SIVB 10-Q Quarterly Report Sept. 30, 2011

SVB FINANCIAL GROUP

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10-Q 1 d231805d10q.htm FORM 10-Q FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 000-15637

SVB FINANCIAL GROUP

(Exact name of registrant as specified in its charter)

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)

(408) 654-7400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At October 28, 2011, 43,342,749 shares of the registrant’s common stock ($0.001 par value) were outstanding.

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION			3

Item 1.	Interim Consolidated Financial Statements (unaudited)		3

	Interim Consolidated Balance Sheets (unaudited) as of September 30, 2011 and December 31, 2010		3

	Interim Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2011 and 2010		4

	Interim Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2011 and 2010		5

	Interim Consolidated Statements of Stockholders’ Equity (unaudited) for the nine months ended September 30, 2011 and 2010		6

	Interim Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2011 and 2010		7

	Notes to Interim Consolidated Financial Statements (unaudited)		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		42

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		74

Item 4.	Controls and Procedures		75

PART II - OTHER INFORMATION			76

Item 1.	Legal Proceedings		76

Item 1A.	Risk Factors		76

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		76

Item 3.	Defaults Upon Senior Securities		76

Item 4.	(Removed and Reserved)		76

Item 5.	Other Information		76

Item 6.	Exhibits		76

SIGNATURES			77

INDEX TO EXHIBITS			78

PART I - FINANCIAL INFORMATION

ITEM 1.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(Dollars in thousands, except par value and share data)	September 30, 2011			December 31, 2010
Assets
Cash and due from banks	$	1,742,144		$	2,672,725
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities		299,828			403,707

Cash and cash equivalents		2,041,972			3,076,432

Available-for-sale securities		9,639,386			7,917,967
Non-marketable securities		951,963			721,520

Investment securities		10,591,349			8,639,487

Loans, net of unearned income		6,328,588			5,521,737
Allowance for loan losses		(85,246	)		(82,627	)

Net loans		6,243,342			5,439,110

Premises and equipment, net of accumulated depreciation and amortization		53,458			44,545
Accrued interest receivable and other assets		265,242			328,187

Total assets	$	19,195,363		$	17,527,761


Liabilities and total equity
Liabilities:
Deposits:
Noninterest-bearing demand	$	11,162,776		$	9,011,538
Interest-bearing deposits		4,976,446			5,325,403

Total deposits		16,139,222			14,336,941

Short-term borrowings		—			37,245
Other liabilities		254,256			196,037
Long-term debt		609,557			1,209,260

Total liabilities		17,003,035			15,779,483

Commitments and contingencies (Note 11)
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; 43,268,880 shares and 42,268,201 shares outstanding, respectively		43			42
Additional paid-in capital		472,443			422,334
Retained earnings		964,159			827,831
Accumulated other comprehensive income		99,453			24,143

Total SVBFG stockholders’ equity		1,536,098			1,274,350
Noncontrolling interests		656,230			473,928

Total equity		2,192,328			1,748,278

Total liabilities and total equity	$	19,195,363		$	17,527,761

See accompanying notes to interim consolidated financial statements (unaudited).

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands, except per share amounts)	2011			2010			2011			2010
Interest income:
Loans	$	101,693		$	80,716		$	284,935		$	230,216
Available-for-sale securities:
Taxable		39,357			32,375			124,956			101,493
Non-taxable		899			948			2,723			2,869
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities		1,375			2,719			4,972			8,444

Total interest income		143,324			116,758			417,586			343,022

Interest expense:
Deposits		1,715			3,783			7,379			11,315
Borrowings		6,154			6,634			24,000			18,090

Total interest expense		7,869			10,417			31,379			29,405

Net interest income		135,455			106,341			386,207			313,617
Provision for (reduction of) loan losses		769			10,971			(2,144	)		29,124

Net interest income after provision for loan losses		134,686			95,370			388,351			284,493

Noninterest income:
Gains on investment securities, net		52,262			46,611			175,279			67,420
Foreign exchange fees		11,546			9,091			32,397			26,207
Gains on derivative instruments, net		9,951			1,257			24,153			4,565
Deposit service charges		8,259			7,324			23,214			22,283
Credit card fees		4,506			3,139			12,687			8,853
Client investment fees		2,939			4,681			9,707			13,562
Letters of credit and standby letters of credit income		3,040			2,752			8,452			7,869
Other		3,108			11,381			23,384			24,907

Total noninterest income		95,611			86,236			309,273			175,666

Noninterest expense:
Compensation and benefits		77,009			62,170			232,529			181,993
Professional services		16,122			12,618			43,000			37,358
Premises and equipment		7,220			5,548			19,572			16,651
Business development and travel		5,886			5,153			17,429			14,542
Net occupancy		4,967			5,131			14,163			14,468
FDIC assessments		2,302			2,637			7,940			13,273
Correspondent bank fees		2,336			2,228			6,701			6,132
Provision for unfunded credit commitments		2,055			1,692			2,131			2,561
Other		9,554			6,994			22,453			19,949

Total noninterest expense		127,451			104,171			365,918			306,927

Income before income tax expense		102,846			77,435			331,706			153,232
Income tax expense		26,770			24,996			92,803			50,397

Net income before noncontrolling interests		76,076			52,439			238,903			102,835
Net income attributable to noncontrolling interests		(38,505	)		(14,652	)		(102,575	)		(25,371	)

Net income available to common stockholders	$	37,571		$	37,787		$	136,328		$	77,464


Earnings per common share—basic	$	0.87		$	0.90		$	3.18		$	1.86
Earnings per common share—diluted		0.86			0.89			3.12			1.83

See accompanying notes to interim consolidated financial statements (unaudited).

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2011			2010			2011			2010
Net income before noncontrolling interests	$	76,076		$	52,439		$	238,903		$	102,835
Other comprehensive income, net of tax:
Change in cumulative translation gains:
Foreign currency translation (losses) gains		(5,573	)		2,113			(3,682	)		1,961
Related tax benefit (expense)		2,280			(862	)		1,506			(800	)
Change in unrealized gains on available-for-sale securities:
Unrealized holding gains		93,701			634			168,378			92,923
Related tax expense		(38,329	)		(259	)		(68,858	)		(37,901	)
Reclassification adjustment for gains included in net income		(5	)		(23,605	)		(37,288	)		(24,473	)
Related tax benefit		2			9,631			15,254			9,985

Other comprehensive income, net of tax		52,076			(12,348	)		75,310			41,695

Comprehensive income		128,152			40,091			314,213			144,530
Comprehensive income attributable to noncontrolling interests		(38,505	)		(14,652	)		(102,575	)		(25,371	)

Comprehensive income available to common stockholders	$	89,647		$	25,439		$	211,638		$	119,159

See accompanying notes to interim consolidated financial statements (unaudited).

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)


	Common Stock				Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income			Total SVBFG Stockholders’ Equity			Noncontrolling Interests		Total Equity
(Dollars in thousands)	Shares		Amount		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income			Total SVBFG Stockholders’ Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2009		41,338,389	$	41	$	389,490		$	732,907	$	5,905		$	1,128,343		$	345,767	$	1,474,110

Common stock issued under employee benefit plans, net of restricted stock cancellations		626,375		1		15,209			—		—			15,210			—		15,210
Income tax benefit from stock options exercised, vesting of restricted stock and other		—		—		2,891			—		—			2,891			—		2,891
Net income		—		—		—			77,464		—			77,464			25,371		102,835
Capital calls and distributions, net		—		—		—			—		—			—			56,547		56,547
Net change in unrealized gains on available-for-sale investment securities, net of tax		—		—		—			—		40,534			40,534			—		40,534
Foreign currency translation adjustments, net of tax		—		—		—			—		1,161			1,161			—		1,161
Stock-based compensation expense		—		—		9,865			—		—			9,865			—		9,865
Repurchase of warrant under Capital Purchase Program		—		—		(6,820	)		—		—			(6,820	)		—		(6,820	)
Other-net		—		—		(45	)		8		—			(37	)		—		(37	)

Balance at September 30, 2010		41,964,764	$	42	$	410,590		$	810,379	$	47,600		$	1,268,611		$	427,685	$	1,696,296

Balance at December 31, 2010		42,268,201	$	42	$	422,334		$	827,831	$	24,143		$	1,274,350		$	473,928	$	1,748,278

Common stock issued under employee benefit plans, net of restricted stock cancellations		999,655		1		30,271			—		—			30,272			—		30,272
Common stock issued upon settlement of 3.875% Convertible Notes, net of shares received from associated convertible note hedge		1,024		—		—			—		—			—			—		—
Income tax benefit from stock options exercised, vesting of restricted stock and other		—		—		6,548			—		—			6,548			—		6,548
Net income		—		—		—			136,328		—			136,328			102,575		238,903
Capital calls and distributions, net		—		—		—			—		—			—			79,727		79,727
Net change in unrealized gains on available-for-sale investment securities, net of tax		—		—		—			—		77,486			77,486			—		77,486
Foreign currency translation adjustments, net of tax		—		—		—			—		(2,176	)		(2,176	)		—		(2,176	)
Stock-based compensation expense		—		—		13,290			—		—			13,290			—		13,290

Balance at September 30, 2011		43,268,880	$	43	$	472,443		$	964,159	$	99,453		$	1,536,098		$	656,230	$	2,192,328

See accompanying notes to interim consolidated financial statements (unaudited).

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine months ended September 30,
(Dollars in thousands)	2011			2010
Cash flows from operating activities:
Net income before noncontrolling interests	$	238,903		$	102,835
Adjustments to reconcile net income to net cash provided by operating activities:
Net gain from note repurchases and termination of corresponding interest rate swaps		(3,123	)		—
(Reduction of) provision for loan losses		(2,144	)		29,124
Provision for unfunded credit commitments		2,131			2,561
Changes in fair values of derivatives, net		(20,334	)		1,556
Gains on investment securities, net		(175,279	)		(67,420	)
Depreciation and amortization		19,999			17,554
Amortization of premiums on available-for-sale securities, net		18,170			15,593
Tax benefit (expense) from stock exercises		854			(306	)
Amortization of share-based compensation		13,501			9,904
Amortization of deferred loan fees		(43,806	)		(36,652	)
Deferred income tax expense		3,135			1,794
Losses on sale of and valuation adjustments to other real estate owned property		—			24
Changes in other assets and liabilities:
Accrued interest receivable and payable, net		(13,919	)		5,817
Accounts receivable		(2,724	)		(10,768	)
Income tax receivable, net		8,174			23,933
Prepaid FDIC assessments and amortization		6,468			7,704
Accrued compensation		9,968			22,567
Foreign exchange spot contracts, net		10,587			4,849
Other, net		19,627			14,193

Net cash provided by operating activities		90,188			144,862

Cash flows from investing activities:
Purchases of available-for-sale securities		(5,034,425	)		(4,167,462	)
Proceeds from sales of available-for-sale securities		1,414,794			653,122
Proceeds from maturities and pay downs of available-for-sale securities		2,048,439			1,526,562
Purchases of nonmarketable securities (cost and equity method accounting)		(43,260	)		(36,847	)
Proceeds from sales of nonmarketable securities (cost and equity method accounting)		21,524			12,185
Purchases of nonmarketable securities (investment fair value accounting)		(127,362	)		(78,667	)
Proceeds from sales and distributions of nonmarketable securities (investment fair value accounting)		66,541			25,866
Net increase in loans		(792,169	)		(322,723	)
Proceeds from recoveries of charged-off loans		21,626			13,397
Proceeds from sale of other real estate owned		—			196
Payment for acquisition of intangibles, net of cash acquired		—			(360	)
Purchases of premises and equipment		(21,600	)		(21,031	)

Net cash used for investing activities		(2,445,892	)		(2,395,762	)

Cash flows from financing activities:
Net increase in deposits		1,802,281			2,083,008
(Decrease) increase in short-term borrowings		(37,245	)		20,980
Payments for repurchases of 5.70% Senior Notes and 6.05% Subordinated Notes, including repurchase premiums and associated fees		(346,443	)		—
Proceeds from termination of portions of interest rate swaps associated with 5.70% Senior Notes and 6.05% Subordinated Notes		36,959			—
Payments for settlement of 3.875% Convertible Notes		(250,000	)		—
Proceeds from issuance of 5.375% Senior Notes, net of discount and issuance cost		—			344,294
Capital contributions from noncontrolling interests, net of distributions		79,727			56,547
Tax benefit from stock exercises		5,694			3,197
Proceeds from issuance of common stock and Employee Stock Purchase Plan		30,271			15,210
Repurchase of warrant under Capital Purchase Program		—			(6,820	)

Net cash provided by financing activities		1,321,244			2,516,416

Net (decrease) increase in cash and cash equivalents		(1,034,460	)		265,516
Cash and cash equivalents at beginning of period		3,076,432			3,512,853

Cash and cash equivalents at end of period	$	2,041,972		$	3,778,369

Supplemental disclosures:
Cash paid during the period for:
Interest	$	37,776		$	22,903
Income taxes		74,313			21,360
Noncash items during the period:
Unrealized gains on available-for-sale securities, net of tax	$	77,486		$	40,534
Net change in fair value of interest rate swaps		(1,753	)		20,362

See accompanying notes to interim consolidated financial statements (unaudited).

SVB FINANCIAL GROUP AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

SVB Financial Group (“SVB Financial” or the “Parent”) is a diversified financial services company, as well as a bank holding company and financial holding company. SVB Financial was incorporated in the state of Delaware in March 1999. Through our various subsidiaries and divisions, we offer a variety of banking and financial products and services to support our clients through all stages of their life cycles. In these notes to our unaudited interim consolidated financial statements, when we use or refer to “SVB Financial Group,” “SVBFG,” the “Company,” “we,” “our,” “us” or other similar words, we mean SVB Financial Group and all of its subsidiaries collectively, including Silicon Valley Bank (the “Bank”), unless the context requires otherwise. When we use or refer to “SVB Financial” or the “Parent” we are referring only to the parent company, SVB Financial Group, unless the context requires otherwise.

The accompanying interim consolidated financial statements reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary to fairly present our financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Such interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of results to be expected for any future periods. These interim consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2010 (“2010 Form 10-K”).

The accompanying unaudited interim consolidated financial statements have been prepared on a consistent basis with the accounting policies described in Consolidated Financial Statements and Supplementary Data—Note 2—“Summary of Significant Accounting Policies” under Part II, Item 8 of our 2010 Form 10-K.

The preparation of unaudited interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates may change as new information is obtained. Significant items that are subject to such estimates include the valuation of non-marketable securities, the allowance for loan losses, the valuation of equity warrant assets, the recognition and measurement of income tax assets and liabilities, the adequacy of the reserve for unfunded credit commitments, and share-based compensation.

Principles of Consolidation and Presentation

Our consolidated financial statements include the accounts of SVB Financial Group and entities in which we have a controlling financial interest. We determine whether we have a controlling financial interest in an entity by evaluating whether the entity is a voting interest entity or a variable interest entity. All significant intercompany accounts and transactions have been eliminated.

Voting interest entities are entities that have sufficient equity and provide the equity investors voting rights that enable them to make significant decisions relating to the entity’s operations. For these types of entities, the Company’s determination of whether it has a controlling interest is based on ownership of the majority of the entities’ voting equity interest or through control of management of the entities.

Variable interest entities (“VIEs”) are entities that, by design, either (1) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. We determine whether we have a controlling financial interest in a VIE by considering whether our involvement with the VIE is significant and designates us as the primary beneficiary based on the following:

We have the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and

The aggregate indirect and direct variable interests held by the Company have the obligation to absorb losses or the right to receive benefits from the entity that could be significant to the VIE.

Voting interest entities in which the Company has a controlling financial interest or VIEs in which the Company is the primary beneficiary are consolidated into our financial statements.

We have not provided financial or other support during the periods presented to any VIE that we were not previously contractually required to provide. We are variable interest holders in certain partnerships for which we are the primary beneficiary. We perform on-going reassessments of whether facts or circumstances have changed in relation to previously evaluated voting interest entities and our involvement in VIEs which could cause the Company’s consolidation conclusion to change.

Impact of Adopting ASU No. 2011-02

In April 2011, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard (ASU No. 2011-02), which requires new disclosures and provides additional guidance to creditors for determining whether a modification or restructuring of a receivable is a troubled debt restructuring (“TDR”). The new guidance requires creditors to evaluate modifications and restructurings of receivables using a more principles-based approach, which may result in more modifications and restructurings being considered TDRs. The new disclosures and guidance are effective for interim and annual reporting periods beginning on or after June 15, 2011 and was therefore adopted on July 1, 2011, with retrospective disclosures required for all TDR activities that have occurred from the beginning of the annual period of adoption. This standard clarified how TDRs are determined and increased the disclosure requirements for TDRs, however it did not have a material impact on our financial position, results of operations or stockholders’ equity. See Note 6—“Loans and Allowance for Loan Losses” for further details.

Recent Accounting Pronouncements

In May 2011, the FASB issued a new accounting standard (ASU No. 2011-04), which requires new disclosures and clarifies existing guidance surrounding fair value measurement. This standard was issued concurrent with the International Accounting Standards Board’s (“IASB”) issuance of a fair value measurement standard with the objective of a converged definition of fair value measurement and disclosure guidance. The new guidance clarifies that the principal market for a financial instrument should be determined based on the market with the greatest volume and level of activity. This new guidance is effective on a prospective basis for interim and annual reporting periods beginning after December 15, 2011. This standard clarifies how fair value is measured and increases the disclosure requirements for fair value measurements. We are currently assessing the impact of this guidance, however we do not expect it to have a material impact on our financial position, results of operations or stockholders’ equity.

In June 2011, the FASB issued a new accounting standard (ASU No. 2011-05), which requires presentation of the components of total comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Regardless of which option is chosen, reclassification adjustments for items that are reclassified from other comprehensive income (“OCI”) to net income are required to be shown on the face of the financial statements. This new guidance does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The guidance is effective on a retrospective basis for the interim and annual reporting periods beginning after December 15, 2011. We have assessed the new guidance and determined that it only clarifies the presentation of comprehensive income and it will not affect our financial position, results of operations or stockholders’ equity.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentations.

2. Stockholders’ Equity and Earnings Per Share (“EPS”)

Earnings Per Share

Basic EPS is the amount of earnings available to each share of common stock outstanding during the reporting period. Diluted EPS is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issued for stock options and restricted stock units outstanding under our equity incentive plans, our Employee Stock Purchase Plan (“ESPP”), and for certain periods, our 3.875% convertible senior notes (“3.875% Convertible Notes”) and the associated convertible note hedge and warrant agreement. Potentially dilutive common shares are excluded from the computation of dilutive EPS in periods in which the effect would be anti-dilutive. The following is a reconciliation of basic EPS to diluted EPS for the three and nine months ended September 30, 2011 and 2010, respectively:


	Three months ended September 30,				Nine months ended September 30,
(Dollars and shares in thousands, except per share amounts)	2011		2010		2011		2010
Numerator:
Net income available to common stockholders	$	37,571	$	37,787	$	136,328	$	77,464

Denominator:
Weighted average common shares outstanding-basic		43,233		41,930		42,882		41,679
Weighted average effect of dilutive securities:
Stock options and ESPP		452		511		610		652
Restricted stock units		106		72		122		70
3.875% Convertible Notes		—		—		27		—

Denominator for diluted calculation		43,791		42,513		43,641		42,401

Earnings per common share:
Basic	$	0.87	$	0.90	$	3.18	$	1.86

Diluted	$	0.86	$	0.89	$	3.12	$	1.83

The following table summarizes the common shares excluded from the diluted EPS calculation as they were deemed to be anti-dilutive for the three and nine months ended September 30, 2011 and 2010, respectively:


	Three months ended September 30,				Nine months ended September 30,
(Shares in thousands)	2011		2010		2011		2010
Stock options		337		6		239		8
Restricted stock units		10		5		134		4

Total		347		11		373		12

Concurrent with the issuance of our 3.875% Convertible Notes, we entered into a convertible note hedge and warrant agreement. The warrants expired ratably over 60 business days beginning on July 15, 2011. The common shares under these warrants were excluded from the diluted EPS calculation for all periods presented as they were deemed to be anti-dilutive based on the conversion price of $64.43 per common share. For more information on our 3.875% Convertible Notes and the associated convertible note hedge and warrant agreement, see Note 7—“Short-Term Borrowings and Long-Term Debt” and Note 8—“Derivative Financial Instruments”.

Our $250 million 3.875% Convertible Notes matured on April 15, 2011. All of the notes were converted prior to maturity and we made an aggregate $260.4 million conversion settlement payment. We paid $250.0 million in cash (representing total principal) and $10.4 million through the issuance of 187,760 shares of our common stock (representing total conversion premium value). In addition, in connection with the conversion settlement, we received 186,736 shares of our common stock, valued at $10.3 million, from the associated convertible note hedge. Accordingly, there was no significant net impact on our total stockholders’ equity with respect to settling the conversion premium value.

3. Share-Based Compensation

For the three and nine months ended September 30, 2011 and 2010, we recorded share-based compensation and related tax benefits as follows:


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2011			2010			2011			2010
Share-based compensation expense	$	4,552		$	3,609		$	13,501		$	9,904
Income tax benefit related to share-based compensation expense		(1,256	)		(925	)		(3,532	)		(2,370	)

Unrecognized Compensation Expense

At September 30, 2011, unrecognized share-based compensation expense was as follows:


(Dollars in thousands)	Unrecognized Expense		Average Expected Recognition Period - in Years
Stock options	$	14,436		2.85
Restricted stock units		21,037		2.80

Total unrecognized share-based compensation expense	$	35,473

Share-Based Payment Award Activity

The table below provides stock option information related to the 1997 Equity Incentive Plan and the 2006 Equity Incentive Plan for the nine months ended September 30, 2011:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value of In-The- Money Options
Outstanding at December 31, 2010		3,112,253		$	37.88
Granted		373,493			59.71
Exercised		(837,448	)		33.93
Forfeited		(43,770	)		42.56
Expired		(1,426	)		35.53

Outstanding at September 30, 2011		2,603,102			42.20		3.54	$	10,788,138

Vested and expected to vest at September 30, 2011		2,478,035			41.84		3.42		10,504,466

Exercisable at September 30, 2011		1,545,346			39.72		2.17		7,085,746

The aggregate intrinsic value of outstanding options shown in the table above represents the pretax intrinsic value based on our closing stock price of $37.00 as of September 30, 2011. The total intrinsic value of options exercised during the three and nine months ended September 30, 2011 was $3.2 million and $19.0 million, respectively, compared to $1.3 million and $8.5 million for the comparable 2010 periods.

The table below provides information for restricted stock units under the 1997 Equity Incentive Plan and the 2006 Equity Incentive Plan for the nine months ended September 30, 2011:


	Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2010		395,950		$	43.49
Granted		320,160			59.97
Vested		(116,749	)		43.83
Forfeited		(16,463	)		48.54

Nonvested at September 30, 2011		582,898			52.33

4. Federal Funds Sold, Securities Purchased under Agreements to Resell and Other Short-Term Investment Securities

The following table details the securities purchased under agreements to resell and other short-term investment securities at September 30, 2011 and December 31, 2010:


(Dollars in thousands)	September 30, 2011		December 31, 2010
Securities purchased under agreements to resell	$	191,655	$	60,345
Short-term agency discount notes		—		330,370
Other short-term investment securities		108,173		12,992

Total federal funds sold, securities purchased under agreements to resell and other short-term investment securities	$	299,828	$	403,707

In addition, as of September 30, 2011 and December 31, 2010, $992.5 million and $2.2 billion, respectively, of our cash and due from banks was deposited with the Federal Reserve Bank and was earning interest at the Federal Funds target rate, and interest-earning deposits in other financial institutions were $461.3 million and $246.3 million, respectively.

5. Investment Securities

Our investment securities portfolio consists of both an available-for-sale securities portfolio, which represents interest-earning investment securities, and a non-marketable securities portfolio, which primarily represents investments managed as part of our funds management business.

The major components of our investment securities portfolio at September 30, 2011 and December 31, 2010 are as follows:


	September 30, 2011									December 31, 2010
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value
Available-for-sale securities, at fair value:
U.S. treasury securities	$	25,277	$	853	$	—		$	26,130	$	25,408	$	1,002	$	—		$	26,410
U.S. agency debentures		2,896,079		49,460		(2	)		2,945,537		2,844,973		7,077		(16,957	)		2,835,093
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		1,461,806		42,205		(160	)		1,503,851		1,234,120		15,487		(1,097	)		1,248,510
Agency-issued collateralized mortgage obligations-fixed rate		2,332,140		70,092		—			2,402,232		806,032		24,435		(1	)		830,466
Agency-issued collateralized mortgage obligations-variable rate		2,558,348		2,905		(2,092	)		2,559,161		2,870,570		10,394		(1,439	)		2,879,525
Agency-issued commercial mortgage-backed securities		101,553		1,628		—			103,181		—		—		—			—
Municipal bonds and notes		92,258		6,523		(5	)		98,776		96,381		2,164		(965	)		97,580
Equity securities		633		13		(128	)		518		358		34		(9	)		383

Total available-for-sale securities	$	9,468,094	$	173,679	$	(2,387	)	$	9,639,386	$	7,877,842	$	60,593	$	(20,468	)	$	7,917,967

Non-marketable securities:
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments (1)									578,126									391,247
Other venture capital investments (2)									120,160									111,843
Other investments (3)									973									981
Non-marketable securities (equity method accounting):
Other investments (4)									65,934									67,031
Low income housing tax credit funds									34,446									27,832
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments (5)									138,960									110,466
Other venture capital investments									13,364									12,120

Total non-marketable securities									951,963									721,520

Total investment securities								$	10,591,349								$	8,639,487

(1)	The following table shows the amount of venture capital and private equity fund investments by the following consolidated funds and our ownership of each fund at September 30, 2011 and December 31, 2010:


	September 30, 2011					December 31, 2010
(Dollars in thousands)	Amount		Ownership %			Amount		Ownership %
SVB Strategic Investors Fund, LP	$	44,205		12.6	%	$	44,722		12.6	%
SVB Strategic Investors Fund II, LP		122,264		8.6			94,694		8.6
SVB Strategic Investors Fund III, LP		205,505		5.9			146,613		5.9
SVB Strategic Investors Fund IV, LP		104,114		5.0			40,639		5.0
Strategic Investors Fund V, LP		1,965		0.3			—		—
SVB Capital Preferred Return Fund, LP		41,432		20.0			23,071		20.0
SVB Capital—NT Growth Partners, LP		44,837		33.0			28,624		33.0
SVB Capital Partners II, LP (i)		2,324		5.1			4,506		5.1
Other private equity fund (ii)		11,480		58.2			8,378		60.6

Total venture capital and private equity fund investments	$	578,126				$	391,247

(i)

At September 30, 2011, we had a direct ownership interest of 1.3% and an indirect ownership interest of 3.8% in the fund through our ownership interest of SVB Strategic Investors Fund II, LP.

(ii)

At September 30, 2011, we had a direct ownership interest of 41.5% and indirect ownership interests 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.

(2)	The following table shows the amount of other venture capital investments by the following consolidated funds and our ownership of each fund at September 30, 2011 and December 31, 2010:


	September 30, 2011					December 31, 2010
(Dollars in thousands)	Amount		Ownership %			Amount		Ownership %
Silicon Valley BancVentures, LP	$	16,606		10.7	%	$	21,371		10.7	%
SVB Capital Partners II, LP (i)		60,129		5.1			51,545		5.1
SVB India Capital Partners I, LP		41,927		14.4			38,927		14.4
SVB Capital Shanghai Yangpu Venture Capital Fund		1,498		6.8			—		—

Total other venture capital investments	$	120,160				$	111,843

(i)

At September 30, 2011, we had a direct ownership interest of 1.3% and an indirect ownership interest of 3.8% in the fund through our ownership of SVB Strategic Investors Fund II, LP.

(3)

Other investments within non-marketable securities (investment company fair value accounting) include our ownership in Partners for Growth, LP, a consolidated debt fund. At both September 30, 2011 and December 31, 2010, we had a majority ownership interest of slightly more than 50.0% in the fund. Partners for Growth, LP is managed by a third party and we do not have an ownership interest in the general partner of this fund.

