0000719739sivb:FundManagementMembersivb:SVBLeerinkSegmentMember2021-04-012021-06-30
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 SeptemberJune 30, 20172021
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: 000-15637001-39154
SVB FINANCIAL GROUP
(Exact name of registrant as specified in its charter)
  
Delaware91-1962278
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
3003 Tasman Drive, Santa Clara, California 95054-1191
3003 Tasman Drive, Santa Clara, California95054-1191
(Address of principal executive offices)(Zip(Address of principal executive offices) (Zip Code)
(408) 654-7400
(Registrant’s telephone number, including area code) 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x☒    No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 filer        x☒             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 shareSIVBThe Nasdaq Stock Market LLC
Depositary shares, each representing a 1/40th ownership interest in a share of 5.250% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series ASIVBPThe Nasdaq Stock Market LLC
At OctoberJuly 31, 2017, 52,740,7292021,56,436,504 shares of the registrant’s common stock ($0.001 par value) were outstanding.


Table of Contents

TABLE OF CONTENTS
 
Page
4
Page
PART I - FINANCIAL INFORMATION
Item 1.
4
Item 1.
Interim Consolidated Financial Statements
4
Interim Consolidated Balance Interim Consolidated Balance Sheets as of SeptemberJune 30, 20172021 and December 31, 20162020 (Unaudited)
4
Interim Consolidated Statements of Income for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 (Unaudited)
5
Interim Consolidated Statements of Comprehensive Income for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 (Unaudited)
6
Interim Consolidated Statements of Stockholders' Equity for the ninesix months ended SeptemberJune 30, 20172021 and 20162020 (Unaudited)
76
Interim Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20172021 and 20162020 (Unaudited)
8
Notes to Interim Consolidated Financial Statements (Unaudited)
98
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
5162
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
93106
Item 4.
Controls and Procedures
95109
96110
Item 1.
Legal Proceedings
97110
Item 1A.
Risk Factors
97110
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
97110
Item 3.
Defaults Upon Senior Securities
97110
Item 4.
Mine Safety Disclosures
97110
Item 5.
Other Information
97110
Item 6.
Exhibits
97111
98112


2
Table of Contents

Glossary of Acronymsacronyms and abbreviations that may be used in this Report
AFS—ACL — Allowance for Credit Losses
AFS — Available-for-Sale
APIC— Additional Paid-in CapitalAIR — Accrued Interest Receivable
ASC—ALCO — Asset Liability Management Committee
AOCI — Accumulated Other Comprehensive Income
ARRC — Alternative Reference Rates Committee
ASC — Accounting Standards Codification
ASU—ASU — Accounting Standards Update
CET—Boston Private — Boston Private Financial Holdings, Inc.
BPS — Basis Points
CECL — Current Expected Credit Losses
CET — Common Equity Tier
EHOP—CMBS — Commercial Mortgage-Backed Securities
CMO — Collateralized Mortgage Obligations
CRA — Community Reinvestment Act
EHOP — Employee Home Ownership Program of the Company
EPS—EPS — Earnings Per Share
ERI—ERI — Energy and Resource Innovation
ESOP—ESOP — Employee Stock Ownership Plan of the Company
ESPP—ESPP — 1999 Employee Stock Purchase Plan of the Company
FASB—EVE — Economic Value of Equity
FASB — Financial Accounting Standards Board
FDIC—FDIC — Federal Deposit Insurance Corporation
FHLB—FHLB — Federal Home Loan Bank
FRB—FRB — Federal Reserve Bank
FTE—FTE — Full-Time Employee
FTP—FTP — Funds Transfer Pricing
GAAP—GAAP — Accounting principles generally accepted in the United States of America
HTM—GCB — Global Commercial Bank
HTM — Held-to-Maturity
IASB—IASB — International Accounting Standards Board
IPO—IOSCO — International Organization of Securities Commissions
IPO — Initial Public Offering
IRS—IRS — Internal Revenue Service
IT—ISDA — International Swaps and Derivatives Association, Inc.
IT — Information Technology
LIBOR—LCR — Liquidity Coverage Ratio
LIBOR — London Interbank Offered Rate
M&A—&A — Merger and Acquisition
OTTI—MBS — Mortgage-Backed Securities
NFSR — Net Stable Funding Ratio
NII — Net Interest Income
NM — Not meaningful
OREO — Other Than Temporary ImpairmentReal Estate Owned
SEC—PPP — Paycheck Protection Program
PPPLF — Paycheck Protection Program Lending Facility
SBA — U.S. Small Business Association
SEC — Securities and Exchange Commission
SPD-SVB—SOFR — Secured Overnight Financing Rate
SPAC — Special Purpose Acquisition Company
SPD-SVB — SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China)
TDR—SVB Leerink — SVB Leerink Holdings LLC
TDR — Troubled Debt Restructuring
UK—U.K. — United Kingdom
VIE—VIE — Variable Interest Entity

3
Table of Contents

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
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTSBALANCE SHEETS (UNAUDITED)
(Dollars in millions, except par value and share data)June 30, 2021December 31, 2020
Assets:
Cash and cash equivalents$23,959 $17,675 
Available-for-sale securities, at fair value (cost of $23,776 and $30,245, respectively)23,876 30,913 
Held-to-maturity securities, at amortized cost and net of allowance for credit losses of $5 and $0 (fair value of $60,107 and $17,217, respectively)59,992 16,592 
Non-marketable and other equity securities1,943 1,802 
Total investment securities85,811 49,307 
Loans, amortized cost50,754 45,181 
Allowance for credit losses: loans(396)(448)
Net loans50,358 44,733 
Premises and equipment, net of accumulated depreciation and amortization196 176 
Goodwill143 143 
Other intangible assets, net57 61 
Lease right-of-use assets225 210 
Accrued interest receivable and other assets2,650 3,206 
Total assets$163,399 $115,511 
Liabilities and total equity:
Liabilities:
Noninterest-bearing demand deposits$101,259 $66,519 
Interest-bearing deposits44,579 35,463 
Total deposits145,838 101,982 
Short-term borrowings34 21 
Lease liabilities277 259 
Other liabilities3,449 3,972 
Long-term debt1,834 844 
Total liabilities151,432 107,078 
Commitments and contingencies (Note 13 and Note 16)00
SVBFG stockholders’ equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized; 367,500 and 350,000 shares issued and outstanding, respectively2,064 340 
Common stock, $0.001 par value, 150,000,000 shares authorized; 54,530,307 shares and 51,888,463 shares issued and outstanding, respectively0 0 
Additional paid-in capital2,755 1,585 
Retained earnings6,706 5,672 
Accumulated other comprehensive income142 623 
Total SVBFG stockholders’ equity11,667 8,220 
Noncontrolling interests300 213 
Total equity11,967 8,433 
Total liabilities and total equity$163,399 $115,511 
See accompanying notes to interim consolidated financial statements (unaudited).
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Table of Contents
1.Basis of Presentation

SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 Three months ended June 30,Six months ended June 30,
(Dollars in millions, except per share amounts)June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Interest income:
Loans$472 $365 $903 $748 
Investment securities:
Taxable251 142 475 296 
Non-taxable24 14 45 27 
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities4 3 7 20 
Total interest income751 524 1,430 1,091 
Interest expense:
Deposits12 6 22 43 
Borrowings11 5 20 11 
Total interest expense23 11 42 54 
Net interest income728 513 1,388 1,037 
Provision for credit losses35 66 54 310 
Net interest income after provision for credit losses693 447 1,334 727 
Noninterest income:
Gains on investment securities, net305 35 472 81 
Gains on equity warrant assets, net122 27 344 40 
Client investment fees15 32 35 75 
Foreign exchange fees67 36 124 84 
Credit card fees31 21 59 50 
Deposit service charges28 21 53 45 
Lending related fees18 11 34 24 
Letters of credit and standby letters of credit fees13 11 26 23 
Investment banking revenue103 142 245 188 
Commissions17 17 41 33 
Other42 16 72 27 
Total noninterest income761 369 1,505 670 
Noninterest expense:
Compensation and benefits425 320 870 575 
Professional services97 64 178 103 
Premises and equipment37 28 70 55 
Net occupancy17 19 35 37 
Business development and travel3 3 7 17 
FDIC and state assessments10 7 20 12 
Merger-related charges19 0 19 0 
Other45 39 90 80 
Total noninterest expense653 480 1,289 879 
Income before income tax expense801 336 1,550 518 
Income tax expense173 88 360 137 
Net income before noncontrolling interests628 248 1,190 381 
Net income attributable to noncontrolling interests(113)(14)(138)(12)
Preferred stock dividends(13)(5)(18)(8)
Net income available to common stockholders$502 $229 $1,034 $361 
Earnings per common share—basic$9.23 $4.44 $19.40 $7.00 
Earnings per common share—diluted9.09 4.42 19.10 6.97 
See accompanying notes to interim consolidated financial statements (unaudited).
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Table of Contents

SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Net income before noncontrolling interests$628 $248 $1,190 $381 
Other comprehensive income, net of tax:
Change in foreign currency cumulative translation gains and losses:
Foreign currency translation gains (losses)2 0 2 (9)
Related tax (expense) benefit(1)0 (1)2 
Change in unrealized gains and losses on AFS securities:
Unrealized holding gains (losses)270 47 (554)591 
Related tax (expense) benefit(75)(13)154 (164)
Reclassification adjustment for gains included in net income0 0 0 (61)
Related tax expense0 0 0 17 
Cumulative-effect adjustment for unrealized losses on securities transferred from AFS to HTM(87)0 (78)0 
Related tax benefit25 0 22 0 
Amortization of unrealized holding net gains on securities transferred from AFS to HTM(2)0 (5)(1)
Related tax expense0 0 1 0 
Change in unrealized gains and losses on cash flow hedges:
Unrealized gains0 0 0 232 
Related tax expense0 0 0 (64)
Reclassification adjustment for gains included in net income(16)(16)(31)(18)
Related tax expense5 4 9 5 
Other comprehensive income (loss), net of tax121 22 (481)530 
Comprehensive income749 270 709 911 
Comprehensive income attributable to noncontrolling interests(113)(14)(138)(12)
Comprehensive income attributable to SVBFG$636 $256 $571 $899 

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

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Table of Contents

SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
 Preferred StockCommon StockAdditional
Paid-in Capital		Retained EarningsAccumulated
Other
Comprehensive Income		Total SVBFG
Stockholders’ Equity		Noncontrolling InterestsTotal 
Equity
(Dollars in millions, except share data)SharesAmount
Balance at December 31, 2019$340 51,655,607 $0 $1,470 $4,576 $84 $6,470 $151 $6,621 
Cumulative adjustment for the day one adoption of ASC 326, net of tax— — — — (35)— (35)— (35)
Common stock issued under employee benefit plans and ESOP, net of restricted stock cancellations— 329,330 0 14 — — 14 — 14 
Net income— — — — 369 — 369 12 381 
Capital calls and distributions, net— — — — — — — (14)(14)
Other comprehensive income, net of tax— — — — — 530 530 — 530 
Share-based compensation, net— — — 39 — — 39 — 39 
Common stock repurchases— (244,223)0 — (60)— (60)— (60)
Dividends on preferred stock— — — — (8)— (8)— (8)
Balance at June 30, 2020$340 51,740,714 $0 $1,523 $4,842 $614 $7,319 $149 $7,468 
Balance at December 31, 2020$340 51,888,463 $0 $1,585 $5,672 $623 $8,220 $213 $8,433 
Common stock issued under employee benefit plans and ESOP, net of restricted stock cancellations— 341,844 0 (3)— — (3)— (3)
Issuance of Common Stock— 2,300,000 0 1,118 — — 1,118 — 1,118 
Issuance of Preferred Stock1,724 — — — — — 1,724 — 1,724 
Net income— — — — 1,052 — 1,052 138 1,190 
Capital calls and distributions, net— — — — — — — (51)(51)
Other comprehensive income, net of tax— — — — — (481)(481)— (481)
Share-based compensation, net— — — 55 — — 55 — 55 
Dividends on preferred stock— — — — (18)— (18)— (18)
Balance at June 30, 2021$2,064 54,530,307 $0 $2,755 $6,706 $142 $11,667 $300 $11,967 
  See accompanying notes to interim consolidated financial statements (unaudited).
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Table of Contents

SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Six months ended June 30,
(Dollars in millions)20212020
Cash flows from operating activities:
Net income before noncontrolling interests$1,190 $381 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses54 310 
Changes in fair values of equity warrant assets, net of proceeds from exercises(40)21 
Changes in fair values of derivatives, net7 (59)
Gains on investment securities, net(472)(81)
Distributions of earnings from non-marketable and other equity securities104 49 
Depreciation and amortization61 50 
Amortization of premiums and discounts on investment securities, net166 30 
Amortization of share-based compensation55 39 
Amortization of deferred loan fees(115)(78)
Deferred income tax expense (benefit)33 (73)
Excess tax benefit from exercise of stock options and vesting of restricted shares(30)(2)
Changes in other assets and liabilities:
Accrued interest receivable and payable, net(86)16 
Accounts receivable and payable, net18 3 
Income tax receivable and payable, net(49)131 
Accrued compensation(137)(115)
Foreign exchange spot contracts, net245 (6)
Proceeds from termination of interest rate swaps0 228 
Other, net(309)(99)
Net cash provided by operating activities695 745 
Cash flows from investing activities:
Purchases of AFS securities(2,289)(8,071)
Proceeds from sales of AFS securities0 2,654 
Proceeds from maturities and paydowns of AFS securities2,948 1,550 
Purchases of HTM securities(42,683)(568)
Proceeds from maturities and paydowns of HTM securities5,104 1,544 
Purchases of non-marketable and other equity securities(75)(119)
Proceeds from sales and distributions of capital of non-marketable and other equity securities568 58 
Net increase in loans(5,573)(3,530)
Purchases of premises and equipment(41)(51)
Net cash used for investing activities(42,041)(6,533)
Cash flows from financing activities:
Net increase in deposits43,856 12,748 
Net increase in short-term borrowings13 34 
Proceeds from issuance of long-term debt990 495 
(Distributions to noncontrolling interests), net of contributions from noncontrolling interests(51)(14)
Net proceeds from the issuance of preferred stock1,724 0 
Payment of preferred stock dividend(17)(8)
Common stock repurchases0 (60)
Proceeds from issuance of common stock, ESPP and ESOP, net of restricted stock awards1,115 13 
Net cash provided by financing activities47,630 13,208 
Net increase in cash and cash equivalents6,284 7,420 
Cash and cash equivalents at beginning of period17,675 6,782 
Cash and cash equivalents at end of period$23,959 $14,202 
Supplemental disclosures:
Cash paid during the period for:
Interest$31 $67 
Income taxes370 58 
Noncash items during the period:
Changes in unrealized gains and losses on AFS securities, net of tax$(400)$383 
Distributions of stock from investments43 11 
Transfers from AFS securities to HTM5,766 0 
See accompanying notes to interim consolidated financial statements (unaudited).

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Table of Contents

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 ninesix months ended SeptemberJune 30, 20172021 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, 20162020 (“20162020 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 StatementsUse of Estimates and Supplementary Data—Note 2—“Summary of Significant Accounting Policies” under Part II, Item 8 of our 2016 Form 10-K.Assumptions
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 itemsItems that are subject to such estimates includeinclude: 1) measurements of fair value, the valuation of non-marketable and other equity securities and the valuation of equity warrant assets, 2) income taxes and 3) the adequacy of the allowanceACL for loan lossesloans 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”).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
9
Table of New Accounting StandardsContents
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 require for all operating leases the recognition of a right-of-use asset and a corresponding lease liability, in the statement of financial position. The lease cost will be allocated over the lease term on a straight-line basis. This guidance will be effective on January 1, 2019, on a modified retrospective basis, with early adoption permitted. We plan to adopt the lease accounting guidance in the first quarter of 2019 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 expect to recognize right-of-use assets and related lease liabilities associated predominantly with noncancelable operating leases included in the table of minimum future payments in the amount of $217 million as disclosed in Note 18 of our 2016 Form 10-K.
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), which amends the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses over the life of the loan and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance will be effective January 1, 2020, on a modified retrospective approach, with early adoption permitted, but not before January 1, 2019. We currently have a working project team in place and subject matter experts to assist with our review of key interpretive issues and assist in the assessment of our existing credit loss forecasting models and processes against the new guidance to determine what modifications may be required. We are currently evaluating the impact this guidance will have on our financial position, results of operation and stockholders’ equity.
In August 2016, the FASB issued a new accounting standard update (ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments), which clarifies the guidance on eight specific cash flow issues. This guidance will be effective January 1, 2018 on a full retrospective approach, with early adoption permitted. Our preliminary evaluation has resulted in the expectation that this guidance will primarily impact 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 impact of this guidance to the presentation of our operating, investing and financing activities within our statements of cash flows.
Reclassifications
Certain prior period amounts primarily related to thepresentation changes to our income statement presentationtable summarizing the activity relating to our ACL for loans and the consolidation of net gains on derivative instruments and provision for unfunded credit commitmentscertain line items in our Consolidated Statement of Stockholders' Equity (unaudited), have been reclassified to conform to current period presentations.presentation.
2.Stockholders’ Equity and EPS
Accumulated Other Comprehensive IncomeSummary of Significant Accounting Policies
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 2020 Form 10-K.
Adoption of New Accounting Standards
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which is part of the FASB’s initiative to reduce cost and complexity related to accounting for income taxes. ASU 2019-12 eliminates certain exceptions to the general principles of ASC 740, Income Taxes, and simplifies income tax accounting in several areas.We adopted the guidance on January 1, 2021, on a modified retrospective basis. The adoption did not have a material impact on our financial position, results of operations, cash flows or disclosures.
2.    Stockholders' Equity and EPS
AOCI
The following table summarizes the items reclassified out of accumulated other comprehensive incomeAOCI into the Consolidated Statements of Income (unaudited) for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)Income Statement Location2021202020212020
Reclassification adjustment for gains on AFS securities included in net incomeGains on investment securities, net$0 $0 $0 $(61)
Related tax expenseIncome tax expense0 0 0 17 
Reclassification adjustment for gains on cash flow hedges included in net incomeNet interest income(16)(16)(31)(18)
Related tax expenseIncome tax expense5 4 9 5 
Total reclassification adjustment for gains included in net income, net of tax$(11)$(12)$(22)$(57)
The table below summarizes the activity relating to net gains and losses on our cash flow hedges included in AOCI for the three and six months ended June 30, 2021 and 2020. Refer to Note 9 — “Derivative Financial Instruments” for additional information regarding the termination of our cash flow hedges during the quarter ended March 31, 2020. Over the next 12 months, we expect that approximately $61 million in AOCI at June 30, 2021, related to unrealized gains will be reclassified out of AOCI and recognized in net income.
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Balance, beginning of period, net of tax$118 $164 $129 $(2)
Net increase in fair value, net of tax0 0 0 168 
Net realized gain reclassified to net income, net of tax(11)(11)(22)(13)
Balance, end of period, net of tax$107 $153 $107 $153 
10
    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)
Table of Contents


