, 2021:
Assets:
Cash and cash equivalents	$	8	$	—	$	—
Non-marketable and other equity securities (1)	762		1,216		1,216
Accrued interest receivable and other assets (2)	24		6		—
Total assets	$	794	$	1,222	$	1,216
Liabilities:
Other liabilities (1)	17		471		—
Long term debt (2)	—		90		—
Total liabilities	$	17	$	561	$	—
December 31, 2020:
Assets:
Cash and cash equivalents	$	15	$	—	$	—
Non-marketable and other equity securities (1)	422		859		859
Accrued interest receivable and other assets	1		—		—
Total assets	$	438	$	859	$	859
Liabilities:
Other liabilities (1)	1		370		—
Total liabilities	$	1	$	370	$	—

(1) Included in our unconsolidated non-marketable and other equity securities portfolio at September 30, 2021 and December 31, 2020 are investments in qualified affordable housing projects of $920 million and $616 million, respectively, and related other liabilities consisting of unfunded commitments of $471 million and $370 million, respectively.

(2) Included in our unconsolidated accrued interest receivable and other assets at September 30, 2021 are investments in statutory trusts for junior subordinated debt of $6 million and $90 million included in long term debt previously issued by Boston Private and assumed in the acquisition.

Non-marketable and other equity securities

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

All investments are generally nonredeemable, and distributions are expected to be received through the liquidation of the underlying investments throughout the life of the investment fund. Investments may only be sold or transferred subject to the notice and approval provisions of the underlying investment agreement. Subject to applicable regulatory requirements, including the Volcker Rule, we also make commitments to invest in venture capital and private equity funds. For additional details, see Note 12 — “Off-Balance Sheet Arrangements, Guarantees and Other Commitments.”

The Bank also has variable interests in low income housing tax credit funds, in connection with fulfilling its responsibilities under the CRA, that are designed to generate a return primarily through the realization of federal tax credits. These investments are typically limited partnerships in which the general partner, other than the Bank, holds the power over significant activities of the VIE; therefore, these investments are not consolidated. For additional information on our investments in qualified affordable housing projects, see Note 6 — “Investment Securities."

As of September 30, 2021, our exposure to loss with respect to the consolidated VIEs is limited to our net assets of $777 million and our exposure to loss for our unconsolidated VIEs is equal to our investment in these assets of $1.2 billion.

Junior subordinated debentures

SVB Financial Group assumed two statutory trusts during the merger with Boston Private. These trusts were for the purpose of issuing trust preferred securities and investing the proceeds in junior subordinated debentures. These statutory trusts created by legacy Boston Private are not consolidated within the financial statements as the Company is not the primary beneficiary of the trusts; however, the total junior subordinated debentures payable to the preferred stockholders of statutory trusts are reported as long-term debt in the financial statements. As of September 30, 2021, there are $90 million of trust preferred securities outstanding.