(4)	The following table shows the carrying value and our ownership percentage of each investment at September 30, 2011 and December 31, 2010:


	September 30, 2011					December 31, 2010
(Dollars in thousands)	Amount		Ownership %			Amount		Ownership %
Gold Hill Venture Lending 03, LP (i)	$	16,781		9.3	%	$	17,826		9.3	%
Gold Hill Capital 2008, LP (ii)		16,414		15.5			12,101		15.5
Partners for Growth II, LP		3,564		24.2			10,465		24.2
Other investments		29,175		N/A			26,639		N/A

Total other investments	$	65,934				$	67,031

(i)

At September 30, 2011, we had a direct ownership interest of 4.8% in the fund and an indirect interest in the fund through our investment in Gold Hill Venture Lending Partners 03, LLC (“GHLLC”) of 4.5%. Our aggregate direct and indirect ownership in the fund is 9.3%.

(ii)

At September 30, 2011, we had a direct ownership interest of 11.5% in the fund and an indirect interest in the fund through our investment in Gold Hill Capital 2008, LLC of 4.0%. Our aggregate direct and indirect ownership in the fund is 15.5%.

(5)

Represents investments in 329 and 343 funds (primarily venture capital funds) at September 30, 2011 and December 31, 2010, respectively, where our ownership interest is 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 and financial policies. For the three months ended September 30, 2011, we recognized other-than-temporary impairment (“OTTI”) losses of $0.3 million resulting from other-than-temporary declines in value for 21 of the 329 investments. For the nine months ended September 30, 2011, we recognized OTTI losses of $0.8 million resulting from other-than-temporary declines in value for 39 of the 329 investments. The OTTI losses are included in net gains on investment securities, a component of noninterest income. For the remaining 290 investments at September 30, 2011, we concluded that declines in value, if any, were temporary and as such, no OTTI was required to be recognized. At September 30, 2011, the carrying value of these venture capital and private equity fund investments (cost method accounting) was $139.0 million, and the estimated fair value was $155.8 million.

The following table summarizes our unrealized losses on our available-for-sale securities portfolio into categories of less than 12 months, or 12 months or longer as of September 30, 2011:


	September 30, 2011
	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
U.S. agency debentures	$	25,000	$	(2	)	$	—	$	—		$	25,000	$	(2	)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		51,756		(160	)		—		—			51,756		(160	)
Agency-issued collateralized mortgage obligations—variable rate		1,304,198		(2,059	)		44,606		(33	)		1,348,804		(2,092	)
Municipal bonds and notes		1,195		(5	)		—		—			1,195		(5	)
Equity securities		320		(128	)		—		—			320		(128	)

Total temporarily impaired securities (1)	$	1,382,469	$	(2,354	)	$	44,606	$	(33	)	$	1,427,075	$	(2,387	)

(1)

As of September 30, 2011, we identified a total of 85 investments that were in unrealized loss positions, of which one investment totaling $44.6 million with unrealized losses of $33 thousand has been in an impaired position for a period of time greater than 12 months. Based on the underlying credit quality of the investments, we do not intend to sell any of our securities prior to recovery of our adjusted cost basis and as of September 30, 2011, it is more likely than not that we will not be required to sell any of our debt securities prior to recovery of our adjusted cost basis. Based on our analysis as of September 30, 2011, we deem all impairments to be temporary and 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 investment securities portfolio are reviewed and monitored on a quarterly basis.

The following table summarizes our unrealized losses on our available-for-sale securities portfolio into categories of less than 12 months, or 12 months or longer as of December 31, 2010:


	December 31, 2010
	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
U.S. agency debentures	$	1,731,639	$	(16,957	)	$	—	$	—		$	1,731,639	$	(16,957	)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		32,595		(1,097	)		—		—			32,595		(1,097	)
Agency-issued collateralized mortgage obligations—fixed rate		322		(1	)		—		—			322		(1	)
Agency-issued collateralized mortgage obligations—variable rate		506,104		(1,439	)		—		—			506,104		(1,439	)
Municipal bonds and notes		25,699		(893	)		3,451		(72	)		29,150		(965	)
Equity securities		148		(9	)		—		—			148		(9	)

Total temporarily impaired securities	$	2,296,507	$	(20,396	)	$	3,451	$	(72	)	$	2,299,958	$	(20,468	)

The following table summarizes the remaining contractual principal maturities and fully taxable equivalent yields on debt securities classified as available-for-sale as of September 30, 2011. Interest income on certain municipal bonds and notes (non-taxable investments) are presented on a fully taxable equivalent basis using the federal statutory tax rate of 35.0 percent. The weighted average yield is computed using the amortized cost of debt securities, which are reported at fair value. For U.S. treasury securities, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for most U.S. agency debentures may occur earlier than their contractual maturities because the note issuers have the right to call outstanding amounts ahead of their contractual maturity. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as available-for-sale typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure.


	September 30, 2011
	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	$	26,130		2.39	%	$	—		—	%	$	26,130		2.39	%	$	—		—	%	$	—		—	%
U.S. agency debentures		2,945,537		1.55			63,421		2.51			2,804,770		1.49			77,346		3.28			—		—
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		1,503,851		2.66			—		—			—		—			1,369,093		2.57			134,758		3.58
Agency-issued collateralized mortgage obligations-fixed rate		2,402,232		2.72			—		—			—		—			—		—			2,402,232		2.72
Agency-issued collateralized mortgage obligations-variable rate		2,559,161		0.70			—		—			—		—			—		—			2,559,161		0.70
Agency-issued commercial mortgage-backed securities		103,181		2.22			—		—			—		—			—		—			103,181		2.22
Municipal bonds and notes		98,776		6.00			564		5.38			12,091		5.48			44,864		5.97			41,257		6.20

Total	$	9,638,868		1.84		$	63,985		2.54		$	2,842,991		1.52		$	1,491,303		2.71		$	5,240,589		1.77

The following table presents the components of gains and losses (realized and unrealized) on investment securities for the three and nine months ended September 30, 2011 and 2010:


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2011			2010			2011			2010
Gross gains on investment securities:
Available-for-sale securities, at fair value (1)	$	5		$	23,605		$	37,382		$	26,737
Marketable securities (investment company fair value accounting)		470			8,109			912			8,160
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments		34,640			19,014			117,344			47,659
Other venture capital investments		22,058			2,321			29,077			7,258
Other investments		—			9			20			36
Non-marketable securities (equity method accounting):
Other investments		2,192			2,663			8,708			4,804
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments		735			222			1,791			780
Other venture capital investments		8			—			2,437			—
Other investments		—			242			—			344

Total gross gains on investment securities		60,108			56,185			197,671			95,778


Gross losses on investment securities:
Available-for-sale securities, at fair value (1)		—			—			(94	)		(2,264	)
Marketable securities (investment company fair value accounting)		(1,691	)		—			(5,806	)		(57	)
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments		(2,373	)		(6,171	)		(9,274	)		(15,291	)
Other venture capital investments		(3,351	)		(2,877	)		(5,015	)		(8,589	)
Other investments		(16	)		—			(16	)		(79	)
Non-marketable securities (equity method accounting):
Other investments		(50	)		(1	)		(1,359	)		(614	)
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments		(365	)		(516	)		(797	)		(1,455	)
Other venture capital investments		—			(9	)		(31	)		(9	)

Total gross losses on investment securities		(7,846	)		(9,574	)		(22,392	)		(28,358	)

Gains on investment securities, net	$	52,262		$	46,611		$	175,279		$	67,420

Gains attributable to noncontrolling interests, including carried interest	$	42,961		$	16,817		$	112,783		$	33,159

(1)	The cost basis of available-for-sale securities sold is determined on a specific identification basis.

6. Loans and Allowance for Loan Losses

We serve a variety of commercial clients in the technology, life science, venture capital/private equity and premium wine industries. Our technology clients generally tend to be in the industries of hardware (semiconductors, communications and electronics), software and related services, and clean technology. Our life science clients are concentrated in the medical devices and biotechnology sectors. Loans made to venture capital/private equity firm clients typically enable them to fund investments prior to their receipt of funds from capital calls. Loans to the premium wine industry focus on vineyards and wineries that produce grapes and wines of high quality.

In addition to commercial loans, we make loans to targeted high-net-worth individuals through SVB Private Bank. These products and services include real estate secured home equity lines of credit, which may be used to finance real estate investments and loans used to purchase, renovate or refinance personal residences. These products and services also include restricted stock purchase loans and capital call lines of credit. We also provide secured real estate loans to eligible employees through our Employee Home Ownership Program (“EHOP”).

We also provide community development loans made as part of our responsibilities under the Community Reinvestment Act. These loans are included within “Construction loans” below and are primarily secured by real estate.

The composition of loans, net of unearned income of $53.6 million and $45.5 million at September 30, 2011 and December 31, 2010, respectively, is presented in the following table:


(Dollars in thousands)	September 30, 2011		December 31, 2010
Commercial loans:
Software	$	2,272,443	$	1,820,385
Hardware		577,443		561,610
Clean technology		270,582		159,502
Venture capital/private equity		1,079,215		1,036,077
Life science		686,722		568,739
Premium wine (1)		130,983		144,972
Other		251,412		303,492

Commercial loans (2)		5,268,800		4,594,777

Real estate secured loans:
Premium wine (1)		344,714		312,255
Consumer loans (3)		497,480		361,704

Real estate secured loans		842,194		673,959

Construction loans		35,529		60,178
Consumer loans		182,065		192,823

Total loans, net of unearned income	$	6,328,588	$	5,521,737

(1)	Included in our premium wine portfolio are gross construction loans of $113.7 million and $119.0 million at September 30, 2011 and December 31, 2010, respectively.

(2)	Included within our commercial loans portfolio are business credit card loans to commercial clients. At September 30, 2011 and December 31, 2010, our business credit card loans portfolio totaled $47.4 million and $32.5 million, respectively.

(3)	Consumer loans secured by real estate at September 30, 2011 and December 31, 2010 were comprised of the following:


(Dollars in thousands)	September 30, 2011		December 31, 2010
Loans for personal residence	$	326,111	$	189,039
Loans to eligible employees		93,966		88,510
Home equity lines of credit		77,403		84,155

Consumer loans secured by real estate	$	497,480	$	361,704

The activity in the allowance for loan losses for the three and nine months ended September 30, 2011 and 2010 was as follows:


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2011			2010			2011			2010
Allowance for loan losses, beginning balance	$	82,155		$	71,789		$	82,627		$	72,450
Provision for (reduction of) loan losses		769			10,971			(2,144	)		29,124
Gross loan charge-offs		(8,248	)		(12,289	)		(16,863	)		(40,602	)
Loan recoveries		10,570			3,898			21,626			13,397

Allowance for loan losses, ending balance	$	85,246		$	74,369		$	85,246		$	74,369

Credit Quality

The composition of loans, net of unearned income, broken out by portfolio segment (which we have identified as our commercial and consumer loan categories) and class of financing receivable (which we have identified as our client industry segments of software, hardware, etc.) as of September 30, 2011 and December 31, 2010, is as follows:


(Dollars in thousands)	September 30, 2011		December 31, 2010
Commercial loans:
Software	$	2,299,022	$	1,820,680
Hardware		735,044		641,052
Venture capital/private equity		1,079,255		1,036,201
Life science		708,798		575,944
Premium wine		475,697		457,227
Other		351,227		436,106

Total commercial loans		5,649,043		4,967,210

Consumer loans:
Real estate secured loans		497,480		361,704
Other consumer loans		182,065		192,823

Total consumer loans		679,545		554,527

Total loans, net of unearned income	$	6,328,588	$	5,521,737

The following table summarizes the aging of our gross loans, broken out by portfolio segment and class of financing receivable as of September 30, 2011 and December 31, 2010:


(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

September 30, 2011:
Commercial loans:
Software	$	496	$	38	$	—	$	534	$	2,319,994	$	—
Hardware		7,793		5		—		7,798		729,541		—
Venture capital/private equity		500		—		—		500		1,090,052		—
Life science		125		213		—		338		715,246		—
Premium wine		21		—		—		21		472,123		—
Other		—		48		—		48		348,262		—

Total commercial loans		8,935		304		—		9,239		5,675,218		—

Consumer loans:
Real estate secured loans		1,745		—		—		1,745		476,840		—
Other consumer loans		9,768		—		—		9,768		168,919		—

Total consumer loans		11,513		—		—		11,513		645,759		—

Total gross loans excluding impaired loans		20,448		304		—		20,752		6,320,977		—

Impaired loans		—		—		2,783		2,783		37,723		—

Total gross loans	$	20,448	$	304	$	2,783	$	23,535	$	6,358,700	$	—


December 31, 2010:
Commercial loans:
Software	$	674	$	239	$	17	$	930	$	1,834,897	$	17
Hardware		89		819		27		935		642,786		27
Venture capital/private equity		—		—		—		—		1,046,696		—
Life science		157		—		—		157		578,208		—
Premium wine		—		—		—		—		451,006		—
Other		—		—		—		—		438,345		—

Total commercial loans		920		1,058		44		2,022		4,991,938		44

Consumer loans:
Real estate secured loans		—		—		—		—		341,048		—
Other consumer loans		—		—		—		—		192,771		—

Total consumer loans		—		—		—		—		533,819		—

Total gross loans excluding impaired loans		920		1,058		44		2,022		5,525,757		44

Impaired loans		323		913		7,805		9,041		30,385		—

Total gross loans	$	1,243	$	1,971	$	7,849	$	11,063	$	5,556,142	$	44

The following table summarizes our impaired loans as they relate to our allowance for loan losses, broken out by portfolio segment and class of financing receivable as of September 30, 2011 and December 31, 2010:


(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
September 30, 2011:
Commercial loans:
Software	$	2,322	$	237	$	2,559	$	3,585
Hardware		5,398		—		5,398		8,579
Life science		633		—		633		825
Premium wine		1,993		1,264		3,257		3,350
Other		5,435		1,158		6,593		9,828

Total commercial loans		15,781		2,659		18,440		26,167

Consumer loans:
Real estate secured loans		18,382		362		18,744		22,535
Other consumer loans		3,322		—		3,322		3,322

Total consumer loans		21,704		362		22,066		25,857

Total	$	37,485	$	3,021	$	40,506	$	52,024


December 31, 2010:
Commercial loans:
Software	$	2,958	$	334	$	3,292	$	5,237
Hardware		3,517		307		3,824		3,931
Life science		2,050		1,362		3,412		4,433
Premium wine		2,995		3,167		6,162		7,129
Other		1,158		1,019		2,177		2,790

Total commercial loans		12,678		6,189		18,867		23,520

Consumer loans:
Real estate secured loans		20,559		—		20,559		23,430

Total consumer loans		20,559		—		20,559		23,430

Total	$	33,237	$	6,189	$	39,426	$	46,950

The following table summarizes our average impaired loans, broken out by portfolio segment and class of financing receivable during the three and nine months ended September 30, 2011 and 2010, respectively:


	Three months ended September 30,				Nine months ended September 30,
(Dollars in thousands)	2011		2010		2011		2010
Average impaired loans:
Commercial loans:
Software	$	2,562	$	5,583	$	2,652	$	6,521
Hardware		7,071		10,801		6,086		11,592
Life science		827		4,745		1,498		6,648
Premium wine		1,954		1,190		2,345		485
Other		7,604		2,212		4,453		2,312

Total commercial loans		20,018		24,531		17,034		27,558

Consumer loans:
Real estate secured loans		18,746		20,978		19,476		21,219
Other consumer loans		1,107		14		369		157

Total consumer loans		19,853		20,992		19,845		21,376

Total average impaired loans	$	39,871	$	45,523	$	36,879	$	48,934

The following tables summarize the activity relating to our allowance for loan losses for the three and nine months ended September 30, 2011, broken out by portfolio segment:


Three months ended September 30, 2011 (dollars in thousands)	Beginning Balance June 30, 2011		Charge-offs			Recoveries		Provision for (Reduction of)			Ending Balance September 30, 2011
Commercial loans:
Software	$	31,873	$	(3,125	)	$	2,718	$	4,899		$	36,365
Hardware		16,042		(4,813	)		44		2,304			13,577
Venture capital/private equity		8,307		—			—		(497	)		7,810
Life science		7,225		(310	)		3,359		(2,110	)		8,164
Premium wine		4,009		—			360		(354	)		4,015
Other		5,869		—			64		(359	)		5,574

Total commercial loans		73,325		(8,248	)		6,545		3,883			75,505

Consumer loans		8,830		—			4,025		(3,114	)		9,741

Total allowance for loan losses	$	82,155	$	(8,248	)	$	10,570	$	769		$	85,246


Nine months ended September 30, 2011 (dollars in thousands)	Beginning Balance December 31, 2010		Charge-offs			Recoveries		(Reduction of) Provision for			Ending Balance September 30, 2011
Commercial loans:
Software	$	29,288	$	(4,747	)	$	10,638	$	1,186		$	36,365
Hardware		14,688		(4,828	)		356		3,361			13,577
Venture capital/private equity		8,241		—			—		(431	)		7,810
Life science		9,077		(3,972	)		4,487		(1,428	)		8,164
Premium wine		5,492		(449	)		1,090		(2,118	)		4,015
Other		5,318		(2,867	)		471		2,652			5,574

Total commercial loans		72,104		(16,863	)		17,042		3,222			75,505

Consumer loans		10,523		—			4,584		(5,366	)		9,741

Total allowance for loan losses	$	82,627	$	(16,863	)	$	21,626	$	(2,144	)	$	85,246

The following table summarizes the allowance for loan losses individually and collectively evaluated for impairment as of September 30, 2011 and December 31, 2010, broken out by portfolio segment:


	September 30, 2011				December 31, 2010
(Dollars in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Commercial loans:
Software	$	595	$	35,770	$	986	$	28,302
Hardware		1,750		11,827		1,348		13,340
Venture capital/private equity		—		7,810		—		8,241
Life science		52		8,112		346		8,731
Premium wine		3		4,012		438		5,054
Other		1,011		4,563		122		5,196

Total commercial loans		3,411		72,094		3,240		68,864

Consumer loans		2,568		7,173		3,696		6,827

Total allowance for loan losses	$	5,979	$	79,267	$	6,936	$	75,691

Credit Quality Indicators

For each individual client we establish an internal credit risk rating for that loan, which is used for assessing and monitoring credit risk as well as performance of the loan and the overall portfolio. Our internal credit risk ratings are also used to summarize the risk of loss due to failure by an individual borrower to repay the loan. For our internal credit risk ratings, each individual loan is given a risk rating of 1 through 10. Loans risk-rated 1 through 4 are performing loans and translate to an internal rating of “Pass”, with loans risk-rated 1 being cash secured. Loans risk-rated 5 through 7 are loans that are performing loans, however, we consider them as demonstrating higher risk which requires more frequent review of the individual exposures. These loans translate to an internal rating

of “Performing (Criticized)”. A majority of our performing (criticized) loans are from our SVB Accelerator practice, serving our emerging or early stage clients. Loans risk-rated 8 and 9 are loans that are considered to be impaired and are on nonaccrual status. Loans are placed on nonaccrual status when they become 90 days past due as to principal or interest payments (unless the principal and interest are well secured and in the process of collection), or when we have determined, based upon most recent available information, that the timely collection of principal or interest is not probable; these loans are deemed “Impaired”. For further description of nonaccrual loans, refer to Note 2—“Summary of Significant Accounting Policies” under Part II, Item 8 of our 2010 Form 10-K. Loans risk-rated 10 are charged-off and are not included as part of our loan portfolio balance. We review our credit quality indicators for performance and appropriateness of risk ratings as part of our ongoing evaluation process for our allowance for loan losses. The following table summarizes the credit quality indicators, broken out by portfolio segment and class of financing receivables as of September 30, 2011 and December 31, 2010:


(Dollars in thousands)	Pass		Performing (Criticized)		Impaired		Total
September 30, 2011:
Commercial loans:
Software	$	2,139,282	$	181,246	$	2,559	$	2,323,087
Hardware		677,590		59,749		5,398		742,737
Venture capital/private equity		1,084,298		6,254		—		1,090,552
Life science		609,348		106,236		633		716,217
Premium wine		432,698		39,446		3,257		475,401
Other		335,031		13,279		6,593		354,903

Total commercial loans		5,278,247		406,210		18,440		5,702,897

Consumer loans:
Real estate secured loans		471,426		7,159		18,744		497,329
Other consumer loans		170,172		8,515		3,322		182,009

Total consumer loans		641,598		15,674		22,066		679,338

Total gross loans	$	5,919,845	$	421,884	$	40,506	$	6,382,235


December 31, 2010:
Commercial loans:
Software	$	1,717,309	$	118,518	$	3,292	$	1,839,119
Hardware		575,401		68,320		3,824		647,545
Venture capital/private equity		1,031,373		15,323		—		1,046,696
Life science		520,596		57,769		3,412		581,777
Premium wine		400,519		50,487		6,162		457,168
Other		415,381		22,964		2,177		440,522

Total commercial loans		4,660,579		333,381		18,867		5,012,827

Consumer loans:
Real estate secured loans		337,087		3,961		20,559		361,607
Other consumer loans		181,561		11,210		—		192,771

Total consumer loans		518,648		15,171		20,559		554,378

Total gross loans	$	5,179,227	$	348,552	$	39,426	$	5,567,205

Troubled Debt Restructurings

During the third quarter of 2011 we adopted ASU No. 2011-02, A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring (“ASU 2011-02”), which updated guidance for determining whether a loan is designated as a troubled debt restructuring (“TDR”) (see Note 1—“Basis of Presentation”). As a result of adopting this new guidance, at September 30, 2011 we identified loans totaling $5.3 million that are now considered TDRs under the new guidance and are classified as impaired. The allowance for loan losses related to these loans was $1.3 million as calculated under Accounting Standards Codification (“ASC”) 310.

As of September 30, 2011 we had TDRs of $34.3 million where concessions have been granted to borrowers experiencing financial difficulties, in an attempt to maximize collection. Substantially all of these TDRs were included as part of our impaired loan balances. In order for these loan balances to return to accrual status, the borrower must demonstrate a sustained period of timely payments and the ultimate collectability of all amounts contractually due may not be in doubt. There were unfunded commitments available for funding of $0.6 million to the clients associated with these TDRs as of September 30, 2011. The following table summarizes our loans modified in TDRs, broken out by portfolio segment and class of financing receivables as of September 30, 2011:


(Dollars in thousands)	September 30, 2011
Loans modified in TDRs:
Commercial loans:
Software (1)	$	2,322
Hardware		3,880
Premium wine		1,993
Other		4,384

Total commercial loans		12,579

Consumer loans:
Real estate secured loans		18,382
Other consumer loans		3,322

Total consumer loans		21,704

Total	$	34,283

During the three and nine months ended September 30, 2011 all new TDRs were modified through payment deferrals granted to our clients, however no principal or interest was forgiven. The following table summarizes the recorded investment in loans modified in TDRs, broken out by portfolio segment and class of financing receivable, for modifications made during the three and nine months ended September 30, 2011.


(Dollars in thousands)	Three months ended September 30, 2011		Nine months ended September 30, 2011
Loans modified in TDRs during the period:
Commercial loans:
Software (1)	$	381	$	941
Hardware		801		2,674
Premium wine		—		1,993
Other		2,247		2,247

Total commercial loans		3,429		7,855

Consumer loans:
Other consumer loans		—		3,322

Total consumer loans		—		3,322

Total loans modified in TDR’s during the period	$	3,429	$	11,177

(1)	During the three and nine months ended September 30, 2011, we had partial charge-offs of $0.6 million on loans classified as TDRs.

The related allowance for loan losses for the majority of our TDRs is determined on an individual basis by comparing the carrying value of the loan to the present value of the estimated future cash flows, discounted at the pre-modification contractual interest rate. For certain TDRs, the related allowance for loan losses is determined based on the fair value of the collateral if the loan is collateral dependent.

The following table summarizes the recorded investment in loans modified in TDRs within the previous 12 months that subsequently defaulted during the three and nine months ended September 30, 2011, broken out by portfolio segment and class of financing receivable:


(Dollars in thousands)	Three months ended September 30, 2011		Nine months ended September 30, 2011
TDRs modified within the previous 12 months that defaulted during the period:
Commercial loans:
Software	$	64	$	64
Hardware		1,206		3,079
Premium wine		1,993		1,993

Total commercial loans		3,263		5,136

Consumer loans:
Other consumer loans		3,322		3,322

Total consumer loans		3,322		3,322

Total TDRs modified within the previous 12 months that defaulted in the period	$	6,585	$	8,458

Charge-offs and defaults on previously restructured loans are evaluated to determine the impact to the allowance for loan losses, if any. The evaluation of these defaults may impact the assumptions used in calculating the reserve on other TDRs and impaired loans as well as management’s overall outlook of macroeconomic factors that affect the reserve on the loan portfolio as a whole. After evaluating the charge-offs and defaults experienced on our TDRs we determined that no change to our reserving methodology was necessary to determine the allowance for loan losses as of September 30, 2011.

7. Short-Term Borrowings and Long-Term Debt

The following table represents outstanding short-term borrowings and long-term debt at September 30, 2011 and December 31, 2010:


				Carrying Value
(Dollars in thousands)	Maturity	Principal value		September 30, 2011		December 31, 2010
Short-term borrowings:
Other short-term borrowings	(1)	$	—	$	—	$	37,245

Total short-term borrowings				$	—	$	37,245


Long-term debt:
5.375% Senior Notes	September 15, 2020		350,000	$	347,744	$	347,601
5.70% Senior Notes (2)	June 1, 2012		141,429		145,632		265,613
6.05% Subordinated Notes (3)	June 1, 2017		45,964		55,302		285,937
3.875% Convertible Notes	April 15, 2011		—		—		249,304
7.0% Junior Subordinated Debentures	October 15, 2033		50,000		55,416		55,548
4.99% long-term notes payable	(4)		5,463		5,463		5,257

Total long-term debt				$	609,557	$	1,209,260

(1)

At December 31, 2010, represented cash collateral received from counterparties for our interest rate swap agreements related to our 5.70% Senior Notes and 6.05% Subordinated Notes. Due to the repurchase of $312.6 million of these notes and termination of associated portions of interest rate swaps (see discussion below) in May 2011, the notional value of our swaps fell below the $10 million threshold specified in the agreement, and therefore, the full collateral was returned to the counterparties.

(2)	At September 30, 2011 and December 31, 2010, included in the carrying value of our 5.70% Senior Notes are $4.2 million and $15.7 million, respectively, related to the fair value of the interest rate swap associated with the notes.

(3)	At September 30, 2011 and December 31, 2010, included in the carrying value of our 6.05% Subordinated Notes are $9.1 million and $36.3 million, respectively, related to the fair value of the interest rate swap associated with the notes.

(4)	Represents long-term notes payable related to one of our debt fund investments, and was payable beginning April 30, 2009 with the last payment due in April 2012.

Interest expense related to short-term borrowings and long-term debt was $6.2 million and $24.0 million for the three and nine months ended September 30, 2011, respectively, and $6.6 million and $18.1 million for the three and nine months ended September 30, 2010, respectively. Interest expense is net of the cash flow impact from our interest rate swap agreements related to our 5.70% Senior Notes and 6.05% Subordinated Notes. The weighted average interest rate associated with our short-term borrowings as of December 31, 2010 was 0.13 percent.

Senior Notes and Subordinated Notes

We repurchased $108.6 million of our 5.70% Senior Notes and $204.0 million of our 6.05% Subordinated Notes through a tender offer transaction on May 2, 2011. These repurchases resulted in a gross loss from extinguishment of debt of $33.9 million, which included the payment of the repurchase premiums, transaction fees, and discount and origination fee accretion related to the notes. In connection with these repurchases, we terminated corresponding amounts of the interest rate swaps associated with these notes (see Note 8—“Derivative Financial Instruments”), resulting in a gross gain on swap termination of $37.0 million. The net gain from the note repurchases and the termination of corresponding portions of the interest rate swaps was $3.1 million (on a pre-tax basis), and was recognized during the second quarter of 2011 as a reduction in noninterest expense, which is included in the line item “Other”.