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 ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions except per share amounts, shares in thousands)2021202020212020
Numerator:
Net income available to common stockholders$502 $229 $1,034 $361 
Denominator:
Weighted average common shares outstanding—basic54,353 51,581 53,272 51,573 
Weighted average effect of dilutive securities:
Stock options and ESPP272 114 274 140 
Restricted stock units and awards527 100 569 135 
Weighted average common shares outstanding—diluted55,152 51,795 54,115 51,848 
Earnings per common share:
Basic$9.23 $4.44 $19.40 $7.00 
Diluted9.09 4.42 19.10 6.97 
  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 ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
 Three months ended June 30,Six months ended June 30,
(Shares in thousands)2021202020212020
Stock options36 288 18 247 
Restricted stock units0 312 44 310 
Total36 600 62 557 
Common Stock
On March 22, 2021, to support the continued growth of our balance sheet, we issued and sold 2,000,000 shares of common stock at a price of $500.00 per share. We received net proceeds of $972 million after deducting underwriting discounts and commissions.
On April 14, 2021, the Company issued and sold 300,000 additional shares of common stock under the full exercise of the underwriters' over-allotment option from our March 22, 2021 underwritten public offering. We received additional net proceeds of $146 million after deducting underwriting discounts and commissions.
Preferred Stock
On December 9, 2019, the Company issued 5.25% Non-Cumulative Perpetual Series A Preferred Stock (''Series A Preferred Stock''). The public offering consists of 14,000,000 depositary shares, each representing a 1/40th ownership interest in a shares of the Series A preferred stock with $0.001 par value and liquidation preference of $1,000 per share, or $25 per depositary share.The Series A Preferred Stock is redeemable at the Company’s option, subject to all applicable regulatory approvals, on or after February 15, 2025.
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  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
3.Share-Based Compensation
ForOn February 2, 2021, the threeCompany issued 4.10% Non-Cumulative Perpetual Series B Preferred Stock (''Series B Preferred Stock''). The public offering consists of 750,000 depositary shares, each representing a 1/100th ownership interest in shares of Series B Preferred Stock with $0.001 par value and nine months endedSeptember 30, 2017liquidation preferences of $100,000 per share, or $1,000 per depositary share. Dividends, if approved and 2016, we recorded share-based compensationdeclared by the Board of Directors, are payable quarterly, in arrears, at a rate per annum equal to (i) 4.10 percent from the original issue date to, but excluding, February 15, 2031 and related tax benefits as follows:
  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, unrecognized share-based compensation expense was as follows:
(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(ii) for the nineFebruary 15, 2031 dividend date and during each subsequent ten year period, the ten-year treasury rate (calculated three business days prior to each reset date as the five day average of the yields on actively traded U.S. treasury securities adjusted to constant maturity, for ten-year maturities) plus 3.064 percent.
On May 13, 2021, the Company issued 4.00% Non-Cumulative Perpetual Series C Preferred Stock (''Series C Preferred Stock''). The public offering consists of 1,000,000 depositary shares, each representing a 1/100th ownership interest in shares of Series C Preferred Stock with $0.001 par value and liquidation preferences of $100,000 per share, or $1,000 per depositary share. Dividends, if approved and declared by the Board of Directors, are payable quarterly, in arrears, at a rate per annum equal to (i) 4.000 percent from the original issue date to, but excluding, May 15, 2026, and (ii) for the May 15, 2026 dividend date and during each subsequent five years period, the five-year treasury rate (calculated three business days prior to each reset date as the five day average of the yields on actively traded U.S. treasury securities adjusted to constant maturity, for five-year maturities) plus 3.202 percent.
The following table summarizes our preferred stock at June 30, 2021:
SeriesDescriptionAmount outstanding (in millions)Carrying value
(in millions)		Shares issued and outstandingPar ValueOwnership interest per depositary shareLiquidation preference per depositary share2021 dividends paid per depositary share
Series A5.250% Fixed-Rate Non-Cumulative Perpetual Preferred Stock$350 $340 350,000$0.001 
1/40th
$25 $0.66 
Series B4.100% Fixed-Rate Non-Cumulative Perpetual Preferred Stock750 739 7,5000.001 
1/100th
1,000 1.17 
Series C4.000% Fixed-Rate Non-Cumulative Perpetual Preferred Stock1,000 985 10,0000.001 
1/100th
1,000 0 

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Consolidated Statement of Changes in Equity
The following table summarizes the changes in our consolidated equity for the three months endedSeptember June 30, 2017:2021 and 2020:
 Preferred
Stock		Common StockAdditional
Paid-in Capital		Retained
Earnings		Accumulated
Other
Comprehensive Income		Total SVBFG
Stockholders’ Equity		Noncontrolling InterestsTotal 
Equity
(Dollars in millions, except share data)SharesAmount
Balance at March 31, 2020$340 51,490,342 $0 $1,489 $4,613 $592 $7,034 $148 $7,182 
Common stock issued under employee benefit plans and ESOP, net of restricted stock cancellations— 250,372 — 14 — — 14 — 14 
Net income— — — — 234 — 234 14 248 
Capital calls and distributions, net— — — — — — — (13)(13)
Other comprehensive income, net of tax— — — — — 22 22 — 22 
Share-based compensation, net— — — 20 — — 20 — 20 
Dividends on preferred stock— — — — (5)— (5)— (5)
Balance at June 30, 2020$340 51,740,714 $0 $1,523 $4,842 $614 $7,319 $149 $7,468 
Balance at March 31, 2021$1,079 54,001,797 $0 $2,591 $6,204 $21 $9,895 $226 $10,121 
Common stock issued under employee benefit plans and ESOP, net of restricted stock cancellations— 228,510 — (5)— — (5)— (5)
Issuance of Common Stock— 300,000 0 146— — 146 — 146 
Issuance of Preferred Stock985 — — — — — 985 — 985 
Net income— — — — 515 — 515 113 628 
Capital calls and distributions, net— — — — — — — (39)(39)
Other comprehensive income, net of tax— — — — — 121 121 — 121 
Share-based compensation, net— — — 28 — — 28 — 28 
Dividends on preferred stock— — — — (13)— (13)— (13)
Other, net— — — (5)— — (5)— (5)
Balance at June 30, 2021$2,064 54,530,307 $0 $2,755 $6,706 $142 $11,667 $300 $11,967 

3.    Variable Interest Entities
  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 as of September 30, 2017. The total intrinsic value of options exercised during the three and nine months ended September 30, 2017 was $3.8 million and $25.8 million, compared to $1.5 million and $8.2 million for the comparable 2016 periods, respectively.
The table below provides information for restricted stock units under the 2006 Equity Incentive Plan for the nine months endedSeptember 30, 2017:
  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
4.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 SeptemberJune 30, 20172021 and December 31, 2016:2020:
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(Dollars in thousands) Consolidated VIEs Unconsolidated VIEs Maximum Exposure to Loss in Unconsolidated VIEs
September 30, 2017:      
(Dollars in millions)(Dollars in millions)Consolidated VIEsUnconsolidated VIEsMaximum Exposure to Loss in Unconsolidated VIEs
June 30, 2021:June 30, 2021:
Assets:      Assets:
Cash and cash equivalents $7,555
 $—
 $—
Cash and cash equivalents$13 $0 $— 
Non-marketable and other securities (1) 190,129
 323,284
 323,284
Non-marketable and other equity securities (1)Non-marketable and other equity securities (1)618 955 955 
Accrued interest receivable and other assets 169
 —
 —
Accrued interest receivable and other assets24 0 — 
Total assets $197,853
 $323,284
 $323,284
Total assets$655 $955 $955 
Liabilities:      Liabilities:
Other liabilities (1) 445
 90,974
 —
Other liabilities (1)14 415 — 
Total liabilities $445
 $90,974
 $—
Total liabilities$14 $415 $— 
December 31, 2016:      
December 31, 2020:December 31, 2020:
Assets:      Assets:
Cash and cash equivalents $11,469
 $—
 $—
Cash and cash equivalents$15 $0 $— 
Non-marketable and other securities (1) 196,140
 314,810
 314,810
Non-marketable and other equity securities (1)Non-marketable and other equity securities (1)422 859 859 
Accrued interest receivable and other assets 294
 —
 —
Accrued interest receivable and other assets1 0 — 
Total assets $207,903
 $314,810
 $314,810
Total assets$438 $859 $859 
Liabilities:      Liabilities:
Other liabilities (1) 517
 58,095
 —
Other liabilities (1)1 370 — 
Total liabilities $517
 $58,095
 $—
Total liabilities$1 $370 $— 
(1)    Included in our unconsolidated non-marketable and other equity securities portfolio at June 30, 2021 and December 31, 2020 are investments in qualified affordable housing projects of $696 million and $616 million, respectively, and related other liabilities consisting of unfunded commitments of $415 million and $370 million, respectively.
(1)Included in our unconsolidated non-marketable and other securities portfolio at September 30, 2017 and December 31, 2016 are investments in qualified affordable housing projects of $148.0 million and $112.4 million, respectively, and related other liabilities consisting of unfunded credit commitments of $91.0 million and $58.1 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”)),SPD-SVB, debt funds, private and public portfolio companies and investments in qualified affordable housing projects. A majorityMany of these investments are through third party fundsinvestments held by SVB Financial in third-party funds in which we do not have controlling or significant variable interests. These investments represent our unconsolidated VIEs in the table above. Our non-marketable and other equity securities portfolio also includes investments from SVB Capital. SVB Capital is the funds management business of SVB Financial Group, which focuses primarily on venture capital investments. The SVB Capital family of funds is comprised of direct venture funds that invest in companies and funds of funds that invest in other venture capital funds. We have a controlling and significant variable interest in four3 of these SVB Capital funds and consolidate these funds for financial reporting purposes.
All investments are generally nonredeemable, and distributions are expected to be received through the liquidation of the underlying investments throughout the life of the investment fund. Investments may only be sold or transferred subject to the notice and approval provisions of the underlying investment agreement. Subject to applicable regulatory requirements, including the Volcker Rule, we also make commitments to invest in venture capital and private equity funds. For additional details, see Note 12—“Off-Balance13 — “Off-Balance Sheet Arrangements, Guarantees and Other Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)Commitments.” 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”),CRA, that are designed to generate a return primarily through the realization of federal tax credits. These investments are typically limited partnerships in which the general partner, other than the Bank, holds the power over significant activities of the VIE; therefore, these investments are not consolidated. For additional information on our investments in qualified affordable housing projects, see Note 6—“Investment Securities" of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

5 — “Investment Securities."
As of SeptemberJune 30, 2017,2021, our exposure to loss with respect to the consolidated VIEs is limited to our net assets of $197.4$641 million and our exposure to loss for our unconsolidated VIEs is equal to our investment in these assets of $323.3$955 million.
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5.Cash and Cash Equivalents

4.    Cash and Cash Equivalents
The following table details our cash and cash equivalents at SeptemberJune 30, 20172021 and December 31, 2016:2020:
(Dollars in millions)June 30, 2021December 31, 2020
Cash and due from banks (1)$23,197 $17,448 
Securities purchased under agreements to resell (2)762 227 
Total cash and cash equivalents$23,959 $17,675 
(Dollars in thousands) September 30, 2017
December 31, 2016
Cash and due from banks (1) $3,490,005
 $2,476,588
Securities purchased under agreements to resell (2) 62,664
 64,028
Other short-term investment securities 2,902
 5,134
Total cash and cash equivalents $3,555,571
 $2,545,750
(1)At June 30, 2021 and December 31, 2020, $16.4 billion and $13.7 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 institutionswere $5.8 billion and $3.0 billion, respectively.
(1)
At September 30, 2017 and December 31, 2016, $1.6 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 billion and $721 million, respectively.
(2)At June 30, 2021 and December 31, 2020, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fairvalues of $777 million and $232 million, respectively. NaN of these securities were sold or repledged as of June 30, 2021 and December 31, 2020.
5.    Investment Securities
(2)
At September 30, 2017 and December 31, 2016, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fair values of $64 million and $66 million, respectively. None of these securities were sold or repledged as of September 30, 2017 and December 31, 2016.
6.Investment Securities
Our investment securities portfolio consists of: (i) an available-for-saleAFS securities portfolio and a held-to-maturityHTM 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, investments in qualified affordable housing projects, as well as public equity securities held as a result of equity warrant assets exercised.
Available-for-SaleAFS Securities
The major components of our available-for-saleAFS investment securities portfolio at SeptemberJune 30, 20172021 and December 31, 20162020 are as follows:
 June 30, 2021
(Dollars in millions)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Carrying
Value
AFS securities, at fair value:
U.S. Treasury securities$6,051 $189 $(5)$6,235 
U.S. agency debentures84 0 (3)81 
Foreign government debt securities15 0 0 15 
Residential MBS:
Agency-issued MBS11,606 80 (124)11,562 
Agency-issued CMO—fixed rate4,497 17 (90)4,424 
Agency-issued CMBS1,523 44 (8)1,559 
Total AFS securities$23,776 $330 $(230)$23,876 

 December 31, 2020
(Dollars in millions)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Carrying
Value
AFS securities, at fair value:
U.S. Treasury securities$4,198 $272 $0 $4,470 
U.S. agency debentures234 4 (1)237 
Foreign government debt securities24 0 0 24 
Residential MBS:
Agency-issued MBS13,271 233 (1)13,503 
Agency-issued CMO—fixed rate8,077 40 (10)8,107 
Agency-issued CMBS4,441 134 (3)4,572 
Total AFS securities$30,245 $683 $(15)$30,913 
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  September 30, 2017
(Dollars in thousands) 
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
U.S. agency debentures 1,668,403
 9,759
 (1,993) 1,676,169
Residential mortgage-backed securities:        
Agency-issued collateralized mortgage obligations—fixed rate 3,024,649
 4,998
 (16,952) 3,012,695
Agency-issued collateralized mortgage obligations—variable rate 394,567
 1,442
 (129) 395,880
Equity securities 8,819
 11,893
 (459) 20,253
Total available-for-sale securities $12,584,564
 $42,140
 $(23,367) $12,603,337
The following table summarizes sale activity of AFS securities during the three and six months ended June 30, 2021 and 2020 as recorded in the line item “Gains on investment securities, net," a component of noninterest income:

For the three and six months ended June 30, 2021 and three months ended June 30, 2020 we did not have any sales proceeds, gross unrealized gains, or gross unrealized losses from our AFS securities portfolio.
  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 June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Sales proceeds$0 $0 $0 $2,654 
Net realized gains and losses:
Gross realized gains$0 $0 $0 $61 
Gross realized losses0 0 0 0 
Net realized gains$0 $0 $0 $61 
The following tables summarize our AFS securities in an unrealized losses on our available-for-sale securities portfolioloss position for which an ACL has not been recorded and summarized into categories of less than 12 months, or 12 months or longer, as of SeptemberJune 30, 20172021 and December 31, 2016:2020:
 June 30, 2021
 Less than 12 months12 months or longer (1)Total
(Dollars in millions)Fair Value of
Investments		Unrealized
Losses		Fair Value of
Investments		Unrealized
Losses		Fair Value of
Investments		Unrealized
Losses
AFS securities:
U.S. Treasury securities$2,218 $(5)$0 $0 $2,218 $(5)
U.S. agency debentures81 (3)0 0 81 (3)
Residential MBS:
Agency-issued MBS8,268 (124)0 0 8,268 (124)
Agency-issued CMO —fixed rate2,832 (89)76 (1)2,908 (90)
Agency-issued CMBS651 (8)0 0 651 (8)
Total AFS securities (1)$14,050 $(229)$76 $(1)$14,126 $(230)
  September 30, 2017
  Less than 12 months 12 months or longer Total
(Dollars in thousands) 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
Available-for-sale securities:            
U.S. Treasury securities $2,824,370
 $(3,834) $—
 $—
 $2,824,370
 $(3,834)
U.S. agency debentures 562,392
 (1,993) —
 —
 562,392
 (1,993)
Residential mortgage-backed securities:            
Agency-issued collateralized mortgage obligations—fixed rate 1,505,319
 (7,389) 415,200
 (9,563) 1,920,519
 (16,952)
Agency-issued collateralized mortgage obligations—variable rate 6,651
 (1) 62,508
 (128) 69,159
 (129)
Equity securities 1,787
 (459) —
 —
 1,787
 (459)
Total temporarily impaired securities (1) $4,900,519
 $(13,676) $477,708
 $(9,691) $5,378,227
 $(23,367)
(1)As of June 30, 2021, we identified a total of 344 investments that were in unrealized loss positions with 2investments in an unrealized loss position for a period of time greater than 12 months. Based on our analysis of the securities in an unrealized loss position as of June 30, 2021, the decline in value is unrelated to credit loss and is related to changes in market interest rates since purchase and therefore changes in value for securities are included in other comprehensive income. Market valuations and credit loss analyses on assets in the AFS securities portfolio are reviewed and monitored on a quarterly basis. As of June 30, 2021, we do not intend to sell any of our securities in an unrealized loss position prior to recovery of our amortized 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 amortized cost basis. None of the investments in our AFS securities portfolio were past due as of June 30, 2021.
 December 31, 2020
 Less than 12 months12 months or longerTotal
(Dollars in millions)Fair Value of
Investments		Unrealized
Losses		Fair Value of
Investments		Unrealized
Losses		Fair Value of
Investments		Unrealized
Losses
AFS securities:
U.S. Treasury securities (1)$60 $0 $0 $0 $60 $0 
U.S. agency debentures133 (1)0 0 133 (1)
Residential MBS:
Agency-issued MBS904 (1)0 0 904 (1)
Agency-issued CMO—fixed rate2,199 (10)0 0 2,199 (10)
Agency-issued CMBS989 (3)0 0 989 (3)
Total AFS securities (2)$4,285 $(15)$0 $0 $4,285 $(15)
(1)
As of September 30, 2017, we identified a total of 202 investments that were in unrealized loss positions, of which 63 investments totaling $477.7 million with unrealized losses of $9.7 million have been in an impaired position for a period of time greater than 12 months. As of September 30, 2017, 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, 2017, 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
  Less than 12 months 12 months or longer Total
(Dollars in thousands) 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
Available-for-sale securities:            
U.S. Treasury securities $879,255
 $(1,190) $—
 $—
 $879,255
 $(1,190)
U.S. agency debentures 513,198
 (1,603) —
 —
 513,198
 (1,603)
Residential mortgage-backed securities:            
Agency-issued collateralized mortgage obligations—fixed rate 635,566
 (6,704) 227,480
 (6,694) 863,046
 (13,398)
Agency-issued collateralized mortgage obligations—variable rate 258,325
 (613) 6,068
 (27) 264,393
 (640)
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)
(1)
As of December 31, 2016, we identified a total of 174 investments that were in unrealized loss positions, of which 20 investments totaling $233.5 million with unrealized losses of $6.7 million have been in an impaired position for a period of time greater than 12 months.

(1)At December 31, 2020, gross unrealized losses totaled less than $1 million for U.S. Treasury AFS securities with a loss duration of less than less than 12 months.
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(2)As of December 31, 2020, we identified a total of 93 investments that were in unrealized loss positions, of which 0 investments are in an unrealized loss position for a period of time greater than 12 months. None of the investments in our AFS securities portfolio were past due as of December 31, 2020.
The following table summarizes thefixed income securities, carried at fair value, classified as available-for-saleAFS as of SeptemberJune 30, 20172021 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 securitiesMBS may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securitiesMBS classified as available-for-saleAFS 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.
 June 30, 2021
(Dollars in millions)TotalOne Year
or Less		After One
Year to
Five Years		After Five
Years to
Ten Years		After
Ten Years
U.S. Treasury securities$6,235 $41 $6,037 $157 $0 
U.S. agency debentures81 0 0 81 0 
Foreign government debt securities15 15 0 0 0 
Residential MBS:
Agency-issued MBS11,562 0 0 0 11,562 
Agency-issued CMO—fixed rate4,424 0 0 0 4,424 
Agency-issued CMBS1,559 0 0 1,559 0 
Total$23,876 $56 $6,037 $1,797 $15,986 
  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-MaturityHTM Securities

During the second quarter of 2021, we re-designated certain securities from the classification of AFS to HTM. The securities re-designated consisted of agency-issued CMBS with a total carrying value of $5.7 billion at June 30, 2021. At the time of re-designation the securities included $78 million of pretax net unrealized loss in other comprehensive income and are being amortized over the life of the securities in a manner consistent with the amortization of a premium or discount. Our decision to re-designate the securities was based on our ability and intent to hold these securities to maturity. Factors used in assessing the ability to hold these securities to maturity were future liquidity needs and sources of funding. HTM securities are carried on the balance sheet at amortized cost and the changes in the value of these securities, other than an ACL, are not reported on the financial statements.
The components of our held-to-maturityHTM investment securities portfolio at SeptemberJune 30, 20172021 and December 31, 20162020 are as follows:
 June 30, 2021
(Dollars in millions)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Fair ValueACL
HTM securities, at cost:
U.S. agency debentures (1)$552 $19 $0 $571 $0 
Residential MBS:
Agency-issued MBS36,724 194 (302)36,616 0 
Agency-issued CMO—fixed rate4,474 29 (23)4,480 0 
Agency-issued CMO—variable rate117 1 0 118 0 
Agency-issued CMBS12,492 76 (61)12,507 0 
Municipal bonds and notes5,265 189 (16)5,438 0 
Corporate bonds373 4 0 377 5 
Total HTM securities$59,997 $512 $(402)$60,107 $5 
  September 30, 2017
(Dollars in thousands) 
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
Residential mortgage-backed securities:        
Agency-issued mortgage-backed securities 5,164,701
 15,764
 (17,116) 5,163,349
Agency-issued collateralized mortgage obligations—fixed rate 3,025,421
 707
 (27,268) 2,998,860
Agency-issued collateralized mortgage obligations—variable rate 269,495
 704
 (37) 270,162
Agency-issued commercial mortgage-backed securities 1,554,220
 2,025
 (11,697) 1,544,548
Municipal bonds and notes 380,976
 1,506
 (1,874) 380,608
Total held-to-maturity securities $11,055,006
 $27,481
 $(59,072) $11,023,415
(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.
17
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 December 31, 2020
(Dollars in millions)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Fair ValueACL
HTM securities, at amortized cost:
U.S. agency debentures (1)$402 $19 $0 $421 $0 
Residential MBS:
Agency-issued MBS7,740 240 (2)7,978 0 
Agency-issued CMO—fixed rate1,735 23 0 1,758 0 
Agency-issued CMO—variable rate137 1 0 138 0 
Agency-issued CMBS2,943 124 0 3,067 0 
Municipal bonds and notes3,635 221 (1)3,855 0 
Total HTM securities$16,592 $628 $(3)$17,217 $0 
(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)
(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
Allowance for Credit Losses for HTM Securities
For HTM securities, the three months ended June 30, 2021 had a beginning ACL balance of $1 million, a provision for credit losses on our held-to-maturityof $4 million, and an ending ACL balance of $5 million. For HTM securities, portfolio into categoriesthe six months ended June 30, 2021 had a beginning ACL balance of less than 12$1 million, a provision for credit losses of $5 million and an ending ACL balance of $5 million.
For the three and six months ended June 30, 2020, the beginning ACL balance, the day one impact of adopting ASC 326, the provision for credit losses and 12 months or longer asthe ending balance of SeptemberACL for HTM securities, in each case, were all less than $1 million.
AIR from HTM securities totaled $144 million at June 30, 20172021 and $55 million at December 31, 2020 and is reported in "Accrued interest receivable and other assets" in our unaudited interim consolidated balance sheets.
Credit Quality Indicators
On a quarterly basis, management monitors the credit quality for HTM securities through the use of standard credit ratings. The following table summarizes our amortized cost of HTM securities aggregated by credit quality indicator at June 30, 2021 and December 31, 2016:2020:
(Dollars in millions)June 30, 2021December 31, 2020
Municipal bonds and notes:
Aaa$2,680 $2,070 
Aa11,619 1,145 
Aa2802 420 
Aa3152 0 
A112 0 
Total municipal bonds and notes$5,265 $3,635 
Corporate bonds:
Aa1$10 $0 
Aa228 0 
Aa324 0 
A1158 0 
A2153 0 
Total corporate bonds$373 $0 

