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Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

(Mark One)☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172019
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐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, California95054-1191
3003 Tasman Drive, Santa Clara, California95054-1191
(Address of principal executive offices)(Zip(Address of principal executive offices) (Zip Code)
(408) (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.    Yesx☒    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).    Yesx☒    No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company,” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerx☒             Accelerated filer        ¨☐
Non-accelerated filer        ¨     (Do not check if a smaller reporting company)
☐Smaller reporting company     ¨☐
Emerging growth company        ¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨☐  No  x☒
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Exchange on Which Registered
Common Stock, par value $0.001 per shareSIVBNASDAQ Global Select Market
At October 31, 2017, 52,740,7292019, 51,568,010 shares of the registrant’s common stock ($0.001 par value) were outstanding.

TABLE OF CONTENTS
 
  Page
PART I - FINANCIAL INFORMATION
4
   
Item 1.
Interim Consolidated Financial Statements
4
   
 
Interim Consolidated Balance Sheets as of September 30, 20172019 and December 31, 20162018 (Unaudited)
4
   
 
Interim Consolidated Statements of Income for the three and nine months ended September 30, 20172019 and 20162018 (Unaudited)
5
   
 
Interim Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 20172019 and 20162018 (Unaudited)
6
   
 
Interim Consolidated Statements of Stockholders' Equity for the nine months ended September 30, 20172019 and 20162018 (Unaudited)
7
   
 
Interim Consolidated Statements of Cash Flows for the nine months ended September 30, 20172019 and 20162018 (Unaudited)
8
   
 
Notes to Interim Consolidated Financial Statements (Unaudited)
9
   
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
5168
   
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
93115
   
Item 4.
Controls and Procedures
95117
  
PART II - OTHER INFORMATION
96119
   
Item 1.
Legal Proceedings
97119
   
Item 1A.
Risk Factors
97119
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
97119
   
Item 3.
Defaults Upon Senior Securities
97119
   
Item 4.
Mine Safety Disclosures
97119
   
Item 5.
Other Information
97119
   
Item 6.
Exhibits
97119
  
SIGNATURES
98121

Glossary of Acronyms that may be used in this Report
AFS— Available-for-Sale
APIC— Additional Paid-in Capital
ASC— Accounting Standards Codification
ASU— Accounting Standards Update
CET— Common Equity Tier
EHOP— Employee Home Ownership Program of the Company
EPS— Earnings Per Share
ERI— Energy and Resource Innovation
ESOP— Employee Stock Ownership Plan of the Company
ESPP— 1999 Employee Stock Purchase Plan of the Company
FASB— Financial Accounting Standards Board
FDIC— Federal Deposit Insurance Corporation
FHLB— Federal Home Loan Bank
FRB— Federal Reserve Bank
FTE— Full-Time Employee
FTP— Funds Transfer Pricing
GAAP— Accounting principles generally accepted in the United States of America
HTM— Held-to-Maturity
IASB— International Accounting Standards Board
IPO— Initial Public Offering
IRS— Internal Revenue Service
IT— Information Technology
LIBOR— London Interbank Offered Rate
M&A— Merger and Acquisition
OTTI— Other Than Temporary Impairment
SEC— Securities and Exchange Commission
SPD-SVB— SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China)
TDR— Troubled Debt Restructuring
UK— United Kingdom
VIE— Variable Interest Entity

PART I - FINANCIAL INFORMATION
ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands, except par value and share data)
September 30,
2017
December 31,
2016
Assets



Cash and cash equivalents
$3,555,571

$2,545,750
Available-for-sale securities, at fair value (cost of $12,584,564 and $12,588,783, respectively)
12,603,337

12,620,411
Held-to-maturity securities, at cost (fair value of $11,023,415 and $8,376,138, respectively)
11,055,006

8,426,998
Non-marketable and other securities
627,469

622,552
Total investment securities
24,285,812

21,669,961
Loans, net of unearned income
22,189,327

19,899,944
Allowance for loan losses
(249,010)
(225,366)
Net loans
21,940,317

19,674,578
Premises and equipment, net of accumulated depreciation and amortization
122,826

120,683
Accrued interest receivable and other assets
849,761

672,688
Total assets
$50,754,287

$44,683,660
Liabilities and total equity



Liabilities:



Noninterest-bearing demand deposits
$36,862,021

$31,975,457
Interest-bearing deposits
7,950,012

7,004,411
Total deposits
44,812,033

38,979,868
Short-term borrowings
4,840

512,668
Other liabilities
990,498

618,383
Long-term debt
749,618

795,704
Total liabilities
46,556,989

40,906,623
Commitments and contingencies (Note 12 and Note 15)




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; 52,723,654 shares and 52,254,074 shares outstanding, respectively
53

52
Additional paid-in capital
1,294,499

1,242,741
Retained earnings
2,749,627

2,376,331
Accumulated other comprehensive income
15,634

23,430
Total SVBFG stockholders’ equity
4,059,813

3,642,554
Noncontrolling interests
137,485

134,483
Total equity
4,197,298

3,777,037
Total liabilities and total equity
$50,754,287

$44,683,660

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)
2017
2016
2017
2016
Interest income:







Loans
$268,445

$214,227

$745,983

$617,456
Investment securities:







Taxable
109,443

83,468

294,768

261,121
Non-taxable
1,172

522

2,703

1,693
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities
6,211

2,196

16,670

5,793
Total interest income
385,271

300,413

1,060,124

886,063
Interest expense:







Deposits
2,304

1,535

6,218

3,984
Borrowings
8,993

9,717

27,243

28,161
Total interest expense
11,297

11,252

33,461

32,145
Net interest income
373,974

289,161

1,026,663

853,918
Provision for credit losses (1)
23,522

20,004

70,062

90,225
Net interest income after provision for credit losses
350,452

269,157

956,601

763,693
Noninterest income:







Gains on investment securities, net
15,238

23,178

48,838

41,764
Gains on equity warrant assets, net (2)
24,922

21,558

42,432

33,253
Foreign exchange fees
29,671

25,944

82,026

76,998
Credit card fees
20,270

18,295

56,099

49,226
Deposit service charges
14,508

13,356

43,046

39,142
Client investment fees
15,563

7,952

37,571

23,959
Lending related fees
15,404

8,168

32,874

23,783
Letters of credit and standby letters of credit fees
7,306

6,811

20,951

18,414
Other (2)
15,896

18,878

41,128

36,511
Total noninterest income
158,778

144,140

404,965

343,050
Noninterest expense:







Compensation and benefits
153,263

136,568

449,412

374,410
Professional services
32,987

23,443

86,331

67,959
Premises and equipment
18,937

16,291

53,753

47,861
Net occupancy
12,660

9,525

35,437

28,919
Business development and travel
10,329

8,504

30,913

30,077
FDIC and state assessments
8,359

7,805

26,354

21,624
Correspondent bank fees
3,162

3,104

9,770

9,469
Other
18,064

15,533

54,670

44,292
Total noninterest expense (1)
257,761

220,773

746,640

624,611
Income before income tax expense
251,469

192,524

614,926

482,132
Income tax expense (3)
97,351

76,877

220,412

195,508
Net income before noncontrolling interests
154,118

115,647

394,514

286,624
Net income loss attributable to noncontrolling interests
(5,498)
(4,566)
(21,218)
(3,405)
Net income available to common stockholders (3)
$148,620

$111,081

$373,296

$283,219
Earnings per common share—basic (3)
$2.82

$2.13

$7.11

$5.46
Earnings per common share—diluted (3)
2.79

2.12

7.01

5.42
(1)Our consolidated statements of income for the three and nine months ended September 30, 2016 were modified from prior period's presentation to conform to the current period's presentation, which reflects our provision for loan losses and provision for unfunded credit commitments together as our “provision for credit losses”. In prior periods, our provision for unfunded credit commitments were reported as a component of noninterest expense.
(2)Our consolidated statements of income for the three and nine months ended September 30, 2016 were modified from prior period's presentation to conform to the current period's presentation, which reflects a new line item to separately disclose net gains on equity warrant assets. In prior periods, net gains on equity warrant assets were reported as a component of gains on derivative instruments, net. We removed the line item gains on derivative instruments, net and reclassified all other gains on derivative instruments, net to other noninterest income.
(3)Included in income tax expense, net income available to common shareholders, earnings per common share-basic and earnings for common share-diluted, for the three and nine months ended September 30, 2017, are tax benefits recognized associated with the adoption of Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting in the first quarter of 2017. This guidance was adopted on a prospective basis with no change to prior period amounts.

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)
2017
2016
2017
2016
Net income before noncontrolling interests
$154,118

$115,647

$394,514

$286,624
Other comprehensive income (loss), net of tax:







Change in cumulative translation gains (losses):







Foreign currency translation gains (losses)
1,928

(119)
4,463

(2,168)
Related tax (expense) benefit
(787)
50

(1,821)
885
Change in unrealized gains (losses) on available-for-sale securities:







Unrealized holding gains (losses)
925

(54,204)
(12,471)
157,564
Related tax (expense) benefit
(429)
21,932

5,207

(64,357)
Reclassification adjustment for losses (gains) included in net income
101

15

(384)
(11,567)
Related tax (benefit) expense
(41)
(6)
157

4,707
Amortization of unrealized gains on securities transferred from available-for-sale to held-to-maturity
(1,594)
(1,690)
(4,931)
(6,507)
Related tax benefit
641

680

1,984

2,618
Other comprehensive income (loss), net of tax
744

(33,342)
(7,796)
81,175
Comprehensive income
154,862

82,305

386,718

367,799
Comprehensive income attributable to noncontrolling interests
(5,498)
(4,566)
(21,218)
(3,405)
Comprehensive income attributable to SVBFG
$149,364

$77,739

$365,500

$364,394

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





Balance at December 31, 2015
51,610,226
 $52
 $1,189,032
 $1,993,646
 $15,404

$3,198,134

$135,097

$3,333,231
Common stock issued under employee benefit plans, net of restricted stock cancellations
408,044
 —
 8,661
 —
 —

8,661

—

8,661
Common stock issued under ESOP
43,165
 —
 4,328
 —
 —

4,328

—

4,328
Income tax effect from stock options exercised, vesting of restricted stock and other (1)
—
 —
 (6,300) —
 —

(6,300)
—

(6,300)
Net income
—
 —
 —
 283,219
 —

283,219

3,405

286,624
Capital calls and distributions, net
—
 —
 —
 —
 —

—

(8,236)
(8,236)
Net change in unrealized gains and losses on AFS securities, net of tax
—
 —
 —
 —
 86,347

86,347

—

86,347
Amortization of unrealized gains on securities transferred from AFS to HTM, net of tax
—
 —
 —
 —
 (3,889)
(3,889)
—

(3,889)
Foreign currency translation adjustments, net of tax
—
 —
 —
 —
 (1,283)
(1,283)
—

(1,283)
Share-based compensation, net
—
 —
 23,834
 —
 —

23,834

—

23,834
Balance at September 30, 2016
52,061,435

$52

$1,219,555

$2,276,865

$96,579

$3,593,051

$130,266

$3,723,317
Balance at December 31, 2016
52,254,074

$52

$1,242,741

$2,376,331

$23,430

$3,642,554

$134,483

$3,777,037
Common stock issued under employee benefit plans, net of restricted stock cancellations
458,742
 1
 14,191
 —
 —

14,192

—

14,192
Common stock issued under ESOP
10,838
 —
 2,094
 —
 —

2,094

—

2,094
Income tax effect from stock options exercised, vesting of restricted stock and other (1) —
 —
 —
 —
 —
 —
 —
 —
Net income
—
 —
 —
 373,296
 —

373,296

21,218

394,514
Capital calls and distributions, net
—
 —
 —
 —
 —

—

(18,216)
(18,216)
Net change in unrealized gains and losses on AFS securities, net of tax
—
 —
 —
 —
 (7,491)
(7,491)
—

(7,491)
Amortization of unrealized gains on securities transferred from AFS to HTM, net of tax
—
 —
 —
 —
 (2,947)
(2,947)
—

(2,947)
Foreign currency translation adjustments, net of tax
—
 —
 —
 —
 2,642

2,642

—

2,642
Share-based compensation, net
—
 —
 35,473
 —
 —

35,473

—

35,473
Balance at September 30, 2017
52,723,654

$53

$1,294,499

$2,749,627

$15,634

$4,059,813

$137,485

$4,197,298
(1)
During the first quarter of 2017 we adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require that all excess tax benefits and tax deficiencies associated with share-based compensation be recognized in income tax expense or benefit in the income statement. Previously, tax effects resulting from changes in the Company's share price subsequent to grant date of share-based compensation awards were recorded through additional paid-in-capital in stockholders' equity at the time of vesting and exercise. This guidance was adopted on a prospective basis with no change to prior period amounts. See Note 1—“Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details.





  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)
2017
2016
Cash flows from operating activities:



Net income before noncontrolling interests
$394,514

$286,624
Adjustments to reconcile net income to net cash provided by operating activities:



Provision for credit losses
70,062

90,225
Changes in fair values of equity warrant assets, net of proceeds from exercises
(29,666) (20,505)
Changes in fair values of derivatives, net
8,214

(4,370)
Gains on investment securities, net
(48,838)
(41,764)
Depreciation and amortization
39,265

35,114
Amortization of premiums and discounts on investment securities, net
2,609

9,622
Amortization of share-based compensation
27,739

22,342
Amortization of deferred loan fees
(81,060)
(72,807)
Deferred income tax benefit
2,325

(6,839)
Gain from sale of equity valuation services business (2,393) —
Excess tax benefit from exercise of stock options and vesting of restricted shares (1) (14,399) —
Changes in other assets and liabilities:



Accrued interest receivable and payable, net
(26,092)
1,169
Accounts receivable and payable, net
4,120

(12,872)
Income tax receivable and payable, net
30,069

13,181
Accrued compensation
(11,731)
(48,740)
Foreign exchange spot contracts, net
86,911

1,803
Other, net
16,383

20,821
Net cash provided by operating activities
468,032

273,004
Cash flows from investing activities:



Purchases of available-for-sale securities
(2,420,741)
—
Proceeds from sales of available-for-sale securities
7,311

2,879,409
Proceeds from maturities and pay downs of available-for-sale securities
2,434,039

1,002,523
Purchases of held-to-maturity securities
(3,812,782)
(225,526)
Proceeds from maturities and pay downs of held-to-maturity securities
1,283,764

1,206,367
Purchases of non-marketable and other securities
(18,713)
(41,925)
Proceeds from sales and distributions of non-marketable and other securities
88,809

54,420
Net increase in loans
(2,263,600)
(2,365,640)
Purchases of premises and equipment
(35,470)
(37,184)
Proceeds from sale of equity valuation services business 3,000
 —
Net cash (used for) provided by investing activities
(4,734,383)
2,472,444
Cash flows from financing activities:



Net increase (decrease) in deposits
5,832,165

(953,360)
Net decrease in short-term borrowings
(507,828)
(772,479)
Principal payments of long-term debt (46,235) —
(Distributions to noncontrolling interests), net of contributions from noncontrolling interests
(18,216)
(8,236)
Tax effect from stock exercises (1)
—

(6,300)
Proceeds from issuance of common stock, ESPP and ESOP
16,286

12,989
Net cash provided by (used for) financing activities
5,276,172

(1,727,386)
Net increase in cash and cash equivalents
1,009,821

1,018,062
Cash and cash equivalents at beginning of period
2,545,750

1,503,257
Cash and cash equivalents at end of period
$3,555,571

$2,521,319
Supplemental disclosures:



Cash paid during the period for:



Interest
$41,324

$39,317
Income taxes
190,706

186,474
Noncash items during the period:



Changes in unrealized gains and losses on available-for-sale securities, net of tax
$(7,491)
$86,347
Distributions of stock from investments
5,360

750
(1)
During the first quarter of 2017 we adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. This guidance was adopted on a prospective basis with no change to prior period amounts. See Note 1—“Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details.

See accompanying notes to 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,
2019
December 31,
2018
Assets:



Cash and cash equivalents
$6,946,196

$3,571,539
Available-for-sale securities, at fair value (cost of $12,699,542 and $7,862,311, respectively)
12,866,857

7,790,043
Held-to-maturity securities, at cost (fair value of $14,698,802 and $15,188,236, respectively)
14,407,078

15,487,442
Non-marketable and other equity securities
1,150,094

941,104
Total investment securities
28,424,029

24,218,589
Loans, net of unearned income
31,063,994

28,338,280
Allowance for loan losses
(304,410)
(280,903)
Net loans
30,759,584

28,057,377
Premises and equipment, net of accumulated depreciation and amortization
146,713

129,213
Goodwill 137,823
 —
Other intangible assets, net 52,288
 —
Lease right-of-use assets 178,532
 —
Accrued interest receivable and other assets
1,586,068

951,261
Total assets
$68,231,233

$56,927,979
Liabilities and total equity:



Liabilities:



Noninterest-bearing demand deposits
$40,480,610

$39,103,422
Interest-bearing deposits
19,062,264

10,225,478
Total deposits
59,542,874

49,328,900
Short-term borrowings
18,898

631,412
Lease liabilities 192,543
 —
Other liabilities
1,731,222

1,006,359
Long-term debt
697,227

696,465
Total liabilities
62,182,764

51,663,136
Commitments and contingencies (Note 16 and Note 19)




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; 51,555,831 shares and 52,586,498 shares issued and outstanding, respectively

52

53
Additional paid-in capital
1,441,730

1,378,438
Retained earnings
4,312,745

3,791,838
Accumulated other comprehensive income (loss)
136,153

(54,120)
Total SVBFG stockholders’ equity
5,890,680

5,116,209
Noncontrolling interests
157,789

148,634
Total equity
6,048,469

5,264,843
Total liabilities and total equity
$68,231,233

$56,927,979

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)
2019
2018
2019
2018
Interest income:







Loans
$394,246

$352,353

$1,202,467

$979,724
Investment securities:







Taxable
149,656

142,075

410,768

403,702
Non-taxable
11,123

10,748

32,991

23,506
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities
28,867

8,137

74,447

20,080
Total interest income
583,892

513,313

1,720,673

1,427,012
Interest expense:







Deposits
55,106

8,042

130,163

18,409
Borrowings
8,142

12,049

27,577

29,075
Total interest expense
63,248

20,091

157,740

47,484
Net interest income
520,644

493,222

1,562,933

1,379,528
Provision for credit losses
36,536

17,174

89,033

74,226
Net interest income after provision for credit losses
484,108

476,048

1,473,900

1,305,302
Noninterest income:







Gains on investment securities, net
29,849

32,193

106,575

77,365
Gains on equity warrant assets, net
37,561

34,141

107,213

72,393
Client investment fees 46,679
 36,265
 136,905
 88,592
Foreign exchange fees
40,309

32,656

116,863

100,560
Credit card fees
30,158

24,121

86,431

68,739
Deposit service charges
22,482

19,588

65,496

56,081
Lending related fees
11,707

10,675

36,857

30,938
Letters of credit and standby letters of credit fees
10,842

8,409

31,205

24,938
Investment banking revenue 38,516
 —
 137,005
 —
Commissions 12,275
 —
 40,812
 —
Other
13,631

12,022

42,773

38,671
Total noninterest income
294,009

210,070

908,135

558,277
Noninterest expense:







Compensation and benefits
233,840

195,437

715,073

543,198
Professional services
55,202

36,542

133,018

112,080
Premises and equipment
26,775

19,858

72,386

57,576
Net occupancy
16,981

13,694

49,716

40,598
Business development and travel
19,539

12,712

51,915

35,998
FDIC and state assessments
4,881

9,550

13,343

29,306
Other
34,106

21,652

105,059

61,845
Total noninterest expense
391,324

309,445

1,140,510

880,601
Income before income tax expense
386,793

376,673

1,241,525

982,978
Income tax expense
105,075

95,308

331,624

246,561
Net income before noncontrolling interests
281,718

281,365

909,901

736,417
Net income attributable to noncontrolling interests
(14,437)
(6,548)
(35,901)
(28,841)
Net income available to common stockholders
$267,281

$274,817

$874,000

$707,576
Earnings per common share—basic
$5.19

$5.16

$16.80

$13.33
Earnings per common share—diluted
5.15

5.10

16.67

13.15
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)
2019
2018
2019
2018
Net income before noncontrolling interests
$281,718

$281,365

$909,901

$736,417
Other comprehensive income (loss), net of tax:
   



Change in foreign currency cumulative translation gains and losses:
   



Foreign currency translation losses
(6,213)
(3,259)
(6,307)
(5,337)
Related tax benefit
1,731

905

1,757

1,482
Change in unrealized gains and losses on available-for-sale securities:
   



Unrealized holding gains (losses)
70,185

(24,902)
236,203

(98,032)
Related tax (expense) benefit
(19,547)
6,994

(65,786)
27,269
Reclassification adjustment for losses included in net income
—

—

3,905

—
Related tax benefit
—

—

(1,087)
—
Reclassification of unrealized gains on equity securities to retained earnings for ASU 2016-01 —
 —
 —
 (40,316)
Related tax expense —
 —
 —
 11,145
Amortization of unrealized holding gains on securities transferred from available-for-sale to held-to-maturity
(374)
(1,777)
(1,767)
(3,915)
Related tax benefit
104

494

492

1,085
Reclassification of stranded tax effect to retained earnings for ASU 2018-02 —
 —
 —
 (319)
Change in unrealized gains and losses on cash flow hedges:        
Unrealized gains 9,810
 —
 28,466
 —
Related tax expense (2,733) —
 (7,930) —
Reclassification adjustment for losses included in net income 2,713
 —
 3,224
 —
Related tax benefit (755) —
 (897) —
Other comprehensive income (loss), net of tax
54,921

(21,545)
190,273

(106,938)
Comprehensive income
336,639

259,820

1,100,174

629,479
Comprehensive income attributable to noncontrolling interests
(14,437)
(6,548)
(35,901)
(28,841)
Comprehensive income attributable to SVBFG
$322,202

$253,272

$1,064,273

$600,638

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 (Loss)
Total SVBFG
Stockholders’ Equity
Noncontrolling Interests
Total Equity
(Dollars in thousands)
Shares
Amount





Balance at December 31, 2017
52,835,188
 $53
 $1,314,377
 $2,866,837
 $(1,472)
$4,179,795

$139,620

$4,319,415
Cumulative adjustment for adoption of the revenue standard (ASU 2014-09), net of tax
—
 —
 —
 (5,802) —

(5,802)
—

(5,802)
Cumulative adjustment for adoption of financial instruments (ASU 2016-01), net of tax
—
 —
 —
 103,766
 (29,171)
74,595

—

74,595
Reclassification of stranded tax effect for ASU 2018-02
—
 —
 —
 319
 (319)
—

—

—
Common stock issued under employee benefit plans, net of restricted stock cancellations
405,395
 —
 9,108
 —
 —

9,108

—

9,108
Common stock issued under ESOP
9,672
 —
 2,577
 —
 —

2,577

—

2,577
Net income
—
 —
 —
 707,576
 —

707,576

28,841

736,417
Capital calls and distributions, net
—
 —
 —
 —
 —

—

(22,785)
(22,785)
Net change in unrealized gains and losses on AFS securities, net of tax
—
 —
 —
 —
 (70,763)
(70,763)
—

(70,763)
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax —
 —
 —
 —
 (2,830) (2,830) —
 (2,830)
Foreign currency translation adjustments, net of tax —
 —
 —
 —
 (3,855) (3,855) —
 (3,855)
Share-based compensation, net —
 —
 33,968
 —
 —
 33,968
 —
 33,968
Balance at September 30, 2018
53,250,255

$53

$1,360,030

$3,672,696

$(108,410)
$4,924,369

$145,676

$5,070,045
Balance at December 31, 2018
52,586,498
 $53
 $1,378,438
 $3,791,838
 $(54,120) $5,116,209
 $148,634
 $5,264,843
Cumulative adjustment for the adoption of premium amortization on purchased callable debt securities (ASU 2017-08) (1) —
 —
 —
 (583) —
 (583) —
 (583)
Acquisition of SVB Leerink —
 —
 —
 —
 —
 —
 5,256
 5,256
Common stock issued under employee benefit plans, net of restricted stock cancellations
487,101
 —
 9,236
 —
 —

9,236

—

9,236
Common stock issued under ESOP
14,442
 —
 3,506
 —
 —

3,506

—

3,506
Net income
—
 —
 —
 874,000
 —

874,000

35,901

909,901
Capital calls and distributions, net
—
 —
 —
 —
 —

—

(32,002)
(32,002)
Net change in unrealized gains and losses on AFS securities, net of tax
—
 —
 —
 —
 173,235

173,235

—

173,235
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax
—
 —
 —
 —
 (1,275)
(1,275)
—

(1,275)
Foreign currency translation adjustments, net of tax
—
 —
 —
 —
 (4,550)
(4,550)
—

(4,550)
Net change in unrealized gains and losses on cash flow hedges, net of tax —
 —
 —
 —
 22,863
 22,863
 —
 22,863
Share-based compensation, net
—
 —
 50,550
 —
 —

50,550

—

50,550
Common stock repurchases (1,532,210) (1) —
 (352,510) —
 (352,511) —
 (352,511)
Balance at September 30, 2019
51,555,831

$52

$1,441,730

$4,312,745

$136,153

$5,890,680

$157,789

$6,048,469

(1)
See "Adoption of New Accounting Standards" in Note 1—“Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details.
  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)
2019
2018
Cash flows from operating activities:



Net income before noncontrolling interests
$909,901

$736,417
Adjustments to reconcile net income to net cash provided by operating activities:



Provision for credit losses
89,033

74,226
Changes in fair values of equity warrant assets, net of proceeds from exercises
12,801
 (24,462)
Changes in fair values of derivatives, net
(29,472)
2,964
Gains on investment securities, net
(106,575) (77,365)
Distributions of earnings from non-marketable and other equity securities 77,584
 54,605
Depreciation and amortization
60,408

43,389
Amortization of premiums and discounts on investment securities, net
9,646

(252)
Amortization of share-based compensation
50,550

33,968
Amortization of deferred loan fees
(112,383)
(94,771)
Deferred income tax benefit
(1,720)
(16,532)
Excess tax benefit from exercise of stock options and vesting of restricted shares (7,931) (17,543)
Losses from the write-off of premises and equipment 185
 7,117
Changes in other assets and liabilities:



Accrued interest receivable and payable, net
(10,429)
(51,521)
Accounts receivable and payable, net
(18,278)
1,697
Income tax receivable and payable, net
(59,527)
(12,962)
Accrued compensation
(109,837)
5,505
Foreign exchange spot contracts, net
34,304

86,298
Other, net
(78,516)
(46,874)
Net cash provided by operating activities
709,744

703,904
Cash flows from investing activities:



Purchases of available-for-sale securities
(7,832,282)
(662,458)
Proceeds from sales of available-for-sale securities
2,189,087

—
Proceeds from maturities and paydowns of available-for-sale securities
801,605

2,529,666
Purchases of held-to-maturity securities
(408,479)
(4,726,595)
Proceeds from maturities and paydowns of held-to-maturity securities
1,516,340

1,482,204
Purchases of non-marketable and other equity securities
(100,068)
(56,435)
Proceeds from sales and distributions of capital of non-marketable and other equity securities
90,371

83,020
Net increase in loans
(2,685,151)
(4,356,980)
Purchases of premises and equipment
(33,871)
(28,718)
Acquisition of SVB Leerink, net of cash acquired (102,328) —
Net cash used for investing activities
(6,564,776)
(5,736,296)
Cash flows from financing activities:



Net increase in deposits
10,213,974

4,342,036
Net (decrease) increase in short-term borrowings
(612,514)
1,597,522
(Distributions to noncontrolling interests), net of contributions from noncontrolling interests
(32,002)
(22,785)
Common stock repurchases (352,511) —
Proceeds from issuance of common stock, ESPP and ESOP
12,742

11,685
Net cash provided by financing activities
9,229,689

5,928,458
Net increase in cash and cash equivalents
3,374,657

896,066
Cash and cash equivalents at beginning of period
3,571,539

2,923,075
Cash and cash equivalents at end of period
$6,946,196

$3,819,141
Supplemental disclosures:



Cash paid during the period for:



Interest
$164,503

$54,681
Income taxes
379,579

277,388
Noncash items during the period:



Changes in unrealized gains and losses on available-for-sale securities, net of tax
$173,235

$(70,763)
Distributions of stock from investments
7,770

4,368

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 is a diversified financial services company, as well as a bank holding company and a financial holding company. SVB Financial was incorporated in the state of Delaware in March 1999. Through our various subsidiaries and divisions, we offer a varietydiverse set of banking and financial products and services to support our clients of all sizes and stages throughout their life cycles. In these notes to our unaudited interim consolidated financial statements, when we refer to “SVB Financial Group,” “SVBFG”,“SVBFG," the “Company,” “we,” “our,” “us” or use 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 refer to “SVB Financial” or the “Parent” we are referring only to the parent company, SVB Financial Group (not including subsidiaries).
The accompanying unaudited 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 GAAP. Such unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the 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, 20172019 are not necessarily indicative of results to be expected for any future periods. These unaudited interim consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 20162018 (“20162018 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 20162018 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 measurements of fair value, the valuation of non-marketable and other equity securities, the valuation of equity warrant assets and the adequacy of the allowance for loan losses and allowance for unfunded credit commitments, and the recognition and measurement of income tax assets and liabilities.commitments.
Principles of Consolidation and Presentation
Our unaudited interim consolidated financial statements include the accounts of SVB Financial Group and consolidated entities. We consolidate voting entities in which we have control through voting interests or entities through which we have a controlling financial interest in a variable interest entity (“VIE”). We determine whether we have a controlling financial interest in a VIE by determining if we have: (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses, or (c) the right to receive the expected returns of the entity. Generally, we have significant variable interests if our commitments to a limited partnership investment represent a significant amount of the total commitments to the entity. We also evaluate the impact of related parties on our determination of variable interests in our consolidation conclusions. We consolidate VIEs in which we are the primary beneficiary based on a controlling financial interest. If we are not the primary beneficiary of a VIE, we record our pro-rata interests or our cost basis in the VIE, as appropriate, based on other accounting guidance within GAAP.our ownership percentage.
VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. We assess VIEs to determine if we are the primary beneficiary of a VIE. A primary beneficiary is defined as a variable interest holder that has a controlling financial interest. A controlling financial interest requires both: (a) the power to direct the activities that most significantly impact the VIE’s economic performance, and (b) obligation to absorb losses or receive benefits of a VIE that could potentially be significant to a VIE. Under this analysis, we also evaluate kick-out rights and other participating rights, which could provide us a controlling financial interest. The primary beneficiary of a VIE is required to consolidate the VIE.
We also evaluate fees paid to managers of our limited partnership investments. We exclude those fee arrangements that are not deemed to be variable interests from the analysis of our interests in our investments in VIEs and the determination of a primary beneficiary, if any. Fee arrangements based on terms that are customary and commensurate with the services provided are deemed not to be variable interests and are, therefore, excluded.

All significant intercompany accounts and transactions with consolidated entities have been eliminated. We have not provided financial or other support during the periods presented to any VIE that we were not previously contractually required to provide.
Adoption of New Accounting Standards
In March 2016, the FASB issued a new accounting standard update (ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718)), which includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under the ASU, an entity recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement in the period when the awards vest or are settled. The guidance also permits an entity to make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. We adopted this guidance on January 1, 2017 and elected to estimate the number of awards that are expected to vest which, is consistent with the previous accounting guidance. In addition, we also elected to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using the prospective transition method.
Previously, tax effects resulting from changes in the Company's share price subsequent to grant date of share-based compensation awards were recorded through additional paid-in capital in stockholders' equity at the time of vesting and exercise. The adoption of the amended accounting guidance resulted in a $1.3 million and $14.4 million reduction of income tax expense (that previously would have been reflected as additional paid-in capital), or a benefit of $0.02 and $0.27 per diluted common share, for the three and nine months ended September 30, 2017, respectively. We expect the impact of this amendment will vary period to period depending on the volatility of the Company's stock price and the timing of vesting and/or settlement of awards.
Recent Accounting Pronouncements
In May 2014, the FASB issued a new accounting standard update (ASU 2014-09, Revenue from Contracts with Customers (Topic 606)), which provides revenue recognition guidance that is intended to create greater consistency with respect to how and when revenue from contracts with customers is shown in the income statement. The guidance requires that revenue from contracts with customers be recognized when transfer of control over goods or services is passed to customers in the amount of consideration expected to be received. Subsequent Accounting Standard Updates have been issued clarifying the original pronouncement (ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20). The new standard and amendments will be effective January 1, 2018, either on a full retrospective approach or a modified retrospective approach. We plan to adopt the revenue guidance in the first quarter of 2018 using the modified retrospective transition approach applied to contracts which are not completed as of January 1, 2018. Upon adoption, we will recognize the cumulative-effect of adopting this guidance as an adjustment to opening retained earnings. We have conducted a comprehensive scoping exercise to determine the revenue streams that are within the scope of this guidance. The scope of this guidance explicitly excludes net interest income, including interest income earned from our loan and fixed income securities portfolios, as well as certain other noninterest income earned from our lending-, investment- and derivative-related activities. Based on our contract assessments to-date, we have not identified any material changes to the timing or the amounts of our revenue recognition. We expect minor changes in the timing of recognizing fund management fees in noninterest income for a portion of our SVB Capital funds as the fees will be recognized at the time of distribution which typically occurs later in the fund life than had been previously recognized. Based on our preliminary analysis, we expect the cumulative adjustment to retained earnings associated with this change to be from $7 million to $10 million, with an immaterial impact to our net income on an ongoing basis. We continue to evaluate the effect the guidance has on our revenue and the presentation of certain costs associated with our credit card and merchant services and whether these costs are presented in noninterest expense or offset against credit card fees in noninterest income. We currently recognize payment networks costs associated with our credit card and merchant services in noninterest expense. If we determine that the adoption of the guidance results in a change in the presentation of these costs, we estimate that this will result in approximately $10 million to $15 million of annual expenses would be netted against credit card interchange fees and reported in noninterest income instead of other noninterest expense. This change would occur on a prospective basis starting January 1, 2018 and would reduce our non-GAAP core fee income within noninterest income and also reduce noninterest expense with no impact to net income. Furthermore, we continue to evaluate the disaggregation of our significant categories of revenue within the scope of this guidance and plan to expand our qualitative disclosures of our noninterest income within the Consolidated Financial Statements upon adoption in 2018.
In January 2016, the FASB issued a new accounting standard update (ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825)), which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This guidance requires equity investments (except those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income. The adoption of the new standard will result in the elimination of cost method accounting for equity investments and will impact our nonmarketable

and other equity securities that are currently carried at cost. This guidance will be effective on January 1, 2018, and our equity investments measured at cost will be measured at fair value and the difference between cost and fair value at adoption date will be recorded as a cumulative-effect adjustment to opening retained earnings of the fiscal year of adoption for our cost method venture capital and private equity fund investments with readily determinable fair values. The actual adjustment to opening retained earnings will depend upon the fair value of our investments at the adoption date but based on September 30, 2017 and historical values, we expect the transition adjustment to increase capital between $110 million and $120 million on a pre-tax basis. Any subsequent changes in the fair value will be recorded as unrealized gains or losses in our consolidated statements of income. Additionally, for purposes of disclosing the fair value of loans carried at amortized cost, we are evaluating our valuation methods to determine the necessary changes to conform to an “exit price” concept as required by the standard update. Accordingly, the fair value amounts disclosed for such loans may change upon adoption.
In February 2016, the FASB issued a new accounting standard update (ASU 2016-02, Leases (Topic 842)), which will requirerequires for all operating leases the recognition of a right-of-use ("ROU") asset and a corresponding lease liability, in the statement of financial position. For short term leases (term of 12 months or less), a lessee is permitted to make an accounting election not to recognize lease assets and lease liabilities. The lease cost will be allocated over the lease term on a straight-line basis. This guidance will be effectiveThere were further amendments, including practical expedients, with the issuance of ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842” in January 2018. In July 2018 the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements", which provides us with the option to apply the new leasing standard to all open leases as of the adoption date, on a prospective basis.
On January 1, 2019, we adopted the new accounting standard ASU 2016-02, Leases (Topic 842) and all the related amendments ("new lease standard", "ASC 842" or "ASU 2016-02") utilizing the practical expedient to apply the new lease standard as of January 1, 2019 on a prospective basis. We also elected the "package of expedients" and elected as an accounting policy to exclude recording ROU assets and lease liabilities for leases that meet the definition of short-term leases. In addition to excluding short-term leases, we have implemented an accounting policy in which non-lease components are not separated from lease components in the measurement of ROU assets and lease liabilities for all lease contracts. The "package of expedients" allowed us to continue to account for existing leases for which the commencement date is before January 1, 2019, in accordance with the previous guidance, Leases (Topic 840), throughout the lease term, including periods after adoption of the new guidance. We recognized $146 million in ROU assets and $178 million in lease liabilities as a result of applying the new lease standard as an adjustment to our opening consolidated balance sheet on January 1, 2019. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See Note 9—"Leases" of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional disclosures related to our leases.
In March 2017, the FASB issued ASU No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain purchased callable debt securities held at a premium. The ASU requires entities to amortize premiums on debt securities by the first call date when the securities have fixed and determinable call dates and prices. The scope of the ASU includes all accounting premiums, such as purchase premiums and cumulative fair value hedge adjustments. The ASU does not change the accounting for discounts, which continue to be recognized over the contractual life of a security. Adoption of the ASU is on a modified retrospective basis with early adoption permitted. We planthrough a cumulative effect adjustment to adoptretained earnings as of the lease accounting guidance inbeginning of the first quarteryear of adoption. Adoption of the ASU primarily affected our HTM portfolio of callable state and municipal debt securities. On January 1, 2019, we adopted the ASU and are currently evaluating the impact this guidance will have on our consolidated financial statements by reviewing our existing lease contracts and service contracts that may include embedded leases. We expectrecognized a net reduction to recognize right-of-use assets and related lease liabilities associated predominantly with noncancelable operating leases included in the tableretained earnings of minimum future payments in the amount of $217 million as disclosed in Note 18 of our 2016 Form 10-K.$583 thousand.
Recent Accounting Pronouncements
In June 2016, the FASB issued a new accounting standard update (ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments) ("ASU 2016-13"), which amends the incurred loss impairment methodology inunder current GAAP with a methodology that reflects a current expected credit loss ("CECL") measurement to estimate the allowance for credit losses over the contractual life of the loanfinancial assets (including loans, HTM debt securities and off-balance sheet commitments) and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. While the CECL model does not apply to available-for-sale debt securities, ASU 2016-13 does require entities to record an allowance when recognizing credit losses for available-for-sale securities, rather than reduce the amortized cost of the securities by direct write-offs, which allows for reversal of credit impairments in future periods based on improvements in credit. This guidance will be effective January 1, 2020, on a modified retrospective approach, with early adoption permitted, but not before January 1, 2019.approach. We currently have a working project team in place and subject matter experts to assist with our review of key interpretive issues and assistwill adopt the guidance in the assessmentfirst quarter of 2020.
Our implementation process, which will continue throughout 2019, includes loss forecasting model development, evaluation of technical accounting topics, updates to our existing creditallowance accounting policies, reporting processes and related internal controls, overall operational readiness for our adoption of CECL as well as parallel runs for CECL alongside our current allowance process. Key remaining project implementation activities include the finalization of loss forecasting models and qualitative factors, reporting processes, againstproduction processes, completion of documentation, policies and disclosures, development of supporting analytics and control design and operating effectiveness. We provide quarterly updates to senior management and to the new guidanceAudit and Credit Committees of the Board of Directors. These communications provide an update on the status of the implementation as discussed above.

Based on our loan and unfunded credit commitments portfolio composition at September 30, 2019, and the current economic environment, we currently estimate the day 1 combined impact of CECL on our allowance for loan losses and allowance for unfunded credit commitments to determine what modifications may be required.an increase of approximately $25 million to $60 million (on a pre-tax basis) or approximately 7% to 16% of the total combined allowance compared to our reported amount at September 30, 2019. Based on the credit quality of our existing debt securities portfolio, we do not expect a material allowance for our held-to-maturity and available-for-sale debt security portfolios. We are currently evaluatingwill continue to evaluate and refine the results of our loss estimates through the end of 2019. The actual effect of CECL on our allowance for loan losses and our allowance for unfunded credit commitments will depend on a variety of factors as of the date of adoption, including the size and composition of our portfolios, the portfolios’ credit quality, current and forecasted economic conditions and management adjustments. In addition, the actual adjustment amount to our allowances will be subject to any necessary changes to our models, methodology and assumptions or other adjustments.
At adoption, we will have a cumulative-effect adjustment to retained earnings for our change in the allowance for credit losses for our loans, unfunded credit commitments and debt securities, which will impact our capital.An increase in our allowance will result in a decrease to our regulatory capital amounts and ratios. Federal banking regulatory agencies have provided relief for an initial capital decrease at adoption by allowing the impact this guidance will haveto be phased-in over three years on our financial position, results of operation and stockholders’ equity.a straight-line basis.
In August 2016,2018, the FASB issued a new accounting standard update (ASU 2016-15, Statement of Cash FlowsNo. 2018-13, Fair Value Measurement (Topic 230)820): Classification of Certain Cash Receipts and Cash Payments), which clarifiesDisclosure Framework - Changes to the guidance on eight specific cash flow issues.Disclosure Requirements for Fair Value Measurement). The ASU primarily modifies certain disclosures with respect to Level 3 fair value measurements. This guidance will be effective January 1, 2018 on a full retrospective approach, with early adoption permitted. Our preliminary evaluation has resulted2020. We will adopt the guidance in the expectation that this guidancefirst quarter of 2020, however, the adoption will primarilynot have an impact on our consolidated financial position or results of operations and we do not expect the presentation between investing and operating activities within our statements of cash flows related to distributions and net gains from our nonmarketable and other securities portfolio. We are continuing to evaluate any further impactadoption of this guidancestandard to have a material impact on the disclosures in our Notes to the presentation of our operating, investing and financing activities within our statements of cash flows.Consolidated Financial Statements.
Reclassifications
Certain prior period amounts primarily related to thepresentation changes to our incomefinancial statement presentation of net gains on derivative instruments and provision for unfunded credit commitmentsline items have been reclassified to conform to current period presentations.
2.Stockholders’
Business Combination
On January 4, 2019, we completed the acquisition of Leerink Holdings LLC, the Boston-based parent company of healthcare and life science investment bank Leerink Partners LLC, now SVB Leerink Holdings LLC ("SVB Leerink"). The acquisition was previously announced on November 13, 2018. SVB Leerink is an investment bank specializing in Equity & Convertible Capital Markets, Mergers & Acquisitions, Equity Research and Sales & Trading for growth and innovation-minded healthcare and life science companies and operates as a wholly-owned subsidiary of SVB Financial.

The acquisition was accounted for as a business combination and accordingly, the results of SVB Leerink's operations have been included in the Company's unaudited interim consolidated financial statements at and for the three and nine months ended September 30, 2019 from the date of acquisition. We acquired SVB Leerink for approximately $273.2 million comprised of cash and share-based replacement award liabilities. In addition, we provided a retention pool for employees of $60.0 million to be paid over five years comprised of a mix of cash and equity issued under the Company's current Equity Incentive Plan. Refer to Note 4—“Share-Based Compensation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for more information. The following table summarizes the allocation of the purchase price to the net assets of SVB Leerink as of January 4, 2019:
(Dollars in thousands) January 4, 2019
Cash paid $265,601
Replacement award liabilities (1) 7,629
Total purchase consideration $273,230
Fair value of net assets acquired 135,407
Goodwill $137,823
(1)The replacement award liabilities recognized as part of the total purchase consideration and the post-combination expenses of $9.1 million related to share-based replacement awards will be paid out in cash in accordance with SVB Leerink's original grant date vesting schedules.

The following table summarizes the estimated fair value of assets acquired and liabilities assumed upon the finalization of the purchase:
(Dollars in thousands) January 4, 2019
Assets acquired:  
Cash and cash equivalents $163,273
Investment securities 33,644
Accounts receivable 36,538
Intangible assets 60,900
Other assets 35,128
Total assets acquired 329,483
Liabilities assumed:  
Accrued compensation 137,206
Due to broker-dealers 18,483
Other liabilities 33,131
Noncontrolling interests 5,256
Total liabilities assumed 194,076
Fair value of net assets acquired $135,407

The Company recognized identifiable intangible assets of $60.9 million and goodwill of $137.8 million as a result of the acquisition. Intangible assets of $60.9 million are subject to amortization over their estimated useful lives. The goodwill recorded includes revenue generating synergies expected from collaboration between SVB Leerink and the Company. All reported goodwill amounts have been allocated to the SVB Leerink reporting segment and are expected to be deductible for tax purposes. The fair value of the noncontrolling interests in SVB Leerink Holdings LLC represents the noncontrolling ownership percentage for SVB Leerink's consolidated VIE investment securities which are measured at net asset value.
The following table summarizes the fair value and estimated useful lives of the other intangible assets at the date of acquisition:
(Dollars in thousands) Estimated Fair Value Weighted Average Estimated Useful Life - in Years
Other intangible assets:    
Customer relationships $42,000
 11.0
Other 18,900
 9.9
Total other intangible assets $60,900
 


SVB Leerink's net income from January 4, 2019 through September 30, 2019 was approximately $8.2 million.Supplementary pro forma financial information related to the acquisition is not included because the impact to the Company's unaudited interim consolidated statements of income is not material. The following table represents the amount of revenue and earnings attributable to SVB Leerink that is included in our financial results for the three and nine months ended September 30, 2019:
(Dollars in thousands) Three months ended September 30, 2019 Nine months ended September 30, 2019
Net interest income $277
 $961
Noninterest income 53,773
 188,925
Noninterest expense 55,200
 177,675
(Loss) income before income tax expense (1,150) 12,211
Income tax (benefit) expense (558) 3,121
Net income attributable to noncontrolling interests 826
 861
Net (loss) income available to common stockholders $(1,418) $8,229


The following table shows the components of acquisition-related activities expense for the three and nine months ended September 30, 2019:
(Dollars in thousands) Three months ended September 30, 2019 Nine months ended September 30, 2019
Professional fees $260
 $911
Other 94
 367
Total acquisition-related expenses $354
 $1,278


3.Stockholders' Equity and EPS
Accumulated Other Comprehensive Income
The following table summarizes the items reclassified out of accumulated other comprehensive income into the Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 20172019 and 2016:2018:
    Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) Income Statement Location 2019 2018 2019 2018
Reclassification adjustment for losses on available-for-sale securities included in net income Gains on investment securities, net $—
 $—
 $3,905
 $—
Related tax benefit Income tax expense —
 —
 (1,087) —
Reclassification adjustment for losses on cash flow hedges included in net income Net interest income 2,713
 —
 3,224
 —
Related tax benefit Income tax expense (755) —
 (897) —
Total reclassification adjustment for losses included in net income, net of tax   $1,958
 $—
 $5,145
 $—

    Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) Income Statement Location 2017
2016 2017 2016
Reclassification adjustment for losses (gains) included in net income Gains on investment securities, net $101
 $15
 $(384) $(11,567)
Related tax (benefit) expense Income tax expense (41) (6) 157
 4,707
Total reclassification adjustment for losses (gains) included in net income, net of tax   $60
 $9
 $(227) $(6,860)
The table below summarizes the activity relating to net gains and losses on our cash flow hedges included in accumulated other comprehensive income for the three and nine months ended September 30, 2019 and 2018. Over the next 12 months, we expect that approximately $1.9 million in accumulated other comprehensive income ("AOCI") at September 30, 2019, related to our cash flow hedges will be reclassified out of AOCI and recognized in net income.

  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 2019 2018
Balance, beginning of period, net of tax $13,828
 $—
 $—
 $—
Net increase in fair value, net of tax 7,077
 —
 20,536
 —
Net realized loss reclassified to net income, net of tax 1,958
 —
 2,327
 —
Balance, end of period, net of tax $22,863
 $—
 $22,863
 $—

EPS

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 issuable for stock options and restricted stock unitsunit awards outstanding under our 2006 Equity Incentive Plan and our ESPP. Potentially dilutive common shares are excluded from the computation of dilutive EPS in periods in which the effect would be antidilutive. The following is a reconciliation of basic EPS to diluted EPS for the three and nine months ended September 30, 20172019 and 20162018:


  Three months ended September 30, Nine months ended September 30,
(Dollars and shares in thousands, except per share amounts) 2019 2018 2019 2018
Numerator:        
Net income available to common stockholders $267,281
 $274,817
 $874,000
 $707,576
Denominator:        
Weighted average common shares outstanding—basic 51,545
 53,235
 52,025
 53,062
Weighted average effect of dilutive securities:        
Stock options and ESPP 203
 383
 238
 404
Restricted stock units and awards 110
 301
 168
 334
Weighted average common shares outstanding—diluted 51,858
 53,919
 52,431
 53,800
Earnings per common share:        
Basic $5.19
 $5.16
 $16.80
 $13.33
Diluted 5.15
 5.10
 16.67
 13.15

  Three months ended September 30, Nine months ended September 30,
(Dollars and shares in thousands, except per share amounts) 2017 2016 2017 2016
Numerator:        
Net income available to common stockholders $148,620
 $111,081
 $373,296
 $283,219
Denominator:        
Weighted average common shares outstanding—basic 52,705
 52,046
 52,530
 51,842
Weighted average effect of dilutive securities:        
Stock options and ESPP 343
 233
 381
 245
Restricted stock units 257
 134
 319
 142
Weighted average common shares outstanding—diluted 53,305
 52,413
 53,230
 52,229
Earnings per common share:        
Basic $2.82
 $2.13
 $7.11
 $5.46
Diluted $2.79
 $2.12
 $7.01
 $5.42


The following table summarizes the weighted-average common shares excluded from the diluted EPS calculation due to the antidilutive effect for the three and nine months ended September 30, 20172019 and 2016:2018:
  Three months ended September 30, Nine months ended September 30,
(Shares in thousands) 2019 2018 2019 2018
Stock options 213
 86
 154
 49
Restricted stock units 432
 5
 294
 71
Total 645
 91
 448
 120

Stock Repurchase Program
On November 13, 2018, the Company announced a program to repurchase up to $500 million of our outstanding common stock (the "Stock Repurchase Program"). For the three months ended September 30, 2019, we repurchased 25,562 shares of our outstanding common stock for $5.7 million under the Stock Repurchase Program. As of September 30, 2019, we had repurchased 2.2 million shares of our outstanding common stock for $499.6 million under the Stock Repurchase Program. The Stock Repurchase Program was completed on July 1, 2019.


Consolidated Statement of Changes in Equity
The following table summarizes the changes in our consolidated equity for the three months ended September 30, 2019 and 2018:
  Three months ended September 30, Nine months ended September 30,
(Shares in thousands) 2017 2016 2017 2016
Stock options 112
 518
 61
 444
Restricted stock units 5
 120
 2
 9
Total 117
 638
 63
 453
  Common Stock 
Additional
Paid-in Capital
 Retained Earnings 
Accumulated
Other
Comprehensive Income (Loss)
 
Total SVBFG
Stockholders’ Equity
 Noncontrolling Interests Total Equity
(Dollars in thousands) Shares Amount      
Balance at June 30, 2018 53,210,627
 $53
 $1,346,586
 $3,397,879
 $(86,865) $4,657,653
 $147,188
 $4,804,841
Common stock issued under employee benefit plans, net of restricted stock cancellations 39,628
 —
 1,943
 —
 —
 1,943
 —
 1,943
Net income —
 —
 —
 274,817
 —
 274,817
 6,548
 281,365
Capital calls and distributions, net —
 —
 —
 —
 —
 —
 (8,060) (8,060)
Net change in unrealized gains and losses on AFS securities, net of tax —
 —
 —
 —
 (17,908) (17,908) —
 (17,908)
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax —
 —
 —
 —
 (1,283) (1,283) —
 (1,283)
Foreign currency translation adjustments, net of tax —
 —
 —
 —
 (2,354) (2,354) —
 (2,354)
Share-based compensation, net —
 —
 11,501
 —
 —
 11,501
 —
 11,501
Balance at September 30, 2018 53,250,255
 $53
 $1,360,030
 $3,672,696
 $(108,410) $4,924,369
 $145,676
 $5,070,045
Balance at June 30, 2019 51,561,719
 $52
 $1,421,565
 $4,051,194
 $81,232
 $5,554,043
 $152,132
 $5,706,175
Common stock issued under employee benefit plans, net of restricted stock cancellations 19,674
 —
 1,383
 —
 —
 1,383
 —
 1,383
Net income —
 —
 —
 267,281
 —
 267,281
 14,437
 281,718
Capital calls and distributions, net —
 —
 —
 —
 —
 —
 (8,780) (8,780)
Net change in unrealized gains and losses on AFS securities, net of tax —
 —
 —
 —
 50,638
 50,638
 —
 50,638
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax —
 —
 —
 —
 (270) (270) —
 (270)
Foreign currency translation adjustments, net of tax —
 —
 —
 —
 (4,482) (4,482) —
 (4,482)
Net change in unrealized gains and losses on cash flow hedges, net of tax —
 —
 —
 —
 9,035
 9,035
 —
 9,035
Share-based compensation, net —
 —
 18,782
 —
 —
 18,782
 —
 18,782
Common stock repurchases (25,562) —
 —
 (5,730) —
 (5,730) —
 (5,730)
Balance at September 30, 2019 51,555,831
 $52
 $1,441,730
 $4,312,745
 $136,153
 $5,890,680
 $157,789
 $6,048,469


3.4.Share-Based Compensation
For the three and nine months endedSeptember 30, 20172019 and 20162018, we recorded share-based compensation and related tax benefits as follows:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 2019 2018
Share-based compensation expense $18,782
 $11,501
 $50,550
 $33,968
Income tax benefit related to share-based compensation expense (4,883) (2,895) (12,028) (7,955)
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Share-based compensation expense $8,644
 $7,916
 $27,739
 $22,342
Income tax benefit related to share-based compensation expense (3,154) (2,881) (9,518) (7,461)

Unrecognized Compensation Expense
As of September 30, 2017,2019, unrecognized share-based compensation expense was as follows:
(Dollars in thousands) 
  Unrecognized  
Expense
 
Weighted Average Expected
Recognition Period 
- in Years  
Stock options $15,837
 2.69
Restricted stock units and awards 116,952
 2.83
Total unrecognized share-based compensation expense $132,789
  
(Dollars in thousands) 
  Unrecognized  
Expense
 
Weighted Average
Expected
Recognition
  Period - in Years  
Stock options $10,935
 2.72
Restricted stock units 56,513
 2.74
Total unrecognized share-based compensation expense $67,448
  


Share-Based Payment Award Activity
The table below provides stock option information related to the 2006 Equity Incentive Plan for the nine months endedSeptember 30, 20172019:
  Options 
Weighted
Average
 Exercise Price 
 Weighted Average Remaining Contractual Life - in Years   
Aggregate
  Intrinsic Value  
of In-The-
Money
Options
Outstanding at December 31, 2018 679,659
 $137.19
    
Granted 121,669
 249.64
    
Exercised (104,576) 85.38
    
Forfeited (20,180) 211.23
    
Expired (720) 64.37
    
Outstanding at September 30, 2019 675,852
 163.32
 3.68 $43,542,167
Vested and expected to vest at September 30, 2019 657,968
 161.08
 3.62 43,364,465
Exercisable at September 30, 2019 411,981
 120.57
 2.46 38,394,292

  Options 
Weighted
Average
 Exercise Price 
 Weighted Average Remaining Contractual Life - in Years   
Aggregate
  Intrinsic Value  
of In-The-
Money
Options
Outstanding at December 31, 2016 1,010,557
 $87.24
    
Granted 113,535
 178.23
    
Exercised (232,370) 70.79
    
Forfeited (9,491) 111.48
    
Outstanding at September 30, 2017 882,231
 103.02
 3.80 $74,172,891
Vested and expected to vest at September 30, 2017 857,176
 101.94
 3.74 72,987,562
Exercisable at September 30, 2017 533,847
 83.46
 2.73 55,323,524
The aggregate intrinsic value of outstanding options shown in the table above represents the pre-tax intrinsic value based on our closing stock price of $187.09$208.95 as of September 30, 2017.2019. The total intrinsic value of options exercised during the three and nine months ended September 30, 20172019 was $3.8$1.6 million and $25.8$16.0 million, respectively, compared to $1.5$8.5 million and $8.2$39.5 million for the comparable 2016 periods, respectively.2018 periods.