3.875% Convertible Notes

Concurrent with the issuance of our 3.875% Convertible Notes, we entered into a convertible note hedge and warrant agreement (see Note 8—“Derivative Financial Instruments”), which effectively increased the economic conversion price of our 3.875% Convertible Notes to $64.43 per share of common stock. The terms of the hedge and warrant agreement were not part of the terms of the notes and did not affect the rights of the holders of the notes. The warrants expired ratably over 60 business days beginning on July 15, 2011.

The effective interest rate for our 3.875% Convertible Notes for the nine months ended September 30, 2011 was 5.92 percent, and interest expense was $4.2 million. For the three and nine months ended September 30, 2010, the effective interest rate was 5.66 percent and 5.72 percent, respectively, and interest expense was $3.5 million and $10.6 million, respectively.

Available Lines of Credit

We have certain facilities in place providing us access to short-term borrowings on a secured basis (using available-for-sale securities as collateral) and on an unsecured basis. These include repurchase agreements and uncommitted federal funds lines with various financial institutions. As of September 30, 2011, we had not borrowed against any of our repurchase lines or any of our uncommitted federal funds lines. We also pledge securities to the Federal Home Loan Bank of San Francisco and the discount window at the Federal Reserve Bank. The market value of collateral pledged to the Federal Home Loan Bank of San Francisco (comprised entirely of U.S. agency debentures) at September 30, 2011 totaled $1.4 billion, all of which was unused and available to support additional borrowings. The market value of collateral pledged at the discount window of the Federal Reserve Bank at September 30, 2011 totaled $98.8 million, all of which was unused and available to support additional borrowings.

8. Derivative Financial Instruments

We primarily use derivative financial instruments to manage interest rate risk, currency exchange rate risk, equity market price risk and to assist customers with their risk management objectives. Also, in connection with negotiating credit facilities and certain other services, we often obtain equity warrant assets giving us the right to acquire stock in primarily private, venture-backed companies in the technology and life science industries.

Interest Rate Risk

Interest rate risk is our primary market risk and can result from timing and volume differences in the repricing of our interest rate-sensitive assets and liabilities and changes in market interest rates. To manage interest rate risk for our 5.70% Senior Notes, and 6.05% Subordinated Notes, we entered into fixed-for-floating interest rate swap agreements at the time of debt issuance based upon London Interbank Offered Rates (“LIBOR”) with matched-terms. Prior to our termination of portions of our interest rate swap agreements (discussed below), we used the shortcut method to assess hedge effectiveness and evaluate the hedging relationships for qualification under the shortcut method requirements for each reporting period. Net cash benefits associated with our interest rate swaps were recorded in “Interest expense—Borrowings,” a component of net interest income. The fair value of our interest rate swaps was calculated using a discounted cash flow method and adjusted for credit valuation associated with counterparty risk. Increases from changes in fair value were included in other assets and decreases from changes in fair value were included in other liabilities.

In connection with the repurchase of portions of our 5.70% Senior Notes and 6.05% Subordinated Notes in May 2011, we terminated corresponding amounts of the associated interest rate swaps. As a result of these terminations, the remaining portions of the interest rate swaps no longer qualify for the shortcut method to assess hedge effectiveness under ASC 815, and going forward will be accounted for under the long-haul method. Any differences associated with our interest rate swaps that arise as a result of hedge

ineffectiveness will be recorded through net gains on derivative instruments, in noninterest income, a component of consolidated net income.

Currency Exchange Risk

We enter into foreign exchange forward contracts to economically reduce our foreign exchange exposure risk related to our client loans that are denominated in foreign currencies, primarily in Pound Sterling and Euro. We do not designate any foreign exchange forward contracts as derivative instruments that qualify for hedge accounting. Changes in currency rates on the loans are included in other noninterest income, a component of noninterest income. We may experience ineffectiveness in the economic hedging relationship, because the loans are revalued based upon changes in the currency’s spot rate on the principal value, while the forwards are revalued on a discounted cash flow basis. We record forward agreements in gain positions in other assets and loss positions in other liabilities, while net changes in fair value are recorded through net gains on derivative instruments, in noninterest income, a component of consolidated net income.

Equity Market Price Risk

Our 3.875% Convertible Notes, which matured in April 2011, contained conversion options that enabled holders to convert the notes, subject to certain conditions. Upon conversion of the notes, we paid the outstanding principal amount in cash as required by the terms of the notes, and to the extent that the conversion value exceeded the principal amount, we had the option to pay cash or shares of our common stock (or a combination of cash and shares) in respect of the excess amount. The conversion option represented an equity risk exposure for the excess conversion value and was an equity derivative classified in stockholders’ equity. We managed equity market price risk of our 3.875% Convertible Notes by entering into a convertible note hedge and warrant agreement at a net cost of $20.6 million, which effectively increased the economic conversion price from $53.04 per common share to $64.43, and decreased potential dilution to stockholders resulting from the conversion option. For the three and nine months ended September 30, 2011 and 2010, there were no conversions or exercises under the warrant agreement as the warrants were not convertible. The warrants expired ratably over 60 business days beginning on July 15, 2011.

For more information on the 3.875% Convertible Notes, see our Consolidated Financial Statements and Supplementary Data—Note 12—“Short-Term Borrowings and Long-Term Debt” under Part II, Item 8 of our 2010 Form 10-K, as well as Note 7—“Short-Term Borrowings and Long-Term Debt” above.

Other Derivative Instruments

Equity Warrant Assets

Our equity warrant assets are concentrated in private, venture-backed companies in the technology and life science industries. Most of these warrant agreements contain net share settlement provisions, which permit us to pay the warrant exercise price using shares issuable under the warrant (“cashless exercise”). Because we can net settle these warrant agreements, these equity warrant assets qualify as derivative instruments. We value our equity warrant assets using a modified Black-Scholes option pricing model, which incorporates assumptions about the underlying asset value, volatility, and the risk-free rate. We make valuation adjustments for estimated remaining life and marketability for warrants issued by private companies. Equity warrant assets are recorded at fair value in other assets, while changes in their fair value are recorded through net gains on derivative instruments, in noninterest income, a component of consolidated net income.

Loan Conversion Options

In connection with negotiating certain credit facilities, we occasionally extend loan facilities which have convertible option features. The convertible loans may be converted into a certain number of shares determined by dividing the principal amount of the loan by the applicable conversion price. Because our loan conversion options have underlying and notional values and had no initial net investment, these assets qualify as derivative instruments. We value our loan conversion options using a modified Black-Scholes option pricing model, which incorporates assumptions about the underlying asset value, volatility, and the risk-free rate. Loan conversion options are recorded at fair value in other assets, while changes in their fair value are recorded through net gains on derivative instruments, in noninterest income, a component of consolidated net income.

Other Derivatives

We sell forward and option contracts to clients who wish to mitigate their foreign currency exposure. We economically reduce the currency risk from this business by entering into opposite way contracts with correspondent banks. This relationship does not qualify for hedge accounting. The contracts generally have terms of one year or less, although we may have contracts extending for up to five years. We generally have not experienced nonperformance on these contracts, have not incurred credit losses, and anticipate performance by all counterparties to such agreements. Increases from changes in fair value are included in other assets and decreases from changes in fair value are included in other liabilities. The net change in the fair value of these contracts is recorded through net gains on derivative instruments, in noninterest income, a component of consolidated net income.

We sell interest rate contracts to clients who wish to mitigate their interest rate exposure. We economically reduce the interest rate risk from this business by entering into opposite way contracts with correspondent banks. We do not designate any of these contracts (which are derivative instruments) as qualifying for hedge accounting. Increases from changes in fair value are included in other assets and decreases from changes in fair value are included in other liabilities. The net change in the fair value of these derivatives is recorded through net gains on derivative instruments, in noninterest income, a component of consolidated net income.

Counterparty Credit Risk

We are exposed to credit risk if counterparties to our derivative contracts do not perform as expected. We mitigate counterparty credit risk through credit approvals, limits, monitoring procedures and obtaining collateral, as appropriate.

The total notional or contractual amounts, fair value, collateral and net exposure of our derivative financial instruments at September 30, 2011 and December 31, 2010 were as follows:


			September 30, 2011										December 31, 2010
(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	$	187,393	$	13,305		$	—	$	13,305		$	500,000	$	52,017		$	37,245	$	14,772

Derivatives not designated as hedging instruments:
Currency exchange risks:
Foreign exchange forwards		Other assets		65,399		1,341			—		1,341			33,046		459			—		459
Foreign exchange forwards		Other liabilities		10,634		(155	)		—		(155	)		26,764		(280	)		—		(280	)

Net exposure						1,186			—		1,186					179			—		179

Other derivative instruments:
Equity warrant assets		Other assets		135,155		58,523			—		58,523			126,062		47,565			—		47,565

Other derivatives:
Foreign exchange forwards		Other assets		313,446		12,188			—		12,188			291,243		9,408			—		9,408
Foreign exchange forwards		Other liabilities		295,392		(11,609	)		—		(11,609	)		267,218		(8,505	)		—		(8,505	)
Foreign currency options		Other assets		75,600		407			—		407			118,133		1,482			—		1,482
Foreign currency options		Other liabilities		75,600		(407	)		—		(407	)		118,133		(1,482	)		—		(1,482	)
Loan conversion options		Other assets		11,000		2,057			—		2,057			10,175		4,291			—		4,291
Client interest rate derivatives		Other assets		36,135		53			—		53			—		—			—		—
Client interest rate derivatives		Other liabilities		36,135		(55	)		—		(55	)		—		—			—		—

Net exposure						2,634			—		2,634					5,194			—		5,194

Net					$	75,648		$	—	$	75,648				$	104,955		$	37,245	$	67,710

(1)	Cash collateral received from counterparties for our interest rate swap agreements 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 September 30, 2011 remain at investment grade or higher and there were no material changes in their credit ratings for the three and nine months ended September 30, 2011.

A summary of our derivative activity and the related impact on our consolidated statements of income for the three and nine months ended September 30, 2011 and 2010 is as follows:


		Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	Statement of income location	2011			2010			2011			2010
Derivatives designated as hedging instruments:
Interest rate risks:
Net cash benefit associated with interest rate swaps	Interest expense—borrowings	$	2,337		$	5,943		$	12,205		$	18,531
Change in fair value of interest rate swaps	Net gains on derivative instruments		(400	)		—			(467	)		—

Net gains associated with interest rate risk derivatives		$	1,937		$	5,943		$	11,738		$	18,531

Derivatives not designated as hedging instruments:
Currency exchange risks:
(Losses) gains on foreign currency loan revaluations, net	Other noninterest income	$	(3,758	)	$	2,871		$	(567	)	$	(75	)
Gains (losses) on foreign exchange forward contracts, net	Net gains on derivative instruments		3,591			(2,987	)		540			178

Net (losses) gains associated with currency risk		$	(167	)	$	(116	)	$	(27	)	$	103

Other derivative instruments:
Gains on equity warrant assets	Net gains on derivative instruments	$	5,518		$	3,762		$	23,375		$	3,073

Gains on client foreign exchange forward contracts, net	Net gains on derivative instruments	$	658		$	420		$	1,448		$	1,252

Net gains (losses) on other derivatives	Net gains on derivative instruments	$	584		$	62		$	(743	)	$	62

9. Other Noninterest Income and Other Noninterest Expense

A summary of other noninterest income for the three and nine months ended September 30, 2011 and 2010 is as follows:


	Three months ended September 30,					Nine months ended September 30,
(Dollars in thousands)	2011			2010		2011			2010
Fund management fees	$	2,671		$	2,702	$	8,022		$	8,098
Service-based fee income		2,339			1,894		7,151			6,512
Unused commitment fees		1,900			1,352		5,194			3,959
Loan syndication fees		50			575		920			575
(Losses) gains on revaluation of foreign currency loans, net		(3,758	)		2,871		(567	)		(75	)
Currency revaluation (losses) gains		(1,551	)		661		(2,672	)		987
Other		1,457			1,326		5,336			4,851

Total other noninterest income	$	3,108		$	11,381	$	23,384		$	24,907

A summary of other noninterest expense for the three and nine months ended September 30, 2011 and 2010 is as follows:


	Three months ended September 30,				Nine months ended September 30,
(Dollars in thousands)	2011		2010		2011			2010
Telephone	$	1,610	$	1,208	$	4,376		$	3,438
Data processing services		1,097		1,008		3,589			2,910
Tax credit fund amortization		1,212		1,050		3,366			3,107
Client services		1,289		651		3,128			2,006
Postage and supplies		641		571		1,725			1,645
Dues and publications		465		444		1,166			1,093
Net gain from note repurchases and termination of corresponding interest rate swaps		—		—		(3,123	)		—
Other		3,240		2,062		8,226			5,750

Total other noninterest expense	$	9,554	$	6,994	$	22,453		$	19,949

10. Segment Reporting

Effective January 1, 2011, we changed the way we monitor performance and results of our business segments and as a result, we changed how our segments are presented. We have reclassified all prior period segment information to conform to the current presentation of our operating segments.

We have three operating segments for management reporting purposes: Global Commercial Bank, SVB Private Bank and SVB Capital. The results of our operating segments are based on our internal management reporting process.

Our operating segments’ primary source of revenue is from net interest income, which is primarily the difference between interest earned on loans, net of funds transfer pricing (“FTP”), and interest paid on deposits, net of FTP. Accordingly, our segments are reported using net interest income, net of FTP. FTP is an internal measurement framework designed to assess the financial impact of a financial institution’s sources and uses of funds. It is the mechanism by which an earnings credit is given for deposits raised, and

an earnings charge is made for funded loans. FTP is calculated by applying a transfer rate to pooled, or aggregated, loan and deposit volumes.

We also evaluate performance based on provision for loan losses, noninterest income and noninterest expense, which are presented as components of segment operating profit or loss. In calculating each reportable segment’s noninterest expense, we consider the direct costs incurred by the operating segment as well as certain allocated direct costs. As part of this review, we allocate certain corporate overhead costs to a corporate account. We do not allocate income taxes to our segments. Additionally, our management reporting model is predicated on average asset balances; therefore, period-end asset balances are not presented for segment reporting purposes. Changes in an individual client’s primary relationship designation have resulted, and in the future may result, in the inclusion of certain clients in different segments in different periods.

Unlike financial reporting, which benefits from the comprehensive structure provided by GAAP, our internal management reporting process is highly subjective, as there is no comprehensive, authoritative guidance for management reporting. Our management reporting process measures the performance of our reportable segments based on our internal operating structure, which is subject to change from time to time, and is not necessarily comparable with similar information for other financial services companies.

The following is a description of the services that our three operating segments provide:

•

Global Commercial Bank provides solutions to the financial needs of commercial clients through lending, deposit products, cash management services, and global banking and trade products and services. It also serves the needs of our non-U.S. clients with global banking products, including loans, deposits and global finance, in key foreign entrepreneurial markets, where applicable. Effective January 1, 2011, Global Commercial Bank included the results of SVB Specialty Lending, SVB Analytics and our Debt Fund Investments. SVB Specialty Lending provides banking products and services to our premium wine industry clients, including vineyard development loans, as well as community development loans made as part of our responsibilities under the Community Reinvestment Act. Previously, the results of SVB Specialty Lending were included as part of our Relationship Management segment (no longer a separately reported operating segment effective January 1, 2011). SVB Analytics provides equity valuation and equity management services to private companies and venture capital/private equity firms. Previously, the results of SVB Analytics were included as part of our Other Business Services segment (no longer a separately reported operating segment effective January 1, 2011). Our Debt Fund Investments primarily include the Gold Hill Funds, which provide secured debt to private companies of all stages, and Partners for Growth Funds, which provide secured debt primarily to mid-stage and late-stage clients. Previously, the results of our Debt Fund Investments were included as part of our Other Business Services segment. As a result of these changes, our Global Commercial Bank segment’s income before income tax expense for the nine months ended September 30, 2010 was reduced by $27.6 million due to our reclassification of all prior periods to reflect the current segment composition.

•

SVB Private Bank provides banking products and a range of credit services to targeted high-net-worth individuals using both long-term secured and short-term unsecured lines of credit. Previously, the results of SVB Private Bank were included as part of our Relationship Management segment. Effective January 1, 2011, the results of SVB Private Bank are separately reported.

•

SVB Capital manages funds (primarily venture capital funds) on behalf of SVB Financial Group and other third party limited partners. The SVB Capital family of funds is comprised of funds of funds and co-investment funds. Effective January 1, 2011, SVB Capital included the results of our Strategic Investments, which includes certain strategic investments held by SVB Financial. Previously, the results of our Strategic Investments were included as part of our Other Business Services segment.

The summary financial results of our operating segments are presented along with a reconciliation to our consolidated interim results. 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. Net interest income (loss) in the Other Items column is primarily interest income recognized from our fixed income investment portfolio, partially offset by interest income transferred to the segments as part of FTP. Noninterest income in the Other Items column is primarily attributable to noncontrolling interests and gains (losses) on equity warrant assets. Noninterest expense in the Other Items column primarily consists of expenses associated with corporate support functions such as finance, human resources, marketing, legal and other expenses. Additionally, average assets in the Other Items column primarily consist of cash and cash equivalents and our available-for-sale securities portfolio balances.

Our segment information for the three and nine months ended September 30, 2011 and 2010 is as follows:


(Dollars in thousands)	Global Commercial Bank (1)			SVB Private Bank			SVB Capital (1)			Other Items			Total
Three months ended September 30, 2011
Net interest income	$	115,333		$	5,848		$	2		$	14,272		$	135,455
(Provision for) reduction of loan losses		(3,883	)		3,114			—			—			(769	)
Noninterest income		39,189			128			9,873			46,421			95,611
Noninterest expense (2)		(93,046	)		(2,846	)		(3,860	)		(27,699	)		(127,451	)

Income before income tax expense (3)	$	57,593		$	6,244		$	6,015		$	32,994		$	102,846

Total average loans, net of unearned income	$	5,263,448		$	684,613		$	—		$	58,553		$	6,006,614
Total average assets		5,815,493			685,308			238,949			12,056,760			18,796,510
Total average deposits		15,573,886			200,547			—			29,603			15,804,036

Three months ended September 30, 2010
Net interest income	$	90,026		$	3,276		$	—		$	13,039		$	106,341
Provision for loan losses		(10,140	)		(831	)		—			—			(10,971	)
Noninterest income		35,514			108			6,209			44,405			86,236
Noninterest expense (2)		(75,787	)		(1,090	)		(2,930	)		(24,364	)		(104,171	)

Income before income tax expense (3)	$	39,613		$	1,463		$	3,279		$	33,080		$	77,435

Total average loans, net of unearned income	$	3,999,091		$	468,774		$	—		$	30,622		$	4,498,487
Total average assets		4,319,825			468,787			161,911			9,805,115			14,755,638
Total average deposits		11,824,240			115,131			—			(20,150	)		11,919,221

Nine months ended September 30, 2011
Net interest income	$	327,587		$	15,086		$	6		$	43,528		$	386,207
(Provision for) reduction of loan losses		(3,222	)		5,366			—			—			2,144
Noninterest income		110,604			351			23,879			174,439			309,273
Noninterest expense (2)		(264,893	)		(7,326	)		(10,113	)		(83,586	)		(365,918	)

Income before income tax expense (3)	$	170,076		$	13,477		$	13,772		$	134,381		$	331,706

Total average loans, net of unearned income	$	4,933,707		$	637,443		$	—		$	48,559		$	5,619,709
Total average assets		5,387,040			637,854			225,041			12,086,913			18,336,848
Total average deposits		15,063,215			169,368			—			18,355			15,250,938

Nine months ended September 30, 2010
Net interest income (loss)	$	268,477		$	9,476		$	(1	)	$	35,665		$	313,617
Provision for loan losses		(28,567	)		(557	)		—			—			(29,124	)
Noninterest income		98,800			345			14,079			62,442			175,666
Noninterest expense (2)		(220,988	)		(3,155	)		(10,088	)		(72,696	)		(306,927	)

Income before income tax expense (3)	$	117,722		$	6,109		$	3,990		$	25,411		$	153,232

Total average loans, net of unearned income	$	3,780,490		$	443,813		$	—		$	19,128		$	4,243,431
Total average assets		4,111,217			443,912			150,696			9,590,314			14,296,139
Total average deposits		11,482,632			131,028			—			(12,877	)		11,600,783

(1)	SVB Capital’s and Global Commercial Bank’s components of net interest income (loss), noninterest income, noninterest expense and total average assets are shown net of noncontrolling interests for all periods presented.

(2)	The Global Commercial Bank segment includes direct depreciation and amortization of $3.1 million and $2.5 million for the three months ended September 30, 2011 and 2010, respectively, and $8.8 million and $7.3 million for the nine months ended September 30, 2011 and 2010, respectively.

(3)	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.

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

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

12. Income Taxes

We are subject to income tax in the U.S. federal jurisdiction and various state and foreign jurisdictions and have identified our federal tax return and tax returns in California and Massachusetts as “major” tax filings. U.S. federal tax examinations through 1998 have been concluded. The U.S. federal tax return for 2006 and subsequent years remain open to examination by the Internal Revenue Service (“IRS”). Our California and Massachusetts tax returns for the years 2006 and 2007, respectively, and subsequent years remain open to examination.

Effective July 2011, the Company is under audit examination by the IRS for the 2008 and 2009 tax years. To the extent the final tax liabilities are different from the amounts originally accrued, the increases or decreases will be recorded as income tax expense or benefit in the consolidated statements of operations. While the actual outcome is subject to the completion of these audits, we do not believe there will be a material adverse impact on the Company’s results of operations.

At September 30, 2011, our unrecognized tax benefit was $0.6 million, the recognition of which would reduce our income tax expense by $0.4 million. Total accrued interest and penalties at September 30, 2011 were $0.2 million. We expect that our unrecognized tax benefit will change in the next 12 months; however we do not expect the change to have a significant impact on our financial position or our results of operations.

13. Fair Value of Financial Instruments

Fair Value Measurements

Our available-for-sale securities, derivative instruments and certain marketable and non-marketable securities are financial instruments recorded at fair value on a recurring basis. We make estimates regarding valuation of assets and liabilities measured at fair value in preparing our interim consolidated financial statements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (the “exit price”) in an orderly transaction between market participants at the measurement date. There is a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable. Observable inputs reflect market-derived or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data. The three levels for measuring fair value are based on the reliability of inputs and are as follows:

Level 1

Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to instruments utilizing Level 1 inputs. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment.

Assets utilizing Level 1 inputs include exchange-traded equity securities and certain marketable securities accounted for under investment company fair value accounting.

Level 2

Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, directly or indirectly. Valuations for the available-for-sale securities are provided by independent external pricing service providers. We review the methodologies used to determine the fair value, including understanding the nature and observability of the inputs used to determine the price. Additional corroboration, such as obtaining a non-binding price from a broker, may be required depending on the frequency of trades of the security and the level of liquidity or depth of the market. The valuation methodology that is generally used for the Level 2 assets is the income approach. Below is a summary of the significant inputs

used for each class of Level 2 assets and liabilities:

U.S. treasury securities: U.S. treasury securities are considered by most investors to be the most liquid fixed income investments available. These securities are priced relative to market prices on similar U.S. treasury securities.

U.S. agency debentures: Valuations of U.S. agency debentures are based on the characteristics specific to bonds held, such as issuer name, coupon rate, maturity date and any applicable issuer call option features. Valuations are based on market spreads relative to similar term benchmark market interest rates, generally U.S. treasury securities.

Agency-issued mortgage-backed securities: Agency-issued mortgage-backed securities are pools of individual conventional mortgage loans underwritten to U.S. agency standards with similar coupon rates, tenor, and other attributes such as geographic location, loan size and origination vintage. Valuations of these securities are based on observable price adjustments relative to benchmark market interest rates taking into consideration estimated loan prepayment speeds.

Agency-issued collateralized mortgage obligations: Agency-issued collateralized mortgage obligations are structured into classes or tranches with defined cash flow characteristics and are collateralized by U.S. agency-issued mortgage pass-through securities. Valuations of these securities incorporate similar characteristics of mortgage pass-through securities such as coupon rate, tenor, geographic location, loan size and origination vintage, in addition to incorporating the effect of estimated prepayment speeds on the cash flow structure of the class or tranche. Valuations incorporate observable market spreads over an estimated average life after considering the inputs listed above.

Agency-issued commercial mortgage-backed securities: Valuations of these securities are based on spreads to benchmark market interest rates (usually U.S. treasury rates or rates observable in the swaps market), prepayment speeds, loan default rate assumptions and loan loss severity assumptions on underlying loans.

Municipal bonds and notes: Bonds issued by municipal governments generally have stated coupon rates, final maturity dates and are subject to being called ahead of the final maturity date at the option of the issuer. Valuations of these securities are priced based on spreads to other municipal benchmark bonds with similar characteristics; or, relative to market rates on U.S. treasury bonds of similar maturity.

Interest rate swap assets: Valuations of interest rate swaps are priced considering the coupon rate of the fixed leg of the contract and the variable coupon on the floating leg of the contract. Valuation is based on both spot and forward rates on the swap yield curve and the credit worthiness of the contract counterparty.

Foreign exchange forward and option contract assets and liabilities: Valuations of these assets and liabilities are priced based on spot and forward foreign currency rates and option volatility assumptions and the credit worthiness of the contract counterparty.

Equity warrant assets (public portfolio): Valuations of equity warrant assets of public portfolio companies are priced based on the Black-Scholes option pricing model that use the publicly-traded equity prices (underlying stock value), stated strike prices, option expiration dates, the risk-free interest rate and market-observable option volatility assumptions.

Level 3

Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions market participants would use in pricing the asset or liability. Below is a summary of the valuation techniques used for each class of Level 3 assets:

Venture capital and private equity fund investments: Valuations are based on the information provided by the investee funds’ management, which reflects our share of the fair value of the net assets of the investment fund on the valuation date. We account for differences between our measurement date and the date of the fund investment’s net asset value by using the most recent available financial information from the investee general partner, adjusted for any contributions paid during the period, distributions received from the investment during the period, or significant fund transactions or market events.

Other venture capital investments: Valuations are based on consideration of a range of factors including, but not limited to, the price at which the investment was acquired, the term and nature of the investment, local market conditions, values for comparable securities, and as it relates to the private company issue, the current and projected operating performance, exit strategies and financing transactions subsequent to the acquisition of the investment.

Other investments: Valuations are based on pricing models that use observable inputs, such as yield curves and publicly-traded equity prices, and unobservable inputs, such as private company equity prices.

Equity warrant assets (private portfolio): Valuations of equity warrant assets of private portfolio companies are priced based on a modified Black-Scholes option pricing model to estimate the underlying asset value, by using stated strike prices, option expiration dates, risk-free interest rates and option volatility assumptions. Option volatility assumptions used in the modified Black-Scholes model are based on public market indices whose members operate in similar industries as companies in our private company portfolio. Option expiration dates are modified to account for estimates of actual life relative to stated expiration. Overall model asset values are further adjusted for a general lack of liquidity due to the private nature of the associated underlying company.

For the three and nine months ended September 30, 2011, we had transfers of $3.9 million from Level 2 to Level 1. There were no transfers between Level 2 and Level 1 during the three and nine months ended September 30, 2010. Transfers from Level 3 to Level 2 for all periods presented were due to the transfer of equity warrant assets from our private portfolio to our public portfolio (See our Level 3 reconciliation below).

It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. When available, we use quoted market prices to measure fair value. If market prices are not available, fair value measurement is based upon models that use primarily market-based or independently-sourced market parameters, including interest rate yield curves, prepayment speeds, option volatilities and currency rates. Substantially all of our financial instruments use either of the foregoing methodologies, collectively Level 1 and Level 2 measurements, to determine fair value adjustments recorded to our financial statements. However, in certain cases, when market observable inputs for model based valuation techniques may not be readily available, we are required to make judgments about assumptions market participants would use in estimating the fair value of the financial instrument.