18
  September 30, 2017
  Less than 12 months 12 months or longer Total
(Dollars in thousands) 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
Held-to-maturity securities:            
U.S. agency debentures $101,211
 $(1,080) $—
 $—
 $101,211
 $(1,080)
Residential mortgage-backed securities:            
Agency-issued mortgage-backed securities 3,071,006
 (16,251) 25,004
 (865) 3,096,010
 (17,116)
Agency-issued collateralized mortgage obligations—fixed rate 2,661,682
 (21,842) 235,320
 (5,426) 2,897,002
 (27,268)
Agency-issued collateralized mortgage obligations—variable rate —
 —
 10,321
 (37) 10,321
 (37)
Agency-issued commercial mortgage-backed securities 1,210,351
 (10,615) 82,151
 (1,082) 1,292,502
 (11,697)
Municipal bonds and notes 111,207
 (896) 29,606
 (978) 140,813
 (1,874)
Total temporarily impaired securities (1) $7,155,457
 $(50,684) $382,402
 $(8,388) $7,537,859
 $(59,072)
Table of Contents

(1)
As of September 30, 2017, we identified a total of 547 investments that were in unrealized loss positions, of which 84 investments totaling $382.4 million with unrealized losses of $8.4 million have been in an impaired position for a period of time greater than 12 months. As of September 30, 2017, 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, 2017, 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
  Less than 12 months 12 months or longer Total
(Dollars in thousands) Fair Value of
Investments		 Unrealized
Losses		 Fair Value of
Investments		 Unrealized
Losses		 Fair Value of
Investments		 Unrealized
Losses
Held-to-maturity securities:            
U.S. agency debentures $118,721
 $(1,198) $—
 $—
 $118,721
 $(1,198)
Residential mortgage-backed securities:            
Agency-issued mortgage-backed securities 1,801,861
 (23,558) 21,917
 (968) 1,823,778
 (24,526)
Agency-issued collateralized mortgage obligations—fixed rate 2,729,889
 (25,723) 228,220
 (5,551) 2,958,109
 (31,274)
Agency-issued collateralized mortgage obligations—variable rate 251,012
 (1,339) —
 —
 251,012
 (1,339)
Agency-issued commercial mortgage-backed securities 999,440
 (7,494) 14,934
 (144) 1,014,374
 (7,638)
Municipal bonds and notes 42,267
 (877) 30,586
 (976) 72,853
 (1,853)
Total temporarily impaired securities (1) $5,943,190
 $(60,189) $295,657
 $(7,639) $6,238,847
 $(67,828)
(1)
As of December 31, 2016, we identified a total of 462 investments that were in unrealized loss positions, of which 85 investments totaling $295.7 million with unrealized losses of $7.6 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-maturityHTM as of SeptemberJune 30, 2017.2021. For U.S. agency debentures, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for mortgage-backed securitiescertain 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 MBS may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securitiesMBS classified as held-to-maturityHTM 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.environments; however, we expect to collect substantially all of the recorded investment on these securities.
 June 30, 2021
 TotalOne Year
or Less		After One Year to
Five Years		After Five Years to
Ten Years		After
Ten Years
(Dollars in millions)Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
U.S. agency debentures$552 $571 $4 $4 $141 $146 $407 $421 $0 $0 
Residential MBS:
Agency-issued MBS36,724 36,616 3 4 9 9 449 465 36,263 36,138 
Agency-issued CMO—fixed rate
4,474 4,480 0 0 5 5 404 413 4,065 4,062 
Agency-issued CMO—variable rate
117 118 0 0 0 0 0 0 117 118 
Agency-issued CMBS12,492 12,507 0 0 0 0 535 554 11,957 11,953 
Municipal bonds and notes5,265 5,438 61 61 113 118 833 881 4,258 4,378 
Corporate bonds373 377 0 0 0 0 373 377 0 0 
Total$59,997 $60,107 $68 $69 $268 $278 $3,001 $3,111 $56,660 $56,649 

19
  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
Table of Contents



Non-marketable and Other Equity Securities
The major components of our non-marketable and other investmentequity securities portfolio at SeptemberJune 30, 20172021 and December 31, 20162020 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 millions)June 30, 2021December 31, 2020
Non-marketable and other equity securities:
Non-marketable securities (fair value accounting):
Consolidated venture capital and private equity fund investments (1)$108 $89 
Unconsolidated venture capital and private equity fund investments (2)187 185 
Other investments without a readily determinable fair value (3)79 61 
Other equity securities in public companies (fair value accounting) (4)107 281 
Non-marketable securities (equity method accounting) (5):
Venture capital and private equity fund investments544 362 
Debt funds7 5 
Other investments215 203 
Investments in qualified affordable housing projects, net (6)696 616 
Total non-marketable and other equity securities$1,943 $1,802 
(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 June 30, 2021 and December 31, 2020 (fair value accounting):
 June 30, 2021December 31, 2020
(Dollars in millions)AmountOwnership %AmountOwnership %
Strategic Investors Fund, LP$5 12.6 %$5 12.6 %
Capital Preferred Return Fund, LP51 20.0 50 20.0 
Growth Partners, LP52 33.0 34 33.0 
Total consolidated venture capital and private equity fund investments$108 $89 

(2)The carrying value represents investmentsin 157and 162 funds (primarily venture capital funds) at June 30, 2021 and December 31, 2020, 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. We carry our unconsolidated venture capital and private equity fund investments at fair value based on the fund investments' net asset values per share as obtained from the general partners of the investments. 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 March 31st for our June 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)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.
20
Table of Contents

The following table shows the changes to the carrying amount of other investments without a readily determinable fair value for the six months endedJune 30, 2021:
(Dollars in millions)Six months ended June 30, 2021Cumulative Adjustments
Measurement alternative:
Carrying value at June 30, 2021$79 
Carrying value adjustments:
Impairment$0 $(1)
Upward changes for observable prices12 16 
Downward changes for observable prices(2)(6)
(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 June 30, 2021 and December 31, 2020 (equity method accounting):
 June 30, 2021December 31, 2020
(Dollars in millions)AmountOwnership %AmountOwnership %
Venture capital and private equity fund investments:
Strategic Investors Fund II, LP$4 8.6 %$4 8.6 %
Strategic Investors Fund III, LP28 5.9 16 5.9 
Strategic Investors Fund IV, LP36 5.0 25 5.0 
Strategic Investors Fund V funds87 Various67 Various
CP II, LP (i)8 5.1 8 5.1 
Other venture capital and private equity fund investments381 Various242 Various
 Total venture capital and private equity fund investments$544 $362 
Debt funds:
Gold Hill Capital 2008, LP (ii)$5 15.5 %$4 15.5 %
Other debt funds2 Various1 Various
Total debt funds$7 $5 
Other investments:
SPD Silicon Valley Bank Co., Ltd.$115 50.0 %$115 50.0 %
Other investments100 Various88 Various
Total other investments$215 $203 
(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, 2017 and December 31, 2016 (fair value accounting):
  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 (fair value accounting):
(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.
  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
  
(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.

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

(4)
The following table shows the carrying value 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
  
(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 liabilities” on our consolidated balance sheets at June 30, 2021 and December 31, 2020:
(Dollars in millions)June 30, 2021December 31, 2020
Investments in qualified affordable housing projects, net$696 $616 
Other liabilities415 370 


21
(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 252 funds (primarily venture capital funds) at September 30, 2017 and December 31, 2016, 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 these 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 estimated fair value, of these venture capital and private equity fund investments (cost method accounting) was $114.6 million and $221.7 million, respectively, as of December 31, 2016.
(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 liabilities” on our consolidated balance sheets at September 30, 2017 and December 31, 2016:
Table of Contents
(Dollars in thousands) September 30, 2017 December 31, 2016
Investments in qualified affordable housing projects, net $148,036
 $112,447
Other liabilities 90,974
 58,095


The following table presents other information relating to our investments in qualified affordable housing projects for the three and nine months ended SeptemberJune 30, 20172021 and 2016:2020:
Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Tax credits and other tax benefits recognized$26 $20 $54 $31 
Amortization expense included in provision for income taxes (i)14 10 30 22 
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017
2016 2017 2016
Tax credits and other tax benefits recognized $4,539
 $3,995
 $13,199
 $12,127
Amortization expense included in provision for income taxes (i) 3,533
 2,556
 10,154
 9,746
(i)All investments are amortized using the proportional amortization method and amortization expense is included in the provision for income taxes.

(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 ninesix months ended SeptemberJune 30, 20172021 and 2016:2020 as recorded in the line item “Gains on investment securities, net," a component of noninterest income:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Net gains (losses) on non-marketable and other equity securities:
Non-marketable securities (fair value accounting):
Consolidated venture capital and private equity fund investments$19 $1 $36 $4 
Unconsolidated venture capital and private equity fund investments15 (2)32 (1)
Other investments without a readily determinable fair value(1)(1)12 (4)
Other equity securities in public companies (fair value accounting)18 13 92 6 
Non-marketable securities (equity method accounting):
Venture capital and private equity fund investments250 26 295 18 
Debt funds1 0 2 0 
Other investments3 (2)3 (3)
Total net gains on non-marketable and other equity securities$305 $35 $472 $20 
Less: realized net gains on sales of non-marketable and other equity securities61 0 127 0 
Net gains on non-marketable and other equity securities still held$244 $35 $345 $20 
6.    Loans and Allowance for Credit Losses: Loans and Unfunded Credit Commitments
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
Gross gains on investment securities:        
Available-for-sale securities, at fair value (1) $38
 $84
 $1,131
 $14,238
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
Non-marketable securities (equity method accounting):        
Venture capital and private equity fund investments 4,542
 5,679
 11,245
 9,351
Debt funds 4,222
 295
 5,388
 1,259
Other investments 215
 7,487
 1,736
 11,528
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
(1)Includes realized gains (losses) on sales of available-for-sale 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)
For the three months ended September 30, 2017 and 2016, 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, 2017 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.
7.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,(such as 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.ERI. Our life science/healthcare clients primarily tend to be in the industries of biotechnology, medical devices, healthcare information technology and healthcare services. Loans to our technology, life science/healthcare and ERI clients are reported under the Investor Dependent, Cash Flow Dependent and Balance Sheet Dependent risk-based segments below. Loans made to private equity/venture capital firm clients typically enable them to fund investments prior to their receipt

of funds from capital calls.calls and are reported under the Global Fund Banking portfolio segment below. 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.CRA. These loans are included within “Construction“construction loans” below and are primarily secured by real estate. Additionally, beginning in April 2020, we accepted applications under the PPP administered by the SBA under the Coronavirus Aid, Relief, and Economic Security Act
22

(the "CARES Act") and originated loans to qualified small businesses. Disbursement of PPP funds under the CARES Act originally expired on August 8, 2020, however, on December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the "Economic Aid Act") was enacted, which extended the application period for PPP loans up to March 31, 2021, and allowed for certain PPP borrowers to apply for second draw loans. The disbursement phase of the PPP was further extended to June 30, 2021 pursuant to the PPP Extension Act of 2021.
The composition of loans net of unearned income of $141 million and $125 million at Septemberamortized cost basis broken out by risk-based segment at June 30, 20172021 and December 31, 2016, respectively,2020 is presented in the following table:
(Dollars in millions)June 30, 2021December 31, 2020
Global fund banking$30,630 $25,543 
Investor dependent:
Early stage1,565 1,486 
Mid stage1,708 1,565 
Later stage2,055 1,921 
Total investor dependent5,328 4,972 
Cash flow dependent:
Sponsor led buyout1,917 1,989 
Other2,926 2,945 
Total cash flow dependent4,843 4,934 
Private bank (4)5,297 4,901 
Balance sheet dependent2,804 2,191 
Premium wine (4)1,002 1,053 
Other (4)7 28 
SBA loans843 1,559 
Total loans (1) (2) (3)$50,754 $45,181 
ACL(396)(448)
Net loans$50,358 $44,733 
(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 211,716
 200,156
Other 384,039
 393,551
Total commercial loans 18,852,453
 16,945,288
Real estate secured loans:    
Premium wine (1) 712,400
 678,166
Consumer loans (2) 2,206,501
 1,926,968
Other 42,504
 43,487
Total real estate secured loans 2,961,405
 2,648,621
Construction loans 75,242
 64,671
Consumer loans 300,227
 241,364
Total loans, net of unearned income (3) $22,189,327
 $19,899,944
(1)
Included in our premium wine portfolio are gross construction loans of $104 million and $110 million at September 30, 2017 and December 31, 2016, respectively.
(2)
Consumer loans secured by real estate at September 30, 2017 and December 31, 2016 were comprised of the following:
(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 $273 million and $224 million at September 30, 2017 and December 31, 2016, respectively.

Credit Quality
The composition of(1)    Total loans at amortized cost is net of unearned income of $141$248 million and $125$226 million at SeptemberJune 30, 20172021 and December 31, 2016, respectively, broken out by2020, respectively.
(2) Included within our total loan portfolio segmentare credit card loans of $509 million and class of financing receivable, is as follows:
(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$400 million at June 30, 2021 and class of financing receivable as of September 30, 2017 and December 31, 2016:2020, respectively.
(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(3)     Included within our impairedtotal loan portfolio are construction loans as they relate to our allowance for loan losses, broken out by portfolio segmentof $84 million and class of financing receivable as of September$118 million at June 30, 20172021 and December 31, 2016:2020, respectively.
(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(4)     Of our average impairedtotal loans, the table below includes those secured by real estate at amortized cost at June 30, 2021 and interest income on impaired loans, broken out by portfolio segment and class of financing receivable for the three and nine months ended September 30, 2017 and 2016:
Three months ended September 30, Average impaired loans Interest income on impaired loans
(Dollars in thousands) 2017 2016 2017 2016
Commercial loans:        
Software/internet

 $121,290
 $61,481
 $767
 $70
Hardware 35,932
 45,353
 419
 761
Private equity/venture capital 644
 —
 3
 —
Life science/healthcare 25,796
 55,558
 21
 128
Premium wine 3,625
 1,291
 39
 19
Other 348
 3,768
 —
 6
Total commercial loans 187,635
 167,451
 1,249
 984
Consumer loans:        
Real estate secured loans 1,306
 584
 24
 —
Other consumer loans 1,966
 1,324
 —
 6
Total consumer loans 3,272
 1,908
 24
 6
Total average impaired loans $190,907
 $169,359
 $1,273
 $990
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, 2017 and 2016, 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
(Dollars in thousands)      
Commercial loans:            
Software/internet

 $92,937
 $(8,791) $426
 $7,241
 $199
 $92,012
Hardware 27,800
 (2,453) 115
 5,681
 156
 31,299
Private equity/venture capital 66,785
 —
 —
 10,142
 279
 77,206
Life science/healthcare 27,730
 (1,083) 63
 (1,621) (45) 25,044
Premium wine 3,133
 —
 —
 362
 10
 3,505
Other 4,135
 —
 947
 (931) (26) 4,125
Total commercial loans 222,520
 (12,327) 1,551
 20,874
 573
 233,191
Total consumer loans 13,976
 (11) 277
 1,535
 42
 15,819
Total allowance for loan losses $236,496
 $(12,338) $1,828
 $22,409
 $615
 $249,010
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
(Dollars in thousands)      
Commercial loans:            
Software/internet $104,229
 $(16,526) $305
 $8,591
 $(261) $96,338
Hardware 23,871
 (3,058) 1,080
 11,048
 (336) 32,605
Private equity/venture capital 49,807
 —
 —
 2,203
 (67) 51,943
Life science/healthcare 41,852
 (28) 361
 (5,298) 161
 37,048
Premium wine 4,810
 —
 —
 288
 (9) 5,089
Other 9,480
 (5,004) 207
 142
 (4) 4,821
Total commercial loans 234,049
 (24,616) 1,953
 16,974
 (516) 227,844
Total consumer loans 10,674
 —
 131
 1,976
 (60) 12,721
Total allowance for loan losses $244,723
 $(24,616) $2,084
 $18,950
 $(576) $240,565
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
(Dollars in thousands)      
Commercial loans:            
Software/internet $97,388
 $(36,172) $2,833
 $27,487
 $476
 $92,012
Hardware 31,166
 (6,726) 459
 6,075
 325
 31,299
Private equity/venture capital 50,299
 —
 —
 26,111
 796
 77,206
Life science/healthcare 25,446
 (7,493) 107
 6,906
 78
 25,044
Premium wine 4,115
 —
 —
 (567) (43) 3,505
Other 4,768
 (1,047) 1,424
 (1,005) (15) 4,125
Total commercial loans 213,182
 (51,438) 4,823
 65,007
 1,617
 233,191
Consumer loans 12,184
 (11) 1,332
 2,266
 48
 15,819
Total allowance for loan losses $225,366
 $(51,449) $6,155
 $67,273
 $1,665
 $249,010


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, 2017 and 2016:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017
2016 2017 2016
Beginning balance $47,000
 $34,889
 $45,265
 $34,415
Provision for unfunded credit commitments 1,113
 1,054
 2,789
 1,601
Foreign currency translation adjustments 59
 (19) 118
 (92)
Ending balance (1) $48,172
 $35,924
 $48,172

$35,924
(1)
See Note 12—“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, 2017 and December 31, 2016, broken out by portfolio segment:2020 and were comprised of the following:
(Dollars in millions)June 30, 2021December 31, 2020
Real estate secured loans:
Private bank:
Loans for personal residence$3,773 $3,392 
Loans to eligible employees447 481 
Home equity lines of credit61 43 
Other131 143 
Total private bank loans secured by real estate$4,412 $4,059 
Premium wine807 824 
Other34 57 
Total real estate secured loans$5,253 $4,940 
23
  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)“Criticized.”. When a significant payment delay occurs on a criticized loan, the loan is impaired. The loan is also considered for nonaccrual status if full repayment is determined to be improbable. All of our nonaccrual loans are risk-rated 8 or 9 and are classified underwith the nonperforming impaired category. (For further descriptioninternal rating of nonaccrual loans, refer to Note 2—“Summary of Significant Accounting Policies” under Part II, Item 8 of our 2016 Form 10-K)."Nonperforming." Loans rated 10 are charged-off and are not included as part of our loan portfolio balance. We review our credit quality indicators on a quarterly basis for performance and appropriateness of risk ratings as part of our evaluation process for our allowanceACL for loan losses.loans.
24

The following table summarizestables summarize the credit quality indicators, broken out by portfoliorisk-based segment and class of financing receivablesvintage year, as of SeptemberJune 30, 20172021 and December 31, 2016:2020:
Term Loans by Origination Year
June 30, 2021 (Dollars in millions)20212020201920182017PriorRevolving LoansRevolving Loans Converted to Term LoansUnallocated (1)Total
Global fund banking:
Risk rating:
Pass$567 $165 $42 $55 $20 $7 $29,766 $1 $0 $30,623 
Criticized0 0 0 0 0 0 5 2 0 7 
Nonperforming0 0 0 0 0 0 0 0 0 0 
Total global fund banking$567 $165 $42 $55 $20 $7 $29,771 $3 $0 $30,630 
Investor dependent:
Early stage:
Risk rating:
Pass$392 $520 $237 $53 $10 $0 $144 $1 $0 $1,357 
Criticized8 93 51 14 2 5 24 0 0 197 
Nonperforming0 1 5 4 0 0 1 0 0 11 
Total early stage$400 $614 $293 $71 $12 $5 $169 $1 $0 $1,565 
Mid stage:
Risk rating:
Pass$505 $654 $215 $106 $16 $2 $100 $5 $0 $1,603 
Criticized8 49 9 13 3 0 18 0 0 100 
Nonperforming0 0 2 3 0 0 0 0 0 5 
Total mid stage$513 $703 $226 $122 $19 $2 $118 $5 $0 $1,708 
Later stage:
Risk rating:
Pass$576 $829 $290 $63 $10 $2 $195 $0 $0 $1,965 
Criticized6 29 16 3 2 0 13 0 0 69 
Nonperforming0 15 0 0 0 0 6 0 0 21 
Total later stage$582 $873 $306 $66 $12 $2 $214 $0 $0 $2,055 
Total investor dependent$1,495 $2,190 $825 $259 $43 $9 $501 $6 $0 $5,328 
Cash flow dependent:
Sponsor led buyout:
Risk rating:
Pass$588 $548 $341 $141 $120 $4 $44 $0 $0 $1,786 
Criticized0 14 15 40 10 13 5 0 0 97 
Nonperforming0 0 12 10 7 0 5 0 0 34 
Total sponsor led buyout$588 $562 $368 $191 $137 $17 $54 $0 $0 $1,917 
Other
Risk rating:
Pass$540 $720 $332 $137 $108 $0 $868 $0 $0 $2,705 
25

