Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2011

Fair Value Hierarchy Tables Present Information about Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The following fair value hierarchy tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2011:

(Dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2011
Assets
Available-for-sale securities:
U.S. treasury securities	$	—	$	25,964	$	—	$	25,964
U.S. agency debentures		—		2,874,932		—		2,874,932
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		—		1,564,286		—		1,564,286
Agency-issued collateralized mortgage obligations—fixed rate		—		3,373,760		—		3,373,760
Agency-issued collateralized mortgage obligations—variable rate		—		2,413,378		—		2,413,378
Agency-issued commercial mortgage-backed securities		—		178,693		—		178,693
Municipal bonds and notes		—		100,498		—		100,498
Equity securities		4,535		—		—		4,535
Total available-for-sale securities		4,535		10,531,511		—		10,536,046
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments		—		—		611,824		611,824
Other venture capital investments		—		—		124,121		124,121
Other investments		—		—		987		987
Total non-marketable securities (fair value accounting)		—		—		736,932		736,932
Other assets:
Marketable securities		1,410		—		—		1,410
Interest rate swaps		—		11,441		—		11,441
Foreign exchange forward and option contracts		—		18,326		—		18,326
Equity warrant assets		—		3,923		63,030		66,953
Loan conversion options		—		923		—		923
Client interest rate derivatives		—		50		—		50
Total assets (1)	$	5,945	$	10,566,174	$	799,962	$	11,372,081
Liabilities
Foreign exchange forward and option contracts	$	—	$	16,816	$	—	$	16,816
Client interest rate derivatives				52				52
Total liabilities	$	—	$	16,868	$	—	$	16,868

(1) Included in Level 1 and Level 3 assets are $1.2 million and $647.5 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

The following fair value hierarchy table presents information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2010:

(Dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2010
Assets
Available-for-sale securities:
U.S. treasury securities	$	—	$	26,410	$	—	$	26,410
U.S. agency debentures		—		2,835,093		—		2,835,093
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		—		1,248,510		—		1,248,510
Agency-issued collateralized mortgage obligations—fixed rate		—		830,466		—		830,466
Agency-issued collateralized mortgage obligations—variable rate		—		2,879,525		—		2,879,525
Municipal bonds and notes		—		97,580		—		97,580
Equity securities		383		—		—		383
Total available-for-sale securities		383		7,917,584		—		7,917,967
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments		—		—		391,247		391,247
Other venture capital investments		—		—		111,843		111,843
Other investments		—		—		981		981
Total non-marketable securities (fair value accounting)		—		—		504,071		504,071
Other assets:
Marketable securities		28		9,240		—		9,268
Interest rate swaps		—		52,017		—		52,017
Foreign exchange forward and option contracts		—		11,349		—		11,349
Equity warrant assets		—		4,028		43,537		47,565
Loan conversion options		—		4,291		—		4,291
Total assets (1)	$	411	$	7,998,509	$	547,608	$	8,546,528
Liabilities
Foreign exchange forward and option contracts	$	—	$	10,267	$	—	$	10,267
Total liabilities	$	—	$	10,267	$	—	$	10,267

(1) Included in Level 2 and Level 3 assets are $8.1 million and $423.5 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

Additional Information about Level 3 Assets Measured at Fair Value on a Recurring Basis

The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for 2011, 2010 and 2009:

(Dollars in thousands)	Beginning Balance		Total Realized and Unrealized Gains (Losses) Included in Income			Purchases		Sales			Issuances		Distributions and Other Settlements			Transfers Into Level 3		Transfers Out of Level 3			Ending Balance
Year ended December 31, 2011:
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	$	391,247	$	119,164		$	156,498	$	—		$	—	$	(55,085	)	$	—	$	—		$	611,824
Other venture capital investments		111,843		25,794			13,981		(27,513	)		—		16			—		—			124,121
Other investments		981		24			—		—			—		(18	)		—		—			987
Total non-marketable securities (fair value accounting) (1)		504,071		144,982			170,479		(27,513	)		—		(55,087	)		—		—			736,932
Other assets:
Equity warrant assets (2)		43,537		31,958			—		(25,534	)		13,849		(63	)		—		(717	)		63,030
Total assets	$	547,608	$	176,940		$	170,479	$	(53,047	)	$	13,849	$	(55,150	)	$	—	$	(717	)	$	799,962
Year ended December 31, 2010:
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	$	271,316	$	43,645		$	105,899	$	—		$	—	$	(29,613	)	$	—	$	—		$	391,247
Other venture capital investments		96,577		18,696			14,134		(6,773	)		—		—			—		(10,791	)		111,843
Other investments		1,143		(18	)		—		—			—		(144	)		—		—			981
Total non-marketable securities (fair value accounting) (1)		369,036		62,323			120,033		(6,773	)		—		(29,757	)		—		(10,791	)		504,071
Other assets:
Equity warrant assets (2)		40,119		4,922			—		(8,538	)		7,781		(60	)		—		(687	)		43,537
Total assets	$	409,155	$	67,245		$	120,033	$	(15,311	)	$	7,781	$	(29,817	)	$	—	$	(11,478	)	$	547,608
Year ended December 31, 2009:
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	$	242,645	$	(28,893	)	$	70,699	$	—		$	—	$	(13,135	)	$	—	$	—		$	271,316
Other venture capital investments		82,444		(1,768	)		17,514		(1,613	)		—		—			—		—			96,577
Other investments		1,547		762			—		—			—		(1,166	)		—		—			1,143
Total non-marketable securities (fair value accounting) (1)		326,636		(29,899	)		88,213		(1,613	)		—		(14,301	)		—		—			369,036
Other assets:
Equity warrant assets (2)		41,699		(2,115	)		—		(4,193	)		4,954		(15	)		—		(211	)		40,119
Total assets	$	368,335	$	(32,014	)	$	88,213	$	(5,806	)	$	4,954	$	(14,316	)	$	—	$	(211	)	$	409,155