The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not fully available, management judgment is necessary to estimate fair value. For inactive markets, there is little information, if any, to evaluate if individual transactions are orderly. Accordingly, we are required to estimate, based upon all available facts and circumstances, the degree to which orderly transactions are occurring and provide more weighting to price quotes that are based upon orderly transactions. In addition, changes in the market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. Therefore, when market data is not available, we use valuation techniques requiring more management judgment to estimate the appropriate fair value measurement. Accordingly, the degree of judgment exercised by management in determining fair value is greater for financial assets and liabilities categorized as Level 3.

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 September 30, 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 September 30, 2011
Assets
Available-for-sale securities:
U.S. treasury securities	$	—	$	26,130	$	—	$	26,130
U.S. agency debentures		—		2,945,537		—		2,945,537
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		—		1,503,851		—		1,503,851
Agency-issued collateralized mortgage obligations (fixed)		—		2,402,232		—		2,402,232
Agency-issued collateralized mortgage obligations (variable)		—		2,559,161		—		2,559,161
Agency-issued commercial mortgage-backed securities		—		103,181		—		103,181
Municipal bonds and notes		—		98,776		—		98,776
Equity securities		518		—		—		518

Total available-for-sale securities		518		9,638,868		—		9,639,386

Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments		—		—		578,126		578,126
Other venture capital investments		—		—		120,160		120,160
Other investments		—		—		973		973

Total non-marketable securities (investment company fair value accounting)		—		—		699,259		699,259

Other assets:
Marketable securities		3,962		—		—		3,962
Interest rate swaps		—		13,305		—		13,305
Foreign exchange forward and option contracts		—		13,936		—		13,936
Equity warrant assets		—		4,105		54,418		58,523
Loan conversion options		—		2,057		—		2,057
Client interest rate derivatives		—		53		—		53

Total assets (1)	$	4,480	$	9,672,324	$	753,677	$	10,430,481

Liabilities
Foreign exchange forward and option contracts	$	—	$	12,171	$	—	$	12,171
Client interest rate derivatives		—		55		—		55

Total liabilities	$	—	$	12,226	$	—	$	12,226

(1)	Included in Level 1 and Level 3 assets are $3.4 million and $605.7 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

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, 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)		—		830,466		—		830,466
Agency-issued collateralized mortgage obligations (variable)		—		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 (investment company 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 (investment company 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.

The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for the three and nine months ended September 30, 2011 and 2010, respectively:


(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
Three months ended September 30, 2011:
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments	$	515,118	$	32,041		$	42,590	$	—		$	—	$	(11,623	)	$	—	$	—		$	578,126
Other venture capital investments		114,070		17,237			2,193		(9,335	)		—		(4,005	)		—		—			120,160
Other investments		995		(16	)		—		—			—		(6	)		—		—			973

Total non-marketable securities (investment company fair value accounting) (1)		630,183		49,262			44,783		(9,335	)		—		(15,634	)		—		—			699,259
Other assets:
Equity warrant assets (2)		49,777		8,192			—		(6,427	)		2,876		—			—		—			54,418

Total assets	$	679,960	$	57,454		$	44,783	$	(15,762	)	$	2,876	$	(15,634	)	$	—	$	—		$	753,677

Three months ended September 30, 2010:
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments	$	322,159	$	13,010		$	31,873	$	—		$	—	$	(1,300	)	$	—	$	—		$	365,742
Other venture capital investments		94,980		(332	)		1,855		(1,177	)		—		—			—		(10,791	)		84,535
Other investments		960		9			—		—			—		(7	)		—		—			962

Total non-marketable securities (investment company fair value accounting) (1)		418,099		12,687			33,728		(1,177	)		—		(1,307	)		—		(10,791	)		451,239
Other assets:
Equity warrant assets (2)		38,633		3,130			—		(4,523	)		2,543		—			—		(18	)		39,765

Total assets	$	456,732	$	15,817		$	33,728	$	(5,700	)	$	2,543	$	(1,307	)	$	—	$	(10,809	)	$	491,004

Nine months ended September 30, 2011:
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments	$	391,247	$	108,032		$	119,990	$	—		$	—	$	(41,143	)	$	—	$	—		$	578,126
Other venture capital investments		111,843		22,608			12,939		(27,513	)		—		283			—		—			120,160
Other investments		981		4			—		—			—		(12	)		—		—			973

Total non-marketable securities (investment company fair value accounting) (1)		504,071		130,644			132,929		(27,513	)		—		(40,872	)		—		—			699,259
Other assets:
Equity warrant assets (2)		43,537		21,403			—		(19,889	)		10,058		(63	)		—		(628	)		54,418

Total assets	$	547,608	$	152,047		$	132,929	$	(47,402	)	$	10,058	$	(40,935	)	$	—	$	(628	)	$	753,677

Nine months ended September 30, 2010:
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments	$	271,316	$	32,408		$	73,718	$	—		$	—	$	(11,700	)	$	—	$	—		$	365,742
Other venture capital investments		96,577		(1,106	)		6,355		(6,500	)		—		—			—		(10,791	)		84,535
Other investments		1,143		(43	)		—		—			—		(138	)		—		—			962

Total non-marketable securities (investment company fair value accounting) (1)		369,036		31,259			80,073		(6,500	)		—		(11,838	)		—		(10,791	)		451,239
Other assets:
Equity warrant assets (2)		40,119		2,588			—		(7,859	)		5,312		(1	)		—		(394	)		39,765

Total assets	$	409,155	$	33,847		$	80,073	$	(14,359	)	$	5,312	$	(11,839	)	$	—	$	(11,185	)	$	491,004

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

The following table presents the amount of unrealized gains (losses) included in earnings (which is inclusive of noncontrolling interest) attributable to Level 3 assets still held at September 30, 2011:


	Three months ended September 30, 2011			Nine months ended September 30, 2011
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments	$	22,845		$	75,576
Other venture capital investments		13,770			14,076
Other investments		(16	)		4

Total non-marketable securities (investment company fair value accounting) (1)		36,599			89,656
Other assets:
Equity warrant assets (2)		3,288			11,297

Total unrealized gains	$	39,887		$	100,953

(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.

Financial Instruments not Carried at Fair Value

FASB guidance over financial instruments requires that we disclose estimated fair values for our financial instruments not carried at fair value. Fair value estimates, methods and assumptions, set forth below for our financial instruments, are made solely to comply with these requirements.

Fair values are based on estimates or calculations at the transaction level using present value techniques in instances where quoted market prices are not available. Because broadly traded markets do not exist for many of our financial instruments, our fair value calculations attempt to incorporate the effect of current market conditions at a specific time. Fair valuations are management’s estimates of the values, and they are calculated based on indicator prices corroborated by observable market quotes or pricing models, the economic and competitive environment, the characteristics of the financial instruments, expected losses, and other such factors. These calculations are subjective in nature, involve uncertainties and matters of significant judgment, and do not include tax ramifications; therefore, the results cannot be determined with precision or substantiated by comparison to independent markets, and they may not be realized in an actual sale or immediate settlement of the instruments. There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results. For all of these reasons, the aggregation of the fair value calculations presented herein does not represent, and should not be construed to represent, the underlying value of the Company.

The following describes the methods and assumptions used in estimating the fair values of financial instruments, excluding financial instruments already recorded at fair value as described above.

Short-Term Financial Assets

Short-term financial assets include cash on hand, cash balances due from banks, interest-earning deposits, securities purchased under agreement to resell and other short-term investment securities. We believe the carrying amount is a reasonable estimate of fair value because of the insignificant risk of changes in fair value due to changes in market interest rates, and purchased in conjunction with our cash management activities.

Non-Marketable Securities (Cost and Equity Method Accounting)

Non-marketable securities (cost and equity method accounting) includes other investments (equity method accounting), low income housing tax credit funds (equity method accounting), venture capital and private equity fund investments (cost method accounting), and other venture capital investments (cost method accounting). The fair value of other investments (equity method accounting), venture capital and private equity fund investments (cost method accounting), and other venture capital investments (cost method accounting) is based on financial information obtained from the investee or obtained from the fund investments’ or debt fund investments’ respective general partners. For private company investments, fair value is based on consideration of a range of factors including, but not limited to, the price at which the investment was acquired, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies and financing transactions subsequent to the acquisition of the investment. For our fund investments, we utilize the net asset value as obtained from the general partners of the investments. We adjust the net asset value for differences between our measurement date and the date of the fund investment’s net asset value by using the most recently available financial information from the investee general partner, for example June 30 ^t ^h , for our September 30 ^th consolidated financial statements, adjusted for any contributions paid during the third quarter,

distributions received from the investment during the third quarter, or significant fund transactions or market events, if any. The fair value of our low income housing tax credit funds (equity method accounting) is based on carrying value.

Loans

The fair value of fixed and variable rate loans is estimated by discounting contractual cash flows using discount rates that reflect our current pricing for loans and the forward yield curve. This method is not based on the exit price concept of fair value required under ASC 820.

Deposits

The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, interest-bearing checking accounts, money market accounts and interest-bearing sweep deposits is equal to the amount payable on demand at the measurement date. The fair value of time deposits is estimated by discounting the balances using our cost of borrowings and the forward yield curve over their remaining contractual term.

Short-Term Borrowings

Short-term borrowings at December 31, 2010 included cash collateral received from counterparties for our interest rate swap agreements related to our 5.70% Senior Notes and 6.05% Subordinated Notes. The carrying amount is a reasonable estimate of fair value. Due to our repurchase of $312.6 million of these notes and termination of associated portions of interest rate swaps (see Note 7—“Short-Term Borrowings and Long-Term Debt”) in May 2011, the notional value of our swaps fell below the $10 million threshold specified in the agreement, and therefore, the full collateral was returned to the counterparties.

Long-Term Debt

Long-term debt at September 30, 2011 includes our 5.375% Senior Notes, 7.0% Junior Subordinated Debentures, 5.70% Senior Notes and 6.05% Subordinated Notes, and other long-term debt. At December 31, 2010, long-term debt also included our 3.875% Convertible Notes, which matured in April 2011 (see Note 7—“Short-Term Borrowings and Long-Term Debt”). The fair value of long-term debt is generally based on quoted market prices, when available, or is estimated based on calculations utilizing third-party pricing services and current market spread, price indications from reputable dealers or observable market prices of the underlying instrument(s), whichever is deemed more reliable. Also included in the estimated fair value of our 5.70% Senior Notes and 6.05% Subordinated Notes are amounts related to the fair value of the interest rate swaps associated with the notes.

Off-Balance Sheet Financial Instruments

The fair value of unfunded commitments to extend credit is estimated based on the average amount we would receive or pay to execute a new agreement with identical terms, considering current interest rates and taking into account the remaining terms of the agreement and counterparties’ credit standing.

Letters of credit are carried at their fair value, which is equivalent to the residual premium or fee at September 30, 2011 or December 31, 2010. Commitments to extend credit and letters of credit typically result in loans with a market interest rate if funded.

The information presented herein is based on pertinent information available to us as of September 30, 2011 and December 31, 2010. The following table is a summary of the estimated fair values of our financial instruments that are not carried at fair value at September 30, 2011 and December 31, 2010.


	September 30, 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)	$	252,704	$	273,991	$	217,449	$	230,158
Net loans		6,243,342		6,302,330		5,439,110		5,466,252
Financial liabilities:
Other short-term borrowings		—		—		37,245		37,245
Deposits		16,139,222		16,139,059		14,336,941		14,334,013
5.375% Senior Notes		347,744		363,763		347,601		344,498
5.70% Senior Notes (1)		145,632		149,695		265,613		277,301
6.05% Subordinated Notes (2)		55,302		58,916		285,937		298,101
3.875% Convertible Notes		—		—		249,304		276,825
7.0% Junior Subordinated Debentures		55,416		50,722		55,548		49,485
Other long-term debt		5,463		5,463		5,257		5,257
Off-balance sheet financial assets:
Commitments to extend credit		—		20,252		—		19,264

(1)	At September 30, 2011 and December 31, 2010, included in the carrying value and estimated fair value of our 5.70% Senior Notes are $4.2 million and $15.7 million, respectively, related to the fair value of the interest rate swaps associated with the notes.

(2)	At September 30, 2011 and December 31, 2010, included in the carrying value and estimated fair value of our 6.05% Subordinated Notes are $9.1 million and $36.3 million, respectively, related to the fair value of the interest rate swaps associated with the notes.

Investments in Entities that Calculate Net Asset Value Per Share

FASB guidance over certain fund investments requires that we disclose the fair value of funds, significant investment strategies of the investees, redemption features of the investees, restrictions on the ability to sell investments, estimate of the period of time over which the underlying assets are expected to be liquidated by the investee, and unfunded commitments related to the investments.

Our investments in debt funds and venture capital and private equity fund investments generally cannot be redeemed. Alternatively, we expect distributions, if any, to be received through initial public offerings (“IPOs”) and merger and acquisition (“M&A”) activity of the underlying assets of the fund. We currently do not have any plans to sell any of these fund investments. If we decide to sell these investments in the future, the investee fund’s management must approve of the buyer before the sale of the investments can be completed. The fair values of the fund investments have been estimated using the net asset value per share of the investments, adjusted for any differences between our measurement date and the date of the fund investment’s net asset value by using the most recently available financial information from the investee general partner, for example June 30 ^t ^h , for our September 30 ^th consolidated financial statements, adjusted for any contributions paid during the third quarter, distributions received from the investment during the third quarter, or significant fund transactions or market events.

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 September 30, 2011:


(Dollars in thousands)	Fair Value		Unfunded Commitments
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments (1)	$	578,126	$	314,285
Non-marketable securities (equity method accounting):
Other investments (2)		60,010		10,150
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments (3)		155,794		92,598

Total	$	793,930	$	417,033

(1)	Venture capital and private equity fund investments within non-marketable securities (investment company fair value accounting) include investments made by our managed funds of funds, one of our co-investment 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 investment company fair value accounting are $495.9 million and $300.0 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 $92.6 million of unfunded commitments is $74.9 million of unfunded commitments made by SVB Financial 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.

14. Legal Matters

Certain lawsuits and claims arising in the ordinary course of business have been filed or are pending against us or our affiliates. Where appropriate, we establish reserves in accordance with GAAP and disclose reasonably possible outcomes that we believe could have a material effect on our financial statements. Based upon information available to us, our review of such claims to date and consultation with our outside legal counsel, management believes the liability relating to these actions, if any, will not have a material adverse effect on our liquidity, consolidated financial position, and/or results of operations. However, the outcome of litigation and other legal and regulatory matters is inherently uncertain, and it is possible that one or more of the legal or regulatory matters currently pending or threatened could have an unanticipated material adverse effect on our liquidity, consolidated financial position, and/or results of operation in the future.

15. Related Parties

During the nine months ended September 30, 2011, the Bank made loans to related parties, including certain companies in which certain of our directors or their affiliated venture funds are beneficial owners of ten percent or more of the equity securities of such companies. Such loans: (a) were made in the ordinary course of business; (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons; and (c) did not involve more than the normal risk of collectability or present other unfavorable features. Additionally, we also provide real estate secured loans to eligible employees through our Employee Home Ownership Plan.

16. Subsequent Events

We have evaluated all material subsequent events and determined there are no events that require disclosure.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including in particular “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part I, Item 2 of this report, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Management has in the past and might in the future make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements are statements that are not historical facts. Broadly speaking, forward-looking statements include, but are not limited to, the following:

•

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 acquisitions

•

Forecasts of venture capital/private equity funding and investment levels

•

Forecasts of future interest rates, economic performance, and income from investments

•

Forecasts of expected levels of provisions for loan losses, loan growth and client funds

•

Descriptions of assumptions underlying or relating to any of the foregoing

In this Quarterly Report on Form 10-Q, we make forward-looking statements, including, but not limited to, those discussing our management’s expectations about:

•

Market and economic conditions (including interest rate environment, and levels of public offerings, mergers/acquisitions and venture capital financing activities) and the associated impact on us

•

The sufficiency of our capital, including sources of capital (such as funds generated through retained earnings) and the extent to which capital may be used or required

•

The adequacy of our liquidity position, including sources of liquidity (such as dividends and liquid assets)

•

The extent of our achievement of internal performance targets for 2011

•

Our overall investment plans, strategies and activities, including venture capital/private equity funding and investments, and our investment of excess cash/liquidity

•

The realization, timing, valuation and performance of equity or other investments

•

The likelihood that the market value of our impaired investments will recover

•

Our intent to sell our investment securities prior to recovery of our cost basis, or the likelihood of such

•

Expected cash requirements for unfunded commitments to certain investments, including capital calls

•

Our overall management of interest rate risk, including managing the sensitivity of our interest-earning assets and interest-bearing liabilities to interest rates, and the impact to earnings from a change in interest rates

•

The credit quality of our loan portfolio, including levels and trends of nonperforming loans, impaired loans, criticized loans and troubled debt restructurings

•

The adequacy of reserves (including allowance for loan losses) and the appropriateness of our methodology for calculating such reserves

•

The level of loan and deposit balances

•

The level of client investment fees and associated margins

•

The profitability of our products and services

•

Our strategic initiatives

•

Our plans to form new managed investment funds and our intent to transfer certain existing investment commitments to third parties or any managed funds

•

Distributions of venture capital, private equity or debt fund investment proceeds; intentions to sell such fund investments

•

The changes in, or adequacy of, our unrecognized tax benefits and any associated impact

•

The impact of the outcome of the IRS tax audit examination of the Company

•

The extent to which counterparties, including those to our forward and option contracts, will perform their contractual obligations

•

The effect of application of certain accounting pronouncements

•

The effect of lawsuits and claims

•

Regulatory developments, including the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Act (as defined below)

You can identify these and other forward-looking statements by the use of words such as “becoming,” “may,” “will,” “should,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “estimates,” “seeks,” “expects,” “plans,” “intends,” the negative of such words, or comparable terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we have based these expectations on our beliefs as well as our assumptions, and such expectations may prove to be incorrect. Our actual results of operations and financial performance could differ significantly from those expressed in or implied by our management’s forward-looking statements.

For information with respect to factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see “Risk Factors” set forth in our Annual Report on Form 10-K for the year ended December 31, 2010 (“2010 Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”). We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this report. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this filing are made only as of the date of this filing. We assume no obligation and do not intend to revise or update any forward-looking statements contained in this Quarterly Report on Form 10-Q.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our interim unaudited consolidated financial statements and accompanying notes as presented in Part I, Item 1 of this report and in conjunction with our 2010 Form 10-K.

Reclassifications

Certain reclassifications have been made to prior period results to conform to the current period’s presentations. Such reclassifications had no effect on our results of operations or stockholders’ equity.

Management’s Overview of Third Quarter 2011 Performance

In the third quarter of 2011, compared to the third quarter of 2010, we experienced growth in our interest-earning assets as a result of continued growth of client deposits. As a result, we recognized a strong increase in net interest income from growth in average loan balances and the investment of excess deposits into available-for-sale securities. In addition to higher net interest income, we saw continued strong overall credit quality, resulting in a nominal provision for the third quarter of 2011. We also recognized higher noninterest income, primarily due to increased valuations from companies in our managed funds, as well as an increase in core fee income. Additionally, our overall capital and liquidity continued to remain strong.

Third quarter 2011 results (compared to the third quarter 2010, where applicable) reflected strong performance across all areas of our business and included:

•

Strong growth in our lending business with average loan balances of $6.0 billion, an increase of $1.5 billion from the third quarter of 2010.

•

Average deposit balances of $15.8 billion, an increase of $3.9 billion from the third quarter of 2010.

•

An increase in net interest income (fully taxable equivalent basis) of $29.1 million, or 27.2 percent, primarily due to an increase in interest income from loans due to the increase in average balances of $1.5 billion, as well as an increase in interest income from our available-for-sale securities as a result of investing our excess cash from deposit growth. These increases were partially offset by lower investment yields available on new purchases of securities in the current rate environment, as well as lower overall yields on our loan portfolio due to changes in loan composition.

•

A nominal provision for loan losses of $0.8 million for the third quarter of 2011, compared to a provision of $11.0 million for the third quarter of 2010. The provision for the third quarter of 2011 was due to an increase in period-end loans, offset by net recoveries. Overall, our allowance for loan losses as a percentage of loans decreased to 1.34 percent from 1.52 percent in the third quarter of 2010 primarily due to continued strong overall credit quality.

•

Core fee income (foreign exchange fees, deposit service charges, credit card fees, client investment fees and letters of credit and standby letters of credit income) increased by $3.3 million, or 12.2 percent, to $30.3 million for the third quarter of 2011. This increase reflects increased client activity and continued growth in our business.

•

Gains on investment securities, net of noncontrolling interests, were $9.3 million for the third quarter of 2011, compared to $6.2 million for the third quarter of 2010 (the third quarter of 2010 amount also excludes gains of $23.6 million from the sale of certain available-for-sale securities during the quarter).

•

An increase of $23.3 million in noninterest expense to $127.5 million, primarily due to an increase of $14.8 million in compensation and benefits expense reflecting higher incentive compensation costs based on our strong performance in 2011 and an increase in the number of average full-time equivalent employees (“FTE”).

•

Overall, our liquidity remained strong based on our period end available-for-sale securities portfolio of $9.6 billion at September 30, 2011, compared to $7.9 billion at December 31, 2010. The increase provided additional liquidity resources through current expected cash flow and through the ability to secure wholesale borrowings, if needed.

•

Overall, SVB Financial and the Bank continue to maintain strong capital positions. The Bank’s Tier 1 leverage ratio increased by 11 basis points to 6.93 percent at September 30, 2011, compared to 6.82 percent at December 31, 2010. The increase in the Bank’s Tier 1 leverage capital ratio was primarily the result of strong earnings, partially offset by growth of average deposits.

A summary of our performance for the three and nine months ended September 30, 2011 and 2010 is as follows:


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands, except per share data and ratios)	2011			2010			% Change			2011			2010			% Change
Income Statement:
Diluted earnings per share	$	0.86		$	0.89			(3.4	)%	$	3.12		$	1.83			70.5	%
Net income available to common stockholders		37,571			37,787			(0.6	)		136,328			77,464			76.0
Net interest income		135,455			106,341			27.4			386,207			313,617			23.1
Net interest margin		3.13	%		3.14	%		(1	)bps		3.07	%		3.21	%		(14	)bps
Provision for (reduction of) loan losses	$	769		$	10,971			(93.0	)%	$	(2,144	)	$	29,124			(107.4	)%
Noninterest income (1)		95,611			86,236			10.9			309,273			175,666			76.1
Noninterest expense (2)		127,451			104,171			22.3			365,918			306,927			19.2
Balance Sheet:
Average loans, net of unearned income	$	6,006,614		$	4,498,487			33.5	%	$	5,619,709		$	4,243,431			32.4	%
Average noninterest-bearing demand deposits		10,634,757			6,924,973			53.6			9,783,426			6,947,666			40.8
Average interest-bearing deposits		5,169,279			4,994,248			3.5			5,467,512			4,653,117			17.5
Average total deposits		15,804,036			11,919,221			32.6			15,250,938			11,600,783			31.5
Ratios:
Return on average common SVBFG stockholders’ equity (annualized) (3)		9.93	%		11.84	%		(16.1	)%		12.95	%		8.56	%		51.3	%
Return on average assets (annualized) (4)		0.79			1.02			(22.5	)		0.99			0.72			37.5
Book value per common share (5)		35.50			30.23			17.4			35.50			30.23			17.4
Operating efficiency ratio (6)		55.04			53.95			2.0			52.50			62.53			(16.0	)
Allowance for loan losses as a percentage of total period-end gross loans		1.34			1.52			(18	)bps		1.34			1.52			(18	)bps
Gross loan charge-offs as a percentage of average total gross loans (annualized)		0.54			1.08			(54	)bps		0.40			1.27			(87	)bps
Net loan (recoveries) charge-offs as a percentage of average total gross loans (annualized)		(0.15	)		0.73			(88	)bps		(0.11	)		0.85			(96	)bps
Other Statistics:
Average SVB prime lending rate		4.00	%		4.00	%		-	bps		4.00	%		4.00	%		-	bps
Average full-time equivalent employees		1,478			1,321			11.9	%		1,428			1,289			10.8	%
Period end full-time equivalent employees		1,504			1,341			12.2			1,504			1,341			12.2
Non-GAAP measures:
Non-GAAP net income available to common stockholders (7)	$	37,571		$	23,579			59.3		$	111,941		$	62,595			78.8
Non-GAAP diluted earnings per common share (7)		0.86			0.55			56.4			2.57			1.48			73.6
Non-GAAP noninterest income, net of noncontrolling interests and excluding gains on sales of available-for-sale securities (8)		54,372			45,042			20.7			160,600			116,566			37.8
Non-GAAP noninterest expense, net of noncontrolling interests and excluding net gains from debt repurchases (9)		124,685			101,232			23.2			360,173			297,877			20.9
Non-GAAP operating efficiency ratio (9)		65.53	%		66.65	%		(1.7	)		65.70	%		69.00	%		(4.8	)
Tangible common equity to tangible assets (10)		8.00			8.10			(1.2	)		8.00			8.10			(1.2	)
Tangible common equity to risk-weighted assets (10)		14.21			15.17			(6.3	)		14.21			15.17			(6.3	)

(1)

Noninterest income included net gains of $41.2 million and $111.4 million attributable to noncontrolling interests for the three and nine months ended September 30, 2011, respectively, compared to net gains of $17.6 million and $34.4 million for the comparable 2010 periods. See “Results of Operations—Noninterest Income” for a description of noninterest income attributable to noncontrolling interests.

(2)

Noninterest expense included $2.8 million and $8.9 million attributable to noncontrolling interests for the three and nine months ended September 30, 2011, respectively, compared to $2.9 million and $9.1 million for the comparable 2010 periods. See “Results of Operations—Noninterest Expense” for a description of noninterest expense attributable to noncontrolling interests.

(3)	Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and year-to-date average SVBFG stockholders’ equity.

(4)	Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and year-to-date average assets.

(5)	Book value per common share is calculated by dividing total SVBFG stockholders’ equity by total outstanding common shares at period-end.

(6)	The operating efficiency ratio is calculated by dividing total noninterest expense by total taxable-equivalent net interest income plus noninterest income.

(7)	To supplement our consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures. See “Non-GAAP Net Income and Non-GAAP Diluted Earnings Per Common Share” below for a reconciliation of these measures.

(8)	See “Results of Operations—Noninterest Income” for a description and reconciliation of non-GAAP noninterest income.

(9)	See “Results of Operations—Noninterest Expense” for a description and reconciliation of non-GAAP noninterest expense and the non-GAAP operating efficiency ratio.

(10)	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.

Non-GAAP Net Income and Non-GAAP Diluted Earnings Per Common Share

We use and report non-GAAP net income and non-GAAP diluted earnings per common share, which excludes (when applicable) gains from the sale of certain available-for-sale securities, as well as net gains from debt repurchases and termination of corresponding interest rate swaps. We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that do not occur every reporting period. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and related trends, and when planning, forecasting and analyzing future periods. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or preferable to, financial measures prepared in accordance with GAAP.

A reconciliation of GAAP to non-GAAP net income available to common stockholders and non-GAAP diluted earnings per common share for the three and nine months ended September 30, 2011 and 2010 is as follows:


	Three months ended September 30,					Nine months ended September 30,
(Dollars in thousands, except share amounts)	2011		2010			2011			2010
Net income available to common stockholders	$	37,571	$	37,787		$	136,328		$	77,464
Less: gains on sales of available-for-sale securities (1)		—		(23,605	)		(37,314	)		(24,699	)
Tax impact of gains on sales of available-for-sale securities		—		9,397			14,810			9,830
Less: net gain from note repurchases and termination of corresponding interest rate swaps (2)		—		—			(3,123	)		—
Tax impact of net gain from note repurchases and termination of corresponding interest rate swaps		—		—			1,240			—

Non-GAAP net income available to common stockholders	$	37,571	$	23,579		$	111,941		$	62,595

GAAP earnings per common share — diluted	$	0.86	$	0.89		$	3.12		$	1.83
Impact of gains on sales of available-for-sale securities (1)		—		(0.56	)		(0.85	)		(0.58	)
Tax impact of gains on sales of available-for-sale securities		—		0.22			0.34			0.23
Net gain from note repurchases and termination of corresponding interest rate swaps (2)		—		—			(0.07	)		—
Tax impact of net gain from note repurchases and termination of corresponding interest rate swaps		—		—			0.03			—

Non-GAAP earnings per common share — diluted	$	0.86	$	0.55		$	2.57		$	1.48

Weighted average diluted common shares outstanding		43,791,238		42,512,515			43,641,185			42,400,685

(1)	Gains on the sales of $1.4 billion, $492.9 million and $157.9 million in certain available-for-sale securities in the second quarter of 2011, the third quarter of 2010 and the second quarter of 2010, respectively.