(Dollars in thousands) Pass Performing (Criticized) Performing Impaired (Criticized) Nonperforming Impaired (Nonaccrual) Total
September 30, 2017:          
Commercial loans:          
Software/internet $5,304,675
 $431,786
 $40,965
 $73,897
 $5,851,323
Hardware 1,015,947
 65,337
 21,886
 18,854
 1,122,024
Private equity/venture capital 9,633,609
 1
 308
 1,010
 9,634,928
Life science/healthcare 1,604,160
 146,705
 1,400
 26,935
 1,779,200
Premium wine 877,235
 43,377
 4,241
 436
 925,289
Other 493,856
 19,252
 —
 298
 513,406
Total commercial loans 18,929,482
 706,458
 68,800
 121,430
 19,826,170
Consumer loans:          
Real estate secured loans 2,188,397
 14,179
 —
 1,301
 2,203,877
Other consumer loans 297,388
 453
 —
 1,941
 299,782
Total consumer loans 2,485,785
 14,632
 —
 3,242
 2,503,659
Total gross loans $21,415,267
 $721,090
 $68,800
 $124,672
 $22,329,829
December 31, 2016:          
Commercial loans:          
Software/internet $4,924,923
 $620,907
 $46,143
 $76,605
 $5,668,578
Hardware 985,889
 137,830
 58,814
 6,581
 1,189,114
Private equity/venture capital 7,747,317
 594
 —
 —
 7,747,911
Life science/healthcare 1,707,499
 120,825
 6,578
 31,783
 1,866,685
Premium wine 865,354
 11,838
 2,696
 491
 880,379
Other 480,845
 23,510
 464
 403
 505,222
Total commercial loans 16,711,827
 915,504
 114,695
 115,863
 17,857,889
Consumer loans:          
Real estate secured loans 1,914,512
 9,604
 —
 1,504
 1,925,620
Other consumer loans 238,256
 499
 786
 1,612
 241,153
Total consumer loans 2,152,768
 10,103
 786
 3,116
 2,166,773
Total gross loans $18,864,595
 $925,607
 $115,481
 $118,979
 $20,024,662
Criticized0 10 35 37 0 0 138 0 0 220 
Nonperforming0 0 0 0 0 0 1 0 0 1 
Total other$540 $730 $367 $174 $108 $0 $1,007 $0 $0 $2,926 
Total cash flow dependent$1,128 $1,292 $735 $365 $245 $17 $1,061 $0 $0 $4,843 
Private bank:
Risk rating:
Pass$1,047 $1,748 $980 $321 $243 $513 $406 $1 $0 $5,259 
Criticized0 1 8 3 4 11 4 0 0 31 
Nonperforming0 0 0 6 0 1 0 0 0 7 
Total private bank$1,047 $1,749 $988 $330 $247 $525 $410 $1 $0 $5,297 
Balance sheet dependent:
Risk rating:
Pass$657 $728 $130 $158 $31 $0 $928 $0 $0 $2,632 
Criticized0 65 42 0 0 0 64 1 0 172 
Nonperforming0 0 0 0 0 0 0 0 0 0 
Total balance sheet dependent$657 $793 $172 $158 $31 $0 $992 $1 $0 $2,804 
Premium wine:
Risk rating:
Pass$52 $128 $195 $72 $74 $210 $112 $36 $0 $879 
Criticized2 15 12 16 10 47 21 0 0 123 
Nonperforming0 0 0 0 0 0 0 0 0 0 
Total Premium wine$54 $143 $207 $88 $84 $257 $133 $36 $0 $1,002 
Other:
Risk rating:
Pass$0 $17 $13 $0 $1 $0 $3 $0 $(27)$7 
Criticized0 0 0 0 0 0 0 0 0 0 
Nonperforming0 0 0 0 0 0 0 0 0 0 
Total other$0 $17 $13 $0 $1 $0 $3 $0 $(27)$7 
SBA loans:
Risk rating:
Pass$401 $368 $0 $0 $0 $0 $0 $0 $0 $769 
Criticized46 28 0 0 0 0 0 0 0 74 
Nonperforming0 0 0 0 0 0 0 0 0 0 
Total SBA loans$447 $396 $0 $0 $0 $0 $0 $0 $0 $843 
Total loans$5,395 $6,745 $2,982 $1,255 $671 $815 $32,871 $47 $(27)$50,754 


(1)    These amounts consist of fees and clearing items that have not yet been allocated at the loan level.
Troubled Debt Restructurings

26

Term Loans by Origination Year
December 31, 2020 (Dollars in millions)20202019201820172016PriorRevolving LoansRevolving Loans Converted to Term LoansTotal
Global fund banking:
Risk rating:
Pass$440 $48 $69 $23 $2 $6 $24,947 $2 $25,537 
Criticized000000 0 6 6 
Nonperforming000000 0 0 0 
Total global fund banking$440 $48 $69 $23 $2 $6 $24,947 $8 $25,543 
Investor dependent:
Early stage:
Risk rating:
Pass$667 $370 $121 $32 $1 $1 $96 $1 $1,289 
Criticized47 73 26 10 4 0 19 0 179 
Nonperforming2 9 5 1 0 0 1 0 18 
Total early stage$716 $452 $152 $43 $5 $1 $116 $1 $1,486 
Mid stage:
Risk rating:
Pass$840 $302 $146 $23 $5 $1 $101 $3 $1,421 
Criticized43 48 26 8 0 5 10 0 140 
Nonperforming0 1 0 3 0 0 0 0 4 
Total mid stage$883 $351 $172 $34 $5 $6 $111 $3 $1,565 
Later stage:
Risk rating:
Pass$906 $394 $170 $38 $0 $8 $224 $5 $1,745 
Criticized22 55 30 1 0 2 37 0 147 
Nonperforming17 2 4 0 0 0 6 0 29 
Total later stage$945 $451 $204 $39 $0 $10 $267 $5 $1,921 
Total investor dependent$2,544 $1,254 $528 $116 $10 $17 $494 $9 $4,972 
Cash flow dependent:
Sponsor led buyout:
Risk rating:
Pass$791 $452 $274 $167 $37 $0 $75 $0 $1,796 
Criticized0 70 39 22 13 0 9 0 153 
Nonperforming0 12 16 7 0 0 5 0 40 
Total sponsor led buyout$791 $534 $329 $196 $50 $0 $89 $0 $1,989 
Other
Risk rating:
Pass$880 $513 $179 $133 $39 $0 $933 $0 $2,677 
Criticized19 68 34 4 0 0 137 0 262 
27

Nonperforming0 0 5 0 0 0 1 0 6 
Total other$899 $581 $218 $137 $39 $0 $1,071 $0 $2,945 
Total cash flow dependent$1,690 $1,115 $547 $333 $89 $0 $1,160 $0 $4,934 
Private bank:
Risk rating:
Pass$1,878 $1,153 $394 $353 $295 $406 $382 $1 $4,862 
Criticized3 10 5 1 5 8 1 0 33 
Nonperforming0 0 3 0 0 2 1 0 6 
Total private bank$1,881 $1,163 $402 $354 $300 $416 $384 $1 $4,901 
Balance sheet dependent:
Risk rating:
Pass$838 $190 $199 $19 $0 $0 $858 $1 $2,105 
Criticized56 4 0 0 0 0 26 0 86 
Nonperforming0 0 0 0 0 0 0 0 0 
Total balance sheet dependent$894 $194 $199 $19 $0 $0 $884 $1 $2,191 
Premium wine:
Risk rating:
Pass$127 $194 $71 $79 $115 $154 $135 $36 $911 
Criticized18 24 36 10 13 6 34 0 141 
Nonperforming0 0 0 0 1 0 0 0 1 
Total Premium wine$145 $218 $107 $89 $129 $160 $169 $36 $1,053 
Other:
Risk rating:
Pass$0 $16 $11 $0 $0 $1 $0 $0 $28 
Criticized0 0 0 0 0 0 0 0 0 
Nonperforming0 0 0 0 0 0 0 0 0 
Total other$0 $16 $11 $0 $0 $1 $0 $0 $28 
SBA loans:
Risk rating:
Pass$1,456 $0 $0 $0 $0 $0 $0 $0 $1,456 
Criticized103 0 0 0 0 0 0 0 103 
Nonperforming0 0 0 0 0 0 0 0 0 
Total SBA loans$1,559 $0 $0 $0 $0 $0 $0 $0 $1,559 
Total loans$9,153 $4,008 $1,863 $934 $530 $600 $28,038 $55 $45,181 


28

Allowance for Credit Losses: Loans
In the second quarter of 2021, the ACL for loans increased by $4 million from the prior quarter, driven primarily by growth in our loan portfolio, partially offset by improved economic conditions within our forecasted assumptions.
The economic forecast in Moody's Analytics June 2021 forecast was utilized in our quantitative model for the ACL as of June 30, 2021. The forecast assumptions included an improvement in the unemployment rate as a result of continued business re-openings and the effect of government aid programs, as well as an improved forecasted gross domestic product growth rate. We determined the forecast to be a reasonable view of the outlook for the economy given the available information at current quarter end. To the extent we identified credit risk considerations that were not captured by the Moody's Analytics June 2021 forecast, we addressed the risk through management's qualitative adjustments to our ACL.
We do not estimate expected credit losses on AIR on loans, as AIR is reversed or written off when the full collection of the AIR related to a loan becomes doubtful. AIR on loans totaled $143 million atJune 30, 2021 and $126 million at December 31, 2020 and is reported in "Accrued interest receivable and other assets" in our unaudited interim consolidated balance sheets.
The following tables summarize the activity relating to our ACL for loans for the three and six months ended June 30, 2021 and 2020, broken out by portfolio segment:
Three months ended June 30, 2021Beginning Balance March 31, 2021Charge-offsRecoveriesProvision (Reduction) for Credit LossesEnding Balance June 30, 2021
(Dollars in millions)
Global fund banking$60 $0 $0 $6 $66 
Investor dependent:
Early stage62 (5)2 (4)55 
Growth stage106 (1)1 (3)103 
Total investor dependent168 (6)3 (7)158 
Cash flow and balance sheet dependent112 (7)0 14 119 
Private bank44 (2)0 5 47 
Premium wine and other8 0 0 (2)6 
Total ACL$392 $(15)$3 $16 $396 
Three months ended June 30, 2020Beginning Balance March 31, 2020Charge-offsRecoveriesProvision (Reduction) for Credit LossesEnding Balance June 30, 2020
(Dollars in millions)
Global fund banking$57 $0 $0 $(3)$54 
Investor dependent:
Early stage127 (2)3 20 148 
Growth stage149 (4)1 (2)144 
Total investor dependent276 (6)4 18 292 
Cash flow and balance sheet dependent104 (8)0 27 123 
Private bank88 (1)0 4 91 
Premium wine and other24 0 0 2 26 
SBA loans0 0 0 4 4 
Total ACL$549 $(15)$4 $52 $590 


29

Six months ended June 30, 2021Beginning Balance December 31, 2020Charge-offsRecoveriesProvision (Reduction) for Credit LossesEnding Balance June 30, 2021
(Dollars in millions)
Global fund banking$46 $(80)$0 $100 $66 
Investor dependent:
Early stage86 (19)3 (15)55 
Growth stage127 (1)5 (28)103 
Total investor dependent213 (20)8 (43)158 
Cash flow and balance sheet dependent125 (7)0 1 119 
Private bank53 (2)0 (4)47 
Premium wine and other9 (1)0 (2)6 
SBA loans2 0 0 (2)0 
Total ACL$448 $(110)$8 $50 $396 

Six months ended June 30, 2020Beginning Balance December 31, 2019Impact of adopting ASC 326Charge-offsRecoveriesProvision for Credit LossesForeign Currency Translation AdjustmentsEnding Balance June 30, 2020
(Dollars in millions)
Global fund banking$107 $(70)$0 $0 $17 $0 $54 
Investor dependent:
Early stage26 40 (12)4 91 (1)148 
Growth stage56 32 (27)5 79 (1)144 
Total investor dependent82 72 (39)9 170 (2)292 
Cash flow and balance sheet dependent81 (1)(11)3 51 0 123 
Private bank22 12 (2)0 59 0 91 
Premium wine and other13 12 0 0 0 1 26 
SBA loans0 0 0 0 4 0 4 
Total ACL$305 $25 $(52)$12 $301 $(1)$590 
30

The following table summarizes the aging of our loans broken out by risk-based segment as of June 30, 2021 and December 31, 2020:
(Dollars in millions)30 - 59
  Days Past  
Due		60 - 89
  Days Past  
Due		Equal to or Greater
Than 90
  Days Past  
Due		  Total Past  
Due		Current  Total  Loans Past Due
90 Days or
More Still
Accruing
Interest
June 30, 2021:
Global fund banking$0 $0 $0 $0 $30,630 $30,630 $0 
Investor dependent:
Early stage1 0 1 2 1,563 1,565 0 
Mid stage0 2 0 2 1,706 1,708 0 
Later stage1 0 0 1 2,054 2,055 0 
Total investor dependent2 2 1 5 5,323 5,328 0 
Cash flow dependent:
Sponsor led buyout0 0 0 0 1,917 1,917 0 
Other5 0 0 5 2,921 2,926 0 
Total cash flow dependent5 0 0 5 4,838 4,843 0 
Private bank0 0 2 2 5,295 5,297 2 
Balance sheet dependent1 3 0 4 2,800 2,804 0 
Premium wine2 0 0 2 1,000 1,002 0 
Other0 0 0 0 7 7 0 
SBA loans0 1 1 2 841 843 1 
Total loans$10 $6 $4 $20 $50,734 $50,754 $3 
December 31, 2020:
Global fund banking$28 $0 $0 $28 $25,515 $25,543 $0 
Investor dependent:
Early stage6 2 0 8 1,478 1,486 0 
Mid stage6 0 1 7 1,558 1,565 0 
Later stage5 0 0 5 1,916 1,921 0 
Total investor dependent17 2 1 20 4,952 4,972 0 
Cash flow dependent
Sponsor led buyout0 0 0 0 1,989 1,989 0 
Other6 0 0 6 2,939 2,945 0 
Total cash flow dependent6 0 0 6 4,928 4,934 0 
Private bank4 4 0 8 4,893 4,901 0 
Balance sheet dependent1 1 0 2 2,189 2,191 0 
Premium wine3 0 1 4 1,049 1,053 0 
Other0 0 0 0 28 28 0 
SBA loans0 0 0 0 1,559 1,559 0 
Total loans$59 $7 $2 $68 $45,113 $45,181 $0 
31

Nonaccrual Loans
The following table summarizes our nonaccrual loans with no allowance for credit loss at June 30, 2021 and December 31, 2020:
June 30, 2021December 31, 2020
(Dollars in millions)Nonaccrual LoansNonaccrual Loans with no Allowance for Credit LossNonaccrual LoansNonaccrual Loans with no Allowance for Credit Loss
Investor dependent:
Early stage$11 $3 $18 $0 
Mid stage5 0 4 3 
Later stage21 0 29 0 
Total investor dependent37 3 51 3 
Cash flow dependent:
Sponsor led buyout34 0 40 0 
Other1 1 6 1 
Total cash flow dependent35 1 46 1 
Private bank7 2 6 3 
Premium wine0 0 1 1 
Total nonaccrual loans$79 $6 $104 $8 
TDRs
As of SeptemberJune 30, 20172021, we had 1812 TDRs with a total carrying value of $87.4$61 million where concessions have been granted to borrowers experiencing financial difficulties, in an attempt to maximize collection. There were $1.2 million of0 unfunded commitments available for funding to the clients associated with these TDRs as of SeptemberJune 30, 2017.2021.
The following table summarizes our loans modified in TDRs, broken out by portfoliorisk-based segment, and class of financing receivables at SeptemberJune 30, 20172021 and December 31, 2016:2020:
(Dollars in millions)June 30, 2021December 31, 2020
Loans modified in TDRs:
Investor dependent:
Early stage$1 $7 
Mid stage5 4 
Later stage15 25 
Total investor dependent21 36 
Cash flow dependent:
Sponsor led buyout34 22 
Other1 1 
Total cash flow dependent35 23 
Private bank3 0 
Premium wine2 2 
Total loans modified in TDRs$61 $61 




32
(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 portfoliorisk-based segment, and class of financing receivable, for modifications made during the three and ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Loans modified in TDRs during the period:
Investor dependent:
Early stage$1 $0 $1 $0 
Mid stage0 5 0 11 
Later stage0 4 0 7 
Total investor dependent1 9 1 18 
Cash flow dependent:
Sponsor led buyout0 0 13 0 
Other0 4 0 4 
Total cash flow dependent0 4 13 4 
Private bank1 0 3 0 
Premium wine0 1 0 1 
Total loans modified in TDRs during the period (1)$2 $14 $17 $23 
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017
2016 2017 2016
Loans modified in TDRs during the period:        
Commercial loans:        
Software/internet $10,876
 $78
 $26,034
 $4,569
Hardware 396
 10,329
 396
 10,329
Life science/healthcare —
 1,714
 —
 1,714
Premium wine —
 —
 185
 495
Total commercial loans 11,272
 12,121
 26,615
 17,107
Consumer loans:        
Other consumer loans —
 —
 —
 786
Total loans modified in TDRs during the period (1) $11,272
 $12,121
 $26,615
 $17,893
(1)There were $6 million and $7 million of partial charge-offs for the three and six months ended June 30, 2021, respectively, and $5 million and $18 million of partial charge-offs for the three and six months ended June 30, 2020, respectively.
(1)
There were zero and $2.6 million of partial charge-offs during the three and nine months endedSeptember 30, 2017, respectively, and $0.7 million and $3.5 million of partial charge-offs during the three and nine months endedSeptember 30, 2016, respectively.