The table below provides information for restricted stock units and awards under the 2006 Equity Incentive Plan for the nine months endedSeptember 30, 20172019:
  Shares     Weighted Average Grant Date Fair Value
Nonvested at December 31, 2018 597,296
 $194.48
Granted (1) 539,266
 243.70
Vested (217,705) 151.40
Forfeited (53,905) 188.07
Nonvested at September 30, 2019 864,952
 236.41

  Shares     Weighted Average Grant Date Fair Value
Nonvested at December 31, 2016 670,969
 $106.64
Granted 239,847
 180.05
Vested (223,561) 102.00
Forfeited (38,871) 122.77
Nonvested at September 30, 2017 648,384
 134.43
(1)On February 1, 2019, we granted 125,160 restricted stock awards to SVB Leerink employees at a market price of $238.28 under the retention plan previously announced on November 13, 2018. The restricted stock awards will vest over a five-year period.
4.5.Variable Interest Entities
Our involvement with VIEs includes our investments in venture capital and private equity funds, debt funds, private and public portfolio companies and our investments in qualified affordable housing projects.

The following table presents the carrying amounts and classification of significant variable interests in consolidated and unconsolidated VIEs as of September 30, 20172019 and December 31, 2016:2018:
(Dollars in thousands) Consolidated VIEs Unconsolidated VIEs Maximum Exposure to Loss in Unconsolidated VIEs Consolidated VIEs Unconsolidated VIEs Maximum Exposure to Loss in Unconsolidated VIEs
September 30, 2017:      
September 30, 2019:      
Assets:            
Cash and cash equivalents $7,555
 $—
 $—
 $21,418
 $—
 $—
Non-marketable and other securities (1) 190,129
 323,284
 323,284
Non-marketable and other equity securities (1) 254,962
 655,278
 655,278
Accrued interest receivable and other assets 169
 —
 —
 708
 —
 —
Total assets $197,853
 $323,284
 $323,284
 $277,088
 $655,278
 $655,278
Liabilities:            
Other liabilities (1) 445
 90,974
 —
 3,077
 276,940
 —
Total liabilities $445
 $90,974
 $—
 $3,077
 $276,940
 $—
December 31, 2016:      
December 31, 2018:      
Assets:            
Cash and cash equivalents $11,469
 $—
 $—
 $9,058
 $—
 $—
Non-marketable and other securities (1) 196,140
 314,810
 314,810
Non-marketable and other equity securities (1) 221,646
 568,272
 568,272
Accrued interest receivable and other assets 294
 —
 —
 228
 —
 —
Total assets $207,903
 $314,810
 $314,810
 $230,932
 $568,272
 $568,272
Liabilities:            
Other liabilities (1) 517
 58,095
 —
 919
 205,685
 —
Total liabilities $517
 $58,095
 $—
 $919
 $205,685
 $—
 
(1)Included in our unconsolidated non-marketable and other equity securities portfolio at September 30, 20172019 and December 31, 20162018 are investments in qualified affordable housing projects of $148.0$419.0 million and $112.4$318.6 million, respectively, and related other liabilities consisting of unfunded credit commitments of $91.0$276.9 million and $58.1$205.7 million, respectively.


Non-marketable and other equity securities
Our non-marketable and other equity securities portfolio primarily represents investments in venture capital and private equity funds, SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China (“SPD-SVB”)), debt funds, private and public

portfolio companies and investments in qualified affordable housing projects. A majority of these investments are through thirdthird- party funds held by SVB Financial in which we do not have controlling or significant variable interests. These investments represent our unconsolidated VIEs in the table above. Our non-marketable and other equity securities portfolio also includes investments from SVB Capital. SVB Capital is the funds management business of SVB Financial Group, which focuses primarily on venture capital investments. The SVB Capital family of funds is comprised of direct venture funds that invest in companies and funds of funds that invest in other venture capital funds. We have a controlling and significant variable interest in four4 of these SVB Capital funds and consolidate these funds for financial reporting purposes.
All investments are generally nonredeemable and distributions are expected to be received through the liquidation of the underlying investments throughout the life of the investment fund. Investments may only be sold or transferred subject to the notice and approval provisions of the underlying investment agreement. Subject to applicable regulatory requirements, including the Volcker Rule, we also make commitments to invest in venture capital and private equity funds. For additional details, see Note 12—16—“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.
The Bank also has variable interests in low income housing tax credit funds, in connection with fulfilling its responsibilities under the Community Reinvestment Act (“CRA”), that are designed to generate a return primarily through the realization of federal tax credits. These investments are typically limited partnerships in which the general partner, other than the Bank, holds the power over significant activities of the VIE; therefore, these investments are not consolidated. For additional information on our investments in qualified affordable housing projects, see Note 6—7—“Investment Securities" of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

As of September 30, 2017,2019, our exposure to loss with respect to the consolidated VIEs is limited to our net assets of $197.4$274.0 million and our exposure to loss for our unconsolidated VIEs is equal to our investment in these assets of $323.3$655.3 million.
5.6.Cash and Cash Equivalents
The following table details our cash and cash equivalents at September 30, 20172019 and December 31, 2016:2018:
(Dollars in thousands) September 30, 2017
December 31, 2016 September 30, 2019
December 31, 2018
Cash and due from banks (1) $3,490,005
 $2,476,588
 $6,557,085
 $3,444,971
Securities purchased under agreements to resell (2) 62,664
 64,028
 387,119
 123,611
Other short-term investment securities 2,902
 5,134
 1,992
 2,957
Total cash and cash equivalents $3,555,571
 $2,545,750
 $6,946,196
 $3,571,539
 
(1)
At September 30, 20172019 and December 31, 20162018, $1.64.1 billion and $1.11.7 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 $1.9 billion and $1.2 billion and $721 million, respectively.
(2)
At September 30, 20172019 and December 31, 20162018, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fair valuesvalues of $64395.2 million an and $66126.2 million, respectively. None of these securities were sold or repledged as of September 30, 20172019 and December 31, 20162018.

6.7.Investment Securities
Our investment securities portfolio consists of: (i) an available-for-sale securities portfolio and a held-to-maturity securities portfolio, both of which represent interest-earning investment securities, and (ii) a non-marketable and other equity securities portfolio, which primarily represents investments managed as part of our funds management business.business as well as public equity securities held as a result of equity warrant assets exercised.
Available-for-Sale Securities
The major components of our available-for-sale investment securities portfolio at September 30, 20172019 and December 31, 20162018 are as follows:
 September 30, 2017 September 30, 2019
(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 $7,488,126
 $14,048
 $(3,834) $7,498,340
 $6,233,957
 $103,821
 $(2,930) $6,334,848
U.S. agency debentures 1,668,403
 9,759
 (1,993) 1,676,169
 100,000
 —
 —
 100,000
Foreign government debt securities 8,837
 10
 —
 8,847
Residential mortgage-backed securities:                
Agency-issued mortgage-backed securities 4,108,235
 40,584
 (119) 4,148,700
Agency-issued collateralized mortgage obligations—fixed rate 3,024,649
 4,998
 (16,952) 3,012,695
 1,658,443
 21,222
 (1) 1,679,664
Agency-issued collateralized mortgage obligations—variable rate 394,567
 1,442
 (129) 395,880
Equity securities 8,819
 11,893
 (459) 20,253
Agency-issued commercial mortgage-backed securities 590,070
 4,929
 (201) 594,798
Total available-for-sale securities $12,584,564
 $42,140
 $(23,367) $12,603,337
 $12,699,542
 $170,566
 $(3,251) $12,866,857

  December 31, 2018
(Dollars in thousands) 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Carrying
Value
Available-for-sale securities, at fair value:        
U.S. Treasury securities $4,762,182
 $11,638
 $(35,562) $4,738,258
U.S. agency debentures 1,090,426
 61
 (6,370) 1,084,117
Foreign government debt securities 5,815
 —
 (3) 5,812
Residential mortgage-backed securities:        
Agency-issued collateralized mortgage obligations—fixed rate 1,922,618
 —
 (42,400) 1,880,218
Agency-issued collateralized mortgage obligations—variable rate 81,270
 383
 (15) 81,638
Total available-for-sale securities $7,862,311
 $12,082
 $(84,350) $7,790,043


The following table summarizes sale activity of available-for-sale securities during the three and nine months ended September 30, 2019 and 2018 as recorded in the line item “Gains on investment securities, net," a component of noninterest income:
  December 31, 2016
(Dollars in thousands) 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Carrying
Value
Available-for-sale securities, at fair value:        
U.S. Treasury securities $8,880,358
 $30,323
 $(1,190) $8,909,491
U.S. agency debentures 2,065,535
 14,443
 (1,603) 2,078,375
Residential mortgage-backed securities:        
Agency-issued collateralized mortgage obligations—fixed rate 1,163,017
 3,046
 (13,398) 1,152,665
Agency-issued collateralized mortgage obligations—variable rate 474,238
 685
 (640) 474,283
Equity securities 5,635
 748
 (786) 5,597
Total available-for-sale securities $12,588,783
 $49,245
 $(17,617) $12,620,411
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019
2018 2019 2018
Sales proceeds $—
 $—
 $2,189,087
 $—
Net realized gains and losses:     
 
Gross realized gains —
 —
 1,250
 —
Gross realized losses —
 —
 (5,155) —
Net realized losses $—
 $—
 $(3,905) $—


The following tables summarize 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, 20172019 and December 31, 2016:2018:
 September 30, 2017 September 30, 2019
 Less than 12 months 12 months or longer Total Less than 12 months 12 months or longer (1) Total
(Dollars in thousands) 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
Available-for-sale securities:                        
U.S. Treasury securities $2,824,370
 $(3,834) $—
 $—
 $2,824,370
 $(3,834) $485,917
 $(973) $1,647,699
 $(1,957) $2,133,616
 $(2,930)
U.S. agency debentures 562,392
 (1,993) —
 —
 562,392
 (1,993)
Residential mortgage-backed securities:                        
Agency-issued mortgage-backed securities 305,208
 (119) —
 —
 305,208
 (119)
Agency-issued collateralized mortgage obligations—fixed rate 1,505,319
 (7,389) 415,200
 (9,563) 1,920,519
 (16,952) —
 —
 350
 (1) 350
 (1)
Agency-issued collateralized mortgage obligations—variable rate 6,651
 (1) 62,508
 (128) 69,159
 (129)
Equity securities 1,787
 (459) —
 —
 1,787
 (459)
Agency-issued commercial mortgage-backed securities 144,892
 (201) —
 —
 144,892
 (201)
Total temporarily impaired securities (1) $4,900,519
 $(13,676) $477,708
 $(9,691) $5,378,227
 $(23,367) $936,017
 $(1,293) $1,648,049
 $(1,958) $2,584,066
 $(3,251)
 
(1)
As of September 30, 20172019, we identified a total of 20259 investments that were in unrealized loss positions, of which 6337 investments totaling $477.7 million1.6 billion with unrealized losses of $9.72.0 million have been in an impaired position for a period of time greater than 12 months. As of September 30, 20172019, we do not intend to sell any of our impaired securities prior to recovery of our adjusted cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our adjusted cost basis. Based on our analysis as of September 30, 20172019, we deem all impairments to be temporary, and therefore 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 available-for-sale securities portfolio are reviewed and monitored on a quarterly basis.
 December 31, 2016 December 31, 2018
 Less than 12 months 12 months or longer Total Less than 12 months 12 months or longer (1) Total
(Dollars in thousands) 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
Available-for-sale securities:                        
U.S. Treasury securities $879,255
 $(1,190) $—
 $—
 $879,255
 $(1,190) $494,287
 $(3,785) $3,568,119
 $(31,777) $4,062,406
 $(35,562)
U.S. agency debentures 513,198
 (1,603) —
 —
 513,198
 (1,603) 443,790
 (1,602) 591,216
 (4,768) 1,035,006
 (6,370)
Foreign government debt securities 5,812
 (3) —
 —
 5,812
 (3)
Residential mortgage-backed securities:                        
Agency-issued collateralized mortgage obligations—fixed rate 635,566
 (6,704) 227,480
 (6,694) 863,046
 (13,398) 13,430
 (22) 1,866,788
 (42,378) 1,880,218
 (42,400)
Agency-issued collateralized mortgage obligations—variable rate 258,325
 (613) 6,068
 (27) 264,393
 (640) —
 —
 13,516
 (15) 13,516
 (15)
Equity securities 3,693
 (786) —
 —
 3,693
 (786)
Total temporarily impaired securities (1) $2,290,037
 $(10,896) $233,548
 $(6,721) $2,523,585
 $(17,617) $957,319
 $(5,412) $6,039,639
 $(78,938) $6,996,958
 $(84,350)
 

(1)
As of December 31, 20162018, we identified a total of 174200 investments that were in unrealized loss positions, of which 20162 investments totaling $233.5 million6.0 billion with unrealized losses of $6.778.9 million have been in an impaired position for a period of time greater than 12 months.

The following table summarizes thefixed income securities, carried at fair value, classified as available-for-sale as of September 30, 20172019 by the remaining contractual principal maturities. For U.S. Treasury securities, and U.S. agency debentures and foreign government debt securities, the expected maturity is the actual contractual maturity of the notes. 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 and prepayments in lower interest rate environments.
  September 30, 2019
(Dollars in thousands) Total One Year
or Less		 After One
Year to
Five Years		 After Five
Years to
Ten Years		 After
Ten Years
U.S. Treasury securities $6,334,848
 $2,007,267
 $1,710,316
 $2,617,265
 $—
U.S. agency debentures 100,000
 —
 —
 100,000
 —
Foreign government debt securities 8,847
 —
 8,847
 —
 —
Residential mortgage-backed securities:          
Agency-issued mortgage-backed securities 4,148,700
 —
 —
 —
 4,148,700
Agency-issued collateralized mortgage obligations—fixed rate 1,679,664
 —
 —
 3,131
 1,676,533
Agency-issued commercial mortgage-backed securities 594,798
 —
 —
 300,208
 294,590
Total $12,866,857
 $2,007,267
 $1,719,163
 $3,020,604
 $6,119,823
  September 30, 2017
(Dollars in thousands) Total One Year
or Less		 After One
Year to
Five Years		 After Five
Years to
Ten Years		 After
Ten Years
U.S. Treasury securities $7,498,340
 $2,592,486
 $4,905,854
 $—
 $—
U.S. agency debentures 1,676,169
 314,852
 1,361,317
 —
 —
Residential mortgage-backed securities:          
Agency-issued collateralized mortgage obligations—fixed rate
 3,012,695
 —
 —
 487,285
 2,525,410
Agency-issued collateralized mortgage obligations—variable rate
 395,880
 —
 —
 —
 395,880
Total $12,583,084
 $2,907,338
 $6,267,171
 $487,285
 $2,921,290

Held-to-Maturity Securities


The components of our held-to-maturity investment securities portfolio at September 30, 20172019 and December 31, 20162018 are as follows:
 September 30, 2017 September 30, 2019
(Dollars in thousands) 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 Fair Value 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 Fair Value
Held-to-maturity securities, at cost:                
U.S. agency debentures (1) $660,193
 $6,775
 $(1,080) $665,888
 $518,841
 $10,528
 $(22) $529,347
Residential mortgage-backed securities:                
Agency-issued mortgage-backed securities 5,164,701
 15,764
 (17,116) 5,163,349
 7,376,458
 135,996
 (4,190) 7,508,264
Agency-issued collateralized mortgage obligations—fixed rate 3,025,421
 707
 (27,268) 2,998,860
 1,754,498
 2,254
 (10,094) 1,746,658
Agency-issued collateralized mortgage obligations—variable rate 269,495
 704
 (37) 270,162
 188,120
 105
 (373) 187,852
Agency-issued commercial mortgage-backed securities 1,554,220
 2,025
 (11,697) 1,544,548
 2,826,344
 75,422
 (3,046) 2,898,720
Municipal bonds and notes 380,976
 1,506
 (1,874) 380,608
 1,742,817
 86,112
 (968) 1,827,961
Total held-to-maturity securities $11,055,006
 $27,481
 $(59,072) $11,023,415
 $14,407,078
 $310,417
 $(18,693) $14,698,802
 
(1)Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States.
  December 31, 2016
(Dollars in thousands) Amortized
Cost		 Unrealized
Gains		 Unrealized
Losses		 Fair Value
Held-to-maturity securities, at cost:        
U.S. agency debentures (1) $622,445
 $7,840
 $(1,198) $629,087
Residential mortgage-backed securities:        
Agency-issued mortgage-backed securities 2,896,179
 6,919
 (24,526) 2,878,572
Agency-issued collateralized mortgage obligations—fixed rate 3,362,598
 788
 (31,274) 3,332,112
Agency-issued collateralized mortgage obligations—variable rate 312,665
 176
 (1,339) 311,502
Agency-issued commercial mortgage-backed securities 1,151,363
 1,237
 (7,638) 1,144,962
Municipal bonds and notes 81,748
 8
 (1,853) 79,903
Total held-to-maturity securities $8,426,998
 $16,968
 $(67,828) $8,376,138
(1)Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States.

  December 31, 2018
(Dollars in thousands) Amortized
Cost		 Unrealized
Gains		 Unrealized
Losses		 Fair Value
Held-to-maturity securities, at cost:        
U.S. agency debentures (1) $640,990
 $2,148
 $(4,850) $638,288
Residential mortgage-backed securities:        
Agency-issued mortgage-backed securities 8,103,638
 5,011
 (157,767) 7,950,882
Agency-issued collateralized mortgage obligations—fixed rate 2,183,204
 —
 (62,272) 2,120,932
Agency-issued collateralized mortgage obligations—variable rate 214,483
 608
 (14) 215,077
Agency-issued commercial mortgage-backed securities 2,769,706
 6,969
 (64,374) 2,712,301
Municipal bonds and notes 1,575,421
 2,304
 (26,969) 1,550,756
Total held-to-maturity securities $15,487,442
 $17,040
 $(316,246) $15,188,236
(1)Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States.

The following tables summarize our unrealized losses on our held-to-maturity securities portfolio into categories of less than 12 months and 12 months or longer as of September 30, 20172019 and December 31, 2016:2018:
 September 30, 2017 September 30, 2019
 Less than 12 months 12 months or longer Total Less than 12 months 12 months or longer (1) Total
(Dollars in thousands) 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
Held-to-maturity securities:                        
U.S. agency debentures $101,211
 $(1,080) $—
 $—
 $101,211
 $(1,080) $50,131
 $(22) $—
 $—
 $50,131
 $(22)
Residential mortgage-backed securities:                        
Agency-issued mortgage-backed securities 3,071,006
 (16,251) 25,004
 (865) 3,096,010
 (17,116) 962,390
 (2,520) 197,721
 (1,670) 1,160,111
 (4,190)
Agency-issued collateralized mortgage obligations—fixed rate 2,661,682
 (21,842) 235,320
 (5,426) 2,897,002
 (27,268) 244,020
 (1,226) 1,220,827
 (8,868) 1,464,847
 (10,094)
Agency-issued collateralized mortgage obligations—variable rate —
 —
 10,321
 (37) 10,321
 (37) 149,910
 (367) 4,856
 (6) 154,766
 (373)
Agency-issued commercial mortgage-backed securities 1,210,351
 (10,615) 82,151
 (1,082) 1,292,502
 (11,697) 86,087
 (423) 456,168
 (2,623) 542,255
 (3,046)
Municipal bonds and notes 111,207
 (896) 29,606
 (978) 140,813
 (1,874) 106,335
 (966) 1,329
 (2) 107,664
 (968)
Total temporarily impaired securities (1) $7,155,457
 $(50,684) $382,402
 $(8,388) $7,537,859
 $(59,072) $1,598,873
 $(5,524) $1,880,901
 $(13,169) $3,479,774
 $(18,693)
 
(1)
As of September 30, 20172019, we identified a total of 547310 investments that were in unrealized loss positions, of which 84164 investments totaling$382.4 million1.9 billion with unrealized losses of $8.413.2 million have been in an impaired position for a period of time greater than 12 months. As of September 30, 20172019, we do not intend to sell any of our impaired securities prior to recovery of our adjusted cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our adjusted cost basis, which is consistent with our classification of these securities. Based on our analysis as of September 30, 20172019, we deem all impairments to be temporary. Market valuations and impairment analyses on assets in the held-to-maturity securities portfolio are reviewed and monitored on a quarterly basis.

 December 31, 2016 December 31, 2018
 Less than 12 months 12 months or longer Total Less than 12 months 12 months or longer (1) Total
(Dollars in thousands) Fair Value of
Investments		 Unrealized
Losses		 Fair Value of
Investments		 Unrealized
Losses		 Fair Value of
Investments		 Unrealized
Losses		 Fair Value of
Investments		 Unrealized
Losses		 Fair Value of
Investments		 Unrealized
Losses		 Fair Value of
Investments		 Unrealized
Losses
Held-to-maturity securities:                        
U.S. agency debentures $118,721
 $(1,198) $—
 $—
 $118,721
 $(1,198) $291,432
 $(2,915) $66,624
 $(1,935) $358,056
 $(4,850)
Residential mortgage-backed securities:                        
Agency-issued mortgage-backed securities 1,801,861
 (23,558) 21,917
 (968) 1,823,778
 (24,526) 2,493,156
 (34,956) 3,972,690
 (122,811) 6,465,846
 (157,767)
Agency-issued collateralized mortgage obligations—fixed rate 2,729,889
 (25,723) 228,220
 (5,551) 2,958,109
 (31,274) 16,952
 (109) 2,103,980
 (62,163) 2,120,932
 (62,272)
Agency-issued collateralized mortgage obligations—variable rate 251,012
 (1,339) —
 —
 251,012
 (1,339) 3,364
 (1) 8,101
 (13) 11,465
 (14)
Agency-issued commercial mortgage-backed securities 999,440
 (7,494) 14,934
 (144) 1,014,374
 (7,638) 177,697
 (1,580) 1,600,277
 (62,794) 1,777,974
 (64,374)
Municipal bonds and notes 42,267
 (877) 30,586
 (976) 72,853
 (1,853) 868,751
 (17,075) 340,413
 (9,894) 1,209,164
 (26,969)
Total temporarily impaired securities (1) $5,943,190
 $(60,189) $295,657
 $(7,639) $6,238,847
 $(67,828) $3,851,352
 $(56,636) $8,092,085
 $(259,610) $11,943,437
 $(316,246)
 
(1)
As of December 31, 20162018, we identified a total of 4621,244 investments that were in unrealized loss positions, of which 85695 investments totaling $295.7 million8.1 billion with unrealized losses of $7.6259.6 million have been in an impaired position for a period of time greater than 12 months.

The following table summarizes the remaining contractual principal maturities on fixed income investment securities classified as held-to-maturity as of September 30, 2017.2019. For U.S. agency debentures, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for certain 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 held-to-maturity 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 and prepayments in lower interest rate environments.
  September 30, 2019
  Total 
One Year
or Less
 
After One Year to
Five Years
 
After Five Years to
Ten Years
 
After
Ten Years
(Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value
U.S. agency debentures $518,841
 $529,347
 $—
 $—
 $123,205
 $124,646
 $395,636
 $404,701
 $—
 $—
Residential mortgage-backed securities:                    
Agency-issued mortgage-backed securities 7,376,458
 7,508,264
 —
 —
 94,514
 94,745
 771,670
 769,409
 6,510,274
 6,644,110
Agency-issued collateralized mortgage obligations—fixed rate
 1,754,498
 1,746,658
 —
 —
 —
 —
 635,235
 630,472
 1,119,263
 1,116,186
Agency-issued collateralized mortgage obligations—variable rate
 188,120
 187,852
 —
 —
 —
 —
 —
 —
 188,120
 187,852
Agency-issued commercial mortgage-backed securities 2,826,344
 2,898,720
 —
 —
 —
 —
 —
 —
 2,826,344
 2,898,720
Municipal bonds and notes 1,742,817
 1,827,961
 14,002
 14,007
 82,708
 83,714
 369,911
 385,458
 1,276,196
 1,344,782
Total $14,407,078
 $14,698,802
 $14,002
 $14,007
 $300,427
 $303,105
 $2,172,452
 $2,190,040
 $11,920,197
 $12,191,650

  September 30, 2017
  Total 
One Year
or Less
 
After One Year to
Five Years
 
After Five Years to
Ten Years
 
After
Ten Years
(Dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value
U.S. agency debentures $660,193
 $665,888
 $—
 $—
 $102,581
 $103,398
 $557,612
 $562,490
 $—
 $—
Residential mortgage-backed securities:                    
Agency-issued mortgage-backed securities 5,164,701
 5,163,349
 738
 731
 255,275
 255,128
 61,538
 61,270
 4,847,150
 4,846,220
Agency-issued collateralized mortgage obligations—fixed rate
 3,025,421
 2,998,860
 —
 —
 —
 —
 437,865
 431,500
 2,587,556
 2,567,360
Agency-issued collateralized mortgage obligations—variable rate
 269,495
 270,162
 —
 —
 —
 —
 —
 —
 269,495
 270,162
Agency-issued commercial mortgage-backed securities 1,554,220
 1,544,548
 —
 —
 —
 —
 —
 —
 1,554,220
 1,544,548
Municipal bonds and notes 380,976
 380,608
 7,560
 7,540
 71,631
 71,529
 159,509
 159,377
 142,276
 142,162
Total $11,055,006
 $11,023,415
 $8,298
 $8,271
 $429,487
 $430,055
 $1,216,524
 $1,214,637
 $9,400,697
 $9,370,452



Non-marketable and Other Equity Securities
The major components of our non-marketable and other investmentequity securities portfolio at September 30, 20172019 and December 31, 20162018 are as follows:
(Dollars in thousands) September 30, 2017 December 31, 2016
Non-marketable and other securities:    
Non-marketable securities (fair value accounting):    
Venture capital and private equity fund investments (1) $128,768
 $141,649
Other venture capital investments (2) 1,897
 2,040
Other securities (fair value accounting) (3) 392
 753
Non-marketable securities (equity method accounting) (4):    
Venture capital and private equity fund investments 87,218
 82,823
Debt funds 17,889
 17,020
Other investments 113,478
 123,514
Non-marketable securities (cost method accounting):    
Venture capital and private equity fund investments (5) 102,956
 114,606
Other investments 26,835
 27,700
Investments in qualified affordable housing projects, net (6) 148,036
 112,447
Total non-marketable and other securities $627,469
 $622,552
(Dollars in thousands) September 30, 2019 December 31, 2018
Non-marketable and other equity securities:    
Non-marketable securities (fair value accounting):    
Consolidated venture capital and private equity fund investments (1) $92,010
 $118,333
Unconsolidated venture capital and private equity fund investments (2) 181,550
 201,098
Other investments without a readily determinable fair value (3) 43,524
 25,668
Other equity securities in public companies (fair value accounting) (4) 56,081
 20,398
Non-marketable securities (equity method accounting) (5):    
Venture capital and private equity fund investments 196,425
 129,485
Debt funds 7,153
 5,826
Other investments 154,323
 121,721
Investments in qualified affordable housing projects, net (6) 419,028
 318,575
Total non-marketable and other equity securities $1,150,094
 $941,104
 
(1)
The following table shows the amounts of venture capital and private equity fund investments held by the following consolidated funds and our ownership percentage of each fund at September 30, 20172019 and December 31, 20162018 (fair value accounting):
  September 30, 2019 December 31, 2018
(Dollars in thousands) Amount Ownership % Amount Ownership %
Strategic Investors Fund, LP $6,829
 12.6% $12,452
 12.6%
Capital Preferred Return Fund, LP 46,691
 20.0
 53,957
 20.0
Growth Partners, LP 38,356
 33.0
 50,845
 33.0
CP I, LP 134
 10.7
 1,079
 10.7
Total consolidated venture capital and private equity fund investments $92,010
   $118,333
  

  September 30, 2017 December 31, 2016
(Dollars in thousands) Amount Ownership % Amount Ownership %
Strategic Investors Fund, LP $15,624
 12.6% $18,459
 12.6%
Capital Preferred Return Fund, LP 55,685
 20.0
 57,627
 20.0
Growth Partners, LP 57,459
 33.0
 59,718
 33.0
Other private equity fund (i) —
 —
 5,845
 58.2
Total venture capital and private equity fund investments $128,768
   $141,649
  
(i)
At December 31, 2016, we had a direct ownership interest of 41.5 percent in the other private equity fund and an indirect ownership interest of 12.6 percent through our ownership interest of Growth Partners, LP and an indirect ownership interest of 4.1 percent through our ownership interest of Capital Preferred Return Fund, LP. On January 3, 2017, the other private equity fund was closed resulting in an immaterial impact on the Company's financial statements for the nine months ended September 30, 2017.

(2)
The following table shows the amounts of other venture capital investments held by the following consolidated funds and our ownership percentage at September 30, 2017 and December 31, 2016 (faircarrying value accounting):
  September 30, 2017 December 31, 2016
(Dollars in thousands) Amount Ownership % Amount Ownership %
CP I, LP $1,897
 10.7% $2,040
 10.7%
Total other venture capital investments $1,897
   $2,040
  

(3)Investments classified as other securities (fair value accounting) represent direct equityrepresents investments in public companies held by our consolidated funds.

(4)
The following table shows the carrying value211 and our ownership percentage of each investment at September 30, 2017 and December 31, 2016 (equity method accounting):
  September 30, 2017 December 31, 2016
(Dollars in thousands) Amount Ownership % Amount Ownership %
Venture capital and private equity fund investments:        
Strategic Investors Fund II, LP $6,084
 8.6% $7,720
 8.6%
Strategic Investors Fund III, LP 19,292
 5.9
 20,449
 5.9
Strategic Investors Fund IV, LP 25,507
 5.0
 24,530
 5.0
Strategic Investors Fund V funds 14,987
 Various
 12,029
 Various
CP II, LP (i) 6,704
 5.1
 7,798
 5.1
Other venture capital and private equity fund investments 14,644
 Various
 10,297
 Various
 Total venture capital and private equity fund investments $87,218
   $82,823
  
Debt funds:        
Gold Hill Capital 2008, LP (ii) $15,381
 15.5% $13,557
 15.5%
Other debt funds 2,508
 Various
 3,463
 Various
Total debt funds $17,889
   $17,020
  
Other investments:        
SPD Silicon Valley Bank Co., Ltd. $75,511
 50.0% $75,296
 50.0%
Other investments 37,967
 Various
 48,218
 Various
Total other investments $113,478
   $123,514
  

(i)
Our ownership includes direct ownership of 1.3 percent and indirect ownership interest of 3.8 percent through our investments in Strategic Investors Fund II, LP.
(ii)
Our ownership includes direct ownership interest of 11.5 percent in the fund and an indirect interest in the fund through our investment in Gold Hill Capital 2008, LLC of 4.0 percent.

(5)
Represents investments in 237 and 252213 funds (primarily venture capital funds) at September 30, 20172019 and December 31, 20162018, respectively, where our ownership interest is typically 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 activities and financial policies. The carrying value, and estimated fair value, of theseWe carry our unconsolidated venture capital and private equity fund investments (cost method accounting) was $103.0 million and $206.5 million, respectively, as of September 30, 2017. The carrying value, and estimatedat fair value based on the fund investments' net asset values per share as obtained from the general partners of these venture capitalthe investments. For each fund investment, we adjust the net asset value per share for differences between our measurement date and private equitythe date of the fund investments (cost method accounting) was $114.6 millioninvestment’s net asset value by using the most recently available financial information from the investee general partner, for example June 30th for our September 30th consolidated financial statements, adjusted for any contributions paid, distributions received from the investment, and $221.7 million, respectively, as of December 31, 2016.significant fund transactions or market events during the reporting period.
(3)These investments include direct equity investments in private companies. The carrying value is based on the price at which the investment was acquired plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies, financing transactions subsequent to the acquisition of the investment and a discount for certain investments that have lock-up restrictions or other features that indicate a discount to fair value is warranted.
The following table shows the changes to the carrying amount of other investments without a readily determinable fair value for the nine months endedSeptember 30, 2019:
(Dollars in thousands) Nine months ended September 30, 2019 Cumulative Adjustments
Measurement alternative:    
Carrying value at September 30, 2019 $43,524
  
Carrying value adjustments:    
Impairment $—
 $—
Upward changes for observable prices 2,605
 3,104
Downward changes for observable prices (2,670) (4,285)
(4)Investments classified as other equity securities (fair value accounting) represent shares held in public companies as a result of exercising public equity warrant assets and direct equity investments in public companies held by our consolidated funds. Changes in equity securities measured at fair value are recognized through net income.


(5)
The following table shows the carrying value and our ownership percentage of each investment at September 30, 2019 and December 31, 2018 (equity method accounting):
  September 30, 2019 December 31, 2018
(Dollars in thousands) Amount Ownership % Amount Ownership %
Venture capital and private equity fund investments:        
Strategic Investors Fund II, LP $4,501
 8.6% $4,670
 8.6%
Strategic Investors Fund III, LP 15,279
 5.9
 17,396
 5.9
Strategic Investors Fund IV, LP 28,549
 5.0
 28,974
 5.0
Strategic Investors Fund V funds 37,233
 Various
 28,189
 Various
CP II, LP (i) 7,333
 5.1
 7,122
 5.1
Other venture capital and private equity fund investments 103,530
 Various
 43,134
 Various
 Total venture capital and private equity fund investments $196,425
   $129,485
  
Debt funds:        
Gold Hill Capital 2008, LP (ii) $5,323
 15.5% $3,901
 15.5%
Other debt funds 1,830
 Various
 1,925
 Various
Total debt funds $7,153
   $5,826
  
Other investments:        
SPD Silicon Valley Bank Co., Ltd. $73,918
 50.0% $76,412
 50.0%
Other investments 80,405
 Various
 45,309
 Various
Total other investments $154,323
   $121,721
  

(i)
Our ownership includes direct ownership interest of 1.3 percent and indirect ownership interest of 3.8 percent through our investments in Strategic Investors Fund II, LP.
(ii)
Our ownership includes direct ownership interest of 11.5 percent in the fund and an indirect interest in the fund through our investment in Gold Hill Capital 2008, LLC of 4.0 percent.

(6)
The following table presents the balances of our investments in qualified affordable housing projects and related unfunded commitments included as a component of “other“Other liabilities” on our consolidated balance sheets at September 30, 20172019 and December 31, 20162018:
(Dollars in thousands) September 30, 2017 December 31, 2016 September 30, 2019 December 31, 2018
Investments in qualified affordable housing projects, net $148,036
 $112,447
 $419,028
 $318,575
Other liabilities 90,974
 58,095
 276,940
 205,685


The following table presents other information relating to our investments in qualified affordable housing projects for the three and nine months ended September 30, 20172019 and 2016:2018:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017
2016 2017 2016 2019
2018 2019 2018
Tax credits and other tax benefits recognized $4,539
 $3,995
 $13,199
 $12,127
 $8,705
 $6,283
 $28,950
 $16,912
Amortization expense included in provision for income taxes (i) 3,533
 2,556
 10,154
 9,746
 6,042
 4,773
 20,436
 14,269
 
(i)All investments are amortized using the proportional amortization method and amortization expense is included in the provision for income taxes.

The following table presents the components ofnet gains and losses (realizedon non-marketable and unrealized) on investmentother equity securities for the three and nine months ended September 30, 20172019 and 2016:
2018 as recorded in the line item “Gains on investment securities, net," a component of noninterest income:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016 2019 2018 2019 2018
Gross gains on investment securities:        
Available-for-sale securities, at fair value (1) $38
 $84
 $1,131
 $14,238
Net gains (losses) on non-marketable and other equity securities:        
Non-marketable securities (fair value accounting):                
Venture capital and private equity fund investments 5,308
 6,030
 24,788
 16,377
Other venture capital investments —
 4
 —
 17
Other securities (fair value accounting) 569
 271
 841
 639
Consolidated venture capital and private equity fund investments $4,555
 $2,928
 $22,674
 $18,971
Unconsolidated venture capital and private equity fund investments 8,530
 6,240
 26,688
 37,095
Other investments without a readily determinable fair value (471) 2,509
 4,701
 4,310
Other equity securities in public companies (fair value accounting) (11,979) 4,407
 106
 (17,786)
Non-marketable securities (equity method accounting):                
Venture capital and private equity fund investments 4,542
 5,679
 11,245
 9,351
 29,049
 11,341
 54,189
 30,122
Debt funds 4,222
 295
 5,388
 1,259
 187
 1,473
 1,529
 (100)
Other investments 215
 7,487
 1,736
 11,528
 (22) 3,295
 593
 4,753
Non-marketable securities (cost method accounting):        
Venture capital and private equity fund investments 4,956
 6,328
 14,985
 14,180
Other investments 2
 150
 3,611
 163
Total gross gains on investment securities 19,852
 26,328
 63,725
 67,752
Gross losses on investment securities:        
Available-for-sale securities, at fair value (1) (139) (99) (747) (2,671)
Non-marketable securities (fair value accounting):        
Venture capital and private equity fund investments (835) (2,122) (4,139) (15,958)
Other venture capital investments —
 —
 (143) (38)
Other securities (fair value accounting) (182) (100) (561) (507)
Non-marketable securities (equity method accounting):        
Venture capital and private equity fund investments (223) (444) (535) (4,465)
Debt funds (1,777) (129) (2,692) (458)
Other investments (1,148) (205) (4,899) (1,161)
Non-marketable securities (cost method accounting):        
Venture capital and private equity fund investments (2) (259) (51) (914) (492)
Other investments (51) —
 (257) (238)
Total gross losses on investment securities (4,614) (3,150) (14,887) (25,988)
Gains on investment securities, net $15,238
 $23,178
 $48,838
 $41,764
Total net gains on non-marketable and other equity securities $29,849
 $32,193
 $110,480
 $77,365
Less: realized net gains (losses) on sales of securities (1) 277
 357
 12,637
 (20,806)
Net gains on non-marketable and other equity securities still held $29,572
 $31,836
 $97,843
 $98,171
 
(1)Includes realizedRealized gains (losses) onand losses include sales of available-for-salenon-marketable and other equity securities that are recognized in the income statement. Unrealized gains (losses) on available-for-sale fixed income and equity securities are recognized in other comprehensive income. The cost basis of available-for-sale securities sold is determined on a specific identification basis.
(2)
Forsecurities. No OTTI was recorded during the three months ended September 30, 2017and2016, includes OTTI losses of $0.3 million from the declines in value for 8 of the 237 investments and $0.1 million from the declines in value for 5 of the 255 investments, respectively. For the nine months ended September 30, 20172019 and 2016, includes OTTI losses of $0.9 million for the declines in value for 21 of the 237 investments and $0.5 million for the declines in value for 21 of the 255 investments. We concluded that any declines in value for the remaining investments were temporary, and as such, no OTTI was required to be recognized.
2018.

7.8.Loans, Allowance for Loan Losses and Allowance for Unfunded Credit Commitments
We serve a variety of commercial clients in the technology, life science/healthcare, private equity/venture capital and premium wine industries. Our technology clients generally tend to be in the industries of hardware (semiconductors, communications, data, storage, and electronics), software/internet (such as infrastructure software, applications, software services, digital content and advertising technology), and energy and resource innovation (“ERI”). Because of the diverse nature of ERI products and services, for our loan-related reporting purposes, ERI-related loans are reported under our hardware, software/internet, life science/healthcare and other commercial loan categories, as applicable. Our life science/healthcare clients primarily tend to be in the industries of biotechnology, medical devices, healthcare information technology and healthcare services. Loans made to private equity/venture capital 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 consumer loans through SVB Private Bank and provide real estate secured loans to eligible employees through our EHOP. Our private banking clients are primarily private equity/venture capital professionals and executive leaders in the innovation companies they support. 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 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 $141$165 million and $125$173 million at September 30, 20172019 and December 31, 2016,2018, respectively, is presented in the following table:

(Dollars in thousands) September 30, 2017 December 31, 2016 September 30, 2019 December 31, 2018
Commercial loans:        
Software/internet $5,793,637
 $5,627,031
 $6,009,518
 $6,154,755
Hardware 1,113,509
 1,180,398
 1,357,617
 1,234,557
Private equity/venture capital 9,623,824
 7,691,148
 16,293,556
 14,110,560
Life science/healthcare 1,725,728
 1,853,004
 2,381,822
 2,385,612
Premium wine 211,716
 200,156
 234,555
 249,266
Other 384,039
 393,551
 385,013
 321,978
Total commercial loans 18,852,453
 16,945,288
 26,662,081
 24,456,728
Real estate secured loans:        
Premium wine (1) 712,400
 678,166
 749,259
 710,397
Consumer loans (2) 2,206,501
 1,926,968
 3,015,396
 2,612,971
Other 42,504
 43,487
 39,332
 40,435
Total real estate secured loans 2,961,405
 2,648,621
 3,803,987
 3,363,803
Construction loans 75,242
 64,671
 116,854
 97,077
Consumer loans 300,227
 241,364
 481,072
 420,672
Total loans, net of unearned income (3) $22,189,327
 $19,899,944
 $31,063,994
 $28,338,280
 
(1)
Included in our premium wine portfolio are gross construction loans of $10496 million and $11099 million at September 30, 20172019 and December 31, 20162018, respectively.
(2)
Consumer loans secured by real estate at September 30, 20172019 and December 31, 20162018 were comprised of the following:
(Dollars in thousands) September 30, 2019 December 31, 2018
Loans for personal residence $2,577,623
 $2,251,292
Loans to eligible employees 380,677
 290,194
Home equity lines of credit 57,096
 71,485
Consumer loans secured by real estate $3,015,396
 $2,612,971
(Dollars in thousands) September 30, 2017 December 31, 2016
Loans for personal residence $1,908,319
 $1,655,349
Loans to eligible employees 232,707
 199,291
Home equity lines of credit 65,475
 72,328
Consumer loans secured by real estate $2,206,501
 $1,926,968

(3)
Included within our total loan portfolio are credit card loans of $273396 million and $224335 million at September 30, 20172019 and December 31, 20162018, respectively.

Credit Quality
The composition of loans, net of unearned income of $141$165 million and $125$173 million at September 30, 20172019 and December 31, 2016,2018, respectively, broken out by portfolio segment and class of financing receivable, is as follows:
(Dollars in thousands) September 30, 2019 December 31, 2018
Commercial loans:    
Software/internet $6,009,518
 $6,154,755
Hardware 1,357,617
 1,234,557
Private equity/venture capital 16,293,556
 14,110,560
Life science/healthcare 2,381,822
 2,385,612
Premium wine 983,814
 959,663
Other 541,199
 459,490
Total commercial loans 27,567,526
 25,304,637
Consumer loans:    
Real estate secured loans 3,015,396
 2,612,971
Other consumer loans 481,072
 420,672
Total consumer loans 3,496,468
 3,033,643
Total loans, net of unearned income $31,063,994
 $28,338,280
(Dollars in thousands) September 30, 2017 December 31, 2016
Commercial loans:    
Software/internet $5,793,637
 $5,627,031
Hardware 1,113,509
 1,180,398
Private equity/venture capital 9,623,824
 7,691,148
Life science/healthcare 1,725,728
 1,853,004
Premium wine 924,116
 878,322
Other 501,785
 501,709
Total commercial loans 19,682,599
 17,731,612
Consumer loans:    
Real estate secured loans 2,206,501
 1,926,968
Other consumer loans 300,227
 241,364
Total consumer loans 2,506,728
 2,168,332
Total loans, net of unearned income $22,189,327
 $19,899,944


The following table summarizes the aging of our gross loans, broken out by portfolio segment and class of financing receivable as of September 30, 20172019 and December 31, 20162018:
(Dollars in thousands) 
30 - 59
  Days Past  
Due
 
60 - 89
  Days Past  
Due
 
Equal to or Greater
Than 90
  Days Past  
Due
 
  Total Past  
Due
 Current   
  Loans Past Due  
90 Days or
More Still
Accruing
Interest
September 30, 2019:            
Commercial loans:            
Software/internet $11,314
 $6,760
 $806
 $18,880
 $5,967,307
 $806
Hardware 2,934
 342
 —
 3,276
 1,354,693
 —
Private equity/venture capital 21,493
 92
 —
 21,585
 16,288,499
 —
Life science/healthcare 6,645
 453
 58
 7,156
 2,400,516
 58
Premium wine 5,846
 —
 —
 5,846
 976,903
 —
Other 13
 8,050
 —
 8,063
 546,943
 —
Total commercial loans 48,245
 15,697
 864
 64,806
 27,534,861
 864
Consumer loans:            
Real estate secured loans 599
 2,117
 —
 2,716
 3,002,256
 —
Other consumer loans 147
 —
 —
 147
 481,277
 —
Total consumer loans 746
 2,117
 —
 2,863
 3,483,533
 —
Total gross loans excluding impaired loans 48,991
 17,814
 864
 67,669
 31,018,394
 864
Impaired loans 2,000
 39,135
 3,059
 44,194
 98,746
 —
Total gross loans $50,991
 $56,949
 $3,923
 $111,863
 $31,117,140
 $864
December 31, 2018:            
Commercial loans:            
Software/internet $28,134
 $6,944
 $378
 $35,456
 $6,059,672
 $378
Hardware 300
 34
 4
 338
 1,233,956
 4
Private equity/venture capital 59,481
 11
 —
 59,492
 14,054,940
 —
Life science/healthcare 16,082
 817
 19
 16,918
 2,410,091
 19
Premium wine 2,953
 14
 —
 2,967
 956,285
 —
Other 7,391
 163
 1
 7,555
 477,442
 1
Total commercial loans 114,341
 7,983
 402
 122,726
 25,192,386
 402
Consumer loans:            
Real estate secured loans 3,598
 1,750
 1,562
 6,910
 2,598,496
 1,562
Other consumer loans 361
 —
 —
 361
 420,359
 —
Total consumer loans 3,959
 1,750
 1,562
 7,271
 3,018,855
 1,562
Total gross loans excluding impaired loans 118,300
 9,733
 1,964
 129,997
 28,211,241
 1,964
Impaired loans 2,843
 1,181
 25,092
 29,116
 140,958
 —
Total gross loans $121,143
 $10,914
 $27,056
 $159,113
 $28,352,199
 $1,964
(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, 2017:            
Commercial loans:            
Software/internet $45,943
 $3,725
 $138
 $49,806
 $5,686,655
 $138
Hardware 273
 44
 626
 943
 1,080,341
 626
Private equity/venture capital 35,628
 34,369
 —
 69,997
 9,563,613
 —
Life science/healthcare 20,956
 —
 —
 20,956
 1,729,909
 —
Premium wine 3,521
 640
 —
 4,161
 916,451
 —
Other 7
 210
 —
 217
 512,891
 —
Total commercial loans 106,328
 38,988
 764
 146,080
 19,489,860
 764
Consumer loans:            
Real estate secured loans 1,748
 850
 —
 2,598
 2,199,978
 —
Other consumer loans 4,540
 —
 —
 4,540
 293,301
 —
Total consumer loans 6,288
 850
 —
 7,138
 2,493,279
 —
Total gross loans excluding impaired loans 112,616
 39,838
 764
 153,218
 21,983,139
 764
Impaired loans 591
 311
 26,456
 27,358
 166,114
 —
Total gross loans $113,207
 $40,149
 $27,220
 $180,576
 $22,149,253
 $764
December 31, 2016:            
Commercial loans:            
Software/internet

 $37,087
 $1,162
 $6
 $38,255
 $5,507,575
 $6
Hardware 5,591
 36
 27
 5,654
 1,118,065
 27
Private equity/venture capital 689
 —
 —
 689
 7,747,222
 —
Life science/healthcare 283
 551
 —
 834
 1,827,490
 —
Premium wine 1,003
 4
 —
 1,007
 876,185
 —
Other 34
 300
 —
 334
 504,021
 —
Total commercial loans 44,687
 2,053
 33
 46,773
 17,580,558
 33
Consumer loans:            
Real estate secured loans 850
 —
 —
 850
 1,923,266
 —
Other consumer loans 1,402
 —
 —
 1,402
 237,353
 —
Total consumer loans 2,252
 —
 —
 2,252
 2,160,619
 —
Total gross loans excluding impaired loans 46,939
 2,053
 33
 49,025
 19,741,177
 33
Impaired loans 34,636
 3,451
 11,180
 49,267
 185,193
 —
Total gross loans $81,575
 $5,504
 $11,213
 $98,292
 $19,926,370
 $33


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, 20172019 and December 31, 20162018:
(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, 2019:        
Commercial loans:        
Software/internet $55,892
 $25,588
 $81,480
 $91,126
Hardware 5,441
 4,482
 9,923
 10,175
Life science/healthcare 32,634
 6,887
 39,521
 76,305
Premium wine 393
 1,946
 2,339
 2,424
Other 2,589
 —
 2,589
 2,639
Total commercial loans 96,949
 38,903
 135,852
 182,669
Consumer loans:        
Real estate secured loans 3,315
 3,760
 7,075
 10,871
Other consumer loans 13
 —
 13
 13
Total consumer loans 3,328
 3,760
 7,088
 10,884
Total $100,277
 $42,663
 $142,940
 $193,553
December 31, 2018:        
Commercial loans:        
Software/internet $49,625
 $65,225
 $114,850
 $131,858
Hardware 1,256
 10,250
 11,506
 12,159
Private equity/venture capital —
 3,700
 3,700
 3,700
Life science/healthcare 17,791
 16,276
 34,067
 44,446
Premium wine —
 1,301
 1,301
 1,365
Other 411
 —
 411
 411
Total commercial loans 69,083
 96,752
 165,835
 193,939
Consumer loans:        
Real estate secured loans 3,919
 320
 4,239
 5,969
Other consumer loans —
 —
 —
 —
Total consumer loans 3,919
 320
 4,239
 5,969
Total $73,002
 $97,072
 $170,074
 $199,908

(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, 2017:        
Commercial loans:        
Software/internet

 $92,584
 $22,278
 $114,862
 $130,324
Hardware 39,728
 1,012
 40,740
 48,061
Private equity/venture capital 1,318
 —
 1,318
 1,321
Life science/healthcare 22,762
 5,573
 28,335
 33,481
Premium wine 4,677
 —
 4,677
 4,702
Other 298
 —
 298
 487
Total commercial loans 161,367
 28,863
 190,230
 218,376
Consumer loans:        
Real estate secured loans —
 1,301
 1,301
 1,379
Other consumer loans 1,941
 —
 1,941
 2,036
Total consumer loans 1,941
 1,301
 3,242
 3,415
Total $163,308
 $30,164
 $193,472
 $221,791
December 31, 2016:        
Commercial loans:        
Software/internet

 $121,658
 $1,090
 $122,748
 $129,648
Hardware 65,395
 —
 65,395
 70,683
Private equity/venture capital —
 —
 —
 —
Life science/healthcare 38,361
 —
 38,361
 41,130
Premium wine 3,187
 —
 3,187
 3,187
Other 867
 —
 867
 867
Total commercial loans 229,468
 1,090
 230,558
 245,515
Consumer loans:        
Real estate secured loans 1,504
 —
 1,504
 2,779
Other consumer loans 2,398
 —
 2,398
 2,398
Total consumer loans 3,902
 —
 3,902
 5,177
Total $233,370
 $1,090
 $234,460
 $250,692







The following tables summarize our average impaired loans and interest income recognized on impaired loans, broken out by portfolio segment and class of financing receivable for the three and nine months ended September 30, 20172019 and 2016:2018:
Three months ended September 30, Average impaired loans Interest income recognized on impaired loans
(Dollars in thousands) 2019
2018
2019
2018
Commercial loans:        
Software/internet $59,336
 $118,840
 $507
 $607
Hardware 10,617
 27,922
 70
 410
Private equity/venture capital —
 1,233
 —
 —
Life science/healthcare 42,242
 38,545
 192
 365
Premium wine 2,308
 2,384
 41
 35
Other 3,404
 —
 —
 —
Total commercial loans 117,907
 188,924
 810
 1,417
Consumer loans:        
Real estate secured loans 7,113
 4,330
 —
 4
Other consumer loans 9
 —
 —
 —
Total consumer loans 7,122
 4,330
 —
 4
Total average impaired loans $125,029
 $193,254
 $810
 $1,421

Three months ended September 30, Average impaired loans Interest income on impaired loans
Nine months ended September 30, Average impaired loans Interest income recognized on impaired loans
(Dollars in thousands) 2017 2016 2017 2016 2019 2018 2019 2018
Commercial loans:                
Software/internet

 $121,290
 $61,481
 $767
 $70
 $88,487
 $112,576
 $2,275
 $991
Hardware 35,932
 45,353
 419
 761
 14,188
 34,469
 417
 499
Private equity/venture capital 644
 —
 3
 —
 3,019
 536
 —
 —
Life science/healthcare 25,796
 55,558
 21
 128
 47,208
 27,671
 785
 376
Premium wine 3,625
 1,291
 39
 19
 1,538
 2,586
 141
 103
Other 348
 3,768
 —
 6
 1,541
 130
 —
 —
Total commercial loans 187,635
 167,451
 1,249
 984
 155,981
 177,968
 3,618
 1,969
Consumer loans:                
Real estate secured loans 1,306
 584
 24
 —
 7,379
 3,953
 54
 12
Other consumer loans 1,966
 1,324
 —
 6
 9
 477
 —
 —
Total consumer loans 3,272
 1,908
 24
 6
 7,388
 4,430
 54
 12
Total average impaired loans $190,907
 $169,359
 $1,273
 $990
 $163,369
 $182,398
 $3,672
 $1,981
Nine months ended September 30, Average impaired loans Interest income on impaired loans
(Dollars in thousands) 2017 2016 2017 2016
Commercial loans:        
Software/internet $122,527
 $84,005
 $1,646
 $133
Hardware 33,271
 31,000
 518
 1,467
Private equity/venture capital 443
 —
 8
 —
Life science/healthcare 33,590
 42,857
 60
 128
Premium wine 3,353
 1,834
 115
 54
Other 706
 4,369
 —
 21
Total commercial loans 193,890
 164,065
 2,347
 1,803
Consumer loans:        
Real estate secured loans 1,385
 282
 24
 —
Other consumer loans 1,931
 715
 —
 17
Total consumer loans 3,316
 997
 24
 17
Total average impaired loans $197,206
 $165,062
 $2,371
 $1,820