(2)	Net gains of $3.1 million from the repurchase of $108.6 million of our 5.70% Senior Notes and $204.0 million of our 6.05% Subordinated Notes and the termination of the corresponding portions of interest rate swaps in the second quarter of 2011.

Critical Accounting Policies and Estimates

The accompanying management’s discussion and analysis of results of operations and financial condition is based upon our unaudited interim consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. Management evaluates estimates and assumptions on an ongoing basis. Management bases its estimates on historical experiences and various other factors and assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.

There have been no significant changes during the nine months ended September 30, 2011 to the items that we disclosed as our critical accounting policies and estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II, Item 7 of our 2010 Form 10-K.

Results of Operations

Net Interest Income and Margin (Fully Taxable Equivalent Basis)

Net interest income is defined as the difference between interest earned on loans, available-for-sale securities and short-term investment securities, and interest paid on funding sources. Net interest income is our principal source of revenue. Net interest margin is defined as the amount of annualized net interest income, on a fully taxable equivalent basis, expressed as a percentage of average interest-earning assets. Net interest income and net interest margin are presented on a fully taxable equivalent basis to consistently reflect income from taxable loans and securities and tax-exempt securities based on the federal statutory tax rate of 35.0 percent.

Analysis of Net Interest Income Changes Due to Volume and Rate (Fully Taxable Equivalent Basis)

Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as “volume change.” Net interest income is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing liabilities, referred to as “rate change.” The following table sets forth changes in interest income for each major category of interest-earning assets and interest expense for each major category of interest-bearing liabilities. The table also reflects the amount of simultaneous changes attributable to both volume and rate changes for the years indicated. For this table, changes that are not solely due to either volume or rate are allocated in proportion to the percentage changes in average volume and average rate.


	2011 Compared to 2010									2011 Compared to 2010
	Three months ended September 30, Increase (decrease) due to change in									Nine months ended September 30, Increase (decrease) due to change in
(Dollars in thousands)	Volume			Rate			Total			Volume			Rate			Total
Interest income:
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities	$	(3,984	)	$	2,640		$	(1,344	)	$	(5,052	)	$	1,580		$	(3,472	)
Available-for-sale securities (taxable) (1)		67,056			(60,074	)		6,982			70,435			(46,972	)		23,463
Available-for-sale securities (non-taxable) (1)		(72	)		(4	)		(76	)		(162	)		(62	)		(224	)
Loans, net of unearned income		48,976			(27,999	)		20,977			70,601			(15,882	)		54,719

Increase (decrease) in interest income, net		111,976			(85,437	)		26,539			135,822			(61,336	)		74,486

Interest expense:
NOW deposits		107			(101	)		6			75			(27	)		48
Money market deposits		1,861			(2,190	)		(329	)		1,531			(1,080	)		451
Money market deposits in foreign offices		98			(136	)		(38	)		122			(41	)		81
Time deposits		(213	)		49			(164	)		(230	)		(224	)		(454	)
Sweep deposits		(215	)		(1,328	)		(1,543	)		(60	)		(4,002	)		(4,062	)

Total increase (decrease) in deposits expense		1,638			(3,706	)		(2,068	)		1,438			(5,374	)		(3,936	)
Short-term borrowings		(21	)		(5	)		(26	)		(30	)		(10	)		(40	)
5.375% Senior Notes		4,234			44			4,278			13,846			51			13,897
3.875% Convertible Notes		(3,540	)		—			(3,540	)		(6,750	)		360			(6,390	)
Junior Subordinated Debentures		(2	)		—			(2	)		(11	)		274			263
5.70% Senior Notes and 6.05% Subordinated Notes		(865	)		(336	)		(1,201	)		(1,489	)		(357	)		(1,846	)
Other long-term debt		(32	)		43			11			(43	)		69			26

Total (decrease) increase in borrowings expense		(226	)		(254	)		(480	)		5,523			387			5,910

(Decrease) increase in interest expense, net		1,412			(3,960	)		(2,548	)		6,961			(4,987	)		1,974

Increase (decrease) in net interest income	$	110,564		$	(81,477	)	$	29,087		$	128,861		$	(56,349	)	$	72,512

(1)	Our available-for-sale securities portfolio represents interest-earning investment securities.

Net Interest Income (Fully Taxable Equivalent Basis)

Three months ended September 30, 2011 and 2010

Net interest income increased by $29.1 million to $135.9 million for the three months ended September 30, 2011, compared to $106.9 million for the comparable 2010 period. Overall, we saw an increase in our net interest income primarily due to higher average loan balances and growth in our available-for-sale securities portfolio, which has increased as a result of our continued growth in deposits. Growth in deposits is reflective of growth from new clients and the continued lack of attractive market investment opportunities for our deposit clients. These increases were partially offset by lower rates earned on our available-for-sale securities and loans, primarily attributable to the low interest rate environment and changes in loan composition.

The main factors affecting interest income and interest expense for the three months ended September 30, 2011, compared to the comparable 2010 period are discussed below:

•

Interest income for the three months ended September 30, 2011 increased by $26.5 million primarily due to:

•

A $21.0 million increase in interest income on loans, primarily related to a $1.5 billion increase in average loan balances for the three months ended September 30, 2011, compared to the comparable 2010 period. This increase was partially offset by a decrease in overall yield on the loan portfolio resulting primarily from changes in loan composition.

•

A $6.9 million increase in interest income on available-for-sale securities, primarily related to the growth in average balances of $4.3 billion due to new investments, which were purchased as a result of our continued deposit growth. This increase was partially offset by lower investment yields available on new purchases of securities in the current rate environment and the effect of sales of higher-yielding securities in the second quarter of 2011 and third quarter of 2010 (which resulted in pre-tax gains of $37.3 million and $23.6 million, respectively).

•

Interest expense for the three months ended September 30, 2011 decreased by $2.5 million primarily due to:

•

A decrease in interest expense from interest-bearing deposits of $2.1 million, primarily due to decreases in rates paid on deposits throughout 2010 and the first three quarters of 2011, which is reflective of current market rates. This decrease was partially offset by an increase in interest expense related to a $175.0 million increase in average interest-bearing deposit balances.

•

A decrease in interest expense of $0.5 million related to our long-term debt, primarily due to a $4.3 million increase in interest expense from the issuance of $350.0 million of 5.375% Senior Notes in September 2010, partially offset by a $3.5 million decrease due to the maturity of $250.0 million of our 3.875% Convertible Notes in April 2011.

Nine months ended September 30, 2011 and 2010

•

Net interest income increased by $72.5 million to $387.7 million for the nine months ended September 30, 2011, compared to $315.2 million for the comparable 2010 period. Overall, we saw an increase in our net interest income primarily due to higher average loan balances and growth in our available-for-sale securities portfolio, which has increased as a result of our continued growth in deposits. Growth in deposits is reflective of growth from new clients and the continued lack of attractive market investment opportunities for our deposit clients. These increases were partially offset by lower rates earned on our available-for-sale securities and loans, primarily attributable to the low interest rate environment and changes in loan composition.

The main factors affecting interest income and interest expense for the nine months ended September 30, 2011, compared to the comparable 2010 period are discussed below:

•

Interest income for the nine months ended September 30, 2011 increased by $74.5 million primarily due to:

•

A $54.7 million increase in interest income on loans, primarily related to a $1.4 billion increase in average loan balances. This increase was partially offset by a decrease in overall yield on the loan portfolio resulting primarily from changes in loan composition.

•

A $23.2 million increase in interest income on available-for-sale securities, primarily related to the growth in average balances of $4.5 billion due to new investments, which were purchased as a result of our continued deposit growth. This increase was partially offset by lower investment yields available on new purchases of securities in the current rate environment and the effect of sales of higher-yielding securities in the second quarter of 2011 and third quarter of 2010.

•

Interest expense for the nine months ended September 30, 2011 increased by $2.0 million primarily due to:

•

An increase in interest expense of $6.0 million related to our long-term debt, primarily due to a $13.9 million increase in interest expense from the issuance of $350 million in 5.375% Senior Notes in September 2010, partially offset by a $6.4 million decrease due to the maturity of our 3.875% Convertible Notes in April 2011.

•

This increase was partially offset by a decrease in interest expense from interest-bearing deposits of $3.9 million, primarily due to decreases in rates paid on deposits throughout 2010 and the first three quarters of 2011, which is reflective of current market rates. This decrease was partially offset by an increase in interest expense related to an $814.4 million increase in average interest-bearing deposit balances.

Net Interest Margin (Fully Taxable Equivalent Basis)

Our net interest margin was 3.13 percent and 3.07 percent for the three and nine months ended September 30, 2011, respectively, compared to 3.14 percent and 3.21 percent for the comparable 2010 periods. The decreases in our net interest margin were primarily due to the significant growth of our deposits, the majority of which were invested in available-for-sale securities (our

deposit growth is reflective of growth from new clients and the continued lack of attractive market investment opportunities for our deposit clients). Additionally, paydowns and sales of higher-yielding securities throughout 2010 and the first nine months of 2011 were reinvested in lower-yielding securities given the current interest rate environment. As such, the overall mix of our interest-earning assets shifted to a higher proportion of lower-yielding assets, which is reflective of the low interest rate environment. The decreases for the three and nine months ended September 30, 2011, were partially offset by increases of $1.5 billion and $1.4 billion, respectively, in average loan balances (higher-yielding assets) and a decrease in rates paid on our deposits.

Average Balances, Yields and Rates Paid (Fully Taxable Equivalent Basis)

The average yield earned on interest-earning assets is the amount of annualized fully taxable equivalent interest income expressed as a percentage of average interest-earning assets. The average rate paid on funding sources is the amount of annualized interest expense expressed as a percentage of average funding sources. The following tables set forth average assets, liabilities, noncontrolling interests and SVBFG stockholders’ equity, interest income, interest expense, annualized yields and rates, and the composition of our annualized net interest margin for the three and nine months ended September 30, 2011 and 2010, respectively:

Average Balances, Rates and Yields for the Three Months Ended September 30, 2011 and 2010


	Three months ended September 30,
	2011									2010
(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)	$	1,595,176		$	1,375			0.34	%	$	3,740,869		$	2,719			0.29	%
Available-for-sale securities: (2)
Taxable		9,528,645			39,357			1.64			5,181,966			32,375			2.48
Non-taxable (3)		92,268			1,382			5.94			96,991			1,458			5.96
Total loans, net of unearned income (4)		6,006,614			101,693			6.72			4,498,487			80,716			7.12

Total interest-earning assets		17,222,703			143,807			3.31			13,518,313			117,268			3.45

Cash and due from banks		286,485									222,458
Allowance for loan losses		(88,315	)								(77,937	)
Other assets (5)		1,375,637									1,092,804

Total assets	$	18,796,510								$	14,755,638

Funding sources:
Interest-bearing liabilities:
NOW deposits	$	89,549		$	53			0.23	%	$	48,284		$	47			0.39	%
Money market deposits		2,577,617			1,125			0.17			1,963,838			1,454			0.29
Money market deposits in foreign offices		104,605			26			0.10			79,838			64			0.32
Time deposits		229,430			236			0.41			399,444			400			0.40
Sweep deposits		2,168,078			275			0.05			2,502,844			1,818			0.29

Total interest-bearing deposits		5,169,279			1,715			0.13			4,994,248			3,783			0.30
Short-term borrowings		1,250			—			—			52,949			26			0.19
5.375% Senior Notes		347,712			4,812			5.49			41,555			534			5.10
3.875% Convertible Notes		—			—			—			248,331			3,540			5.66
Junior Subordinated Debentures		55,445			829			5.93			55,621			831			5.93
5.70% Senior Notes and 6.05% Subordinated Notes		201,024			436			0.86			566,948			1,637			1.15
Other long-term debt		5,840			77			5.23			6,392			66			4.10

Total interest-bearing liabilities		5,780,550			7,869			0.54			5,966,044			10,417			0.69
Portion of noninterest-bearing funding sources		11,442,153									7,552,269

Total funding sources		17,222,703			7,869			0.18			13,518,313			10,417			0.31

Noninterest-bearing funding sources:
Demand deposits		10,634,757									6,924,973
Other liabilities		287,030									197,865
SVBFG stockholders’ equity		1,500,452									1,265,971
Noncontrolling interests		593,721									400,785
Portion used to fund interest-earning assets		(11,442,153	)								(7,552,269	)

Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity	$	18,796,510								$	14,755,638

Net interest income and margin				$	135,938			3.13	%				$	106,851			3.14	%

Total deposits	$	15,804,036								$	11,919,221

Average SVBFG stockholders’ equity as a percentage of average assets								7.98	%								8.58	%

Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis					(483	)								(510	)

Net interest income, as reported				$	135,455								$	106,341

(1)

Includes average interest-bearing deposits in other financial institutions of $338.4 million and $237.8 million for the three months ended September 30, 2011 and 2010, respectively. For the three months ended September 30, 2011 and 2010, balances also include $975.1 million and $3.4 billion, respectively, deposited at the Federal Reserve Bank, earning interest at the Federal Funds target rate.

(2)	Yields on interest-earning investment securities are based on amortized cost, therefore do not give effect to unrealized changes in fair value that are reflected in other comprehensive income.

(3)	Interest income on non-taxable investments 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)	Average investment securities of $1.0 billion and $740.1 million for the three months ended September 30, 2011 and 2010, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable securities.

Average Balances, Rates and Yields for the Nine Months Ended September 30, 2011 and 2010


	Nine months ended September 30,
	2011									2010
(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)	$	1,951,625		$	4,972			0.34	%	$	4,048,242		$	8,444			0.28	%
Available-for-sale securities: (2)
Taxable		9,195,583			124,956			1.82			4,733,666			101,493			2.87
Non-taxable (3)		94,179			4,189			5.95			97,796			4,413			6.03
Total loans, net of unearned income (4)		5,619,709			284,935			6.78			4,243,431			230,216			7.25

Total interest-earning assets		16,861,096			419,052			3.32			13,123,135			344,566			3.51

Cash and due from banks		275,617									229,192
Allowance for loan losses		(87,616	)								(77,207	)
Other assets (5)		1,287,751									1,021,019

Total assets	$	18,336,848								$	14,296,139

Funding sources:
Interest-bearing liabilities:
NOW deposits	$	79,112		$	198			0.33	%	$	50,338		$	150			0.40	%
Money market deposits		2,486,211			4,186			0.23			1,667,830			3,735			0.30
Money market deposits in foreign offices		134,216			264			0.26			74,841			183			0.33
Time deposits		292,710			913			0.42			359,278			1,367			0.51
Sweep deposits		2,475,263			1,818			0.10			2,500,830			5,880			0.31

Total interest-bearing deposits		5,467,512			7,379			0.18			4,653,117			11,315			0.33
Short-term borrowings		22,287			25			0.15			47,807			65			0.18
5.375% Senior Notes		347,665			14,431			5.55			14,004			534			5.10
3.875% Convertible Notes		95,071			4,210			5.92			247,765			10,600			5.72
Junior Subordinated Debentures		55,489			2,494			6.01			55,750			2,231			5.35
5.70% Senior Notes and 6.05% Subordinated Notes		357,523			2,617			0.98			557,405			4,463			1.07
Other long-term debt		5,580			223			5.34			6,897			197			3.82

Total interest-bearing liabilities		6,351,127			31,379			0.66			5,582,745			29,405			0.70
Portion of noninterest-bearing funding sources		10,509,969									7,540,390

Total funding sources		16,861,096			31,379			0.25			13,123,135			29,405			0.30

Noninterest-bearing funding sources:
Demand deposits		9,783,426									6,947,666
Other liabilities		254,033									176,854
SVBFG stockholders’ equity		1,407,231									1,210,082
Noncontrolling interests		541,031									378,792
Portion used to fund interest-earning assets		(10,509,969	)								(7,540,390	)

Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity	$	18,336,848								$	14,296,139

Net interest income and margin				$	387,673			3.07	%				$	315,161			3.21	%

Total deposits	$	15,250,938								$	11,600,783

Average SVBFG stockholders’ equity as a percentage of average assets								7.67	%								8.46	%

Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis					(1,466	)								(1,544	)

Net interest income, as reported				$	386,207								$	313,617

(1)

Includes average interest-bearing deposits in other financial institutions of $293.0 million and $207.9 million for the nine months ended September 30, 2011 and 2010, respectively. For the nine months ended September 30, 2011 and 2010, balances also include $1.4 billion and $3.8 billion, respectively, deposited at the Federal Reserve Bank, earning interest at the Federal Funds target rate.

(2)	Yields on interest-earning investment securities are based on amortized cost, therefore do not give effect to unrealized changes in fair value that are reflected in other comprehensive income.

(3)	Interest income on non-taxable investments 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)	Average investment securities of $899.6 million and $666.1 million for the nine months ended September 30, 2011 and 2010, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable securities.

Provision for (Reduction of) Loan Losses

Our provision for (reduction of) loan losses is based on our evaluation of the adequacy of the existing allowance for loan losses in relation to total gross loans using historical and other objective information, and on our periodic assessment of the inherent and identified risk dynamics of the loan portfolio resulting from reviews of selected individual loans. The following table summarizes our allowance for loan losses for the three and nine months ended September 30, 2011 and 2010:


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2011			2010			2011			2010
Allowance for loan losses, beginning balance	$	82,155		$	71,789		$	82,627		$	72,450
Provision for (reduction of) loan losses		769			10,971			(2,144	)		29,124
Gross loan charge-offs		(8,248	)		(12,289	)		(16,863	)		(40,602	)
Loan recoveries		10,570			3,898			21,626			13,397

Allowance for loan losses, ending balance	$	85,246		$	74,369		$	85,246		$	74,369

Provision for (reduction of) as a percentage of total gross loans (annualized)		0.05	%		0.89	%		(0.04	)%		0.79	%
Gross loan charge-offs as a percentage of average total gross loans (annualized)		0.54			1.08			0.40			1.27
Net loan charge-offs (recoveries) as a percentage of average total gross loans (annualized)		(0.15	)		0.73			(0.11	)		0.85
Allowance for loan losses as a percentage of period-end total gross loans		1.34			1.52			1.34			1.52
Period-end total gross loans	$	6,382,235		$	4,900,129		$	6,382,235		$	4,900,129
Average total gross loans		6,057,937			4,534,485			5,666,939			4,277,371

We had a provision for loan losses of $0.8 million for the three months ended September 30, 2011, compared to a provision of $11.0 million for the comparable 2010 period. The provision of $0.8 million was due to an increase in the allowance for the increase in period-end loans. This increase was partially offset by a decrease in the allowance for our performing loans as a percentage of total performing loans due to changes in loan composition. Gross loan charge-offs of $8.2 million for the three months ended September 30, 2011 were primarily from our hardware and software client portfolios. Loan recoveries of $10.6 million for the three months ended September 30, 2011 were primarily from our private bank and life science client portfolios.

We had a reduction of loan losses of $2.1 million for the nine months ended September 30, 2011, compared to a provision of $29.1 million for the comparable 2010 period. Gross loan charge-offs of $16.9 million for the nine months ended September 30, 2011 were primarily from our hardware, software, life sciences, and other commercial loans client portfolios. Loan recoveries of $21.6 million for the nine months ended September 30, 2011 were primarily from our software, private bank and life science client portfolios.

Our allowance for loan losses as a percentage of total gross loans decreased from 1.52 percent at September 30, 2010 to 1.34 percent at September 30, 2011, primarily due to a reduction in the allowance for our performing loans. Our allowance for loan losses for total gross performing loans as a percentage of total gross performing loans decreased to 1.25 percent at September 30, 2011, compared to 1.37 percent at December 31, 2010 due to the strong overall credit quality of our clients.

Noninterest Income

A summary of noninterest income for the three and nine months ended September 30, 2011 and 2010 is as follows:


	Three months ended September 30,							Nine months ended September 30,
(Dollars in thousands)	2011		2010		% Change			2011		2010		% Change
Gains on investment securities, net	$	52,262	$	46,611		12.1	%	$	175,279	$	67,420		160.0	%
Foreign exchange fees		11,546		9,091		27.0			32,397		26,207		23.6
Gains on derivative instruments, net		9,951		1,257		NM			24,153		4,565		NM
Deposit service charges		8,259		7,324		12.8			23,214		22,283		4.2
Credit card fees		4,506		3,139		43.5			12,687		8,853		43.3
Client investment fees		2,939		4,681		(37.2	)		9,707		13,562		(28.4	)
Letters of credit and standby letters of credit income		3,040		2,752		10.5			8,452		7,869		7.4
Other		3,108		11,381		(72.7	)		23,384		24,907		(6.1	)

Total noninterest income	$	95,611	$	86,236		10.9		$	309,273	$	175,666		76.1

NM—Not meaningful

Included in net income is income and expense attributable to noncontrolling interests. We recognize, as part of our investment funds management business through SVB Capital and Debt Fund Investments, the entire income or loss from funds where we own significantly less than 100%. We are required under GAAP to consolidate 100% of the results of entities that we are deemed to control, even though we may own less than 100% of such entities. The relevant amounts attributable to investors other than us are reflected under “Net Income Attributable to Noncontrolling Interests” on our statements of income. The non-GAAP tables presented

below, for noninterest income and net gains on investment securities, all exclude noncontrolling interests. We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that represent income attributable to investors other than us and our subsidiaries. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or preferable to, financial measures prepared in accordance with GAAP.

The following table provides a summary of non-GAAP noninterest income, net of noncontrolling interests:


	Three months ended September 30,							Nine months ended September 30,
Non-GAAP noninterest income, net of noncontrolling interests
(Dollars in thousands)	2011		2010		% Change			2011		2010		% Change
GAAP noninterest income (as reported)	$	95,611	$	86,236		10.9	%	$	309,273	$	175,666		76.1	%
Less: income attributable to noncontrolling interests, including carried interest		41,239		17,589		134.5			111,359		34,401		NM

Noninterest income, net of noncontrolling interests		54,372		68,647		(20.8	)		197,914		141,265		40.1
Less: gains on sales of certain available-for-sale securities		—		23,605		(100.0	)		37,314		24,699		51.1

Non-GAAP noninterest income, net of noncontrolling interests and excluding gains on sales of certain available-for-sale securities	$	54,372	$	45,042		20.7		$	160,600	$	116,566		37.8

NM—Not meaningful

Gains on Investment Securities, Net

Net gains on investment securities include both gains from our non-marketable and marketable securities, as well as gains from sales of our available-for-sale securities portfolio (when applicable).

Our available-for-sale securities portfolio is managed to maximize portfolio yield over the long-term in a manner consistent with our liquidity, credit diversification, and asset/liability strategies. Though infrequent, the sale of investments from our available-for-sale portfolio results in net gains or losses on investment securities.

We experience variability in the performance of our non-marketable and marketable investments from quarter to quarter, which results in net gains or losses on investment securities. This variability is due to a number of factors, including changes in the values of our investments, changes in the amount of distributions or liquidity events and general economic and market conditions. Such variability may lead to volatility in the gains from investment securities and as such our results for a particular period are not necessarily indicative of our expected performance in a future period.

For the three months ended September 30, 2011, we had net gains on investment securities of $52.3 million, compared to net gains of $46.6 million for the comparable 2010 period. Gains on investment securities, net of noncontrolling interests, were $9.3 million for the three months ended September 30, 2011, compared to $6.2 million for the comparable 2010 period (the third quarter of 2010 amount also excludes gains from the sale of certain available-for-sale-securities). The gains, net of noncontrolling interests, of $9.3 million for the three months ended September 30, 2011 were primarily due to the continued trend of increased valuations of companies (primarily internet and social networking) in our managed funds.

For the nine months ended September 30, 2011, we had net gains on investment securities of $175.3 million, compared to net gains of $67.4 million for the comparable 2010 period. Gains on investment securities, net of noncontrolling interests, were $25.2 million for the nine months ended September 30, 2011, compared to $9.6 million for the comparable 2010 period (amounts also exclude gains of $37.3 million and $24.7 million, respectively, from the sale of certain available-for-sale securities). The gains, net of noncontrolling interests, of $25.2 million for the nine months ended September 30, 2011 were primarily attributable to the following:

•

Net gains of $14.5 million from our managed funds, primarily due to increased valuations and liquidity events from companies (primarily internet and social networking).

•

Net gains of $6.2 million from our strategic and other investments, which included gains of $2.3 million from the sale of shares of a company that completed an IPO during the second quarter of 2011. These shares were originally acquired through the exercise of equity warrant assets.

The following tables provide a summary of net gains on investment securities, net of noncontrolling interests, for the three and nine months ended September 30, 2011 and 2010:


	Three months ended September 30, 2011
(Dollars in thousands)	Managed Funds of Funds		Managed Co- Investment Funds		Debt Funds			Available- For- Sale Securities			Strategic and Other Investments		Total
Total gains on investment securities, net	$	32,264	$	17,517	$	1,422		$	5		$	1,054	$	52,262
Less: income (loss) attributable to noncontrolling interests, including carried interest		28,765		14,222		(26	)		—			—		42,961

Non-GAAP net gains on investment securities, net of noncontrolling interests	$	3,499	$	3,295	$	1,448		$	5		$	1,054	$	9,301


	Three months ended September 30, 2010
(Dollars in thousands)	Managed Funds of Funds		Managed Co- Investment Funds		Debt Funds			Available- For- Sale Securities			Strategic and Other Investments		Total
Total gains on investment securities, net	$	11,825	$	8,552	$	1,527		$	23,605		$	1,102	$	46,611
Less: income attributable to noncontrolling interests, including carried interest		10,081		6,710		26			—			—		16,817

Net gains on investment securities, net of noncontrolling interests		1,744		1,842		1,501			23,605			1,102		29,794
Less: gains on sales of certain available-for-sale securities		—		—		—			23,605			—		23,605

Non-GAAP net gains on investment securities, net of noncontrolling interests and excluding gains on sales of certain available-for-sale securities	$	1,744	$	1,842	$	1,501		$	—		$	1,102	$	6,189


	Nine months ended September 30, 2011
(Dollars in thousands)	Managed Funds of Funds		Managed Co- Investment Funds		Debt Funds			Available- For- Sale Securities			Strategic and Other Investments		Total
Total gains on investment securities, net	$	107,640	$	19,623	$	4,524		$	37,288		$	6,204	$	175,279
Less: income attributable to noncontrolling interests, including carried interest		95,727		17,042		14			—			—		112,783

Net gains on investment securities, net of noncontrolling interests		11,913		2,581		4,510			37,288			6,204		62,496
Less: gains on sales of certain available-for-sale securities		—		—		—			37,314			—		37,314

Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests and excluding gains on sales of certain available-for-sale securities	$	11,913	$	2,581	$	4,510		$	(26	)	$	6,204	$	25,182


	Nine months ended September 30, 2010
(Dollars in thousands)	Managed Funds of Funds		Managed Co- Investment Funds		Debt Funds			Available- For- Sale Securities			Strategic and Other Investments		Total
Total gains on investment securities, net	$	30,175	$	8,952	$	2,376		$	24,473		$	1,444	$	67,420
Less: income (loss) attributable to noncontrolling interests, including carried interest		26,342		6,818		(1	)		—			—		33,159

Net gains on investment securities, net of noncontrolling interests		3,833		2,134		2,377			24,473			1,444		34,261
Less: gains on sales of certain available-for-sale securities		—		—		—			24,699			—		24,699

Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests and excluding gains on sales of certain available-for-sale securities	$	3,833	$	2,134	$	2,377		$	(226	)	$	1,444	$	9,562

Foreign Exchange Fees

Foreign exchange fees were $11.5 million and $32.4 million for the three and nine months ended September 30, 2011, respectively, compared to $9.1 million and $26.2 million for the comparable 2010 periods. The increases were primarily due to improving business conditions for our clients and increased volatility in foreign markets, which has resulted in higher commissioned notional volumes. Commissioned notional volumes increased to $2.5 billion and $7.0 billion for the three and nine months ended September 30, 2011, respectively, compared to $1.9 billion and $4.7 billion for the comparable 2010 periods.