During the three and nine months ended SeptemberJune 30, 2017 all2021 and 2020, new TDRs of $11.3$1 million and $26.6$14 million, respectively, were modified through payment deferrals granted to our clients.
During the three months ended SeptemberJune 30, 2016, $12.02021, new TDRs of $1 million were modified through forgiveness of new TDRsprincipal; there were 0 modifications of principal forgiveness during the three months ended June 30, 2020. During the six months ended June 30, 2021 and 2020,$14 millionand $23 million, respectively, were modified through payment deferrals granted to our clients, and $0.1$3 million and less than $1 million, respectively, were modified through partial forgiveness of principal. During the nine months ended September 30, 2016, $17.6 million of new TDRs were modified through payment deferrals granted to our clients and $0.3 million were modified through partial forgiveness of principal.
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 ninesix months ended SeptemberJune 30, 20172021 and SeptemberJune 30, 2016.2020:
  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
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
TDRs modified within the previous 12 months that defaulted during the period:
Cash flow dependent:
Sponsor led buyout$0 $10 $0 $10 
Total cash flow dependent0 10 0 10 
Total TDRs modified within the previous 12 months that defaulted in the period$0 $10 $0 $10 
Charge-offs and defaults on previously restructured loans are evaluated to determine the impact to the allowanceACL for loan losses,loans, if any. The evaluation of these defaults may impact the assumptions used in calculating the reserve on other TDRs and impairednonaccrual 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 allowanceACL for loan lossesloans as of SeptemberJune 30, 2017.2021.
ACL: Unfunded Credit Commitments
We maintain a separate ACL for unfunded credit commitments that is determined using a methodology that is inherently similar to the methodology used for calculating the ACL for loans. At June 30, 2021, our ACL estimates utilized the improved Moody's economic forecasts from June 2021 as mentioned above.
33

The following table summarizes the activity relating to our ACL for unfunded credit commitments for the three and six months ended June 30, 2021 and 2020:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
ACL: unfunded credit commitments, beginning balance$105 $85 $121 $67 
Impact of adopting ASC 3260 0 0 23 
Provision of credit losses15 14 (1)9 
ACL: unfunded credit commitments, ending balance (1)$120 $99 $120 $99 
8.Short-Term Borrowings and Long-Term Debt
(1)The “ACL: unfunded credit commitments” is included as a component of “other liabilities” on our unaudited interim consolidated balance sheets. See Note 13 — “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.
7.     Goodwill and Other Intangible Assets

Goodwill
Goodwill at both June 30, 2021 and December 31, 2020 was $143 million, which was a result of revenue generating synergies expected from our acquisition of SVB Leerink in 2019 as well as our acquisition of WestRiver Group's debt fund business in December 2020.
Other Intangible Assets
The components of net other intangible assets were as follows:
June 30, 2021December 31, 2020
(Dollars in millions)Gross AmountAccumulated AmortizationNet Carrying AmountGross AmountAccumulated AmortizationNet Carrying Amount
Other intangible assets:
Customer relationships$42 $10 $32 $42 $8 $34 
Other36 11 25 36 9 27 
Total other intangible assets$78 $21 $57 $78 $17 $61 

For the six months ended June 30, 2021, we recorded amortization expense of $4 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 June 30, 2021:
Years ended December 31,
(Dollars in millions)		Other
Intangible Assets
2021 (excluding the six months ended June 30, 2021)$4 
20228 
20238 
20248 
20257 
2026 and thereafter22 
Total future amortization expense$57 
34

8.    Short-Term Borrowings and Long-Term Debt
The following table represents outstanding short-term borrowings and long-term debt at SeptemberJune 30, 20172021 and December 31, 2016:2020:
   Carrying Value
(Dollars in millions)MaturityPrincipal value at June 30, 2021June 30, 2021December 31, 2020
Short-term borrowings:
Other short-term borrowings(1)$34 $34 $21 
Total short-term borrowings$34 $21 
Long-term debt:
3.50% Senior NotesJanuary 29, 2025$350 $349 $349 
3.125% Senior NotesJune 5, 2030500 495 495 
1.800% Senior NotesFebruary 2, 2031500 494 0 
2.100% Senior NotesMay 15, 2028500 496 0 
Total long-term debt$1,834 $844 
      Carrying Value
(Dollars in thousands) Maturity Principal value at September 30, 2017 September 30,
2017		 December 31,
2016
Short-term borrowings:        
Short-term FHLB advances 
 $—
 $—
 $500,000
Other short-term borrowings (1) 4,840
 4,840
 12,668
Total short-term borrowings     $4,840
 $512,668
Long-term debt:        
3.50% Senior Notes January 29, 2025 $350,000
 $347,221
 $346,979
5.375% Senior Notes September 15, 2020 350,000
 348,035
 347,586
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
(1)Represents cash collateral received from certain counterparties in relation to market value exposures of derivative contracts in our favor.
(1)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$11 millionand$20 millionfor the three and six months ended June 30, 2021, respectively and $5 million and $27.2$11 million for the three and ninesix months ended SeptemberJune 30, 2017, respectively, and $9.7 million and $28.2 million for the three and nine months ended September 30, 2016,2020, 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 short-term borrowings was 1.060.8 percent as of SeptemberJune 30, 20172021 and 0.590.8 percent as of as of December 31, 2016.2020.

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 June 30, 2021, collateral pledged to the FHLB of San Francisco (comprisedwas comprised primarily of U.S. Treasury securities)fixed income investment securities and loans and had a carrying value of $7.1 billion, of which $5.9 billion was available to support additional borrowings. As of June 30, 2021, collateral pledged to the discount window at September 30, 2017 totaled $1.9the FRB was comprised of fixed income investment securities and had a carrying value of $0.9 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 borrowing capacity for our uncommitted federal funds lines totaled $1.9 billion at June 30, 2021. Our total unused and available borrowing capacity under our master repurchase agreements with various financial institutions totaled $4.0 billion at June 30, 2021.
3.50% Senior Notes
In January 2015, SVB Financial issued $350 million of 3.50% Senior Notes due in January 2025. We received net proceeds of approximately $346 million after deducting underwriting discounts and commissions and issuance costs. The balance of our 3.50% Senior Notes at June 30, 2021 was $349 million, which is reflective of $1 million of debt issuance costs and a discount of less than $1 million.
3.125% Senior Notes
On June 5, 2020, the Company issued $500 million of 3.125% Senior Notes due in June 2030 ("3.125% Senior Notes"). The 3.125% Senior Notes may be redeemed by us, at our option, at any time prior to support additional borrowings.March 5, 2030, at a redemption price equal to the full aggregate principal amount plus a “make-whole” premium payment. We received net proceeds from this offering of approximately $495 million after deducting underwriting discounts and commissions and issuance costs. The balance of our 3.125% Senior Notes at June 30, 2021 was $495 million, which is reflective of $4 million of debt issuance costs and a discount of less than $1 million.
35
9.Derivative Financial Instruments

1.800% Senior Notes
On February 2, 2021 the Company issued $500 million of 1.800% Senior Notes due February 2031 ("1.800% Senior Notes"), with interest payments starting August 2, 2021, and payable every February 2nd and August 2nd. The notes are senior unsecured obligations of SVB Financial Group and rank equally with all of our other unsecured and unsubordinated indebtedness. We received net proceeds from this offering of approximately $494 million after deducting underwriting discounts and commissions and issuance costs. The balance of our 1.800% Senior Notes at June 30, 2021 was $494 million, which is reflective of $4 million of debt issuance costs and a $2 million discount.
2.100% Senior Notes
On May 13, 2021 the Company issued $500 million of 2.100% Senior Notes due May 2028 ("2.100% Senior Notes"), with interest payments starting November 15, 2021, and payable every May 15th and November 15th. The notes are senior unsecured obligations of SVB Financial Group and rank equally with all of our other unsecured and unsubordinated indebtedness. We received net proceeds from this offering of approximately $496 million after deducting underwriting discounts and commissions and issuance costs. The balance of our 2.100% Senior Notes at June 30, 2021 was $496 million, which is reflective of $4 million of debt issuance costs and a discount of less than $1 million.
9.    Derivative Financial Instruments
We primarily use derivative financial instruments to manage interest rate risk and 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,interest rate sensitive assets, we have entered into a fixed-for-floating interest rate swap agreement at the time of debt issuance based upon LIBOR with matched-terms. The net cash benefit associated with ourcontracts to hedge against future changes in 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 ourand cash flow hedges.
Fair Value Hedges
To manage interest rate swaps is calculated using a discounted cash flow method and adjusted for credit valuation associated with counterparty risk. Changesrisk on our AFS securities portfolio, we enter into pay-fixed, receive-floating interest rate swap contracts to hedge against exposure to changes in the fair value of the securities resulting from changes in interest rate swaps are reflected in either other assets (for swaps in an asset position) or other liabilities (for swaps in a liability position). On June 1, 2017, ourrates. We designate these interest rate swap was terminated upon repaymentcontracts as fair value hedges that qualify for hedge accounting under ASC 815, Derivatives and Hedging ("ASC 815") and have elected to account for a portion of them using the last-of-layer method as outlined in ASC 815. We record the fair value hedges in other assets and other liabilities. For qualifying fair value hedges, both the changes in the fair value of the 6.05% Subordinated Notes.derivative and the portion of the fair value adjustments associated with the last-of-layer attributable to the hedged risk will be recognized into earnings as they occur. Derivative amounts affecting earnings are recognized consistent with the classification of the hedged item in the line item "investment securities" 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 and hedge accounting under ASC 815 can be applied. In conjunction with the assessment of effectiveness, we assess the hedged item to ensure it is expected to be outstanding at the hedged item’s assumed maturity date and the last-of-layer method of 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 remaining fair value basis adjustments are allocated to the individual assets in the portfolio and amortized into earnings over a period consistent with the amortization of other discounts and premiums associated with the respective assets. As allowed under GAAP, we applied the "shortcut" method of accounting to a portion of our fair value hedges which assumes there is perfect effectiveness.





36

The following table summarizes the amortized cost basis of hedged assets that are designated and qualify as fair value hedges and the cumulative amount of fair value hedging adjustments included in the carrying value that have been recorded on our unaudited interim consolidated balance sheets as of June 30, 2021:
 June 30, 2021
(Dollars in millions)Amortized Cost Basis of the Hedged AssetsCumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
AFS securities (1)$21,817 $4 
(1)These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. At June 30, 2021, the amortized cost basis of the closed portfolios used in these hedging relationships was$17.5 billion, the amounts of the designated hedged items was $8.8 billion and the cumulative basis adjustments associated with these hedging relationships was $6 million.
Cash Flow Hedges
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 qualifying cash flow hedges, changes in the fair value of the derivative are recorded in AOCI and recognized in earnings as the hedged item affects earnings. Derivative amounts affecting earnings are recognized consistent with the classification of the 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 and 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 AOCI are reclassified into earnings in the line item "Loans" as part of interest income, a component of consolidated net income. As of March 31, 2020, all derivatives previously classified as hedges with notional balances totaling $5.0 billion and a net asset fair value of $228 million were terminated. As of June 30, 2021, the total unrealized gains on terminated cash flow hedges remaining in AOCI was $148 million, $107 million net of tax. The unrealized gains will be reclassified into interest income as the underlying forecasted transactions impact earnings through the original maturity of the hedged forecasted transactions. The total remaining term over which the unrealized gains will be reclassified into earnings is approximately four 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”“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”“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-“Summary2 — “Summary of Significant Accounting Policies" under Part II, Item 8 of our 20162020 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.

37

The total notional or contractual amounts and fair value collateral and net exposure of our derivative financial instruments at SeptemberJune 30, 20172021 and December 31, 20162020 were as follows:
 June 30, 2021December 31, 2020
Notional or
Contractual
Amount		Fair ValueNotional or
Contractual
Amount		Fair Value
(Dollars in millions)Derivative Assets (1)Derivative Liabilities (1)Derivative Assets (1)Derivative Liabilities (1)
Derivatives designated as hedging instruments:
 Interest rate risks:
Interest rate swaps$9,775 $16 $— $0 $0 $— 
Interest rate swaps3,025 — 2 0 — 0 
Derivatives not designated as hedging instruments:
 Currency exchange risks:
Foreign exchange forwards616 10 — 68 0 — 
Foreign exchange forwards184 — 2 567 — 20 
 Other derivative instruments:
Equity warrant assets301 266 — 253 203 — 
Client foreign exchange forwards11,234 165 — 8,026 215 — 
Client foreign exchange forwards10,717 — 153 7,491 — 188 
Client foreign currency options233 2 — 98 2 — 
Client foreign currency options233 — 2 98 — 2 
Client interest rate derivatives1,306 65 — 1,082 68 — 
Client interest rate derivatives (2)1,483 — 59 1,251 — 27 
Total derivatives not designated as hedging instruments508 216 488 237 
Total derivatives$524 $218 $488 $237 
    September 30, 2017 December 31, 2016
(Dollars in thousands) 
Balance Sheet
Location
 
Notional or
Contractual
Amount
 Fair Value 
Collateral
(1)
 
Net
Exposure
(2)
 
Notional or
Contractual
Amount
 Fair Value 
Collateral
(1)
 
Net
Exposure
(2)
Derivatives designated as hedging instruments:                  
 Interest rate risks:
                  
Interest rate swaps Other assets $—
 $—
 $—
 $—
 $45,964
 $810
 $89
 $721
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
Foreign exchange forwards Other liabilities 84,618
 (1,244) —
 (1,244) 54,338
 (968) —
 (968)
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
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
Client foreign exchange forwards Other liabilities 1,838,439
 (86,627) —
 (86,627) 1,068,991
 (43,317) —
 (43,317)
Client foreign currency options Other assets 101,544
 1,090
 —
 1,090
 775,000
 10,383
 —
 10,383
Client foreign currency options Other liabilities 101,544
 (1,090) —
 (1,090) 775,000
 (10,383) —
 (10,383)
Client interest rate derivatives Other assets 676,148
 11,824
 —
 11,824
 583,511
 10,110
 —
 10,110
Client interest rate derivatives Other liabilities 711,969
 (11,955) —
 (11,955) 627,639
 (9,770) —
 (9,770)
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
(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.
(2)Net exposure for contracts in a gain position reflects the replacement cost in the event of nonperformance by all such counterparties. The credit ratings of our institutional counterparties as of September 30, 2017 remain 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.

(1)Derivative assets and liabilities are included in "accrued interest receivable and other assets" and "other liabilities", respectively, on our consolidated balance sheets.
(2)The amount reported reflects reductions of approximately $6 million and $45 million of derivative liabilities at June 30, 2021 and December 31, 2020, respectively, reflecting variation margin treated as settlement of the related derivative fair values for legal and accounting purposes as required by central clearing houses.
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A summary of our derivative activity and the related impact on our consolidated statements of income for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 is as follows:
  Three months ended June 30,Six months ended June 30,
(Dollars in millions)Statement of income location   2021202020212020
Derivatives designated as hedging instruments:
 Interest rate risks:
Amounts reclassified from AOCI into incomeInterest income - loans$16 $16 $31 $18 
Change in fair value of interest rate swaps hedging investment securitiesInterest income - investment securities taxable(14)0 4 0 
Change in fair value of hedged investment securitiesInterest income - investment securities taxable4 0 (13)0 
Net gains associated with interest rate risk derivatives$6 $16 $22 $18 
Derivatives not designated as hedging instruments:
 Currency exchange risks:
Gains (losses) on revaluations of internal foreign currency instruments, netOther noninterest income$7 $11 (21)$3 
(Losses) gains on internal foreign exchange forward contracts, netOther noninterest income(6)(9)21 (1)
Net gains associated with internal currency risk$1 $2 $0 $2 
 Other derivative instruments:
Gains (losses) on revaluations of client foreign currency instruments, netOther noninterest income$17 $5 $15 $(3)
(Losses) gains on client foreign exchange forward contracts, netOther noninterest income(12)(7)(10)1 
Net gains (losses) associated with client currency risk$5 $(2)$5 $(2)
Net gains on equity warrant assetsGains on equity warrant assets, net$122 $27 $344 $40 
Net (losses) gains on other derivativesOther noninterest income$(2)$0 $2 $(5)
39
    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 SeptemberJune 30, 20172021 and December 31, 2016:2020:
Gross Amounts of Recognized AssetsGross Amounts offset in the Statement of Financial PositionNet Amounts of Assets Presented in the Statement of Financial PositionGross Amounts Not Offset in the Statement of Financial Position but Subject to Master Netting ArrangementsNet Amount
(Dollars in millions)Financial InstrumentsCash Collateral Received (1)
June 30, 2021
Derivative assets:
Interest rate swaps$16 $0 $16 $(2)$0 $14 
Foreign exchange forwards175 0 175 (48)(31)96 
   Foreign currency options2 0 2 (1)0 1 
   Client interest rate derivatives65 0 65 (62)(3)0 
Total derivative assets258 0 258 (113)(34)111 
Reverse repurchase, securities borrowing, and similar arrangements762 0 762 (762)0 0 
Total$1,020 $0 $1,020 $(875)$(34)$111 
December 31, 2020
Derivative assets:
   Interest rate swaps$0 $0 $0 $0 $0 $0 
Foreign exchange forwards215 0 215 (76)(21)118 
   Foreign currency options2 0 2 (1)0 1 
   Client interest rate derivatives68 0 68 (68)0 0 
Total derivative assets285 0 285 (145)(21)119 
Reverse repurchase, securities borrowing, and similar arrangements227 0 227 (227)0 0 
Total$512 $0 $512 $(372)$(21)$119 
(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.
40

  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
The following table summarizes our liabilities subject to enforceable master netting arrangements as of SeptemberJune 30, 20172021 and December 31, 2016:2020:
Gross Amounts of Recognized LiabilitiesGross Amounts offset in the Statement of Financial PositionNet Amounts of Liabilities Presented in the Statement of Financial PositionGross Amounts Not Offset in the Statement of Financial Position but Subject to Master Netting ArrangementsNet Amount
(Dollars in millions)Financial InstrumentsCash Collateral Pledged (1)
June 30, 2021
Derivative liabilities:
Interest rate swaps$2 $0 $2 $(2)$0 $0 
   Foreign exchange forwards155 0 155 (54)(42)59 
   Foreign currency options2 0 2 0 (1)1 
   Client interest rate derivatives59 0 59 (37)(21)1 
Total derivative liabilities218 0 218 (93)(64)61 
Repurchase, securities lending, and similar arrangements0 0 0 0 0 0 
Total$218 $0 $218 $(93)$(64)$61 
December 31, 2020
Derivative liabilities:
   Interest rate swaps$0 $0 $0 $0 $0 $0 
   Foreign exchange forwards208 0 208 (84)(45)79 
   Foreign currency options2 0 2 (1)0 1 
   Client interest rate derivatives27 0 27 0 (26)1 
Total derivative liabilities237 0 237 (85)(71)81 
Repurchase, securities lending, and similar arrangements0 0 0 0 0 0 
Total$237 $0 $237 $(85)$(71)$81 
  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.Other Noninterest Income and Other Noninterest Expense
(1)Cash collateral pledged to our counterparties in relation to market value exposures of derivative contracts in a liability position and repurchase agreements are recorded as a component of “cash and cash equivalents" on our consolidated balance sheets.
10.    Noninterest Income
All of the Company's revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income. Included below is a summary of noninterest income for the three and six months ended June 30, 2021 and 2020:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Noninterest income:
Gains on investment securities, net$305 $35 $472 $81 
Gains on equity warrant assets, net122 27 344 40 
Client investment fees15 32 35 75 
Foreign exchange fees67 36 124 84 
Credit card fees31 21 59 50 
Deposit service charges28 21 53 45 
Lending related fees18 11 34 24 
Letters of credit and standby letters of credit fees13 11 26 23 
Investment banking revenue103 142 245 188 
Commissions17 17 41 33 
Other42 16 72 27 
Total noninterest income$761 $369 $1,505 $670 
41

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, SPD-SVB, debt funds, private and public portfolio companies, which includes 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 (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.
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 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.
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 six months ended June 30, 2021 and 2020 is as follows:
  Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Gains on non-marketable and other equity securities, net$305 $35 $472 $20 
Gains on sales of AFS securities, net0 0 0 61 
Total gains on investment securities, net$305 $35 $472 $81 
42

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 six months ended June 30, 2021 and 2020 is as follows:
  Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Equity warrant assets:
Gains on exercises, net$78 $9 $251 $33 
Terminations(1)0 (1)(1)
Changes in fair value, net45 18 94 8 
Total net gains on equity warrant assets$122 $27 $344 $40 
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 six months ended June 30, 2021 and 2020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Client investment fees by type:
Sweep money market fees$7 $19 $18 $42 
Asset management fees (1)8 12 16 21 
Repurchase agreement fees0 1 1 12 
Total client investment fees (2)$15 $32 $35 $75 
(1)Represents fees earned from investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(2)Represents fees earned on client investment funds that are maintained at third-party financial institutions and are not recorded on our balance sheet.
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 the transactions are typically settled within two business days.
43

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 six months ended June 30, 2021 and 2020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Foreign exchange fees by instrument type:
Spot contract commissions$60 $33 $115 $74 
Forward contract commissions6 3 8 10 
Option premium fees1 0 1 0 
Total foreign exchange fees$67 $36 $124 $84 
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 six months ended June 30, 2021 and 2020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Credit card fees by instrument type:
Card interchange fees, net$26 $15 $49 $37 
Merchant service fees4 5 8 10 
Card service fees1 1 2 3 
Total credit card fees$31 $21 $59 $50 
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.
44

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 six months ended June 30, 2021 and 2020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Lending related fees by instrument type:
Unused commitment fees$15 $8 $28 $17 
Other3 3 6 7 
Total lending related fees$18 $11 $34 $24 
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
We earn 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; we recognize the applicable management fee as well as the underwriting fee, net of consideration payable to customers. Private placement fees are recognized 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. We have determined that we act as principal in the majority of these transactions and therefore present expenses gross within other operating expenses.
A summary of investment banking revenue by instrument type for the three and six months ended June 30, 2021 and 2020 is as follows:
  Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Investment banking revenue:
Underwriting fees$84 $131 $209 $162 
Advisory fees9 9 13 24 
Private placements and other10 2 23 2 
Total investment banking revenue$103 $142 $245 $188 
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. Commissions are presented in the "Disaggregation of revenue from contracts with customers"table below.
45

Other
Other noninterest income primarily includes income from fund management fees, gains from conversion of convertible debt options 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.
Gains from conversion of convertible debt options represent unrealized valuation gains on loan conversion derivative assets, and realized gains from the conversion of debt instruments, convertible into a third party’s common stock upon a triggering event such as an IPO. Gains from conversion of convertible debt options are recognized outside of the scope of ASC 606 as it explicitly excludes noninterest income earned from our derivative-related activities.
Other service revenue primarily consists of dividend income on FHLB/FRB stock, correspondent bank rebate income, incentive fees, or performance 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, quarterly, semi-annual 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 ninesix months ended SeptemberJune 30, 20172021 and 20162020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Other noninterest income by instrument type:
Fund management fees$21 $8 $36 $16 
Net gains on revaluation of foreign currency instruments, net of foreign exchange forward contracts (1)6 0 5 0 
Other service revenue15 8 31 11 
Total other noninterest income$42 $16 $72 $27 
  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
(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.
46

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 six months ended June 30, 2021 and 2020:
Three months ended June 30, 2021Global
Commercial
Bank (2)		SVB Private  
Bank		SVB Capital (2)  SVB
Leerink (2)		Other ItemsTotal      
(Dollars in millions)
Revenue from contracts with customers:
Client investment fees$14 $1 $0 $0 $0 $15 
Spot contract commissions60 0 0 0 0 60 
Card interchange fees, gross48 0 0 0 1 49 
Merchant service fees4 0 0 0 0 4 
Deposit service charges27 0 0 0 1 28 
Investment banking revenue0 0 0 103 0 103 
Commissions0 0 0 17 0 17 
Fund management fees0 0 20 1 0 21 
Performance fees0 0 8 0 0 8 
Correspondent bank rebates1 0 0 0 0 1 
Total revenue from contracts with customers$154 $1 $28 $121 $2 $306 
Revenues outside the scope of ASC 606 (1)20 0 147 28 260 455 
Total noninterest income$174 $1 $175 $149 $262 $761 
(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.
(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 June 30, 2020Global
Commercial
Bank (2)		SVB Private  
Bank		SVB Capital (2)SVB
Leerink (2)		Other ItemsTotal
(Dollars in millions)
Revenue from contracts with customers:
Client investment fees$31 $1 $0 $0 $0 $32 
Spot contract commissions33 0 0 0 0 33 
Card interchange fees, gross26 0 0 0 0 26 
Merchant service fees5 0 0 0 0 5 
Deposit service charges21 0 0 0 0 21 
Investment banking revenue0 0 0 142 0 142 
Commissions0 0 0 17 0 17 
Fund management fees0 0 7 1 0 8 
Correspondent bank rebates1 0 0 0 0 1 
Total revenue from contracts with customers$117 $1 $7 $160 $0 $285 
Revenues outside the scope of ASC 606 (1)16 0 14 4 50 84 
Total noninterest income$133 $1 $21 $164 $50 $369 
(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.
(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."