(1) Realized and unrealized gains (losses) are recorded on the line items gains (losses) on investment securities, net, and other noninterest income, components of noninterest income.

(2) Realized and unrealized gains (losses) are recorded on the line item gains (losses) on derivative instruments, net, a component of noninterest income.

Unrealized Gains Included in Earnings Attributable to Level 3 Assets Held

The following table presents the amount of unrealized gains included in earnings (which is inclusive of noncontrolling interest) attributable to Level 3 assets still held at December 31, 2011:

(Dollars in thousands)	Year ended December 31, 2011
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	$	78,361
Other venture capital investments		17,406
Other investments		24
Total non-marketable securities (fair value accounting) (1)		95,791
Other assets:
Equity warrant assets (2)		16,345
Total unrealized gains	$	112,136
Unrealized gains attributable to noncontrolling interests	$	89,436

(1) Unrealized gains are recorded on the line items gains on investment securities, net, and other noninterest income, components of noninterest income.

(2) Unrealized gains are recorded on the line item gains on derivative instruments, net, a component of noninterest income.

Summary of the Estimated Fair Values of Financial Instruments that are Not Carried at Fair Value

The information presented herein is based on pertinent information available to us as of December 31, 2011 and 2010. The following table is a summary of the estimated fair values of our financial instruments that are not carried at fair value at December 31, 2011 and 2010:

	December 31, 2011				December 31, 2010
(Dollars in thousands)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Non-marketable securities (cost and equity method accounting)	$	267,508	$	290,393	$	217,449	$	230,158
Net loans		6,880,135		6,964,438		5,439,110		5,466,252
Financial liabilities:
Other short-term borrowings		—		—		37,245		37,245
Deposits		16,709,536		16,709,133		14,336,941		14,334,013
5.375% Senior Notes		347,793		362,786		347,601		344,498
5.70% Senior Notes (1)		143,969		145,184		265,613		277,301
6.05% Subordinated Notes (2)		55,075		57,746		285,937		298,101
3.875% Convertible Notes		—		—		249,304		276,825
7.0% Junior Subordinated Debentures		55,372		51,526		55,548		49,485
Other long-term debt		1,439		1,439		5,257		5,257
Off-balance sheet financial assets:
Commitments to extend credit		—		21,232		—		19,264

(1) At December 31, 2011 and December 31, 2010, included in the carrying value and estimated fair value of our 5.70% Senior Notes are $2.6 million and $15.7 million, respectively, related to the fair value of the interest rate swaps associated with the notes.

(2) At December 31, 2011, and December 31, 2010, included in the carrying value and estimated fair value of our 6.05% Subordinated Notes, are $8.8 million and $36.3 million, respectively, related to the fair value of the interest rate swaps associated with the notes.

Summary of Estimated Fair Values of Investments and Remaining Unfunded Commitments for Each Major Category of Investments

The following table is a summary of the estimated fair values of these investments and remaining unfunded commitments for each major category of these investments as of December 31, 2011:

(Dollars in thousands)	Fair Value		Unfunded Commitments
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments (1)	$	611,824	$	309,765
Non-marketable securities (equity method accounting):
Other investments (2)		61,227		8,750
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments (3)		163,674		80,010
Total	$	836,725	$	398,525

(1) Venture capital and private equity fund investments within non-marketable securities (fair value accounting) include investments made by our managed funds of funds, one of our direct venture funds and one other private equity fund. These investments represent investments in venture capital and private equity funds that invest primarily in U.S. and global technology and life sciences companies. Included in the fair value and unfunded commitments of fund investments under fair value accounting are $534.2 million and $296.4 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) Other investments within non-marketable securities (equity method accounting) include investments in debt funds and venture capital and private equity fund investments that invest in or lend money to primarily U.S. and global technology and life sciences companies. It is estimated that we will receive distributions from the fund investments over the next 10 years, depending on the age of the funds.

(3) Venture capital and private equity fund investments within non-marketable securities (cost method accounting) include investments in venture capital and private equity fund investments that invest primarily in U.S. and global technology and life sciences companies. 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 the terms of the funds. Included in the $80.0 million of unfunded commitments is $63.7 million of unfunded commitments 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 to a fund managed by us or a third party, they continue to remain investments and obligations of SVB Financial.