Gains on Derivative Instruments, Net

A summary of gains on derivative instruments, net, for the three and nine months ended September 30, 2011 and 2010 is as follows:


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2011			2010			% Change			2011			2010			% Change
Gains (losses) on foreign exchange forward contracts, net:
Gains on client foreign exchange forward contracts, net (1)	$	658		$	420			56.7	%	$	1,448		$	1,252			15.7	%
Gains (losses) on internal foreign exchange forward contracts, net (2)		3,591			(2,987	)		NM			540			178			NM

Total gains (losses) on foreign exchange forward contracts, net		4,249			(2,567	)		NM			1,988			1,430			39.0
Change in fair value of interest rate swap		(400	)		—			—			(467	)		—			—
Net gains (losses) on other derivatives		584			62			NM			(743	)		62			NM
Equity warrant assets: (3)
Gains on exercise, net		2,372			3,462			(31.5	)		11,977			5,099			134.9
Change in fair value:
Cancellations and expirations		(386	)		(513	)		(24.8	)		(1,690	)		(3,039	)		(44.4	)
Other changes in fair value		3,532			813			NM			13,088			1,013			NM

Total net gains on equity warrant assets (4) (5)		5,518			3,762			46.7			23,375			3,073			NM

Total gains on derivative instruments, net	$	9,951		$	1,257			NM		$	24,153		$	4,565			NM

NM—Not meaningful

(1)	Represents the net gains from foreign exchange forward contracts executed on behalf of clients.

(2)

Represents the change in the fair value of foreign exchange forward contracts used to economically reduce our foreign exchange exposure risk related to certain foreign currency denominated loans. Revaluations of foreign currency denominated loans are recorded in the line item “Other” as part of noninterest income, a component of consolidated net income.

(3)	At September 30, 2011, we held warrants in 1,151 companies, compared to 1,158 companies at September 30, 2010.

(4)	Includes net gains (losses) on equity warrant assets held by consolidated investment affiliates. Relevant amounts attributable to noncontrolling interests are reflected in the interim consolidated statements of income under the caption “Net Income Attributable to Noncontrolling Interests.”

(5)	Net gains on equity warrant assets are included in the line item “Gains to derivative instruments, net” as part of noninterest expense.

Net gains on derivative instruments were $10.0 million for the three months ended September 30, 2011, compared to net gains of $1.3 million for the comparable 2010 period. The increase of $8.7 million was primarily attributable to the following:

•

Net gains of $3.6 million on foreign exchange forward contracts hedging our foreign currency denominated loans for the three months ended September 30, 2011, compared to net losses of $3.0 million for the comparable 2010 period. The net gains of $3.6 million for the three months ended September 30, 2011 were primarily due to the strengthening of the U.S. dollar against the Euro and were offset by net losses of $3.8 million from the revaluation of foreign currency denominated loans that are included in the line item “Other” as part of noninterest income.

•

Net gains on equity warrant assets of $5.5 million for the three months ended September 30, 2011, compared to net gains of $3.8 million for the comparable 2010 period. The net gains of $5.5 million for the three months ended September 30, 2011 reflect increased M&A activity within our client base.

Net gains on derivative instruments were $24.2 million for the nine months ended September 30, 2011, compared to net gains of $4.6 million for the comparable 2010 period. The increase of $19.6 million was primarily attributable to the following:

•

Net gains on equity warrant assets of $23.4 million for the nine months ended September 30, 2011, compared to net gains of $3.1 million for the comparable 2010 period. The net gains of $23.4 million for the nine months ended September 30, 2011 reflect increased IPO and M&A activity within our client base.

•

Net gains of $0.5 million on foreign exchange forward contracts hedging our foreign currency denominated loans for the nine months ended September 30, 2011, compared to net gains of $0.2 million for the comparable 2010 period. The net gains of $0.5 million for the nine months ended September 30, 2011 were primarily due to the strengthening of the U.S. dollar against the Pound Sterling and Euro. These gains were partially offset by net losses of $0.6 million from the revaluation of foreign currency denominated loans that are included in the line item “Other” as part of noninterest income.

Credit Card Fees

Credit card fees were $4.5 million and $12.7 million for the three and nine months ended September 30, 2011, respectively, compared to $3.1 million and $8.9 million for the comparable 2010 periods. The increases were primarily due to the addition of new credit card clients, as well as an increase in client activity.

Client Investment Fees

Client investment fees were $2.9 million and $9.7 million for the three and nine months ended September 30, 2011, respectively, compared to $4.7 million and $13.6 million for the comparable 2010 periods. The decreases were primarily attributable to lower margins earned on certain products owing to historically low rates in the short-term fixed income markets, partially offset by an increase in average client investment funds. The following table summarizes average client investment funds for the three and nine months ended September 30, 2011 and 2010, respectively:


	Three months ended September 30,							Nine months ended September 30,
(Dollars in millions)	2011		2010		% Change			2011		2010		% Change
Client directed investment assets	$	8,063	$	9,171		(12.1	)%	$	8,845	$	9,300		(4.9	)%
Client investment assets under management		9,541		6,803		40.2			8,519		6,215		37.1
Sweep money market funds		312		—		—			132		—		—

Total average client investment funds	$	17,916	$	15,974		12.2		$	17,496	$	15,515		12.8

The following table summarizes period-end client investment funds at September 30, 2011 and December 31, 2010:


(Dollars in millions)	September 30, 2011		December 31, 2010		% Change
Client directed investment assets	$	8,581	$	9,479		(9.5	)%
Client investment assets under management		9,682		7,415		30.6
Sweep money market funds		429		—		—

Total period-end client investment funds	$	18,692	$	16,894		10.6

The increases in average and period-end balances were primarily due to an increase in client investment assets under management, mainly attributable to a steadily improving funding environment for both private and public clients, as well as our increased efforts to guide clients towards products that are more appropriate for them, resulting in a shift of funds off the balance sheet.

Other Noninterest Income

A summary of other noninterest income for the three and nine months ended September 30, 2011 and 2010, respectively, is as follows:


	Three months ended September 30,								Nine months ended September 30,
(Dollars in thousands)	2011			2010		% Change			2011			2010			% Change
Fund management fees	$	2,671		$	2,702		(1.1	)%	$	8,022		$	8,098			(0.9	)%
Service-based fee income (1)		2,339			1,894		23.5			7,151			6,512			9.8
Unused commitment fees		1,900			1,352		40.5			5,194			3,959			31.2
Loan syndication fees		50			575		(91.3	)		920			575			60.0
(Losses) gains on revaluation of foreign currency loans, net		(3,758	)		2,871		NM			(567	)		(75	)		NM
Currency revaluation (losses) gains		(1,551	)		661		NM			(2,672	)		987			NM
Other		1,457			1,326		9.9			5,336			4,851			10.0

Total other noninterest income	$	3,108		$	11,381		(72.7	)	$	23,384		$	24,907			(6.1	)

NM—Not meaningful

(1)	Includes income from SVB Analytics

Other noninterest income was $3.1 million and $23.4 million for the three and nine months ended September 30, 2011, respectively, compared to $11.4 million and $24.9 million for the comparable 2010 periods. The decrease of $8.3 million for the three month period was primarily due to net losses from the revaluation of foreign currency denominated loans of $3.8 million for the three months ended September 30, 2011, compared to net gains of $2.9 million for the comparable 2010 period. Net losses from the revaluation of foreign currency denominated loans of $3.8 million for the three months ended September 30, 2011 were primarily due to the strengthening of the U.S. dollar against the Euro and was partially offset by net gains of $3.6 million from foreign exchange forward contracts, which we use to reduce our foreign exchange exposure related to certain foreign currency denominated loans and are included in net gains on derivative instruments.

Additionally, we had currency revaluation losses of $1.6 million for the three months ended September 30, 2011, compared to net gains of $0.7 million for the comparable 2010 period. The net losses of $1.6 million for the three months ended September 30, 2011 were primarily due to the strengthening of the U.S. dollar against the Indian Rupee.

Noninterest Expense

A summary of noninterest expense for the three and nine months ended September 30, 2011 and 2010 is as follows:


	Three months ended September 30,							Nine months ended September 30,
(Dollars in thousands)	2011		2010		% Change			2011		2010		% Change
Compensation and benefits	$	77,009	$	62,170		23.9	%	$	232,529	$	181,993		27.8	%
Professional services		16,122		12,618		27.8			43,000		37,358		15.1
Premises and equipment		7,220		5,548		30.1			19,572		16,651		17.5
Business development and travel		5,886		5,153		14.2			17,429		14,542		19.9
Net occupancy		4,967		5,131		(3.2	)		14,163		14,468		(2.1	)
FDIC assessments		2,302		2,637		(12.7	)		7,940		13,273		(40.2	)
Correspondent bank fees		2,336		2,228		4.8			6,701		6,132		9.3
Provision for unfunded credit commitments		2,055		1,692		21.5			2,131		2,561		(16.8	)
Other		9,554		6,994		36.6			22,453		19,949		12.6

Total noninterest expense	$	127,451	$	104,171		22.3		$	365,918	$	306,927		19.2

Compensation and Benefits

Compensation and benefits expense was $77.0 million for the three months ended September 30, 2011, compared to $62.2 million for the comparable 2010 period. The increase of $14.8 million was primarily due to the following:

•

An increase of $6.9 million in incentive compensation and Employee Stock Ownership Plan (“ESOP”) expenses due to our strong financial performance in the third quarter of 2011 and our current expectation that we will exceed our internal performance targets for 2011.

•

An increase of $4.4 million in salaries and wages expense, primarily due to an increase in the number of average FTE employees to support our sales and advisory positions and continued investment in growth initiatives and related infrastructure support, as well as from merit increases. Average FTEs increased by 157 to 1,478 average FTEs in the third quarter of 2011, compared to 1,321 average FTEs in the third quarter of 2010.

Compensation and benefits expense was $232.5 million for the nine months ended September 30, 2011, compared to $182.0 million for the comparable 2010 period. The increase of $50.5 million was primarily due to the following:

•

An increase of $25.6 million in incentive compensation and ESOP expenses due to our strong financial performance in the first three quarters of 2011 and our current expectation that we will exceed our internal performance targets for 2011.

•

An increase of $13.1 million in salaries and wages expense, primarily due to an increase in the number of average FTE, as well as from merit increases. Average FTEs increased by 139 to 1,428 average FTEs in the nine months ended September 30, 2011, compared to 1,289 average FTEs in the comparable 2010 period.

Our variable compensation plans primarily consist of our Incentive Compensation Plans, Direct Drive Incentive Compensation Plan, Long-Term Cash Incentive Plan, 401(k) and ESOP Plan, Retention Program and Warrant Incentive Plan. Total costs incurred under these plans were $26.5 million and $82.4 million for the three and nine months ended September 30, 2011, respectively, compared to $17.7 million and $51.9 million for the comparable 2010 periods. These amounts are included in total compensation and benefits expense discussed above.

Federal Deposit Insurance Corporation (“FDIC”) Assessments

FDIC assessments were $2.3 million and $7.9 million for the three and nine months ended September 30, 2011, compared to $2.6 million and $13.3 million for the comparable 2010 periods. The decrease for the nine month period was primarily due to higher FDIC assessment rates in 2010 associated with the FDIC’s Temporary Liquidity Guarantee Program as well as changes in our assessment calculation by the FDIC beginning in April 2011 pursuant to the Dodd-Frank Act.

Provision for Unfunded Credit Commitments

We recorded a provision for unfunded credit commitments of $2.1 million for the three months ended September 30, 2011, compared to a provision of $1.7 million for the comparable 2010 period. The provision for unfunded credit commitments of $2.1 million for the three months ended September 30, 2011 was primarily due to an increase in unfunded credit commitments and letters of credit balances of $204.6 million, as well as from changes in the composition of the unfunded loan commitments.

Other Noninterest Expense

A summary of other noninterest expense for the three and nine months ended September 30, 2011 and 2010 is as follows:


	Three months ended September 30,							Nine months ended September 30,
(Dollars in thousands)	2011		2010		% Change			2011			2010		% Change
Telephone	$	1,610	$	1,208		33.3	%	$	4,376		$	3,438		27.3	%
Data processing services		1,097		1,008		8.8			3,589			2,910		23.3
Tax credit fund amortization		1,212		1,050		15.4			3,366			3,107		8.3
Client services		1,289		651		98.0			3,128			2,006		55.9
Postage and supplies		641		571		12.3			1,725			1,645		4.9
Dues and publications		465		444		4.7			1,166			1,093		6.7
Net gain from note repurchases and termination of corresponding interest rate swaps (1)		—		—		—			(3,123	)		—		—
Other		3,240		2,062		57.1			8,226			5,750		43.1

Total other noninterest expense	$	9,554	$	6,994		36.6		$	22,453		$	19,949		12.6

(1)	Net gains of $3.1 million from the repurchase of $108.6 million of our 5.70% Senior Notes and $204.0 million of our 6.05% Subordinated Notes and the termination of the corresponding portions of interest rate swaps in the second quarter of 2011.

Non-GAAP Noninterest Expense

We use and report non-GAAP noninterest expense, non-GAAP taxable equivalent revenue and non-GAAP operating efficiency ratio, which excludes noncontrolling interests. We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by: (i) excluding certain items that represent expenses attributable to investors other than us and our subsidiaries, or certain items that do not occur every reporting period; or (ii) providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or preferable to, financial measures prepared in accordance with GAAP. The table below provides a summary of non-GAAP noninterest expense and non-GAAP operating efficiency ratio, both net of noncontrolling interests:


	Three months ended September 30,									Nine months ended September 30,
Non-GAAP operating efficiency ratio, net of noncontrolling interests (Dollars in thousands, except ratios)	2011			2010			% Change			2011			2010			% Change
GAAP noninterest expense	$	127,451		$	104,171			22.3	%	$	365,918		$	306,927			19.2	%
Less: amounts attributable to noncontrolling interests		2,766			2,939			(5.9	)		8,868			9,050			(2.0	)
Less: net gain from note repurchases and termination of corresponding interest rate swaps		—			—			—			(3,123	)		—			—

Non-GAAP noninterest expense, net of noncontrolling interests and excluding net gains from debt repurchases	$	124,685		$	101,232			23.2		$	360,173		$	297,877			20.9

GAAP taxable equivalent net interest income	$	135,938		$	106,851			27.2		$	387,673		$	315,161			23.0
Less: income attributable to noncontrolling interests		32			2			NM			84			20			NM

Non-GAAP taxable equivalent net interest income, net of noncontrolling interests		135,906			106,849			27.2			387,589			315,141			23.0
Non-GAAP noninterest income, net of noncontrolling interests and and excluding gains on sales of certain available-for-sale securities (1)		54,372			45,042			20.7			160,600			116,566			37.8

Non-GAAP taxable equivalent revenue, net of noncontrolling interests	$	190,278		$	151,891			25.3		$	548,189		$	431,707			27.0

Non-GAAP operating efficiency ratio (2)		65.53	%		66.65	%		(1.7	)		65.70	%		69.00	%		(4.8	)

NM—Not meaningful

(1)	See “Noninterest Income” above for a description and reconciliation of non-GAAP noninterest income.

(2)	The non-GAAP operating efficiency ratio is calculated by dividing non-GAAP noninterest expense by non-GAAP total taxable-equivalent income.

Net Income Attributable to Noncontrolling Interests

Included in net income is income and expense attributable to noncontrolling interests. The relevant amounts attributable to investors other than us are reflected under “Net Income Attributable to Noncontrolling Interests” on our statements of income.

In the table below, noninterest income consists primarily of investment gains and losses from our consolidated funds. Noninterest expense is primarily related to management fees paid by our managed funds to SVB Financial’s subsidiaries as the funds’ general partners. A summary of net income attributable to noncontrolling interests for the three and nine months ended September 30, 2011 and 2010, respectively, is as follows:


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2011			2010			% Change			2011			2010			% Change
Net interest income (1)	$	(32	)	$	(2	)		NM	%	$	(84	)	$	(20	)		NM	%
Noninterest income (1)		(43,487	)		(17,922	)		142.6			(114,276	)		(35,668	)		NM
Noninterest expense (1)		2,766			2,939			(5.9	)		8,868			9,050			(2.0	)
Carried interest (2)		2,248			333			NM			2,917			1,267			130.2

Net income attributable to noncontrolling interests	$	(38,505	)	$	(14,652	)		162.8		$	(102,575	)	$	(25,371	)		NM

NM—Not meaningful

(1)	Represents noncontrolling interests’ share in net interest income, noninterest income and noninterest expense.

(2)

Represents the change in the preferred allocation of income we earn as general partners managing our managed funds, the preferred allocation earned by the general partner entity managing one of our consolidated debt funds, and the preferred allocation earned by the limited partners of two of our managed funds of funds.

Income Taxes

Our effective tax expense rate was 41.6 percent for the three months ended September 30, 2011, compared to 39.8 percent for the comparable 2010 period. Our effective tax expense rate was 40.5 percent for the nine months ended September 30, 2011, compared to an effective tax expense of 39.4 percent for the comparable 2010 period. The increases in the tax rates were primarily attributable to higher taxes on foreign operations and higher non-deductible expenses as a percentage of pre-tax income.

Our effective tax rate is calculated by dividing income tax expense by the sum of income before income tax expense and the net income attributable to noncontrolling interests.

Operating Segment Results

We have three operating segments for which we report our financial information: Global Commercial Bank, SVB Private Bank and SVB Capital.

In accordance with ASC 280, we report segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reporting segments. Please refer to Note 10—“Segment Reporting” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details.

Our primary source of revenue is from net interest income, which is primarily the difference between interest earned on loans, net of funds transfer pricing (“FTP”), and interest paid on deposits, net of FTP. Accordingly, our segments are reported using net interest income, net of FTP. FTP is an internal measurement framework designed to assess the financial impact of a financial institution’s sources and uses of funds. It is the mechanism by which an earnings credit is given for deposits raised, and an earnings charge is made for funded loans. FTP is calculated by applying a transfer rate to pooled, or aggregated, loan and deposit volumes.

We also evaluate performance based on provision for loan losses, noninterest income and noninterest expense, which are presented as components of segment operating profit or loss. In calculating each operating segment’s noninterest expense, we consider the direct costs incurred by the operating segment as well as certain allocated direct costs. As part of this review, we allocate certain corporate overhead costs to a corporate account. We do not allocate income taxes to our segments. Additionally, our management reporting model is predicated on average asset balances; therefore, period-end asset balances are not presented for segment reporting purposes.

Changes in an individual client’s primary relationship designation have resulted, and in the future may result, in the inclusion of certain clients in different segments in different periods. Effective January 1, 2011, we have three segments for management reporting

purposes: Global Commercial Bank, SVB Private Bank and SVB Capital. Previously, we reported based on four segments: Global Commercial Bank, Relationship Management, SVB Capital and Other Business Services. We have reclassified all prior period amounts to conform to the current period’s presentation. Refer to Note 10-“Segment Reporting” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

The following is our reportable segment information for the three and nine months ended September 30, 2011 and 2010:

Global Commercial Bank


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2011			2010			% Change			2011			2010			% Change
Net interest income	$	115,333		$	90,026			28.1	%	$	327,587		$	268,477			22.0	%
Provision for loan losses		(3,883	)		(10,140	)		(61.7	)		(3,222	)		(28,567	)		(88.7	)
Noninterest income		39,189			35,514			10.3			110,604			98,800			11.9
Noninterest expense		(93,046	)		(75,787	)		22.8			(264,893	)		(220,988	)		19.9

Income before income tax expense	$	57,593		$	39,613			45.4		$	170,076		$	117,722			44.5

Total average loans, net of unearned income	$	5,263,448		$	3,999,091			31.6		$	4,933,707		$	3,780,490			30.5
Total average assets		5,815,493			4,319,825			34.6			5,387,040			4,111,217			31.0
Total average deposits		15,573,886			11,824,240			31.7			15,063,215			11,482,632			31.2

Three months ended September 30, 2011 compared to the three months ended September 30, 2010

Net interest income from our Global Commercial Bank (“GCB”) increased by $25.3 million for the three months ended September 30, 2011, primarily due to an increase in loan interest income of $18.1 million resulting mainly from an increase in average loan balances and an increase in the FTP earned for deposits of $8.3 million due to significant deposit growth. Our deposit growth is reflective of growth from new clients and the continued lack of attractive market investment opportunities for our deposit clients. These increases were partially offset by a decrease in the FTP earned for deposits of $6.3 million due to decreases in market interest rates.

We had a provision for loan losses for GCB of $3.9 million for the three months ended September 30, 2011, compared to a provision of $10.1 million for the comparable 2010 period. The provision of $3.9 million was due to an increase in allowance for the increase in period-end loan balances, partially offset by a decrease in the allowance for our performing loans due to the strong overall credit quality of our clients. The decrease in provision from the comparable 2010 period is primarily due to a decrease in net charge-offs.

Noninterest income increased by $3.7 million for the three months ended September 30, 2011, primarily due to an increase in foreign exchange fees and credit card fees. The increase in foreign exchange fees was primarily due to improving business conditions for our clients and increased volatility in foreign markets, which has resulted in higher commissioned notional volumes. Commissioned notional volumes increased to $2.5 billion for the three months ended September 30, 2011, compared to $1.9 billion for the comparable 2010 period. The increase in credit card fees was primarily due to the addition of new credit card clients and an increase in client activity.

Noninterest expense increased by $17.3 million for the three months ended September 30, 2011, primarily due to an increase in incentive compensation, ESOP and salaries and wages expenses. The increase in incentive compensation and ESOP expenses was due to our strong financial performance in 2011 and our current expectation that we will exceed our internal performance targets for 2011. The increase in salaries and wages was primarily due to an increase in the average number of FTE employees at GCB, which increased to 1,157 for the three months ended September 30, 2011, compared to 1,057 for the comparable 2010 period, as well as from merit increases. The increase in average FTEs was attributable to increases in positions for product development, operational, sales and advisory, as well as to support our global commercial banking operations and initiatives.

Nine months ended September 30, 2011 compared to the Nine months ended September 30, 2010

Net interest income from our GCB increased by $59.1 million for the nine months ended September 30, 2011, primarily due to an increase in loan interest income of $45.3 million resulting mainly from an increase in average loan balances and an increase in the FTP earned for deposits of $24.7 million due to significant deposit growth. These increases were partially offset by a decrease in the FTP earned for deposits of $22.9 million due to decreases in market interest rates.

We had a provision for loan losses for GCB of $3.2 million for the nine months ended September 30, 2011, compared to a provision of $28.6 million for the comparable 2010 period. The provision of $3.2 million was primarily due an increase in allowance for the increase in period-end loan balances, partially offset by a decrease in the allowance for our performing loans due to the strong overall credit quality of our clients. The decrease in provision from the comparable 2010 period is primarily due to a decrease in net charge-offs.

Noninterest income increased by $11.8 million for the nine months ended September 30, 2011, primarily due to an increase in foreign exchange fees and credit card fees. The increase in foreign exchange fees was primarily due to improving business conditions

for our clients and increased volatility in foreign markets, which has resulted in higher commissioned notional volumes. Commissioned notional volumes increased to $7.0 billion for the nine months ended September 30, 2011, compared to $4.7 billion for the comparable 2010 period. The increase in credit card fees was primarily due to the addition of new credit card clients and an increase in client activity.

Noninterest expense increased by $43.9 million for the nine months ended September 30, 2011, primarily due to an increase in incentive compensation, ESOP and salaries and wages expenses. The increase in incentive compensation and ESOP expenses was due to our strong financial performance in 2011 and our current expectation that we will exceed our internal performance targets for 2011. The increase in salaries and wages was primarily due to an increase in the average number of FTE employees at GCB, which increased to 1,125 for the nine months ended September 30, 2011, compared to 1,033 for the comparable 2010 period, as well as from merit increases.

SVB Private Bank


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2011			2010			% Change			2011			2010			% Change
Net interest income	$	5,848		$	3,276			78.5	%	$	15,086		$	9,476			59.2	%
Reduction of (provision for) loan losses		3,114			(831	)		NM			5,366			(557	)		NM
Noninterest income		128			108			18.5			351			345			1.7
Noninterest expense		(2,846	)		(1,090	)		161.1			(7,326	)		(3,155	)		132.2

Income before income tax expense	$	6,244		$	1,463			NM		$	13,477		$	6,109			120.6

Total average loans, net of unearned income	$	684,613		$	468,774			46.0		$	637,443		$	443,813			43.6
Total average assets		685,308			468,787			46.2			637,854			443,912			43.7
Total average deposits		200,547			115,131			74.2			169,368			131,028			29.3

NM—Not meaningful

Three months ended September 30, 2011 compared to the three months ended September 30, 2010

Net interest income from SVB Private Bank increased by $2.6 million for the three months ended September 30, 2011, primarily due to an increase in loan interest income resulting primarily from an increase in average loan balances.

We had a reduction of provision for loan losses for SVB Private Bank of $3.1 million for the three months ended September 30, 2011, compared to a provision of $0.8 million for the comparable 2010 period. The reduction of provision of $3.1 million was primarily due to net recoveries, partially offset by an increase in the allowance for the increase in period-end loan balances.

Noninterest expense increased by $1.8 million for the three months ended September 30, 2011, primarily due to an increase in compensation and benefits expense of $1.5 million attributable to an increase in salaries and wages and incentive compensation expenses. The increase in salaries and wages expense was primarily due to an increase in the average number of FTE employees at SVB Private Bank, which increased by 27 to 40 FTEs for the three months ended September 30, 2011, compared to 13 FTEs for the comparable 2010 period. The increase in average FTEs was attributable to increases in positions for product development, operational, sales and advisory to support the growth of SVB Private Bank. The increase in incentive compensation expense was primarily due to our strong financial performance in 2011 and our current expectation that we will exceed our internal performance targets for 2011.

Nine months ended September 30, 2011 compared to the nine months ended September 30, 2010

Net interest income increased by $5.6 million for the nine months ended September 30, 2011, primarily due to an increase in loan interest income resulting primarily from an increase in average loan balances.

We had a reduction of provision for loan losses for SVB Private Bank of $5.4 million for the nine months ended September 30, 2011, compared to a provision of $0.6 million for the comparable 2010 period. The reduction of provision of $5.4 million was primarily due to net recoveries, partially offset by an increase in allowance for the increase in period-end loan balances.

Noninterest expense increased by $4.2 million for the nine months ended September 30, 2011, primarily due to an increase in compensation and benefits expense of $3.4 million attributable to an increase in salaries and wages and incentive compensation expenses. The increase in salaries and wages expense was primarily due to an increase in the average number of FTE employees at SVB Private Bank, which increased by 17 to 31 FTEs for the nine months ended September 30, 2011, compared to 14 FTEs for the comparable 2010 period. The increase in average FTEs was attributable to increases in positions for product development, operational, sales and advisory to support the growth of SVB Private Bank. The increase in incentive compensation expense was primarily due to our strong financial performance in 2011 and our current expectation that we will exceed our internal performance targets for 2011.

SVB Capital


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2011			2010			% Change			2011			2010			% Change
Net interest income (loss)	$	2		$	—			—	%	$	6		$	(1	)		NM	%
Noninterest income		9,873			6,209			59.0			23,879			14,079			69.6
Noninterest expense		(3,860	)		(2,930	)		31.7			(10,113	)		(10,088	)		0.2

Income before income tax expense	$	6,015		$	3,279			83.4		$	13,772		$	3,990			NM

Total average assets	$	238,949		$	161,911			47.6		$	225,041		$	150,696			49.3

NM—Not meaningful

SVB Capital’s components of noninterest income primarily include net gains and losses on marketable and non-marketable securities, carried interest and fund management fees. All components of income before income tax expense discussed below are net of noncontrolling interests.