47


Six months ended June 30, 2021Global
Commercial
Bank (2)		SVB Private  
Bank		SVB Capital (2)SVB
Leerink (2)		Other ItemsTotal
(Dollars in millions)
Revenue from contracts with customers:
Client investment fees$33 $2 $0 $0 $0 $35 
Spot contract commissions115 0 0 0 0 115 
Card interchange fees, gross89 0 0 0 1 90 
Merchant service fees8 0 0 0 0 8 
Deposit service charges52 0 0 0 1 53 
Investment banking revenue0 0 0 245 0 245 
Commissions0 0 0 41 0 41 
Fund management fees0 0 33 3 0 36 
Performance fees0 0 8 0 0 8 
Correspondent bank rebates2 0 0 0 0 2 
Total revenue from contracts with customers$299 $2 $41 $289 $2 $633 
Revenues outside the scope of ASC 606 (1)34 0 203 30 605 872 
Total noninterest income$333 $2 $244 $319 $607 $1,505 
(3)Includes dividends on FHLB/FRB stock, correspondent bank rebate income, incentive fees related to carried interest and other fee income.
(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."

Six months ended June 30, 2020Global
Commercial
Bank (2)		SVB Private  
Bank		SVB Capital (2)SVB
Leerink (2)		Other ItemsTotal
(Dollars in millions)
Revenue from contracts with customers:
Client investment fees$74 $1 $0 $0 $0 $75 
Spot contract commissions74 0 0 0 0 74 
Card interchange fees, gross62 0 0 0 1 63 
Merchant service fees10 0 0 0 0 10 
Deposit service charges45 0 0 0 0 45 
Investment banking revenue0 0 0 188 0 188 
Commissions0 0 0 33 0 33 
Fund management fees0 0 14 2 0 16 
Correspondent bank rebates2 0 0 0 0 2 
Total revenue from contracts with customers$267 $1 $14 $223 $1 $506 
Revenues outside the scope of ASC 606 (1)33 0 12 3 116 164 
Total noninterest income$300 $1 $26 $226 $117 $670 
(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."

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 six months ended June 30, 2021 and 2020, changes in our contract assets, contract liabilities and receivables were not material. Additionally, revenues recognized during the three and six months ended June 30, 2021 and 2020 that were included in the corresponding contract liability balance at the beginning of the periods were not material.
48

11.    Other Noninterest Expense
A summary of other noninterest expense for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Lending and other client related processing costs$8 $7 $15 $16 
Correspondent bank fees5 4 9 8 
Investment banking activities3 8 9 11 
Trade order execution costs3 2 6 5 
Data processing services5 3 10 7 
Telephone2 2 4 4 
Dues and publications1 1 3 2 
Postage and supplies1 1 1 1 
Other17 11 33 26 
Total other noninterest expense$45 $39 $90 $80 
12.    Segment Reporting
  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.Segment Reporting
We have three4 reportable segments for management reporting purposes: Global Commercial Bank, SVB Private Bank, SVB Capital and SVB Capital.Leerink. The results of our reportable and operating segments are based on our internal management reporting process.
Our Global Commercial Bank and SVB Private Bank segments'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”),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 provisionprovisions for

unfunded credit commitments or HTM securities (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 three operating4 reportable segments for which we report our financial information:
•Global Commercial Bank is comprised of results from the following:following operating segments:
◦Our Commercial Bank products and services are provided by the Bank and its subsidiaries to commercial clients in key innovation markets. The Bank provides solutions to the financial needs of commercial clients through credit, treasury management, foreign exchange, trade finance, and other services. 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 Global Fund Banking Division provides banking products and services primarily to our private equity and venture capital clients.
◦SVBWine provides banking products and services to our premium wine industry clients, including vineyard development loans. 
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◦
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 serves clients within the United States, 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 Wine 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 and private stock purchase loans, capital call lines of credit and other secured and unsecured lending products, as well as cash and wealth management services. 
In addition, we provide real estate secured loans to eligible employees through our EHOP.
•SVB Capital is the funds management business of SVBFG,SVB Financial Group, which focuses primarily on venture capital investments. SVB Capital manages funds (primarily venture capital funds) on behalf of third partythird-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.funds, investments in certain debt funds in which we are a strategic investor and WestRiver Group's debt fund business. 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.

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The following table presents a summary of financial results of our operatingreportable segments are presented along with a reconciliation to our consolidated interim results.

Our reportable segment information for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 is as follows:
(Dollars in millions)Global
Commercial
Bank (1)		SVB Private  
Bank		SVB Capital (1)  SVB
Leerink (1)		Other Items (2)Total      
Three months ended June 30, 2021
Net interest income$715 $29 $0 $0 $(16)$728 
Provision for credit losses(11)(5)0 0 (19)(35)
Noninterest income174 1 175 149 262 761 
Noninterest expense (3)(307)(15)(18)(98)(215)(653)
Income before income tax expense (4)$571 $10 $157 $51 $12 $801 
Total average loans, amortized cost$42,727 $5,154 $0 $0 $1,931 $49,812 
Total average assets (5) (6)131,885 5,199 613 729 12,291 150,717 
Total average deposits128,918 3,977 0 0 865 133,760 
Three months ended June 30, 2020
Net interest income$485 $19 $0 $0 $9 $513 
Provision for credit losses(44)(4)0 0 (18)(66)
Noninterest income133 1 21 164 50 369 
Noninterest expense (3)(241)(10)(8)(109)(112)(480)
Income (loss) before income tax expense (4)$333 $6 $13 $55 $(71)$336 
Total average loans, amortized cost$30,472 $4,036 $0 $0 $2,004 $36,512 
Total average assets (5) (6)67,936 4,072 430 455 5,540 78,433 
Total average deposits65,091 2,120 0 0 706 67,917 
Six months ended June 30, 2021
Net interest income$1,334 $56 $0 $0 $(2)$1,388 
(Provision for) reduction of credit losses(56)4 0 0 (2)(54)
Noninterest income333 2 244 319 607 1,505 
Noninterest expense (3)(585)(28)(34)(235)(407)(1,289)
Income before income tax expense (4)$1,026 $34 $210 $84 $196 $1,550 
Total average loans, amortized cost$41,016 $5,066 $0 $0 $1,974 $48,056 
Total average assets (5) (6)120,470 5,114 595 748 10,910 137,837 
Total average deposits117,655 3,636 0 0 957 122,248 
Six months ended June 30, 2020
Net interest income$949 $34 $0 $0 $54 $1,037 
Provision for credit losses(238)(59)0 0 (13)(310)
Noninterest income300 1 26 226 117 670 
Noninterest expense (3)(466)(20)(17)(171)(205)(879)
Income (loss) before income tax expense (4)$545 $(44)$9 $55 $(47)518 
Total average loans, amortized cost$29,805 $3,946 $0 $0 $1,335 $35,086 
Total average assets (5) (6)64,871 3,982 439 469 5,659 75,420 
Total average deposits62,153 2,021 0 0 689 64,863 
(Dollars in thousands) 
Global
Commercial
Bank (1)
 
SVB Private  
Bank
 SVB Capital (1)   Other Items (2)       Total      
Three months ended September 30, 2017          
Net interest income $337,860
 $14,600
 $15
 $21,499
 $373,974
Provision for credit losses (20,874) (1,535) —
 (1,113) (23,522)
Noninterest income 97,227
 460
 13,913
 47,178
 158,778
Noninterest expense (3) (176,964) (4,706) (4,873) (71,218) (257,761)
Income (loss) before income tax expense (4) $237,249
 $8,819
 $9,055
 $(3,654) $251,469
Total average loans, net of unearned income $18,807,616
 $2,499,507
 $—
 $277,769
 $21,584,892
Total average assets (5) 47,817,114
 2,538,400
 323,417
 (883,565) 49,795,366
Total average deposits 42,376,024
 1,231,390
 —
 435,428
 44,042,842
Three months ended September 30, 2016          
Net interest income $262,484
 $13,298
 $1
 $13,378
 $289,161
Provision for credit losses (16,974) (1,976) —
 (1,054) (20,004)
Noninterest income 79,226
 664
 30,619
 33,631
 144,140
Noninterest expense (3) (159,479) (3,122) (3,924) (54,248) (220,773)
Income (loss) before income tax expense (4) $165,257
 $8,864
 $26,696
 $(8,293) $192,524
Total average loans, net of unearned income $16,357,099
 $2,074,982
 $—
 $215,113
 $18,647,194
Total average assets (5) 40,828,549
 2,096,237
 325,321
 201,222
 43,451,329
Total average deposits 36,484,125
 1,115,446
 —
 310,183
 37,909,754
Nine months ended September 30, 2017          
Net interest income $924,789
 $42,952
 $41
 $58,881
 $1,026,663
Provision for credit losses (65,007) (2,266) —
 (2,789) (70,062)
Noninterest income 260,650
 1,715
 45,707
 96,893
 404,965
Noninterest expense (3) (525,043) (12,675) (14,537) (194,385) (746,640)
Income (loss) before income tax expense (4) $595,389
 $29,726
 $31,211
 $(41,400) $614,926
Total average loans, net of unearned income $18,125,020
 $2,371,027
 $—
 $230,420
 $20,726,467
Total average assets (5) 45,414,432
 2,403,777
 333,439
 (586,597) 47,565,051
Total average deposits 40,398,413
 1,289,990
 —
 373,232
 42,061,635
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 Leerink'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."
(1)Global Commercial Bank’s and SVB Capital’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”.
(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 on the sale of fixed income securities. 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 $5.9 million and $6.4 million for the three months endedSeptember 30, 2017 and 2016, respectively, and $19.1 million and $18.3 million for the nine months endedSeptember 30, 2017 and 2016, respectively.
(2)The “Other Items” column reflects the adjustments necessary to reconcile the results of the reportable 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 or losses on equity warrant assets, gains or losses on the sale of AFS securities and gains or losses 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.
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(3)The Global Commercial Bank segment includes direct depreciation and amortization of $8 million and $6 million for the three months ended June 30, 2021 and 2020, respectively, and $14 millionand $11 million for the six months ended June 30, 2021 and 2020, respectively.
(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 $138 million for the three and six months ended June 30, 2021 and 2020.
13.    Off-Balance Sheet Arrangements, Guarantees and Other Commitments

(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.
12.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 SeptemberJune 30, 20172021 and December 31, 2016:2020:
(Dollars in millions)June 30, 2021December 31, 2020
Loan commitments available for funding: (1)$33,174 $28,975 
Commercial and standby letters of credit (2)3,211 3,007 
Total unfunded credit commitments$36,385 $31,982 
Allowance for unfunded credit commitments (3)120 121 
(Dollars in thousands) September 30, 2017 December 31, 2016
Loan commitments available for funding: (1)    
Fixed interest rate commitments $1,462,728
 $1,475,179
Variable interest rate commitments 13,037,817
 13,572,161
Total loan commitments available for funding 14,500,545
 15,047,340
Commercial and standby letters of credit (2) 1,841,385
 1,695,856
Total unfunded credit commitments $16,341,930
 $16,743,196
Commitments unavailable for funding (3) $2,209,680
 $1,719,524
Allowance for unfunded credit commitments (4) 48,172
 45,265
(1)Represents commitments which are available for funding, due to clients meeting all collateral, compliance and financial covenants required under loan commitment agreements.
(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.
(2)See below for additional information on our commercial and standby letters of credit.
(3)Our allowance for credit losses 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 SeptemberJune 30, 2017.2021. 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 millions)Expires in One
Year or Less		Expires After
One Year		Total Amount
Outstanding		Maximum Amount
of Future Payments
Financial standby letters of credit$2,916 $101 $3,017 $3,017 
Performance standby letters of credit121 5 126 126 
Commercial letters of credit23 45 68 68 
Total$3,060 $151 $3,211 $3,211 
(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$18 million at both SeptemberJune 30, 20172021 and $17 million at December 31, 2016.2020. At SeptemberJune 30, 2017,2021, collateral in the form of cash of $926 million$1.9 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, weWe 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-year10-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 SeptemberJune 30, 2017:2021:
(Dollars in millions)SVBFG Capital Commitments    SVBFG Unfunded    
Commitments		SVBFG Ownership  
of each Fund
CP II, LP (1)$1 $0 5.1 %
Capital Preferred Return Fund, LP13 0 20.0 
Growth Partners, LP25 1 33.0 
Strategic Investors Fund, LP15 1 12.6 
Strategic Investors Fund II, LP15 1 8.6 
Strategic Investors Fund III, LP15 1 5.9 
Strategic Investors Fund IV, LP12 2 5.0 
Strategic Investors Fund V funds1 0 Various
Other venture capital and private equity fund investments (equity method accounting)11 3 Various
Debt funds (equity method accounting)59 0 Various
Other fund investments (2)267 16 Various
Total$434 $25 
(Dollars in thousands) SVBFG Capital Commitments     
SVBFG Unfunded    
Commitments
 
SVBFG Ownership  
of each Fund (3)
CP I, LP $6,000
 $270
 10.7%
CP II, LP (1) 1,200
 162
 5.1
Shanghai Yangpu Venture Capital Fund (LP) 872
 —
 6.8
Strategic Investors Fund, LP 15,300
 688
 12.6
Strategic Investors Fund II, LP 15,000
 1,050
 8.6
Strategic Investors Fund III, LP 15,000
 1,275
 5.9
Strategic Investors Fund IV, LP 12,239
 2,325
 5.0
Strategic Investors Fund V funds 515
 131
 Various
Capital Preferred Return Fund, LP 12,688
 —
 20.0
Growth Partners, LP 24,670
 1,340
 33.0
Debt funds (equity method accounting) 58,493
 —
 Various
Other fund investments (2) 302,867
 11,360
 Various
Total $464,844
 $18,601
  
(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 243 funds (primarily venture capital funds) where our ownership interest is generally less than five 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 Item 1 of Part I of our 2016 Form 10-K.

(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 163 funds (primarily venture capital funds) where our ownership interest is generally less than 5 percent of the voting interests of each such fund.

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 SeptemberJune 30, 2017:2021:
(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.(Dollars in millions)Income TaxesUnfunded Commitments    
Capital Preferred Return Fund, LP$2 
Growth Partners, LP1 
Total$3 
14.    Income Taxes
We are subject to income tax inand non-income based taxes by the U.S. federal jurisdiction andtax authorities as well as various state and foreign jurisdictions andtax authorities. We have identified ourthe U.S. federal tax return and California tax returnsstate jurisdictions as major tax filings. Our U.S. federal tax returns for 2014 and subsequent years remain open to full examination.examination for 2017 and subsequent tax years. Our California tax returns for 2013 and subsequent years remain open to full examination.examination for 2016 and subsequent tax years.
At SeptemberJune 30, 2017,2021, our unrecognized tax benefit was $6.3$22 million, the recognition of which would reduce our income tax expense by $3.8$18 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 ninesix months ended SeptemberJune 30, 2017.2021.
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14.Fair Value of Financial Instruments

15.    Fair Value of Financial Instruments
Fair Value Measurements
Our available-for-saleAFS 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-saleAFS 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, issuance date, 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:MBS: Agency-issued mortgage-backed securitiesMBS 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:CMO: Agency-issued collateralized mortgage obligationsCMO 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:CMBS: 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 bondsForeign exchange forward and notes: Bonds issued by municipal governments generally have stated coupon rates, final maturity datesoption contract assets and are subject to being called ahead of the final maturity date at the option of the issuer.liabilities: Fair value measurements

of these securitiesassets and liabilities are priced based on spreads to other municipal benchmark bonds with similar characteristics; or, relative to marketspot and forward foreign currency rates on U.S. Treasury bonds of similar maturity.and option volatility assumptions.
Interest rate derivative and interest rate swap assets and liabilities: Fair value measurements of interest rate derivatives and interest rate swaps are priced considering the coupon rate of the fixed leg of the contract and the
54

variable coupon rate 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:Other equity securities: Fair value measurements of these assets and liabilitiesequity securities of public companies are priced based on spot and forward foreign currency rates and option volatility assumptions.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.
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. The valuation techniques are consistent with the market approach, income approach and/or the cost approach used to measure fair value. 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-upcertain sales 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 Black-Scholes model are based on public market indices whose members operate in similar industries as companies in our private company portfolio. Option expiration dates are modified to account for estimates 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
55
Table 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.Contents


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 SeptemberJune 30, 2017:2021:
(Dollars in millions)Level 1Level 2Level 3Balance at June 30, 2021
Assets:
AFS securities:
U.S. Treasury securities$6,235 $0 $0 $6,235 
U.S. agency debentures0 81 0 81 
Foreign government debt securities15 0 0 15 
Residential MBS:
Agency-issued MBS0 11,562 0 11,562 
Agency-issued CMO—fixed rate
0 4,424 0 4,424 
Agency-issued CMBS0 1,559 0 1,559 
Total AFS securities6,250 17,626 0 23,876 
Non-marketable and other equity securities (fair value accounting):
Non-marketable securities:
Venture capital and private equity fund investments measured at net asset value— — — 295 
Other equity securities in public companies35 72 0 107 
Total non-marketable and other equity securities (fair value accounting)35 72 0 402 
Other assets:
Foreign exchange forward and option contracts0 177 0 177 
Equity warrant assets0 9 257 266 
Interest rate swaps0 16 0 16 
Client interest rate derivatives0 65 0 65 
Total assets$6,285 $17,965 $257 $24,802 
Liabilities:
Foreign exchange forward and option contracts$0 $157 $0 $157 
Interest rate swaps0 2 0 2 
Client interest rate derivatives0 59 0 59 
Total liabilities$0 $218 $0 $218 

56

(Dollars in thousands) Level 1 Level 2 Level 3 
Balance at
September 30, 2017
Assets:        
Available-for-sale securities:        
U.S. Treasury securities $7,498,340
 $—
 $—
 $7,498,340
U.S. agency debentures —
 1,676,169
 —
 1,676,169
Residential mortgage-backed securities:        
Agency-issued collateralized mortgage obligations—fixed rate
 —
 3,012,695
 —
 3,012,695
Agency-issued collateralized mortgage obligations—variable rate
 —
 395,880
 —
 395,880
Equity securities 802
 19,451
 —
 20,253
Total available-for-sale securities 7,499,142
 5,104,195
 —
 12,603,337
Non-marketable and other securities (fair value accounting):        
Non-marketable securities:        
Venture capital and private equity fund investments measured at net asset value —
 —
 —
 128,768
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
Other assets:        
Foreign exchange forward and option contracts —
 94,947
 —
 94,947
Equity warrant assets —
 2,710
 139,075
 141,785
Client interest rate derivatives —
 11,824
 —
 11,824
Total assets $7,499,534
 $5,213,676
 $140,972
 $12,982,950
Liabilities:        
Foreign exchange forward and option contracts $—
 $88,961
 $—
 $88,961
Client interest rate derivatives —
 11,955
 —
 11,955
Total liabilities $—
 $100,916
 $—
 $100,916
(1)
Included in Level 1 and Level 3 assets are $0.3 million and $1.7 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.