The following tables summarize the activity relating to our allowance for loan losses for the three and nine months ended September 30, 20172019 and 20162018, broken out by portfolio segment:
Three months ended September 30, 2017 Beginning Balance June 30, 2017 Charge-offs Recoveries 
Provision for
(Reduction of) Loan Losses
 Foreign Currency Translation Adjustments Ending Balance September 30, 2017
Three months ended September 30, 2019 Beginning Balance June 30, 2019 Charge-offs Recoveries 
Provision for
(Reduction of) Loan Losses
 Foreign Currency Translation Adjustments Ending Balance September 30, 2019
(Dollars in thousands) Beginning Balance June 30, 2017 Charge-offs Recoveries 
Provision for
(Reduction of) Loan Losses
 Foreign Currency Translation Adjustments Ending Balance September 30, 2017 
Commercial loans:             
Software/internet

 $92,937
 $(8,791) $426
 $7,241
 $199
 $92,012
 $101,998
 $(27,128) $988
 $22,679
 $(335) $98,202
Hardware 27,800
 (2,453) 115
 5,681
 156
 31,299
 26,932
 (331) 1,669
 (4,290) 64
 24,044
Private equity/venture capital 66,785
 —
 —
 10,142
 279
 77,206
 105,524
 —
 1,200
 1,834
 (27) 108,531
Life science/healthcare 27,730
 (1,083) 63
 (1,621) (45) 25,044
 40,206
 (9,361) 15
 13,836
 (204) 44,492
Premium wine 3,133
 —
 —
 362
 10
 3,505
 3,998
 —
 —
 46
 (1) 4,043
Other 4,135
 —
 947
 (931) (26) 4,125
 4,291
 —
 —
 (30) —
 4,261
Total commercial loans 222,520
 (12,327) 1,551
 20,874
 573
 233,191
 282,949
 (36,820) 3,872
 34,075
 (503) 283,573
Total consumer loans 13,976
 (11) 277
 1,535
 42
 15,819
 18,939
 —
 16
 1,910
 (28) 20,837
Total allowance for loan losses $236,496
 $(12,338) $1,828
 $22,409
 $615
 $249,010
 $301,888
 $(36,820) $3,888
 $35,985
 $(531) $304,410
Three months ended September 30, 2016 Beginning Balance June 30, 2016 Charge-offs Recoveries 
Provision for
(Reduction of) Loan Losses
 Foreign Currency Translation Adjustments Ending Balance September 30, 2016
Three months ended September 30, 2018 Beginning Balance June 30, 2018 Charge-offs Recoveries 
Provision for
(Reduction of) Loan Losses
 Foreign Currency Translation Adjustments Ending Balance September 30, 2018
(Dollars in thousands) Beginning Balance June 30, 2016 Charge-offs Recoveries 
Provision for
(Reduction of) Loan Losses
 Foreign Currency Translation Adjustments Ending Balance September 30, 2016 
Commercial loans:             
Software/internet $104,229
 $(16,526) $305
 $8,591
 $(261) $96,338
 $102,648
 $(6,304) $841
 $16,640
 $(335) $113,490
Hardware 23,871
 (3,058) 1,080
 11,048
 (336) 32,605
 34,695
 (12,697) 227
 (1,763) 36
 20,498
Private equity/venture capital 49,807
 —
 —
 2,203
 (67) 51,943
 89,409
 —
 3
 1,632
 (33) 91,011
Life science/healthcare 41,852
 (28) 361
 (5,298) 161
 37,048
 35,064
 (2,076) 189
 2,322
 (47) 35,452
Premium wine 4,810
 —
 —
 288
 (9) 5,089
 3,438
 —
 —
 125
 (3) 3,560
Other 9,480
 (5,004) 207
 142
 (4) 4,821
 2,896
 (1,128) 771
 118
 (2) 2,655
Total commercial loans 234,049
 (24,616) 1,953
 16,974
 (516) 227,844
 268,150
 (22,205) 2,031
 19,074
 (384) 266,666
Total consumer loans 10,674
 —
 131
 1,976
 (60) 12,721
 18,559
 —
 133
 362
 (7) 19,047
Total allowance for loan losses $244,723
 $(24,616) $2,084
 $18,950
 $(576) $240,565
 $286,709
 $(22,205) $2,164
 $19,436
 $(391) $285,713
Nine months ended September 30, 2017 Beginning Balance December 31, 2016 Charge-offs Recoveries Provision for
(Reduction of) Loan Losses		 Foreign Currency Translation Adjustments Ending Balance September 30, 2017
Nine months ended September 30, 2019 Beginning Balance December 31, 2018 Charge-offs Recoveries 
Provision for
Loan Losses
 Foreign Currency Translation Adjustments Ending Balance September 30, 2019
(Dollars in thousands) Beginning Balance December 31, 2016 Charge-offs Recoveries Provision for
(Reduction of) Loan Losses		 Foreign Currency Translation Adjustments Ending Balance September 30, 2017 
Commercial loans:             
Software/internet $97,388
 $(36,172) $2,833
 $27,487
 $476
 $92,012
 $103,567
 $(38,319) $8,758
 $24,667
 $(471) $98,202
Hardware 31,166
 (6,726) 459
 6,075
 325
 31,299
 19,725
 (3,576) 4,738
 2,962
 195
 24,044
Private equity/venture capital 50,299
 —
 —
 26,111
 796
 77,206
 98,581
 (2,047) 1,200
 11,305
 (508) 108,531
Life science/healthcare 25,446
 (7,493) 107
 6,906
 78
 25,044
 32,180
 (26,879) 196
 38,397
 598
 44,492
Premium wine 4,115
 —
 —
 (567) (43) 3,505
 3,355
 —
 —
 681
 7
 4,043
Other 4,768
 (1,047) 1,424
 (1,005) (15) 4,125
 3,558
 (415) —
 1,163
 (45) 4,261
Total commercial loans 213,182
 (51,438) 4,823
 65,007
 1,617
 233,191
 260,966
 (71,236) 14,892
 79,175
 (224) 283,573
Consumer loans 12,184
 (11) 1,332
 2,266
 48
 15,819
Total consumer loans 19,937
 (1,019) 241
 1,779
 (101) 20,837
Total allowance for loan losses $225,366
 $(51,449) $6,155
 $67,273
 $1,665
 $249,010
 $280,903
 $(72,255) $15,133
 $80,954
 $(325) $304,410



Nine months ended September 30, 2018 Beginning Balance December 31, 2017 Charge-offs Recoveries 
Provision for
(Reduction of) Loan Losses
 Foreign Currency Translation Adjustments Ending Balance September 30, 2018
(Dollars in thousands)      
Commercial loans:            
Software/internet $96,104
 $(26,377) $1,818
 $42,620
 $(675) $113,490
Hardware 27,614
 (16,111) 1,458
 7,788
 (251) 20,498
Private equity/venture capital 82,468
 (112) 13
 8,200
 442
 91,011
Life science/healthcare 24,924
 (2,940) 245
 13,829
 (606) 35,452
Premium wine 3,532
 —
 —
 42
 (14) 3,560
Other 3,941
 (2,391) 1,874
 (775) 6
 2,655
Total commercial loans 238,583
 (47,931) 5,408
 71,704
 (1,098) 266,666
Total consumer loans 16,441
 (289) 470
 2,384
 41
 19,047
Total allowance for loan losses $255,024
 $(48,220) $5,878
 $74,088
 $(1,057) $285,713
Nine months ended September 30, 2016 Beginning Balance December 31, 2015 Charge-offs Recoveries 
Provision for
(Reduction of) Loan Losses
 Foreign Currency Translation Adjustments Ending Balance September 30, 2016
(Dollars in thousands)      
Commercial loans:            
Software/internet $103,045
 $(56,742) $4,525
 $46,438
 $(928) $96,338
Hardware 23,085
 (6,559) 1,502
 15,010
 (433) 32,605
Private equity/venture capital 35,282
 —
 —
 17,008
 (347) 51,943
Life science/healthcare 36,576
 (3,029) 1,037
 3,252
 (788) 37,048
Premium wine 5,205
 —
 —
 (138) 22
 5,089
Other 4,252
 (5,034) 880
 4,573
 150
 4,821
Total commercial loans 207,445
 (71,364) 7,944
 86,143
 (2,324) 227,844
Consumer loans 10,168
 (102) 214
 2,481
 (40) 12,721
Total allowance for loan losses $217,613
 $(71,466) $8,158
 $88,624
 $(2,364) $240,565

The following table summarizes the activity relating to our allowance for unfunded credit commitments for the three and nine months ended September 30, 20172019 and 2016:2018:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017
2016 2017 2016 2019
2018 2019 2018
Beginning balance $47,000
 $34,889
 $45,265
 $34,415
Allowance for unfunded credit commitments, beginning balance $62,664
 $54,104
 $55,183
 $51,770
Provision for unfunded credit commitments 1,113
 1,054
 2,789
 1,601
 551
 (2,262) 8,079
 138
Foreign currency translation adjustments 59
 (19) 118
 (92) (107) (34) (154) (100)
Ending balance (1) $48,172
 $35,924
 $48,172

$35,924
Allowance for unfunded credit commitments, ending balance (1) $63,108
 $51,808
 $63,108

$51,808
 
(1)
See Note 12—16—“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 for additional disclosures related to our commitments to extend credit.
The following table summarizes the allowance for loan losses individually and collectively evaluated for impairment as of September 30, 20172019 and December 31, 20162018, broken out by portfolio segment:
  September 30, 2019 December 31, 2018
  
Individually Evaluated for  
Impairment
 
Collectively Evaluated for  
Impairment
 
Individually Evaluated for  
Impairment
 
Collectively Evaluated for  
Impairment
(Dollars in thousands) Allowance for loan losses Recorded investment in loans Allowance for loan losses Recorded investment in loans Allowance for loan losses Recorded investment in loans Allowance for loan losses Recorded investment in loans
Commercial loans:                
Software/internet $24,882
 $81,480
 $73,320
 $5,928,038
 $28,527
 $114,850
 $75,040
 $6,039,905
Hardware 5,230
 9,923
 18,814
 1,347,694
 1,253
 11,506
 18,472
 1,223,051
Private equity/venture capital —
 —
 108,531
 16,293,556
 —
 3,700
 98,581
 14,106,860
Life science/healthcare 22,161
 39,521
 22,331
 2,342,301
 7,484
 34,067
 24,696
 2,351,545
Premium wine 394
 2,339
 3,649
 981,475
 —
 1,301
 3,355
 958,362
Other 910
 2,589
 3,351
 538,610
 411
 411
 3,147
 459,079
Total commercial loans 53,577
 135,852
 229,996
 27,431,674
 37,675
 165,835
 223,291
 25,138,802
Total consumer loans 151
 7,088
 20,686
 3,489,380
 266
 4,239
 19,671
 3,029,404
Total $53,728
 $142,940
 $250,682
 $30,921,054
 $37,941
 $170,074
 $242,962
 $28,168,206

  September 30, 2017 December 31, 2016
  
Individually Evaluated for  
Impairment
 
Collectively Evaluated for  
Impairment
 
Individually Evaluated for  
Impairment
 
Collectively Evaluated for  
Impairment
(Dollars in thousands) Allowance for loan losses Recorded investment in loans Allowance for loan losses Recorded investment in loans Allowance for loan losses Recorded investment in loans Allowance for loan losses Recorded investment in loans
Commercial loans:                
Software/internet $26,981
 $114,862
 $65,031
 $5,678,775
 $28,245
 $122,748
 $69,143
 $5,504,283
Hardware 11,179
 40,740
 20,120
 1,072,769
 9,995
 65,395
 21,171
 1,115,003
Private equity/venture capital 536
 1,318
 76,670
 9,622,506
 —
 —
 50,299
 7,691,148
Life science/healthcare 9,843
 28,335
 15,201
 1,697,393
 8,709
 38,361
 16,737
 1,814,643
Premium wine 456
 4,677
 3,049
 919,439
 520
 3,187
 3,595
 875,135
Other 145
 298
 3,980
 501,487
 233
 867
 4,535
 500,842
Total commercial loans 49,140
 190,230
 184,051
 19,492,369
 47,702
 230,558
 165,480
 17,501,054
Total consumer loans 1,710
 3,242
 14,109
 2,503,486
 1,123
 3,902
 11,061
 2,164,430
Total $50,850
 $193,472
 $198,160
 $21,995,855
 $48,825
 $234,460
 $176,541
 $19,665,484



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”,“Pass," with loans risk-rated 1 being cash secured. Loans risk-rated 5 through 7 are performing loans,loans; however, we consider them as demonstrating higher risk, which requires more frequent review of the individual exposures; these translate to an internal rating of “Performing (Criticized)”." When a significant payment delay occurs onfull repayment of a criticized loan has been deemed improbable under the original contractual terms but full repayment remains probable overall, the loan is impaired. The loan is also considered for nonaccrual status if full repayment is determined to be improbable.a “Performing Impaired (Criticized)” loan. All of our nonaccrual loans are risk-rated 8 or 9 and are classified under the nonperforming impaired category. (For further description of nonaccrual loans, refer to Note 2—“Summary of Significant Accounting Policies” under Part II, Item 8 of our 20162018 Form 10-K). Loans 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 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, 20172019 and December 31, 2016:
2018:
(Dollars in thousands) Pass Performing (Criticized) Performing Impaired (Criticized) Nonperforming Impaired (Nonaccrual) Total Pass Performing (Criticized) Performing Impaired (Criticized) Nonperforming Impaired (Nonaccrual) Total
September 30, 2017:          
September 30, 2019:          
Commercial loans:                    
Software/internet $5,304,675
 $431,786
 $40,965
 $73,897
 $5,851,323
 $5,454,896
 $531,291
 $25,588
 $55,892
 $6,067,667
Hardware 1,015,947
 65,337
 21,886
 18,854
 1,122,024
 1,251,074
 106,895
 4,482
 5,441
 1,367,892
Private equity/venture capital 9,633,609
 1
 308
 1,010
 9,634,928
 16,310,056
 28
 —
 —
 16,310,084
Life science/healthcare 1,604,160
 146,705
 1,400
 26,935
 1,779,200
 2,258,771
 148,901
 6,879
 32,642
 2,447,193
Premium wine 877,235
 43,377
 4,241
 436
 925,289
 928,817
 53,932
 1,946
 393
 985,088
Other 493,856
 19,252
 —
 298
 513,406
 537,852
 17,154
 —
 2,589
 557,595
Total commercial loans 18,929,482
 706,458
 68,800
 121,430
 19,826,170
 26,741,466
 858,201
 38,895
 96,957
 27,735,519
Consumer loans:                    
Real estate secured loans 2,188,397
 14,179
 —
 1,301
 2,203,877
 2,994,694
 10,278
 —
 7,075
 3,012,047
Other consumer loans 297,388
 453
 —
 1,941
 299,782
 481,424
 —
 —
 13
 481,437
Total consumer loans 2,485,785
 14,632
 —
 3,242
 2,503,659
 3,476,118
 10,278
 —
 7,088
 3,493,484
Total gross loans $21,415,267
 $721,090
 $68,800
 $124,672
 $22,329,829
 $30,217,584
 $868,479
 $38,895
 $104,045
 $31,229,003
December 31, 2016:          
December 31, 2018:          
Commercial loans:                    
Software/internet $4,924,923
 $620,907
 $46,143
 $76,605
 $5,668,578
 $5,574,332
 $520,796
 $48,069
 $66,781
 $6,209,978
Hardware 985,889
 137,830
 58,814
 6,581
 1,189,114
 1,146,985
 87,309
 10,250
 1,256
 1,245,800
Private equity/venture capital 7,747,317
 594
 —
 —
 7,747,911
 14,098,281
 16,151
 —
 3,700
 14,118,132
Life science/healthcare 1,707,499
 120,825
 6,578
 31,783
 1,866,685
 2,291,356
 135,653
 16,276
 17,791
 2,461,076
Premium wine 865,354
 11,838
 2,696
 491
 880,379
 909,965
 49,287
 1,017
 284
 960,553
Other 480,845
 23,510
 464
 403
 505,222
 467,653
 17,344
 —
 411
 485,408
Total commercial loans 16,711,827
 915,504
 114,695
 115,863
 17,857,889
 24,488,572
 826,540
 75,612
 90,223
 25,480,947
Consumer loans:                    
Real estate secured loans 1,914,512
 9,604
 —
 1,504
 1,925,620
 2,584,261
 21,145
 320
 3,919
 2,609,645
Other consumer loans 238,256
 499
 786
 1,612
 241,153
 419,771
 949
 —
 —
 420,720
Total consumer loans 2,152,768
 10,103
 786
 3,116
 2,166,773
 3,004,032
 22,094
 320
 3,919
 3,030,365
Total gross loans $18,864,595
 $925,607
 $115,481
 $118,979
 $20,024,662
 $27,492,604
 $848,634
 $75,932
 $94,142
 $28,511,312




Troubled Debt Restructurings
As of September 30, 20172019, we had 1820 TDRs with a total carrying value of $87.4$105.2 million where concessions have been granted to borrowers experiencing financial difficulties, in an attempt to maximize collection. There were $1.2$3.8 million of unfunded commitments available for funding to the clients associated with these TDRs as of September 30, 2017.2019.
The following table summarizes our loans modified in TDRs, broken out by portfolio segment and class of financing receivables at September 30, 20172019 and December 31, 2016:2018:
(Dollars in thousands) September 30, 2019 December 31, 2018
Loans modified in TDRs:    
Commercial loans:    
Software/internet $80,704
 $58,089
Hardware —
 9,665
Life science/healthcare 18,689
 12,738
Premium wine 3,712
 2,883
Total commercial loans 103,105
 83,375
Consumer loans:    
Other consumer loans 2,140
 320
Total loans modified in TDRs $105,245
 $83,695
(Dollars in thousands) September 30, 2017 December 31, 2016
Loans modified in TDRs:    
Commercial loans:    
Software/internet $63,326
 $52,646
Hardware 395
 14,870
Life science/healthcare 20,015
 24,176
Premium wine 3,265
 3,194
Other —
 387
Total commercial loans 87,001
 95,273
Consumer loans:    
Other consumer loans 437
 786
Total $87,438
 $96,059

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, 20172019 and 2016:2018:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017
2016 2017 2016 2019
2018 2019 2018
Loans modified in TDRs during the period:                
Commercial loans:                
Software/internet $10,876
 $78
 $26,034
 $4,569
 $8,566
 $—
 $60,650
 $14,069
Hardware 396
 10,329
 396
 10,329
 —
 10,398
 —
 12,347
Life science/healthcare —
 1,714
 —
 1,714
 —
 —
 10,963
 5,909
Premium wine —
 —
 185
 495
Total commercial loans 11,272
 12,121
 26,615
 17,107
 8,566
 10,398
 71,613
 32,325
Consumer loans:                
Other consumer loans —
 —
 —
 786
 —
 —
 1,826
 322
Total loans modified in TDRs during the period (1) $11,272
 $12,121
 $26,615
 $17,893
 $8,566
 $10,398
 $73,439
 $32,647
 
(1)
There were zero$3.7 million and $2.69.2 million of partial charge-offs duringfor the three and nine months endedSeptember 30, 20172019, respectively, and $0.713.0 million and $3.521.5 million of partial charge-offs duringfor the three and nine months endedSeptember 30, 20162018, respectively.
During the three and nine months ended September 30, 2017 all new TDRs of $11.32019, $6.4 million and $26.6$69.4 million, respectively, were modified through payment deferrals granted to our clients.
During the three and nine months ended September 30, 2016, $12.02019, $2.2 million of new TDRs were modified through payment deferrals granted to our clients and $0.1$4.0 million, respectively, were modified through partial forgiveness of principal. During the three and nine months ended September 30, 2016, $17.62018, all new TDRs of $10.4 million of new TDRsand $32.6 million, respectively, were modified through payment deferrals granted to our clients and $0.3 million were modified through partial forgiveness of principal.clients.
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, 20172019 and September 30, 2016.2018:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 2019 2018
TDRs modified within the previous 12 months that defaulted during the period:        
Commercial loans:        
Software/internet $37,294
 $18,911
 $37,294
 $41,568
Hardware —
 2,100
 —
 5,549
Life science/healthcare 10,963
 5,909
 10,963
 7,139
Total TDRs modified within the previous 12 months that defaulted in the period $48,257
 $26,920
 $48,257
 $54,256
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
TDRs modified within the previous 12 months that defaulted during the period:        
Commercial loans:        
Software/internet $1,234
 $—
 $1,234
 $584
Premium wine 186
 790
 186
 790
Total TDRs modified within the previous 12 months that defaulted in the period $1,420
 $790
 $1,420
 $1,374

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 for TDRs was necessary to determine the allowance for loan losses as of September 30, 2017.2019.
8.
9.
Leases
We have operating leases for our corporate offices, data centers and certain equipment utilized at those properties. We are obligated under a number of noncancelable operating leases for premises and equipment that expire at various dates, through 2030, and in most instances, include options to renew or extend at market rates and terms. Such leases may provide for periodic adjustments of rentals during the term of the lease based on changes in various economic indicators.
At the inception of the lease, the lease is evaluated to determine whether the lease will be accounted for as an operating or a finance lease. There were no significant assumptions or judgments required upon applying the new lease standard. Operating lease ROU assets and operating lease liabilities are included in our consolidated balance sheets. We have no leases that meet the definition of a finance lease under ASC 842 and our lessor accounting treatment for subleases is not material. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
Total recorded balances for the lease assets and liabilities are as follows:
(Dollars in thousands) September 30, 2019
Assets:  
Right-of-use assets - operating leases (1) $178,532
Liabilities:  
Lease liabilities - operating leases (1) 192,543
(1)
Included in these amounts are $22.8 million and $31.4 million of ROU assets and lease liabilities, respectively, attributable to the inclusion of SVB Leerink in our financial results at September 30, 2019.

The components of our lease cost and supplemental cash flow information related to leases for the three and nine months ended September 30, 2019 were as follows:
 (Dollars in thousands) Three months ended September 30, 2019 Nine months ended September 30, 2019
Operating lease cost $10,120
 $29,099
Short-term lease cost 370
 1,214
Variable lease cost 903
 2,683
Less: sublease income (1,140) (3,363)
Total lease cost, net $10,253
 $29,633
Supplemental cash flows information:    
Cash paid for amounts included in the measurement of lease liabilities:    
Cash paid for operating leases $11,514
 $32,752
Noncash items during the period:    
Lease obligations in exchange for obtaining Right-of-use assets    
Operating leases $7,770
 $7,770
The table below presents additional information related to the Company's leases as of September 30, 2019:
September 30, 2019
Weighted-average remaining term (in years) - operating leases6.15
Weighted-average discount rate - operating leases (1)3.15%
(1)The incremental borrowing rate used to calculate the lease liability was determined based on the facts and circumstances of the economic environment and the Company’s credit standing as of the effective date of ASC 842. Additionally, the total lease term and total lease payments were also considered in determining the rate. Based on these considerations the Company identified credit terms available under its existing credit lines which represent a collateralized borrowing rate that has varying credit terms that could be matched to total lease terms and total lease payments in ultimately determining the implied borrowing rate in each lease contract.

The following table presents our undiscounted future cash payments for our operating lease liabilities as of September 30, 2019:
Years ended December 31,
(Dollars in thousands)
 Operating Leases
2019 (excluding the nine months ended September 30, 2019) $10,994
2020 41,197
2021 38,325
2022 32,830
2023 31,033
2024 and thereafter 41,792
Total future lease payments (1) $196,171
Less: imputed interest (3,628)
Total lease liabilities $192,543
(1)
As of September 30, 2019, we have additional leases that have not yet commenced. We estimate that we will record additional lease liabilities of $35.4 million upon commencement. Theseleases will commence by 2020 with lease terms of one to ten years.


The following table presents minimum future payments under noncancelable operating leases under ASC 840, as of December 31, 2018:
(Dollars in thousands) Amount
2019 $38,609
2020 37,575
2021 35,854
2022 31,659
2023 30,904
2024 and thereafter 49,071
Total minimum future payments $223,672

10.
Goodwill and Other Intangible Assets

Goodwill
On January 4, 2019, we completed the acquisition of Leerink Holdings LLC, the Boston-based parent company of healthcare and life science investment bank Leerink Partners LLC, now SVB Leerink. We recognized identifiable intangible assets of $60.9 million and goodwill of $137.8 million as a result of the acquisition. For additional information, refer to Note 2—“Business Combination” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report. The goodwill of $137.8 million includes revenue generating synergies expected from collaboration between SVB Leerink and the Company.
The changes in goodwill were as follows for the nine months ended September 30, 2019:
(Dollars in thousands) Goodwill
Beginning balance at December 31, 2018 $—
Acquisitions (1) 137,823
Ending balance at September 30, 2019 $137,823
(1)All reported goodwill amounts have been allocated to the SVB Leerink reporting segment and are expected to be deductible for tax purposes. Refer to Note 15—“Segment Reporting” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional information.

Other Intangible Assets
The components of net other intangible assets related to the acquisition of SVB Leerink were as follows:
  September 30, 2019
(Dollars in thousands) Gross Amount Accumulated Amortization Net Carrying Amount
Other intangible assets:      
Customer relationships $42,000
 $2,864
 $39,136
Other 18,900
 5,748
 13,152
Total other intangible assets $60,900
 $8,612
 $52,288



For the nine months ended September 30, 2019, we recorded amortization expense of $8.6 million. Assuming no future impairments of other intangible assets or additional acquisitions or dispositions, the following table presents the Company's future expected amortization expense for other intangible assets that will continue to be amortized as of September 30, 2019:
Years ended December 31,
(Dollars in thousands)
 
Other
Intangible Assets
2019 (excluding the nine months ended September 30, 2019) $2,872
2020 5,382
2021 4,732
2022 4,732
2023 4,732
2024 and thereafter 29,838
Total future amortization expense $52,288

11.Short-Term Borrowings and Long-Term Debt
The following table represents outstanding short-term borrowings and long-term debt at September 30, 20172019 and December 31, 20162018:
     Carrying Value     Carrying Value
(Dollars in thousands) Maturity Principal value at September 30, 2017 September 30,
2017		 December 31,
2016		 Maturity Principal value at September 30, 2019 September 30,
2019		 December 31,
2018
Short-term borrowings:            
Short-term FHLB advances 
 $—
 $—
 $500,000
 
 

 $—
 $300,000
Securities sold under agreement to repurchase (1) 
 —
 319,414
Other short-term borrowings (1) 4,840
 4,840
 12,668
 (2) $18,898
 18,898
 11,998
Total short-term borrowings   $4,840
 $512,668
   $18,898
 $631,412
Long-term debt:            
3.50% Senior Notes January 29, 2025 $350,000
 $347,221
 $346,979
 January 29, 2025 $350,000
 $347,899
 $347,639
5.375% Senior Notes September 15, 2020 350,000
 348,035
 347,586
 September 15, 2020 350,000
 349,328
 348,826
6.05% Subordinated Notes (2) June 1, 2017 —
 —
 46,646
7.0% Junior Subordinated Debentures October 15, 2033 50,000
 54,362
 54,493
Total long-term debt   $749,618
 $795,704
   $697,227
 $696,465
 
(1)Securities sold under repurchase agreements are effectively short-term borrowings collateralized by U.S. Treasury securities.
(2)Represents cash collateral received from certain counterparties in relation to market value exposures of derivative contracts in our favor.
(2)
Our 6.05% Subordinated Notes were repaid on June 1, 2017 and therefore, the interest rate swap agreement related to this issuance was terminated upon repayment of the 6.05% Subordinated Notes. At December 31, 2016, included in the carrying value of our 6.05% Subordinated Notes were $0.8 million related to hedge accounting associated with the notes.
Interest expense related to short-term borrowings and long-term debt was $9.0$8.1 million and $27.2 million for the three and nine months ended September 30, 2017, respectively, and $9.7 million and $28.2$27.6 million for the three and nine months ended September 30, 2016,2019, respectively, and $12.0 million and $29.1 million for the three and nine months endedSeptember 30, 2018, respectively. Interest expense is net of the hedge accounting impact from our interest rate swap agreement related to our 6.05% Subordinated Notes through June 1, 2017. The weighted average interest rate associated with our overnight short-term borrowings was 1.06 percent as of September 30, 2017 and 0.592.62 percent as of December 31, 2016.2018. There were no overnight short-term borrowings as of September 30, 2019.

Short-term Borrowings
Available Lines of Credit
We have certain facilities in place to enable us to access short-term borrowings on a secured (using high-quality fixed income securities as collateral) and an unsecured basis. TheseOur secured facilities include repurchase agreements and uncommitted federal funds lines with various financial institutions. As of September 30, 2017, we did not have any borrowings outstanding against our uncommitted federal funds lines. We also pledge securitiescollateral pledged to the FHLB of San Francisco and the discount window at the Federal Reserve Bank. The fair valueFRB (using both fixed income securities and loans as collateral). Our unsecured facility consists of our uncommitted federal funds lines. As of September 30, 2019, collateral pledged to the FHLB of San Francisco (comprisedwas comprised primarily of U.S. Treasury securities) at fixed income investment securities and loans and had a carrying value of $4.5 billion, of which $4.1 billion was available to support additional borrowings. As of September 30, 2017 totaled $1.92019, collateral pledged to the discount window at the FRB was comprised of fixed income investment securities and had a carrying value of $1.0 billion,, all of which was unused and available to support additional borrowings. The fair value of collateral pledged at the discount window of the Federal Reserve Bank at September 30, 2017 totaled $0.7 billion, all of which wasOur total unused and available to support additional borrowings.borrowing capacity for our uncommitted federal funds lines totaled $1.9 billion at September 30, 2019. Our total unused and available borrowing capacity under our master repurchase agreements with various financial institutions totaled $3.3 billion at September 30, 2019.

9.12.Derivative Financial Instruments
We primarily use derivative financial instruments to manage interest rate risk, currency exchange rate risk and to assist customers with their risk management objectives.objectives, which may include currency exchange rate risks and interest rate risks. 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 private, venture-backed companies in the technology and life science/healthcare 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 foron our 6.05% Subordinated Notes,variable-interest rate loan portfolio, we enteredenter into a fixed-for-floating interest rate swap agreement atcontracts to hedge against future changes in interest rates by using hedging instruments to lock in future cash inflows that would otherwise be impacted by movements in the time of debt issuance based upon LIBOR with matched-terms. The net cash benefit associated with ourmarket interest rates. We designate these interest rate swap is recordedcontracts as a reduction in “Interest expense—Borrowings,” a component of net interest income. The fair value of our interest rate swaps is calculated using a discounted cash flow methodhedges that qualify for hedge accounting under ASC 815, Derivatives and adjusted for credit valuation associated with counterparty risk. ChangesHedging ("ASC 815"), and record them in other assets and other liabilities. For qualifying cash flow hedges, changes in the fair value of the interest rate swapsderivative are reflectedrecorded in eitheraccumulated other assets (for swapscomprehensive income and recognized in an asset position) or other liabilities (for swaps in a liability position). On June 1, 2017, our interest rate swap was terminated upon repaymentearnings as the hedged item affects earnings. Derivative amounts affecting earnings are recognized consistent with the classification of the 6.05% Subordinated Notes.hedged item in the line item "Loans" as part of interest income, a component of consolidated net income.
We assess hedge effectiveness under ASC 815 on a quarterly basis to ensure all hedges remain highly effective to ensure hedge accounting under ASC 815 can be applied. If the hedging relationship no longer exists or no longer qualifies as a hedge per ASC 815, any amounts remaining as gain or loss in accumulated other comprehensive income are reclassified into earnings in the line item "Loans" as part of interest income, a component of consolidated net income. As of September 30, 2019, no derivatives classified as hedges were terminated or were disqualified for hedge accounting. The maximum length of time over which the forecasted transactions are hedged is approximately six years.
Currency Exchange Risk
We enter into foreign exchange forward contracts to economically reduce our foreign exchange exposure risk associated with the net difference between foreign currency denominated assets and liabilities. We do not designate any foreign exchange forward contracts as derivative instruments that qualify for hedge accounting. Gains or losses from changes in currency rates on foreign currency denominated instruments are recorded in the line item “Other” as part of noninterest income, a component of consolidated net income. We may experience ineffectiveness in the economic hedging relationship, because the instruments 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 in the line item “Other” as part of noninterest income, a component of consolidated net income.
Other Derivative Instruments
Also included in our derivative instruments are equity warrant assets and client forward and option contracts, and client interest rate contracts. For further description of these other derivative instruments, refer to Note 2-“Summary of Significant Accounting Policies" under Part II, Item 8 of our 20162018 Form 10-K.
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. With respect to measuring counterparty credit risk for derivative instruments, we measure the fair value of a group of financial assets and financial liabilities on a net risk basis by counterparty portfolio.

The total notional or contractual amounts and fair value collateral and net exposure of our derivative financial instruments at September 30, 20172019 and December 31, 20162018 were as follows:
 September 30, 2019 December 31, 2018
   September 30, 2017 December 31, 2016 
Notional or
Contractual
Amount
 Fair Value 
Notional or
Contractual
Amount
 Fair Value
(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)
 
Derivative Assets (1)
Derivative Liabilities (1) Derivative Assets (1)
Derivative Liabilities (1)
Derivatives designated as hedging instruments:                            
Interest rate risks:
                            
Interest rate swaps Other assets $—
 $—
 $—
 $—
 $45,964
 $810
 $89
 $721
 $2,000,000
 $40,976
 $—
 $—
 $—
 $—
Interest rate swaps 2,000,000
 —
 9,286
 —
 —
 —
Derivatives not designated as hedging instruments:                 




 
  

Currency exchange risks:
                 




 
  

Foreign exchange forwards Other assets 286,378
 3,166
 —
 3,166
 219,950
 3,057
 —
 3,057
 255,228

4,303

—
 263,733
 4,767

—
Foreign exchange forwards Other liabilities 84,618
 (1,244) —
 (1,244) 54,338
 (968) —
 (968) —

—

—
 178,310
 —

1,094
Net exposure   1,922
 —
 1,922
   2,089
 —
 2,089
Other derivative instruments:
                 

 
  
  
 
Equity warrant assets Other assets 211,018
 141,785
 —
 141,785
 211,434
 131,123
 —
 131,123
 223,383

149,113

—
 223,532
 149,238

—
Other derivatives:                
Client foreign exchange forwards Other assets 1,925,726
 90,691
 4,840
 85,851
 1,251,308
 54,587
 12,579
 42,008
 3,921,970

116,492

—
 2,759,878
 93,876

—
Client foreign exchange forwards Other liabilities 1,838,439
 (86,627) —
 (86,627) 1,068,991
 (43,317) —
 (43,317) 3,876,021

—

100,244
 2,568,085
 —

85,706
Client foreign currency options Other assets 101,544
 1,090
 —
 1,090
 775,000
 10,383
 —
 10,383
 125,531

1,485

—
 93,556
 1,759

—
Client foreign currency options Other liabilities 101,544
 (1,090) —
 (1,090) 775,000
 (10,383) —
 (10,383) 125,531

—

1,485
 93,579
 —

1,759
Client interest rate derivatives(2) Other assets 676,148
 11,824
 —
 11,824
 583,511
 10,110
 —
 10,110
 1,230,782

25,608

—
 1,020,416
 8,499

—
Client interest rate derivatives(2) Other liabilities 711,969
 (11,955) —
 (11,955) 627,639
 (9,770) —
 (9,770) 1,310,689

—

37,525
 1,337,328
 —

9,491
Net exposure   3,933
 4,840
 (907)   11,610
 12,579
 (969)
Net   $147,640
 $4,840
 $142,800
   $145,632
 $12,668
 $132,964
Total derivatives not designated as hedging instruments   297,001

139,254
   258,139

98,050
Total derivatives   $337,977
 $148,540
   $258,139
 $98,050
 
(1)Cash collateral received from our counterparties
Derivative assets and liabilities are included in relation to market value exposures of derivative contracts in our favor is recorded as a component of “short-term borrowings”"Accrued interest receivable and other assets" and "Other liabilities", respectively, on our consolidated balance sheets.
(2)Net exposure
The amount reported 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, 2017 remain2019 reflects rule changes implemented by two central clearing houses that require entities to treat derivative assets, liabilities and the related variation margin as settlement of the related derivative fair values for legal and accounting purposes, as opposed to presenting gross derivative assets and liabilities. As a result, client interest rate derivatives reflect reductions of approximately $7.8 million and $0.4 million of derivative assets at investment grade or higher and there were no material changes in their credit ratings during the three and nine months ended September 30, 2017.2019 and December 31, 2018, respectively.

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, 20172019 and 20162018 is as follows:
    Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) Statement of income location    2019 2018 2019 2018
Derivatives designated as hedging instruments:          
 Interest rate risks:
          
Amounts reclassified from accumulated other comprehensive income into income Interest income—loans $(2,713) $—
 $(3,224) $—
Derivatives not designated as hedging instruments:          
 Currency exchange risks:
          
(Losses) gains on revaluations of internal foreign currency instruments, net Other noninterest income $(8,724) $5,412
 $(5,183) $8,019
Gains (losses) on internal foreign exchange forward contracts, net Other noninterest income 8,660
 (5,002) 4,917
 (8,055)
Net (losses) gains associated with internal currency risk   $(64) $410
 $(266) $(36)
 Other derivative instruments:
          
(Losses) gains on revaluations of client foreign currency instruments, net Other noninterest income $(2,181) $(1,187) $(14,793) $3,718
Gains (losses) on client foreign exchange forward contracts, net Other noninterest income 2,167
 1,573
 15,232
 (2,697)
Net (losses) gains associated with client currency risk   $(14) $386
 $439
 $1,021
Net gains on equity warrant assets Gains on equity warrant assets, net $37,561
 $34,141
 $107,213
 $72,393
Net (losses) gains on other derivatives Other noninterest income $(1,123) $222
 $(2,619) $643
    Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) Statement of income location    2017 2016 2017 2016
Derivatives designated as hedging instruments:          
 Interest rate risks:
          
Net cash benefit associated with interest rate swaps Interest expense—borrowings $62
 $580
 $997
 $1,778
Changes in fair value of interest rate swaps Other noninterest income —
 (3) (7) (33)
Net gains associated with interest rate risk derivatives   $62
 $577
 $990
 $1,745
Derivatives not designated as hedging instruments:          
 Currency exchange risks:
          
Gains (losses) on revaluations of internal foreign currency instruments, net Other noninterest income $10,561
 $(1,406) $29,265
 $(4,222)
(Losses) gains on internal foreign exchange forward contracts, net Other noninterest income (10,550) 1,352
 (28,349) 3,067
Net gains (losses) associated with internal currency risk   $11
 $(54) $916
 $(1,155)
 Other derivative instruments:
          
Gains on revaluations of client foreign currency instruments, net Other noninterest income $3,760
 $3,488
 $8,889
 $7,009
Losses on client foreign exchange forward contracts, net Other noninterest income (3,871) (3,194) (8,350) (8,780)
Net (losses) gains associated with client currency risk   $(111) $294
 $539
 $(1,771)
Net gains on equity warrant assets Gains on equity warrant assets, net $24,922
 $21,558
 $42,432
 $33,252
Net (losses) gains on other derivatives Other noninterest income $(38) $31
 $(524) $(659)

Balance Sheet Offsetting
Certain of our derivative and other financial instruments are subject to enforceable master netting arrangements with our counterparties. These agreements provide for the net settlement of multiple contracts with a single counterparty through a single payment, in a single currency, in the event of default on or termination of any one contract.

The following table summarizes our assets subject to enforceable master netting arrangements as of September 30, 20172019 and December 31, 20162018:
  Gross Amounts of Recognized Assets Gross Amounts offset in the Statement of Financial Position Net Amounts of Assets Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position but Subject to Master Netting Arrangements Net Amount
(Dollars in thousands)    Financial Instruments Cash Collateral Received (1) 
September 30, 2019            
Derivative assets:            
Interest rate swaps $40,976
 $—
 $40,976
 $(9,286) $(13) $31,677
Foreign exchange forwards 120,795
 —
 120,795
 (60,525) (18,586) 41,684
   Foreign currency options 1,485
 —
 1,485
 (848) (299) 338
   Client interest rate derivatives 25,608
 —
 25,608
 (25,608) —
 —
Total derivative assets 188,864
 —
 188,864
 (96,267) (18,898) 73,699
Reverse repurchase, securities borrowing, and similar arrangements 387,119
 —
 387,119
 (387,119) —
 —
Total $575,983
 $—
 $575,983
 $(483,386) $(18,898) $73,699
December 31, 2018            
Derivative assets:            
Foreign exchange forwards $98,643
 $—
 $98,643
 $(38,213) $(11,825) $48,605
   Foreign currency options 1,759
 —
 1,759
 (613) (90) 1,056
   Client interest rate derivatives 8,499
 —
 8,499
 (8,416) (83) —
Total derivative assets 108,901
 —
 108,901
 (47,242) (11,998) 49,661
Reverse repurchase, securities borrowing, and similar arrangements 123,611
 —
 123,611
 (123,611) —
 —
Total $232,512
 $—
 $232,512
 $(170,853) $(11,998) $49,661

  Gross Amounts of Recognized Assets Gross Amounts offset in the Statement of Financial Position Net Amounts of Assets Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements Net Amount
(Dollars in thousands)    Financial Instruments Cash Collateral Received 
September 30, 2017            
Derivative Assets:            
   Interest rate swaps $—
 $—
 $—
 $—
 $—
 $—
Foreign exchange forwards 93,857
 —
 93,857
 (21,154) (4,840) 67,863
   Foreign currency options 1,090
 —
 1,090
 (331) —
 759
   Client interest rate derivatives 11,824
 —
 11,824
 (11,808) —
 16
Total derivative assets 106,771
 —
 106,771
 (33,293) (4,840) 68,638
Reverse repurchase, securities borrowing, and similar arrangements 62,664
 —
 62,664
 (62,664) —
 —
Total $169,435
 $—
 $169,435
 $(95,957) $(4,840) $68,638
December 31, 2016            
Derivative Assets:            
   Interest rate swaps $810
 $—
 $810
 $(721) $(89) $—
Foreign exchange forwards 57,644
 —
 57,644
 (22,738) (12,579) 22,327
   Foreign currency options 10,383
 —
 10,383
 (8,806) —
 1,577
   Client interest rate derivatives 10,110
 —
 10,110
 (10,091) —
 19
Total derivative assets 78,947
 —
 78,947
 (42,356) (12,668) 23,923
Reverse repurchase, securities borrowing, and similar arrangements 64,028
 —
 64,028
 (64,028) —
 —
Total $142,975
 $—
 $142,975
 $(106,384) $(12,668) $23,923
(1)Cash collateral received from our counterparties in relation to market value exposures of derivative contracts in our favor is recorded as a component of “Short-term borrowings” on our consolidated balance sheets.
The following table summarizes our liabilities subject to enforceable master netting arrangements as of September 30, 20172019 and December 31, 20162018:
  Gross Amounts of Recognized Liabilities Gross Amounts offset in the Statement of Financial Position Net Amounts of Liabilities Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position but Subject to Master Netting Arrangements Net Amount
(Dollars in thousands)    Financial Instruments Cash Collateral Pledged (1) 
September 30, 2019            
Derivative liabilities:            
Interest rate swaps $9,286
 $—
 $9,286
 $(9,286) $—
 $—
   Foreign exchange forwards 100,244
 —
 100,244
 (44,565) (5,010) 50,669
   Foreign currency options 1,485
 —
 1,485
 (802) —
 683
   Client interest rate derivatives 37,525
 —
 37,525
 —
 (37,220) 305
Total derivative liabilities 148,540
 —
 148,540
 (54,653) (42,230) 51,657
Repurchase, securities lending, and similar arrangements —
 —
 —
 —
 —
 —
Total $148,540
 $—
 $148,540
 $(54,653) $(42,230) $51,657
December 31, 2018            
Derivative liabilities:            
   Foreign exchange forwards $86,800
 $—
 $86,800
 $(24,778) $(20,732) $41,290
   Foreign currency options 1,759
 —
 1,759
 (1,054) —
 705
   Client interest rate derivatives 9,491
 —
 9,491
 —
 (9,207) 284
Total derivative liabilities 98,050
 —
 98,050
 (25,832) (29,939) 42,279
Repurchase, securities lending, and similar arrangements 319,414
 —
 319,414
 —
 —
 319,414
Total $417,464
 $—
 $417,464
 $(25,832) $(29,939) $361,693

  Gross Amounts of Recognized Liabilities Gross Amounts offset in the Statement of Financial Position Net Amounts of Liabilities Presented in the Statement of Financial Position Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements Net Amount
(Dollars in thousands)    Financial Instruments Cash Collateral Pledged 
September 30, 2017            
Derivative Liabilities:            
   Foreign exchange forwards $87,871
 $—
 $87,871
 $(68,852) $—
 $19,019
   Foreign currency options 1,090
 —
 1,090
 (759) —
 331
   Client interest rate derivatives 11,955
 —
 11,955
 (11,936) —
 19
Total derivative liabilities 100,916
 —
 100,916
 (81,547) —
 19,369
Repurchase, securities lending, and similar arrangements —
 —
 —
 —
 —
 —
Total $100,916
 $—
 $100,916
 $(81,547) $—
 $19,369
December 31, 2016            
Derivative Liabilities:            
   Foreign exchange forwards $44,285
 $—
 $44,285
 $(17,964) $—
 $26,321
   Foreign currency options 10,383
 —
 10,383
 (1,585) —
 8,798
   Client interest rate derivatives 9,770
 —
 9,770
 (9,770) —
 —
Total derivative liabilities 64,438
 —
 64,438
 (29,319) —
 35,119
Repurchase, securities lending, and similar arrangements —
 —
 —
 —
 —
 —
Total $64,438
 $—
 $64,438
 $(29,319) $—
 $35,119

10.(1)Other Noninterest Income
Cash collateral pledged to our counterparties in relation to market value exposures of derivative contracts in a liability position and Other Noninterest Expenserepurchase agreements are recorded as a component of “Cash and cash equivalents" on our consolidated balance sheets.
A
13.Noninterest Income
On January 1, 2018, we adopted accounting standard ASU 2014-09, Revenue from Contracts with Customers and all the related amendments ("ASC 606" or "ASU 2014-09"). Included below is a summary of other noninterest income for the three and nine months ended September 30, 20172019 and 20162018:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 2019 2018
Noninterest income:        
Gains on investment securities, net $29,849
 $32,193
 $106,575
 $77,365
Gains on equity warrant assets, net 37,561
 34,141
 107,213
 72,393
Client investment fees 46,679
 36,265
 136,905
 88,592
Foreign exchange fees 40,309
 32,656
 116,863
 100,560
Credit card fees 30,158
 24,121
 86,431
 68,739
Deposit service charges 22,482
 19,588
 65,496
 56,081
Lending related fees 11,707
 10,675
 36,857
 30,938
Letters of credit and standby letters of credit fees 10,842
 8,409
 31,205
 24,938
Investment banking revenue 38,516
 —
 137,005
 —
Commissions 12,275
 —
 40,812
 —
Other 13,631
 12,022
 42,773
 38,671
Total noninterest income $294,009
 $210,070
 $908,135
 $558,277

Gains on investment securities, net
Net gains on investment securities include both gains and losses from our non-marketable and other equity securities, which include public equity securities held as a result of exercised equity warrant assets, gains and losses from sales of our AFS debt securities portfolio, when applicable, and carried interest.
Our non-marketable and other equity securities portfolio primarily represents investments in venture capital and private equity funds, our China Joint Venture, debt funds, private and public portfolio companies, which include public equity securities held as a result of exercised equity warrant assets and qualified affordable housing projects. We experience variability in the performance of our non-marketable and other equity securities from period to period, which results in net gains or losses on investment securities (both realized and unrealized). This variability is due to a number of factors, including unrealized changes in the values of our investments, changes in the amount of realized gains from distributions, changes in liquidity events and general economic and market conditions. Unrealized gains from non-marketable and other equity securities for any single period are typically driven by valuation changes.
The extent to which any unrealized gains or losses will become realized is subject to a variety of factors, including, among other things, the expiration of certain sales restrictions to which these equity securities may be subject to (i.e., lock-up agreements), changes in prevailing market prices, market conditions, the actual sales or distributions of securities, and the timing of such actual sales or distributions, which, to the extent such securities are managed by our managed funds, are subject to our funds' separate discretionary sales/distributions and governance processes.
Carried interest is comprised of preferential allocations of profits recognizable when the return on assets of our individual managed fund of funds and direct venture funds exceeds certain performance targets and is payable to us, as the general partners of the managed funds. The carried interest we earn is often shared with employees, who are also members of the general partner entities. We record carried interest on a quarterly basis by measuring fund performance to date versus the performance target.  For our unconsolidated managed funds, carried interest is recorded as gains on investment securities, net. For our consolidated managed funds, it is recorded as a component of net income attributable to noncontrolling interests. Carried interest allocated to others is recorded as a component of net income attributable to noncontrolling interests. Any carried interest paid to us (or our employees) may be subject to reversal to the extent fund performance declines to a level where inception to date carried interest is lower than actual payments made by the funds. The limited partnership agreements for our funds provide that carried interest is generally not paid to the general partners until the funds have provided a full return of contributed capital to the limited partners. Accrued, but unpaid carried interest may be subject to reversal to the extent that the fund performance declines

to a level where inception-to-date carried interest is less than prior amounts recognized. Carried interest income is accounted for under an ownership model based on ASC 323 — Equity Method of Accounting and ASC 810 — Consolidation.
Our available-for-sale securities portfolio is a fixed income investment portfolio that is managed with the objective of earning an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and credit diversification as well as addressing our asset/liability management objectives. Though infrequent, sales of debt securities in our AFS securities portfolio may result in net gains or losses and are conducted pursuant to the guidelines of our investment policy related to the management of our liquidity position and interest rate risk.
Gains on investment securities are recognized outside of the scope of ASC 606 as it explicitly excludes noninterest income earned from our investment-related activities. A summary of gains and losses on investment securities for the three and nine months ended September 30, 2019 and 2018 is as follows:
   Three months ended September 30,
Nine months ended September 30,
(Dollars in thousands) 2019
2018
2019
2018
Gains on non-marketable and other equity securities, net $29,849
 $32,193
 $110,480
 $77,365
Losses on sales of available-for-sale securities, net —
 —
 (3,905) —
Total gains on investment securities, net $29,849
 $32,193
 $106,575
 $77,365

Gains on equity warrant assets, net
In connection with negotiating credit facilities and certain other services, we often obtain rights to acquire stock in the form of equity warrant assets in primarily private, venture-backed companies in the technology and life science/healthcare industries. Any changes in fair value from the grant date fair value of equity warrant assets will be recognized as increases or decreases to other assets on our balance sheet and as net gains or losses on equity warrant assets, in noninterest income, a component of consolidated net income. Gains on equity warrant assets are recognized outside of the scope of ASC 606 as it explicitly excludes noninterest income earned from our derivative-related activities. A summary of net gains on equity warrant assets for the three and nine months ended September 30, 2019 and 2018 is as follows:
   Three months ended September 30,
Nine months ended September 30,
(Dollars in thousands) 2019
2018
2019
2018
Equity warrant assets:        
Gains on exercises, net $30,047
 $18,287
 $90,357
 $42,808
Terminations (481) (1,432) (2,931) (3,158)
Changes in fair value, net 7,995
 17,286
 19,787
 32,743
Total net gains on equity warrant assets $37,561
 $34,141
 $107,213
 $72,393

Client investment fees
Client investment fees include fees earned from discretionary investment management services for substantially all clients, managing clients’ portfolios based on their investment policies, strategies and objectives and investment advisory fees. Revenue is recognized on a monthly basis upon completion of our performance obligation and consideration is typically received in the subsequent month. Included in our sweep money market fees are Rule 12(b)-1 fees, revenue sharing and customer transactional-based fees. Rule 12(b)-1 fees and revenue sharing are recognized as earned based on client funds that are invested in the period, typically monthly. Transactional based fees are earned and recognized on fixed income securities when the transaction is executed on the clients' behalf. Amounts paid to third-party service providers are predominantly expensed, such that client investment fees are recorded gross of payments made to third parties. A summary of client investment fees by instrument type for the three and nine months ended September 30, 2019 and 2018 is as follows:
  Three months ended September 30,
Nine months ended September 30,
(Dollars in thousands) 2017
2016
2017
2016
Fund management fees $5,198
 $5,231
 $15,903
 $14,149
Service-based fee income 469
 2,029
 3,860
 6,270
Gains on revaluation of client foreign currency instruments, net (1) 3,760
 3,488
 8,889
 7,009
Losses on client foreign exchange forward contracts, net (1) (3,871) (3,194) (8,350) (8,780)
Gains (losses) on revaluation of internal foreign currency instruments, net (2) 10,561
 (1,406) 29,265
 (4,222)
(Losses) gains on internal foreign exchange forward contracts, net (2) (10,550) 1,352
 (28,349) 3,067
Other (3) 10,329
 11,378
 19,910
 19,018
Total other noninterest income $15,896
 $18,878
 $41,128
 $36,511
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 2019 2018
Client investment fees by type:        
Sweep money market fees $26,202
 $21,105
 $79,698
 $50,605
Asset management fees (1) 7,256
 6,358
 20,883
 17,447
Repurchase agreement fees 13,221
 8,802
 36,324
 20,540
Total client investment fees (2) $46,679
 $36,265
 $136,905
 $88,592

 
(1)Represents the net revaluation of client foreign currency denominated financial instruments. We enter into client foreign exchange forward contracts to economically reduce our foreign exchange exposure related to client foreign currency denominated financial instruments.fees earned from investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(2)Represents the net revaluation of foreign currency denominatedfees earned on client investment funds which are maintained at third-party financial instruments issuedinstitutions and held by us, primarily loans, deposits and cash. We enter into internal foreign exchange forward contracts to economically reduceare not recorded on our foreign exchange exposure related to these foreign currency denominated financial instruments issued and held by us.balance sheet.
(3)Includes dividends
Foreign exchange fees
Foreign exchange fees represent the income differential between purchases and sales of foreign currency on behalf of our clients, primarily from spot contracts. Foreign exchange spot contract fees are recognized upon the completion of the single performance obligation, the execution of a spot trade in exchange for a fee. In line with customary business practice, the legal right transfers to the client upon execution of a foreign exchange contract on the trade date, and as such, we currently recognize our fees based on the trade date and are typically settled within two business days.
Forward contract and option premium fees are recognized outside of the scope of ASC 606 as it explicitly excludes noninterest income earned from our derivative-related activities. A summary of foreign exchange fee income by instrument type for the three and nine months ended September 30, 2019 and 2018 is as follows:
  Three months ended September 30,
Nine months ended September 30,
(Dollars in thousands) 2019
2018
2019
2018
Foreign exchange fees by instrument type:        
Spot contract commissions $36,836
 $30,041
 $106,561
 $92,791
Forward contract commissions 3,371
 2,534
 10,144
 7,474
Option premium fees 102
 81
 158
 295
Total foreign exchange fees $40,309
 $32,656
 $116,863
 $100,560

Credit card fees
Credit card fees include interchange income from credit and debit cards and fees earned from processing transactions for merchants. Interchange income is earned after satisfying our performance obligation of providing nightly settlement services to a payment network. Costs related to rewards programs are recorded when the rewards are earned by the customer and presented as a reduction to interchange fee income. Rewards programs continue to be accounted for under ASC 310 - Receivables. Our performance obligations for merchant service fees are to transmit data and funds between the merchant and the payment network. Credit card interchange and merchant service fees are earned daily upon completion of transaction settlement services.
Annual card service fees are recognized on a straight-line basis over a 12-month period and continue to be accounted for under ASC 310 - Receivables.
A summary of credit card fees by instrument type for the three and nine months ended September 30, 2019 and 2018 is as follows:
  Three months ended September 30,
Nine months ended September 30,
(Dollars in thousands) 2019
2018
2019
2018
Credit card fees by instrument type:        
Card interchange fees, net $24,560
 $18,849
 $68,808
 $54,547
Merchant service fees 3,943
 3,679
 12,763
 10,010
Card service fees 1,655
 1,593
 4,860
 4,182
Total credit card fees $30,158
 $24,121
 $86,431
 $68,739

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

Lending related fees
Unused commitment fees, minimum finance fees and unused line fees are recognized as earned on a monthly basis. Fees that qualify for syndication treatment are recognized at the completion of the syndicated loan deal for which the fees were received. Lending related fees are recognized outside of the scope of ASC 606 as it explicitly excludes noninterest income earned from our lending-related activities. A summary of lending related fees by instrument type for the three and nine months ended September 30, 2019 and 2018 is as follows:
  Three months ended September 30,
Nine months ended September 30,
(Dollars in thousands) 2019
2018
2019
2018
Lending related fees by instrument type:        
Unused commitment fees $8,339
 $8,410
 $25,060
 $24,994
Other 3,368
 2,265
 11,797
 5,944
Total lending related fees $11,707
 $10,675
 $36,857
 $30,938

Letters of credit and standby letters of credit fees
Commercial and standby letters of credit represent conditional commitments issued by us on behalf of a client to guarantee the performance of the client to a third party when certain specified future events have occurred. Fees generated from letters of credit and standby letters of credit are deferred as a component of other liabilities and recognized in noninterest income over the commitment period using the straight-line method, based on the likelihood that the commitment being drawn down will be remote. Letters of credit and standby letters of credit fees are recognized outside of the scope of ASC 606 as it explicitly excludes noninterest income earned from our lending related activities.
Investment banking revenue
The Company earns investment banking revenue from clients for providing services related to securities underwriting, private placements and advisory services on strategic matters such as mergers and acquisitions. Underwriting fees are attributable to public and private offerings of equity and debt securities and are recognized at the point in time when the offering has been deemed to be completed by the lead manager of the underwriting group. Once the offering is completed, the performance obligation has been satisfied and the Company recognizes the applicable management fee as well the underwriting fee, net of consideration payable to customers. The Company recognizes private placement fees at the point in time when the private placement is completed, which is generally when the client accepts capital from the fund raise. Advisory fees from mergers and acquisitions engagements are generally recognized at the point in time when the related transaction is completed. Expenses are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other deal-related expenses are expensed as incurred. The Company has determined that it acts as principal in the majority of these transactions and therefore presents expenses gross within other operating expenses.
A summary of investment banking revenue by instrument type for the three and nine months ended September 30, 2019 and 2018 is as follows:
   Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 2019 2018
Investment banking revenue:        
Underwriting fees $31,016
 $—
 $109,371
 $—
Advisory fees 5,200
 —
 22,789
 —
Private placements and other 2,300
 —
 4,845
 —
Total investment banking revenue $38,516
 $—
 $137,005
 $—

Commissions
Commissions include commissions received from customers for the execution of agency-based brokerage transactions in listed and over-the-counter equities. The execution of each trade order represents a distinct performance obligation and the transaction price is fixed at the point in time or trade order execution. Trade execution is satisfied at the point in time that the customer has control of the asset and as such, fees are recorded on a trade date basis. Commission are presented in the "Disaggregation of revenue from contracts with customers"table below.