We experience variability in the performance of SVB Capital from quarter to quarter due to a number of factors, including changes in the values of our funds’ underlying investments, changes in the amount of distributions and general economic and market conditions. Such variability may lead to volatility in the gains and losses from investment securities and cause our results to differ from period to period. Results for a particular period may not be indicative of future performance.

Three months ended September 30, 2011 compared to the three months ended September 30, 2010

Noninterest income increased by $3.7 million to $9.9 million for the three months ended September 30, 2011, primarily due to higher net gains on investment securities. SVB Capital’s components of noninterest income primarily include the following:

•

Net gains on investment securities of $7.5 million for the three months ended September 30, 2011, compared to net gains of $3.4 million for the comparable 2010 period. The net gains on investment securities of $7.5 million for the three months ended September 30, 2011 were primarily related to net gains of $6.8 million from our managed funds attributable to the continued trend of increased valuations of companies (primarily internet and social networking).

•

We received fund management fees of $2.7 million for both the three months ended September 30, 2011 and 2010.

Nine months ended September 30, 2011 compared to the nine months ended September 30, 2010

Noninterest income increased by $9.8 million to $23.9 million for the nine months ended September 30, 2011, primarily due to higher net gains on investment securities. SVB Capital’s components of noninterest income primarily include the following:

•

Net gains on investment securities of $16.1 million for the nine months ended September 30, 2011, compared to net gains of $5.8 million for the comparable 2010 period. The net gains on investment securities of $16.1 million for the nine months ended September 30, 2011 were primarily related to net gains of $14.5 million from our managed funds attributable to the continued trend of increased valuations and liquidity events from companies (primarily internet and social networking).

•

We received fund management fees of $8.0 million for the nine months ended September 30, 2011, compared to $8.1 million for the comparable 2010 period.

Consolidated Financial Condition

Our total assets were $19.2 billion at September 30, 2011, an increase of $1.7 billion, or 9.5 percent, compared to $17.5 billion at December 31, 2010. The increase was primarily due to increases in our available-for-sale securities portfolio due to the growth in our deposit balances.

Cash and Due from Banks

Cash and due from banks totaled $1.7 billion at September 30, 2011, a decrease of $930.6 million, or 34.8 percent, compared to $2.7 billion at December 31, 2010. The decrease was primarily due to the investment of cash previously held at the Federal Reserve into available-for-sale securities, as well as the use of cash to settle the maturity of our 3.875% Convertible Notes in April 2011 and the repurchase of $312.6 million of our 5.70% Senior Notes and 6.05% Subordinated Notes in May 2011. These decreases were partially offset by our continued growth in deposits.

As of September 30, 2011 and December 31, 2010, $992.5 million and $2.2 billion, 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 $461.3 million and $246.3 million, respectively.

Federal Funds Sold, Securities Purchased Under Agreements to Resell and Other Short-Term Investments

Federal funds sold, securities purchased under agreements to resell and other short-term investments were $299.8 million at September 30, 2011, a decrease of $103.9 million compared to $403.7 million at December 31, 2010. The decrease was primarily due to cash management strategies.

Investment Securities

Investment securities totaled $10.6 billion at September 30, 2011, an increase of $2.0 billion, or 22.6 percent, compared to $8.6 billion at December 31, 2010. Our investment securities portfolio consists of both an available-for-sale securities portfolio, which represents interest-earning investment securities, and a non-marketable securities portfolio, which primarily represents investments managed as part of our funds management business.

Available-for-Sale Securities

Our available-for-sale portfolio is a fixed income investment portfolio that is managed to maximize portfolio yield over the long-term in a manner consistent with our liquidity, credit diversification and asset/liability strategies. Available-for-sale securities were $9.6 billion at September 30, 2011, an increase of $1.7 billion, or 21.7 percent, compared to $7.9 billion at December 31, 2010. The increase was primarily due to purchases of new investments of $5.0 billion during the nine months ended September 30, 2011, partially offset by sales of $1.4 billion and paydowns of $2.0 billion in securities. The purchases of new investments of $5.0 billion during the nine months ended September 30, 2011 were primarily comprised of fixed-rate agency-issued mortgage securities. The sales of securities of $1.4 billion during the nine months ended September 30, 2011 were comprised entirely of agency-issued mortgage securities.

Portfolio duration is a standard measure used to approximate changes in the market value of fixed income instruments due to a change in market interest rates. The measure is an estimate based on the level of current market interest rates, expectations for changes in the path of forward rates and the effect of forward rates on mortgage prepayment speed assumptions. As such, portfolio duration will fluctuate with changes in market interest rates. Changes in portfolio duration are also impacted by changes in the mix of longer versus shorter term-to-maturity securities. At September 30, 2011, our estimated portfolio duration was 1.5 years, compared to 2.5 years at December 31, 2010.

Non-Marketable Securities

Non-marketable securities primarily represent investments managed by SVB Capital and investments in Debt Fund Investments and Strategic Investments as part of our investment funds management business and include funds of funds, co-investment funds and debt funds, as well as direct equity investments in portfolio companies and fund investments. Included in our non-marketable securities carried under investment company fair value accounting are amounts that are attributable to noncontrolling interests. We are required under GAAP to consolidate 100% of these investments that we are deemed to control, even though we may own less than 100% of such entities. See below for a summary of the carrying value (as reported) of non-marketable securities compared to the amounts attributable to SVBFG.

Non-marketable securities were $952.0 million as of September 30, 2011, an increase of $230.5 million, or 31.9 percent, from $721.5 million as of December 31, 2010. The increase was primarily attributable to additional capital calls for fund investments, as well as valuation gains from our managed funds.

The following table summarizes the carrying value (as reported) of nonmarketable securities compared to the amounts attributable to SVBFG (which generally represents the carrying value times our ownership percentage) at September 30, 2011 and December 31, 2010:


	September 30, 2011				December 31, 2010
(Dollars in thousands)	Carrying value (as reported)		Amount attributable to SVBFG		Carrying value (as reported)		Amount attributable to SVBFG
Non-marketable securities (investment company fair value accounting):
Venture capital and private equity fund investments (1)	$	578,126	$	82,253	$	391,247	$	69,676
Other venture capital investments (2)		120,160		10,962		111,843		10,504
Other investments		973		487		981		491
Non-marketable securities (equity method accounting):
Other investments		65,934		65,934		67,031		67,031
Low income housing tax credit funds		34,446		34,446		27,832		27,832
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments		138,960		138,960		110,466		110,466
Other venture capital investments		13,364		13,364		12,120		12,120

Total non-marketable securities	$	951,963	$	346,406	$	721,520	$	298,120

(1)	The following table shows the amount of venture capital and private equity fund investments by the following consolidated funds and amounts attributable to SVBFG for each fund at September 30, 2011 and December 31, 2010:


	September 30, 2011				December 31, 2010
(Dollars in thousands)	Carrying value (as reported)		Amount attributable to SVBFG		Carrying value (as reported)		Amount attributable to SVBFG
SVB Strategic Investors Fund, LP	$	44,205	$	5,553	$	44,722	$	5,618
SVB Strategic Investors Fund II, LP		122,264		10,480		94,694		8,117
SVB Strategic Investors Fund III, LP		205,505		12,065		146,613		8,607
SVB Strategic Investors Fund IV, LP		104,114		5,206		40,639		2,032
Strategic Investors Fund V, LP		1,965		7		—		—
SVB Capital Preferred Return Fund, LP		41,432		12,632		23,071		12,262
SVB Capital—NT Growth Partners, LP		44,837		24,712		28,624		24,434
SVB Capital Partners II, LP		2,324		118		4,506		229
Other private equity fund		11,480		11,480		8,378		8,377

Total venture capital and private equity fund investments	$	578,126	$	82,253	$	391,247	$	69,676

(2)	The following table shows the amount of other venture capital investments by the following consolidated funds and amounts attributable to SVBFG for each fund at September 30, 2011 and December 31, 2010:


	September 30, 2011				December 31, 2010
(Dollars in thousands)	Carrying value (as reported)		Amount attributable to SVBFG		Carrying value (as reported)		Amount attributable to SVBFG
Silicon Valley BancVentures, LP	$	16,606	$	1,776	$	21,371	$	2,286
SVB Capital Partners II, LP		60,129		3,054		51,545		2,618
SVB India Capital Partners I, LP		41,927		6,031		38,927		5,600
SVB Capital Shanghai Yangpu Venture Capital Fund		1,498		101		—		—

Total other venture capital investments	$	120,160	$	10,962	$	111,843	$	10,504

Loans

Loans, net of unearned income were $6.3 billion at September 30, 2011, an increase of $806.9 million, or 14.6 percent, compared to $5.5 billion at December 31, 2010. Unearned income was $53.6 million at September 30, 2011, compared to $45.5 million at December 31, 2010. The majority of our loans are commercial in nature. Total gross loans were $6.4 billion at September 30, 2011, an increase of $815.0 million, or 14.6 percent, compared to $5.6 billion at December 31, 2010. The increase was primarily due to increases in loans to software, life science and clean technology clients. The breakdown of total gross loans and total loans as a percentage of total gross loans by category is as follows:


	September 30, 2011					December 31, 2010
(Dollars in thousands)	Amount		Percentage			Amount		Percentage
Commercial loans:
Software	$	2,296,270		36.0	%	$	1,838,996		33.0	%
Hardware		583,498		9.1			567,352		10.2
Clean technology		273,419		4.3			161,133		2.9
Venture capital/private equity		1,090,531		17.1			1,046,670		18.8
Life science		693,923		10.9			574,554		10.3
Premium wine		130,902		2.0			144,953		2.6
Other		254,045		4.0			306,594		5.5

Total commercial loans		5,322,588		83.4			4,640,252		83.3

Real estate secured loans:
Premium wine		344,500		5.4			312,215		5.6
Consumer loans		497,328		7.8			361,607		6.5

Total real estate secured loans		841,828		13.2			673,822		12.1

Construction loans		35,810		0.5			60,360		1.1
Consumer loans		182,009		2.9			192,771		3.5

Total gross loans	$	6,382,235		100.0	%	$	5,567,205		100.0	%

Loan Concentration

The following table provides a summary of loans by size and category. The breakout of the categories is based on total client balances (individually or in the aggregate) as of September 30, 2011:


(Dollars in thousands)	September 30, 2011
(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	$	760,499	$	327,190	$	592,295	$	518,531	$	97,755	$	2,296,270
Hardware		254,839		115,045		92,842		46,553		74,219		583,498
Clean technology		61,621		38,974		47,237		48,507		77,080		273,419
Venture capital/private equity		227,268		156,785		243,179		142,017		321,282		1,090,531
Life science		230,227		150,405		117,558		73,529		122,204		693,923
Premium wine (1)		68,958		7,024		50,120		4,800		—		130,902
Other		62,320		5,250		56,485		20,133		109,857		254,045

Commercial loans		1,665,732		800,673		1,199,716		854,070		802,397		5,322,588

Real estate secured loans:
Premium wine (1)		124,589		58,378		84,105		45,928		31,500		344,500
Consumer loans (2)		402,077		35,471		39,795		19,985		—		497,328

Real estate secured loans		526,666		93,849		123,900		65,913		31,500		841,828

Construction loans		8,038		27,772		—		—		—		35,810
Consumer loans (2)		60,046		55,559		21,384		20		45,000		182,009

Total gross loans	$	2,260,482	$	977,853	$	1,345,000	$	920,003	$	878,897	$	6,382,235

(1)	Premium wine clients can have loan balances included in both commercial loans and real estate secured loans, the total of which are used for the breakout of the above categories.

(2)	Consumer loan clients have loan balances included in both real estate secured loans and other consumer loans, the total of which are used for the breakout of the above categories.

At September 30, 2011, gross loans (individually or in the aggregate) totaling $1.8 billion, or 28.2 percent of our portfolio, were equal to or greater than $20 million to any single client. These loans represented 60 clients, and of these loans, none were on nonaccrual status as of September 30, 2011.

The following table provides a summary of loans by size and category. The breakout of the categories is based on total client balances (individually or in the aggregate) as of December 31, 2010:


(Dollars in thousands)	December 31, 2010
(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	$	687,549	$	297,053	$	525,097	$	299,297	$	30,000	$	1,838,996
Hardware		225,095		157,458		99,039		51,418		34,342		567,352
Clean technology		53,243		29,019		40,951		—		37,920		161,133
Venture capital/private equity		237,766		210,297		189,209		70,324		339,074		1,046,670
Life science		200,256		92,648		92,085		21,160		168,405		574,554
Premium wine (1)		72,019		13,589		52,845		6,500		—		144,953
Other		81,178		24,410		66,404		20,198		114,404		306,594

Commercial loans		1,557,106		824,474		1,065,630		468,897		724,145		4,640,252

Real estate secured loans:
Premium wine (1)		106,335		82,020		76,546		47,314		—		312,215
Consumer loans (2)		282,293		32,989		46,325		—		—		361,607

Real estate secured loans		388,628		115,009		122,871		47,314		—		673,822

Construction loans		24,342		21,703		14,315		—		—		60,360
Consumer loans (2)		71,411		32,303		49,857		—		39,200		192,771

Total gross loans	$	2,041,487	$	993,489	$	1,252,673	$	516,211	$	763,345	$	5,567,205

(1)	Premium wine clients can have loan balances included in both commercial loans and real estate secured loans, the total of which are used for the breakout of the above categories.

(2)	Consumer loan clients have loan balances included in both real estate secured loans and other consumer loans, the total of which are used for the breakout of the above categories.

At December 31, 2010, gross loans (individually or in the aggregate) totaling $1.3 billion, or 23.0 percent of our portfolio, were equal to or greater than $20 million to any single client. These loans represented 38 clients, and of these loans, none were on nonaccrual status as of December 31, 2010.

The credit profile of our clients varies across our loan portfolio, based on the nature of the lending we do for different market segments. Our technology and life sciences loan portfolio includes loans to clients at all stages of their life cycles, beginning with our SVB Accelerator practice, which serves our emerging or early-stage clients. Loans provided to early-stage clients represent a relatively small percentage of our overall portfolio at approximately 10.7 percent of total gross loans at September 30, 2011, compared to 9.0 percent of total gross loans at December 31, 2010. Typically these loans are made to companies with modest or negative cash flows and no established record of profitable operations. Repayment of these loans may be dependent upon receipt by borrowers of additional equity financing from venture capitalists or others, or in some cases, a successful sale to a third party or a public offering. Venture capital firms may provide financing at lower levels, more selectively or on less favorable terms, which may have an adverse effect on our borrowers that are otherwise dependent on such financing to repay their loans to us. When repayment is dependent upon the next round of venture investment and there is an indication that further investment is unlikely or will not occur, it is often likely the company would need to be sold to repay debt in full. If reasonable efforts have not yielded a likely buyer willing to repay all debt at the close of the sale or on commercially viable terms, the account will most likely be deemed to be impaired.

At September 30, 2011, our lending to venture capital/private equity firms represented 17.1 percent of total gross loans, compared to 18.8 percent of total gross loans at December 31, 2010. Many of these clients have capital call lines of credit, the repayment of which is dependent on the payment of capital calls by the underlying limited partner investors in the funds managed by these firms.

At September 30, 2011, our asset-based lending, which consists primarily of working capital lines and accounts receivable factoring represented 8.3 percent and 5.5 percent, respectively, of total gross loans, compared to 8.5 percent and 6.5 percent, respectively at December 31, 2010. The repayment of these arrangements is dependent on the financial condition, and payment ability, of third parties with whom our clients do business.

Approximately 43.6 percent and 8.3 percent of our outstanding total gross loan balances as of September 30, 2011 were to borrowers based in the states of California and Massachusetts, respectively, compared to 45.9 percent and 6.6 percent, respectively, as of December 31, 2010. Other than California, there are no states with balances greater than 10 percent.

See generally “Risk Factors—Credit Risks” set forth in our 2010 Form 10-K.

Credit Quality Indicators

As of September 30, 2011, our criticized and impaired loans represented 7.2 percent of our total gross loans. This compares to 7.0 percent at December 31, 2010. A majority of our criticized loans are from our SVB Accelerator portfolio, which are loans to emerging or early stage clients and make up approximately 11 percent of our loan portfolio. It is common for an early stage client’s remaining liquidity to fall temporarily below the threshold for a pass-rated credit during its capital-raising period for a new round of funding. This situation typically lasts only a few weeks and, in our experience, generally resolves itself with a subsequent round of venture funding. As a result, we expect that each of our early-stage clients will be managed through our criticized portfolio during a portion their life cycle. The increase in criticized loans from December 31, 2010 to September 30, 2011 was primarily due to the timing of certain early-stage clients’ cash flow cycles. We believe that our current criticized loan levels are representative of ongoing levels of criticized assets.

Credit Quality and Allowance for Loan Losses

Nonperforming assets consist of loans past due 90 days or more that are still accruing interest, loans on nonaccrual status, and when applicable, foreclosed property classified as Other Real Estate Owned (“OREO”). We measure all loans placed on nonaccrual status for impairment based on the fair value of the underlying collateral or the net present value of the expected cash flows in accordance with ASC 310. The table below sets forth certain data and ratios between nonperforming loans, nonperforming assets and the allowance for loan losses:


(Dollars in thousands)	September 30, 2011			December 31, 2010
Gross nonperforming loans:
Loans past due 90 days or more still accruing interest	$	—		$	44
Impaired loans		40,506			39,426

Total gross nonperforming loans	$	40,506		$	39,470

Nonperforming loans as a percentage of total gross loans		0.63	%		0.71	%
Nonperforming assets as a percentage of total assets		0.21			0.23
Allowance for loan losses	$	85,246		$	82,627
As a percentage of total gross loans		1.34	%		1.48	%
As a percentage of total gross nonperforming loans		210.45			209.34
Allowance for loan losses for impaired loans	$	5,979		$	6,936
As a percentage of total gross loans		0.09	%		0.12	%
As a percentage of total gross nonperforming loans		14.76			17.57
Allowance for loan losses for total gross performing loans	$	79,267		$	75,691
As a percentage of total gross loans		1.24	%		1.36	%
As a percentage of total gross performing loans		1.25			1.37
Reserve for unfunded credit commitments (1)	$	19,546		$	17,414
Total gross loans		6,382,235			5,567,205
Total gross performing loans		6,341,729			5,527,735
Total unfunded credit commitments		6,764,629			6,270,505

(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.

Impaired Loans

Average impaired loans for the three and nine months ended September 30, 2011 were $39.9 million and $36.9 million, respectively, compared to $45.5 million and $48.9 million for the comparable 2010 periods. If the impaired loans had not been impaired, $0.9 million and $2.5 million in interest income would have been recorded for the three and nine months ended September 30, 2011, respectively, compared to $0.7 million and $2.4 million for the comparable 2010 periods.

Accrued Interest Receivable and Other Assets

A summary of accrued interest receivable and other assets at September 30, 2011 and December 31, 2010 is as follows:


(Dollars in thousands)	September 30, 2011		December 31, 2010		% Change
Foreign exchange spot contract assets, gross	$	21,066	$	13,335		58.0	%
Derivative assets, gross (1)		87,874		115,222		(23.7	)
Accrued interest receivable		55,352		47,830		15.7
Deferred tax assets		—		41,871		(100.0	)
FHLB and FRB stock		38,890		38,618		0.7
Prepaid FDIC assessments		11,062		17,530		(36.9	)
Other assets		50,998		53,781		(5.2	)

Total accrued interest receivable and other assets	$	265,242	$	328,187		(19.2	)

(1)	See “Derivatives, Net” section below.

Foreign Exchange Spot Contract Assets

Foreign exchange spot contract assets represent unsettled client trades at the end of the period. The increase of $7.7 million was primarily due to increased client trade activity at period-end, and is largely offset by an increase in foreign exchange spot contract liabilities (see “Other Liabilities” section below).

Accrued Interest Receivable

Accrued interest receivable consists of interest on available-for-sale securities and loans. The increase of $7.5 million was primarily due to an increase in interest receivable for our available-for-sale securities as a result of a $1.7 billion increase in our portfolio from December 31, 2010 to September 30, 2011 (See “Available-For-Sale Securities” section above for further details).

Deferred tax assets

Our net deferred tax position at September 30, 2011 was reclassified from assets to liabilities due to an increase in the fair value of our available-for-sale securities portfolio.

Prepaid FDIC Assessments

In 2009 the FDIC required insured financial institutions to prepay their estimated quarterly risk-based assessments for 2010 through 2012. The decrease of $6.5 million from December 31, 2010 was due to the amortization of this prepayment during 2011.

Derivatives, Net

Derivative instruments are recorded as a component of other assets and other liabilities on the balance sheet. The following table provides a summary of derivative assets (liabilities), net at September 30, 2011 and December 31, 2010:


(Dollars in thousands)	September 30, 2011			December 31, 2010			% Change
Assets (liabilities):
Equity warrant assets	$	58,523		$	47,565			23.0	%
Interest rate swaps—assets		13,305			52,017			(74.4	)
Foreign exchange forward and option contracts—assets		13,936			11,349			22.8
Loan conversion options—assets		2,057			4,291			(52.1	)
Client interest rate derivative assets		53			—			—
Foreign exchange forward and option contracts—liabilities		(12,171	)		(10,267	)		18.5
Client interest rate derivative liabilities		(55	)		—			—

Total derivatives, net	$	75,648		$	104,955			(27.9	)

Equity Warrant Assets

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 industries. At September 30, 2011, we held warrants in 1,151 companies, compared to 1,157 companies at December 31, 2010. The change in fair value of equity warrant assets is recorded in gains on derivatives instruments, net, in noninterest income, a component of consolidated net income. The following table provides a summary of transactions and valuation changes for equity warrant assets for the three and nine months ended September 30, 2011 and 2010:


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2011			2010			2011			2010
Balance, beginning of period	$	56,941		$	40,597		$	47,565		$	41,292
New equity warrant assets		3,090			2,733			10,386			5,946
Non-cash increases in fair value		3,532			813			13,088			1,013
Exercised equity warrant assets		(4,654	)		(1,061	)		(10,826	)		(2,643	)
Terminated equity warrant assets		(386	)		(513	)		(1,690	)		(3,039	)

Balance, end of period	$	58,523		$	42,569		$	58,523		$	42,569

Interest Rate Swaps

For information on our interest rate swaps, see Note 8—“Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

Foreign Exchange Forward and Foreign Currency Option Contracts

We enter into foreign exchange forward contracts and foreign currency option contracts with clients involved in international activities, either as the purchaser or seller, depending upon the clients’ need. For each forward or option contract entered into with our clients, we enter into an opposite way forward or option contract with a correspondent bank, which mitigates the risk of fluctuations in currency rates. We enter into forward contracts with correspondent banks to economically hedge currency exposure risk related to certain foreign currency denominated loans. Revaluations of foreign currency denominated loans are recorded on the line item “Other” as part of noninterest income, a component of consolidated net income. We have not experienced nonperformance by a counterparty and therefore have not incurred related losses. Further, we anticipate performance by all counterparties. Our net exposure for foreign exchange forward and foreign currency option contracts at September 30, 2011 and December 31, 2010 amounted to $1.8 million and $1.1 million, respectively.

Deposits

Deposits were $16.1 billion at September 30, 2011, an increase of $1.8 billion, or 12.6 percent, compared to $14.3 billion at December 31, 2010. The increase in our deposit balance was primarily from increases in our noninterest-bearing demand deposits of $2.2 billion. The overall increase in deposit balances was primarily due to growth from new clients and the continued lack of attractive market investment opportunities for our deposit clients. At September 30, 2011, 30.8 percent of our total deposits were interest-bearing deposits, compared to 37.1 percent at December 31, 2010.

At September 30, 2011, the aggregate balance of time deposit accounts individually equal to or greater than $100,000 totaled $129.5 million, compared to $343.5 million at December 31, 2010. At September 30, 2011, substantially all time deposit accounts individually equal to or greater than $100,000 were scheduled to mature within one year. No material portion of our deposits has been obtained from a single depositor and the loss of any one depositor would not materially affect our business.

Long-Term Debt

At September 30, 2011, we had long-term debt of $609.6 million, compared to $1.2 billion at December 31, 2010. At September 30, 2011, long-term debt included 5.375% Senior Notes, 5.70% Senior Notes, 6.05% Subordinated Notes, 7.0% Junior Subordinated Debentures and 4.99% notes payable related to one of our debt fund investments. The decrease of $599.7 million was primarily due to the maturity of $250.0 million of our 3.875% Convertible Notes in April 2011 and the repurchase of $312.6 million of our 5.70% Senior Notes and 6.05% Subordinated Notes in May 2011. For more information on our long-term debt, see Note 7—“Short-Term Borrowings and Long-Term Debt” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

Other Liabilities

A summary of other liabilities at September 30, 2011 and December 31, 2010 is as follows:


(Dollars in thousands)	September 30, 2011		December 31, 2010		% Change
Foreign exchange spot contract liabilities, gross	$	35,023	$	16,705		109.7	%
Accrued compensation		89,037		79,068		12.6
Reserve for unfunded credit commitments		19,546		17,414		12.2
Derivative liabilities, gross (1)		12,225		10,267		19.1
Deferred tax liabilities		12,376		—		—
Other		86,049		72,583		18.6

Total other liabilities	$	254,256	$	196,037		29.7

(1)	See “Derivatives, Net” section above.

Foreign Exchange Spot Contract Liabilities

Foreign exchange spot contract liabilities represent unsettled client trades at the end of the period. The increase of $18.3 million was primarily due to increased client trade activity at period-end, and is largely offset by an increase in foreign exchange spot contract assets. (See “Accrued Interest Receivable and Other Assets” section above).

Accrued Compensation

Accrued compensation includes amounts for vacation time, our Incentive Compensation Plans, Direct Drive Incentive Compensation Plan, Long-Term Cash Incentive Plan, Retention Program, Warrant Incentive Plan, ESOP and other compensation arrangements. The increase of $10.0 million was primarily due to our strong financial performance in the first three quarters of 2011 and our current expectation that we will exceed our internal performance targets for 2011.

Deferred tax liabilities

Our net deferred tax position at September 30, 2011 was reclassified from assets to liabilities due to an increase in the fair value of our available-for-sale securities portfolio.

Noncontrolling Interests

Noncontrolling interests totaled $656.2 million and $473.9 million at September 30, 2011 and December 31, 2010, respectively. The increase of $182.3 million was primarily due to net income attributable to noncontrolling interests of $102.6 million for the nine months ended September 30, 2011, primarily from our managed funds of funds, as well as $79.7 million of contributed capital (net of distributions) primarily from investors in our managed funds.

Fair Value Measurements

At September 30, 2011, approximately 54.3 percent of our total assets, or $10.4 billion, consisted of financial assets recorded at fair value on a recurring basis, compared to 48.8 percent of our total assets, or $8.5 billion as of December 31, 2010. Of these assets as of September 30, 2011, 92.8 percent used valuation methodologies involving market-based or market-derived information, collectively Level 1 and 2 measurements, to measure fair value, and 7.2 percent of these financial assets were measured using model-based techniques, or Level 3 measurements. This compares to 93.6 percent and 6.4 percent, respectively, as of December 31, 2010. Our financial assets valued using Level 3 measurements at September 30, 2011 and December 31, 2010 represented non-marketable securities and equity warrant assets. At September 30, 2011, 0.1 percent of total liabilities, or $12.2 million, consisted of financial liabilities recorded at fair value on a recurring basis, which were valued using market-observable inputs, compared to 0.1 percent, or $10.3 million as of December 31, 2010. During the nine months ended September 30, 2011, we had transfers of $3.9 million from Level 2 to Level 1. During the nine months ended September 30, 2010, there were no transfers between Level 2 and Level 1. All transfers from Level 3 to Level 2 during the nine months ended September 30, 2011 and 2010 were due to the transfer of equity warrant assets from our private portfolio to our public portfolio. Our valuation processes include a number of key controls that are designed to ensure that fair value is calculated appropriately.