The following fair value hierarchy table presents information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2016:2020:
(Dollars in millions)Level 1Level 2Level 3Balance at December 31, 2020
Assets:
AFS securities:
U.S. Treasury securities$4,470 $0 $0 $4,470 
U.S. agency debentures0 237 0 237 
Foreign government debt securities24 0 0 24 
Residential MBS:
Agency-issued MBS0 13,503 0 13,503 
Agency-issued CMO—fixed rate0 8,107 0 8,107 
Agency-issued CMBS0 4,572 0 4,572 
Total AFS securities4,494 26,419 0 30,913 
Non-marketable and other equity securities (fair value accounting):
Non-marketable securities:
Venture capital and private equity fund investments measured at net asset value— — — 274 
Other equity securities in public companies43 238 0 281 
Total non-marketable and other equity securities (fair value accounting)43 238 0 555 
Other assets:
Foreign exchange forward and option contracts0 217 0 217 
Equity warrant assets0 11 192 203 
Client interest rate derivatives0 68 0 68 
Total assets$4,537 $26,953 $192 $31,956 
Liabilities:
Foreign exchange forward and option contracts$0 $210 $0 $210 
Client interest rate derivatives0 27 0 27 
Total liabilities$0 $237 $0 $237 
(Dollars in thousands) Level 1 Level 2 Level 3 Balance at December 31, 2016
Assets:        
Available-for-sale securities:        
U.S. Treasury securities $8,909,491
 $—
 $—
 $8,909,491
U.S. agency debentures —
 2,078,375
 —
 2,078,375
Residential mortgage-backed securities:        
Agency-issued collateralized mortgage obligations—fixed rate —
 1,152,665
 —
 1,152,665
Agency-issued collateralized mortgage obligations—variable rate —
 474,283
 —
 474,283
Equity securities 175
 5,422
 —
 5,597
Total available-for-sale securities 8,909,666
 3,710,745
 —
 12,620,411
Non-marketable and other securities (fair value accounting):        
Non-marketable securities:        
Venture capital and private equity fund investments measured at net asset value —
 —
 —
 141,649
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
Other assets:        
Interest rate swaps —
 810
 —
 810
Foreign exchange forward and option contracts —
 68,027
 —
 68,027
Equity warrant assets —
 2,310
 128,813
 131,123
Client interest rate derivatives —
 10,110
 —
 10,110
Total assets $8,910,419
 $3,792,002
 $130,853
 $12,974,923
Liabilities:        
Foreign exchange forward and option contracts $—
 $54,668
 $—
 $54,668
Client interest rate derivatives —
 9,770
 —
 9,770
Total liabilities $—
 $64,438
 $—
 $64,438
(1)
Included in Level 1 and Level 3 assets are $0.6 million and $1.8 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
(Dollars in millions)Beginning BalanceTotal Net Gains Included in Net Income (1)Sales/ExitsIssuances  Transfers out of Level 3 Ending Balance
Three months ended June 30, 2021
Equity warrant assets$233 $121 $(104)$7 $0 $257 
Three months ended June 30, 2020
Equity warrant assets150 24 (15)6 0 165 
Six months ended June 30, 2021
Equity warrant assets192 341 (285)13 (4)257 
Six months ended June 30, 2020
Equity warrant assets161 39 (46)11 0 165 
(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
Three months ended September 30, 2017              
Non-marketable and other securities (fair value accounting):              
Other venture capital investments (1) $1,897
 $—
 $—
 $—
 $—
 $—
 $1,897
Other assets:              
Equity warrant assets (2) 128,952
 24,354
 (17,412) 3,622
 —
 (441) 139,075
Total assets $130,849
 $24,354
 $(17,412) $3,622
 $—
 $(441) $140,972
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
Other assets:              
Equity warrant assets (2) 127,811
 21,092
 (10,682) 5,251
 —
 (252) 143,220
Total assets $129,851
 $21,096
 $(10,686) $5,251
 $—
 $(252) $145,260
Nine months ended September 30, 2017              
Non-marketable and other securities (fair value accounting):              
Other venture capital investments (1) $2,040
 $(143) $—
 $—
 $—
 $—
 $1,897
Other assets:              
Equity warrant assets (2) 128,813
 41,549
 (40,998) 11,071
 —
 (1,360) 139,075
Total assets $130,853
 $41,406
 $(40,998) $11,071
 $—
 $(1,360) $140,972
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
Other assets:              
Equity warrant assets (2) 135,168
 33,115
 (34,276) 9,842
 —
 (629) 143,220
Total assets $137,208
 $33,094
 $(34,280) $9,842
 $25
 $(629) $145,260
 
(1)Realized and unrealized gains (losses) are recorded in the line item “Gains on investment securities, net”, a component of noninterest income.
(2)Realized and unrealized gains (losses) are recorded in the line item “Gains on equity warrant assets, net”, a component of noninterest income.

(1)Realized and unrealized gains (losses) are recorded in the line item “Gains on equity warrant assets, net," a component of noninterest income.




57


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 SeptemberJune 30, 20172021 and 2016:2020:
Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
Other assets:
Equity warrant assets (1)$31 $11 $92 $7 
Total unrealized gains, net$31 $11 $92 $7 
  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 and losses are recorded in the line item “Gains on equity warrant assets, net," a component of noninterest income.
(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 SeptemberJune 30, 20172021 and December 31, 2016.2020. 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 millions)Fair valueValuation TechniqueSignificant Unobservable InputsInput RangeWeighted 
Average
June 30, 2021:
Equity warrant assets (public portfolio)12 Black-Scholes option pricing modelVolatility48.2% - 58.5%49.0 %
Risk-Free interest rate1.2- 1.51.2 
Sales restrictions discount (1)20.020.0 
Equity warrant assets (private portfolio)245 Black-Scholes option pricing modelVolatility25.4 - 58.546.3 
Risk-Free interest rate0.02 - 1.050.4 
Marketability discount (2)22.022.0 
Remaining life assumption (3)40.040.0 
December 31, 2020:
Equity warrant assets (public portfolio)1 Black-Scholes option pricing modelVolatility46.0% - 56.8%49.1 %
Risk-Free interest rate0.3- 0.90.6 
Sales restrictions discount (1)10.0 - 20.010.2 
Equity warrant assets (private portfolio)191 Black-Scholes option pricing modelVolatility24.4 - 56.843.2 
Risk-Free interest rate0.01 - 0.520.1 
Marketability discount (2)20.620.6 
Remaining life assumption (3)40.040.0 
(Dollars in thousands) 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)
Equity warrant assets (public portfolio) 21,660
 Black-Scholes option pricing model Volatility 37.5%
    Risk-Free interest rate 1.8
    Sales restrictions discount (2) 19.9
Equity warrant assets (private portfolio) 117,415
 Black-Scholes option pricing model Volatility 36.7
    Risk-Free interest rate 1.5
    Marketability discount (3) 16.6
    Remaining life assumption (4) 45.0
December 31, 2016:        
Other venture capital investments (fair value accounting) $2,040
 Private company equity pricing (1) (1)
Equity warrant assets (public portfolio) 764
 Black-Scholes option pricing model Volatility 46.6%
    Risk-Free interest rate 2.1
    Sales restrictions discount (2) 17.7
Equity warrant assets (private portfolio) 128,049
 Black-Scholes option pricing model Volatility 36.9
    Risk-Free interest rate 1.3
    Marketability discount (3) 17.1
    Remaining life assumption (4) 45.0
(1)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.
(1)In determining the fair value of our other venture capital investment portfolio, 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.
(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.
(2)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.
(3)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 terminations and exercises. At June 30, 2021, the weighted average contractual remaining term was 6.7 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.

(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 cancellations and exercises. At September 30, 2017, the weighted average contractual remaining term was 5.9 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 ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, 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 ninesix months ended SeptemberJune 30, 20172021 and 20162020 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
58

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 SeptemberJune 30, 20172021 and December 31, 2016:2020:

  Estimated Fair Value
(Dollars in millions)Carrying AmountTotalLevel 1Level 2Level 3
June 30, 2021:
Financial assets:
Cash and cash equivalents$23,959 $23,959 $23,959 $0 $0 
HTM securities59,992 60,107 0 60,107 0 
Non-marketable securities not measured at net asset value262 262 0 0 262 
Non-marketable securities measured at net asset value583 583 0 0 0 
Net commercial loans45,108 46,353 0 0 46,353 
Net consumer loans5,250 5,395 0 0 5,395 
FHLB and Federal Reserve Bank stock83 83 0 0 83 
Financial liabilities:
Short-term borrowings34 34 0 34 0 
Non-maturity deposits (1)145,193 145,193 145,193 0 0 
Time deposits645 645 0 645 0 
3.50% Senior Notes349 379 0 379 0 
3.125% Senior Notes495 534 0 534 0 
1.80% Senior Notes494 479 0 479 0 
2.10% Senior Notes496 507 0 507 0 
Off-balance sheet financial assets:
Commitments to extend credit0 41 0 0 41 
December 31, 2020:
Financial assets:
Cash and cash equivalents$17,675 $17,675 $17,675 $0 $0 
HTM securities16,592 17,217 0 17,217 0 
Non-marketable securities not measured at net asset value241 241 0 0 241 
Non-marketable securities measured at net asset value390 390 0 0 0 
Net commercial loans39,886 40,412 0 0 40,412 
Net consumer loans4,847 4,911 0 0 4,911 
FHLB and Federal Reserve Bank stock61 61 0 0 61 
Financial liabilities:
Short-term borrowings21 21 0 21 0 
Non-maturity deposits (1)101,294 101,294 101,294 0 0 
Time deposits688 502 0 502 0 
3.50% Senior Notes349 383 0 383 0 
3.125% Senior Notes495 564 0 564 0 
Off-balance sheet financial assets:
Commitments to extend credit0 37 0 0 37 
    Estimated Fair Value
(Dollars in thousands) Carrying Amount Total Level 1 Level 2 Level 3
September 30, 2017:          
Financial assets:          
Cash and cash equivalents $3,555,571
 $3,555,571
 $3,555,571
 $—
 $—
Held-to-maturity securities 11,055,006
 11,023,415
 —
 11,023,415
 —
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
 —
 —
 —
Net commercial loans 19,449,408
 19,878,367
 —
 —
 19,878,367
Net consumer loans 2,490,909
 2,457,138
 —
 —
 2,457,138
FHLB and Federal Reserve Bank stock 58,012
 58,012
 —
 —
 58,012
Accrued interest receivable 129,451
 129,451
 —
 129,451
 —
Financial liabilities:          
Other short-term borrowings 4,840
 4,840
 4,840
 —
 —
Non-maturity deposits (1) 44,766,988
 44,766,988
 44,766,988
 —
 —
Time deposits 45,045
 44,895
 —
 44,895
 —
3.50% Senior Notes 347,221
 350,864
 —
 350,864
 —
5.375% Senior Notes 348,035
 383,439
 —
 383,439
 —
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
December 31, 2016:          
Financial assets:          
Cash and cash equivalents $2,545,750
 $2,545,750
 $2,545,750
 $—
 $—
Held-to-maturity securities 8,426,998
 8,376,138
 —
 8,376,138
 —
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
 —
 —
 —
Net commercial loans 17,518,430
 17,811,356
 —
 —
 17,811,356
Net consumer loans 2,156,148
 2,199,501
 —
 —
 2,199,501
FHLB and Federal Reserve Bank stock 57,592
 57,592
 —
 —
 57,592
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
 —
 —
Non-maturity deposits (1) 38,923,750
 38,923,750
 38,923,750
 —
 —
Time deposits 56,118
 55,949
 —
 55,949
 —
3.50% Senior Notes 346,979
 337,600
 —
 337,600
 —
5.375% Senior Notes 347,586
 378,777
 —
 378,777
 —
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
(1)Includes noninterest-bearing demand deposits, interest-bearing checking accounts, money market accounts and interest-bearing sweep deposits.
(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.
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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,March 31st for our SeptemberJune 30thconsolidated 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 SeptemberJune 30, 2017:2021:
(Dollars in millions)Carrying AmountFair ValueUnfunded Commitments
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments (1)$295 $295 $19 
Non-marketable securities (equity method accounting):
Venture capital and private equity fund investments (2)544 544 8 
Debt funds (2)7 7 0 
Other investments (2)32 32 1 
Total$878 $878 $28 
(Dollars in thousands) 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
Non-marketable securities (equity method accounting):      
Venture capital and private equity fund investments (2) 87,218
 87,218
 4,943
Debt funds (2) 17,889
 17,889
 —
Other investments (2) 17,820
 17,820
 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
(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 (consolidated VIEs) and investments in venture capital and private equity fund investments (unconsolidated VIEs). Collectively, these investments in venture capital and private equity funds are 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 $79 million and $2 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.
(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. These investments represent investments in venture capital and private equity funds that invest 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 $95.7 million and $4.9 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 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.
16.    Legal Matters
(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.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
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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.Related Parties
17.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—“Employee19 — “Employee Compensation and Benefit Plans" under Part II, Item 8 of our 20162020 Form 10-K.

18. Subsequent Events
Acquisition of Boston Private
On July 1, 2021 we completed the acquisition of Boston Private for approximately $1.2 billion in consideration. Under the terms of the merger agreement each share of Boston Private common stock was converted into the right to receive 0.228 shares of SIVB common stock and $2.10 in cash. For the transaction, we issued approximately 1.9 million shares of SIVB common stock and registered an additional 99,000 shares of SIVB common stock issuable upon the exercise, vesting or settlement of converted legacy Boston Private equity awards.
The acquisition will be accounted for as a business combination. Accordingly, we will begin consolidating Boston Private's financial results in our consolidated financial statements in the third quarter of 2021. We are in the process of performing our valuation of the acquired assets and liabilities. Given the recent date of the acquisition, we have not finalized our determination of the fair value of the assets and liabilities as we continue to gather information to complete our valuations.
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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, net interest margin, noninterest income, earnings per share,EPS, noninterest expenses (including professional services, compliance, compensation and other costs), cash flows, balance sheet positions, capital expenditures, deposit growth, liquidity and capitalization, effective tax rate or other financial items;
•Descriptions of our strategic initiatives, plans or objectives for future operations, including pending sales or acquisitions;acquisitions, such as the integration of Boston Private;
•Forecasts of private equity/equity and venture capital funding, investment level and investment levels;exit activity;
•Forecasts of future interest rates, economic performance, and income from investments;
•Forecasts of expected levels of provisions for credit losses, net loan losses,charge-offs, nonperforming loans, loan growth, loan mix, loan yields and client funds;
•The outlook on our clients' performance;
•The potential effects of the COVID-19 pandemic; 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,"“could,” “would,” “predict,” “potential,” “continue,” “anticipate,” “believe,” “estimate,” “assume,” “seek,” “expect,” “plan,” “intend,” and 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 theseour forward-looking statements are reasonable, we have based these expectations on our current beliefs as well as our assumptions, and such expectations may not prove to be incorrect.correct. 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(including the interest rate environment,general condition of the capital and equity markets, and IPO, secondary offering, SPAC fundraising, M&A and financing activity levels) and the associated impact on us;us (including effects on client demand for our commercial and investment banking and other financial services, as well as on the valuations of our investments);
•The credit profileCOVID-19 pandemic and its effects on the economic and business environments in which we operate, and its effects on our operations, including, as a result of, prolonged work-from-home arrangements;
•The impact of changes from the Biden-Harris administration and the U.S. Congress on the economic environment, capital markets and regulatory landscape, including monetary, tax and other trade policies;
•Changes in the volume and credit quality of our loan portfolio andloans as well as volatility of our levels of nonperforming assets and charge-offs;
•The impact of changes in interest rates or market levels or factors affecting or affected by them, especially on our loan and investment portfolios;
•The adequacy of our allowance for loan lossesACL and the need to make provisions for loancredit losses for any period;
The borrowing needs of our clients;
•The sufficiency of our capital and liquidity positions;provisions;
The•Changes in the levels of our loans, deposits and client investment fund balances;

•Changes in the performance or equity valuations of funds or companies in which we have invested or hold derivative instruments or equity warrant assets;
The performance of•Variations from our portfolio investments; the general conditionexpectations as to factors impacting our cost structure;
•Changes in our assessment 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 equitycreditworthiness or other investments;
The levels of public offerings, mergers and acquisitions and venture capital investment activityliquidity of our clients, that may impactunanticipated effects of credit concentration risks which create or exacerbate deterioration of such creditworthiness or liquidity;
•Variations from our expectations as to factors impacting the borrowing needstiming and level of our clients;employee share-based transactions;
•The occurrence of fraudulent activity, including breaches of our information security or cyber security-related incidents;
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•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•The expansion of our business internationally, and the impact of international market and economic events on us;
•The effectiveness of our risk management framework and quantitative models;
•The impact of governmental policy, legal requirements and regulations, including, among other regulatory requirements, regulations promulgated by the Dodd-Frank Act,Board of Governors of the Federal Reserve System (the "Federal Reserve"), including enhanced prudential standards for bank holding companies with between $100 billion and other regulatory requirements;$250 billion in average total consolidated assets (“Category IV firms”) and bank holding companies that (i) exceed $250 billion in average total consolidated assets or (ii) exceed $100 billion in average total consolidated assets and exceed $75 billion in one of three risk-based indicators (“Category III firms”);
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);
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 Boston Private;
•Greater than expected costs or other difficulties related to the integration of our business and that of Boston Private;
•Variations from our expectations as to the amount and timing of business opportunities, growth prospects and cost savings associated with the integration of Boston Private;
•The inability to retain existing Boston Private clients and employees following the Boston Private acquisition;
•Unfavorable resolution of legal proceedings or claims, as well as legal or regulatory proceedings or governmental actions;
•Variations from our expectations as to factors impacting our estimate of our full-year effective tax rate;
•Changes in applicable accounting standards and tax laws;
•Regulatory or legal changes and their impact on us; and
•Other factors as discussed in “Risk Factors” under Part I, Item 1A in our 20162020 Form 10-K.
10-K and under Part II, Item 1A of this report.