Other
Other noninterest income primarily includes income from fund management fees and service revenue. Fund management fees are comprised of fees charged directly to our managed funds of funds and direct venture funds. Fund management fees are based upon the contractual terms of the limited partnership agreements and are generally recognized as earned over the specified contract period, which is generally equal to the life of the individual fund. Fund management fees are calculated as a percentage of committed capital and collected in advance and are received quarterly. Fund management fees for certain of our limited partnership agreements are calculated as a percentage of distributions made by the funds and revenue is recorded only at the time of a distribution event. As distribution events are not predetermined for these certain funds, management fees are considered variable and constrained under ASC 606.
Other service revenue primarily consists of dividend income on FHLB/FRB stock, correspondent bank rebate income, incentive fees related to carried interest and other fee income. We recognize revenue when our performance obligations are met and record revenues on a daily/monthly basis, quarterly, semi-annually or annual basis. For event driven revenue sources, we recognize revenue when: (i) persuasive evidence of an arrangement exists, (ii) we have performed the service, provided we have no other remaining obligations to the customer, (iii) the fee is fixed or determinable and (iv) collectability is probable.
A summary of other noninterest income by instrument type for the three and nine months ended September 30, 2019 and 2018 is as follows:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 2019 2018
Other noninterest income by instrument type:        
Fund management fees $8,493
 $5,479
 $24,292
 $17,144
Net (losses) gains on revaluation of foreign currency instruments, net of foreign exchange forward contracts (1) (78) 796
 173
 985
Other service revenue 5,216
 5,747
 18,308
 20,542
Total other noninterest income $13,631
 $12,022
 $42,773
 $38,671
(1)Represents the net revaluation of client and internal foreign currency denominated financial instruments. We enter into foreign exchange forward contracts to economically reduce our foreign exchange exposure related to client and internal foreign currency denominated financial instruments.

Disaggregation of revenue from contracts with customers
The following tables present our revenues from contracts with customers disaggregated by revenue source and segment for the three and nine months ended September 30, 2019 and 2018:
Three months ended September 30, 2019
(Dollars in thousands)
 Global
Commercial
Bank (2)		 SVB Private  
Bank		 SVB Capital (2)   SVB
Leerink (2)		 Other Items Total      
Revenue from contracts with customers:            
Client investment fees $46,171
 $508
 $—
 $—
 $—
 $46,679
Spot contract commissions 36,644
 89
 —
 —
 103
 36,836
Card interchange fees, gross 34,867
 —
 —
 —
 181
 35,048
Merchant service fees 3,943
 —
 —
 —
 —
 3,943
Deposit service charges 22,263
 36
 —
 —
 183
 22,482
Investment banking revenue —
 —
 —
 38,516
 —
 38,516
Commissions —
 —
 —
 12,275
 —
 12,275
Fund management fees —
 —
 7,063
 1,430
 —
 8,493
Correspondent bank rebates 1,633
 —
 —
 —
 —
 1,633
Total revenue from contracts with customers $145,521
 $633
 $7,063
 $52,221
 $467
 $205,905
Revenues outside the scope of ASC 606 (1) 15,508
 1
 27,892
 726
 43,977
 88,104
Total noninterest income $161,029
 $634
 $34,955
 $52,947
 $44,444
 $294,009
(1)Amounts are accounted for under separate guidance than ASC 606.
(2)Global Commercial Bank’s, SVB Capital’s and SVB Leerink's components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."
Three months ended September 30, 2018
(Dollars in thousands)
 Global
Commercial
Bank (2)		 SVB Private  
Bank		 SVB Capital (2)   Other Items Total      
Revenue from contracts with customers:          
Client investment fees (3) $35,845
 $420
 $—
 $—
 $36,265
Spot contract commissions 29,776
 184
 —
 81
 30,041
Card interchange fees, gross 33,905
 —
 —
 108
 34,013
Merchant service fees 3,677
 2
 —
 —
 3,679
Deposit service charges 19,207
 24
 —
 357
 19,588
Fund management fees —
 —
 5,479
 —
 5,479
Correspondent bank rebates 1,372
 —
 —
 —
 1,372
Total revenue from contracts with customers $123,782
 $630
 $5,479
 $546
 $130,437
Revenues outside the scope of ASC 606 (1) 11,446
 (25) 18,944
 49,268
 79,633
Total noninterest income $135,228
 $605
 $24,423
 $49,814
 $210,070
(1)Amounts are accounted for under separate guidance than ASC 606.
(2)Global Commercial Bank’s and SVB Capital’s components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."
(3)For the three months ended September 30, 2018, the amount of client investment fees previously reported as "Other Items" has been correctly allocated to the reportable segment "Global Commercial Bank" to properly reflect the source of such revenue. The correction of this immaterial error had no impact on the "Total" amount of client investment fees.



Nine months ended September 30, 2019
(Dollars in thousands)
 Global
Commercial
Bank (2)		 SVB Private  
Bank		 SVB Capital (2)   SVB
Leerink (2)		 Other Items Total      
Revenue from contracts with customers:            
Client investment fees $135,551
 $1,354
 $—
 $—
 $—
 136,905
Spot contract commissions 105,877
 376
 —
 —
 308
 106,561
Card interchange fees, gross 115,468
 —
 —
 —
 518
 115,986
Merchant service fees 12,764
 —
 —
 —
 —
 12,764
Deposit service charges 64,806
 104
 —
 —
 586
 65,496
Investment banking revenue —
 —
 —
 137,005
 —
 137,005
Commissions —
 —
 —
 40,812
 —
 40,812
Fund management fees —
 —
 20,050
 4,242
 —
 24,292
Correspondent bank rebates 4,712
 —
 —
 —
 —
 4,712
Total revenue from contracts with customers $439,178
 $1,834
 $20,050
 $182,059
 $1,412
 $644,533
Revenues outside the scope of ASC 606 (1) 32,314
 (5) 79,810
 6,005
 145,478
 263,602
Total noninterest income $471,492
 $1,829
 $99,860
 $188,064
 $146,890
 $908,135
(1)Amounts are accounted for under separate guidance than ASC 606.
(2)Global Commercial Bank’s, SVB Capital’s and SVB Leerink's components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."
Nine months ended September 30, 2018
(Dollars in thousands)
 Global
Commercial
Bank (2)		 SVB Private  
Bank		 SVB Capital (2)   Other Items Total      
Revenue from contracts with customers:          
Client investment fees (3) $87,491
 $1,101
 $—
 $—
 $88,592
Spot contract commissions 92,098
 507
 —
 186
 92,791
Card interchange fees, gross 95,088
 —
 —
 311
 95,399
Merchant service fees 10,008
 2
 —
 —
 10,010
Deposit service charges 54,633
 83
 —
 1,365
 56,081
Fund management fees —
 —
 17,144
 —
 17,144
Correspondent bank rebates 4,241
 —
 —
 —
 4,241
Total revenue from contracts with customers $343,559
 $1,693
 $17,144
 $1,862
 $364,258
Revenues outside the scope of ASC 606 (1) 33,761
 (16) 64,688
 95,586
 194,019
Total noninterest income $377,320
 $1,677
 $81,832
 $97,448
 $558,277
(1)Amounts are accounted for under separate guidance than ASC 606.
(2)Global Commercial Bank’s and SVB Capital’s components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."
(3)For the nine months ended September 30, 2018, the amount of client investment fees previously reported as "Other Items" has been correctly allocated to the reportable segment "Global Commercial Bank" to properly reflect the source of such revenue. The correction of this immaterial error had no impact on the "Total" amount of client investment fees.
The timing of revenue recognition may differ from the timing of cash settlements or invoicing to customers. We record a receivable when revenue is recognized prior to invoicing, and unearned revenue when revenue is recognized subsequent to receipt of consideration. These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. During the three and nine months ended September 30, 2019 and 2018, changes in our contract assets, contract liabilities and receivables were not material. Additionally, revenues recognized during the three and nine months ended September 30, 2019 and 2018 that were included in the corresponding contract liability balance at the beginning of the periods were not material.

14.Other Noninterest Expense
A summary of other noninterest expense for the three and nine months ended September 30, 20172019 and 20162018 is as follows:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 2019 2018
Lending and other client related processing costs $7,502
 $5,698
 $21,442
 $16,301
Correspondent bank fees 3,657
 3,513
 10,970
 10,200
Investment banking activities 1,864
 —
 9,918
 —
Trade order execution costs 2,615
 —
 7,959
 —
Data processing services 3,066
 2,740
 8,624
 7,934
Telephone 2,466
 2,269
 7,629
 7,025
Dues and publications 1,055
 1,387
 3,439
 3,081
Postage and supplies 720
 652
 2,168
 2,133
Other 11,161
 5,393
 32,910
 15,171
Total other noninterest expense $34,106
 $21,652
 $105,059
 $61,845
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Lending and other client related processing costs $6,935
 $5,885
 $18,806
 $13,721
Telephone 2,518
 2,460
 7,892
 7,109
Data processing services 2,244
 2,137
 7,254
 6,353
Dues and publications 883
 809
 2,355
 2,258
Postage and supplies 612
 598
 2,013
 2,172
Other 4,872
 3,644
 16,350
 12,679
Total other noninterest expense $18,064
 $15,533
 $54,670
 $44,292

11.15.Segment Reporting
We have three4 reportable segments for management reporting purposes: Global Commercial Bank, SVB Private Bank, SVB Capital and SVB Capital.Leerink. SVB Leerink is a new reportable segment and was created as a result of the acquisition of Leerink Holdings LLC effective January 4, 2019. The results of our operating segments are based on our internal management reporting process.
Our Global Commercial Bank and SVB Private Bank 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, these 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 a funding credit is given for deposits raised, and a funding charge is made for loans funded.funded loans. FTP is calculated at an instrument level based on account characteristics.
We also evaluate performance based on provision for credit 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 taxestax expense or the provision for

unfunded credit commitments (included in provision for credit losses) 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 operating 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.
For reporting purposes, SVB Financial Group has three4 operating segments for which we report our financial information:
Global Commercial Bank is comprised of results from the following:
•
Global Commercial Bank is comprised of results from the following:
◦
Our Commercial Bank products and services are provided by the Bank and its subsidiaries to commercial clients in the technology, life science/healthcare and private equity/venture capital industries. The Bank provides solutions to the financial needs of commercial clients through credit, global treasury management, foreign exchange, global trade finance, and other services. It servesWe broadly serve clients within the United States,U.S., as well as non-U.S. clients in key international innovation markets. In addition, the Bank and its subsidiaries offer a variety of investment services and solutions to its clients that enable them to effectively manage their assets. 
◦
Our Private Equity Division provides banking products and services primarily to our private equity and venture capital clients.
◦
Our SVBWine practice provides banking products and services to our premium wine industry clients, including vineyard development loans. 

◦
SVB Analytics previously provided equity valuation services and currently provides research for investors and companies in the global innovation economy. In September 2017, SVB Analytics sold its equity valuation services business.
◦
Debt Fund Investments is comprised of our investments in certain debt funds in which we are a strategic investor.
SVB Private Bank is the private banking division of the Bank, which provides a range of personal financial solutions for consumers. Our clients are primarily private equity/venture capital professionals and executive leaders of the innovation companies they support. We offer a customized suite of private banking services, including mortgages, home equity lines of credit, restricted stock purchase loans, capital call lines of credit and other secured and unsecured lending, as well as cash and wealth management services. 
SVB Capital is the funds management business of SVBFG, which focuses primarily on venture capital investments. SVB Capital manages funds (primarily venture capital funds) on behalf of third party limited partners and, on a more limited basis, SVB Financial Group. The SVB Capital family of funds is comprised of direct venture funds that invest in companies and funds of funds that invest in other venture capital funds. SVB Capital generates income for the Company primarily from investment returns (including carried interest allocations) and management fees.
•
SVB Private Bank is the private banking division of the Bank, which provides a range of personal financial solutions for consumers. Our clients are primarily private equity/venture capital professionals and executive leaders of the innovation companies they support. We offer a customized suite of private banking services, including mortgages, home equity lines of credit, restricted stock purchase loans, capital call lines of credit and other secured and unsecured lending products, as well as cash and wealth management services. 
•
SVB Capital is the funds management business of SVBFG, which focuses primarily on venture capital investments. SVB Capital manages funds (primarily venture capital funds) on behalf of third-party limited partners and, on a more limited basis, SVB Financial Group. The SVB Capital family of funds is comprised of direct venture funds that invest in companies and funds of funds that invest in other venture capital funds. SVB Capital generates income for the Company primarily from investment returns (including carried interest allocations) and management fees.
•
SVB Leerink is an investment bank specializing in the equity and convertible capital markets, mergers and acquisitions, equity research and sales and trading for growth and innovation-minded healthcare and life science companies and operates as a wholly-owned subsidiary of SVB Financial. SVB Leerink provides investment banking services across all subsectors of healthcare including: biotechnology, pharmaceuticals, medical devices, diagnostic and life science tools, healthcare services and digital health. SVB Leerink focuses on two primary lines of business: (i) investment banking focused on providing companies with capital-raising services, financial advice on mergers and acquisitions, sales and trading services and equity research, and (ii) sponsorship of private investment funds.
The summary financial results of our operating segments are presented along with a reconciliation to our consolidated interim results.

Our segment information for the three and nine months ended September 30, 20172019 and 20162018 is as follows:
(Dollars in thousands) 
Global
Commercial
Bank (1)
 
SVB Private  
Bank
 SVB Capital (1)   Other Items (2)       Total       
Global
Commercial
Bank (1)
 
SVB Private  
Bank
 SVB Capital (1)   
SVB
Leerink (1)
 Other Items (2)       Total      
Three months ended September 30, 2017          
Three months ended September 30, 2019            
Net interest income $337,860
 $14,600
 $15
 $21,499
 $373,974
 $455,161
 $12,772
 $9
 $277
 $52,425
 $520,644
Provision for credit losses (20,874) (1,535) —
 (1,113) (23,522) (34,075) (1,910) —
 —
 (551) (36,536)
Noninterest income 97,227
 460
 13,913
 47,178
 158,778
 161,029
 634
 34,955
 52,947
 44,444
 294,009
Noninterest expense (3) (176,964) (4,706) (4,873) (71,218) (257,761) (213,786) (11,638) (8,129) (55,200) (102,571) (391,324)
Income (loss) before income tax expense (4) $237,249
 $8,819
 $9,055
 $(3,654) $251,469
 $368,329
 $(142) $26,835
 $(1,976) $(6,253) $386,793
Total average loans, net of unearned income $18,807,616
 $2,499,507
 $—
 $277,769
 $21,584,892
 $25,839,647
 $3,400,889
 $—
 $—
 $581,890
 $29,822,426
Total average assets (5) 47,817,114
 2,538,400
 323,417
 (883,565) 49,795,366
Total average assets (5) (6) 58,384,473
 3,431,313
 396,031
 428,848
 2,687,083
 65,327,748
Total average deposits 42,376,024
 1,231,390
 —
 435,428
 44,042,842
 55,250,154
 1,497,303
 —
 —
 487,512
 57,234,969
Three months ended September 30, 2016          
Three months ended September 30, 2018            
Net interest income $431,036
 $14,919
 $6
 $—
 $47,261
 $493,222
(Provision for) reduction of credit losses (19,074) (362) —
 —
 2,262
 (17,174)
Noninterest income (7) 135,228
 605
 24,423
 —
 49,814
 210,070
Noninterest expense (3) (206,487) (6,760) (6,469) —
 (89,729) (309,445)
Income before income tax expense (4) $340,703
 $8,402
 $17,960
 $—
 $9,608
 $376,673
Total average loans, net of unearned income $22,925,909
 $2,928,576
 $—
 $—
 $476,892
 $26,331,377
Total average assets (5) (8) 49,948,578
 2,949,908
 388,531
 —
 3,178,020
 56,465,037
Total average deposits 47,037,693
 1,505,746
 —
 —
 548,801
 49,092,240
Nine months ended September 30, 2019            
Net interest income $262,484
 $13,298
 $1
 $13,378
 $289,161
 $1,360,997
 $37,200
 $20
 $961
 $163,755
 $1,562,933
Provision for credit losses (16,974) (1,976) —
 (1,054) (20,004) (79,175) (1,779) —
 —
 (8,079) (89,033)
Noninterest income 79,226
 664
 30,619
 33,631
 144,140
 471,492
 1,829
 99,860
 188,064
 146,890
 908,135
Noninterest expense (3) (159,479) (3,122) (3,924) (54,248) (220,773) (617,933) (30,015) (21,794) (177,675) (293,093) (1,140,510)
Income (loss) before income tax expense (4) $165,257
 $8,864
 $26,696
 $(8,293) $192,524
Income before income tax expense (4) $1,135,381
 $7,235
 $78,086
 $11,350
 $9,473
 $1,241,525
Total average loans, net of unearned income $16,357,099
 $2,074,982
 $—
 $215,113
 $18,647,194
 $25,457,997
 $3,235,943
 $—
 $—
 $517,020
 $29,210,960
Total average assets (5) 40,828,549
 2,096,237
 325,321
 201,222
 43,451,329
Total average assets (5) (6) 54,196,976
 3,264,071
 382,707
 380,290
 2,990,088
 61,214,132
Total average deposits 36,484,125
 1,115,446
 —
 310,183
 37,909,754
 51,352,644
 1,461,170
 —
 —
 517,530
 53,331,344
Nine months ended September 30, 2017          
Nine months ended September 30, 2018            
Net interest income $924,789
 $42,952
 $41
 $58,881
 $1,026,663
 $1,209,960
 $46,811
 $22
 $—
 $122,735
 $1,379,528
Provision for credit losses (65,007) (2,266) —
 (2,789) (70,062) (71,704) (2,384) —
 —
 (138) (74,226)
Noninterest income 260,650
 1,715
 45,707
 96,893
 404,965
Noninterest income (7) 377,320
 1,677
 81,832
 —
 97,448
 558,277
Noninterest expense (3) (525,043) (12,675) (14,537) (194,385) (746,640) (591,434) (18,729) (17,182) —
 (253,256) (880,601)
Income (loss) before income tax expense (4) $595,389
 $29,726
 $31,211
 $(41,400) $614,926
 $924,142
 $27,375
 $64,672
 $—
 $(33,211) $982,978
Total average loans, net of unearned income $18,125,020
 $2,371,027
 $—
 $230,420
 $20,726,467
 $21,781,557
 $2,791,910
 $—
 $—
 $434,810
 $25,008,277
Total average assets (5) 45,414,432
 2,403,777
 333,439
 (586,597) 47,565,051
Total average assets (5) (8) 48,380,180
 2,813,101
 379,809
 —
 2,859,562
 54,432,652
Total average deposits 40,398,413
 1,289,990
 —
 373,232
 42,061,635
 45,701,317
 1,519,200
 —
 —
 513,845
 47,734,362
Nine months ended September 30, 2016          
Net interest income (expense) $773,342
 $40,508
 $(51) $40,119
 $853,918
Provision for credit losses (86,143) (2,481) —
 (1,601) (90,225)
Noninterest income 231,295
 2,052
 44,492
 65,211
 343,050
Noninterest expense (3) (462,234) (9,481) (11,521) (141,375) (624,611)
Income (loss) before income tax expense (4) $456,260
 $30,598
 $32,920
 $(37,646) $482,132
Total average loans, net of unearned income $15,769,964
 $1,978,175
 $—
 $207,358
 $17,955,497
Total average assets (5) 41,020,808
 1,999,455
 334,328
 315,125
 43,669,716
Total average deposits 37,002,027
 1,120,575
 —
 321,388
 38,443,990
 
(1)Global Commercial Bank’s, SVB Capital’s and SVB Capital’sLeerink's components of net interest income, noninterest income, noninterest expense and total average assets are shown net of noncontrolling interests for all periods presented. Noncontrolling interest is included within “Other Items”.Items."
(2)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 consists primarily of interest earned from our fixed income investment portfolio, net of FTP. Noninterest income consists primarily of gains on equity warrant assets, and gains or losses on the sale of fixed income securities.investments and gains on equity securities from exercised warrant assets. Noninterest expense consists primarily of expenses associated with corporate support functions such as finance, human resources, marketing, legal and other expenses.

(3)
The Global Commercial Bank segment includes direct depreciation and amortization of $5.95.1 million and $6.45.5 million for the three months endedSeptember 30, 20172019 and 20162018, respectively, and $19.114.8 million and $18.316.6 million for the nine months endedSeptember 30, 20172019 and 2016, respectively.2018.

(4)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.
(5)Total average assets equal the greater of total average assets or the sum of total average liabilities and total average stockholders’ equity for each segment to reconcile the results to the consolidated financial statements prepared in conformity with GAAP.
(6)
Included in the total average assets for SVB Leerink is goodwill of $137.8 million for both the three and nine months ended September 30, 2019 related to the acquisition effective January 4, 2019.
(7)For the three and nine months ended September 30, 2018, amounts of client investment fees included in the line item "Noninterest Income" previously reported as "Other Items" have been correctly allocated to our reportable segment "Global Commercial Bank" to properly reflect the source of such revenue. The correction of this immaterial error had no impact on the "Total" amount of noninterest income.
(8)
For the three and nine months ended September 30, 2018, amounts for average assets previously reported as "Other Items" have been correctly allocated to the reportable segments "Global Commercial Bank" and “Private Bank” to properly reflect the greater of total average assets or the sum of total average liabilities and total average stockholders’ equity for “Global Commercial Bank” and “Private Bank.” The correction of this immaterial error had no impact on the "Total" amount of average assets.
12.16.Off-Balance Sheet Arrangements, Guarantees and Other Commitments
In the normal course of business, we use financial instruments with off-balance sheet risk to meet the financing needs of our customers. These financial instruments include commitments to extend credit, commercial and standby letters of credit and commitments to invest in venture capital and private equity fund investments. These instruments involve, to varying degrees, elements of credit risk. Credit risk is defined as the possibility of sustaining a loss because other parties to the financial instrument fail to perform in accordance with the terms of the contract.
Commitments to Extend Credit
The following table summarizes information related to our commitments to extend credit at September 30, 20172019 and December 31, 20162018:
(Dollars in thousands) September 30, 2017 December 31, 2016 September 30, 2019 December 31, 2018
Loan commitments available for funding: (1)        
Fixed interest rate commitments $1,462,728
 $1,475,179
 $2,154,186
 $1,839,190
Variable interest rate commitments 13,037,817
 13,572,161
 17,272,556
 14,821,815
Total loan commitments available for funding 14,500,545
 15,047,340
 19,426,742
 16,661,005
Commercial and standby letters of credit (2) 1,841,385
 1,695,856
 2,847,676
 2,252,016
Total unfunded credit commitments $16,341,930
 $16,743,196
 $22,274,418
 $18,913,021
Commitments unavailable for funding (3) $2,209,680
 $1,719,524
 $3,306,209
 $2,723,835
Allowance for unfunded credit commitments (4) 48,172
 45,265
 63,108
 55,183
 
(1)Represents commitments which are available for funding, due to clients meeting all collateral, compliance and financial covenants required under loan commitment agreements.
(2)See below for additional information on our commercial and standby letters of credit.
(3)Represents commitments which are currently unavailable for funding due to clients failing to meet all collateral, compliance and financial covenants under loan commitment agreements.
(4)Our allowance for unfunded credit commitments includes an allowance for both our unfunded loan commitments and our letters of credit.

Commercial and Standby Letters of Credit
The table below summarizes our commercial and standby letters of credit at September 30, 20172019. 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 $2,571,352
 $58,290
 $2,629,642
 $2,629,642
Performance standby letters of credit 119,666
 19,102
 138,768
 138,768
Commercial letters of credit 79,266
 —
 79,266
 79,266
Total $2,770,284
 $77,392
 $2,847,676
 $2,847,676

(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 $1,666,751
 $54,244
 $1,720,995
 $1,720,995
Performance standby letters of credit 85,220
 7,042
 92,262
 92,262
Commercial letters of credit 28,128
 —
 28,128
 28,128
Total $1,780,099
 $61,286
 $1,841,385
 $1,841,385
Deferred fees related to financial and performance standby letters of credit were $10$16.6 million at both September 30, 20172019 and $14.1 million at December 31, 2016.2018. At September 30, 2017,2019, collateral in the form of cash of $926 million$1.6 billion was 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
Subject to applicable regulatory requirements, including the Volcker Rule, we make commitments to invest in venture capital and private equity funds, which generally makesmake investments in privately-held companies. Commitments to invest in these funds are generally made for a 10-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 call most of the capital commitments over 5 to 7 years, and in certain cases, the funds may not call 100% of committed capital. 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 percentage in each fund at September 30, 20172019:
(Dollars in thousands) SVBFG Capital Commitments     
SVBFG Unfunded    
Commitments
 
SVBFG Ownership  
of each Fund (3)
 SVBFG Capital Commitments     
SVBFG Unfunded    
Commitments
 
SVBFG Ownership  
of each Fund (3)
CP I, LP $6,000
 $270
 10.7% $6,000
 $270
 10.7%
CP II, LP (1) 1,200
 162
 5.1
 1,200
 162
 5.1
Shanghai Yangpu Venture Capital Fund (LP) 872
 —
 6.8
Capital Preferred Return Fund, LP 12,688
 —
 20.0
Growth Partners, LP 24,670
 1,340
 33.0
Strategic Investors Fund, LP 15,300
 688
 12.6
 15,300
 688
 12.6
Strategic Investors Fund II, LP 15,000
 1,050
 8.6
 15,000
 1,050
 8.6
Strategic Investors Fund III, LP 15,000
 1,275
 5.9
 15,000
 1,275
 5.9
Strategic Investors Fund IV, LP 12,239
 2,325
 5.0
 12,239
 2,325
 5.0
Strategic Investors Fund V funds 515
 131
 Various
 515
 131
 Various
Capital Preferred Return Fund, LP 12,688
 —
 20.0
Growth Partners, LP 24,670
 1,340
 33.0
Other venture capital and private equity fund investments (equity method accounting) 21,782
 5,732
 Various
Debt funds (equity method accounting) 58,493
 —
 Various
 58,493
 —
 Various
Other fund investments (2) 302,867
 11,360
 Various
 286,293
 6,111
 Various
Total $464,844
 $18,601
   $469,180
 $19,084
  
 
(1)
Our ownership includes direct ownership of 1.3 percent and indirect ownership interest of 3.8 percent through our investment in Strategic Investors Fund II, LP.
(2)
Represents commitments to 243217 funds (primarily venture capital funds) where our ownership interest is generally less than five5 percent of the voting interests of each such fund.
(3)We are subject to the Volcker Rule, which restricts or limits us from sponsoring or having ownership interests in “covered” funds including venture capital and private equity funds. See “Business - Supervision and Regulation” under Part 1, Item 1 of Part I of our 20162018 Form 10-K.

The following table details the amounts of remaining unfunded commitments to venture capital and private equity funds by our consolidated managed funds of funds (including our interest and the noncontrolling interests) at September 30, 20172019:
(Dollars in thousands) Unfunded Commitments    
Strategic Investors Fund, LP $1,338
Capital Preferred Return Fund, LP 1,563
Growth Partners, LP 2,527
Total $5,428
(Dollars in thousands) Unfunded Commitments    
Strategic Investors Fund, LP $1,338
Capital Preferred Return Fund, LP 2,197
Growth Partners, LP 2,936
Total $6,471

13.17.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 California tax returns as major tax filings. Our U.S. federal tax returns for 20142015 and subsequent tax years remain open to full examination. Our California tax returns for 20132015 and subsequent tax years remain open to full examination.

At September 30, 2017,2019, our unrecognized tax benefit was $6.3$13.7 million, the recognition of which would reduce our income tax expense by $3.8$10.7 million. We do not expect that our unrecognized tax benefit will materially change in the next 12 months.

We recognize interest and penalties related to income tax matters as part of income before income taxes. Interest and penalties were not material for the three and nine months ended September 30, 2017.2019.
14.18.Fair Value of Financial Instruments
Fair Value Measurements
Our available-for-sale securities, derivative instruments and certain non-marketable and other equity 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 and on the significance of those inputs in the fair value measurement. Observable inputs reflect market-derived or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data and views of market participants. The three levels for measuring fair value are based on the reliability of inputs and are as follows:
Level 1
Fair value measurements based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. 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 U.S. Treasury securities, foreign government debt securities, exchange-traded equity securities and certain marketable securities accounted for under fair value accounting.
Level 2
Fair value measurements 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 pricing service providers who have experience in valuing these securities and by comparison to and/or average of quoted market prices obtained from independent brokers. We perform a monthly analysis on the values received from third parties to ensure that the prices represent a reasonable estimate of the fair value. The procedures include, but are not limited to, initial and ongoing review of third partythird-party pricing methodologies, review of pricing trends and monitoring of trading volumes. Additional corroboration, such as obtaining a non-binding price from a broker, may be obtained depending on the frequency of trades of the security and the level of liquidity or depth of the market. We ensure prices received from independent brokers represent a reasonable estimate of the fair value through the use of observable market inputs including comparable trades, yield curve, spreads and, when available, market indices. As a result of this analysis, if the Company determines that there is a more appropriate fair value based upon the available market data, the price received from the third party is adjusted accordingly. Below is a summary of the significant inputs used for each class of Level 2 assets and liabilities:

U.S. agency debentures: Fair value measurements 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. Fair value measurements 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. Fair value measurements 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. These measurements incorporate observable market spreads over an estimated average life after considering the inputs listed above.
Agency-issued commercial mortgage-backed securities: Fair value measurements 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. Fair value measurements

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.
Other equity securities: Fair value measurements of equity securities of public companies are priced based on quoted market prices less a discount if the securities are subject to certain sales restrictions. Certain sales restriction discounts generally range from 10 percent to 20 percent depending on the duration of the sale restrictions which typically range from three to six months.
Equity warrant assets (public portfolio): Fair value measurements of equity warrant assets of publicly-traded portfolio companies are valued based on the Black-Scholes option pricing model. The model uses the price of publicly-traded companies (underlying stock price), stated strike prices, warrant expiration dates, the risk-free interest rate and market-observable option volatility assumptions.
Foreign exchange forward and option contract assets and liabilities: Fair value measurements of these assets and liabilities are priced based on spot and forward foreign currency rates and option volatility assumptions.
Interest rate derivative and interest rate swap assets and liabilities: Fair value measurements of interest rate derivatives 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: Fair value measurements of these assets and liabilities are priced based on spot and forward foreign currency rates and option volatility assumptions.
Equity warrant assets (public portfolio): Fair value measurements of equity warrant assets of publicly-traded portfolio companies are valued based on the Black-Scholes option pricing model. The model uses the price of publicly-traded companies (underlying stock price), stated strike prices, warrant expiration dates, the risk-free interest rate and market-observable option volatility assumptions.
Level 3
The fair value measurement is derived from valuation techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions we believe market participants would use in pricing the asset. Below is a summary of the valuation techniques used for each class of Level 3 assets:
Other ventureVenture capital investments:and private equity fund investments not measured at net asset value: Fair value measurements 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, the current and projected operating performance, exit strategies and financing transactions subsequent to the acquisition of the investment. The significant unobservable inputs used in the fair value measurement include the information about each portfolio company, including actual and forecasted results, cash position, recent or planned transactions and market comparable companies. Significant changes to any one of these inputs in isolation could result in a significant change in the fair value measurement,measurement; however, we generally consider all factors available through ongoing communication with the portfolio companies and venture capital fund managers to determine whether there are changes to the portfolio company or the environment that indicate a change in the fair value measurement.
Other securities: Fair value measurements of equity securities of public companies are priced based on quoted market prices less a discount if the securities are subject to certain sales restrictions. Marketability discounts generally range from 10 percent to 20 percent depending on the duration of the sale restrictions which typically range from three to six months.
Equity warrant assets (public portfolio): Fair value measurements of equity warrant assets of publicly-traded portfolio companies are valued based on the Black-Scholes option pricing model. The model uses the price of publicly-traded companies (underlying stock price), stated strike prices, warrant expiration dates, the risk-free interest rate and market-observable option volatility assumptions. Modeled asset values are further adjusted by applying a discount of up to 20 percent for certain warrants that have lock-up restrictions or other features that indicate a discount to fair value is warranted.

As a lock-up term nears, and other sale restrictions are lifted, discounts are adjusted downward to zero percent once all restrictions expire or are removed.
Equity warrant assets (private portfolio): Fair value measurements of equity warrant assets of private portfolio companies are priced based on a Black-Scholes option pricing model to estimate the asset value by using stated strike prices, option expiration dates, risk-free interest rates and option volatility assumptions. Option volatility assumptions used in the 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 to 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. There is a direct correlation between changes in the volatility and remaining life assumptions in isolation and the fair value measurement while there is an inverse correlation between changes in the liquidity discount assumption and the fair value measurement.
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 valuation techniques 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 the foregoing methodologies and are categorized as a Level 1 or Level 2 measurement in the fair value hierarchy. However, in certain cases, when market observable inputs for our valuation techniques may not be readily available, we are required to make judgments about assumptions we believe market participants would use in estimating the fair value of the financial instrument, and based on the significance of those judgments, the measurement may be determined to be a Level 3 fair value measurement.

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 table presents information about our assets and liabilities that are measured at fair value on a recurring basis as of September 30, 20172019:
(Dollars in thousands) Level 1 Level 2 Level 3 
Balance at
September 30, 2017
 Level 1 Level 2 Level 3 Balance at September 30, 2019
Assets:                
Available-for-sale securities:                
U.S. Treasury securities $7,498,340
 $—
 $—
 $7,498,340
 $6,334,848
 $—
 $—
 $6,334,848
U.S. agency debentures —
 1,676,169
 —
 1,676,169
 —
 100,000
 —
 100,000
Foreign government debt securities 8,847
 —
 —
 8,847
Residential mortgage-backed securities:                
Agency-issued mortgage-backed securities —
 4,148,700
 —
 4,148,700
Agency-issued collateralized mortgage obligations—fixed rate
 —
 3,012,695
 —
 3,012,695
 —
 1,679,664
 —
 1,679,664
Agency-issued collateralized mortgage obligations—variable rate
 —
 395,880
 —
 395,880
Equity securities 802
 19,451
 —
 20,253
Agency-issued commercial mortgage-backed securities —
 594,798
 —
 594,798
Total available-for-sale securities 7,499,142
 5,104,195
 —
 12,603,337
 6,343,695
 6,523,162
 —
 12,866,857
Non-marketable and other securities (fair value accounting):        
Non-marketable and other equity securities (fair value accounting):        
Non-marketable securities:                
Venture capital and private equity fund investments measured at net asset value —
 —
 —
 128,768
 —
 —
 —
 273,426
Other venture capital investments (1) —
 —
 1,897
 1,897
Other securities (1) 392
 —
 —
 392
Total non-marketable and other securities (fair value accounting) 392
 —
 1,897
 131,057
Venture capital and private equity fund investments not measured at net asset value (1) —
 —
 134
 134
Other equity securities in public companies 3,226
 52,855
 —
 56,081
Total non-marketable and other equity securities (fair value accounting) 3,226
 52,855
 134
 329,641
Other assets:                
Foreign exchange forward and option contracts —
 94,947
 —
 94,947
 —
 122,280
 —
 122,280
Equity warrant assets —
 2,710
 139,075
 141,785
 —
 4,072
 145,041
 149,113
Interest rate swaps —
 40,976
 —
 40,976
Client interest rate derivatives —
 11,824
 —
 11,824
 —
 25,608
 —
 25,608
Total assets $7,499,534
 $5,213,676
 $140,972
 $12,982,950
 $6,346,921
 $6,768,953
 $145,175
 $13,534,475
Liabilities:                
Foreign exchange forward and option contracts $—
 $88,961
 $—
 $88,961
 $—
 $101,729
 $—
 $101,729
Interest rate swaps —
 9,286
 —
 9,286
Client interest rate derivatives —
 11,955
 —
 11,955
 —
 37,525
 —
 37,525
Total liabilities $—
 $100,916
 $—
 $100,916
 $—
 $148,540
 $—
 $148,540
 
(1)
Included in Level 1 and Level 3 assets are is $0.3 million and $1.7 million, respectively,120 thousand attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.



The following fair value hierarchy table presents information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31, 20162018:
(Dollars in thousands) Level 1 Level 2 Level 3 Balance at December 31, 2016 Level 1 Level 2 Level 3 Balance at December 31, 2018
Assets:                
Available-for-sale securities:                
U.S. Treasury securities $8,909,491
 $—
 $—
 $8,909,491
 $4,738,258
 $—
 $—
 $4,738,258
U.S. agency debentures —
 2,078,375
 —
 2,078,375
 —
 1,084,117
 —
 1,084,117
Foreign government debt securities 5,812
 —
 —
 5,812
Residential mortgage-backed securities:                
Agency-issued collateralized mortgage obligations—fixed rate —
 1,152,665
 —
 1,152,665
 —
 1,880,218
 —
 1,880,218
Agency-issued collateralized mortgage obligations—variable rate —
 474,283
 —
 474,283
 —
 81,638
 —
 81,638
Equity securities 175
 5,422
 —
 5,597
Total available-for-sale securities 8,909,666
 3,710,745
 —
 12,620,411
 4,744,070
 3,045,973
 —
 7,790,043
Non-marketable and other securities (fair value accounting):        
Non-marketable and other equity securities (fair value accounting):        
Non-marketable securities:                
Venture capital and private equity fund investments measured at net asset value —
 —
 —
 141,649
 —
 —
 —
 318,352
Other venture capital investments (1) —
 —
 2,040
 2,040
Other securities (1) 753
 —
 —
 753
Total non-marketable and other securities (fair value accounting) 753
 —
 2,040
 144,442
Venture capital and private equity fund investments not measured at net asset value (1) —
 —
 1,079
 1,079
Other equity securities in public companies 1,181
 19,217
 —
 20,398
Total non-marketable and other equity securities (fair value accounting) 1,181
 19,217
 1,079
 339,829
Other assets:                
Interest rate swaps —
 810
 —
 810
Foreign exchange forward and option contracts —
 68,027
 —
 68,027
 —
 100,402
 —
 100,402
Equity warrant assets —
 2,310
 128,813
 131,123
 —
 4,039
 145,199
 149,238
Client interest rate derivatives —
 10,110
 —
 10,110
 —
 8,499
 —
 8,499
Total assets $8,910,419
 $3,792,002
 $130,853
 $12,974,923
 $4,745,251
 $3,178,130
 $146,278
 $8,388,011
Liabilities:                
Foreign exchange forward and option contracts $—
 $54,668
 $—
 $54,668
 $—
 $88,559
 $—
 $88,559
Client interest rate derivatives —
 9,770
 —
 9,770
 —
 9,491
 —
 9,491
Total liabilities $—
 $64,438
 $—
 $64,438
 $—
 $98,050
 $—
 $98,050
 
(1)
Included in Level 1 and Level 3 assets are is $0.6 million and $1.8 million, respectively,964 thousand 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, 20172019 and 20162018:
(Dollars in thousands) 
Beginning
Balance
 Total Realized and Unrealized Gains (Losses) Included in Income Sales Issuances   Distributions and Other Settlements Transfers Out of Level 3 
Ending
Balance
 Beginning Balance Total Realized and Unrealized Gains Included in Income Purchases Sales/Exits Issuances   Distributions and Other Settlements Transfers Out of Level 3 Ending Balance
Three months ended September 30, 2017              
Non-marketable and other securities (fair value accounting):              
Other venture capital investments (1) $1,897
 $—
 $—
 $—
 $—
 $—
 $1,897
Three months ended September 30, 2019                
Non-marketable and other equity securities (fair value accounting):                
Venture capital and private equity fund investments not measured at net asset value (1) $441
 $57
 $—
 $(364) $—
 $—
 $—
 $134
Other assets:                              
Equity warrant assets (2) 128,952
 24,354
 (17,412) 3,622
 —
 (441) 139,075
 147,770
 39,527
 —
 (45,270) 4,130
 —
 (1,116) 145,041
Total assets $130,849
 $24,354
 $(17,412) $3,622
 $—
 $(441) $140,972
 $148,211
 $39,584
 $—
 $(45,634) $4,130
 $—
 $(1,116) $145,175
Three months ended September 30, 2016              
Non-marketable and other securities (fair value accounting):              
Other venture capital investments (1) $2,040
 $4
 $(4) $—
 $—
 $—
 $2,040
Three months ended September 30, 2018                
Non-marketable and other equity securities (fair value accounting):                
Venture capital and private equity fund investments not measured at net asset value (1) $1,001
 $—
 $—
 $—
 $—
 $—
 $—
 $1,001
Other assets:                              
Equity warrant assets (2) 127,811
 21,092
 (10,682) 5,251
 —
 (252) 143,220
 137,753
 32,237
 —
 (34,101) 4,809
 —
 (209) 140,489
Total assets $129,851
 $21,096
 $(10,686) $5,251
 $—
 $(252) $145,260
 $138,754
 $32,237
 $—
 $(34,101) $4,809
 $—
 $(209) $141,490
Nine months ended September 30, 2017              
Non-marketable and other securities (fair value accounting):              
Other venture capital investments (1) $2,040
 $(143) $—
 $—
 $—
 $—
 $1,897
Nine months ended September 30, 2019                
Non-marketable and other equity securities (fair value accounting):                
Venture capital and private equity fund investments not measured at net asset value (1) $1,079
 $12
 $—
 $(960) $—
 $3
 $—
 $134
Other assets:                              
Equity warrant assets (2) 128,813
 41,549
 (40,998) 11,071
 —
 (1,360) 139,075
 145,199
 105,338
 575
 (113,143) 11,714
 —
 (4,642) 145,041
Total assets $130,853
 $41,406
 $(40,998) $11,071
 $—
 $(1,360) $140,972
 $146,278
 $105,350
 $575
 $(114,103) $11,714
 $3
 $(4,642) $145,175
Nine months ended September 30, 2016              
Non-marketable and other securities (fair value accounting):              
Other venture capital investments (1) $2,040
 $(21) $(4) $—
 $25
 $—
 $2,040
Nine months ended September 30, 2018                
Non-marketable and other equity securities (fair value accounting):                
Venture capital and private equity fund investments not measured at net asset value (1) $919
 $82
 $—
 $—
 $—
 $—
 $—
 $1,001
Other assets:                              
Equity warrant assets (2) 135,168
 33,115
 (34,276) 9,842
 —
 (629) 143,220
 121,331
 69,097
 —
 (61,464) 14,007
 —
 (2,482) 140,489
Total assets $137,208
 $33,094
 $(34,280) $9,842
 $25
 $(629) $145,260
 $122,250
 $69,179
 $—
 $(61,464) $14,007
 $—
 $(2,482) $141,490
 
(1)Realized and unrealized gains (losses) are recorded in the line item “Gains on investment securities, net”,net," a component of noninterest income.
(2)Realized and unrealized gains (losses) are recorded in the line item “Gains on equity warrant assets, net”,net," a component of noninterest income.





The following table presents the amount of net unrealized gains and losses included in earnings (which is inclusive of noncontrolling interest) attributable to Level 3 assets still held at September 30, 20172019 and 20162018:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 2019 2018
Non-marketable and other equity securities (fair value accounting):        
Venture capital and private equity fund investments not measured at net asset value (1) $57
 $—
 $12
 $82
Other assets:        
Equity warrant assets (2) (727) 15,841
 21,041
 30,954
Total unrealized (losses) gains, net $(670) $15,841
 $21,053
 $31,036
Unrealized (losses) gains attributable to noncontrolling interests (1) $(158) $—
 $(199) $73
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Non-marketable and other securities (fair value accounting):        
Other venture capital investments (1) $—
 $—
 $(143) $—
Other assets:        
Equity warrant assets (2) 17,827
 15,785
 23,734
 23,144
Total unrealized gains, net $17,827
 $15,785
 $23,591
 $23,144
Unrealized losses attributable to noncontrolling interests $—
 $—
 $(127) $—

 
(1)
Unrealized gains (losses) are recorded in the line item “Gains on investment securities, net”," a component of noninterest income.
(2)
Unrealized gains (losses) are recorded in the line item “Gains on equity warrant assets, net”," a component of noninterest income.
The extent to which any unrealized gains or losses will become realized is subject to a variety of factors, including, among other things, the expiration of current sales restrictions to which these securities are subject, the actual sales of securities and the timing of such actual sales.
The following table presents quantitative information about the significant unobservable inputs used for certain of our Level 3 fair value measurements at September 30, 20172019 and December 31, 2016.2018. We have not included in this table our venture capital and private equity fund investments (fair value accounting) as we use net asset value per share (as obtained from the general partners of the investments) as a practical expedient to determine fair value.
(Dollars in thousands) Fair value Valuation Technique Significant Unobservable Inputs 
Weighted 
Average
 Fair value Valuation Technique Significant Unobservable Inputs 
Weighted 
Average
September 30, 2017:    
Other venture capital investments (fair value accounting) $1,897
 Private company equity pricing (1) (1)
September 30, 2019:    
Venture capital and private equity fund investments (fair value accounting) $134
 Private company equity pricing (1) (1)
Equity warrant assets (public portfolio) 21,660
 Black-Scholes option pricing model Volatility 37.5% 776
 Black-Scholes option pricing model Volatility 34.8%
  Risk-Free interest rate 1.8
   Risk-Free interest rate 1.6
  Sales restrictions discount (2) 19.9
   Sales restrictions discount (2) 19.2
Equity warrant assets (private portfolio) 117,415
 Black-Scholes option pricing model Volatility 36.7
 144,265
 Black-Scholes option pricing model Volatility 38.9
  Risk-Free interest rate 1.5
   Risk-Free interest rate 1.6
  Marketability discount (3) 16.6
   Marketability discount (3) 17.8
  Remaining life assumption (4) 45.0
   Remaining life assumption (4) 45.0
December 31, 2016:    
Other venture capital investments (fair value accounting) $2,040
 Private company equity pricing (1) (1)
December 31, 2018:    
Venture capital and private equity fund investments (fair value accounting) $1,079
 Private company equity pricing (1) (1)
Equity warrant assets (public portfolio) 764
 Black-Scholes option pricing model Volatility 46.6% 2,757
 Black-Scholes option pricing model Volatility 54.7%
  Risk-Free interest rate 2.1
   Risk-Free interest rate 2.6
  Sales restrictions discount (2) 17.7
   Sales restrictions discount (2) 18.5
Equity warrant assets (private portfolio) 128,049
 Black-Scholes option pricing model Volatility 36.9
 142,442
 Black-Scholes option pricing model Volatility 38.5
  Risk-Free interest rate 1.3
   Risk-Free interest rate 2.5
  Marketability discount (3) 17.1
   Marketability discount (3) 17.7
  Remaining life assumption (4) 45.0
   Remaining life assumption (4) 45.0
 
(1)In determining the fair value of our other venture capital and private equity fund investment portfolio (not measured at net asset value), we evaluate a variety of factors related to each underlying private portfolio company including, but not limited to, actual and forecasted results, cash position, recent or planned transactions and market comparable companies. Additionally, we have ongoing communication with the portfolio companies and venture capital fund managers, to determine whether there is a material change in fair value. We use company provided valuation reports, if available, to support our valuation assumptions. These factors are specific to each portfolio company and a weighted average or range of values of the unobservable inputs is not meaningful.

assumptions. These factors are specific to each portfolio company and a weighted average or range of values of the unobservable inputs is not meaningful.
(2)
We adjust quoted market prices of public companies, which are subject to certain sales restrictions. Sales restriction discounts generally range from 10 percent to 20 percent depending on the duration of the sales restrictions, which typically range from three to six months. months.

(3)Our marketability discount is applied to all private company warrants to account for a general lack of liquidity due to the private nature of the associated underlying company. The quantitative measure used is based upon various option-pricing models. On a quarterly basis, a sensitivity analysis is performed on our marketability discount.
(4)
We adjust the contractual remaining term of private company warrants based on our estimate of the actual remaining life, which we determine by utilizing historical data on cancellationsterminations and exercises. At September 30, 20172019, the weighted average contractual remaining term was 5.96.1 years, compared to our estimated remaining life of 2.7 years. On a quarterly basis, a sensitivity analysis is performed on our remaining life assumption.
For the three and nine months ended September 30, 20172019 and 2016,2018, we did not have any transfers between Level 2 and Level 1 or transfers between Level 3 and Level 1. All transfers from Level 3 to Level 2 for the three and nine months ended September 30, 20172019 and 20162018 were due to the transfer of equity warrant assets from our private portfolio to our public portfolio (see our Level 3 reconciliation above). All amounts reported as transfers represent the fair value as of the date of the change in circumstances that caused the transfer.

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. As broadly traded markets do not exist for many of our financial instruments, the fair value calculations attempt to incorporate the effect of current market conditions at a specific time. 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 for which carrying value approximates fair value and estimated fair values of financial instruments not recorded at fair value on a recurring basis and excludes financial instruments and assets and liabilities already recorded at fair value as described above.
Financial Instruments for which Carrying Value Approximates Fair Value
Certain financial instruments that are not carried at fair value on the Consolidated Balance Sheets are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents; FHLB and FRB stock; accrued interest receivable; short-term borrowings; short-term time deposits; and accrued interest payable. In addition, U.S. GAAP requires that the fair value of deposit liabilities with no stated maturity (i.e., demand, savings and certain money market deposits) be equal to their carrying value; recognition of the inherent funding value of these instruments is not permitted.