As of September 30, 2011, our available-for-sale portfolio, consisting of agency-issued mortgage-backed securities, agency-issued collateralized mortgage obligations, U.S. agency debentures, U.S. treasury securities, agency-issued commercial mortgage-backed securities and municipal bonds and notes, represented $9.6 billion, or 92.4 percent of our portfolio of assets measured at fair value on a recurring basis, compared to $7.9 billion, or 92.6 percent, as of December 31, 2010. These instruments were classified as Level 2 because their valuations were based on indicative prices corroborated by observable market quotes or pricing models with all significant inputs derived from or corroborated by observable market data. The fair value of our available-for-sale securities portfolio is sensitive to

changes in levels of market interest rates and market perceptions of credit quality of the underlying securities. Market valuations and impairment analyses on assets in the available-for-sale securities portfolio are reviewed and monitored on a quarterly basis.

Financial assets valued using Level 3 measurements consist primarily of our investments in venture capital and private equity funds and direct equity investments in privately held companies. Our managed funds and debt fund that hold these investments are investment companies under the American Institute of Certified Public Accountants (“AICPA”) Audit and Accounting Guide for Investment Companies and accordingly, these funds report their investments at estimated fair value, with unrealized gains and losses resulting from changes in fair value reflected as investment gains or losses in our consolidated statements of income. Assets valued using Level 3 measurements also include equity warrant assets in shares of private company capital stock.

During the three and nine months ended September 30, 2011, the Level 3 assets that are measured at fair value on a recurring basis experienced net realized and unrealized gains of $57.5 million and $152.0 million (which is inclusive of noncontrolling interest), respectively, primarily due to valuation increases in underlying fund investments in our managed funds, as well as gains from liquidity events and distributions. During the three and nine months ended September 30, 2010, the Level 3 assets that are measured at fair value on a recurring basis experienced net realized and unrealized gains of $15.8 million and $33.8 million (which is inclusive of noncontrolling interest), respectively.

The valuation of non-marketable securities and equity warrant assets in shares of private company capital stock is subject to significant judgment. The inherent uncertainty in the process of valuing securities for which a ready market does not exist may cause our estimated values of these securities to differ significantly from the values that would have been derived had a ready market for the securities existed, and those differences could be material. The timing and amount of changes in fair value, if any, of these financial instruments depend upon factors beyond our control, including the performance of the underlying companies, fluctuations in the market prices of the preferred or common stock of the underlying companies, general volatility and interest rate market factors, and legal and contractual restrictions. The timing and amount of actual net proceeds, if any, from the disposition of these financial instruments depend upon factors beyond our control, including investor demand for initial public offerings, levels of merger and acquisition activity, legal and contractual restrictions on our ability to sell, and the perceived and actual performance of portfolio companies. All of these factors are difficult to predict (see “Risk Factors” set forth in our 2010 Form 10-K).

Capital Resources

Our management seeks to maintain adequate capital to support anticipated asset growth, operating needs and unexpected credit risks, and to ensure that SVB Financial and the Bank are in compliance with all regulatory capital guidelines. Our primary sources of new capital include retained earnings and proceeds from the sale and issuance of capital stock or other securities. Our management engages, in consultation with our Finance Committee of the Board of Directors, in a regular capital planning process in an effort to make effective use of the capital available to us and to appropriately plan for our future capital needs. The capital plan considers capital needs for the foreseeable future and allocates capital to both existing and future business activities. Expected future use or activities for which capital may be set aside include balance sheet growth and associated relative increases in market or credit exposure, investment activity, potential product and business expansions, acquisitions and strategic or infrastructure investments.

SVBFG Stockholders’ Equity

SVBFG stockholders’ equity totaled $1.5 billion at September 30, 2011, an increase of $261.7 million, or 20.5 percent compared to $1.3 billion at December 31, 2010. This increase was primarily the result of net income of $136.3 million for the nine months ended September 30, 2011, an increase in accumulated other comprehensive income of $75.3 million resulting from increases in the fair value of our available-for-sale securities portfolio as a result of decreases in market interest rates, and an increase in additional-paid-in-capital of $50.1 million primarily from stock option exercises during the nine months ended September 30, 2011.

Funds generated through retained earnings are a significant source of capital and liquidity and are expected to continue to be so in the future.

Capital Ratios

Both SVB Financial and the Bank are subject to various capital adequacy guidelines issued by the Federal Reserve Board and the California Department of Financial Institutions (“DFI”). To be classified as “adequately capitalized” under these capital guidelines, minimum ratios for total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratio for bank holding companies and banks are 8.0%, 4.0% and 4.0%, respectively.

To be classified as “well capitalized” under these capital guidelines, minimum ratios for total risk-based capital and Tier 1 risk-based capital for bank holding companies and banks are 10.0% and 6.0%, respectively. Under the same capital adequacy guidelines, a well-capitalized state member bank must maintain a minimum Tier 1 leverage ratio of 5.0%. There is no Tier 1 leverage requirement for a holding company to be deemed well-capitalized.

The Federal Reserve 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 below.

Regulatory capital ratios for SVB Financial and the Bank exceeded minimum federal regulatory guidelines for a well-capitalized depository institution as of September 30, 2011 and December 31, 2010. Capital ratios for SVB Financial and the Bank, compared to the minimum regulatory ratios to be considered “well capitalized”, are set forth below:


	September 30, 2011			December 31, 2010			Minimum ratio to be "Well Capitalized"
SVB Financial:
Total risk-based capital ratio		14.81	%		17.35	%		10.0	%
Tier 1 risk-based capital ratio		13.42			13.63			6.0
Tier 1 leverage ratio		8.01			7.96			N/A
Tangible common equity to tangible assets ratio (1)		8.00			7.27			N/A
Tangible common equity to risk-weighted assets ratio (1)		14.21			13.54			N/A

Bank:
Total risk-based capital ratio		13.07	%		15.48	%		10.0	%
Tier 1 risk-based capital ratio		11.63			11.61			6.0
Tier 1 leverage ratio		6.93			6.82			5.0
Tangible common equity to tangible assets ratio (1)		7.31			6.61			N/A
Tangible common equity to risk-weighted assets ratio (1)		12.60			11.88			N/A

(1)	See below for a reconciliation of non-GAAP tangible common equity to tangible assets and tangible common equity to risk-weighted assets.

Our tier 1 risk-based capital and tier 1 leverage ratios for both SVB Financial and the Bank remained relatively flat compared to December 31, 2010 and above the levels to be considered “well capitalized”. Both of these ratios benefited from growth in retained earnings and additional-paid-in-capital, the impact of which was largely offset by continued growth in assets and deposits. Our total risk-based capital ratio (includes tier 1 and tier 2 capital components) for both SVB Financial and the Bank declined primarily due to our repurchase of $204.0 million of our 6.05% Subordinated Notes as these notes are considered tier 2 capital instruments, as well as from increases in risk-weighted assets (loans and available-for-sale securities).

The tangible common equity to tangible assets ratio and the tangible common equity to risk-weighted assets ratios are not required by GAAP or applicable bank regulatory requirements. However, we believe these ratios provide meaningful supplemental information regarding our capital levels. Our management uses, and believes that investors benefit from referring to, these ratios in evaluating the adequacy of the Company’s capital levels; however, this financial measure should be considered in addition to, not as a substitute for or preferable to, comparable financial measures prepared in accordance with GAAP. These ratios are calculated by dividing total SVBFG stockholder’s equity, by total period-end assets and risk-weighted assets, after reducing both amounts by acquired intangibles and goodwill. The manner in which this ratio is calculated varies among companies. Accordingly, our ratio is not necessarily comparable to similar measures of other companies. The following table provides a reconciliation of non-GAAP financial measures with financial measures defined by GAAP:


	SVB Financial						Bank
Non-GAAP tangible common equity and tangible assets (dollars in thousands, except ratios)	September 30, 2011			December 31, 2010			September 30, 2011			December 31, 2010
	September 30, 2011			December 31, 2010			September 30, 2011			December 31, 2010
GAAP SVBFG stockholders’ equity	$	1,536,098		$	1,274,350		$	1,317,325		$	1,074,561
Less:
Intangible assets		650			847			—			—

Tangible common equity	$	1,535,448		$	1,273,503		$	1,317,325		$	1,074,561

GAAP Total assets	$	19,195,363		$	17,527,761		$	18,016,695		$	16,268,589
Less:
Intangible assets		650			847			—			—

Tangible assets	$	19,194,713		$	17,526,914		$	18,016,695		$	16,268,589

Risk-weighted assets	$	10,808,233		$	9,406,677		$	10,453,446		$	9,047,907
Tangible common equity to tangible assets		8.00	%		7.27	%		7.31	%		6.61	%
Tangible common equity to risk-weighted assets		14.21			13.54			12.60			11.88

For both SVB Financial and the Bank, the tangible common equity to tangible assets and tangible common equity to risk-weighted assets ratios increased due to an increase in retained earnings, an increase in accumulated other comprehensive income from increases in the fair value of our available-for-sale securities portfolio, and an increase in additional-paid-in-capital from stock option

exercises during the nine months ended September 30, 2011. This growth was partially offset by increases in both tangible and risk-weighted assets, which reflects our continued growth in deposit and loan balances.

Off-Balance Sheet Arrangements

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, credit card guarantees 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. For details of our commitments to extend credit, and commercial and standby letters of credit, please refer to Note 11—“Off-Balance Sheet Arrangements, Guarantees, and Other Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

Commitments to Invest in Venture Capital/Private Equity Funds

For further details on our commitments to invest in private equity funds, refer to Note 11—“Off-Balance Sheet Arrangements, Guarantees, and Other Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

Liquidity

The objective of liquidity management is to ensure that funds are available in a timely manner to meet our financial obligations, including, as necessary, paying creditors, meeting depositors’ needs, accommodating loan demand and growth, funding investments, repurchasing securities and other operating or capital needs, without incurring undue cost or risk, or causing a disruption to normal operating conditions.

We regularly assess the amount and likelihood of projected funding requirements through a review of factors such as historical deposit volatility and funding patterns, present and forecasted market and economic conditions, individual client funding needs, and existing and planned business activities. Our Asset/Liability Committee (“ALCO”), which is a management committee, provides oversight to the liquidity management process and recommends policy guidelines, subject to the approval of the Finance Committee of our Board of Directors, and courses of action to address our actual and projected liquidity needs.

Our deposit base is, and historically has been, our primary source of liquidity. Our deposit levels and cost of deposits may fluctuate from time to time due to a variety of factors, including market conditions, prevailing interest rates, changes in client deposit behaviors, availability of insurance protection, and our offering of deposit products. At September 30, 2011, our period-end total deposit balances increased by $1.8 billion to $16.1 billion, compared to $14.3 billion at December 31, 2010. The overall increase in deposit balances was primarily due to growth from new clients and the continued lack of attractive market investment opportunities for our clients given the low interest rate environment. This growth has been a continuing trend since 2009. Under the Dodd-Frank Act, unlimited FDIC insurance is currently available for noninterest-bearing accounts until January 1, 2013.

Our liquidity requirements can also be met through the use of our portfolio of liquid assets. Our definition of liquid assets includes cash and cash equivalents in excess of the minimum levels necessary to carry out normal business operations, investment securities maturing within one year, investment securities eligible and available for financing or pledging purposes with a maturity in excess of one year and anticipated near-term cash flows from investments.

On a stand-alone basis, SVB Financial’s primary liquidity channels include dividends from the Bank, its portfolio of liquid assets, and its ability to raise debt and capital. The ability of the Bank to pay dividends is subject to certain regulations described in “Business—Supervision and Regulation—Restriction on Dividends” under Part I, Item 1 of our 2010 Form 10-K.

Consolidated Summary of Cash Flows

Below is a summary of our average cash position and statement of cash flows for the nine months ended September 30, 2011 and 2010, respectively. Please refer to our Interim Statements of Cash Flows for the nine months ended September 30, 2011 and 2010 under Part I, Item 1 of this report for more details.


	Nine months ended September 30,
(Dollars in thousands)	2011			2010
Average cash and cash equivalents	$	2,227,242		$	4,277,434

Percentage of total average assets		12.1	%		29.9	%

Net cash provided by operating activities	$	90,188		$	144,862
Net cash used for investing activities		(2,445,892	)		(2,395,762	)
Net cash provided by financing activities		1,321,244			2,516,416

Net (decrease) increase in cash and cash equivalents	$	(1,034,460	)	$	265,516

Average cash and cash equivalents decreased by $2.1 billion to $2.2 billion for the nine months ended September 30, 2011, compared to $4.3 billion for the comparable 2010 period, primarily due to the investment of excess cash previously held at the Federal Reserve into available-for-sale securities, partially offset by increases in cash from deposit growth. The increase in our deposit balances was primarily due to growth from new clients and the continued lack of attractive market investment opportunities for our deposit clients.

Cash provided by operating activities was $90.2 million for the nine months ended September 30, 2011, which included net income before noncontrolling interests of $238.9 million. Significant adjustments that increased cash provided by operating activities included $20.0 million of depreciation and amortization, $18.2 million of amortization of premiums on available-for-sale securities and $13.5 million of amortization of shared-based compensation. Significant adjustments that decreased cash provided by operating activities included $175.3 million of net gains on investment securities (which is inclusive of noncontrolling interests), $43.8 million of deferred loan fee amortization, $20.3 million of net changes in fair value of derivatives, and a net change of $13.9 million in accrued interest receivable and payable.

Cash used for investing activities was $2.4 billion for the nine months ended September 30, 2011. Net cash outflows included purchases of available-for-sale securities of $5.0 billion, a net increase in loans of $792.2 million, purchases of non-marketable securities of $170.6 million and purchases of premises and equipment of $21.6 million. Net cash inflows included proceeds from the sales, maturities and paydowns of available-for-sale securities of $3.5 billion, sales or distributions of non-marketable securities of $88.1 million and the recovery of $21.6 million from loans previously charged-off.

Cash provided by financing activities was $1.3 billion for the nine months ended September 30, 2011. Net cash inflows included increases in deposits of $1.8 billion, capital contributions (net of distributions) from noncontrolling interests of $79.7 million, proceeds of $37.0 million from the termination of portions of interest rate swaps associated with our 5.70% Senior Notes and 6.05% Subordinated Notes and proceeds from issuance of common stock and ESPP of $30.3 million. Net cash outflows included payments of $346.4 million (including repurchase premiums and associated fees) for the repurchase of portions of our 5.70% Senior Notes and 6.05% Subordinated Notes, settlement of the maturity of $250.0 million of our 3.875% Convertible Notes, and a decrease in short-term borrowings of $37.2 million due to the return of collateral to our counterparties that we had previously held related to our interest rate swaps.

Cash and cash equivalents at September 30, 2011 were $2.0 billion, compared to $3.8 billion at September 30, 2010.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk Management

Market risk is defined as the risk of adverse fluctuations in the market value of financial instruments due to changes in market interest rates. Interest rate risk is our primary market risk and can result from timing and volume differences in the repricing of our rate-sensitive assets and liabilities, widening or tightening of credit spreads, changes in the general level of market interest rates and changes in the shape and level of the benchmark LIBOR/SWAP yield curve. Other market risks include foreign currency exchange risk and equity price risk. These risks are not considered significant and no separate quantitative information concerning them is presented herein.

Interest rate risk is managed by our ALCO. ALCO reviews the market valuation and 12-month forward looking earnings sensitivity of assets and liabilities to changes in interest rates, structural changes in investment and funding portfolios, loan and deposit activity and current market conditions. Adherence to relevant policies, which are approved by the Finance Committee of our Board of Directors, is monitored on an ongoing basis.

Management of interest rate risk is carried out primarily through strategies involving our investment securities, available funding channels and capital market activities. In addition, our policies permit the use of off-balance sheet derivative instruments to assist in managing interest rate risk.

We utilize a simulation model to perform sensitivity analysis on the market value of portfolio equity and net interest income under a variety of interest rate scenarios, balance sheet forecasts and proposed strategies. The simulation model provides a dynamic assessment of interest rate sensitivity embedded in our balance sheet which measures the potential volatility in forecasted results relating to changes in market interest rates over time. We review our interest rate risk position on a quarterly basis at a minimum.

Model Simulation and Sensitivity Analysis

One application of the aforementioned simulation model involves measurement of the impact of market interest rate changes on our market value of portfolio equity (“MVPE”). MVPE is defined as the market value of assets, less the market value of liabilities, adjusted for any off-balance sheet items. A second application of the simulation model measures the impact of market interest rate changes on our net interest income (“NII”) assuming a static balance sheet as of the quarter-end reporting date. The market interest rate changes that affect us are principally short-term interest rates and include the following: (1) National Prime and SVB Prime rates (impacts the majority of our variable rate loans); (2) LIBOR (impacts our variable rate available-for-sale securities, our 5.70% Senior Notes and 6.05% Subordinated Notes, and a portion of our variable rate loans); and (3) Fed Funds target rate (impacts cash and cash equivalents). Additionally, deposit pricing generally follows overall changes in short-term interest rates.

The following table presents our MVPE and NII sensitivity exposure at September 30, 2011 and December 31, 2010, related to an instantaneous and sustained parallel shift in market interest rates of 100 and 200 basis points (“bps”).


	Estimated		Estimated (Decrease)/ Increase In MVPE						Estimated		Estimated Increase/ (Decrease) In NII
Change in interest rates (basis points)	MVPE		Amount			Percent			NII		Amount			Percent
						(Dollars in thousands)
September 30, 2011:
+200	$	2,118,379	$	(129,283	)		(5.8	)%	$	689,147	$	112,190			19.4	%
+100		2,084,276		(163,386	)		(7.3	)		621,631		44,674			7.7
-		2,247,662		—			—			576,957		—			—
-100		2,463,959		216,297			9.6			544,429		(32,528	)		(5.6	)
-200		2,484,315		236,653			10.5			540,147		(36,810	)		(6.4	)

December 31, 2010:
+200	$	1,751,856	$	72,018			4.3	%	$	613,871	$	112,795			22.5	%
+100		1,688,368		8,530			0.5			544,870		43,794			8.7
-		1,679,838		—			—			501,076		—			—
-100		1,858,246		178,408			10.6			484,575		(16,501	)		(3.3	)
-200		1,956,178		276,340			16.5			475,716		(25,360	)		(5.1	)

Market Value of Portfolio Equity

The estimated MVPE in the preceding table is based on a combination of valuation methodologies including a discounted cash flow analysis (for non option based products) and a multi-path lattice based valuation (for option embedded products). Both methodologies use publicly available market interest rates sources that we deem reliable. The model simulations and calculations are highly assumption-dependent and will change regularly as our asset/liability structure changes, as interest rate environments evolve,

and as we change our assumptions in response to relevant circumstances. These calculations do not reflect the changes that we anticipate or may make to reduce our MVPE exposure in response to a change in market interest rates as a part of our overall interest rate risk management strategy.

As with any method of measuring interest rate risk, certain limitations are inherent in the method of analysis presented in the preceding table. We are exposed to yield curve risk, prepayment risk and basis risk, which cannot be fully modeled and expressed using the above methodology. Accordingly, the results in the preceding table should not be relied upon as a precise indicator of actual results in the event of changing market interest rates. Additionally, the resulting MVPE and NII estimates are not intended to represent, and should not be construed to represent the underlying value.

Our base case MVPE at September 30, 2011 increased from December 31, 2010 by $567.8 million primarily due to the overall growth in the balance sheet as our available-for-sale securities and loans grew by $1.7 billion and $806.9 million, respectively. Additionally, the maturity of $250.0 million of our 3.875% Convertible Notes and our repurchase of $312.6 million of 5.70% Senior Notes and 6.05% Subordinated Notes contributed to the increase. The growth in our asset base was mostly offset by a $1.8 billion increase in our deposit balances. MVPE sensitivity increased in the simulated upward interest rate movement primarily due to additional investments in fixed-rate available-for-sale securities throughout the year. The increase was partially offset by the growth in noninterest-bearing deposits. In the simulated downward interest rate movements, MVPE sensitivity decreased due to a combination of growth in fixed-rate available-for-sale securities and deposit rates being at or near their absolute floors thus muting the effects of the downward interest rate shocks.

12-Month Net Interest Income Simulation

Our expected 12-month NII at September 30, 2011 increased from December 31, 2010 by $75.9 million primarily due to growth in available-for-sale securities and the loan portfolio. Additionally, the maturity of $250.0 million of our 3.875% Convertible Notes and our repurchase of $312.6 million of our 5.70% Senior Notes and 6.05% Subordinated Notes contributed to the improvement. The growth in total assets was funded primarily by growth in deposits. NII sensitivity decreased slightly in the simulated upward interest rate movements due primarily to the growth in fixed-rate available-for-sale securities and interest-bearing deposits. In the simulated downward interest rate movements, the NII sensitivity increased slightly due to assumed faster prepayments of mortgage securities and an increase in callable agency debentures being retired. In addition to these changes, other general contributing factors include changes in balance sheet mix, changes in deposit repricing assumptions, and changes in projected forward rate curve.

The simulation model used for above analysis embeds floors in our interest rate scenarios, which prevent model benchmark rates from moving below 0.0%. Current modeling assumptions maintain the SVB prime lending rate at its existing level (currently at 4.0%) until the National Prime Index has been adjusted upward by a minimum of 75 bps (to 4.0%), as we did not lower the Bank’s prime lending rate despite the 75 bps decrease in the target Federal Funds rates in December 2008. While we do have a portion of the loans in the portfolio indexed off of the National Prime Rate, the majority of our floating rate loans are indexed off of the SVB Prime Rate. These assumptions may change in future periods based on management discretion. Actual changes in our deposit pricing strategies may differ from our current model assumptions and may have an impact on our overall sensitivity.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, among other things, processes, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of our most recently completed fiscal quarter, pursuant to Exchange Act Rule 13a-15(b). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Please refer to Note 14—“Legal Matters” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

ITEM 1A.

RISK FACTORS

There are no material changes from the risk factors set forth in our 2010 Form 10-K.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

(REMOVED AND RESERVED)

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

See Index to Exhibits at end of report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		SVB Financial Group

Date: November 4, 2011		/s/ MICHAEL DESCHENEAUX
		Michael Descheneaux
		Chief Financial Officer
		(Principal Financial Officer)


		SVB Financial Group

Date: November 4, 2011		/s/ KAMRAN HUSAIN
		Kamran Husain
		Chief Accounting Officer
		(Principal Accounting Officer)

INDEX TO EXHIBITS


Exhibit Number		Incorporated by Reference				Filed Herewith
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
3.1	Restated Certificate of Incorporation	8-K	000-15637	3.1	May 31, 2005

3.2	Amended and Restated Bylaws	8-K	000-15637	3.2	July 27, 2010

3.3	Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock	8-K	000-15637	3.3	December 8, 2008

3.4	Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series B	8-K	000-15637	3.4	December 15, 2008

4.1	Indenture dated as of May 20, 2003 between SVB Financial and Wells Fargo Bank Minnesota, National Association	S-3	333-107994	4.1	August 14, 2003

4.2	Form of Note	S-3	333-107994	4.1	August 14, 2003

4.3	Registration Rights Agreement dated as of May 20, 2003, between SVB Financial and the initial purchasers named therein	S-3	333-107994	4.3	August 14, 2003

4.4	Junior Subordinated Indenture, dated as of October 30, 2003 between SVB Financial and Wilmington Trust Company, as trustee	8-K	000-15637	4.12	November 19, 2003

4.5	7.0% Junior Subordinated Deferrable Interest Debenture due October 15, 2033 of SVB Financial	8-K	000-15637	4.13	November 19, 2003

4.6	Amended and Restated Trust Agreement, dated as of October 30, 2003, by and among SVB Financial as depositor, Wilmington Trust Company as property trustee, Wilmington Trust Company as Delaware trustee, and the Administrative Trustees named therein	8-K	000-15637	4.14	November 19, 2003

4.7	Certificate Evidencing 7% Cumulative Trust Preferred Securities of SVB Capital II, dated October 30, 2003	8-K	000-15637	4.15	November 19, 2003

4.8	Guarantee Agreement, dated October 30, 2003, between SVB Financial and Wilmington Trust Company, as trustee	8-K	000-15637	4.16	November 19, 2003

4.9	Agreement as to Expenses and Liabilities, dated as of October 30, 2003, between SVB Financial and SVB Capital II	8-K	000-15637	4.17	November 19, 2003

4.10	Certificate Evidencing 7% Common Securities of SVB Capital II, dated October 30, 2003	8-K	000-15637	4.18	November 19, 2003

4.11	Officers’ Certificate and Company Order, dated October 30, 2003, relating to the 7.0% Junior Subordinated Deferrable Interest Debentures due October 15, 2033	8-K	000-15637	4.19	November 19, 2003

4.12	Amended and Restated Preferred Stock Rights Agreement, dated as of January 29, 2004, between SVB Financial and Wells Fargo Bank Minnesota, N.A.	8-A12G/A	000-15637	4.20	February 27, 2004

4.13	Amendment No. 1 to Amended & Restated Preferred Stock Rights Agreement, dated as of August 2, 2004, by and between SVB Financial and Wells Fargo Bank, N.A.	8-A12G/A	000-15637	4.13	August 3, 2004

4.14	Amendment No. 2 to Amended & Restated Preferred Stock Rights Agreement, dated as of January 29, 2008, by and between SVB Financial and Wells Fargo Bank, N.A.	8-A/A	000-15637	4.14	January 29, 2008

4.15	Amendment No. 3 to Amended and Restated Preferred Stock Rights Agreement, dated as of April 30, 2008, by and between SVB Financial and Wells Fargo Bank, N.A	8-A/A	000-15637	4.20	April 30, 2008

4.16	Amendment No. 4 to Amended and Restated Preferred Stock Rights Agreement, dated as of January 15, 2010, by and between SVB Financial, Wells Fargo Bank, N.A. and American Stock Transfer & Trust Company, LLC	8-A/A	000-15637	4.22	January 19, 2010

Exhibit

Number

Incorporated by Reference

Filed
Herewith

Exhibit Description

Form

File No.

Exhibit

Filing Date

4.17

Indenture for 3.875% Convertible Senior Notes Due 2011, dated as of April 7, 2008, by and between Wells Fargo Bank, N.A., as Trustee, and SVB Financial

8-K

000-15637

4.1

April 7, 2008

4.18

Letter Agreement re Call Option Transaction, dated as of April 1, 2008, by and between SVB Financial and JPMorgan Chase Bank, National Association.

8-K

000-15637

4.2

April 7, 2008

4.19

Letter Agreement re Call Option Transaction, dated as of April 1, 2008, by and between SVB Financial and Bank of America, N.A.

8-K

000-15637

4.3

April 7, 2008

4.20

Letter Agreement re Warrants, dated as of April 1, 2008, by and between SVB Financial and JPMorgan Chase Bank, National Association.

8-K

000-15637

4.4

April 7, 2008

4.21

Letter Agreement re Warrants, dated as of April 1, 2008, by and between SVB Financial and Bank of America, N.A.

8-K

000-15637

4.5

April 7, 2008

4.22

Warrant, dated December 12, 2008 to purchase shares of Common Stock of SVB Financial Group

8-K

000-15637

4.21

December 15, 2008

4.23

Indenture, dated September 20, 2010, by and between SVB Financial Group and U.S. Bank National Association, as trustee

8-K

000-15637

4.1

September 20, 2010

4.24

Form of 5.375% Senior Note due 2020

8-K

000-15637

4.2

September 20, 2010

31.1

Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Executive Officer

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

***

101.SCH

XBRL Taxonomy Extension Schema Document

***

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

***

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

***

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

***

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

***

*	Denotes management contract or any compensatory plan, contract or arrangement.

**	Furnished herewith

***

Pursuant to Rule 406T of Regulation S-T, XBRL (Extensible Business Reporting Language) information is submitted and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

TABLE OF CONTENTS

Part I - Financial Informationprint Item 1. Interim Consolidated Financial Statements (unaudited)print Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operationsprint Item 3. Quantitative and Qualitative Disclosures About Market Riskprint Item 4. Controls and Proceduresprint Part II Other Informationprint Item 1. Legal Proceedingsprint Item 1A. Risk Factorsprint Item 2. Unregistered Sales Of Equity Securities and Use Of Proceedsprint Item 3. Defaults Upon Senior Securitiesprint Item 4. (removed and Reserved)print Item 5. Other Informationprint Item 6. Exhibitsprint

Customer name	Ticker
Apartment Investment and Management Company	AIV
Equity Residential	EQR

SIVB 10-Q Quarter ended Sept. 30, 2011