11. Off-Balance Sheet Arrangements, Guarantees and Other Commitments

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

Commitments to Extend Credit

The following table summarizes information related to our commitments to extend credit (excluding letters of credit) at September 30, 2011 and December 31, 2010:


(Dollars in thousands)	September 30, 2011		December 31, 2010
Commitments available for funding: (1)
Fixed interest rate commitments	$	675,328	$	386,055
Variable interest rate commitments		6,089,301		5,884,450

Total commitments available for funding	$	6,764,629	$	6,270,505

Commitments unavailable for funding (2)	$	926,530	$	963,847
Maximum lending limits for accounts receivable factoring arrangements (3)		741,545		697,702
Reserve for unfunded credit commitments (4)		19,546		17,414

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

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

(3)	We extend credit under accounts receivable factoring arrangements when our clients’ sales invoices are deemed creditworthy under existing underwriting practices.

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

Commercial and Standby Letters of Credit

The table below summarizes our commercial and standby letters of credit at September 30, 2011. The maximum potential amount of future payments represents the amount that could be remitted under letters of credit if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or from the collateral held or pledged.


(Dollars in thousands)	Expires In One Year or Less		Expires After One Year		Total Amount Outstanding		Maximum Amount of Future Payments
Financial standby letters of credit	$	686,753	$	115,563	$	802,316	$	802,316
Performance standby letters of credit		40,596		3,855		44,451		44,451
Commercial letters of credit		7,775		—		7,775		7,775

Total	$	735,124	$	119,418	$	854,542	$	854,542

At September 30, 2011 and December 31, 2010, deferred fees related to financial and performance standby letters of credit were $5.5 million and $5.2 million, respectively. At September 30, 2011, collateral in the form of cash of $284.4 million and available-for-sale securities of $17.3 million were available to us to reimburse losses, if any, under financial and performance standby letters of credit.

Commitments to Invest in Venture Capital and Private Equity Funds

We make commitments to invest in venture capital and private equity funds, which in turn make investments generally in, or in some cases make loans to, privately-held companies. Commitments to invest in these funds are generally made for a ten-year period from the inception of the fund. Although the limited partnership agreements governing these investments typically do not restrict the general partners from calling 100% of committed capital in one year, it is customary for these funds to generally call most of the capital commitments over five to seven years. The actual timing of future cash requirements to fund these commitments is generally dependent upon the investment cycle, overall market conditions, and the nature and type of industry in which the privately held companies operate. The following table details our total capital commitments, unfunded capital commitments, and our ownership in each fund at September 30, 2011:


Our Ownership in Limited Partnership (Dollars in thousands)	SVBFG Capital Commitments		SVBFG Unfunded Commitments		SVBFG Ownership of each Fund
Silicon Valley BancVentures, LP	$	6,000	$	270		10.7	%
SVB Capital Partners II, LP (1)		1,200		234		5.1
SVB India Capital Partners I, LP		7,750		1,364		14.4
SVB Capital Shanghai Yangpu Venture Capital Fund		909		157		6.8
SVB Strategic Investors Fund, LP		15,300		688		12.6
SVB Strategic Investors Fund II, LP		15,000		1,950		8.6
SVB Strategic Investors Fund III, LP		15,000		3,300		5.9
SVB Strategic Investors Fund IV, LP		12,239		6,732		5.0
Strategic Investors Fund V, LP		500		475		0.3
SVB Capital Preferred Return Fund, LP		12,687		—		20.0
SVB Capital—NT Growth Partners, LP		24,670		1,340		33.0
Other private equity fund (2)		9,338		—		58.2
Partners for Growth, LP		25,000		9,750		50.0
Partners for Growth II, LP		15,000		4,950		24.2
Gold Hill Venture Lending 03, LP (3)		20,000		—		9.3
Other Fund Investments (4) (5)		333,382		100,798		Various

Total	$	513,975	$	132,008

(1)	Our ownership includes 1.3% direct ownership through SVB Capital Partners II, LLC and SVB Financial, and 3.8% indirect ownership through our investment in SVB Strategic Investors Fund II, LP.

(2)	Our ownership includes 41.5% direct ownership and indirect ownership interest of 12.6% and 4.1% in the fund through our ownership interests of SVB Capital - NT Growth Partners, LP and SVB Capital Preferred Return Fund, LP, respectively.

(3)	Our ownership includes 4.8% direct ownership and 4.5% indirect ownership interest through GHLLC.

(4)	Represents commitments to 334 funds (primarily venture capital funds) where our ownership interest is generally less than 5% of the voting interests of each such fund.

(5)

Included in Other Fund Investments are $180.1 million and $74.9 million of commitments and unfunded commitments, respectively, made by SVB Financial Group which were originally intended to be transferred to certain new managed funds of funds. We currently do not have any plans to transfer these investments to any new or existing managed fund. Until we may later decide to transfer, sell or otherwise dispose of the investments and related commitments to a fund managed by us or a third party, they continue to remain obligations of SVB Financial.

The following table details the total remaining unfunded commitments to the venture capital and private equity funds by our consolidated managed funds of funds (including our interest and the noncontrolling interests) at September 30, 2011:


Limited Partnership (Dollars in thousands)	Unfunded Commitments
SVB Strategic Investors Fund, LP	$	2,359
SVB Strategic Investors Fund II, LP		14,512
SVB Strategic Investors Fund III, LP		64,985
SVB Strategic Investors Fund IV, LP		151,586
Strategic Investors Fund V, LP		18,030
SVB Capital Preferred Return Fund, LP		27,053
SVB Capital—NT Growth Partners, LP		30,510
Other private equity fund		5,250

Total	$	314,285