Estimated Fair Values of Financial Instruments Not Recorded at Fair Value on a Recurring Basis
Held-to-Maturity Securities
Held-to-maturity securities include similar investments held in our available-for-sale securities portfolio and are valued using the same methodologies. All securities included in our held-to-maturity securities portfolio are valued using Level 2 inputs. Refer to Level 2 fair value measurements above for significant inputs used in the valuation of our held-to-maturity investment securities.
Non-Marketable Securities (Cost and Equity Method Accounting)
Non-marketable securities includes other investments (equity method accounting), venture capital and private equity fund investments (cost method accounting), and other venture capital investments (cost method accounting). Other investments (equity method accounting) includes our investment in SPD-SVB, our joint venture bank in China. At this time, the carrying value of our investment in SPD-SVB is a reasonable estimate of fair value. The fair value of the remaining other investments (equity method accounting) and the fair value of 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 fund investments' or debt fund investments' respective general partners. For private company investments, estimated 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 per share as obtained from the general partners of the investments. We adjust the net asset value per share 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 30th, for our September 30th consolidated

financial statements, adjusted for any contributions paid, distributions received from the investment, and significant fund transactions or market events during the reporting period.
Loans
The fair value of fixed and variable rate loans is estimated by discounting contractual cash flows using rates that reflect current pricing for similar loans and the projected forward yield curve. This method is not based on the exit price concept of fair value required under ASC 820, Fair Value Measurements and Disclosures.
Long-Term Deposits
The fair value of long-term time deposits is estimated by discounting the cash flows using our cost of borrowings and the projected forward yield curve over their remaining contractual term.
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 6.05% Subordinated Notes are amounts related to hedge accounting associated with the notes.
Off-Balance Sheet Financial Instruments
The fair value of net available commitments to extend credit is estimated based on the average amount we would receive or pay to execute a new agreement with identical terms and pricing, while taking into account the counterparties’ credit standing.
Letters of credit are carried at their fair value, which was equivalent to the residual premium or fee at September 30, 2017 and December 31, 2016. Commitments to extend credit and letters of credit typically result in loans with a market interest rate if funded.
The following fair value hierarchy table presents the estimated fair values of our financial instruments that are not carried at fair value at September 30, 20172019 and December 31, 20162018:

   Estimated Fair Value   Estimated Fair Value
(Dollars in thousands) Carrying Amount Total Level 1 Level 2 Level 3 Carrying Amount Total Level 1 Level 2 Level 3
September 30, 2017:          
September 30, 2019:          
Financial assets:                    
Cash and cash equivalents $3,555,571
 $3,555,571
 $3,555,571
 $—
 $—
 $6,946,196
 $6,946,196
 $6,946,196
 $—
 $—
Held-to-maturity securities 11,055,006
 11,023,415
 —
 11,023,415
 —
 14,407,078
 14,698,802
 —
 14,698,802
 —
Non-marketable securities (cost and equity method accounting) not measured at net asset value 122,493
 127,338
 —
 —
 127,338
Non-marketable securities (cost and equity method accounting) measured at net asset value 225,883
 329,468
 —
 —
 —
Non-marketable securities not measured at net asset value 183,980
 183,980
 —
 —
 183,980
Non-marketable securities measured at net asset value 217,459
 217,459
 —
 —
 —
Net commercial loans 19,449,408
 19,878,367
 —
 —
 19,878,367
 27,283,952
 28,427,753
 —
 —
 28,427,753
Net consumer loans 2,490,909
 2,457,138
 —
 —
 2,457,138
 3,475,632
 3,620,703
 —
 —
 3,620,703
FHLB and Federal Reserve Bank stock 58,012
 58,012
 —
 —
 58,012
 59,790
 59,790
 —
 —
 59,790
Accrued interest receivable 129,451
 129,451
 —
 129,451
 —
Financial liabilities:                    
Other short-term borrowings 4,840
 4,840
 4,840
 —
 —
Short-term borrowings 18,898
 18,898
 —
 18,898
 —
Non-maturity deposits (1) 44,766,988
 44,766,988
 44,766,988
 —
 —
 59,352,559
 59,352,559
 59,352,559
 —
 —
Time deposits 45,045
 44,895
 —
 44,895
 —
 190,315
 190,078
 —
 190,078
 —
3.50% Senior Notes 347,221
 350,864
 —
 350,864
 —
 347,899
 362,551
 —
 362,551
 —
5.375% Senior Notes 348,035
 383,439
 —
 383,439
 —
 349,328
 360,560
 —
 360,560
 —
7.0% Junior Subordinated Debentures 54,362
 54,977
 —
 54,977
 —
Accrued interest payable 4,150
 4,150
 —
 4,150
 —
Off-balance sheet financial assets:                    
Commitments to extend credit —
 20,751
 —
 —
 20,751
 —
 25,136
 —
 —
 25,136
December 31, 2016:          
December 31, 2018:          
Financial assets:                    
Cash and cash equivalents $2,545,750
 $2,545,750
 $2,545,750
 $—
 $—
 $3,571,539
 $3,571,539
 $3,571,539
 $—
 $—
Held-to-maturity securities 8,426,998
 8,376,138
 —
 8,376,138
 —
 15,487,442
 15,188,236
 —
 15,188,236
 —
Non-marketable securities (cost and equity method accounting) not measured at net asset value 120,037
 127,343
 —
 —
 127,343
Non-marketable securities (cost and equity method accounting) measured at net asset value 245,626
 353,870
 —
 —
 —
Non-marketable securities not measured at net asset value 131,453
 131,453
 —
 —
 131,453
Non-marketable securities measured at net asset value 151,247
 151,247
 —
 —
 —
Net commercial loans 17,518,430
 17,811,356
 —
 —
 17,811,356
 25,043,671
 25,463,968
 —
 —
 25,463,968
Net consumer loans 2,156,148
 2,199,501
 —
 —
 2,199,501
 3,013,706
 3,064,093
 —
 —
 3,064,093
FHLB and Federal Reserve Bank stock 57,592
 57,592
 —
 —
 57,592
 58,878
 58,878
 —
 —
 58,878
Accrued interest receivable 111,222
 111,222
 —
 111,222
 —
Financial liabilities:                    
Short-term FHLB advances 500,000
 500,000
 500,000
 —
 —
Other short-term borrowings 12,668
 12,668
 12,668
 —
 —
Short-term borrowings 631,412
 631,412
 —
 631,412
 —
Non-maturity deposits (1) 38,923,750
 38,923,750
 38,923,750
 —
 —
 49,278,174
 49,278,174
 49,278,174
 —
 —
Time deposits 56,118
 55,949
 —
 55,949
 —
 50,726
 50,337
 —
 50,337
 —
3.50% Senior Notes 346,979
 337,600
 —
 337,600
 —
 347,639
 336,088
 —
 336,088
 —
5.375% Senior Notes 347,586
 378,777
 —
 378,777
 —
 348,826
 361,281
 —
 361,281
 —
6.05% Subordinated Notes (2) 46,646
 47,489
 —
 47,489
 —
7.0% Junior Subordinated Debentures 54,493
 53,140
 —
 53,140
 —
Accrued interest payable 12,013
 12,013
 —
 12,013
 —
Off-balance sheet financial assets:                    
Commitments to extend credit —
 22,074
 —
 —
 22,074
 —
 22,930
 —
 —
 22,930
 
(1)Includes noninterest-bearing demand deposits, interest-bearing checking accounts, money market accounts and interest-bearing sweep deposits.


(2)
At December 31, 2016, included in the carrying value and estimated fair value of our 6.05% Subordinated Notes was an interest rate swap valued at $0.8 million related to hedge accounting 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 primarily through IPO and M&A activity of the underlying assets of the fund. Subject to applicable requirements under the Volcker Rule, we 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 30th, for our September 30th consolidated financial statements, adjusted for any contributions paid, distributions received from the investment, and significant fund transactions or market events during the reporting period.
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, 20172019:
(Dollars in thousands) Carrying Amount       Fair Value         Unfunded Commitments       Carrying Amount       Fair Value         Unfunded Commitments      
Non-marketable securities (fair value accounting):            
Venture capital and private equity fund investments (1) $128,768
 $128,768
 $6,471
 $273,426
 $273,426
 $10,653
Non-marketable securities (equity method accounting):            
Venture capital and private equity fund investments (2) 87,218
 87,218
 4,943
 196,425
 196,425
 10,674
Debt funds (2) 17,889
 17,889
 —
 7,153
 7,153
 —
Other investments (2) 17,820
 17,820
 886
 13,881
 13,881
 886
Non-marketable securities (cost method accounting):      
Venture capital and private equity fund investments (2) 102,956
 206,541
 10,474
Total $354,651
 $458,236
 $22,774
 $490,885
 $490,885
 $22,213
 
(1)
Venture capital and private equity fund investments within non-marketable securities (fair value accounting) include investments made by our managed funds of funds and one of our direct venture funds. Thesefunds (consolidated VIEs) and investments representin venture capital and private equity fund investments (unconsolidated VIEs). Collectively, these investments in venture capital and private equity funds that investare primarily in U.S. and global technology and life science/healthcare companies. Included in the fair value and unfunded commitments of fund investments under fair value accounting are $95.768.2 million and $4.94.1 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)
Venture capital and private equity fund investments, debt funds, and other fund investments within non-marketable securities (equity and cost method accounting) include funds that invest in or lend money to primarily U.S. and global technology and life science/healthcare companies. It is estimated that we will receive distributions from the funds over the next 5 to 8 years, depending on the age of the funds and any potential extensions of the terms of the funds.
15.19.Legal Matters
Certain lawsuits and claims arising in the ordinary course of business have been filed or are pending against us and/or our affiliates, and we may from time to time be involved in other legal or regulatory proceedings. In accordance with applicable accounting guidance, we establish accruals for all such matters, including expected settlements, when we believe it is probable that a loss has been incurred and the amount of the loss is reasonably estimable. When a loss contingency is not both probable and estimable, we do not establish an accrual. Any such loss estimates are inherently uncertain, based on currently available information and are subject to management’s judgment and various assumptions. Due to the inherent subjectivity of these estimates and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate resolution of such matters.

To the extent we believe any potential loss relating to such matters may have a material impact on our liquidity, consolidated financial position, results of operations, and/or our business as a whole and is reasonably possible but not probable, we aim to disclose information relating to such potential loss. We also aim to disclose information relating to any material potential loss that is probable but not reasonably estimable. In such cases, where reasonably practicable, we aim to provide an estimate of loss or range of potential loss. No disclosures are generally made for any loss contingencies that are deemed to be remote.

Based upon information available to us, our review of lawsuits and claims filed or pending against us to date and consultation with our outside legal counsel, we have not recognized a material accrual liability for any such matters, nor do we currently expect that these matters will result in a material liability to the Company. However, the outcome of litigation and other legal and regulatory matters is inherently uncertain, and it is possible that one or more of such matters currently pending or threatened could have an unanticipated material adverse effect on our liquidity, consolidated financial position, results of operations, and/or our business as a whole, in the future.
16.20.Related Parties
We have no material related party transactions requiring disclosure. In the ordinary course of business, the Bank may extend credit to related parties, including executive officers, directors, principal shareholders and their related interests. Additionally, we provide real estate secured loans to eligible employees through our EHOP. For additional details, see Note 16—17—“Employee Compensation and Benefit Plans" under Part II, Item 8 of our 20162018 Form 10-K.


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 safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, 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:
Financial projections, including with respect to 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 sales or acquisitions;

Forecasts of private equity/venture capital funding and investment levels;
Forecasts of future interest rates, economic performance, and income from investments;
Forecasts of expected levels of provisions for loan losses, nonperforming loans, loan growth and client funds; and
Descriptions of assumptions underlying or relating to any of the foregoing.
You can identify these and other forward-looking statements by the use of words such as “becoming,” “may,” “will,” “should,” "could,""would," “predict,” “potential,” “continue,” “anticipate,” “believe,” “estimate,” “assume,” “seek,” “expect,” “plan,” “intend,” the negative of such words, or comparable terminology. Forward-looking statements are neither historical facts nor assurances of future performance. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we have based these expectations on our current beliefs as well as our assumptions, and such expectations may prove to be incorrect. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results of operations and financial performance could differ significantly from those expressed in or implied by our management’s forward-looking statements. Important factors that could cause our actual results and financial condition to differ from the expectations stated in the forward-looking statements include, among others:
Market and economic conditions, including the interest rate environment, and the associated impact on us;
The credit profile and credit quality of our loan portfolio and volatility of our levels of nonperforming assets and charge-offs;
The adequacy of our allowance for loan losses and the need to make provisions for loan losses for any period;
The borrowing needs of our clients;
The sufficiency of our capital and liquidity positions;
The levels of loans, deposits and client investment fund balances;

The performance of our portfolio investments; the general condition of the public and private equity and mergers and acquisitions markets and their impact on our investments, including equity warrant assets, venture capital and private equity funds and direct equity investments;
Our overall investment plans and strategies; the realization, timing, valuation and performance of our equity or other investments;
The levels of public offerings, mergers and acquisitions and venture capital investment activity of our clients that may impact the borrowing needs of our clients;
The occurrence of fraudulent activity, including breaches of our information security or cyber security-related incidents;
Business disruptions and interruptions due to natural disasters and other external events;
The impact on our reputation and business from our interactions with business partners, counterparties, service providers and other third parties;
Expansion of our business internationally, and the impact of international market and economic events on us;
The impact of governmental policy, legal requirements and regulations, including the Economic Growth, Regulatory Relief and Consumer Protection Act and the Dodd-Frank Act, promulgated by the Federal Reserve and other regulatory requirements;
The impact of lawsuits and claims, as well as legal or regulatory proceedings;
The impact of changes in accounting standards and tax laws (including any tax reform, such as the proposed Tax Cuts and Jobs Act);laws;
The levels of equity capital available to our client or portfolio companies;
The effectiveness of our risk management framework and quantitative models;
The sale of impaired assets;
Our ability to maintain or increase our market share, including through successfully implementing our business strategy and undertaking new business initiatives;initiatives, including through the integration of SVB Leerink; and
•
Other factors as discussed in “Risk Factors” under Part I, Item 1A in our 2018 Form 10-K.
Other factors as discussed in “Risk Factors” under Part I, Item 1A in our 2016 Form 10-K.


We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this Quarterly Report on Form 10-Q. 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, except as required by law.
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited interim consolidated financial statements and accompanying notes as presented in Part I, Item 1 of this report and in conjunction with our 20162018 Form 10-K.
Reclassifications
Certain prior period amounts primarily related to thepresentation changes to our incomefinancial statement presentation of gains on derivative instruments, net and provision for unfunded credit commitmentsline items have been reclassified to conform to current period presentations.

Management’s Overview of Third Quarter 20172019 Performance
Overall, we had an outstandingcontinued to deliver strong results in the third quarter in 2017, which wasof 2019, marked by higher net interest andcontinued healthy balance sheet growth, stable credit quality, continued core fee income increased warrantgrowth, solid gains strong totalon equity warrants and robust client funds growth, healthy loan growth and stable credit quality. Additionally, we saw higher noninterest expense, primarily from increased compensation and benefits expenses as well as professional services expenses reflective of increased expenses to support our increasing regulatory, risk and compliance initiatives to support our domestic and global expansion as well as investments made in projects, systems and technology to support our revenue growth and related initiatives and other operating costs.acquisition. Our core business continued to perform well as a result of our ongoing focus on innovation companies and their investors and continued efforts to secure client relationships. We saw continued success in working with private equity/venture capital firms, our technology and technologylife science/healthcare clients as well asand clients in our private bankingbank division.

A summary of our performance for the three months ended September 30, 20172019 (compared to the three months ended September 30, 2016,2018, where applicable) is as follows:

BALANCE SHEET EARNINGS
Assets.$49.865.3 billion in average total assets (up 14.6%15.7%). $50.8$68.2 billion in period-end total assets (up 17.3%17.4%).
Loans.$21.6 $29.8 billion in average total loan balances, net of unearned income (up 15.8%13.3%). $22.2$31.1 billion in period-end total loan balances, net of unearned income (up 16.1%13.0%).
Total Client Funds (on-balanceFunds. (on-balance sheet deposits and off-balance sheet client investment funds).$97.3 $150.1 billion in average total client fund balances (up 20.1%16.6%). $99.0$156.0 billion in period-end total client fund balances (up 21.5%19.4%).
AFS/HTM Fixed Income Investments.$23.125.1 billion in average fixed income investment securities (up 11.5%(down 1.5%). $23.7$27.3 billion in period-end fixed income investment securities (up 15.6%9.2%).




 
 EPS. Earnings per diluted share of $2.79$5.15 (up 31.6%1.0%).
Net Income. Consolidated net income available to common stockholders of $148.6$267.3 million (up 33.8%(down 2.7%).
- Net interest income of $374.0$520.6 million (up 29.3%5.6%).
- Net interest margin of 3.10% (up 353.34% (down 28 bps).
- Noninterest income of $158.8$294.0 million (up 10.2%40.0%), with non-GAAP core fee income+ of $102.7$162.2 million (up 27.6%23.1%).
- Noninterest expense of $257.8$391.3 million (up 16.8%26.5%).


ROE.ROE. Return on average equity (annualized) (“ROE”) performance of 14.59%18.27%.
Operating Efficiency Ratio. Operating efficiency ratio of 48.38%48.04% with a non-GAAP core operating efficiency ratio of 48.05%++.


   
CAPITAL CREDIT QUALITY
Capital. Continued strong capital, levels, with all capital ratios considered “well-capitalized” under banking regulations. SVBFG and SVB capital ratios, respectively, were:
- CET 1 risk-based capital ratio of 12.96%12.71% and 12.41%11.48%.
- Tier 1 risk-based capital ratio of 13.32%12.86% and 12.41%11.48%.
- Total risk-based capital ratio of 14.29%13.70% and 13.40%12.36%.
- Tier 1 leverage ratio of 8.34%8.64% and 7.59%7.48%.


 
Credit Quality. Continued disciplined underwriting.
- Allowance for loan losses of 1.12%0.97% as a percentage of period-end total gross loans.
- Provision for loan losses of 0.40%0.46% as a percentage of period-end total gross loans (annualized).
- Net loan charge-offs of 0.19%0.44% as a percentage of average total gross loans (annualized).






+ Consists of fee income for deposit services, letters of credit and standby letters of credit, credit cards, client investments, foreign exchange and lending-related activities. This is a non-GAAP financial metric.measure. (See the non-GAAP reconciliation under “Results of Operations—Noninterest Income”)

++ This ratio excludes certain financial line items where performance is typically subject to market or other conditions beyond our control and excludes SVB Leerink revenue and expenses. It is calculated by dividing noninterest expense after adjusting for noninterest expense attributable to SVB Leerink by total revenue after adjusting for noninterest income attributable to SVB Leerink, net gains or losses on investment securities and equity warrant assets, investment banking revenue and commissions. Additionally, noninterest expense and total revenue are adjusted for income or losses and expenses attributable to noncontrolling interests and adjustments to net interest income for a taxable equivalent basis. This is a non-GAAP financial measure. (See the non-GAAP reconciliation under "Results of Operations-Noninterest Expense").


A summary of our performance for the three and nine months ended September 30, 20172019 and 20162018 is as follows:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands, except per share data, employees and ratios) 2017
2016 % Change   2017 2016 % Change  
               
Diluted earnings per common share $2.79
 $2.12
 31.6
%  $7.01
 $5.42
 29.3
% 
Net income available to common stockholders 148,620
 111,081
 33.8
   373,296
 283,219
 31.8
  
Net interest income 373,974
 289,161
 29.3
   1,026,663
 853,918
 20.2
  
Net interest margin 3.10% 2.75% 35
bps  2.99% 2.72% 27
bps 
Provision for credit losses $23,522
 $20,004
 17.6
% $70,062
 $90,225
 (22.3)%
Noninterest income 158,778
 144,140
 10.2
  404,965
 343,050
 18.0
 
Noninterest expense 257,761
 220,773
 16.8
  746,640
 624,611
 19.5
  
Non-GAAP core fee income (1) 102,722
 80,526
 27.6
  272,567
 231,522
 17.7
 
Non-GAAP noninterest income, net of noncontrolling interests (1) 153,164
 139,461
 9.8
   383,256
 339,423
 12.9
  
Non-GAAP noninterest expense, net of noncontrolling interests(2) 257,636
 220,656
 16.8
   746,123
 624,327
 19.5
  
Balance Sheet: 
      
     
Average available-for-sale securities $12,674,610
 $12,743,715
 (0.5)% $12,539,773
 $13,608,722
 (7.9)%
Average held-to-maturity securities 10,467,470
 8,003,825
 30.8
  9,405,525
 8,347,190
 12.7
 
Average loans, net of unearned income 21,584,892
 18,647,194
 15.8

 20,726,467
 17,955,497
 15.4
 
Average noninterest-bearing demand deposits 36,578,779
 30,522,314
 19.8
   34,653,264
 30,694,119
 12.9
  
Average interest-bearing deposits 7,464,063
 7,387,440
 1.0
   7,408,371
 7,749,871
 (4.4)  
Average total deposits 44,042,842
 37,909,754
 16.2
   42,061,635
 38,443,990
 9.4
  
Earnings Ratios: 
      
     
Return on average assets (annualized) (3) 1.18% 1.02% 15.7
%  1.05% 0.87% 20.7
% 
Return on average SVBFG stockholders’ equity (annualized) (4) 14.59
 12.32
 18.4
   12.85
 10.95
 17.4
  
Asset Quality Ratios: 
      
     
Allowance for loan losses as a % of total period-end gross loans 1.12% 1.25% (13)bps  1.12% 1.25% (13)bps 
Allowance for loan losses for performing loans as a % of total gross performing loans 0.92
 1.03
 (11)   0.92
 1.03
 (11)  
Gross loan charge-offs as a % of average total gross loans (annualized) 0.23
 0.52
 (29)   0.33
 0.53
 (20)  
Net loan charge-offs as a % of average total gross loans (annualized) 0.19
 0.48
 (29)   0.29
 0.47
 (18)  
Capital Ratios: 
      
     
CET 1 risk-based capital ratio 12.96% 12.75% 21
bps 12.96% 12.75% 21
bps
Tier 1 risk-based capital ratio 13.32
 13.21
 11
  13.32
 13.21
 11
 
Total risk-based capital ratio 14.29
 14.22
 7
  14.29
 14.22
 7
 
Tier 1 leverage ratio 8.34
 8.35
 (1)   8.34
 8.35
 (1)  
Tangible common equity to tangible assets (5) 8.00
 8.30
 (30)   8.00
 8.30
 (30)  
Tangible common equity to risk-weighted assets (5) 13.01
 13.11
 (10)   13.01
 13.11
 (10)  
Bank CET 1 risk-based capital ratio 12.41
 12.77
 (36)  12.41
 12.77
 (36) 
Bank tier 1 risk-based capital ratio 12.41
 12.77
 (36)   12.41
 12.77
 (36)  
Bank total risk-based capital ratio 13.40
 13.83
 (43)   13.40
 13.83
 (43)  
Bank tier 1 leverage ratio 7.59
 7.74
 (15)   7.59
 7.74
 (15)  
Bank tangible common equity to tangible assets (5) 7.47
 7.98
 (51)   7.47
 7.98
 (51)  
Bank tangible common equity to risk-weighted assets (5) 12.44
 13.14
 (70)   12.44
 13.14
 (70)  
Other Ratios: 
      
     
GAAP operating efficiency ratio (6) 48.38% 50.95% (5.0)%  52.15% 52.18% (0.1)% 
Non-GAAP operating efficiency ratio (2) 48.82
 51.45
 (5.1)   52.87
 52.28
 1.1
  
Book value per common share (7) $77.00
 $69.02
 11.6
   $77.00
 $69.02
 11.6
  
Other Statistics: 
      
     
Average full-time equivalent employees 2,434
 2,255
 7.9
%  2,384
 2,199
 8.4
% 
Period-end full-time equivalent employees 2,433
 2,280
 6.7
   2,433
 2,280
 6.7
  
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands, except per share data, employees and ratios) 2019
2018 % Change   2019 2018 % Change  
Income Statement:              
Diluted earnings per share $5.15
 $5.10
 1.0
%  $16.67
 $13.15
 26.8
% 
Net income available to common stockholders 267,281
 274,817
 (2.7)   874,000
 707,576
 23.5
  
Net interest income 520,644
 493,222
 5.6
   1,562,933
 1,379,528
 13.3
  
Net interest margin 3.34% 3.62% (28)bps  3.60% 3.53% 7
bps 
Provision for credit losses $36,536
 $17,174
 112.7
% $89,033
 $74,226
 19.9
%
Noninterest income 294,009
 210,070
 40.0
  908,135
 558,277
 62.7
 
Noninterest expense 391,324
 309,445
 26.5
  1,140,510
 880,601
 29.5
  
Non-GAAP core fee income (1) 162,177
 131,714
 23.1
  473,757
 369,848
 28.1
 
Non-GAAP core fee income, including investment banking revenue and commissions (1) 212,968
 131,714
 61.7
  651,574
 369,848
 76.2
 
Non-GAAP noninterest income, net of noncontrolling interests (1) 279,441
 203,378
 37.4
   871,583
 529,116
 64.7
  
Non-GAAP noninterest expense, net of noncontrolling interests (2) 391,179
 309,291
 26.5
   1,139,818
 880,252
 29.5
  
Balance Sheet: 
      
     

Average available-for-sale securities $10,600,449
 $9,589,917
 10.5
% $8,572,314
 $10,124,707
 (15.3)%
Average held-to-maturity securities 14,534,505
 15,916,690
 (8.7)  14,891,158
 14,764,215
 0.9
 
Average loans, net of unearned income 29,822,426
 26,331,377
 13.3

 29,210,960
 25,008,277
 16.8
 
Average noninterest-bearing demand deposits 39,146,184
 40,625,772
 (3.6)   38,498,971
 39,473,468
 (2.5)  
Average interest-bearing deposits 18,088,785
 8,466,468
 113.7
   14,832,373
 8,260,894
 79.5
  
Average total deposits 57,234,969
 49,092,240
 16.6
   53,331,344
 47,734,362
 11.7
  
Earnings Ratios: 
      
     
Return on average assets (annualized) (3) 1.62% 1.93% (16.1)%  1.91% 1.74% 9.8
% 
Return on average SVBFG stockholders’ equity (annualized) (4) 18.27
 22.46
 (18.7)   21.16
 20.56
 2.9
  
Asset Quality Ratios: 
      
     
Allowance for loan losses as a % of total period-end gross loans 0.97% 1.03% (6)bps  0.97% 1.03% (6)bps 
Allowance for loan losses for performing loans as a % of total gross performing loans 0.81
 0.86
 (5)   0.81
 0.86
 (5)  
Gross loan charge-offs as a % of average total gross loans (annualized) 0.49
 0.33
 16
   0.33
 0.26
 7
  
Net loan charge-offs as a % of average total gross loans (annualized) 0.44
 0.30
 14
   0.26
 0.22
 4
  
Capital Ratios: 
      
     
SVBFG CET 1 risk-based capital ratio 12.71% 13.28% (57)bps 12.71% 13.28% (57)bps
SVBFG tier 1 risk-based capital ratio 12.86
 13.45
 (59)  12.86
 13.45
 (59) 
SVBFG total risk-based capital ratio 13.70
 14.34
 (64)  13.70
 14.34
 (64) 
SVBFG tier 1 leverage ratio 8.64
 8.99
 (35)   8.64
 8.99
 (35)  
SVBFG tangible common equity to tangible assets (5) 8.38
 8.47
 (9)   8.38
 8.47
 (9)  
SVBFG tangible common equity to risk-weighted assets (5) 13.04
 13.00
 4
   13.04
 13.00
 4
  
Bank CET 1 risk-based capital ratio 11.48
 11.98
 (50)  11.48
 11.98
 (50) 
Bank tier 1 risk-based capital ratio 11.48
 11.98
 (50)   11.48
 11.98
 (50)  
Bank total risk-based capital ratio 12.36
 12.91
 (55)   12.36
 12.91
 (55)  
Bank tier 1 leverage ratio 7.48
 7.82
 (34)   7.48
 7.82
 (34)  
Bank tangible common equity to tangible assets (5) 7.36
 7.44
 (8)   7.36
 7.44
 (8)  
Bank tangible common equity to risk-weighted assets (5) 11.82
 11.70
 12
   11.82
 11.70
 12
  
Other Ratios: 
      
     
GAAP operating efficiency ratio (6) 48.04% 44.00% 9.2
%  46.15% 45.44% 1.6
% 
Non-GAAP core operating efficiency ratio (2) 48.05
 48.35
 (0.6)  46.09
 49.06
 (6.1) 
Total costs of deposits (annualized) (7) 0.38
 0.06
 533.3
  0.33
 0.05
 560.0
 
Book value per common share (8) $114.26
 $92.48
 23.6
   $114.26
 $92.48
 23.6
  
Other Statistics: 
      
     
Average full-time equivalent employees 3,413
 2,778
 22.9
%  3,309
 2,623
 26.2
% 
Period-end full-time equivalent employees 3,460
 2,836
 22.0
   3,460
 2,836
 22.0
  
 
(1)See “Results of Operations–Noninterest Income” for a description and reconciliation of non-GAAP core fee income and noninterest income.non-GAAP core fee income including investment banking revenue and commissions.

(2)See “Results of Operations–Noninterest Expense” for a description and reconciliation of non-GAAP noninterest expense and non-GAAP core operating efficiency ratio.
(3)Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and year-to-date average assets.
(4)Ratio represents annualized consolidated net income available to common stockholders divided by quarterly and year-to-date average SVBFG stockholders’ equity.
(5)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.
(6)The operating efficiency ratio is calculated by dividing total noninterest expense by total taxable-equivalent net interest income plus noninterest income.
(7)Ratio represents annualized total cost of deposits and is calculated by dividing interest expense from deposits by average total deposits.
(8)Book value per common share is calculated by dividing total SVBFG stockholders’ equity by total outstanding common shares at period-end.
For more information with respect to our capital ratios, please refer to “Capital Ratios” under “Consolidated Financial Condition-Capital Ratios” below.

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, 20172019 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 20162018 Form 10-K.
Results of Operations
Net Interest Income and Margin (Fully Taxable Equivalent Basis)
Net interest income is defined as the difference betweenbetween: (i) interest earned on loans, fixed income investment portfolio (available-for-saleinvestments in our available-for-sale and held-to-maturity securities),securities portfolios and short-term investment securities, and (ii) 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 3521.0 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 compositionmix 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 periods 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.

 2017 Compared to 2016 2017 Compared to 2016 2019 Compared to 2018 2019 Compared to 2018
 Three months ended September 30, increase (decrease) due to change in Nine months ended September 30, increase (decrease) due to change in 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 Volume Rate Total Volume Rate Total
Interest income:                        
Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell, trade receivables purchased and other short-term investment securities $1,678
 $2,337
 $4,015
 $5,788
 $5,089
 $10,877
Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities $18,640
 $2,090
 $20,730
 $41,307
 $13,060
 $54,367
Fixed income investment portfolio (taxable) 15,325
 10,650
 25,975
 6,655
 26,992
 33,647
 (3,985) 11,566
 7,581
 (31,754) 38,820
 7,066
Fixed income investment portfolio (non-taxable) 1,342
 (342) 1,000
 2,620
 (1,067) 1,553
 703
 (229) 474
 11,030
 975
 12,005
Loans, net of unearned income 37,814
 16,404
 54,218
 98,851
 29,676
 128,527
 46,151
 (4,258) 41,893
 173,003
 49,740
 222,743
Increase in interest income, net 56,159
 29,049
 85,208
 113,914
 60,690
 174,604
 61,509
 9,169
 70,678
 193,586
 102,595
 296,181
Interest expense:                        
Interest bearing checking and savings accounts 25
 1
 26
 63
 (2) 61
 (22) 8
 (14) (56) 36
 (20)
Money market deposits 65
 698
 763
 (219) 2,466
 2,247
 28,312
 13,075
 41,387
 54,630
 39,961
 94,591
Money market deposits in foreign offices (1) 2
 1
 10
 (1) 9
 (11) 1
 (10) (21) 3
 (18)
Time deposits —
 5
 5
 (8) 6
 (2) 311
 244
 555
 295
 424
 719
Sweep deposits in foreign offices (23) (3) (26) (75) (6) (81) 2,186
 2,960
 5,146
 6,266
 10,216
 16,482
Total increase (decrease) in deposits expense 66
 703
 769
 (229) 2,463
 2,234
Total increase in deposits expense 30,776
 16,288
 47,064
 61,114
 50,640
 111,754
Short-term borrowings (1,558) 1,059
 (499) (1,851) 1,081
 (770) (3,926) 6
 (3,920) (2,663) 1,129
 (1,534)
3.50% Senior Notes 5
 (2) 3
 4
 4
 8
 3
 —
 3
 9
 —
 9
5.375% Senior Notes 12
 (5) 7
 15
 9
 24
 10
 —
 10
 27
 —
 27
Junior Subordinated Debentures 1
 —
 1
 (9) 10
 1
6.05% Subordinated Notes (236) —
 (236) (405) 224
 (181)
Total (decrease) increase in borrowings expense (1,776) 1,052
 (724) (2,246) 1,328
 (918) (3,913) 6
 (3,907) (2,627) 1,129
 (1,498)
(Decrease) increase in interest expense, net (1,710) 1,755
 45
 (2,475) 3,791
 1,316
Increase in net interest income $57,869
 $27,294
 $85,163
 $116,389
 $56,899
 $173,288
Increase in interest expense, net 26,863
 16,294
 43,157
 58,487
 51,769
 110,256
Increase (decrease) in net interest income $34,646
 $(7,125) $27,521
 $135,099
 $50,826
 $185,925
Net Interest Income (Fully Taxable Equivalent Basis)
Three months ended September 30, 20172019 and 20162018
Net interest income increased by $85.2$27.5 million to $374.6$523.6 million for the three months ended September 30, 2017,2019, compared to $289.4$496.1 million for the comparable 20162018 period. Overall, our net interest income increased primarily from interest earned on loans, reflective of higher average loan balances driven by strong loan growth from our private equity/venture capital and SVB Private Bank loan portfolios and rate increases subsequent to September 30, 2016.portfolio as well as an increase in our private bank loan portfolio. In addition, we saw an increase in interest earned onincome from our fixed incomeinterest earning cash and short-term investment securities portfolio reflective of higher average fixed income investment securities balances drivenbalances. These increases were partially offset by higheran increase in interest paid on our interest-bearing deposits due to the increase in average deposit balancesinterest-bearing deposits as well as an increase in yield fromcontinued market rate increases.adjustments on our interest-bearing deposits due to the competitive environment.
The main factors affecting interest income and interest expense for the three months ended September 30, 2017,2019, compared to the comparable 20162018 period are discussed below:
Interest income for the three months endedSeptember 30, 2017 increased by $85.2 million due primarily to:
•
Interest income for the three months endedSeptember 30, 2019 increased by $70.7 million due primarily to:
◦
A $54.2$41.9 million increase in interest income on loans to $268.4394.2 million for the three months endedSeptember 30, 20172019, compared to $214.2352.4 million for the comparable 20162018 period. The increase was reflective of an increase in average loan balances of $2.93.5 billion and an increase partially offset by a decrease in the overall loan yieldyields of 367 basis points to 4.935.24 percent from 4.575.31 percent. Gross loan yields, excluding loan interest recoveries and loan fees, increased 37decreased 9 basis points to 4.304.72 percent from 3.934.81 percent, reflective primarily of the benefit of interest rate increases. Loan feecontinued growth in our lower yielding private equity/venture capital and private bank loan portfolios, as well as compression on our loan yields were flat at 61 basis points for both the three months ended September 30, 2017due to pricing competition, and 2016.
◦
A $27.0$20.7 million increase in interest income on fixed income investment securities to $111.2 million for the three months endedSeptember 30, 2017, compared to $84.3 million for the comparable 2016 period. The increase was reflective of an increase in average fixed income investments of $2.4 billion due to growth in average deposit balances and an increase in our fixed income investment securities yield of 29 basis points to 1.91 percent from 1.62 percent resulting primarily from higher reinvestment yields on maturing fixed income investments as well as higher yields on new purchases due to interest rate increases.

◦A $4.0 million increase in interest income from our interest earninginterest-earning cash and short-term investment securities. The increase was due primarily to anthe increase of $0.9$4.6 billion in average interest-earning Federal Reserve cash balances as a result of a $6.1 billionbalances.
•
Interest expense for the three months endedSeptember 30, 2019 increased by $43.2 milliondue primarily to:
◦
A $47.1 million increase in interest expense on deposits due primarily to an increase in interest paid on our interest-bearing money market and foreign sweep deposits due to the growth in average deposit balances and from the impactinterest-bearing deposits of the recent$9.6 billion as well as market rate adjustments due to competition, partially offset by

◦A $3.9 million decrease in interest expense on short-term borrowings due primarily to a decrease in average short-term borrowings outstanding due to increases in the Federal Funds target rate.our cash and cash equivalents.
Nine months ended September 30, 2019 and 2018
The main factors affecting interest income and interest expense for the nine months ended September 30, 2017,2019, compared to the comparable 20162018 period are discussed below:
Interest income for the nine months endedSeptember 30, 2017 increased by $174.6 million due primarily to:
•
Interest income for the nine months endedSeptember 30, 2019 increased by $296.2 million due primarily to:
◦
A $128.5$222.7 million increase in interest income on loans to $746.0 million$1.2 billion for the nine months endedSeptember 30, 20172019, compared to $617.5$979.7 million for the comparable 20162018 period. The increase was reflective of an increase in average loan balances of $2.8$4.2 billion and an increase in the overall loan yieldyields of 2226 basis points to 4.815.50 percent from 4.595.24 percent. Gross loan yields, excluding loan interest recoveries and loan fees, increased 25 basis points to 4.184.95 percentfrom 3.994.70 percent, reflective of the benefit of interest rate increases during late 2018, partially offset by the strongcontinued growth of our lower yielding private equity/venture capital and Private Bank loan portfolios.portfolio. Our private equity/venture capital loan portfolio represented 43.152.2 percent and 38.848.3 percent of our total gross loan portfolio at September 30, 20172019 and 2016, respectively. Our Private Bank loan portfolio represented 11.2 percent2018, respectively, and 10.8 percent of our total gross loan portfolio at September 30, 2017 and 2016, respectively.
Loan fee yields increased two basis points to 60 basis points from 58 basis points in the comparable 2016 period. The increase in loan fee yields was primarily a result of higher income from loan prepayments.
◦
A $35.2 million increase in interest income on fixed income investment securities to $298.9 million for the nine months endedSeptember 30, 2017, compared to $263.7 million for the comparable 2016 period. The increase was primarily reflective of an increase in our fixed income investment securities yield of 21 basis points to 1.82 percent from 1.61 percent resulting primarily from higher reinvestment yields on maturing fixed income investments as well as higher yields on new purchases due to interest rate increases.
◦
A $10.9$54.4 million increase in interest income from our interest earning cash and short-term investment securities.The increase was due primarily to anthe increase of $1.1$3.2 billion in average interest-earning Federal Reserve cash balances as a result of a $3.6 billion increase in averagedriven by deposit balances. We also saw agrowth and the benefit from the impact of the recent increases in the Federal Funds target rate.rate during 2018.
Interest expense for the nine months endedSeptember 30, 2017 increased by $1.3 million primarily due to:
•
Interest expense for the nine months endedSeptember 30, 2019 increased by $110.3 million primarily due to:
◦An
A $111.8 million increase in deposits interest expense of $2.2 million,on deposits due primarily to an increase in interest paid on our interest-bearing money market deposits and foreign sweep deposits due to the growth in average interest-bearing deposits of $6.6 billion as a result ofwell as market rate adjustments.adjustments due to competition.
Net Interest Margin (Fully Taxable Equivalent Basis)
Three months ended September 30, 20172019 and 20162018
Our net interest margin increased by 35 basis points to 3.10 percent for the three months endedSeptember 30, 2017, compared to 2.75 percent for the comparable 2016 period. The higher margin during the third quarter of 2017 was reflective primarily of the increases in the Federal Funds target rate since the third quarter of 2016.
•
Our net interest margin decreased by 28 basis points to 3.34 percent for the three months endedSeptember 30, 2019, compared to 3.62 percent for the comparable 2018 period. The lower margin for the three months ended September 30, 2019 was due primarily to a change in the mix of interest earning assets resulting in a decrease in higher yielding loans and an increase in lower yielding cash and investments as a percentage of total interest earning assets as well as the increase of $9.6 billion in average interest bearing deposits. Our net interest margin also saw a decrease from an increase in yields paid on interest bearing deposits reflective of the full quarter impact of the two 25 basis point Federal Funds rate increases since September of 2018 partially offset by a benefit from the two 25 basis point Federal Funds rate decreases during the third quarter of 2019. Additionally, lower loan yields were driven by decreased prepayment fees as well as the continued compression on our loan yields due to pricing competition. Average loans represented 48.0 percent of average interest earnings assets for the three months ended September 30, 2019, compared to 48.4 percent for the comparable 2018 period.
Nine months ended September 30, 20172019 and 20162018
Our net interest margin increased by 27 basis points to 2.99 percent for the nine months endedSeptember 30, 2017, compared to 2.72 percent for the comparable 2016 period. Our net interest margin increased primarily as a result of the impact of rising interest rates and a higher level of loans as a percentage of our interest-earning assets portfolio during the nine months ended September 30, 2017. Average loans represented 45 percent of year-to-date interest earning assets compared to 43 percent for the comparable 2016 period.

•
Our net interest margin increased by 7 basis points to 3.60 percent for the nine months endedSeptember 30, 2019, compared to 3.53 percent for the comparable 2018 period.The higher margin for the nine months ended September 30, 2019 was reflective primarily of the increases in the Federal Funds target rate during late 2018, as well as a shift in the mix of the growth in our interest-earning assets to higher-yielding loans from our fixed income investment securities portfolio. Average loans represented 50.0 percent of year-to-date average interest earnings assets, compared to 47.7 percent for the comparable 2018 period.

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, 20172019 and 20162018:

Average Balances, Rates and Yields for the Three Months Ended September 30, 20172019 and 20162018
 Three months ended September 30, Three months ended September 30,
 2017 2016 2019 2018
(Dollars in thousands) 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
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) $3,291,908
 $6,211
 0.75% $2,404,006
 $2,196
 0.36% $7,193,195
 $28,867
 1.59% $2,548,271
 $8,137
 1.27%
Investment securities: (2)                        
Available-for-sale securities:                        
Taxable 12,674,610
 52,825
 1.65
 12,743,715
 44,741
 1.40
 10,600,449
 62,121
 2.32
 9,589,917
 46,684
 1.93
Held-to-maturity securities:                        
Taxable 10,249,131
 56,618
 2.19
 7,947,983
 38,727
 1.94
 12,922,438
 87,535
 2.69
 14,385,027
 95,391
 2.63
Non-taxable (3) 218,339
 1,803
 3.28
 55,842
 803
 5.72
 1,612,067
 14,080
 3.47
 1,531,663
 13,606
 3.52
Total loans, net of unearned income (4) (5) 21,584,892
 268,445
 4.93
 18,647,194
 214,227
 4.57
 29,822,426
 394,246
 5.24
 26,331,377
 352,353
 5.31
Total interest-earning assets 48,018,880
 385,902
 3.19
 41,798,740
 300,694
 2.86
 62,150,575
 586,849
 3.74
 54,386,255
 516,171
 3.77
Cash and due from banks 371,373
     317,044
     590,391
     553,132
    
Allowance for loan losses (246,210)     (247,657)     (308,609)     (296,177)    
Other assets (6) 1,651,323
     1,583,202
     2,895,391
     1,821,827
    
Total assets $49,795,366
     $43,451,329
     $65,327,748
     $56,465,037
    
Funding sources:
                        
Interest-bearing liabilities:                        
Interest bearing checking and savings accounts $442,518
 $86
 0.08% $308,345
 $60
 0.08% $470,601
 $102
 0.09% $572,242
 $116
 0.08%
Money market deposits 5,774,281
 2,079
 0.14
 5,592,603
 1,316
 0.09
 15,805,507
 49,169
 1.23
 6,704,337
 7,782
 0.46
Money market deposits in foreign offices 187,183
 21
 0.04
 199,539
 20
 0.04
 115,590
 12
 0.04
 218,734
 22
 0.04
Time deposits 51,406
 17
 0.13
 50,351
 12
 0.09
 157,218
 590
 1.49
 74,597
 35
 0.19
Sweep deposits in foreign offices 1,008,675
 101
 0.04
 1,236,602
 127
 0.04
 1,539,869
 5,233
 1.35
 896,558
 87
 0.04
Total interest-bearing deposits 7,464,063
 2,304
 0.12
 7,387,440
 1,535
 0.08
 18,088,785
 55,106
 1.21
 8,466,468
 8,042
 0.38
Short-term borrowings 48,614
 164
 1.34
 513,446
 663
 0.51
 22,045
 119
 2.14
 745,156
 4,039
 2.15
3.50% Senior Notes 347,168
 3,144
 3.59
 346,848
 3,141
 3.60
 347,841
 3,150
 3.59
 347,499
 3,147
 3.59
5.375% Senior Notes 347,934
 4,854
 5.53
 347,345
 4,847
 5.55
 349,216
 4,873
 5.54
 348,557
 4,863
 5.54
Junior Subordinated Debentures 54,391
 831
 6.06
 54,566
 830
 6.05
6.05% Subordinated Notes —
 —
 —
 47,421
 236
 1.98
Total interest-bearing liabilities 8,262,170
 11,297
 0.54
 8,697,066
 11,252
 0.51
 18,807,887
 63,248
 1.33
 9,907,680
 20,091
 0.80
Portion of noninterest-bearing funding sources 39,756,710
     33,101,674
     43,342,688
     44,478,575
    
Total funding sources 48,018,880
 11,297
 0.09
 41,798,740
 11,252
 0.11
 62,150,575
 63,248
 0.40
 54,386,255
 20,091
 0.15
Noninterest-bearing funding sources:
                        
Demand deposits 36,578,779
     30,522,314
     39,146,184
     40,625,772
    
Other liabilities 773,586
     517,066
     1,417,659
     932,544
    
SVBFG stockholders’ equity 4,041,218
     3,586,196
     5,802,907
     4,854,440
    
Noncontrolling interests 139,613
     128,687
     153,111
     144,601
    
Portion used to fund interest-earning assets (39,756,710)     (33,101,674)     (43,342,688)     (44,478,575)    
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity $49,795,366
     $43,451,329
     $65,327,748
     $56,465,037
    
Net interest income and margin   $374,605
 3.10%   $289,442
 2.75%   $523,601
 3.34%   $496,080
 3.62%
Total deposits $44,042,842
     $37,909,754
     $57,234,969
     $49,092,240
    
Reconciliation to reported net interest income:
                        
Adjustments for taxable equivalent basis   (631)     (281)     (2,957)     (2,858)  
Net interest income, as reported   $373,974
     $289,161
     $520,644
     $493,222
  
 
(1)
Includes average interest-earning deposits in other financial institutions of $1.31.1 billion and $0.80.7 billion for the three months endedSeptember 30, 20172019 and 20162018, respectively. For the three months endedSeptember 30, 20172019 and 20162018, balances also include $1.95.1 billion and $1.61.4 billion, respectively, deposited at the FRB, earning interest at the Federal Funds target rate.
(2)Yields on interest-earning investment securities do not give effect to changes in fair value that are reflected in other comprehensive income.
(3)Interest income on non-taxable investment securities areis presented on a fully taxable-equivalenttaxable equivalent basis using the federal statutory income tax rate of 35.021.0 percent for all periods presented.
(4)Nonaccrual loans are reflected in the average balances of loans.
(5)
Interest income includes loan fees of $33.439.4 million and $28.433.1 million for the three months ended September 30, 20172019 and 20162018, respectively.
(6)
Average investment securities of $692 million1.2 billion and $804761 million for the three months ended September 30, 20172019 and 20162018, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted primarily of non-marketable and other equity securities.

Average Balances, Rates and Yields for the Nine Months Ended September 30, 20172019 and 20162018

 Nine months ended September 30, Nine months ended September 30,
 2017 2016 2019 2018
(Dollars in thousands) 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
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) $3,235,628
 $16,670
 0.69% $2,111,619
 $5,793
 0.37% $5,696,501
 $74,447
 1.75% $2,535,749
 $20,080
 1.06%
Investment securities: (2)                        
Available-for-sale securities:                        
Taxable 12,539,773
 146,803
 1.57
 13,608,722
 140,932
 1.38
 8,572,314
 142,891
 2.23
 10,124,707
 141,266
 1.87
Held-to-maturity securities:                        
Taxable
9,242,953
 147,965
 2.14
 8,287,043
 120,189
 1.94

13,305,424
 267,877
 2.69
 13,597,340
 262,436
 2.58
Non-taxable (3)
162,572
 4,158
 3.42
 60,147
 2,605
 5.79

1,585,734
 41,760
 3.52
 1,166,875
 29,755
 3.41
Total loans, net of unearned income (4) (5) 20,726,467
 745,983
 4.81
 17,955,497
 617,456
 4.59
 29,210,960
 1,202,467
 5.50
 25,008,277
 979,724
 5.24
Total interest-earning assets 45,907,393
 1,061,579
 3.09
 42,023,028
 886,975
 2.82
 58,370,933
 1,729,442
 3.96
 52,432,948
 1,433,261
 3.65
Cash and due from banks 361,041
     326,144
     553,523
     496,658
    
Allowance for loan losses (243,594)     (237,613)     (303,154)     (280,102)    
Other assets (6) 1,540,211
     1,558,157
     2,592,830
     1,783,148
    
Total assets $47,565,051
     $43,669,716
     $61,214,132
     $54,432,652
    
Funding sources:
                        
Interest-bearing liabilities:                        
Interest bearing checking and savings accounts $420,680
 $242
 0.08% $310,505
 $181
 0.08% $491,663
 $318
 0.09% $578,313
 $338
 0.08%
Money market deposits 5,664,082
 5,544
 0.13
 5,887,627
 3,297
 0.07
 12,540,843
 112,249
 1.20
 6,437,372
 17,658
 0.37
Money market deposits in foreign offices 183,040
 59
 0.04
 153,593
 50
 0.04
 142,053
 43
 0.04
 206,924
 61
 0.04
Time deposits 50,855
 49
 0.13
 59,069
 51
 0.12
 94,934
 790
 1.11
 59,561
 71
 0.16
Sweep deposits in foreign offices 1,089,714
 324
 0.04
 1,339,077
 405
 0.04
 1,562,880
 16,763
 1.43
 978,724
 281
 0.04
Total interest-bearing deposits 7,408,371
 6,218
 0.11
 7,749,871
 3,984
 0.07
 14,832,373
 130,163
 1.17
 8,260,894
 18,409
 0.30
Short-term borrowings 39,523
 295
 1.00
 287,735
 1,065
 0.49
 186,930
 3,519
 2.52
 328,425
 5,053
 2.06
3.5% Senior Notes 347,088
 9,429
 3.63
 346,771
 9,421
 3.63
3.50% Senior Notes 347,756
 9,447
 3.63
 347,416
 9,438
 3.63
5.375% Senior Notes 347,786
 14,558
 5.60
 347,205
 14,534
 5.59
 349,050
 14,611
 5.60
 348,400
 14,584
 5.60
Junior Subordinated Debentures 54,434
 2,494
 6.13
 54,610
 2,493
 6.10
6.05% Subordinated Notes 25,641
 467
 2.44
 47,859
 648
 1.81
Total interest-bearing liabilities 8,222,843
 33,461
 0.54
 8,834,051
 32,145
 0.49
 15,716,109
 157,740
 1.34
 9,285,135
 47,484
 0.68
Portion of noninterest-bearing funding sources 37,684,550
     33,188,977
     42,654,824
     43,147,813
    
Total funding sources 45,907,393
 33,461
 0.10
 42,023,028
 32,145
 0.10
 58,370,933
 157,740
 0.36
 52,432,948
 47,484
 0.12
Noninterest-bearing funding sources:
                        
Demand deposits 34,653,264
     30,694,119
     38,498,971
     39,473,468
    
Other liabilities 668,417
     556,568
     1,327,040
     930,985
    
SVBFG stockholders’ equity 3,883,876
     3,453,904
     5,523,196
     4,602,027
    
Noncontrolling interests 136,651
     131,074
     148,816
     141,037
    
Portion used to fund interest-earning assets (37,684,550)     (33,188,977)     (42,654,824)     (43,147,813)    
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity $47,565,051
     $43,669,716
     $61,214,132
     $54,432,652
    
Net interest income and margin   $1,028,118
 2.99%   $854,830
 2.72%   $1,571,702
 3.60%   $1,385,777
 3.53%
Total deposits $42,061,635
     $38,443,990
     $53,331,344
     $47,734,362
    
Reconciliation to reported net interest income:
                        
Adjustments for taxable equivalent basis   (1,455)     (912)     (8,769)     (6,249)  
Net interest income, as reported   $1,026,663
     $853,918
     $1,562,933
     $1,379,528
  
 
(1)
Includes average interest-earning deposits in other financial institutions of $1.00.9 billion and $0.7 billion for both the nine months endedSeptember 30, 2017 and 2016, respectively.2019. The balance also includes $2.13.9 billion and $1.4 billion deposited at the FRB, earning interest at the Federal Funds target rate for the nine months endedSeptember 30, 20172019 and 20162018, respectively.
(2)Yields on interest-earning investment securities do not give effect to changes in fair value that are reflected in other comprehensive income.
(3)Interest income on non-taxable available-for-sale securities is presented on a fully taxable-equivalent basis using the federal statutory income tax rate of 35.021.0 percent for all periods presented.
(4)Nonaccrual loans are reflected in the average balances of loans.
(5)
Interest income includes loan fees of $93.5120.2 million and $78.1100.8 million for the nine months endedSeptember 30, 20172019 and 20162018, respectively.
(6)
Average investment securities of $674 million1.1 billion and $803774 million for the nine months endedSeptember 30, 20172019 and 20162018, respectively, were classified as other assets as they were noninterest-earning assets. These investments consisted primarily of non-marketable securities.

Provision for Credit Losses
The provision for credit losses is the combination of both the provision for loan losses and the provision for unfunded credit commitments. Our provision for loan losses is a function of our reserve methodology, which is used to determine an appropriate allowance for loan losses for the period. Our reserve methodology is based on our evaluation of the existing allowance for loan losses in relation to total gross loans using historical and other objective information, and on our qualitative assessment of the inherent and identified credit risk of the loan portfolio. Our provision for unfunded credit commitments is determined using a methodology that is similar to the methodology used for calculating the allowance for loan losses, adjusted for factors specific to binding commitments, including the probability of funding and exposure at funding. Our provision for credit losses equals our best estimate of probable credit losses that are inherent in the portfolios at the balance sheet date.
The following table summarizes our allowance for loan losses and the allowance for unfunded credit commitments for the three and nine months ended September 30, 20172019 and 2016:2018:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands, except ratios) 2017 2016 2017 2016 2019 2018 2019 2018
Allowance for loan losses, beginning balance $236,496
 $244,723
 $225,366
 $217,613
 $301,888
 $286,709
 $280,903
 $255,024
Provision for loan losses (1) 22,409
 18,950
 67,273
 88,624
 35,985
 19,436
 80,954
 74,088
Gross loan charge-offs (12,338) (24,616) (51,449) (71,466) (36,820) (22,205) (72,255) (48,220)
Loan recoveries 1,828
 2,084
 6,155
 8,158
 3,888
 2,164
 15,133
 5,878
Foreign currency translation adjustments 615
 (576) 1,665
 (2,364) (531) (391) (325) (1,057)
Allowance for loan losses, ending balance $249,010
 $240,565
 $249,010
 $240,565
 $304,410
 $285,713
 $304,410
 $285,713
        
Allowance for unfunded credit commitments, beginning balance $47,000
 $34,889
 $45,265
 $34,415
 62,664
 54,104
 55,183
 51,770
Provision for unfunded credit commitments (1)
 1,113
 1,054
 2,789
 1,601
Provision for (reduction of) unfunded credit commitments 551
 (2,262) 8,079
 138
Foreign currency translation adjustments 59
 (19) 118
 (92) (107) (34) (154) (100)
Allowance for unfunded credit commitments, ending balance (2) $48,172
 $35,924
 $48,172
 $35,924
Allowance for unfunded credit commitments, ending balance (1) $63,108
 $51,808
 $63,108
 $51,808
Ratios and other information:                
Provision for loan losses as a percentage of period-end total gross loans (annualized) 0.40% 0.39% 0.40% 0.62% 0.46% 0.28% 0.35% 0.36%
Gross loan charge-offs as a percentage of average total gross loans (annualized) 0.23
 0.52
 0.33
 0.53
 0.49
 0.33
 0.33
 0.26
Net loan charge-offs as a percentage of average total gross loans (annualized) 0.19
 0.48
 0.29
 0.47
 0.44
 0.30
 0.26
 0.22
Allowance for loan losses as a percentage of period-end total gross loans 1.12
 1.25
 1.12
 1.25
 0.97
 1.03
 0.97
 1.03
Provision for credit losses (1) $23,522
 $20,004
 $70,062
 $90,225
Provision for credit losses $36,536
 $17,174
 $89,033
 $74,226
Period-end total gross loans 22,329,829
 19,228,928
 22,329,829
 19,228,928
 31,229,003
 27,668,829
 31,229,003
 27,668,829
Average total gross loans 21,712,866
 18,762,144
 20,850,468
 18,067,893
 29,979,522
 26,497,171
 29,373,264
 25,165,486
 
(1)Our consolidated statements of income were modified from prior periods’ presentation to conform to the current period presentation, which reflect our provision for loan losses and provision for unfunded credit commitments together as our “provision for credit losses.”
(2)The “allowance for unfunded credit commitments” is included as a component of “other liabilities.”“Other liabilities” on our consolidated balance sheets.


Three months ended September 30, 20172019 and 20162018
Our provision for credit losses was $23.5$36.5 million for the three months ended September 30, 2017,2019, consisting of a provision for loan losses of $22.4$36.0 million and a provision for unfunded credit commitments of $1.1$0.5 million. Our provision for credit losses was $20.0$17.2 million for the three months ended September 30, 2016,2018, consisting of a provision for loan losses of $19.0$19.4 million and a reduction of our allowance for unfunded credit commitments of $2.2 million.
The provision for loan losses of $36.0 million for the three months ended September 30, 2019 reflects an increase of $19.1 million for net new nonaccrual loans, $18.3 million for charge-offs not specifically reserved for and $15.2 million in additional reserves for period-end loan growth, partially offset by a decrease of $13.0 million for the qualitative component of our performing loans and $3.9 million of recoveries.
The provision for unfunded credit commitments of $0.5 million was driven primarily by the growth in unfunded credit commitments of $1.3 billion for three months ended September 30, 2019, offset by a decrease related to the continued shift in the mix of our unfunded credit facilities to our large, higher credit quality private equity/venture capital clients.

The provision for loan losses of $19.4 million for the three months ended September 30, 2018 reflects primarily an increase of $12.9 million in additional reserves for period-end loan growth, $9.2 million for charge-offs not specifically reserved for and $9.3 million in net new specific reserves for nonaccrual loans, partially offset by a decrease in the qualitative component of our performing loan reserves of $8.2 million reflective of the continued growth of larger, higher credit quality private equity/venture capital loans as a percentage of total gross loans.
The reduction of the allowance for unfunded credit commitments of $2.2 million for the three months ended September 30, 2018 was driven primarily by a decrease in reserves reflective primarily of the continued shift in the mix of our unfunded credit facilities consisting of large, higher credit quality private equity/venture capital loans.
Gross loan charge-offs were $36.8 million for the three months ended September 30, 2019, of which $18.3 million was not specifically reserved for in prior quarters. Gross loan charge-offs were primarily driven by a $9.4 million charge-off for one mid-stage life science/healthcare portfolio client and $7.6 million for one later-stage software client, both of which were previously included in our nonaccrual loan portfolio. The remaining charge-offs came primarily from our early-stage and mid-stage clients.
Gross loan charge-offs were $22.2 million for the three months ended September 30, 2018, of which $9.2 million was not specifically reserved for at June 30, 2018. Gross loan charge-offs included $12.7 million from our hardware loan portfolio and consisted primarily of $11.1 million for one early-stage client and $6.3 million from our software/internet loan portfolio primarily attributable to one mid-stage client.
Nine months ended September 30, 2019 and 2018
Our provision for credit losses was $89.0 million for the nine months ended September 30, 2019, consisting of a provision for loan losses of $81.0 million and a provision for unfunded credit commitments of $1.0$8.0 million. Our provision for credit losses was $74.2 million for the nine months ended September 30, 2018, consisting of a provision for loan losses of $74.1 million and a provision for unfunded credit commitments of $0.1 million.
The provision for loan losses of $22.4$81.0 million for the threenine months ended September 30, 20172019 was reflective primarily reflects $13.8of $57.5 million in net new specific reserves for nonaccrual loans, $30.5 million for charge-offs not specifically reserved for in prior quarters and $22.4 million from period-end loan growth, partially offset by a decrease of $14.3 million for our performing loans and $15.1 million of recoveries.
The provision for unfunded credit commitments of $8.0 million for nine months ended September 30, 2019 was driven primarily by growth in unfunded credit commitments of $3.4 billion.
The provision for loan losses of $74.1 million for the nine months ended September 30, 2018 was reflective primarily of $39.4 million from period-end loan growth, $34.0 million in net new specific reserves for nonaccrual loans and a $10.9$24.0 million increasefor charge-offs not specifically reserved for in reserves for period-end loan growth,

prior quarters, partially offset by a benefitdecrease in reserves of $20.7 million for our performing loans from overall improvedcertain reserve methodology enhancements made to our qualitative reserve for large loan exposure as a result of growth within our higher credit quality of our loan portfolio and the continued shift in our loan portfolio to private equity/venture capital loans, which tend to be of higher credit quality.loan portfolio.
The provision for loan lossesunfunded credit commitments of $19.0 million for the three months ended September 30, 2016, was reflective primarily of $8.0 million increase in reserves for performing loans, $5.5 million for charge-offs that did not previously have a specific reserve, $4.0 million net reserves for nonaccrual loans and $2.8 million for loan growth. The net increase in reserves for nonaccrual loans included a $5.5 million partial reserve release for one of our non-performing sponsored buyout loans due to credit improvement.
Gross loan charge-offs were $12.3 million for three months ended September 30, 2017, of which $6.3 million was not specifically previously reserved for. Gross loan charge-offs were primarily from four clients consisting of $8.7 million from two clients in our software/internet loan portfolio, of which $5.9 million was a late-stage client loan, and two early-stage client loan charge-offs of $3.5 million from our hardware and life science/healthcare portfolios.
Gross loan charge-offs of $24.6 million for the three months ended September 30, 2016 included $14.2 million from two late-stage clients, all of which, previously, had been fully reserved. Remaining charge-offs were primarily from early-stage clients in our software/internet and hardware loan portfolios.
Nine months ended September 30, 2017 and 2016
Our provision for credit losses was $70.1$0.1 million for the nine months ended September 30, 2017, consisting2018 was drivenprimarily by increased reserves of a provision for loan losses of $67.3$4.5 million and a provision forfrom growth in our unfunded credit commitmentscommitment balances, offset by a decrease in reserves reflective of $2.8 million. Our provision for credit losses was $90.2 million for the third quarter of 2016, consisting of a provision formethodology enhancements.
Gross loan losses of $88.6 million and a provision for unfunded credit commitments of $1.6 million.
The provision for loan losses of $67.3charge-offs were $72.3 million for the nine months ended September 30, 20172019, of which $30.5 million was reflective primarily of $51.9 millionnot specifically reserved for in net new specific reserves for nonaccrual loans and $20.9prior quarters.Gross loan charge-offs included $26.9 million from period-end loan growth, partially offset by a benefit from overall improved credit quality of our life science/healthcare loan portfolio and the continued shift in$38.3 million from our software/internet loan portfolio. Gross loan charge-offs for our life science/healthcare portfolio were driven primarily by $22.5 million from one mid-stage client. Gross loan charge-offs for our software/internet loan portfolio to private equity/venture capital loans, which tend to be of higher credit quality.were driven primarily by our early-stage clients.
The provision forGross loan losses of $88.6charge-offs were $48.2 million for the nine months ended September 30, 20162018, of which $24.0 million was reflective of $33.0 millionnot specifically reserved for charge-offs that did not previously have a specific reserve and $23.0 million from period-end loan growth, with the remaining provision due primarily to reserves for new nonaccrual loans.
The provision for unfunded credit commitments of $2.8 million for nine months ended September 30, 2017 was driven primarily by qualitative allocations based on our loan portfolio being comprised of larger loans. Our provision for unfunded credit commitments was $1.6 million for nine months ended September 30, 2016.
in prior quarters. Gross loan charge-offs of $51.4included $26.4 million for the nine months ended September 30, 2017 included $27.8 million from our early-stage loan portfolio and $13.0 million from two Corporate Finance client loans. These charge-offs were primarily from our software/internet loan portfolio. Gross loan charge-offs of $71.5 million for the nine months ended September 30, 2016 included $35.4portfolio and $16.1 million from our early-stagehardware loan portfolio and $27.6consisted primarily of $24.4 million from fourearly-stage clients, $8.7 million for one sponsor-led buyout loan, $4.8 million from one mid-stage client and $3.2 million from one late-stage client loans. These charge-offs were primarily from our software/internet loan portfolio.client.
See “Consolidated Financial Condition—Credit Quality and Allowance for Loan Losses” below and Note 7—8—“Loans, and Allowance for Loan Losses and Allowance for Unfunded Credit Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for further details on our allowance for loan losses.
Noninterest Income
For the three and nine months ended September 30, 2017,2019, noninterest income was $158.8$294.0 million and $405.0$908.1 million, respectively, compared to $144.1$210.1 million and $343.1$558.3 million for the comparable 20162018 periods. For the three and nine months ended September 30, 2017,2019, non-GAAP noninterest income, net of noncontrolling interests was $153.2$279.4 million and $383.3$871.6 million,

respectively, compared to $139.5$203.4 million and $339.4$529.1 million for the comparable 20162018 periods. For the three and nine months ended September 30, 2017,2019, non-GAAP core fee income including investment banking revenue and commissions was $213.0 million and $651.6 million, respectively, compared to $131.7 million and $369.8 million for the comparable 2018 periods. For the three and nine months ended September 30, 2019, non-GAAP core fee income was $102.7$162.2 million and $272.6$473.8 million, respectively, compared to $80.5$131.7 million and $231.5$369.8 million for the comparable 20162018 periods. (See reconciliations of non-GAAP measures used below under “Use of Non-GAAP Financial Measures”.)
Use of Non-GAAP Financial Measures
To supplement our unaudited interim consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures of financial performance (including, but not limited to, non-GAAP core fee income, non-GAAP core fee income including investment banking revenue and commissions, non-GAAP noninterest income, and non-GAAP net gains on investment securities). These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures by other companies in our industry. Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable

measure calculated and presented in accordance with GAAP. A non-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirement.
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 items that represent income attributable to investors other than us and our subsidiaries and certain other certain non-recurring items. 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, and not as a substitute for or preferable to, financial measures prepared in accordance with GAAP.
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 SVB Leerink, the entire income or loss from funds consolidated in accordance with ASC Topic 810 as discussed in Note 1—“Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report. We are required under GAAP to consolidate 100% of the results of these entities, 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. Where applicable, the tables below for noninterest income and net gains on investment securities exclude noncontrolling interests.
Core fee income is a non-GAAP financial measure, which represents GAAP noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control.control, primarily our net gains (losses) on investment securities and equity warrant assets. Core fee income includes client investment fees, foreign exchange fees, credit card fees, deposit service charges, credit card fees, lending related fees, client investment fees and letters of credit and letters of credit fees.
Core fee income including investment banking revenue and commissions is a non-GAAP measure, which represents GAAP noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control.
The following table provides a reconciliation of GAAP noninterest income to non-GAAP noninterest income, net of noncontrolling interests, for the three and nine months ended September 30, 20172019 and 2016:2018:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
GAAP noninterest income $158,778

$144,140
 10.2% $404,965

$343,050
 18.0% $294,009

$210,070
 40.0% $908,135

$558,277
 62.7%
Less: income attributable to noncontrolling interests, including carried interest allocation 5,614
 4,679
 20.0
 21,709
 3,627
 NM
 14,568
 6,692
 117.7
 36,552
 29,161
 25.3
Non-GAAP noninterest income, net of noncontrolling interests $153,164
 $139,461
 9.8
 $383,256
 $339,423
 12.9
 $279,441
 $203,378
 37.4
 $871,583
 $529,116
 64.7
NM—Not meaningful
The following table provides a reconciliation of GAAP noninterest income to non-GAAP core fee income for the three and nine months ended September 30, 20172019 and 2016:2018:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
GAAP noninterest income $158,778
 $144,140
 10.2 % $404,965
 $343,050
 18.0% $294,009
 $210,070
 40.0 % $908,135
 $558,277
 62.7%
Less: gains on investment securities, net 15,238
 23,178
 (34.3) 48,838
 41,764
 16.9
 29,849
 32,193
 (7.3) 106,575
 77,365
 37.8
Less: gains on equity warrant assets, net 24,922
 21,558
 15.6
 42,432
 33,253
 27.6
 37,561
 34,141
 10.0
 107,213
 72,393
 48.1
Less: other noninterest income 15,896
 18,878
 (15.8) 41,128
 36,511
 12.6
 13,631
 12,022
 13.4
 42,773
 38,671
 10.6
Non-GAAP core fee income (1) $102,722
 $80,526
 27.6
 $272,567
 $231,522
 17.7
Non-GAAP core fee income including investment banking revenue and commissions (1) $212,968
 $131,714
 61.7
 $651,574
 $369,848
 76.2
Less: investment banking revenue 38,516
 —
 —
 137,005
 —
 —
Less: commissions 12,275
 —
 —
 40,812
 —
 —
Non-GAAP core fee income (2) $162,177
 $131,714
 23.1
 $473,757
 $369,848
 28.1
 
(1)Non-GAAP core fee income including investment banking revenue and commissions represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control.
(2)Non-GAAP core fee income represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control, as well as our investment banking revenue and commissions, and includes client investment fees, foreign exchange fees, credit card fees, deposit service charges, lending related fees client investment fees and letters of credit and standby letters of credit fees.
Gains on Investment Securities, Net
Net gains and losses on investment securities include gains and losses from our non-marketable and other equity securities, which include public equity securities held as a result of exercised equity warrant assets, as well as gains and losses from sales of our available-for-saleAFS debt securities portfolio, when applicable.
Our available-for-sale securities portfolio represents primarily interest-earning fixed income investment securities and is managed to earn an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and addressing our asset/liability management objectives. Sales of equity securities held as a result of our exercised warrants, result in net gains or losses on investment securities. These sales are conducted pursuant to the guidelines of our investment policy related to the

management of our liquidity position and interest rate risk. Though infrequent, sales of investment securities in our available-for-sale securities portfolio may result in net gains or losses and are also conducted pursuant to the guidelines of our investment policy.
Our non-marketable and other equity securities portfolio primarily represents investments in venture capital and private equity funds, SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China (“SPD-SVB”)), debt funds, private and public portfolio companies and investments in qualified affordable housing projects. We experience variability in the performance of our non-marketable and other equity securities from quarterperiod to quarter,period, which results in net gains or losses on investment securities (both realized and unrealized). This variability is due to a number of factors, including unrealized changes in the values of our investments, changes in the amount of realized gains and losses from distributions, changes in liquidity events and general economic and market conditions. Unrealized gains or losses from non-marketable and other equity securities for any single period are typically driven by valuation changes, and are therefore subject to potential increases or decreases in future periods. Such variability may lead to volatility in the gains or losses from investment securities. As such, our results for a particular period are not necessarily indicative of our expected performance in a future period.
The extent to which any unrealized gains or losses will become realized is subject to a variety of factors, including, among other things, the expiration of certain sales restrictions to which these equity securities may be subject to (i.e.(e.g. lock-up agreements), changes in prevailing market prices, market conditions, the actual sales or distributions of securities, and the timing of such actual sales or distributions, which, to the extent such securities are managed by our managed funds, are subject to our funds' separate discretionary sales/distributions and governance processes.
Our AFS securities portfolio is a fixed income investment portfolio that is managed with the objective of earning an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and credit diversification as well as addressing our asset/liability management objectives. Though infrequent, sales of debt securities in our AFS securities portfolio may result in net gains or losses and are conducted pursuant to the guidelines of our investment policy related to the management of our liquidity position and interest rate risk.
Three months ended September 30, 20172019 and 20162018
For the three months ended September 30, 2017,2019, we had net gains on investment securities of $15.2$29.8 million, compared to $23.2$32.2 million for the comparable 20162018 period. Non-GAAP net gains on investment securities, net of noncontrolling interests, were $9.7$15.2 million for the three months ended September 30, 2017,2019, compared to $18.4non-GAAP net gains, net of controlling interest of $25.6 million for the comparable 20162018 period.

Non-GAAP net gains on investment securities, net of noncontrolling interests, of $9.7$15.2 million for the three months ended September 30, 20172019 were driven by the following:
Gains of $3.7 million from our strategic and other investments, comprised primarily of realized gains from distributions from our strategic venture capital fund investments reflective of M&A activity,
Gains of $3.1 million from our managed funds of funds portfolio, related primarily to net unrealized valuation increases in the investments held by the funds driven by IPO and M&A activity, and
Gains of $2.4 million from our debt funds portfolio, related primarily to net unrealized valuation increases in the investments held by the funds driven by IPO activity during the third quarter of 2017.
•
Gains of $12.5 million from our managed funds of funds portfolio, related primarily to net unrealized valuation increases in private and public company investments held by the funds in the portfolio,
•
Gains of $8.0 million from our strategic and other investments, comprised primarily of net unrealized valuation increases in private companies held in our strategic venture capital funds, and
•
Gains of $5.5 million from our managed direct venture funds, related primarily to net unrealized valuation increases in investments held by the funds in the portfolio, partially offset by
•
Losses of $11.5 million from our public equity securities investments, primarily driven by unrealized losses due to a decline in value of our public equity securities held.
Nine months ended September 30, 20172019 and 20162018
For the nine months ended September 30, 2017,2019, we had net gains on investment securities of $48.8$106.6 million, compared to $41.8$77.4 million for the comparable 20162018 period. Non-GAAP net gains on investment securities, net of noncontrolling interests, were $27.4$69.9 million for the nine months endedSeptember 30, 2017,2019, compared to net gains of $38.1$48.1 million for the comparable 20162018 period.
Non-GAAP net gains, net of noncontrolling interests, of $27.4$69.9 million for the nine months ended September 30, 20172019 were driven primarily by the following:
Gains of $14.2 million from our strategic and other investments, attributable primarily to distribution gains from our strategic venture capital funds investments and $3.4 million related to the partial sale of shares of one of our direct equity investments,
Gains of $9.4 million from our managed funds of funds portfolio, related primarily to net unrealized valuation increases in the investments held by the funds driven by IPO, M&A and private equity-backed financing activity, and
Gains of $2.7 million from our debt funds portfolio, related primarily to net unrealized valuation increases in the investments held by the funds driven by IPO activity during the nine months ended September 30, 2017.
•
Gains of $30.5 million from our managed funds of funds portfolio, related primarily to net unrealized valuation increases in private and public company investments held by the funds in the portfolio,
•
Gains of $30.3 million from our strategic and other investments portfolio, comprised primarily of net unrealized valuation increases in private and public companies held in our strategic venture capital funds and a realized gain for one company in our direct equity portfolio due to M&A activity,
•
Gains of $7.6 million from our managed direct venture funds, related primarily to net unrealized valuation increases in investments held by the funds in the portfolio, and
•
Gains of $5.2 million from our strategic and other investments, comprised primarily of net unrealized valuation increases in private companies held in our strategic venture capital funds.
The following table providestables provide a reconciliation of GAAP total gains (losses) on investment securities, net, to non-GAAP net gains (losses) on investment securities, net of noncontrolling interests, for the three and nine months ended September 30, 20172019 and 2016:2018:

(Dollars in thousands) 
Managed
Funds of
Funds
 
Managed
Direct
Venture
Funds
 
Debt
Funds
 
Available-
For-Sale
Securities
 
Strategic
and Other
Investments
 Total Managed
Funds of
Funds		 Managed
Direct
Venture
Funds		 Public Equity Securities 
Debt
Funds
 Sales of AFS Securities 
Strategic
and Other
Investments
 SVB Leerink Total
Three months ended September 30, 2017            
Three months ended September 30, 2019                
Total gains (losses) on investment securities, net $8,446
 $729
 $2,445
 $(101) $3,719
 $15,238

$22,223
 $9,668

$(11,488)
$187

$—

$8,035
 $1,224
 $29,849
Less: income attributable to noncontrolling interests, including carried interest allocation 5,335
 161
 —
 —
 —
 5,496

9,676
 4,138

—

—

—

—
 826
 14,640
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests $3,111
 $568
 $2,445
 $(101) $3,719
 $9,742
 $12,547
 $5,530
 $(11,488) $187
 $—
 $8,035
 $398
 $15,209
                            
Three months ended September 30, 2016            
Three months ended September 30, 2018                
Total gains on investment securities, net $12,949
 $1,863
 $4,372
 $1,473
 $—
 $11,536
 $—
 $32,193
Less: income attributable to noncontrolling interests, including carried interest allocation 5,914
 727
 —
 —
 —
 —
 —
 $6,641
Non-GAAP net gains on investment securities, net of noncontrolling interests $7,035
 $1,136
 $4,372
 $1,473
 $—
 $11,536
 $—
 $25,552
                
Nine months ended September 30, 2019                
Total gains (losses) on investment securities, net $8,931
 $390
 $166
 $(15) $13,706
 $23,178
 $60,787
 $13,135
 $(1,408) $1,529
 $(3,905) $30,348
 $6,089
 $106,575
Less: income attributable to noncontrolling interests, including carried interest allocation 4,615
 130
 —
 —
 —
 4,745
 30,273
 5,540
 —
 —
 —
 —
 861
 36,674
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests $4,316
 $260
 $166
 $(15) $13,706
 $18,433
 $30,514
 $7,595
 $(1,408) $1,529
 $(3,905) $30,348
 $5,228
 $69,901
                            
Nine months ended September 30, 2017            
Total gains on investment securities, net $30,624
 $894
 $2,696
 $384
 $14,240
 $48,838
Nine months ended September 30, 2018                
Total gains (losses) on investment securities, net $49,553
 $3,377
 $(17,770) $(100) $—
 $42,305
 $—
 $77,365
Less: income attributable to noncontrolling interests, including carried interest allocation 21,245
 178
 —
 —
 —
 21,423
 27,904
 1,314
 —
 —
 —
 —
 —
 29,218
Non-GAAP net gains on investment securities, net of noncontrolling interests $9,379
 $716
 $2,696
 $384
 $14,240
 $27,415
            
Nine months ended September 30, 2016            
Total gains (losses) on investment securities, net $5,830
 $(411) $801
 $11,567
 $23,977
 $41,764
Less: income (losses) attributable to noncontrolling interests, including carried interest allocation 3,668
 (17) —
 —
 —
 3,651
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests $2,162
 $(394) $801
 $11,567
 $23,977
 $38,113
 $21,649
 $2,063
 $(17,770) $(100) $—
 $42,305
 $—
 $48,147


Gains on Equity Warrant Assets, Net
Three months ended September 30, 2019 and 2018
Net gains on equity warrant assets were $37.6 million for the three months ended September 30, 2019, compared to net gains of $34.1 million for the comparable 2018 period. Net gains on equity warrant assets for the three months ended September 30, 2019 consisted of:
•
Net gains of $30.0 million from the exercise of equity warrant assets compared to net gains of $18.3 million, primarily driven by healthy gains from IPO activity, and
•
Net gains of $8.0 million from increases in warrant valuations compared to net gains of $17.3 million, driven by valuation increases in our private company warrant portfolio driven by healthy funding rounds during the three months ended September 30, 2019.


Nine months ended September 30, 2019 and 2018
Net gains on equity warrant assets were $107.2 million for the nine months ended September 30, 2019, compared to net gains of $72.4 million for the comparable 2018 period. Net gains on equity warrant assets for the nine months ended September 30, 2019 consisted of:
•
Net gains of $90.4 million from the exercise of equity warrant assets compared to net gains of $42.8 million, reflective primarily of increased IPO activity during the nine months endedSeptember 30, 2019, and
•
Net gains of $19.8 million from changes in warrant valuation increases compared to net gains of $32.7 million, driven by valuation increases in our private company warrant portfolio during the nine months endedSeptember 30, 2019.
A summary of gains on equity warrant assets, net, for the three and nine months ended September 30, 20172019 and 20162018 is as follows:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
Equity warrant assets (1)            
Equity warrant assets (1):            
Gains on exercises, net $7,449
 $5,931
 25.6 % $22,482
 $13,808
 62.8% $30,047
 $18,287
 64.3 % $90,357
 $42,808
 111.1 %
Cancellations and expirations (757) (1,161) (34.8) (3,614) (2,544) 42.1
Terminations (481) (1,432) (66.4) (2,931) (3,158) (7.2)
Changes in fair value, net 18,230
 16,788
 8.6
 23,564
 21,989
 7.2
 7,995
 17,286
 (53.7) 19,787
 32,743
 (39.6)
Gains on equity warrant assets, net $24,922
 $21,558
 15.6
 $42,432
 $33,253
 27.6
Total gains on equity warrant assets, net $37,561
 $34,141
 10.0
 $107,213
 $72,393
 48.1
 
(1)
At September 30, 20172019, we held warrants in 1,8422,227 companies, compared to 1,7192,031 companies at September 30, 20162018. The total fair value of our warrant portfolio was $142149.1 million at September 30, 20172019 and $145$147.0 million at September 30, 20162018. Warrants in 1615 companies each had fair values greater than $1.0 million and collectively represented $51.7$43.7 million, or 36.529.3 percent, of the fair value of the total warrant portfolio at September 30, 20172019. Warrants in 18 companies each had fair values greater than $1.0 million and collectively represented $42.8 million, or 29.1 percent, of the fair value of the total warrant portfolio at September 30, 2018.
Three months ended September 30, 2017 and 2016
Net gains on equity warrant assets were $24.9 million for the three months ended September 30, 2017, compared to net gains of $21.6 million for the comparable 2016 period. Net gains on equity warrant assets for the three months ended September 30, 2017 consisted of:

Net gains of $18.2 million from changes in warrant valuations for the three months endedSeptember 30, 2017, compared to net gains of $16.8 million for the comparable 2016 period, driven by an increase of $15.9 million in the valuation of one company in our portfolio associated with its IPO during the third quarter of 2017, and
Net gains of $7.4 million from the exercise of equity warrant assets during the three months ended September 30, 2017, compared to net gains of $5.9 million for the comparable 2016 period, reflective of increased M&A activity in the third quarter of 2017.
Nine months ended September 30, 2017 and 2016
Net gains on equity warrant assets were $42.4 million for the nine months ended September 30, 2017, compared to net gains of $33.3 million for the comparable 2016 period. Net gains on equity warrant assets for the nine months ended September 30, 2017 consisted of:
Net gains of $22.5 million from the exercise of equity warrant assets for the nine months endedSeptember 30, 2017, compared to net gains of $13.8 million for the comparable 2016 period, reflective primarily of increased M&A and IPO activity during the nine months endedSeptember 30, 2017, and
Net gains of $23.6 million from changes in warrant valuations for the nine months endedSeptember 30, 2017, compared to net gains of $22.0 million for the comparable 2016 period, driven primarily by an increase in the valuation of one company in our portfolio associated with its IPO during the third quarter of 2017 as mentioned above as well as increases in valuation in our private company warrant portfolio reflective of M&A exit activity during the nine months endedSeptember 30, 2017.
Non-GAAP Core Fee Income
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
Non-GAAP core fee income (1):                        
Client investment fees $46,679
 $36,265
 28.7% $136,905
 $88,592
 54.5%
Foreign exchange fees $29,671
 $25,944
 14.4% $82,026
 $76,998
 6.5% 40,309
 32,656
 23.4
 116,863
 100,560
 16.2
Credit card fees 20,270
 18,295
 10.8
 56,099
 49,226
 14.0
 30,158
 24,121
 25.0
 86,431
 68,739
 25.7
Deposit service charges 14,508
 13,356
 8.6
 43,046
 39,142
 10.0
 22,482
 19,588
 14.8
 65,496
 56,081
 16.8
Client investment fees 15,563
 7,952
 95.7
 37,571
 23,959
 56.8
Lending related fees 15,404
 8,168
 88.6
 32,874
 23,783
 38.2
 11,707
 10,675
 9.7
 36,857
 30,938
 19.1
Letters of credit and standby letters of credit fees 7,306
 6,811
 7.3
 20,951
 18,414
 13.8
 10,842
 8,409
 28.9
 31,205
 24,938
 25.1
Total non-GAAP core fee income (1) $102,722
 $80,526
 27.6
 $272,567
 $231,522
 17.7
 $162,177
 $131,714
 23.1
 $473,757
 $369,848
 28.1
Investment banking revenue 38,516
 —
 —
 137,005
 —
 —
Commissions 12,275
 —
 —
 40,812
 —
 —
Total non-GAAP core fee income including investment banking revenue and commissions (2) $212,968
 $131,714
 61.7
 $651,574
 $369,848
 76.2
 
(1)This non-GAAP measure represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control. See “Use of Non-GAAP Measures” above.
(2)This non-GAAP measure represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control, as well as investment banking revenue and commissions. See “Use of Non-GAAP Measures” above.

Foreign ExchangeClient Investment Fees
Foreign exchangeClient investment fees were $29.7$46.7 million and $82.0$136.9 million for the three and nine months ended September 30, 2017,2019, compared to $25.9$36.3 million and $77.0$88.6 million for the comparable 2016 periods. The increases in foreign exchange fees were driven by our continued investments in people, expertise and focused client engagement, largely from our focus on our foreign exchange business as a key area targeted for growth, resulting in increased client count and higher trade volumes from existing clients across all of our client portfolios.

Credit Card Fees
Credit card fees were $20.3 million and $56.1 million for the three and nine months endedSeptember 30, 2017, compared to $18.3 million and $49.2 million for the comparable 2016 periods. The increases were primarily due to higher interchange fee income driven by an increase in transaction volume reflective of higher spend by our commercial clients and our focus on our credit card business as a key area targeted for growth. The increases in interchange fee income were partially offset by increases in rebate/rewards expense for the three and nine months ended September 30, 2017.
Deposit Service Charges
Deposit service charges were $14.5 million and $43.0 million for the three and nine months ended September 30, 2017, compared to $13.4 million and $39.1 million for the comparable 20162018 periods. The increases were reflective of higher deposit client counts, as well as an increase in transaction volumes, during the three and nine months ended September 30, 2017.
Lending Related Fees
Lending related fees were $15.4 million and $32.9 million for the three and nine months ended September 30, 2017, compared to $8.2 million and $23.8 million for the comparable 2016 periods. The increases were due primarily to an adjustment of $4.5 million related to fees earned in prior periods from unused lines of credit with the remaining increase attributable primarily to higher loan syndication fee income for the three and nine months ended September 30, 2017.
Client Investment Fees
Client investment fees were $15.6 million and $37.6 million for the three and nine months ended September 30, 2017, compared to $8.0 million and $24.0 million for the comparable 2016 periods. The increases were attributable primarily tolarge increases in average client investment fund balancesfunds driven by our clients’ increased utilization of our off-balance sheet sweep money market funds and products managed by SVB Asset Management and third-party sweep money market funds, as well asManagement. Client investment fees also benefited from improved spreads on our client investment funds due to increases in general market rates since the third quarter ended September 30, 2018. A summary of client investment fees by instrument type for the three and the reintroduction of fees that had been previously waived due to the low rate environment.nine months ended September 30, 2019 and 2018 is as follows:

  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 % Change 2019 2018 % Change
Client investment fees by type:            
Sweep money market fees $26,202
 $21,105
 24.2% $79,698
 $50,605
 57.5%
Asset management fees 7,256
 6,358
 14.1
 20,883
 17,447
 19.7
Repurchase agreement fees 13,221
 8,802
 50.2
 36,324
 20,540
 76.8
Total client investment fees $46,679
 $36,265
 28.7
 $136,905
 $88,592
 54.5
The following table summarizes average client investment funds for the three and nine months ended September 30, 20172019 and 2016:2018:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in millions) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
Client directed investment assets (1) $6,985
 $6,846
 2.0% $6,190
 $7,137
 (13.3)%
Sweep money market funds $40,321
 $34,556
 16.7% $40,048
 $30,284
 32.2%
Client investment assets under management (2)(1) 26,123
 20,692
 26.2
 24,531
 21,215
 15.6
 42,834
 36,541
 17.2
 40,969
 33,561
 22.1
Sweep money market funds 20,165
 15,567
 29.5
 18,783
 14,468
 29.8
Repurchase agreements 9,670
 8,464
 14.2
 8,947
 7,905
 13.2
Total average client investment funds (3)(2) $53,273
 $43,105
 23.6
 $49,504
 $42,820
 15.6
 $92,825
 $79,561
 16.7
 $89,964
 $71,750
 25.4
 
(1)
Comprised of mutual funds and Repurchase Agreement Program assets.
(2)These funds represent investments in third partythird-party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(3)(2)Client investment funds are maintained at third partythird-party financial institutions and are not recorded on our balance sheet.

The following table summarizes period-end client investment funds at September 30, 20172019 and December 31, 2016:2018:
(Dollars in millions) September 30, 2017 December 31, 2016 % Change September 30, 2019 December 31, 2018 % Change
Client directed investment assets (1) $6,860
 $5,510
 24.5%
Sweep money market funds $42,022
 $38,348
 9.6%
Client investment assets under management (2)(1) 26,718
 23,115
 15.6
 44,886
 39,214
 14.5
Sweep money market funds 20,664
 17,173
 20.3
Repurchase agreements 9,564
 8,422
 13.6
Total period-end client investment funds (3)(2) $54,242
 $45,798
 18.4
 $96,472
 $85,984
 12.2
 
(1)Comprised of mutual funds and Repurchase Agreement Program assets.
(2)These funds represent investments in third partythird-party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(3)(2)Client investment funds are maintained at third partythird-party financial institutions and are not recorded on our balance sheet.
Foreign Exchange Fees
Foreign exchange fees were $40.3 million and $116.9 million for the three and nine months ended September 30, 2019, respectively, compared to $32.7 million and $100.6 million for the comparable 2018 periods. The increase in foreign exchange fees was driven primarily by increases in spot contract commissions driven by increased volume of trades for the three and nine months ended September 30, 2019 compared to the 2018 periods. The volume of trades for spot contracts increased 16.0 and 21.6 percent for the three and nine months ended September 30, 2019, respectively, compared to the comparable 2018 periods reflective primarily of our global expansion initiative and increased client engagement efforts. A summary of foreign exchange fee income by instrument type for the three and nine months ended September 30, 2019 and 2018 is as follows:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019
2018
% Change 2019 2018 % Change
Foreign exchange fees by instrument type:            
Spot contract commissions $36,836
 $30,041
 22.6% $106,561
 $92,791
 14.8 %
Forward contract commissions 3,371
 2,534
 33.0
 10,144
 7,474
 35.7
Option premium fees 102
 81
 25.9
 158
 295
 (46.4)
Total foreign exchange fees $40,309
 $32,656
 23.4
 $116,863
 $100,560
 16.2
Credit Card Fees
Credit card fees were $30.2 million and $86.4 million for the three and nine months endedSeptember 30, 2019, respectively, compared to $24.1 million and $68.7 million for the comparable 2018 periods. The increases were primarily due to an increase in net interchange fees for the three and nine months ended September 30, 2019. A summary of credit card fees by instrument type for the three and nine months ended September 30, 2019 and 2018 is as follows:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 % Change 2019 2018 % Change
Credit card fees by instrument type:            
Card interchange fees, net $24,560
 $18,849
 30.3% $68,808
 $54,547
 26.1%
Merchant service fees 3,943
 3,679
 7.2
 12,763
 10,010
 27.5
Card service fees 1,655
 1,593
 3.9
 4,860
 4,182
 16.2
Total credit card fees $30,158
 $24,121
 25.0
 $86,431
 $68,739
 25.7
Deposit Service Charges
Deposit service charges were $22.5 million and $65.5 million for the three and nine months ended September 30, 2019, respectively, compared to $19.6 million and $56.1 million for the comparable 2018 periods. The increases were reflective of higher deposit client counts as well as higher volumes of our transaction-based fee products during the three and nine months ended September 30, 2019.
Lending Related Fees
Lending related fees were $11.7 million and $36.9 million for the three and nine months ended September 30, 2019, respectively, compared to $10.7 million and $30.9 million for the comparable 2018 periods. The increases were due to an increase in loan servicing fees and syndication fee income for the three and nine months ended September 30, 2019. A summary of lending

related fees by type for the three and nine months ended September 30, 2019 and 2018 is as follows:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 % Change 2019 2018 % Change
Lending related fees by instrument type:            
Unused commitment fees $8,339
 $8,410
 (0.8)% $25,060
 $24,994
 0.3%
Other 3,368
 2,265
 48.7
 11,797
 5,944
 98.5
Total lending related fees $11,707
 $10,675
 9.7
 $36,857
 $30,938
 19.1
Letters of Credit and Standby Letters of Credit Fees
Letters of credit and standby letters of credit fees were $10.8 million and $31.2 million for the three and nine months ended September 30, 2019, respectively, compared to $8.4 million and $24.9 million for the comparable 2018 periods. The increases were primarily driven by increases in deferred fee income reflective of larger letter of credit issuances.
Investment Banking Revenue
Investment banking revenue was $38.5 million and $137.0 million for the three and nine months ended September 30, 2019, respectively, consisting primarily of underwriting fees. A summary of investment banking revenue by type for the three and nine months ended September 30, 2019 and 2018 is as follows:
   Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 % Change 2019 2018 % Change
Investment banking revenue:            
Underwriting fees $31,016
 $—
 —
 $109,371
 $—
 —
Advisory fees 5,200
 —
 —
 22,789
 —
 —
Private placements and other 2,300
 —
 —
 4,845
 —
 —
Total investment banking revenue $38,516
 $—
 —
 $137,005
 $—
 —
Commissions
Commissions for the three and nine months ended September 30, 2019 were $12.3 million and $40.8 million, respectively, which were driven by client trading activity, consistent with market volumes.
Other Noninterest Income
Total other noninterest income was $13.6 million and $42.8 million for the three and nine months ended September 30, 2019, respectively, compared to $12.0 million and $38.7 million for the comparable 2018 periods. The increases were due primarily to an increase in fund management fees due to the inclusion of SVB Leerink in our financial results as of January 4, 2019. A summary of other noninterest income for the three and nine months ended September 30, 20172019 and 20162018 is as follows:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
Fund management fees $5,198
 $5,231
 (0.6)% $15,903
 $14,149
 12.4 %
Service-based fee income 469
 2,029
 (76.9) 3,860
 6,270
 (38.4)
Gains on revaluation of client foreign currency instruments, net (1) 3,760
 3,488
 7.8
 8,889
 7,009
 26.8
Losses on client foreign exchange forward contracts, net (1) (3,871) (3,194) 21.2
 (8,350) (8,780) (4.9)
Gains (losses) on revaluation of internal foreign currency instruments, net (2) 10,561
 (1,406) NM
 29,265
 (4,222) NM
(Losses) gains on internal foreign exchange contracts, net (2) (10,550) 1,352
 NM
 (28,349) 3,067
 NM
Other (3) 10,329
 11,378
 (9.2) 19,910
 19,018
 4.7
Total other noninterest income $15,896
 $18,878
 (15.8) $41,128
 $36,511
 12.6
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 % Change 2019 2018 % Change
Other noninterest income by instrument type:            
Fund management fees $8,493
 $5,479
 55.0 % $24,292
 $17,144
 41.7 %
Net (losses) gains on revaluation of foreign currency instruments, net of foreign exchange forward contracts (1) (78) 796
 (109.8) 173
 985
 (82.4)
Other service revenue (2) 5,216
 5,747
 (9.2) 18,308
 20,542
 (10.9)
Total other noninterest income $13,631
 $12,022
 13.4
 $42,773
 $38,671
 10.6
 
NM—Not meaningful
(1)Represents the net revaluation of client and internal foreign currency denominated financial instruments. We enter into client foreign exchange forward contracts to economically reduce our foreign exchange exposure related to client and internal foreign currency denominated financial instruments.
(2)Represents the net revaluation of foreign currency denominated financial instruments issued and held by us, primarily loans, deposits and cash. We enter into internal foreign exchange forward contracts to economically reduce our foreign exchange exposure related to these foreign currency denominated financial instruments issued and held by us.
(3)Includes dividends on FHLB/FRB stock, correspondent bank rebate income, incentive fees related to carried interest, valuation fee income and other fee income.
Three months ended September 30, 2017 and 2016
Total other noninterest income was $15.9 million for the three months ended September 30, 2017, compared to $18.9 million for the comparable 2016 period. The decrease of $3.0 million in other noninterest income was due to the following:
Service-based fee income of $0.5 million compared to $2.0 million for the comparable 2016 period. The $1.5 million decrease was primarily due to the sale of our equity valuation services business during the third quarter of 2017, and
Other noninterest income of $10.3 million compared to $11.4 million for the comparable 2016 period. The $1.1 million decrease was primarily attributable to higher carried interest income earned from one of our unconsolidated fund investments during the third quarter of 2016 as compared to the third quarter of 2017.
Nine months ended September 30, 2017 and 2016
Total other noninterest income was $41.1 million for the nine months endedSeptember 30, 2017, compared $36.5 million for the comparable 2016 period. The increase of $4.6 million in other noninterest income was due to the following:
Fund management fees of $15.9 million compared to fees of $14.1 million for the comparable 2016 period. The increase was due primarily to the addition of new managed funds at SVB Capital,
Service-based fee income of $3.9 million compared to $6.3 million for the comparable 2016 period. The $2.4 million decrease was primarily due to the sale of our equity valuation services business during the third quarter of 2017,
Net gains of $0.5 million on client foreign exchange forward contracts and the revaluation of client foreign currency denominated cash for the nine months ended September 30, 2017, compared to net losses of $1.8 million for the comparable 2016 period. The net losses for the nine months ended September 30, 2016 was primarily due to a reclassification of $2.8 million in unrealized gains on forward contracts to foreign exchange fee income reflecting fees earned on forward contracts executed on behalf of our clients that were previously recorded in gains on derivative instruments, and

Net gains of $0.9 million on internal foreign exchange forward contracts and the revaluation of internal foreign currency denominated cash for the nine months ended September 30, 2017, compared to net losses of $1.2 million for the comparable 2016 period. The net losses of $1.2 million for the nine months ended September 30, 2016 were primarily due to the strengthening of the U.S. dollar against various foreign currencies during the nine months ended September 30, 2016.
Noninterest Expense
A summary of noninterest expense for the three and nine months ended September 30, 20172019 and 20162018 is as follows:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017
2016 % Change 2017 2016 % Change 2019
2018 % Change 2019 2018 % Change
Compensation and benefits $153,263
 $136,568
 12.2% $449,412
 $374,410
 20.0% $233,840
 $195,437
 19.6 % $715,073
 $543,198
 31.6 %
Professional services 32,987
 23,443
 40.7
 86,331
 67,959
 27.0
 55,202
 36,542
 51.1
 133,018
 112,080
 18.7
Premises and equipment 18,937
 16,291
 16.2
 53,753
 47,861
 12.3
 26,775
 19,858
 34.8
 72,386
 57,576
 25.7
Net occupancy 16,981
 13,694
 24.0
 49,716
 40,598
 22.5
Business development and travel 10,329
 8,504
 21.5
 30,913
 30,077
 2.8
 19,539
 12,712
 53.7
 51,915
 35,998
 44.2
Net occupancy 12,660
 9,525
 32.9
 35,437
 28,919
 22.5
FDIC and state assessments 8,359
 7,805
 7.1
 26,354
 21,624
 21.9
 4,881
 9,550
 (48.9) 13,343
 29,306
 (54.5)
Correspondent bank fees 3,162
 3,104
 1.9
 9,770
 9,469
 3.2
Other 18,064
 15,533
 16.3
 54,670
 44,292
 23.4
 34,106
 21,652
 57.5
 105,059
 61,845
 69.9
Total noninterest expense (1) $257,761
 $220,773
 16.8
 $746,640
 $624,611
 19.5
Total noninterest expense $391,324
 $309,445
 26.5
 $1,140,510
 $880,601
 29.5
(1)Our consolidated statements of income were modified from prior periods' presentation to the current period presentation, which reflects our provision for loan losses and provision for unfunded credit commitments together as our “provision for credit losses”. In prior periods, our provision for unfunded credit commitments were reported separately as a component of noninterest expense.
Included in noninterest expense is expense attributable to noncontrolling interests. See below for a description and reconciliation of non-GAAP noninterest expense and non-GAAP core operating efficiency ratio, both of which exclude noncontrolling interests.
Non-GAAP Noninterest Expense
We use and report non-GAAP noninterest expense, non-GAAP taxable equivalent revenue and non-GAAP core operating efficiency ratio, which excludes noncontrolling interests.interests and SVB Leerink. 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 core operating efficiency ratio both net of noncontrolling interests for the three and nine months ended September 30, 20172019 and 20162018:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands, except ratios) 2017
2016 % Change 2017 2016 % Change
Non-GAAP core operating efficiency ratio (Dollars in thousands, except ratios) 2019
2018 % Change 2019 2018 % Change
GAAP noninterest expense $257,761
 $220,773
 16.8 % $746,640
 $624,611
 19.5 % $391,324
 $309,445
 26.5 % $1,140,510
 $880,601
 29.5 %
Less: amounts attributable to noncontrolling interests 125
 117
 6.8
 517
 284
 82.0
Less: expense attributable to noncontrolling interests 145
 154
 (5.8) 692
 349
 98.3
Non-GAAP noninterest expense, net of noncontrolling interests $257,636
 $220,656
 16.8
 $746,123
 $624,327
 19.5
 391,179
 309,291
 26.5
 1,139,818
 880,252
 29.5
Less: expense attributable to SVB Leerink 55,200
 —
 —
 177,675
 —
 —
Non-GAAP noninterest expense, net of noncontrolling interests and SVB Leerink $335,979
 $309,291
 8.6
 $962,143
 $880,252
 9.3
                        
GAAP net interest income $373,974
 $289,161
 29.3
 $1,026,663
 $853,918
 20.2
 $520,644
 $493,222
 5.6
 $1,562,933
 $1,379,528
 13.3
Adjustments for taxable equivalent basis 631
 281
 124.6
 1,455
 912
 59.5
 2,957
 2,858
 3.5
 8,769
 6,249
 40.3
Non-GAAP taxable equivalent net interest income $374,605
 $289,442
 29.4
 $1,028,118
 $854,830
 20.3
 523,601
 496,080
 5.5
 1,571,702
 1,385,777
 13.4
Less: income attributable to noncontrolling interests 9
 4
 125.0
 26
 62
 (58.1) 14
 10
 40.0
 41
 29
 41.4
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests $374,596
 $289,438
 29.4
 $1,028,092
 $854,768
 20.3
 523,587
 496,070
 5.5
 1,571,661
 1,385,748
 13.4
Less: net interest income attributable to SVB Leerink 277
 —
 —
 961
 —
 —
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests and SVB Leerink $523,310
 $496,070
 5.5
 $1,570,700
 $1,385,748
 13.3
                        
GAAP noninterest income $158,778
 $144,140
 10.2
 $404,965
 $343,050
 18.0
 $294,009
 $210,070
 40.0
 $908,135
 $558,277
 62.7
Less: income attributable to noncontrolling interests 5,614
 4,679
 20.0
 21,709
 3,627
 NM
Less: income attributable to noncontrolling interests, including carried interest allocation 14,568
 6,692
 117.7
 36,552
 29,161
 25.3
Non-GAAP noninterest income, net of noncontrolling interests $153,164
 $139,461
 9.8
 $383,256
 $339,423
 12.9
 279,441
 203,378
 37.4
 871,583
 529,116
 64.7
Less: non-GAAP net gains on investment securities, net of noncontrolling interests 15,209
 25,552
 (40.5) 69,901
 48,147
 45.2
Less: net gains on equity warrant assets 37,561
 34,141
 10.0
 107,213
 72,393
 48.1
Less: investment banking revenue 38,516
 —
 —
 137,005
 —
 —
Less: commissions 12,275
 —
 —
 40,812
 —
 —
Non-GAAP noninterest income, net of noncontrolling interests and net of net gains on investment securities, net gains on equity warrant assets, investment banking revenue and commissions $175,880
 $143,685
 22.4
 $516,652
 $408,576
 26.5
                        
GAAP total revenue $532,752
 $433,301
 23.0
 $1,431,628
 $1,196,968
 19.6
 $814,653
 $703,292
 15.8
 $2,471,068
 $1,937,805
 27.5
Non-GAAP taxable equivalent revenue, net of noncontrolling interests $527,760
 $428,899
 23.0
 $1,411,348
 $1,194,191
 18.2
Non-GAAP taxable equivalent revenue, net of noncontrolling interests and SVB Leerink, net gains on investment securities, net gains on equity warrant assets, investment banking revenue and commissions $699,190
 $639,755
 9.3
 $2,087,352
 $1,794,324
 16.3
            
GAAP operating efficiency ratio 48.38% 50.95% (5.0) 52.15% 52.18% (0.1) 48.04% 44.00% 9.2
 46.15% 45.44% 1.6
Non-GAAP operating efficiency ratio (1) 48.82
 51.45
 (5.1) 52.87
 52.28
 1.1
Non-GAAP core operating efficiency ratio (1) 48.05
 48.35
 (0.6) 46.09
 49.06
 (6.1)

 
NM—Not meaningful
(1)The non-GAAP core operating efficiency ratio is calculated by dividing non-GAAP noninterest expense after adjusting for noninterest expense attributable to SVB Leerink by total revenue after adjusting for net ofinterest income attributable to SVB Leerink, net gains or losses on investment securities and equity warrant assets, investment banking revenue and commissions. Additionally, noninterest expense and total revenue are adjusted for income or losses and expenses attributable to noncontrolling interests by non-GAAP taxable-equivalent revenue,and adjustments to net of noncontrolling interests.interest income for a taxable equivalent basis.

Compensation and Benefits Expense
The following table provides a summary of our compensation and benefits expense for the three and nine months ended September 30, 20172019 and 2016:2018:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands, except employees) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
Compensation and benefits:                        
Salaries and wages $72,799
 $62,636
 16.2 % $207,687
 $182,375
 13.9% $109,473
 $84,962
 28.8% $316,472
 $234,832
 34.8%
Incentive compensation & ESOP 37,668
 38,255
 (1.5) 108,310
 87,162
 24.3
 60,486
 57,375
 5.4
 203,614
 155,390
 31.0
Other employee incentives and benefits (1) 42,796
 35,677
 20.0
 133,415
 104,873
 27.2
 63,881
 53,100
 20.3
 194,987
 152,976
 27.5
Total compensation and benefits $153,263
 $136,568
 12.2
 $449,412
 $374,410
 20.0
 $233,840
 $195,437
 19.6
 $715,073
 $543,198
 31.6
Period-end full-time equivalent employees 2,433
 2,280
 6.7
 2,433
 2,280
 6.7
 3,460
 2,836
 22.0
 3,460
 2,836
 22.0
Average full-time equivalent employees 2,434
 2,255
 7.9
 2,384
 2,199
 8.4
 3,413
 2,778
 22.9
 3,309
 2,623
 26.2
 

(1)
Other employee incentives and benefits includes employer payroll taxes, group health and life insurance, share-based compensation, 401(k), warrant and retention plans, agency fees and other employee-related expenses.
Compensation and benefits expense was $153.3$233.8 million for the three months ended September 30, 2017,2019, compared to $136.6$195.4 million for the comparable 20162018 period. The key changes in factors affecting compensation and benefits expense were as follows:
An increase of $10.2$24.5 million in salaries and wages reflective primarily due to the increase in the number of average FTE by 635 to 3,413 for the third quarter of 2019, of which 229 FTE were attributable to the acquisition of SVB Leerink compared to the same period in 2018, as well as annual pay raises,
An increase of $3.1 million in incentive compensation and ESOP expense reflective primarily of the inclusion of SVB Leerink in our financial results for the third quarter of 2019, partially offset by a decrease in our incentive accruals as a result of our 2019 full-year projected financial performance, and
An increase of $10.8 million in other employee incentives and benefits primarily driven by an increase of $7.3 million in share-based compensation expense due to the increased restricted stock awards granted during 2019, a $2.3 million increase in retention compensation primarily due to an increase in the number of average FTE by 179 to 2,434 FTEs for the third quarter of 2017 compared to the same period in 2016, and annual pay raises. The increase in headcount was primarily to support our growth initiatives.
An increase of $7.1 million in total other miscellaneous employee incentives and benefits,expenses related to various expenses, particularly personnel contracting expenses, to support our growth both domestically and globally, and employer payroll taxes reflective of our increased headcount since the third quarter of 2016. The increase in other employee incentives and benefits also includes an increase of $2.7 million in warrant incentive plan expenses reflective of our quarterly equity warrant portfolio performance as well as an increase of $0.7 million in share-based compensation expense, primarily due to our accruals based on our performance expectations for our outstanding performance-based restricted stock awards compared to our estimate for the third quarter of 2016, reflective of the increase in our stock price relative to our peers.average FTE as noted above.
Compensation and benefits expense was $449.4$715.1 million for the nine months ended September 30, 2017,2019, compared to $374.4$543.2 million for the comparable 20162018 period. The key changes in factors affecting compensation and benefits expense were as follows:

An increase of $28.5$81.6 million in total other employee incentivessalaries and benefits, related to various expenses, particularly personnel contracting expenses, to support our growth both domestically and globally, as well as group health and life insurance and employer payroll taxeswages reflective of our increased headcount since the nine months ended September 30, 2016. The increase in other employee incentives and benefits also includes an increase of $5.4 million in warrant incentive plan expenses reflective of our year-to-date equity warrant portfolio performance as well as an increase of $5.4 million in share-based compensation expense, primarily due to our accruals based on our performance expectations for our outstanding performance-based restricted stock awards as comparedthe increase in the number of average FTE by 686 to our estimate3,309 for the nine months ended September 30, 2016, reflective2019, of which 230 FTE were attributable to the increaseacquisition of SVB Leerink compared to the same period in our stock price relative to our peers.2018, as well as annual pay raises,
An increase of $25.3$48.2 million in salariesincentive compensation and wages,ESOP expense reflective primarily of the inclusion of SVB Leerink in our financial results for the nine months ended September 30, 2019, and
An increase of $42.0 million in other employee incentives and benefits primarily driven by an increase of $16.6 million in share-based compensation expense due to the increased restricted stock awards granted during 2019, $4.2 million for increased warrant compensation expense due to gains on equity warrant assets, $5.9 million increase in retention compensation primarily due to an increase in the number of average FTE by 185 to 2,384 FTEs during the nine months ended September 30, 2017 compared to the same period in 2016, and annual pay raises.
An increase of $21.1 million inother miscellaneous employee expenses related to incentive compensation plans and ESOP. Our incentive compensation expense was higher during the nine months ended September 30, 2017 primarily due to higher expected full year performance for 2017 related to the trend of our improving ROE relative to our peers, which is one of our key plan performance metrics.increase in average FTE as noted above.

Our variable compensation plans consist primarily of our Incentive Compensation Plan, Direct Drive Incentive Compensation Plan, 401(k) and ESOP Plan, Retention Program and Warrant Incentive Plan (see descriptions in our 20162018 Form 10-K). Total costs incurred under these plans were $45.9$72.1 million and $133.3$244.1 million for the three and nine months ended September 30, 2017,2019, respectively, compared to $43.7$67.3 million and $105.9$182.2 million for the comparable 20162018 periods. These amounts are included in total compensation and benefits expense discussed above.
Professional Services
Professional services expense was $33.0$55.2 million and $86.3$133.0 million for the three and nine months ended September 30, 2017,2019, respectively, compared to $23.4$36.5 million and $68.0$112.1 million for the comparable 20162018 periods. The increases wereincrease for the three months ended September 30, 2019 was primarily related to enhancements in our regulatory, risk and compliance infrastructureincreased consulting fees during the third quarter of 2019 associated with increased project spend to support our momentum as we continueglobal digital banking, and continued global infrastructure, initiatives. The increase for the nine months ended September 30, 2019 was primarily due to grow both domesticallythe increase in legal and globallyconsulting costs related to the acquisition of SVB Leerink as well as investments made in projects, systems and technology to support our revenue growth and related initiatives and other operating costs.the increased project spend as discussed above.
Premises and Equipment
Premises and equipment expense was $18.9$26.8 million and $53.8$72.4 million for the three and nine months ended September 30, 2017,2019, respectively, compared to $16.3$19.9 million and $47.9$57.6 million for the comparable 20162018 periods. The increases related to investments toin projects, systems and technology to support our revenue growth and related initiatives as well as other operating costs.

Net Occupancy
Net occupancy expense was $12.7$17.0 million and $35.4$49.7 million for the three and nine months ended September 30, 2017,2019, respectively, compared to $9.5$13.7 million and $28.9$40.6 million for the comparable 20162018 periods. The increases were primarily due to lease renewals at higher costs, reflective of market conditions, and the expansion of certain offices to support our growth. Additionally, for the three and nine months ended September 30, 2019, $1.9 million and $5.6 million, respectively, were directly attributable to the inclusion of SVB Leerink in our financial results effective January 4, 2019.
FDIC and State Assessments
FDIC and state assessments expense was $8.4$4.9 million and $26.4$13.3 million for the three and nine months ended September 30, 2017,2019, respectively, compared to $7.8$9.6 million and $21.6$29.3 million for the comparable 20162018 periods. The decreases were primarily due to the elimination of the FDIC surcharge for banks effective October 1, 2018, reflective of the deposit insurance fund reserve ratio reaching its minimum funding requirements.
Business Development and Travel
Business development and travel expense was $19.5 million and $51.9 million for the three and nine months ended September 30, 2019, respectively, compared to $12.7 million and $36.0 million for the comparable 2018 periods. The increases were due primarily to the increases in our average assets.support expansion initiatives as we continue to grow both domestically and globally.
Other Noninterest Expense
Total other noninterest expense was $34.1 million and $105.1 million for the three and nine months ended September 30, 2019, respectively, compared to $21.7 million and $61.8 million for the comparable 2018 periods. The increases were driven primarily by ongoing expenses related to the consolidation of SVB Leerink, specifically, $7.3 million and $26.5 million of the overall increases for the three and nine months ended September 30, 2019, respectively, were related to expenses for investment banking and trade order execution costs as well as amortization of intangible assets recorded as part of the acquisition.

A summary of other noninterest expense for the three and nine months ended September 30, 20172019 and 20162018 is as follows:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
Lending and other client related processing costs $6,935
 $5,885
 17.8% $18,806
 $13,721
 37.1 % $7,502
 $5,698
 31.7 % $21,442
 $16,301
 31.5%
Correspondent bank fees 3,657
 3,513
 4.1
 10,970
 10,200
 7.5
Investment banking activities 1,864
 —
 —
 9,918
 —
 —
Trade order execution costs 2,615
 —
 —
 7,959
 —
 —
Data processing services 3,066
 2,740
 11.9
 8,624
 7,934
 8.7
Telephone 2,518
 2,460
 2.4
 7,892
 7,109
 11.0
 2,466
 2,269
 8.7
 7,629
 7,025
 8.6
Data processing services 2,244
 2,137
 5.0
 7,254
 6,353
 14.2
Dues and publications 883
 809
 9.1
 2,355
 2,258
 4.3
 1,055
 1,387
 (23.9) 3,439
 3,081
 11.6
Postage and supplies 612
 598
 2.3
 2,013
 2,172
 (7.3) 720
 652
 10.4
 2,168
 2,133
 1.6
Other 4,872
 3,644
 33.7
 16,350
 12,679
 29.0
 11,161
 5,393
 107.0
 32,910
 15,171
 116.9
Total other noninterest expense $18,064
 $15,533
 16.3
 $54,670
 $44,292
 23.4
 $34,106
 $21,652
 57.5
 $105,059
 $61,845
 69.9
Net Income Attributable to Noncontrolling Interests
Included in net income is income and expense attributable to noncontrolling interests. The relevant amounts allocated to investors in our consolidated subsidiaries, other than us, are reflected under “Net“net income attributable to noncontrolling interests” on our statements of income.
In the table below, noninterest income consists primarily of net 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 managed funds’ general partners. A summary of net income attributable to noncontrolling interests for the three and nine months ended September 30, 20172019 and 20162018 is as follows:
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
Net interest income (1) $(9) $(4) 125.0% $(26) $(62) (58.1)% $(14) $(10) 40.0 % $(41) $(29) 41.4 %
Noninterest income (1) (4,341) (3,721) 16.7
 (19,059) (1,144) NM
 (4,910) (2,749) 78.6
 (19,586) (20,127) (2.7)
Noninterest expense (1) 125
 117
 6.8
 517
 284
 82.0
 145
 154
 (5.8) 692
 349
 98.3
Carried interest allocation (2) (1,273) (958) 32.9
 (2,650) (2,483) 6.7
 (9,658) (3,943) 144.9
 (16,966) (9,034) 87.8
Net income attributable to noncontrolling interests $(5,498) $(4,566) 20.4
 $(21,218) $(3,405) NM
 $(14,437) $(6,548) 120.5
 $(35,901) $(28,841) 24.5
 
NM—Not meaningful
(1)Represents noncontrolling interests’ share in net interest income, noninterest income or loss and noninterest expense.

(2)Represents the preferred allocation of income (or change in income) earned by us as the general partner of certain consolidated funds.


Three months ended September 30, 20172019 and 20162018
Net income attributable to noncontrolling interests was $5.514.4 million for the three months ended September 30, 2017,2019, compared to $4.6$6.5 million for the comparable 20162018 period. Net income attributable to noncontrolling interests of $5.5$14.4 million for the three months ended September 30, 20172019 was primarily a result of net gains on investment securities (including carried interest allocation) from our managed funds of funds portfolio dueand our managed direct venture fund portfolios, related primarily to net unrealized valuation increases offor private and public company investments held by the funds driven primarily by IPO and M&A activity.in the portfolio. See “Results of Operations—Noninterest Income—Gains on Investment Securities, Net”.
Nine months ended September 30, 20172019 and 20162018
Net income attributable to noncontrolling interests was $21.2$35.9 million for the nine months ended September 30, 2017,2019, compared to $3.4$28.8 million for the comparable 20162018 period. Net income attributable to noncontrolling interests of $21.2$35.9 million for the nine months ended September 30, 20172019 was primarily a result of net gains on investment securities (including carried interest allocation) from our managed funds of funds portfolio dueand our managed direct venture fund portfolios, related primarily to net unrealized valuation increases offor private and public company investments held by the funds driven by IPO, M&A and private equity-backed financing activity.in the portfolio. See “Results of Operations—Noninterest Income—Gains on Investment Securities, Net”.

Income Taxes
Our effective income tax expense rate was 39.628.2 percent and 37.127.5 percent for the three and nine months ended September 30, 2017,2019, respectively, compared to 40.9 percent and 40.825.8 percent for the three and nine months ended September 30, 2016, respectively.both comparable 2018 periods. 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.
The reductionsincreases in the effective tax rate for the three and nine months ended September 30, 2017 resulted from2019 was due primarily to a decrease in the recognition of a tax benefit for share-based compensation expense related to the lower number of $1.3 million and $14.4 million, respectively,stock options exercised due to the adoption and implementation of Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting,decrease in the first quarterstock price of 2017. The new guidance requires tax impacts from employee share-based transactions to be recognized in the provision for income taxes rather than additional paid-in-capital in stockholders' equity required under the previous guidance. Additionally, our effective income tax expense rate for the nine months ended September 30, 2017 included the recognition of a tax benefit of $4.7 million reflective of the return of tax funds related to a prior years' tax return.
Additionally, in early November 2017, draft tax reform legislation entitled the Tax Cuts and Jobs Act (the “TCJ Act”) was introduced.  If enacted, the TCJ Act would make significant changes to the U.S. Internal Revenue Code of 1986, including corporate taxation provisions.  Such changes under the TCJ Act or any other similar tax reform could have a material impact on our results of operations or financial condition.
Excluding the impact of the tax benefit items discussed above and any tax reform, we expect the annual effective tax rate for 2017 to be comparable to the full-year 2016 effective tax rate.SIVB.
Operating Segment Results
We have threefour segments for which we report our financial information: Global Commercial Bank, SVB Private Bank, SVB Capital and SVB Capital.Leerink. SVB Leerink is a new reportable segment for 2019 as a result of the acquisition of SVB Leerink effective January 4, 2019.
We report segment information based on the “management” approach. The management approach which designates the internal reporting used by management for making decisions and assessing performance as the source of our reporting segments. Please refer to Note 11—15—“Segment Reporting” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details.

The following is our reportable segment information for the three and nine months ended September 30, 20172019 and 20162018:
Global Commercial Bank
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
Net interest income $337,860
 $262,484
 28.7% $924,789
 $773,342
 19.6 % $455,161
 $431,036
 5.6% $1,360,997
 $1,209,960
 12.5%
Provision for credit losses (20,874) (16,974) 23.0
 (65,007) (86,143) (24.5) (34,075) (19,074) 78.6
 (79,175) (71,704) 10.4
Noninterest income 97,227
 79,226
 22.7
 260,650
 231,295
 12.7
 161,029
 135,228
 19.1
 471,492
 377,320
 25.0
Noninterest expense (176,964) (159,479) 11.0
 (525,043) (462,234) 13.6
 (213,786) (206,487) 3.5
 (617,933) (591,434) 4.5
Income before income tax expense $237,249
 $165,257
 43.6
 $595,389
 $456,260
 30.5
 $368,329
 $340,703
 8.1
 $1,135,381
 $924,142
 22.9
Total average loans, net of unearned income $18,807,616
 $16,357,099
 15.0
 $18,125,020
 $15,769,964
 14.9
 $25,839,647
 $22,925,909
 12.7
 $25,457,997
 $21,781,557
 16.9
Total average assets 47,817,114
 40,828,549
 17.1
 45,414,432
 41,020,808
 10.7
 58,384,473
 49,948,578
 16.9
 54,196,976
 48,380,180
 12.0
Total average deposits 42,376,024
 36,484,125
 16.1
 40,398,413
 37,002,027
 9.2
 55,250,154
 47,037,693
 17.5
 51,352,644
 45,701,317
 12.4
Three months ended September 30, 20172019 and 20162018
Income before income tax expense from our Global Commercial Bank (“GCB”) increased to $237.2$368.3 million for the three months ended September 30, 2017,2019, compared to $165.3$340.7 million for the comparable 20162018 period, which reflected the continued acquisition of new clients and growth of our core commercial business. The key components of GCB's performance for the three months ended September 30, 20172019 compared to the comparable 20162018 period are discussed below.
Net interest income from GCB increased by $75.4$24.1 million for the three months ended September 30, 2017,2019, due primarily to an increase in loan interest income resulting mainly from higher average loan balances.
GCB had a provision for credit losses of $34.1 million for the three months ended September 30, 2019, compared to $19.1 million for the comparable 2018 period. The provision of $34.1 million for the three months ended September 30, 2019 primarily reflects an increase of $19.1 million for net new nonaccrual loans, $18.3 million for charge-offs not specifically reserved for and $15.2 million in additional reserves for period-end loan growth, partially offset by a decrease of $13.0 million for the qualitative component of our performing loans as described above and $3.9 million of recoveries.
The provision of $19.1 million for the three months ended September 30, 2018 reflects primarily $12.9 million in additional reserves for period-end loan growth, $9.2 million for charge-offs not specifically reserved for and $9.3 million in net new specific reserves for nonaccrual loans, partially offset by a decrease in the qualitative component of our performing loan reserves of $8.2 million reflective of the continued growth of larger, higher credit quality private equity/venture capital loans as a percentage of total gross loans.
Noninterest income increased by $25.8 million for the three months ended September 30, 2019 related primarily to an overall increase in our non-GAAP core fee income (higher client investment fees, foreign exchange fees and credit card fees).

These increases were due primarily to the continued growth of our client base and work with larger global companies reflective of investments in our platform, capabilities and global reach.
Noninterest expense increased by $7.3 million for the three months ended September 30, 2019, due primarily to professional services expense. Professional services expense increased primarily as a result of increased consulting fees during the third quarter of 2019 associated with increased project spend to support our global digital banking, and continued global infrastructure, initiatives.
Nine months ended September 30, 2019 and 2018
Net interest income from our GCB increased by $151.0 million for the nine months ended September 30, 2019, due primarily to an increase in loan interest income resulting mainly from higher average loan balances as well as from an increase in loan yields as a result of rate increases.
GCB had a provision for credit losses of $20.9$79.2 million for the threenine months ended September 30, 2017,2019, compared to $17.0a provision of $71.7 million for the comparable 20162018 period. The provision of $20.9$79.2 million for the threenine months ended September 30, 20172019 was reflective primarily reflected $13.8of $57.5 million in net new specific reserves for nonaccrual loans, $30.5 million for charge-offs not specifically reserved for in prior quarters and $22.4 million for period-end loan growth, partially offset by a decrease of $14.3 million for our performing loans and $15.1 million of recoveries.
The provision of $71.7 million for the nine months ended September 30, 2018 was reflective primarily of $39.4 million from period-end loan growth, $34.0 million in net new specific reserves for nonaccrual loans and a $10.9$24.0 million increasefor charge-offs not specifically reserved for in reserves for period-end loan growth,prior quarters, partially offset by a benefitdecrease in reserves of $20.7 million for our performing loans from overall improvedcertain reserve methodology enhancements made to our qualitative reserve for large loan exposure as a result of growth within our higher credit quality of our loan portfolio and the continued shift in our loan portfolio to private equity/venture capital loans, which tend to be of higher credit quality.
The provision of $17.0 million for the three months ended September 30, 2016 primarily reflected $8.0 million of reserves for performing loans, $5.5 million in charge-offs that did not previously have a specific reserve, $3.0 million net reserves for nonaccrual loans and $2.8 million for loan growth.portfolios.
Noninterest income increased by $18.0$94.2 million for the threenine months ended September 30, 2017,2019, related primarily to an overall increase acrossin our non-GAAP core fee income (higher client investment fees, credit card fees, foreign exchange fees client investment fees and credit card fees)deposit service charges). This increase was due primarily to the continued growth of our client base and work with larger global companies reflective of investments in our platform, capabilities and global reach.
Noninterest expense increased by $17.5$26.5 million for the threenine months ended September 30, 2017,2019, due primarily to increased professional services expense andan increase in compensation and benefits expense. Professional services expenses were higher due to enhancements in our risk and compliance infrastructure to support our momentum as we continue to grow both domestically and globally as well as investments made in projects, systems and technology to support our revenue growth and related initiatives and other operating costs. Compensation and benefits expense increased by $15.5 million primarily as a result of increasedan increase in salaries and wages and other employee benefits. The increase in GCB salaries and wages wasprimarily due primarily to an increase in the average number of FTEs at GCB, which increased by 111282 to 1,881 FTEs for the three months ended September 30, 2017, compared to 1,770 FTEs for the comparable 2016 period. The increase in total other employee benefits was related to various expenses, particularly personnel contracting expenses, to support our growth both domestically and globally, and employer payroll taxes reflective of our increased headcount since the third quarter 2016.
Nine months ended September 30, 2017 and 2016
Net interest income from our GCB increased by $151.4 million for the nine months ended September 30, 2017, due primarily to an increase in loan interest income resulting mainly from higher average loan balances as well as from an increase in loan yields as a result of rate increases.

GCB had a provision for credit losses of $65.0 million for the nine months ended September 30, 2017, compared to a provision of $86.1 million for the comparable 2016 period. The provision of $65.0 million for the nine months ended September 30, 2017 was reflective primarily of $51.9 million in net new specific reserves for nonaccrual loans and $20.9 million from period-end loan growth, partially offset by a benefit from overall improved credit quality of our loan portfolio and the continued shift in our loan portfolio to private equity/venture capital loans, which tend to be of higher credit quality.
The provision of $86.1 million for the nine months ended September 30, 2016 was reflective of $33.0 million in charge-offs that did not previously have a specific reserve and $23.0 million from period-end loan growth, with the remaining provision due primarily to reserves for new nonaccrual loans.
Noninterest income increased by $29.4 million for the nine months ended September 30, 2017, related primarily to an increase across our non-GAAP core fee income (higher foreign exchange fees, credit card fees and client investment fees). This increase was due primarily to the continued growth of our client base and work with larger global companies reflective of investments in our platform, capabilities and global reach.
Noninterest expense increased by $62.8 million for the nine months ended September 30, 2017, due primarily to increased expenses for compensation and benefits and professional services. Compensation and benefits expense increased as a result of higher incentive compensation expenses, increased salaries and wages and higher other employee benefits. The increase in incentive compensation expenses was due to the expectation of our performance to exceed budget for 2017. The increase in our salaries and wages expenses was due primarily to an increase in the average number of FTEs at GCB, which increased by 124 to 1,8572,283 FTEs for the nine months ended September 30, 2017,2019, compared to 1,7332,001 FTEs for the comparable 20162018 period. The increase in total other employee incentives and benefits was related to various expenses, particularly personnel contracting expenses, to support our growth both domestically and globally as well as group health and life insurance and employer payroll taxes reflective of our increased headcount since the nine months ended September 30, 2016. Professional services expenses were higher due to enhancements in our risk and compliance infrastructure to support our momentum as we continue to grow both domestically and globally as well as investments made in projects, systems and technology to support our revenue growth and related initiatives and other operating costs.
SVB Private Bank
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
Net interest income $14,600
 $13,298
 9.8 % $42,952
 $40,508
 6.0 % $12,772
 $14,919
 (14.4)% $37,200
 $46,811
 (20.5)%
Provision for credit losses (1,535) (1,976) (22.3) (2,266) (2,481) (8.7) (1,910) (362) NM
 (1,779) (2,384) (25.4)
Noninterest income 460
 664
 (30.7) 1,715
 2,052
 (16.4) 634
 605
 4.8
 1,829
 1,677
 9.1
Noninterest expense (4,706) (3,122) 50.7
 (12,675) (9,481) 33.7
 (11,638) (6,760) 72.2
 (30,015) (18,729) 60.3
Income before income tax expense $8,819
 $8,864
 (0.5) $29,726
 $30,598
 (2.8)
(Loss) income before income tax expense $(142) $8,402
 (101.7) $7,235
 $27,375
 (73.6)
Total average loans, net of unearned income $2,499,507
 $2,074,982
 20.5
 $2,371,027
 $1,978,175
 19.9
 $3,400,889
 $2,928,576
 16.1
 $3,235,943
 $2,791,910
 15.9
Total average assets 2,538,400
 2,096,237
 21.1
 2,403,777
 1,999,455
 20.2
 3,431,313
 2,949,908
 16.3
 3,264,071
 2,813,101
 16.0
Total average deposits 1,231,390
 1,115,446
 10.4
 1,289,990
 1,120,575
 15.1
 1,497,303
 1,505,746
 (0.6) 1,461,170
 1,519,200
 (3.8)
NM—Not meaningful

Three months ended September 30, 20172019 and 20162018
Net interest income from our SVB Private Bank increaseddecreased by $1.3$2.1 million for the three months ended September 30, 2017,2019, due primarily to higher interest incomepaid on interest-bearing deposits due to loan growth, partially offset by a higher funding chargethe continued market rate adjustments for loans fundedthe three months ended September 30, 2019 as loan growth exceeded deposit growth.compared to the 2018 comparable period.

Noninterest expense increased by $1.6$4.9 million for the three months ended September 30, 2017,2019, due primarily to professional services expense. Professional services expense increased primarily as a result of increased consulting fees during the third quarter of 2019 associated with increased project spend to support our global digital banking, and continued global infrastructure, initiatives.
Nine months ended September 30, 2019 and 2018
Net interest income from our SVB Private Bank decreased by $9.6 million for the nine months ended September 30, 2019, due primarily to higher interest paid on interest-bearing deposits due to the continued market rate adjustments for the nine months ended September 30, 2019 as compared to the 2018 comparable period.
Noninterest expense increased by $11.3 million for the nine months ended September 30, 2019, due primarily to an increase in compensation and benefits expense and an increase in professional services expense. Compensation and benefits expense increased as a result of increased salaries and wages reflective primarily of annual pay raises, and higher incentive compensation expenses due to the expectationincrease in the number of our performance to exceed budget for 2017.
Nine months endedaverage FTE since September 30, 2017 and 2016
Net interest income from our SVB Private Bank increased by $2.4 million for the nine months ended September 30, 2017, due primarily to higher interest income due to loan growth, partially offset by a higher funding charge for loans funded as loan growth exceeded deposit growth.

SVB Private Bank had a provision for credit losses of $2.3 million for the nine months ended September 30, 2017, compared to $2.5 million for the comparable 2016 period. The provisions for both the nine months ended September 30, 2017 and 2016 were due primarily to reserves for period-end loan growth.
Noninterest2018. Professional services expense increased by $3.2 million for the nine months ended September 30, 2017, due primarily to increased compensation and benefits expense. Compensation and benefits expense increased as a result of increased salariesconsulting fees during the third quarter of 2019 associated with increased project spend to support our global digital banking, and wages, reflective primarily of annual pay raises, and higher incentive compensation expenses due to the expectation of our performance to exceed budget for 2017.

continued global infrastructure, initiatives.
SVB Capital
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change 2019 2018 % Change 2019 2018 % Change
Net interest income (expense) $15
 $1
 NM
 $41
 $(51) (180.4)%
Net interest income $9
 $6
 50.0% $20
 $22
 (9.1)%
Noninterest income 13,913
 30,619
 (54.6) 45,707
 44,492
 2.7
 34,955
 24,423
 43.1
 99,860
 81,832
 22.0
Noninterest expense (4,873) (3,924) 24.2
 (14,537) (11,521) 26.2
 (8,129) (6,469) 25.7
 (21,794) (17,182) 26.8
Income before income tax expense $9,055
 $26,696
 (66.1) $31,211
 $32,920
 (5.2) $26,835
 $17,960
 49.4
 $78,086
 $64,672
 20.7
Total average assets $323,417
 $325,321
 (0.6) $333,439
 $334,328
 (0.3) $396,031
 $388,531
 1.9
 $382,707
 $379,809
 0.8
NM—Not meaningful
SVB Capital’s components of noninterest income primarily include net gains and losses on non-marketable and other equity securities, carried interest and fund management fees. All components of income before income tax expense and average assets 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.
Three months endedSeptember 30, 20172019 and 20162018
SVB Capital had noninterest income of $13.9$35.0 million for the three months ended September 30, 2017,2019, compared to $30.6$24.4 million for the comparable 2016 period. The decrease in noninterest income was due primarily to lower net gains on investment securities compared to the comparable 2016 period. SVB Capital’s components of noninterest income primarily include the following:
Net gains on investment securities of $8.2 million for the three months endedSeptember 30, 2017, compared to net gains of $18.2 million for the comparable 2016 period. The gains on investment securities of $8.2 million for the three months endedSeptember 30, 2017 were primarily related to gains from distributions from our strategic venture capital fund investments and net unrealized valuation increases in the investments held by the funds driven by IPO and M&A activity during the third quarter of 2017. Investment security gains in the three months ended September 30, 2016 included $7.2 million from valuation increases for one of our equity method fund investments,
In 2016, we recognized $6.7 million in carried interest related to the equity method fund that drove the $7.2 million of investment gains, and
Fund management fees remained flat at $5.2 million for the three months ended September 30, 2017 and 2016.
Nine months ended September 30, 2017 and 2016
SVB Capital had noninterest income of $45.7 million for the nine months ended September 30, 2017, compared to $44.5 million for the comparable 20162018 period. The increase in noninterest income was due primarily to higher net gains on investment securities compared to the comparable 20162018 period. SVB Capital’s components of noninterest income primarily include the following:
•
Net gains on investment securities of $26.0 million for the three months endedSeptember 30, 2019, compared to net gains of $17.8 million for the comparable 2018 period. The net gains on investment securities of $26.0 million were related primarily to gains from our managed funds of funds and our strategic venture capital fund investments reflective of net unrealized valuation increases in public and private company investments held by the funds in our portfolios, and
•
Fund management fees of $7.1 million for the three months endedSeptember 30, 2019, compared to $5.5 million for the comparable 2018 period.
Nine months ended September 30, 2019 and 2018
Net gains on investment securitiesSVB Capital had noninterest income of $28.2$99.9 million for the nine months endedSeptember 30, 2017, compared to net gains of $23.0 million for the comparable 2016 period. The net gains on investment securities of $28.2 million for the nine months endedSeptember 30, 2017 were related to gains from distributions from our strategic venture capital

fund investments and net unrealized valuation increases in the investments held by the funds driven by IPO and M&A activity during the nine months ended September 30, 2017, and
Fund management fees of $15.9 million2019, compared to $14.1$81.8 million for the comparable 20162018 period. The increase in noninterest income was due primarily to higher fund management fees and other noninterest income compared to the additioncomparable 2018 period. SVB Capital’s components of new managed funds at noninterest income primarily include the following:

•
Net gains on investment securities of $70.0 million for the nine months endedSeptember 30, 2019, compared to net gains of $61.6 million for the comparable 2018 period. The net gains on investment securities of $70.0 million were related primarily to gains from our managed funds of funds and our strategic venture capital fund investments reflective of net unrealized valuation increases in public and private company investments held by the funds in our portfolios, and
•
Fund management fees of $20.1 million for the nine months endedSeptember 30, 2019, compared to $17.1 million for the comparable 2018 period.
SVB Capital.Leerink
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2019 2018 % Change 2019 2018 % Change
Net interest income $277
 $—
 �� $961
 $—
 —
Noninterest income 52,947
 —
 — 188,064
 —
 —
Noninterest expense (55,200) —
 — (177,675) —
 —
(Loss) income before income tax expense $(1,976) $—
 — $11,350
 $—
 —
Total average assets $428,848
 $—
 — $380,290
 $—
 —
SVB Leerink’s components of noninterest income primarily include investment banking revenue, commissions and net gains and losses on non-marketable and other equity securities, carried interest and fund management fees. All components of income before income tax expense discussed below are net of noncontrolling interests.
Three months ended September 30, 2019
SVB Leerink had noninterest income of $52.9 million for the three months ended September 30, 2019, primarily consisting of $38.5 million of investment banking revenue, $12.3 million of commissions and $1.4 million in fund management fees.
SVB Leerink had noninterest expense of $55.2 million for the three months ended September 30, 2019, primarily consisting of $37.2 million in compensation and benefits expense and $8.5 million in other noninterest expense, driven by investment banking and trade order execution costs as well as amortization of intangible assets recorded as part of the acquisition.
Nine months endedSeptember 30, 2019
SVB Leerink had noninterest income of $188.1 million for the nine months ended September 30, 2019, primarily consisting of $137.0 million of investment banking revenue, $40.8 million of commissions and $5.2 million in net gains on investment securities.
SVB Leerink had noninterest expense of $177.7 million for the nine months ended September 30, 2019, primarily consisting of $124.4 million in compensation and benefits expense and $30.7 million in other noninterest expense, driven by investment banking and trade order execution costs as well as amortization of intangible assets recorded as part of the acquisition.
Consolidated Financial Condition
Our total assets, and total liabilities and stockholders' equity, were $50.8$68.2 billion at September 30, 20172019 compared to $44.7$56.9 billion at December 31, 2016,2018, an increase of $6.1$11.3 billion, or 13.619.9 percent. Refer below to a summary of the individual components driving the changes in total assets, total liabilities and stockholders' equity.
Cash and Cash Equivalents
Cash and cash equivalents totaled $3.6$6.9 billion at September 30, 2017,2019, an increase of $1.1$3.3 billion, or 39.794.5 percent, compared to $2.5$3.6 billion at December 31, 2016. The increase in period-end cash balances was primarily due to growth in our deposit balances during the nine months ended September 30, 2017.
2018. As of September 30, 2017 and December 31, 2016, $1.62019, $4.1 billion and $1.1 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 $1.2$1.9 billion. As of December 31, 2018, $1.7 billion of our cash and $721 million, respectively.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 $1.2 billion.


Investment Securities
Investment securities totaled $24.3$28.4 billion at September 30, 2017, an increase2019, a decrease of $2.6$4.2 billion, or 12.117.4 percent,, compared to $21.7$24.2 billion at December 31, 2016.2018. Our investment securities portfolio consistsis comprised of: (i) an available-for-sale securities portfolio and a held-to-maturity securities portfolio, both of which represent primarily interest earning fixed income investment securities; and (ii) a non-marketable and other equity securities portfolio, which represents primarily investments managed as part of our funds management business.

business as well as public equity securities held as a result of equity warrant assets exercised.
Available-for-Sale Securities
Period-end available-for-sale securities were $12.6$12.9 billion at September 30, 20172019 compared to $12.6$7.8 billion at December 31, 2016,a decrease2018, an increase of $17.1 million,$5.1 billion, or 0.165.2 percent. The $17.1 million decrease$5.1 billion increase in period-end AFS securities balances from the fourth quarter of 2016December 31, 2018 to the third quarter of 2017September 30, 2019, was due primarily to $2.4the purchases of $7.8 billion in portfolioof U.S. Treasury securities and mortgage-backed securities. Portfolio purchases and cash flows from paydowns and maturities offset by purchases of $2.4sales were $3.0 billion of agency backed mortgage securities and U.S. Treasury securities.
during the nine months ended September 30, 2019. Securities classified as available-for-sale are carried at fair value with changes in fair value recorded as unrealized gains or losses in a separate component of stockholders' equity.
The following table summarizes the remaining contractual principal maturities and fully taxable equivalent yields on fixed income securities, carried at fair value, classified as available-for-sale as of September 30, 2017.2019. The weighted average yield is computed using the amortized cost of fixed income investment securities, which are reported at fair value. For U.S. Treasury securities, and U.S. agency debentures and foreign government debt securities, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for certain 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 and prepayments in lower interest rate environments. The weighted average yield on mortgage-backed securities is based on prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments.
 September 30, 2017 September 30, 2019
 Total 
One Year
or Less
 
After One Year to
Five Years
 
After Five Years to
Ten Years
 
After
Ten Years
 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		 
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 $7,498,340
 1.46% $2,592,486
 1.19% $4,905,854
 1.60% $—
 —% $—
 —% $6,334,848
 2.00 % $2,007,267
 1.70% $1,710,316
 2.26 % $2,617,265
 2.06% $—
 —%
U.S. agency debentures 1,676,169
 1.71
 314,852
 1.45
 1,361,317
 1.77
 —
 —
 —
 —
 100,000
 2.28
 —
 —
 —
 —
 100,000
 2.28
 —
 —
Foreign government debt securities 8,847
 (0.64) —
 —
 8,847
 (0.64) —
 —
 —
 —
Residential mortgage-backed securities:                                        
Agency-issued collateralized mortgage obligations—fixed rate
 3,012,695
 2.40
 —
 —
 —
 —
 487,285
 1.98
 2,525,410
 2.48
Agency-issued collateralized mortgage obligations—variable rate
 395,880
 0.71
 —
 —
 —
 —
 —
 —
 395,880
 0.71
Agency-issued mortgage-backed securities 4,148,700
 2.83
 —
 —
 —
 —
 —
 —
 4,148,700
 2.83
Agency-issued collateralized mortgage obligations—fixed rate 1,679,664
 2.58
 —
 —
 —
 —
 3,131
 3.13
 1,676,533
 2.58
Agency-issued commercial mortgage-backed securities 594,798
 2.43
 —
 —
 —
 —
 300,208
 2.33
 294,590
 2.52
Total $12,583,084
 1.69
 $2,907,338
 1.22
 $6,267,171
 1.64
 $487,285
 1.98
 $2,921,290
 2.24
 $12,866,857
 2.36
 $2,007,267
 1.70
 $1,719,163
 2.24
 $3,020,604
 2.09
 $6,119,823
 2.75
Held-to-Maturity Securities
Period-end held-to-maturity securities were $11.1$14.4 billion at September 30, 20172019 compared to $8.4$15.5 billion at December 31, 2016, an increase2018, a decrease of $2.7$1.1 billion, or 31.27.0 percent. The $2.7$1.1 billion increasedecrease in period-end HTM security balances from the fourth quarter of 2016December 31, 2018 to the third quarter of 2017September 30, 2019 was due primarily to new purchasespay downs and maturities of $3.9$1.5 billion, primarily in agency backed mortgage securities, partially offset by $1.2the purchase of $0.4 billion in portfolio paydowns and maturities.of securities.

Securities classified as held-to-maturity are accounted for at cost with no adjustments for changes in fair value. For securities previously re-designated as held-to-maturity from available-for-sale, the net unrealized gains at the date of transfer will continue to be reported as a separate component of shareholders' equity and amortized over the life of the securities in a manner consistent with the amortization of a premium or discount.
The following table summarizes the remaining contractual principal maturities and fully taxable equivalent yields on fixed income investment securities classified as held-to-maturity as of September 30, 2017.2019. 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 3521.0 percent. The weighted average yield is computed using the amortized cost of fixed income investment securities. For U.S. agency

debentures, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for certain 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 held-to-maturity 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 and prepayments in lower interest rate environments. The weighted average yield on mortgage-backed securities is based on prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments.
 September 30, 2017 September 30, 2019
 Total 
One Year
or Less
 
After One Year to
Five Years
 
After Five Years to
Ten Years
 
After
Ten Years
 Total 
One Year
or Less
 
After One Year to
Five Years
 
After Five Years to
Ten Years
 
After
Ten Years
(Dollars in thousands) Amortized Cost 
Weighted-
Average
Yield
 Amortized Cost 
Weighted-
Average
Yield
 Amortized Cost 
Weighted-
Average
Yield
 Amortized Cost 
Weighted-
Average
Yield
 Amortized Cost 
Weighted-
Average
Yield
 Amortized Cost 
Weighted-
Average
Yield
 Amortized Cost 
Weighted-
Average
Yield
 Amortized Cost 
Weighted-
Average
Yield
 Amortized Cost 
Weighted-
Average
Yield
 Amortized Cost 
Weighted-
Average
Yield
U.S. agency debentures $660,193
 2.37% $—
 —% $102,581
 2.73% $557,612
 2.30% $—
 —% $518,841
 2.65% $—
 —% $123,205
 2.61% $395,636
 2.66% $—
 —%
Residential mortgage-backed securities:                                        
Agency-issued mortgage-backed securities 5,164,701
 2.47
 738
 7.52
 255,275
 2.20
 61,538
 2.06
 4,847,150
 2.49
 7,376,458
 2.90
 —
 —
 94,514
 2.05
 771,670
 2.47
 6,510,274
 2.96
Agency-issued collateralized mortgage obligations—fixed rate
 3,025,421
 1.78
 —
 —
 —
 —
 437,865
 1.48
 2,587,556
 1.83
 1,754,498
 1.78
 —
 —
 —
 —
 635,235
 1.64
 1,119,263
 1.87
Agency-issued collateralized mortgage obligations—variable rate
 269,495
 0.74
 —
 —
 —
 —
 —
 —
 269,495
 0.74
 188,120
 0.74
 —
 —
 —
 —
 —
 —
 188,120
 0.74
Agency-issued commercial mortgage-backed securities 1,554,220
 2.39
 —
 —
 —
 —
 —
 —
 1,554,220
 2.39
 2,826,344
 3.02
 —
 —
 —
 —
 —
 —
 2,826,344
 3.02
Municipal bonds and notes 380,976
 2.24
 7,560
 4.04
 71,631
 3.06
 159,509
 3.24
 142,276
 0.59
 1,742,817
 3.57
 14,002
 1.90
 82,708
 2.16
 369,911
 2.87
 1,276,196
 3.89
Total $11,055,006
 2.21
 $8,298
 4.35
 $429,487
 2.47
 $1,216,524
 2.12
 $9,400,697
 2.21
 $14,407,078
 2.83
 $14,002
 1.90
 $300,427
 2.31
 $2,172,452
 2.33
 $11,920,197
 2.94
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. OurThe estimated weighted-average duration of our fixed income investment securities portfolio duration was 2.73.4 years and 2.53.8 years at September 30, 20172019 and December 31, 2016,2018, respectively.

Non-Marketable and Other Equity Securities
Our non-marketable and other equity securities portfolio primarily represents investments in venture capital and private equity funds, SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China (“SPD-SVB”)), debt funds, private and public portfolio companies, including public equity securities held as a result of equity warrant assets exercised, and investments in qualified affordable housing projects. Included in our non-marketable and other equity securities carried under 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 and other equity securities compared to the amounts attributable to SVBFG.
Period-end non-marketable and other equity securities were $627.5 million$1.2 billion at September 30, 20172019 compared to $622.6$941.1 million at December 31, 2016,2018, an increase of $4.9$209.0 million, or 0.822.2 percent. Non-marketable and other equity securities, net of noncontrolling interests were $506.1$1,007.9 million at September 30, 2017,2019, compared to $500.1$806.1 million at December 31, 2016.2018.The increase was primarily attributable to equity securities from exercised equity warrant assets, valuation increases in our managed funds of funds investments and an increase in new investments within our qualified housing projects portfolio. We also increased our investment in non-marketable and other equity securities by $35.0 million to the inclusion of SVB Leerink in our financial results at September 30, 2019. The following table summarizes the carrying value (as reported) of non-marketable and other equity securities compared to the amounts attributable to SVBFG (which generally represents the carrying value times our ownership percentage) at September 30, 20172019 and December 31, 2016:2018:
 September 30, 2017 December 31, 2016 September 30, 2019 December 31, 2018
(Dollars in thousands) Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG
Non-marketable and other equity securities:        
Non-marketable securities (fair value accounting):                
Venture capital and private equity fund investments (1) $128,768
 $33,092
 $141,649
 $40,464
Other venture capital investments (2) 1,897
 203
 2,040
 218
Other securities (fair value accounting) (3) 392
 114
 753
 138
Non-marketable securities (equity method accounting):        
Consolidated venture capital and private equity fund investments (1) $92,010
 $23,704
 $118,333
 $30,235
Unconsolidated venture capital and private equity fund investments (2) 181,550
 181,550
 201,098
 201,098
Other investments without a readily determinable fair value (3) 43,524
 43,523
 25,668
 25,668
Other equity securities in public companies (fair value accounting (4) 56,081
 56,081
 20,398
 20,098
Non-marketable securities (equity method accounting) (5):        
Venture capital and private equity fund investments 87,218
 63,465
 82,823
 64,030
 196,425
 122,550
 129,485
 82,921
Debt funds 17,889
 17,889
 17,020
 17,020
 7,153
 7,153
 5,826
 5,826
Other investments (4) 113,478
 113,478
 123,514
 123,514
Non-marketable securities (cost method accounting):        
Venture capital and private equity fund investments 102,956
 102,956
 114,606
 114,606
Other investments 26,835
 26,835
 27,700
 27,700
 154,323
 154,323
 121,721
 121,721
Investments in qualified affordable housing projects, net 148,036
 148,036
 112,447
 112,447
 419,028
 419,028
 318,575
 318,575
Total non-marketable and other securities $627,469
 $506,068
 $622,552
 $500,137
Total non-marketable and other equity securities $1,150,094
 $1,007,912
 $941,104
 $806,142
 
(1)
The following table shows the amounts of venture capital and private equity fund investments held by the following consolidated funds and amounts attributable to SVBFG for each fund at September 30, 20172019 and December 31, 20162018:
 September 30, 2017 December 31, 2016 September 30, 2019 December 31, 2018
(Dollars in thousands) Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG
Strategic Investors Fund, LP $15,624
 $1,963
 $18,459
 $2,319
 $6,829
 $858
 $12,452
 $1,564
Capital Preferred Return Fund, LP 55,685
 12,001
 57,627
 12,420
 46,691
 10,063
 53,957
 11,629
Growth Partners, LP 57,459
 19,128
 59,718
 19,880
 38,356
 12,769
 50,845
 16,927
Other private equity fund (i) —
 —
 5,845
 5,845
Total venture capital and private equity fund investments $128,768
 $33,092
 $141,649
 $40,464
CP I, LP 134
 14
 1,079
 115
Total consolidated venture capital and private equity fund investments $92,010
 $23,704
 $118,333
 $30,235
(i)On January 3, 2017, the other private equity fund was closed resulting in an immaterial impact on the Company's financial statements.




(2)
The following table shows the amounts of othercarrying value represents investments in 211 and 213 funds (primarily venture capital investments held by the following consolidated funds and amounts attributable to SVBFG for each fundfunds) at September 30, 20172019 and December 31, 2016:2018, respectively, where our ownership interest is typically 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 activities

  September 30, 2017 December 31, 2016
(Dollars in thousands) Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG
CP I, LP $1,897
 $203
 $2,040
 $218
Total other venture capital investments $1,897
 $203
 $2,040
 $218

and financial policies.Our unconsolidated venture capital and private equity fund investments are carried at fair value based on the fund investments' net asset values per share as obtained from the general partners of the funds. For each fund investment, we adjust the net asset value per share 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 30th for our September 30th consolidated financial statements, adjusted for any contributions paid, distributions received from the investment, and significant fund transactions or market events during the reporting period.
(3)
Investments classified as "Other investments without a readily determinable fair value" include direct equity investments in private companies. The carrying value is based on the price at which the investment was acquired plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies, financing transactions subsequent to the acquisition of the investment and a discount for certain investments that have lock-up restrictions or other features that indicate a discount to fair value is warranted. For further details on the carrying value of these investments refer to Note 7—“Investment Securities" of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
(4)Investments classified as other equity securities (fair value accounting) represent shares held in public companies as a result of exercising public equity warrant assets and direct equity investments in public companies held by our consolidated funds. Changes in the fair value recognized through net income.
(4)(5)
The following table shows the amountscarrying value and our ownership percentage of our other investmentseach investment at September 30, 2019 and December 31, 2018 (equity method accounting) at September 30, 2017 and December 31, 2016:
  September 30, 2019 December 31, 2018
(Dollars in thousands) Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG
Venture capital and private equity fund investments:        
Strategic Investors Fund II, LP $4,501
 $4,249
 $4,670
 $4,366
Strategic Investors Fund III, LP 15,279
 12,391
 17,396
 14,059
Strategic Investors Fund IV, LP 28,549
 24,041
 28,974
 24,388
Strategic Investors Fund V, LP 37,233
 19,547
 28,189
 14,799
CP II, LP (i) 7,333
 4,432
 7,122
 4,308
Other venture capital and private equity fund investments 103,530
 57,890
 43,134
 21,001
Total venture capital and private equity fund investments $196,425
 $122,550
 $129,485
 $82,921
Debt funds:        
Gold Hill Capital 2008, LP (ii) $5,323
 $5,323
 $3,901
 $3,901
Other debt funds 1,830
 1,830
 1,925
 1,925
Total debt funds $7,153
 $7,153
 $5,826
 $5,826
Other investments:        
SPD Silicon Valley Bank Co., Ltd. $73,918
 $73,918
 $76,412
 $76,412
Other investments 80,405
 80,405
 45,309
 45,309
Total other investments $154,323
 $154,323
 $121,721
 $121,721
(i)Our ownership includes direct ownership interest of 1.3 percent and indirect ownership interest of 3.8 percent through our investments in Strategic Investors Fund II, LP.
(ii)Our ownership includes direct ownership interest of 11.5 percent in the fund and an indirect interest in the fund through our investment in Gold Hill Capital 2008, LLC of 4.0 percent.
  September 30, 2017 December 31, 2016
(Dollars in thousands) Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG
Other investments:        
SPD Silicon Valley Bank Co., Ltd. $75,511
 $75,511
 $75,296
 $75,296
Other investments 37,967
 37,967
 48,218
 48,218
Total other investments $113,478
 $113,478
 $123,514
 $123,514

Volcker Rule
On June 6, 2017, we received notice that the Board of Governors of the Federal Reserve System approved the Company’s application for an extension of the permitted conformance period for the Company’s investments in “illiquid” covered funds. The approval extends the deadline by which the Company must sell, divest, restructure or otherwise conform such investments

to the provisions of the Volcker Rule until the earlier of (i) July 21, 2022, or (ii) the date by which each fund matures by its terms or is otherwise conformed to the Volcker Rule.
As implemented under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Volcker Rule prohibits, subject to certain exceptions, a banking entity, such as the Company, from sponsoring or investing in covered funds, defined to include many venture capital and private equity funds.  As noted above, the Company currently maintains certain investments deemed to be prohibited investments in “illiquid” covered funds, which are now covered under the approved extension. As of September 30, 2017,2019, such prohibited investments had an estimated aggregate carrying value of approximately $147 million (and an aggregateand fair value of approximately $249 million).$231.5 million. (For more information about the Volcker Rule, see “Business—Supervision and Regulation” under Part 1, Item 1 of Part 1 of our 20162018 Form 10-K.)
Loans
Loans, net of unearned income, increased by $2.3$2.8 billion to $22.2$31.1 billion at September 30, 2017,2019, compared to $19.9$28.3 billion at December 31, 2016.2018. Unearned income was $141$165 million at September 30, 20172019 and $125$173 million at December 31, 2016.2018. Total gross loans were $22.3$31.2 billion at September 30, 2017,2019, an increase of $2.3$2.7 billion, compared to $20.0$28.5 billion at December 31, 2016.2018. Period-end loans increased compared to December 31, 2016,2018, driven primarily by loan growth in our private equity/venture capital portfolio as well as from our private bank portfolio.

The breakdown of total gross loans and total loans as a percentage of total gross loans by categoryindustry sector is as follows:

 September 30, 2017 December 31, 2016 September 30, 2019 December 31, 2018
(Dollars in thousands) Amount Percentage  Amount Percentage  Amount Percentage  Amount Percentage 
Commercial loans:                
Software/internet $5,851,323
 26.2% $5,668,578
 28.3% $6,067,667
 19.4% $6,209,978
 21.8%
Hardware 1,122,024
 5.0
 1,189,114
 5.9
 1,367,892
 4.4
 1,245,800
 4.4
Private equity/venture capital 9,634,928
 43.1
 7,747,911
 38.7
 16,310,084
 52.2
 14,118,132
 49.5
Life science/healthcare 1,779,200
 8.0
 1,866,685
 9.3
 2,447,193
 7.8
 2,461,076
 8.6
Premium wine 211,822
 1.0
 201,634
 1.0
 234,784
 0.8
 249,316
 0.9
Other 395,091
 1.8
 396,458
 2.0
 400,487
 1.3
 346,747
 1.2
Total commercial loans 18,994,388
 85.1
 17,070,380
 85.2
Commercial loans 26,828,107
 85.9
 24,631,049
 86.4
Real estate secured loans:                
Premium wine 713,467
 3.2
 678,745
 3.5
 750,304
 2.4
 711,237
 2.5
Consumer 2,203,877
 9.9
 1,925,620
 9.6
 3,012,047
 9.6
 2,609,645
 9.2
Other 42,671
 0.2
 43,807
 0.2
 39,455
 0.2
 40,627
 0.1
Total real estate secured loans 2,960,015
 13.3
 2,648,172
 13.3
Real estate secured loans 3,801,806
 12.2
 3,361,509
 11.8
Construction loans 75,644
 0.3
 64,957
 0.3
 117,653
 0.4
 98,034
 0.3
Consumer loans 299,782
 1.3
 241,153
 1.2
 481,437
 1.5
 420,720
 1.5
Total gross loans $22,329,829
 100.0
 $20,024,662
 100.0
 $31,229,003
 100.0
 $28,511,312
 100.0
Loan Concentration
The following table provides a summary of gross 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, 20172019:
 September 30, 2017 September 30, 2019
(Dollars in thousands) 
Less than
Five Million
 
Five to Ten
Million
 
Ten to Twenty
Million
  Twenty to Thirty Million Thirty Million or More Total Less than Five Million Five to Ten Million Ten to Twenty Million  Twenty to Thirty Million Thirty Million or More Total
Commercial loans:                        
Software/internet $1,484,316
 $859,890
 $1,485,139
 $1,144,494
 $877,484
 $5,851,323
 $1,565,054
 $847,876
 $1,334,672
 $1,145,303
 $1,174,762
 $6,067,667
Hardware 240,941
 185,029
 215,278
 272,862
 207,914
 1,122,024
 304,558
 152,184
 243,057
 336,547
 331,546
 1,367,892
Private equity/venture capital 656,327
 766,075
 1,563,788
 971,708
 5,677,030
 9,634,928
 1,036,306
 1,003,076
 2,376,076
 2,138,287
 9,756,339
 16,310,084
Life science/healthcare 330,412
 456,618
 500,453
 325,108
 166,609
 1,779,200
 354,874
 399,046
 630,421
 509,353
 553,499
 2,447,193
Premium wine 73,551
 42,149
 39,630
 48,492
 8,000
 211,822
 70,134
 52,972
 50,998
 58,880
 1,800
 234,784
Other 150,103
 8,000
 50,885
 69,521
 116,582
 395,091
 325,423
 8,050
 10,158
 22,815
 34,041
 400,487
Commercial loans 2,935,650
 2,317,761
 3,855,173
 2,832,185
 7,053,619
 18,994,388
 3,656,349
 2,463,204
 4,645,382
 4,211,185
 11,851,987
 26,828,107
Real estate secured loans:                        
Premium wine 165,085
 191,436
 222,088
 95,440
 39,418
 713,467
 182,556
 193,478
 235,052
 110,035
 29,183
 750,304
Consumer 1,886,402
 234,167
 83,308
 —
 —
 2,203,877
 2,568,735
 284,988
 125,574
 20,250
 12,500
 3,012,047
Other 7,826
 —
 14,312
 20,533
 —
 42,671
 7,310
 —
 32,145
 —
 —
 39,455
Real estate secured loans 2,059,313
 425,603
 319,708
 115,973
 39,418
 2,960,015
 2,758,601
 478,466
 392,771
 130,285
 41,683
 3,801,806
Construction loans 6,587
 46,164
 —
 22,893
 —
 75,644
 2,693
 41,153
 29,767
 44,040
 —
 117,653
Consumer loans 131,676
 49,404
 32,097
 51,755
 34,850
 299,782
 192,079
 74,369
 66,728
 95,575
 52,686
 481,437
Total gross loans $5,133,226
 $2,838,932
 $4,206,978
 $3,022,806
 $7,127,887
 $22,329,829
 $6,609,722
 $3,057,192
 $5,134,648
 $4,481,085
 $11,946,356
 $31,229,003
At September 30, 2017,2019, gross loans equal to or greater than $20 million to any single client (individually or in the aggregate) totaled $10.2$16.4 billion, or 45.552.6 percent of our total gross loan portfolio. These loans represented 257388 clients, and of these loans, $71.6$37.3 million were on nonaccrual status as of both September 30, 2017 and December 31, 2016.2019.

The following table provides a summary of gross 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, 20162018:
 December 31, 2016 December 31, 2018
(Dollars in thousands) Less than Five Million Five to Ten Million Ten to Twenty Million  Twenty to Thirty Million Thirty Million or More Total Less than Five Million Five to Ten Million Ten to Twenty Million  Twenty to Thirty Million Thirty Million or More Total
Commercial loans:                        
Software/internet $1,317,707
 $779,986
 $1,657,760
 $1,021,486
 $891,639
 $5,668,578
 $1,515,096
 $918,647
 $1,520,634
 $1,221,250
 $1,034,351
 $6,209,978
Hardware 252,339
 160,534
 223,781
 244,988
 307,472
 1,189,114
 292,022
 152,061
 196,763
 386,288
 218,666
 1,245,800
Private equity/venture capital 635,838
 668,998
 1,182,427
 888,916
 4,371,732
 7,747,911
 836,894
 1,012,605
 2,120,918
 2,135,279
 8,012,436
 14,118,132
Life science/healthcare 328,942
 372,171
 457,833
 420,580
 287,159
 1,866,685
 273,075
 477,046
 645,895
 410,127
 654,933
 2,461,076
Premium wine 76,400
 25,209
 76,609
 15,902
 7,514
 201,634
 70,573
 55,852
 48,656
 65,035
 9,200
 249,316
Other 124,650
 40,950
 61,228
 26,320
 143,310
 396,458
 246,011
 18,921
 10,911
 70,904
 —
 346,747
Commercial loans 2,735,876
 2,047,848
 3,659,638
 2,618,192
 6,008,826
 17,070,380
 3,233,671
 2,635,132
 4,543,777
 4,288,883
 9,929,586
 24,631,049
Real estate secured loans:                        
Premium wine 151,759
 172,975
 229,750
 101,387
 22,874
 678,745
 168,130
 173,882
 263,093
 83,945
 22,187
 711,237
Consumer loans 1,664,432
 196,345
 64,843
 —
 —
 1,925,620
 2,258,479
 239,400
 111,766
 —
 —
 2,609,645
Other 8,014
 —
 14,660
 21,133
 —
 43,807
 7,506
 —
 33,121
 —
 —
 40,627
Real estate secured loans 1,824,205
 369,320
 309,253
 122,520
 22,874
 2,648,172
 2,434,115
 413,282
 407,980
 83,945
 22,187
 3,361,509
Construction loans 23,976
 6,685
 14,016
 20,280
 —
 64,957
 7,076
 15,064
 75,894
 —
 —
 98,034
Consumer loans 99,119
 29,092
 9,473
 29,089
 74,380
 241,153
 148,391
 55,401
 51,409
 93,690
 71,829
 420,720
Total gross loans $4,683,176
 $2,452,945
 $3,992,380
 $2,790,081
 $6,106,080
 $20,024,662
 $5,823,253
 $3,118,879
 $5,079,060
 $4,466,518
 $10,023,602
 $28,511,312
At December 31, 2016,2018, gross loans equal to or greater than $20 million to any single client (individually or in the aggregate) totaled $8.9$14.5 billion, or 44.450.8 percent of our total gross loan portfolio. These loans represented 233361 clients, and of these loans, $79.7$27.5 million were on nonaccrual status as of December 31, 2016.2018.
The credit profile of our loan portfolio clients varies based on the nature of the lending we do for different market segments. Our three main market segments include (i) technology (software/internet and hardware) and life science/healthcare, (ii) private equity/venture capital, and (iii) SVB Private Bank.
(i) Technology and Life Science/Healthcare
Our technology and life science/healthcare loan portfolios include loans to clients at allthe various stages of their life cycles and represent the largest segments of our loan portfolio. The primary underwriting method for our technology and life science/healthcare portfolios are classified as investor dependent, balance sheet dependent or cash flow dependent.
Investor dependent loans represent a relatively small percentage of our overall portfolio at 11 percent of total gross loans at both September 30, 20172019 and December 31, 2016.2018. These loans are made to companies in both our Accelerator (early-stage) and Growth practices. Investor dependent loans typically have 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 capital firms or others, or in some cases, a successful sale to a third party or an IPO. Venture capital firms may provide financing selectively, at reduced amounts, or on less favorable terms, which may have an adverse effect on our borrowers' ability 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 that the company would need to be sold to repay the 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.
Balance sheet dependent loans, which includesinclude asset-based loans, represented 10eight percent of total gross loans at both September 30, 2017 compared to 13 percent at2019 and December 31, 2016.2018. Balance sheet dependent loans are structured to require constant current asset coverage (i.e., cash, cash equivalents, accounts receivable and, to a much lesser extent, inventory) in an amount that exceeds the outstanding debt. These loans are generally made to companies in our Growth and Corporate Finance practices. Our asset-based lending, which includes working capital lines and accounts receivable financing, both represented three percent of total gross loans as of September 30, 2017two and five percent and twoone percent of total gross loans at both September 30, 2019 and December 31, 2016, respectively.2018. The repayment of these arrangements is dependent on the financial condition, and payment ability, of third parties with whom our clients do business.
Cash flow dependent loans, which include sponsored buyout lending, represent our largest source of repayment within our technology and life science/healthcare loan portfolios at approximately 19represented 13 percent of total gross loans at September 30, 2017,2019, compared to 2216 percent of total gross loans at December 31, 2016.2018. Cash flow dependent loans require the borrower

to maintain cash flow from operations that is sufficient to service all debt. Borrowers must demonstrate normalized cash flow in excess of all fixed charges associated with operating the business. Sponsored buyout loans represented 10six percent of total

gross loans at September 30, 2017,2019, compared to 11eight percent of total gross loans at December 31, 2016.2018. These loans are typically used to assist a select group of experienced private equity sponsors with the acquisition of businesses, are larger in size, and repayment is generally dependent upon the cash flows of the acquired company. The acquired companies are typically established, later-stage businesses of scale and characterized by reasonable levels of leverage and loan structures that include meaningful financial covenants. The sponsor's equity contribution is often 50 percent or more of the acquisition price.


(ii) Private Equity/Venture Capital
We also provide financial services to clients in the private equity/venture capital community. At September 30, 2017, ourOur lending to private equity/venture capital firms and funds represented 43 percent of total gross loans, compared to 3952 percent of total gross loans at September 30, 2019, compared to 50 percent at December 31, 2016.2018. The vast majority of this portfolio consists of 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. These facilities are generally governed by meaningful financial covenants oriented towards ensuring that the funds' remaining callable capital is sufficient to repay the loan, and larger commitments (typically provided to larger private equity funds) are often secured by an assignment of the general partner's right to call capital from the fund's limited partner investors.


(iii) SVB Private Bank
Our SVB Private Bank clients are primarily private equity/venture capital professionals and executive leaders of the innovation companies they support. Our lending to SVB Private Bank clients represented 11 percent of total gross loans at both September 30, 20172019 and December 31, 2016.2018. Many of these clients have mortgages, which represented 8586 percent of this portfolio at September 30, 2017;2019; the balance of this portfolio consisted of home equity lines of credit, restricted stock purchase loans, capital call lines of credit, and other secured and unsecured lending.


State Concentrations
Approximately 31 percent and 1128 percent of our outstanding total gross loan balances atas of both September 30, 20172019 and December 31, 20162018 were to borrowers based in California andCalifornia. Additionally, as of September 30, 2019, borrowers in Massachusetts increased to 10 percent of our outstanding gross loan balances compared to 9 percent as of December 31, 2018. As of September 30, 2019, borrowers in New York.York decreased to 9 percent of our outstanding gross loan balances compared to 10 percent as of December 31, 2018. Other than California and New York,Massachusetts, there are no states with gross loan balances greater than or equal to 10 percent. In October 2017, wildfires impacted regions of Northern California where some of our premium wine clients are located. As of September 30, 2017, our total loans outstanding for our wine portfolio was $925 million (4% of total loan portfolio) with loans outstanding to clients in the impacted regions of approximately $700 million. We do not currently believe there will be a material effect on the credit quality of our wine portfolio in the near term; however, we will continue to monitor this segment of our portfolio closely.


See generally “Risk Factors–Credit Risks” set forth under Part I, Item 1A Part I in our 20162018 Form 10-K.


Credit Quality Indicators
As of September 30, 20172019 and December 31, 2016,2018, our total criticized loans and impaired loans represented four percentthree and sixfour percent of our total gross loans, respectively.Criticized and impaired loans to early-stage clients represented 17 20 and 19percent of our total criticized and impaired loan balances at both September 30, 20172019 and December 31, 2016.2018, respectively. Loans to early-stage clients represent a relatively small percentage of our overall portfolio at sixfive percent of total gross loans at September 30, 2017.2019 and six percent at December 31, 2018. 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. Based on our experience, for most early-stage clients, this situation typically lasts one to two quarters and generally resolves itself with a subsequent round of venture funding, though there are exceptions, from time to time. As a result, we expect that each of our early-stage clients will reside in our criticized portfolio during a portion of their life cycle.

Credit Quality and Allowance for Loan Losses
Nonperforming assets consist of loans on nonaccrual status, loans past due 90 days or more still accruing interest, and Other Real Estate Owned (“OREO”) and other foreclosed assets. 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. 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, 2019 December 31, 2018
Gross nonperforming, past due, and restructured loans:    
Nonaccrual loans $104,045
 $94,142
Loans past due 90 days or more still accruing interest 864
 1,964
Total nonperforming loans 104,909
 96,106
OREO and other foreclosed assets —
 —
Total nonperforming assets $104,909
 $96,106
Performing TDRs $31,692
 $31,639
Nonperforming loans as a percentage of total gross loans 0.34% 0.34%
Nonperforming assets as a percentage of total assets 0.15
 0.17
Allowance for loan losses $304,410
 $280,903
As a percentage of total gross loans 0.97% 0.99%
As a percentage of total gross nonperforming loans 290.17
 292.28
Allowance for loan losses for nonaccrual loans $53,728
 $37,941
As a percentage of total gross loans 0.17% 0.13%
As a percentage of total gross nonperforming loans 51.21
 39.48
Allowance for loan losses for total gross performing loans $250,682
 $242,962
As a percentage of total gross loans 0.80% 0.85%
As a percentage of total gross performing loans 0.81
 0.86
Total gross loans $31,229,003
 $28,511,312
Total gross performing loans 31,124,094
 28,415,206
Allowance for unfunded credit commitments (1) 63,108
 55,183
As a percentage of total unfunded credit commitments 0.28% 0.29%
Total unfunded credit commitments (2) $22,274,418
 $18,913,021
(Dollars in thousands) September 30, 2017 December 31, 2016
Gross nonaccrual, past due, and restructured loans:    
Nonaccrual loans $124,672
 $118,979
Loans past due 90 days or more still accruing interest 764
 33
Total nonperforming loans 125,436
 119,012
OREO and other foreclosed assets —
 —
Total nonperforming assets $125,436
 $119,012
Performing TDRs $22,946
 $33,732
Nonperforming loans as a percentage of total gross loans 0.56% 0.59%
Nonperforming assets as a percentage of total assets 0.25
 0.27
Allowance for loan losses $249,010
 $225,366
As a percentage of total gross loans 1.12% 1.13%
As a percentage of total gross nonperforming loans 198.52
 189.36
Allowance for loan losses for nonaccrual loans $43,824
 $37,277
As a percentage of total gross loans 0.20% 0.19%
As a percentage of total gross nonperforming loans 34.94
 31.32
Allowance for loan losses for total gross performing loans $205,186
 $188,089
As a percentage of total gross loans 0.92% 0.94%
As a percentage of total gross performing loans 0.92
 0.94
Total gross loans $22,329,829
 $20,024,662
Total gross performing loans 22,204,393
 19,905,650
Allowance for unfunded credit commitments (1) 48,172
 45,265
As a percentage of total unfunded credit commitments 0.29% 0.27%
Total unfunded credit commitments (2) $16,341,930
 $16,743,196
 
(1)The “allowance for unfunded credit commitments” is included as a component of other liabilities and any provision is included in the “provision for credit losses” in the statement of income. See “Provision for credit losses”Credit Losses” for a discussion of the changes to the allowance.
(2)Includes unfunded loan commitments and letters of credit.


Our allowance for loan losses as a percentage of total gross loans decreased onetwo basis pointpoints to 1.120.97 percent at September 30, 2017,2019, compared to 1.130.99 percent at December 31, 2016. The decrease2018 reflective of one basis point was reflective primarily of thea decrease in the qualitative component of our allowance for performing loansloan reserves as a percentage of total gross loans which decreased by two basis points to 0.92 percent, partially offset by an increasereflective of one basis pointthe continued growth in theour large, high credit quality private equity/venture capital loan portfolio.
Our allowance for nonaccrualloan losses for performing loans as a percentage of total gross loanswas $250.7 million at September 30, 2017.2019, compared to $243.0 million at December 31, 2018. The $7.7 million increase in reserves for performing loans was driven primarily bythe overall growth in loans during the nine months ended September 30, 2019 as well as the continued change in the mix of the overall loan portfolio.
Our allowance for loan losses for nonaccrual loans was $43.8$53.7 million at September 30, 2017,2019, compared to $37.3$37.9 million at December 31, 2016.2018. The $6.5$15.8 million increase in the allowancereserves for nonaccrual loans included $48.0 million ofwas due to new nonaccrual loan reserves partially offsetof $92.8 million driven primarily by $41.4 million of charge-offsthree clients in our life science/healthcare loan portfolio and reserve releases. New nonaccrual loan reserves of $48.0 million were mostly attributable tothree clients in our software/internet loan portfolio.portfolio, partially offset by $77.0 million of repayments and charge-offs.

The following table presents a summary of changes in nonaccrual loans for the three and nine months ended September 30, 20172019 and 2016: 

2018: 
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016 2019 2018 2019 2018
Balance, beginning of period $120,172
 $124,319
 $118,979
 $123,392
 $96,641
 $124,842
 $94,142
 $119,259
Additions 29,650
 15,940
 85,990
 73,680
 53,643
 18,346
 143,960
 69,202
Paydowns (14,183) (14,941) (43,995) (58,376) (22,493) (14,891) (86,430) (48,550)
Charge-offs (10,967) (19,102) (36,299) (31,348) (23,729) (13,135) (47,559) (24,714)
Other reductions —
 —
 (3) (1,132) (17) —
 (68) (35)
Balance, end of period $124,672
 $106,216
 $124,672
 $106,216
 $104,045
 $115,162
 $104,045
 $115,162
Our nonaccrual loans as of September 30, 20172019 included $98.0$70.1 million from sevenfive clients (software/(two software/internet clients represent $61.3represented $45.5 million twoand three life science/healthcare clients represent $25.0 million and one hardware client represents $11.7represented $24.6 million). TwoOne of these loans areis a sponsored buyout loansloan that werewas added to our nonaccrual portfolio in 2015, anotherone is a Corporate FinanceGrowth client that was added during 20162018 and fourthree are new nonaccrual loans added during 2017 spread across our Accelerator2019, two Growth clients and Growth practices.one sponsored buyout loan. The total credit exposure for these sevenfive largest nonaccrual loans is $99.0was $70.3 million as of September 30, 2019, for which we have specifically reserved $30.4$38.1 million.
Average nonaccrual loans for the three and nine months ended September 30, 20172019 were $119.5$90.3 million and $124.6$98.1 million, respectively, compared to $111.8$122.9 million and $113.1$120.6 million for the comparable 20162018 periods. The $7.7$32.6 million increasedecrease in average nonaccrual loans for the three months ended September 30, 20172019 compared to September 30, 20162018 was primarily from our software/internet and hardware loan portfolios,portfolio partially offset by a decreasean increase in our life sciences loanscience/healthcare portfolio. If the nonaccrual loans had not been impaired, $1.8nonperforming, $1.0 million and $5.6$4.1 million in interest income would have been recorded for the three and nine months ended September 30, 2017,2019, respectively, compared to $1.1$1.8 million and $3.8$5.8 million for the comparable 20162018 periods.
Accrued Interest Receivable and Other Assets
A summary of accrued interest receivable and other assets at September 30, 20172019 and December 31, 20162018 is as follows:
(Dollars in thousands) September 30, 2017
December 31, 2016 % Change       September 30, 2019
December 31, 2018 % Change      
Derivative assets, gross (1) $248,556
 $210,070
 18.3%
Derivative assets (1) $337,977
 $258,139
 30.9 %
Foreign exchange spot contract assets, gross 147,304
 53,058
 177.6
 644,122
 152,268
 NM
Accrued interest receivable 129,451
 111,222
 16.4
 201,595
 197,927
 1.9
FHLB and Federal Reserve Bank stock 58,012
 57,592
 0.7
 59,790
 58,878
 1.5
Net deferred tax assets 6,759
 65,433
 (89.7)
Accounts receivable 78,242
 62,569
 25.0
 49,524
 55,807
 (11.3)
Net deferred tax assets 75,043
 71,840
 4.5
Other assets 113,153
 106,337
 6.4
 286,301
 162,809
 75.9
Total accrued interest receivable and other assets $849,761
 $672,688
 26.3
 $1,586,068
 $951,261
 66.7
 
NM—Not meaningful
(1)See “Derivatives” 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 $94.2$491.9 million was primarily due primarily to an overall increase in activitythe amount of unsettled spot trades at period-end as compared to December 31, 2016.2018.
Net Deferred Tax Assets
The decrease of $58.7 million in net deferred tax assets was primarily due to an increase in the fair value of AFS securities due to a decrease in market interest rates as compared to December 31, 2018.

Other Assets

Other assets includes various asset amounts for other operational transactions. The increase of $123.5 million was primarily due to $72.3 million in current taxes receivable due to estimated tax payments made during the nine months ended September 30, 2019. Additionally, an increase in other assets of $48.0 million was due primarily to the inclusion of SVB Leerink in our financial results at September 30, 2019.
Derivatives
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 and liabilities net at September 30, 20172019 and December 31, 2016:2018:
(Dollars in thousands) September 30, 2017 December 31, 2016 % Change  September 30, 2019 December 31, 2018 % Change 
Assets:            
Equity warrant assets $141,785
 $131,123
 8.1 % $149,113
 $149,238
 (0.1)%
Foreign exchange forward and option contracts 94,947
 68,027
 39.6
 122,280
 100,402
 21.8
Client interest rate derivatives 25,608
 8,499
 NM
Interest rate swaps —
 810
 (100.0) 40,976
 —
 —
Client interest rate derivatives 11,824
 10,110
 17.0
Total derivative assets $248,556
 $210,070
 18.3
 $337,977
 $258,139
 30.9
Liabilities:            
Foreign exchange forward and option contracts $(88,961) $(54,668) 62.7
 $101,729
 $88,559
 14.9
Client interest rate derivatives (11,955) (9,770) 22.4
 37,525
 9,491
 NM
Interest rate swaps 9,286
 —
 —
Total derivative liabilities $(100,916) $(64,438) 56.6
 $148,540
 $98,050
 51.5
NM—Not meaningful
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/healthcare industries. At September 30, 2017,2019, we held warrants in 1,8422,227 companies, compared to 1,7392,095 companies at December 31, 2016.2018. Warrants in 1615 companies each had values greater than $1.0 million and collectively represented $51.7$43.7 million, or 36.529.3 percent, of the fair value of the total warrant portfolio at September 30, 2017.2019. The change in fair value of equity warrant assets is recorded in gains"Gains on equity warrant assets, 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, 20172019 and 2016: 2018: 
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016 2019 2018 2019 2018
Balance, beginning of period $131,750
 $129,800
 $131,123
 $137,105
 $158,048
 $143,725
 $149,238
 $123,763
New equity warrant assets 3,622
 5,251
 11,114
 9,857
 3,843
 5,113
 11,365
 14,511
Non-cash changes in fair value, net 18,230
 16,788
 23,564
 21,989
 7,995
 17,286
 19,787
 32,743
Exercised equity warrant assets (11,060) (5,338) (20,402) (21,066) (20,292) (17,725) (28,346) (20,892)
Terminated equity warrant assets (757) (1,161) (3,614) (2,545) (481) (1,432) (2,931) (3,158)
Balance, end of period $141,785
 $145,340
 $141,785
 $145,340
 $149,113
 $146,967
 $149,113
 $146,967


Foreign Exchange Forward and Foreign Currency Option Contracts
We enter into foreign exchange forward contracts and foreign currency option contracts with clients involved in foreign activities, either as the purchaser or seller, depending upon the clients’ needs. 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 also enter into forward contracts with correspondent banks to economically reduce our foreign exchange exposure related to certain foreign currency denominated instruments. Net gains and losses on the revaluation of foreign currency denominated instruments are recorded in the line item “Other” as part of noninterest income, a component of consolidated net income. We have not experienced nonperformance by any of our counterparties and therefore have not

incurred any related losses. Further, we anticipate performance by all counterparties. Our net exposure for foreign exchange forward and foreign currency option contracts, net of cash collateral, was $6.7 million at September 30, 2017 was $1.12019 and $20.7 million and our net exposure at December 31, 2016 was $0.8 million.2018. For additional information on our foreign exchange forward contracts and foreign currency option contracts, see Note 9—12—“Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.


Client Interest Rate Derivatives

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. Our net exposure for client interest rate derivative contracts, net of cash collateral, was zero$25.3 million at September 30, 20172019 and our net exposure$8.7 million at December 31, 2016 was $0.3 million.2018. For additional information on our client interest rate derivatives, see Note 9—12—“Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
Interest Rate Swaps
To manage interest rate risk on our variable-interest rate loan portfolio, we enter into interest rate swap contracts to hedge against future changes in interest rates by using hedging instruments to lock in future cash inflows that would otherwise be impacted by movements in the market interest rates. We designate these interest rate swap contracts as cash flow hedges that qualify for hedge accounting under ASC 815 and record them in other assets and other liabilities. For additional information on our interest rate swaps, see Note 12—“Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” and "Quantitative and Qualitative Disclosures about Market Risk" under Part I, Item 1 of this report.
Deposits
Deposits were $44.8$59.5 billion at September 30, 2017,2019, an increase of $5.8$10.2 billion, or 15.020.7 percent, compared to $39.0$49.3 billion at December 31, 2016.2018. The increase in deposits was driven primarily by funds coming from both new and existing clients ingrowth across all our Technology Early-Stage, Private Equity Services, andportfolio segments. The leading contributor was our Life Sciences portfolios during the nine months ended September 30, 2017 duetechnology client portfolio attributable primarily to a healthy venture capitalequity funding environment and robust secondary public offering market activities.IPO and SPO markets as well as continued healthy new client acquisition.
At September 30, 2017,2019, the aggregate balance of time deposit accounts individually equal to or greater than $100,000 totaled $38.6$187 million, compared to $48.3$46 million at December 31, 2016.2018. At September 30, 2017, $38.6 million of2019, all the 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. Approximately 13 percent and 1216 percent of our total deposits at September 30, 20172019 and December 31, 2016,2018, respectively, were from our clients in Asia.
Short-Term Borrowings
WeAs of September 30, 2019, we had $4.8no overnight borrowings and $18.9 million in other short-term borrowings consisting of cash collateral received from certain counterparties in relation to market value exposures of derivative contracts in our favor. As of December 31, 2018, we had $0.6 billion in short-term borrowings, at September 30, 2017, comparedconsisting of $0.3 billion in advances from the FHLB and $0.3 billion in securities sold under an agreement to $512.7 million at December 31, 2016. The decrease was due to the repayment, on January 6, 2017, of our short-term FHLB advances utilized and outstanding at December 31, 2016.
Long-Term Debt
Our long-term debt was $749.6 million at September 30, 2017 and $795.7 million at December 31, 2016.
As of September 30, 2017, long-term debt included our 3.50% Senior Notes, 5.375% Senior Notes, and 7.0% Junior Subordinated Debentures.repurchase. For more information on our long-termshort-term debt, see Note 8—11—“Short-Term Borrowings and Long-Term Debt” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
Long-Term Debt
Our 6.05% Subordinatedlong-term debt was $697.2 million at September 30, 2019 and $696.5 million at December 31, 2018. As of September 30, 2019, long-term debt included our 3.50% Senior Notes issued by the Bank, were repaidand 5.375% Senior Notes. For more information on June 1, 2017. The interest rate swap agreement relating to this issuance was terminated upon repaymentour long-term debt, see Note 11—“Short-Term Borrowings and Long-Term Debt” of the notes.“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, 20172019 and December 31, 20162018 is as follows:
(Dollars in thousands) September 30, 2017 December 31, 2016 % Change   September 30, 2019 December 31, 2018 % Change  
Foreign exchange spot contract liabilities, gross $249,175
 $68,018
 NM
 $696,513
 $170,355
 NM
Accrued compensation 124,111
 135,842
 (8.6) 259,809
 224,405
 15.8
Allowance for unfunded credit commitments 48,172
 45,265
 6.4
 63,108
 55,183
 14.4
Derivative liabilities, gross (1) 100,916
 64,438
 56.6
Other 468,124
 304,820
 53.6
Derivative liabilities (1) 148,540
 98,050
 51.5
Other liabilities 563,251
 458,366
 22.9
Total other liabilities $990,498
 $618,383
 60.2
 $1,731,221
 $1,006,359
 72.0
 
NM—Not meaningful
(1)
See “Derivatives” 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 $181.2$526.2 million was due primarily to increased client trade activityan increase in the amount of unsettled spot trades at period-end as compared to December 31, 2016.2018.

Accrued Compensation
Accrued compensation includes amounts for our Incentive Compensation Plan, Direct Drive Incentive Compensation Plan, Retention Program, Warrant Incentive Plan, ESOP and other compensation arrangements. The increase of $35.4 million was the result of higher incentive compensation accruals for the nine months ended September 30, 2019 primarily due to the increase in the number of average FTEs for 2019.
Other Liabilities
Other liabilities includes various accrued liability amounts for other operational transactions. The increase of $163.3$104.9 millionwas reflective primarily of a $145.3$71.3 million increase in unsettled investment securities purchasesnew commitments for our qualified affordable tax credit funds, a $17.2 million increase in accrued rebate liabilities due to the timing of settlement at September 30, 20172019 as compared to December 31, 2016.2018. In addition, an increase of $5.2 million in other liabilities was attributable to the inclusion of SVB Leerink in our financial results at September 30, 2019.
Noncontrolling Interests
Noncontrolling interests totaled $137.5$157.8 million and $134.5$148.6 million at September 30, 20172019 and December 31, 2016,2018, respectively.The $3.0$9.2 million increase was due primarily to income attributable to noncontrolling interests of $21.2$35.9 million aswell as an additional $5.3 million attributable to the acquisition of SVB Leerink in our financial results for the nine months ended September 30, 2019, partially offset by net distributions of $18.2$32.0 million to limited partners from various managed funds of funds for the nine months ended September 30, 2017.funds.
Fair Value Measurements
The following table summarizes our financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 20172019 and December 31, 20162018:
 September 30, 2017 December 31, 2016 September 30, 2019 December 31, 2018
(Dollars in thousands) Total Balance   Level 3      Total Balance   Level 3      Total Balance   Level 3      Total Balance   Level 3     
Assets carried at fair value $12,982,950
 $140,972
 $12,974,923
 $130,853
 $13,534,475
 $145,175
 $8,388,011
 $146,278
As a percentage of total assets 25.6% 0.3% 29.0% 0.3% 19.8% 0.2% 14.7% 0.3%
Liabilities carried at fair value $100,916
 $—
 $64,438
 $—
 $148,540
 $—
 $98,050
 $—
As a percentage of total liabilities 0.2% —% 0.2% —% 0.2% —% 0.2% —%
As a percentage of assets carried at fair value   1.1%   1.0%   1.1%   1.7%

Financial assets valued using Level 3 measurements consist of our non-marketable investment securities in shares of private company stock and equity warrant assets (rights to shares of private and public company capital stock). The valuation methodologies of our non-marketable securities carried under fair value accounting and equity warrant assets involve a significant degree of management judgment. Refer to Note 14—18—“Fair Value of Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for a summary of the valuation techniques and significant inputs used for each class of Level 3 assets.
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 IPOs, levels of M&A 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 and there can be no assurances that we will realize the full value of these securities, which could result in significant losses. See “Risk Factors” set forth in our 20162018 Form 10-K.
During the three and nine months ended September 30, 2017,2019, the Level 3 assets that are measured at fair value on a recurring basis experienced net realized and unrealized gains of $24.4$39.6 million and $41.4$105.4 million, respectively, primarily due to realizedreflective of valuation increases from our private company warrant portfolio driven by healthy funding rounds and unrealized net gains realized on equityexercised warrant assets due primarily to M&A and IPO activity. During the three and nine months ended September 30, 2016,2018, the Level 3 assets that are measured at fair value on a recurring basis experienced net realized and unrealized gains of $21.1$32.2 million and $33.1$69.2 million, respectively, primarily due toreflective of valuation increases from our public and private company warrant portfolios and net gains realized on exercised warrant assets due to IPO and M&A activity.

Capital Resources
We maintain an adequate capital base to support anticipated asset growth, operating needs and credit and other business risks, and to provide for SVB Financial and the Bank to be in compliance with all regulatory capital guidelines.guidelines, including the joint agency rules implementing the "Basel III" capital rules. Our primary sources of new capital include retained earnings and proceeds from the sale and issuance of our capital stock or other securities. In consultation with the Finance Committee of our Board of Directors, management engages in regular capital planning processes in an effort to optimize the use of 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. In addition, we conduct capital stress tests as part of our annual capital planning process. The capital stress tests allow us to assess the impact of adverse changes in the economy and interest rates on our capital adequacy position.
SVBFG Stockholders’ Equity
SVBFG stockholders’ equity totaled $4.1$5.9 billion at September 30, 2017,2019, an increase of $417.3 million,$0.8 billion, or 11.515.1 percent, compared to $3.6$5.1 billion at December 31, 2016.2018. This increase was due primarily to net income of $373.3$874.0 million for the nine months endedSeptember 30, 2017 and an increase in additional paid-in capitalaccumulated other comprehensive income reflective primarily of $51.8a $240.1 million attributable primarily($173.2 million net of tax) increase in the fair value of our AFS securities portfolio driven by decreases in period-end market interest rates. The increases were partially offset by a $352.5 million decrease in SVBFG stockholders' equity related to amortizationthe repurchase of share-based compensation expense andour outstanding common stock issued under employee benefit plans.stock.
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 regulatory capital requirements administered by state and federal banking agencies.
Regulatory capital ratios for SVB Financial and the Bank exceeded minimum federal regulatory guidelines for a well-capitalized depository institution as of September 30, 20172019 and December 31, 2016.2018. Capital ratios for SVB Financial and the Bank, compared to the minimum regulatory ratios applicable to bank holding companies and banks to be considered “well capitalized” and “adequately capitalized”,capitalized," are set forth below:

     Minimum Ratios under Applicable Regulatory Capital Adequacy Requirements     Minimum Ratios under Applicable Regulatory Capital Adequacy Requirements
 September 30,
2017		 December 31, 2016 
“Well
Capitalized”
 
“Adequately 
Capitalized” 
 September 30,
2019		 December 31, 2018 
“Well
Capitalized”
 
“Adequately 
Capitalized” 
SVB Financial:                
CET 1 risk-based capital ratio 12.96% 12.80% 6.5% 4.5% 12.71% 13.41% 6.5% 4.5%
Tier 1 risk-based capital ratio 13.32
 13.26
 8.0
 6.0
 12.86
 13.58
 8.0
 6.0
Total risk-based capital ratio 14.29
 14.21
 10.0
 8.0
 13.70
 14.45
 10.0
 8.0
Tier 1 leverage ratio 8.34
 8.34
 N/A  
 4.0
 8.64
 9.06
 N/A  
 4.0
Tangible common equity to tangible assets ratio (1) 8.00
 8.15
 N/A  
 N/A  
 8.38
 8.99
 N/A  
 N/A  
Tangible common equity to risk-weighted assets ratio (1) 13.01
 12.89
 N/A  
 N/A  
 13.04
 13.28
 N/A  
 N/A  
Bank:                
CET 1 risk-based capital ratio 12.41% 12.65% 6.5% 4.5% 11.48% 12.41% 6.5% 4.5%
Tier 1 risk-based capital ratio 12.41
 12.65
 8.0
 6.0
 11.48
 12.41
 8.0
 6.0
Total risk-based capital ratio 13.40
 13.66
 10.0
 8.0
 12.36
 13.32
 10.0
 8.0
Tier 1 leverage ratio 7.59
 7.67
 5.0
 4.0
 7.48
 8.10
 5.0
 4.0
Tangible common equity to tangible assets ratio (1) 7.47
 7.77
 N/A  
 N/A  
 7.36
 8.13
 N/A  
 N/A  
Tangible common equity to risk-weighted assets ratio (1) 12.44
 12.75
 N/A  
 N/A  
 11.82
 12.28
 N/A  
 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.


CapitalRisk-based capital ratios (CET 1, tier 1, total risk-based capital, and tier 1 leverage)leverage ratio) for SVB Financial increaseddecreased as of September 30, 2017,2019, compared to the same ratios as of December 31, 2016.2018 as a result of an increase in risk-weighted assets, primarily driven by increases in funded loans and loan commitments. The changes weredecrease in the tier 1 leverage ratio is due to the increase in average assets driven by an increase in capital during the nine months ended September 30, 2017, primarily from net income. An increase in additional paid-inaverage loan portfolio and investment securities.
Risk-based capital from share-based compensation expense during the nine months ended September 30, 2017 also resulted in a benefit to the capital ratios. The

increases in capital were partially offset by an increase in risk-weighted assets due to period-end loan growth and higher investment and cash balances driven by increases in deposits.
Capital ratios (CET 1, tier 1, total risk-based capital, and tier 1 leverage)leverage ratio) for the Bank decreased as of September 30, 2017,2019, compared to the same ratios as of December 31, 2016.2018. The decrease in the Bank's capital ratios reflected $60.0$633.0 million of cash dividends paid by the Bank to our bank holding company, SVB Financial, during the nine months ended September 30, 2017. 2019.
All of our reported capital ratios remain above the levels considered to be “well capitalized” under applicable banking regulations.
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, these financial measures 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 stockholders' equity, by total period-end assets and risk-weighted assets, after reducing both amounts by acquired intangibles, if any. 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 for SVB Financial and the Bank for the periods ended September 30, 20172019 and December 31, 20162018:
 SVB Financial Bank SVB Financial Bank
Non-GAAP tangible common equity and tangible assets
(Dollars in thousands, except ratios)
 September 30,
2017		 December 31,
2016		 September 30,
2017		 December 31,
2016		 September 30,
2019		 December 31,
2018		 September 30,
2019		 December 31,
2018
GAAP SVBFG stockholders’ equity $4,059,813
 $3,642,554
 $3,728,890
 $3,423,427
 $5,890,680
 $5,116,209
 $4,918,767
 $4,554,814
Less: intangible assets 190,111
 —
 —
 —
Tangible common equity $4,059,813
 $3,642,554
 $3,728,890
 $3,423,427
 $5,700,569
 $5,116,209
 $4,918,767
 $4,554,814
GAAP total assets $50,754,287
 $44,683,660
 $49,937,343
 $44,059,340
 $68,231,233
 $56,927,979
 $66,824,088
 $56,047,134
Less: intangible assets 190,111
 —
 —
 —
Tangible assets $50,754,287
 $44,683,660
 $49,937,343
 $44,059,340
 $68,041,122
 $56,927,979
 $66,824,088
 $56,047,134
Risk-weighted assets $31,208,081
 $28,248,750
 $29,970,913
 $26,856,850
 $43,712,495
 $38,527,853
 $41,597,959
 $37,104,080
Tangible common equity to tangible assets 8.00% 8.15% 7.47% 7.77%
Tangible common equity to risk-weighted assets 13.01
 12.89
 12.44
 12.75
Non-GAAP tangible common equity to tangible assets 8.38% 8.99% 7.36% 8.13%
Non-GAAP tangible common equity to risk-weighted assets 13.04
 13.28
 11.82
 12.28
The tangible common equity to tangible assets ratio decreased for SVB Financial and the Bank due to the proportionally higher increase in our assets compared to the increases in common equity during the nine months ended September 30, 2017. Increased capital was reflective primarily of net income for the nine months ended September 30, 2017. Total assets increased primarily as a result of loan growth and higher investment and cash balances driven by increases in deposits. The tangible common equity to risk-weighted assets ratio increased for SVB Financial and decreased for the Bank. The increase for SVB Financial was a result of the proportionally higher increase in net income compared to the changes in risk-weighted assets during the nine months ended September 30, 2017. The growth in period-end risk-weighted assets was primarily due to period-end loan growth and higher investment and cash balances driven by increases in deposits. The decrease for the Bank was a result of $60.0$633.0 million in cash dividends paid by the Bank to our bank holding company, SVB Financial Group, during the nine months ended September 30, 2017. See “SVBFG Stockholders’ Equity” above2019. The tangible common equity to risk-weighted assets ratio decreased for further details on changesthe Bank as a result of the proportionally higher increase in risk-weighted assets relative to the individual components of our equity balance.increase tangible common equity. The growth in period-end risk-weighted assets was primarily due to increases in cash and cash equivalents and period-end loan growth.
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 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 12—16—“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 and Private Equity Funds
Subject to applicable regulatory requirements, including the Volcker Rule, we make investments. 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 10-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 5 to 7 years; however, in certain cases, the funds may not call 100% of committed capital over the life of the fund. 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.
For further details on our commitments to invest in venture capital and private equity funds, refer to Note 12—16—“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 for the approval of the Finance

Committee of our Board of Directors, and courses of action to address our actual and projected liquidity needs. Additionally, we routinely conduct liquidity stress testing as part of our liquidity management practices.
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. We may also offer more investment alternatives for our off-balance sheet products which may impact deposit levels. At September 30, 2017,2019, our period-end total deposit balances were $44.8$59.5 billion, compared to $39.0$49.3 billion at December 31, 2016.2018.
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, short-term investment securities maturing within one year, available-for-sale 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.
We have certain facilities in place to enable us to access short-term borrowings on a secured (using high-quality fixed income securities as collateral) and an unsecured basis. TheseOur secured facilities include repurchase agreements and uncommitted federal funds lines with various financial institutions. We also pledge securitiescollateral pledged to the FHLB of San Francisco and the discount window at the Federal Reserve Bank. The fair valueFRB (using both fixed income securities and loans as collateral). Our unsecured facility consists of our uncommitted federal funds lines. As of September 30, 2019, collateral pledged to the FHLB of San Francisco (comprisedwas comprised primarily of U.S. Treasury securities) atfixed income investment securities and loans and had a carrying value of $4.5 billion, of which $4.1 billion was available to support additional borrowings. As of September 30, 2017 totaled $1.92019, collateral pledged to the discount window at the FRB was comprised of fixed income investment securities and had a carrying value of $1.0 billion, all of which was unused and available to support additional borrowings. The fair value of collateral pledged at the discount window of the Federal Reserve BankOur total unused and available borrowing capacity for our uncommitted federal funds lines totaled $1.9 billion at September 30, 2017 totaled $0.7 billion, all of which was2019. Our total unused and available to support additional borrowings.borrowing capacity under our master repurchase agreements with various financial institutions totaled $3.3 billion at September 30, 2019.
On a stand-alone basis, SVB Financial’s primary liquidity channels include cash flow from investments and interest in financial assets (including equity warrants) held by SVB Financial or its operating subsidiaries other than the Bank; to the extent declared, dividends from the Bank;Bank, its portfolio of liquid assets, and its ability to the extent needed, capital market transactions offeringraise debt and equity instruments in the public and private markets.capital. Consistent with recent prior quarters, the Bank has paid a quarterly dividend to SVB Financial. For the three and nine months ended September 30, 2017,2019, the dividend amount paid was $20$336.0 million and $60$633.0 million, respectively.
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 20162018 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, 20172019 and 2016.2018. For further details, see our “Interim Consolidated Statements of Cash Flows (Unaudited)” under Part I, Item 1 of this report.

 Nine months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2019 2018
Average cash and cash equivalents $3,596,669
 $2,437,763
 $6,250,024
 $3,032,407
Percentage of total average assets 7.6% 5.6% 10.2% 5.6%
Net cash provided by operating activities $468,032
 $273,004
 $709,744
 $703,904
Net cash (used for) provided by investing activities (4,734,383) 2,472,444
Net cash provided by (used for) financing activities 5,276,172
 (1,727,386)
Net cash used for investing activities (6,564,776) (5,736,296)
Net cash provided by financing activities 9,229,689
 5,928,458
Net increase in cash and cash equivalents $1,009,821
 $1,018,062
 $3,374,657
 $896,066
Average cash and cash equivalents increased by $1.2$3.2 billion, or 47.5106.1 percent, to $3.6$6.3 billion for the nine months ended September 30, 2017,2019, compared to $2.4$3.0 billion for the comparable 20162018 period.
Cash provided by operating activities was $468.0$709.7 million for the nine months ended September 30, 2017,2019, reflective primarily of net income before noncontrolling interests of $394.5 million.$909.9 million, partially offset by a net decrease of $205.8 million in adjustments to reconcile net income to net cash driven primarily by the changes in our amortization of deferred loan fees and the change in accrued compensation.
Cash used for investing activities of $4.7$6.6 billion for the nine months ended September 30, 20172019 was driven by $6.2$8.2 billion in purchases of fixed income investment securities and a $2.7 billion increase in loan balances, partially offset by $3.7$4.5 billion of proceeds from maturities and principal paydownsprinciple pay downs from our fixed income investment securities portfolio. Additionally, $2.3
Cash provided by financing activities was $9.2 billion in cash outflows were used to fund loan growth duringfor the nine months ended September 30, 2017.
Cash provided by financing activities was $5.3 billion for the nine months endedSeptember 30, 2017,2019, reflective primarily of a net increase of $5.8$10.2 billion in deposits, partially offset by $507.8 million$0.6 billion in paydowns of payments on our short-term overnight short-term borrowings and $46.2 million for the repayment$0.4 billion in cash outflows related to repurchases of our 6.05% Subordinated Notes upon maturity.outstanding common stock.

Cash and cash equivalents were $3.6$6.9 billion and $2.5$3.8 billion, respectively, at September 30, 20172019 and September 30, 2016.2018.
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. Additionally, changes in interest rates can influence the rate of principal prepayments on mortgage securities, which affects the rate of amortization of purchase premiums and discounts. Other market risks include foreign currency exchange risk, equity price risk, including the effect of competition on product pricing. While all ofAll these risks are important considerations, allbut are also inherently difficult to predict and it is equally difficult to assess the impact of each on the overall simulation results. Consequently, simulations used to analyze the sensitivity of net interest income to changes in interest rate riskrates will differ from actual results due to differences in the timing and frequency andof rate resets, the magnitude of changes in market rates, the impact of competition, fluctuating business conditions, and the impact of strategies taken by management to mitigate these risks.
Interest rate risk is managed by our ALCO. ALCO reviews the sensitivity of the market valuation on earning assets and funding liabilities and the modeled 12-month forward lookingprojection of net interest income from changes in interest rates, structural changes in investment and funding portfolios, loan and deposit activity and current market conditions. Adherence with relevantRelevant metrics included in our Interest Rate Risk Policy,and guidelines, which isare approved by the Finance Committee of our Board of Directors isand are included in our Interest Rate Risk Policy, are monitored on an ongoing basis.
Management of interestInterest rate risk is carried outmanaged primarily through strategies involving our fixed income securities portfolio, available funding channels and capital market activities. In addition, our policies permit the use of off-balance sheet derivatives, such as interest rate swaps, to assist inwith managing interest rate risk.
We utilize a simulation model to perform sensitivity analysis on the economic value of our equity and our net interest income under a variety of interest rate scenarios, balance sheet forecasts and business strategies. The simulation model provides a dynamic assessment of interest rate sensitivity embedded within our balance sheet which measures the potential variability in economic value and net interest income relating solely to changes in market interest rates over time. We review our interest rate risk position and sensitivity to market interest rates on a quarterly basis at a minimum.

regularly.
Model Simulation and Sensitivity Analysis
A specific application of our simulation model involves measurement of the impact of changes in market interest rates on ourthe economic value of equity (“EVE”). EVE is defined as the market value of assets, less the market value of liabilities, adjusted for any off-balance sheet items, if any.liabilities. Another application of the simulation model measures the impact of changes in market interest rates on our net interest income (“NII”) assuming a static balance sheet size and composition as of the period-end reporting date. Meaning,In the NII simulation, the level of market interest rates as well as the size and composition of earning assets and funding liabilitiesthe balance sheet are held constant over the simulation horizon. Simulated cash flows during the scenario horizon are assumed to be replaced as they occur, which restoresmaintains the balance sheet toat its originalcurrent size and composition. More specifically, with respect to earning assets, loan maturities, principal maturities, paydowns and calls on investments are added back as replacement balances as they occur during the simulation horizon. Yield and spread assumptions on cash and investment balances reflect current market rates.rates and the shape of the yield curve. Yield and spread assumptions on loans reflect recent market impacts on product pricing. Similarly, we make certain deposit decay rate assumptions on demand deposits and interest bearinginterest-bearing deposits, which are replenished to hold the level and mix of funding liabilities constant. Changes in market interest rates that affect usnet interest income are principally short-term interest rates and include the following benchmark indexes: (i) the National and SVB Prime rates,Rate, (ii) 1-month and 3-month LIBOR, and (iii) the Federal Funds target rate. Changes in these short-term rates impact interest earned on our variable rate loans variable rate investment securities and balances held as cash and cash equivalents. Additionally, simulated changes in deposit pricing relative to changes in market rates, commonly referred to as deposit beta, generally follow overall changes in short-term interest rates, although actual changes may lag in terms of timing and magnitude. Overall,
Changes in short-term interest rates through an increasing rate cycle from the assumed weightedend of 2015 through the end of 2018 and corresponding increases in deposit rates paid to our clients to attract new deposit funding and retain existing funds has resulted in a realized beta onof approximately 50 percent, as measured since the beginning of the increasing rate cycle. Management expects deposit repricing behavior in a falling rate environment to be different than repricing behavior in a rising rate environment. This results in an "asymmetric" beta assumption that is applied in the NII and EVE simulation models for interest bearing deposits. This model assumes the overall beta for interest bearing deposits is approximately 35.0 percent, which means deposit repricing is assumed toin a falling rate environment would be approximately 35.060 percent. That is, overall changes in interest bearing deposit rates would be approximately 60 percent of a giventhe change in short-term interestmarket rates. ThisThese repricing isassumptions are reflected as a changechanges in interest expense on interest bearing deposit balances.
For the three months ended September 30, 2017, our results include two key modeling assumption changes relating to our non-maturity deposits and prepayments on outstanding commercial loans. The impact was seen primarily in our EVE sensitivity profile and, to a lesser degree, on our NII sensitivity.
For non-maturity deposits, the assumed deposit decay rate is greater in current modeled results compared to assumptions used in prior periods. The impact of the change in assumptions in all rate simulations resulted in greater market value sensitivity of deposits and greater EVE sensitivity overall. Prepayment rate assumptions on commercial loans are also greater in current modeled results compared to assumptions used in prior periods. The impact of the change in assumptions resulted in lower market value sensitivity on commercial loans but the impact on overall EVE sensitivity was minimal in comparison to the overall changes in EVE sensitivity.
The following table presents our EVE and NII sensitivity exposure related to an instantaneous and sustained parallel shift in market interest rates of 100 and 200 basis points ("bps") at September 30, 20172019 and at December 31, 2016 (as revised based on2018. NII sensitivity for December 31, 2018 reflects the higher beta assumptions noted above):discussed above in both increasing and decreasing rate scenarios for purposes of comparison. Modeled EVE for December 31, 2018 has not been adjusted as the assumption change had an immaterial impact.
Change in interest rates (basis points) (Dollars in thousands) Estimated Estimated Increase/(Decrease) in EVE Estimated Estimated Increase/(Decrease) in NII
 EVE Amount Percent NII Amount Percent
September 30, 2017:            
200 $8,223,716
 $999,900
 13.8 % $1,889,933
 $426,799
 29.2 %
100 7,767,694
 543,878
 7.5
 1,677,489
 214,355
 14.7
— 7,223,816
 —
 —
 1,463,134
 —
 —
-100 6,448,044
 (775,772) (10.7) 1,248,346
 (214,788) (14.7)
-200 5,444,025
 (1,779,791) (24.6) 1,190,846
 (272,288) (18.6)
             
December 31, 2016 (As revised):            
200 $7,601,404
 $1,129,823
 17.5 % $1,543,247
 $365,734
 31.1 %
100 7,073,407
 601,826
 9.3
 1,360,356
 182,843
 15.5
— 6,471,581
 —
 —
 1,177,513
 —
 —
-100 5,765,799
 (705,782) (10.9) 1,075,353
 (102,160) (8.7)
-200 4,860,540
 (1,611,041) (24.9) 1,039,903
 (137,610) (11.7)
Change in interest rates (bps)
(Dollars in thousands)
 Estimated Estimated Increase/(Decrease) in EVE Estimated Estimated Increase/(Decrease) in NII
 EVE Amount Percent NII Amount Percent
September 30, 2019:            
+200 $10,053,818
 $(210,435) (2.1)% $2,494,222
 $443,430
 21.6 %
+100 10,193,693
 (70,560) (0.7) 2,274,377
 223,585
 10.9
— 10,264,253
 —
 —
 2,050,792
 —
 —
-100 10,080,991
 (183,262) (1.8) 1,851,688
 (199,104) (9.7)
-200 9,961,089
 (303,164) (3.0) 1,675,960
 (374,832) (18.3)
             
December 31, 2018: (as revised)            
+200 $9,348,408
 $504,405
 5.7 % $2,583,577
 $499,257
 24.0 %
+100 9,090,781
 246,778
 2.8
 2,334,040
 249,720
 12.0
— 8,844,003
 —
 —
 2,084,320
 —
 —
-100 8,470,501
 (373,502) (4.2) 1,840,190
 (244,130) (11.7)
-200 7,590,973
 (1,253,030) (14.2) 1,543,150
 (541,170) (26.0)
Economic Value of Equity
The estimated EVE in the preceding table is based on a combination of valuation methodologies including a discounted cash flow analysis and a multi-path lattice basedlattice-based valuation. Both methodologies use publicly available market interest rates to

determine discounting factors on projected cash flows. The model simulations and calculations are highly assumption-dependent and will change regularly as the composition of earning assets and funding liabilities change (including the impact of changes in the value of interest rate derivatives, if any), as interest rate environments evolve, and as we change our assumptions in response to relevant market conditions, competition or business circumstances. These calculations do not reflect forecast changes in our balance sheet or changes we may make to reduce our EVE exposure 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, basis risk and yield spread compression, 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 EVE and NII estimates are not intended to represent and should not be construed to represent our estimate of the underlying value of equityEVE or forecast of NII.
Our base case EVE as of September 30, 20172019 increased from December 31, 20162018 by $0.8$1.4 billion, primarily due todriven equally by changes in balance sheet mix changescomposition as well as changes in interest rates. Interest rate changes include the assumption model changes discussed above. Asshape of the yield curve which remains inverted, with rates across the curve approximately 90 bps to 115 bps lower compared to December 31, 2018. At September 30, 2017, period-end loans, net of unearned2019, as compared to December 31, 2018, total loan balances increased by $2.7 billion, primarily in Prime and LIBOR indexed variable rate loans. Total fixed income securities increased $2.3by $4.0 billion due primarily to total deposit growth. Total deposit growth was $10.2 billion as compared to December 31, 2016. Comparing2018.
Overall balance sheet growth contributed $731 million to the same periods, period-endchange in total base EVE. Lower rates across the yield curve contributed an additional $689 million to base EVE. Excess liquidity due to deposit growth was absorbed by the investment portfolio, of which approximately 42% of holdings are 15-year and 30-year fixed income investmentagency MBS. Under the current rate environment, the MBS portfolio contributes to a negatively convex EVE profile as the securities increased $2.6 billionextend in the +100 and period-end cash+200 instantaneous rate shock scenarios due to slower prepayment speeds. Thus, in the +100 and cash equivalents increased by $1.0 billion driven primarily by an increase+200 rate shock scenarios, EVE decreased slightly relative to base EVE. The change in deposits balances of $5.8 billion.
Higher short-term LIBOR ratesEVE under the +100 bps rate shock scenario as of September 30, 2017, with marginally2019 is approximately $317 million lower long-term rates, contributed to a flattening of the yield curve compared to the results from December 31, 2016. Changes in nominal rates and a change in the shape of the yield curve resulted in the market value of deposits decreasing proportionally higher than assets. However, as noted above, non-maturity deposit modeling assumption changes were the primary driver of a higher base case EVE as of September 30, 2017. Compared to December 31, 2016, proportional growth in loans, investments, and deposits did not significantly impact EVE sensitivity measures in the +100 bps and +200 bps rate shock scenarios as of September 30, 2017.2018. The change in EVE sensitivity can be attributed primarilyin the +200 is approximately $715 million lower compared to the non-maturity assumptions changes as described above.December 31, 2018 results.

12-Month Net Interest Income Simulation
Our simulatedNII sensitivity is measured as the percentage change in projected 12-month net interest income earned in +/-100 and +/-200 basis point interest rate shock scenarios compared to a base case NII atscenario where balances and interest rates are held constant over the forecast horizon. At September 30, 2017 increased from December 31, 2016 by $286 million, primarily due to the impact of the loan prepayment assumptions changes described above, higher rates on LIBOR and Prime rate based loans, higher period-end loan growth as noted above, and a higher level of earning assets at September 30, 2017.
2019, NII sensitivity as of September 30, 2017was 10.9 percent in the +100 and -100 bps interest rate shock scenarios is nearly symmetricalscenario, compared to 12.0 percent at +14.7% and -14.7%, respectively. This profile is as expected, given the composition of floating rate loans in our balance sheet.December 31, 2018. Our NII sensitivity in the +200 and -200 bps interest rate shock scenarios still shows asymmetry, with lessscenario was 21.6 percent compared to 24.0 percent at December 31, 2018. NII sensitivity in the -100 bps scenario of negative 9.7 percent was lower at September 31, 2019, compared to a negative 11.7 percent at December 31, 2018. The -200 bps scenario currently indicates a lower percentage change in NII of negative 18.3 percent at September 30, 2019, compared to negative 26.0 percent at December 31, 2018. The September 30, 2019 NII sensitivity percentages are inclusive of the income or expense associated with interest rate swaps that are part of our macro hedging process initiated in 2019 as part of the effort to reduce the impact of decreasing rates on NII. The changes in NII sensitivity are primarily the result of the changes in balance sheet composition described previously, combined with the impact of hedges in the respective parallel rate shock scenario duescenarios.
Our base case static 12-month NII forecast at September 30, 2019 decreased compared to floorsDecember 31, 2018 by $34 million. This decrease is primarily the result of fundamental changes in balance sheet composition that have taken place year-to-date. Specifically, significant growth in interest bearing deposit balances as well as corresponding growth in loan and investment balances. However, in the 12-month NII simulation, the interest income benefit of growth in the balance sheet was offset by an increase in interest expense associated with the increase in interest-bearing deposit balances and lower overall rate levels across the yield curve. Costs associated with the macro hedging swap portfolio also contributed to the decrease in the simulated 12-month NII.
A majority of our loans are indexed to Prime and LIBOR. In the positive parallel simulated rate shock scenarios, interest income on loans.assets that are tied to variable rate indexes, primarily our variable rate loans, are expected to benefit our base 12-month NII projections. The opposite is true for negative rate shock scenarios.
The 12-month NII simulations include repricing assumptions on our interest bearing deposit products which we set at our discretion based on client needs and our overall funding mix. Repricing of interest bearing deposits impacts estimated interest expense. As noted previously, repricing deposit rates are generally assumed to be less than one-half of the amount of simulated changes in short-term market interest rates.
The simulation model used in the above analysis incorporates embedded floors on loans, where present, in our interest rate scenarios, which prevent model benchmark rates from moving below zero percent in the down rate scenarios. The embedded floors are also a factor in the up rate scenarios to the extent a simulated increase in rates is needed before floored rates are cleared. In addition, we assume different deposit balance decay rates for each interest rate scenario based on a historical deposit study of our clients. These assumptions may change in future periods based on changes in client behavior and at management's discretion. Actual changes in our deposit pricing strategies may differ from our current model assumptions and may have an impact on our actual sensitivity overall.
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 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
ThereExcept as set forth below, 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.

Beginning January 1, 2019, we implemented ASC 842, Leases. Although the new lease standard had an immaterial impact on our consolidated financial statements, we did implement changes to our processes related to recognition and the control activities to properly identify and record them.  These included the development of new policies, new controls, new training, ongoing contract review requirements, and gathering of information provided for disclosures.



PART II–OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Please refer to Note 15—19—“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 to the risk factors set forth in our 20162018 Annual Report on 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.Stock repurchase activity during the three months ended September 30, 2019 was as follows:
Period ended Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced programs Maximum dollar value that may yet be purchased under the programs (1)
July 31, 2019 25,562
 $224.16
 2,247,417
 $365,526
August 31, 2019 —
 —
 —
 —
September 30, 2019 —
 —
 —
 —
Total 25,562
 $224.16
 2,247,417
 $365,526
(1) On November 13, 2018, the Company announced that its Board of Directors had authorized a $500 million stock repurchase program (the “Stock Repurchase Program”), pursuant to which the Company may, from time to time and on or before the program’s expiration date of November 15, 2019, repurchase shares of its outstanding common stock in the open market, in privately-negotiated transactions, or otherwise, subject to applicable laws and regulations. During the three months ended September 30, 2019, the Company repurchased 25,562 shares of its outstanding common stock for $5.7 million under the Stock Repurchase Program. As of September 30, 2019, the Company had repurchased 2.2 million shares of its outstanding common stock for $499.6 million under the Stock Repurchase Program. The Stock Repurchase Program was completed on July 1, 2019.
On October 24, 2019, the Company’s Board of Directors authorized a new stock repurchase program that enables the Company to repurchase up to $350 million of its outstanding common stock. This program expires on October 29, 2020. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements, availability of funds, and other relevant considerations, as determined by the Company. The Company may, in its discretion, begin, suspend or terminate repurchases at any time prior to the program’s expiration, without any prior notice. Repurchases may also be made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS

Exhibit
Number    
 Exhibit Description Incorporated by Reference 
 Filed
 Herewith  
Form File No. Exhibit   Filing Date 
31.1*10.1
 
Rule 13a-14(a) / 15(d)-14(a) CertificationForm of Principal Executive OfficerNonqualified Stock Option Agreement under 2006 Equity Incentive Plan**
         X
31.2*10.2
 
Rule 13a-14(a) / 15(d)-14(a) CertificationForm of Principal Financial OfficerRestricted Stock Unit Award Agreement under 2006 Equity Incentive Plan**
         X
32.1*10.3
 
Form of Restricted Stock Unit Award Agreement under 2006 Equity Incentive Plan (Performance-Based)**
X
31.1
Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Executive Officer
X
31.2
Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Financial Officer
X
32.1
Section 1350 Certifications
         X
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document         X
101.SCH XBRL Taxonomy Extension Schema Document         X
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document         X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document         X
101.LAB XBRL Taxonomy Extension Label Linkbase Document         X
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document         X
*Denotes management contract or any compensatory plan, contract or arrangement.
**Forms applicable to grants made under the 2006 Equity Incentive Plan beginning in 2019.





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 8, 201712, 2019  /s/ DANIEL BECK
   Daniel Beck
   Chief Financial Officer
   (Principal Financial Officer)
  
   SVB Financial Group
  
Date: November 8, 201712, 2019  /s/ KAMRAN HUSAINKAREN HON
   Kamran HusainKaren Hon
   Interim Chief Accounting Officer
   (Principal Accounting Officer)


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