The operating and economic environment during the second quarter continued to be impacted by the COVID-19 pandemic and related government orders. Statements about the effects of the COVID-19 pandemic on our business, operations, financial performance and prospects may constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, potential variations of the virus, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us.
Accordingly, you are cautioned not to place undue reliance on forward-looking statements. We urge investors to consider all of these factors, among others, 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 20162020 Form 10-K.
Reclassifications
Certain prior period amounts, primarily related to the changes to our income statement presentation of gains on derivative instruments, net and provision for unfunded credit commitments have been reclassified to conform to current period presentations.
Management’s Overview of ThirdSecond Quarter 20172021 Performance
Overall,The second quarter was yet another quarter of outstanding performance as strong markets and effective execution continued to drive our extraordinary growth. We delivered excellent performance across our business as we had an outstanding third quarterhit a new milestone of $50 billion in 2017, which was marked by higherperiod-end loan balances, warrant and investment gains of $314 million, net of noncontrolling interests, record foreign exchange fees, robust SVB Leerink revenues of $120 million and average client funds of $308 billion. Continuing the trend of recent quarters, our balance sheet growth more than offset pressure from the low rate environment, driving net interest income to a 42 percent increase from the year ago quarter. Additionally, credit quality remains stable as economic conditions continued to improve.
We continued to invest in our strategic priorities to drive and core fee income, increased warrant gains,support our long-term growth. During the quarter, we expanded SVB Leerink, which has been actively hiring leaders and senior bankers to help enhance capabilities and capacity. On July 1, we closed our acquisition of Boston Private, which will significantly accelerate and scale the growth of our private bank and wealth management strategy. Also on the investment front, we recently announced a joint venture with Nasdaq and a consortium of leading investment banks to create Nasdaq Private Market, an institutional-grade, secondary trading venue
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for private company stock. Lastly, our focus on continuous infrastructure and regulatory investments supports our tremendous growth as we prepare to become a Category III banking organization. Overall, these investments have allowed us to deepen and expand our platform as we continue to enhance the client experience, improve employee enablement, drive revenue growth, enhance risk management and ensure that our growth momentum is not interrupted.
Our exceptional balance sheet growth continued to outpace our forecasts. To support this momentum, we raised $1.5 billion in preferred equity and senior debt, issued $150 million in common equity from the full exercise of the underwriters' over-allotment option related to our first quarter common equity offering and provided a $1.3 billion downstream capital infusion to the bank. These capital measures combined with our strong total client fundsprofitability enable us to sustain our growth healthy loan growthmomentum and stable credit quality. Additionally,support our capital objectives.
Continuing COVID-19 Pandemic Environment
The global COVID-19 pandemic has resulted in unprecedented challenges and volatility in economic, market and business conditions. It has caused significant economic and financial disruptions that have adversely affected or otherwise impacted our business, financial condition and results of operations.
In recent months there has been some improvement in the economic environment and resilience in the markets in which we saw higher noninterest expense, primarily from increased compensationoperate. With the seemingly wider availability and benefits expensesdistribution of vaccinations and the easing of some restrictions in the U.S. and other parts of the world, we have seen steps towards broader containment. However, there still remains much uncertainty around containment of the pandemic, particularly in light of the recent spread of variants of the virus that have caused the number of cases to increase in the United States and other international locations where we operate. We cannot predict at this time the scope and duration of the pandemic, which will depend on a variety of factors, including but not limited to, the extent and spread of variants of the virus; the availability, adoption and efficacy of vaccines, as well as professional services expenses reflectivegovernment and other actions to mitigate the spread of increased expensesCOVID-19, such as stay at home orders, restrictions on business activities, health and safety guidelines, economic relief for individuals and businesses, and monetary policy measures. The economic, market and business conditions impacted by COVID-19 may be slow to supportrecover or may worsen if the pandemic continues for a prolonged period of time. Even if the pandemic subsides, there may be additional variants of the virus or a resurgence of the pandemic, as we have seen domestically and internationally. We continue to be subject to heightened business, operational (including fraud), market, credit and other risks related to the COVID-19 pandemic environment, which may have an adverse effect on our increasing regulatory, riskbusiness, financial condition and compliance initiativesresults of operations. (See “Risk Factors” under Part II, Item 1A of this report)
Reference Rate Reform
Following the 2017 announcement by the U.K.’s Financial Conduct Authority that it would no longer compel participating banks to support our domesticsubmit rates for LIBOR after 2021, regulators, trade associations and global expansionfinancial industry working groups have identified recommended replacement rates for LIBOR, as well as other Interbank Offered Rates, and have published recommended conventions to allow new and existing products to incorporate fallbacks. The continuation of all British Pound Sterling, Euro, Swiss Franc and Japanese Yen LIBOR settings and one-week and two-month U.S. dollar LIBOR settings on the current basis are due to terminate at the end of December 2021, with the remaining U.S. dollar LIBOR settings (i.e., overnight, one month, three month, six month and 12 month) expected to terminate at the end of June 2023. Therefore, existing contracts referencing all other U.S. dollar LIBOR settings must be remediated no later than June 30, 2023. We hold instruments that may be impacted by the discontinuance of LIBOR, including loans, investments, made in projects, systems and technology to support our revenue growth and related initiatives and other operating costs. Our core business continued to perform wellderivative products that use LIBOR as a resultbenchmark rate. Our LIBOR exposure is primarily in settings other than 1-week or 2-month U.S. dollar LIBOR.
We have established a LIBOR Transition Program to identify and address all LIBOR transition issues, consisting of dedicated leadership and staff that engage with relevant business lines and support groups. As part of this program, we continue to identify, assess, and monitor risks associated with the discontinuation of LIBOR. As such, we have implemented a process to assess the population of loans and contracts that will be impacted by this reference rate reform. As of March 31, 2021, we ceased issuing new loans denominated in British Pound Sterling, Euro, or Swiss Franc that reference LIBOR. We plan to no longer offer U.S. dollar LIBOR-based loans effective December 31, 2021.
We intend to offer SOFR as a replacement index for U.S. dollar LIBOR. SOFR is the ARRC preferred alternative to U.S. dollar LIBOR. It represents a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities and is compliant with IOSCO standards. Furthermore, SOFR is suitable for use across a broad range of financial products, including derivatives and many cash products that historically referenced U.S. dollar LIBOR.
As of June 30, 2021, we had approximately $16.1 billion of loans that reference LIBOR, $118 million fixed-income investment securities that reference LIBOR and $2.8 billion of notional balance exposure for our ongoing focusderivative contracts that reference LIBOR.
We are currently evaluating the use and when we might apply the allowable practical expedients under ASU 2020-04, Reference rate Reform (Topic 848), which became effective on innovation companiesMarch 12, 2020, as it relates to our loans, investment securities and their investors and continued efforts to secure client relationships. We saw continued success in working with private equity/venture capital firms and technology clients as well as clients in our private banking division.derivative portfolios.
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A summary of our performance for the three months ended SeptemberJune 30, 20172021 (compared to the three months ended SeptemberJune 30, 2016,2020, where applicable) is as follows:

BALANCE SHEETEARNINGS
Assets.$49.8 $150.7 billion in average total assets (up 14.6%92.2%). $163.4 billion in period-end total assets (up 90.6%).
Loans. $49.8 billion in average total loan balances (up 36.4%). $50.8 billion in period-end total assets (up 17.3%).
Loans.$21.6 billion in average total loan balances net of unearned income (up 15.8%38.2%). $22.2 billion in period-end total loan balances, net of unearned income (up 16.1%).
Total Client Funds (on-balanceFunds. (on-balance sheet deposits and off-balance sheet client investment funds).$97.3 $308.1 billion in average total client fund balances (up 20.1%73.9%). $99.0$329.0 billion in period-end total client fund balances (up 21.5%72.8%).
AFS/HTM Fixed Income Investments.$23.172.3 billion in average fixed income investment securities (up 11.5%179.9%). $23.7$83.9 billion in period-end fixed income investment securities (up 15.6%167.9%).




EPS. Earnings per diluted share of $2.79$9.09 (up 31.6%105.7%).
Net Income.Income. Consolidated net income available to common stockholders of $148.6$502 million (up 33.8%119.2%).
- Net interest income of $374.0$728 million (up 29.3%41.9%).
- Net-Net interest margin of 3.10% (up 352.06% (down 74 bps).
- Noninterest-Noninterest income of $158.8$761 million (up 10.2%106.2%), with non-GAAP core fee income+ of $102.7$172 million (up 27.6%30.3%) and non-GAAP SVB Leerink revenue++ of $120 million (down 24.5%).
- Noninterest-Noninterest expense of $257.8$653 million (up 16.8%36.0%).


ROE.Return on Average Equity.Return on average equity (annualized) (“ROE”) performance of 14.59%21.7%.
Operating Efficiency Ratio.Ratio.Operating efficiency ratio of 48.38%43.85% with a non-GAAP core operating efficiency ratio of 56.38%+++.


CAPITALCREDIT QUALITY
Capital++++. Continued strongActive capital levels,management, with all capital ratios considered “well-capitalized” under banking regulations. SVBFGSVB Financial and SVBBank capital ratios, respectively, were:
- CET 1 risk-based capital ratio of 12.96%11.93% and 12.41%13.66%.
- Tier 1 risk-based capital ratio of 13.32%14.95% and 12.41%13.66%.
- Total risk-based capital ratio of 14.29%15.53% and 13.40%14.26%.
- Tier 1 leverage ratio of 8.34%7.77% and 7.59%6.96%.


Credit Quality.  Continued disciplined underwriting.Quality.Stable credit trends and improving economic environment.
- AllowanceACL for loan lossesloans of 1.12%0.78% as a percentage of period-end total gross loans.
- Provision for loan losses of 0.40%loans was 0.13% as a percentage of period-end total gross loans (annualized).
- Net loan charge-offs of 0.19%0.10% 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”)

++ Consists of investment banking revenue and commissions. This is a non-GAAP financial 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, merger-related charges resulting from the acquisition of Boston Private and other non-recurring expenses 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").
++++ In March 2020, the federal banking agencies provided transitional relief to banking organizations with respect to the impact of CECL on regulatory capital. Under the 2020 CECL Transition Rule, banking organizations may delay the estimated impact of CECL on regulatory capital for two years, followed by a three-year period to phase out the aggregate capital benefit provided during the initial two-year delay. We have elected to use this five-year transition option. For additional details, see "Capital Resources" within "Consolidated Financial Condition" under Part 1, Item 2 of this report.


65

A summary of our performance for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 is as follows:
Three months ended June 30,Six months ended June 30,
 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
% 
(Dollars in millions, except per share data, employees and ratios)(Dollars in millions, except per share data, employees and ratios)20212020% Change  20212020% Change  
Income Statement:Income Statement:
Diluted EPSDiluted EPS$9.09 $4.42 105.7 % $19.10 $6.97 174.0 % 
Net income available to common stockholders 148,620
 111,081
 33.8
   373,296
 283,219
 31.8
  Net income available to common stockholders502 229 119.2   1,034 361 186.4   
Net interest income 373,974
 289,161
 29.3
   1,026,663
 853,918
 20.2
  Net interest income728 513 41.9   1,388 1,037 33.8   
Net interest margin 3.10% 2.75% 35
bps  2.99% 2.72% 27
bps Net interest margin2.06 %2.80 %(74)bps2.16 %2.95 %(79)bps
Provision for credit losses $23,522
 $20,004
 17.6
% $70,062
 $90,225
 (22.3)%Provision for credit losses35 66 (47.0)%54 310 (82.6)%
Noninterest income 158,778
 144,140
 10.2
 404,965
 343,050
 18.0
 Noninterest income761 369 106.2 1,505 670 124.6 
Noninterest expense 257,761
 220,773
 16.8
 746,640
 624,611
 19.5
  Noninterest expense653 480 36.0 1,289 879 46.6   
Non-GAAP core fee income (1) 102,722
 80,526
 27.6
 272,567
 231,522
 17.7
 Non-GAAP core fee income (1)172 132 30.3 331 301 10.0 
Non-GAAP core fee income, plus SVB Leerink revenue (1)Non-GAAP core fee income, plus SVB Leerink revenue (1)292 291 0.3 617 522 18.2 
Non-GAAP noninterest income, net of noncontrolling interests (1) 153,164
 139,461
 9.8
   383,256
 339,423
 12.9
  Non-GAAP noninterest income, net of noncontrolling interests (1)648 355 82.5   1,367 658 107.8   
Non-GAAP noninterest expense, net of noncontrolling interests(2) 257,636
 220,656
 16.8
   746,123
 624,327
 19.5
  
Non-GAAP noninterest expense, net of noncontrolling interests (2)Non-GAAP noninterest expense, net of noncontrolling interests (2)653 480 36.0   1,289 879 46.6   
Balance Sheet: 
     
     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 AFS securitiesAverage AFS securities$24,358 $12,784 90.5 %$26,292 $13,175 99.6 %
Average HTM securitiesAverage HTM securities47,914 13,040 267.4 36,667 13,308 175.5 
Average loans, amortized costAverage loans, amortized cost49,812 36,512 36.4 48,056 35,086 37.0 
Average noninterest-bearing demand deposits 36,578,779
 30,522,314
 19.8
   34,653,264
 30,694,119
 12.9
  Average noninterest-bearing demand deposits91,530 46,088 98.6   82,432 43,712 88.6   
Average interest-bearing deposits 7,464,063
 7,387,440
 1.0
   7,408,371
 7,749,871
 (4.4)  Average interest-bearing deposits42,230 21,829 93.5   39,816 21,151 88.2   
Average total deposits 44,042,842
 37,909,754
 16.2
   42,061,635
 38,443,990
 9.4
  Average total deposits133,760 67,916 96.9   122,248 64,862 88.5   
Earnings Ratios: 
     
     Earnings Ratios:
Return on average assets (annualized) (3) 1.18% 1.02% 15.7
%  1.05% 0.87% 20.7
% Return on average assets (annualized) (3)1.34 %1.17 %14.5 % 1.51 %0.96 %57.3 % 
Return on average SVBFG stockholders’ equity (annualized) (4) 14.59
 12.32
 18.4
   12.85
 10.95
 17.4
  Return on average SVBFG stockholders’ equity (annualized) (4)21.69 13.36 62.4   24.14 10.84 122.7   
Asset Quality Ratios: 
     
     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)  
ACL for loans as a % of total period-end loansACL for loans as a % of total period-end loans0.78 %1.61 %(83)bps0.78 %1.61 %(83)bps
ACL for performing loans as a % of total performing loansACL for performing loans as a % of total performing loans0.71 1.46 (75)  0.71 1.46 (75)  
Gross loan charge-offs as a % of average total loans (annualized)Gross loan charge-offs as a % of average total loans (annualized)0.12 0.17 (5)  0.46 0.30 16   
Net loan charge-offs as a % of average total loans (annualized)Net loan charge-offs as a % of average total loans (annualized)0.10 0.12 (2)  0.43 0.23 20   
Capital Ratios: 
     
     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)  
SVBFG CET 1 risk-based capital ratioSVBFG CET 1 risk-based capital ratio11.93 %12.63 %(70)bps11.93 %12.63 %(70)bps
SVBFG tier 1 risk-based capital ratioSVBFG tier 1 risk-based capital ratio14.95 13.62 133 14.95 13.62 133 
SVBFG total risk-based capital ratioSVBFG total risk-based capital ratio15.53 14.77 76 15.53 14.77 76 
SVBFG tier 1 leverage ratioSVBFG tier 1 leverage ratio7.77 8.68 (91)  7.77 8.68 (91)  
SVBFG tangible common equity to tangible assets (5)SVBFG tangible common equity to tangible assets (5)5.76 7.94 (218)  5.76 7.94 (218)  
SVBFG tangible common equity to risk-weighted assets (5)SVBFG tangible common equity to risk-weighted assets (5)12.02 13.68 (166)  12.02 13.68 (166)  
Bank CET 1 risk-based capital ratio 12.41
 12.77
 (36) 12.41
 12.77
 (36) Bank CET 1 risk-based capital ratio13.66 11.08 258 13.66 11.08 258 
Bank tier 1 risk-based capital ratio 12.41
 12.77
 (36)   12.41
 12.77
 (36)  Bank tier 1 risk-based capital ratio13.66 11.08 258   13.66 11.08 258   
Bank total risk-based capital ratio 13.40
 13.83
 (43)   13.40
 13.83
 (43)  Bank total risk-based capital ratio14.26 12.28 198   14.26 12.28 198   
Bank tier 1 leverage ratio 7.59
 7.74
 (15)   7.59
 7.74
 (15)  Bank tier 1 leverage ratio6.96 6.91 5   6.96 6.91 5   
Bank tangible common equity to tangible assets (5) 7.47
 7.98
 (51)   7.47
 7.98
 (51)  Bank tangible common equity to tangible assets (5)6.47 6.91 (44)  6.47 6.91 (44)  
Bank tangible common equity to risk-weighted assets (5) 12.44
 13.14
 (70)   12.44
 13.14
 (70)  Bank tangible common equity to risk-weighted assets (5)13.76 12.17 159   13.76 12.17 159   
Other Ratios: 
     
     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
  
Operating efficiency ratio (6)Operating efficiency ratio (6)43.85 %54.39 %(19.4)% 44.56 %51.48 %(13.4)% 
Non-GAAP core operating efficiency ratio (2)Non-GAAP core operating efficiency ratio (2)56.38 55.70 1.2 57.40 51.59 11.3 
Total costs of deposits (annualized) (7)Total costs of deposits (annualized) (7)0.04 0.03 33.3 0.04 0.13 (69.2)
Book value per common share (8)Book value per common share (8)$176.10 $134.89 30.6   $176.10 $134.89 30.6   
Tangible book value per common share (9)Tangible book value per common share (9)172.44 131.32 31.3 172.44 131.32 31.3 
Other Statistics: 
     
     Other Statistics:
Average full-time equivalent employees 2,434
 2,255
 7.9
%  2,384
 2,199
 8.4
% Average full-time equivalent employees4,8083,85524.7 % 4,7053,76425.0 % 
Period-end full-time equivalent employees 2,433
 2,280
 6.7
   2,433
 2,280
 6.7
  Period-end full-time equivalent employees4,9323,98423.8   4,9323,98423.8   
(1)See “Results of Operations–Noninterest Income” for a description and reconciliation of non-GAAP core fee income and non-GAAP core fee income plus investment banking revenue and commissions.
(1)See “Results of Operations–Noninterest Income” for a description and reconciliation of non-GAAP core fee income and noninterest income.

(2)See “Results of Operations–Noninterest Expense” for a description and reconciliation of non-GAAP noninterest expense and non-GAAP core operating efficiency ratio.
(2)See “Results of Operations–Noninterest Expense” for a description and reconciliation of non-GAAP noninterest expense and non-GAAP 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)Book value per common share is calculated by dividing total SVBFG stockholders’ equity by total outstanding common shares at period-end.
(3)Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average assets.
(4)Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average SVBFG stockholders’ equity.
66

(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 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 common stockholders’ equity by total outstanding common shares at period-end.
(9)Tangible book value per common share is calculated by dividing tangible common equity by total outstanding common shares at period-end. Tangible common equity is a non-GAAP measure defined under the section “Capital Resources-Capital Ratios.”

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 discussionOur accounting policies are fundamental to understanding our financial condition and analysis of results of operations and financial condition is based upon our unaudited interim consolidated financial statements, whichoperations. We have been prepared in accordance with GAAP. The preparation of these financial statements in accordance with GAAPidentified one policy as being critical because it requires managementus to make estimatesparticularly difficult, subjective and/or complex judgments about matters that are inherently uncertain, and judgmentsbecause it is likely that affect thematerially different amounts would be reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. Management evaluatesunder different conditions or using different assumptions. We evaluate our estimates and assumptions on an ongoing basis. Management bases itsbasis and we base these 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 ninesix months ended SeptemberJune 30, 20172021 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 20162020 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 AFS and held-to-maturity securities),HTM 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 applicable federal statutory tax rate of 35 percent.rate.
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.

67

2021 Compared to 20202021 Compared to 2020
 2017 Compared to 2016 2017 Compared to 2016 Three months ended June 30, increase (decrease) due to change inSix months ended June 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
(Dollars in millions)(Dollars in millions)VolumeRateTotalVolumeRateTotal
Interest income:            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 securitiesFederal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities$1 $— $1 $4 $(17)$(13)
Fixed income investment portfolio (taxable) 15,325
 10,650
 25,975
 6,655
 26,992
 33,647
Fixed income investment portfolio (taxable)134 (25)109 279 (100)179 
Fixed income investment portfolio (non-taxable) 1,342
 (342) 1,000
 2,620
 (1,067) 1,553
Fixed income investment portfolio (non-taxable)10 3 13 29 (6)23 
Loans, net of unearned income 37,814
 16,404
 54,218
 98,851
 29,676
 128,527
Increase in interest income, net 56,159
 29,049
 85,208
 113,914
 60,690
 174,604
Loans, amortized costLoans, amortized cost126 (19)107 242 (87)155 
Increase (decrease) in interest income, netIncrease (decrease) in interest income, net271 (41)230 554 (210)344 
Interest expense:            Interest expense:
Interest bearing checking and savings accounts 25
 1
 26
 63
 (2) 61
Interest bearing checking and savings accounts— (1)(1)1 (1)— 
Money market deposits 65
 698
 763
 (219) 2,466
 2,247
Money market deposits5 1 6 9 (26)(17)
Money market deposits in foreign offices (1) 2
 1
 10
 (1) 9
Money market deposits in foreign offices— — — — — — 
Time deposits —
 5
 5
 (8) 6
 (2)Time deposits1 — 1 — — — 
Sweep deposits in foreign offices (23) (3) (26) (75) (6) (81)Sweep deposits in foreign offices— — — — (4)(4)
Total increase (decrease) in deposits expense 66
 703
 769
 (229) 2,463
 2,234
Total increase (decrease) in deposits expense6 — 6 10 (31)(21)
Short-term borrowings (1,558) 1,059
 (499) (1,851) 1,081
 (770)Short-term borrowings(1)— (1)— (3)(3)
2.10% Senior Notes2.10% Senior Notes2 — 2 2 — 2 
1.80% Senior Notes1.80% Senior Notes2 — 2 4 — 4 
3.125% Senior Notes3.125% Senior Notes3 — 3 6 — 6 
3.50% Senior Notes 5
 (2) 3
 4
 4
 8
3.50% Senior Notes— — — — — — 
5.375% Senior Notes 12
 (5) 7
 15
 9
 24
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)
(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
Total increase (decrease) in borrowings expenseTotal increase (decrease) in borrowings expense6 — 6 12 (3)9 
Increase (decrease) in interest expense, netIncrease (decrease) in interest expense, net12 — 12 22 (34)(12)
Increase (decrease) in net interest incomeIncrease (decrease) in net interest income$259 $(41)$218 $532 $(176)$356 
Net Interest Income (Fully Taxable Equivalent Basis)
Three months ended SeptemberJune 30, 20172021 and 20162020
Net interest income increased by $85.2$218 million to $374.6$735 million for the three months ended SeptemberJune 30, 2017,2021, compared to $289.4$517 million for the comparable 20162020 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. In addition, we saw an increase in interest earned on our fixed income investment securities portfolio reflective of higherand loans due to increases in average balances. The increase in net interest income was partially offset by lower yields on fixed income investment securities balances driven by higher average deposit balances as well as an increase in yield from rate increases.and loans.
The main factors affecting interest income for the three months ended September 30, 2017, compared to the comparable 2016 period are discussed below:
Interest income for the three months endedSeptember 30, 2017 increased by $85.2 million due primarily to:
◦
A $54.2 million increase in interest income on loans to $268.4 million for the three months endedSeptember 30, 2017, compared to $214.2 million for the comparable 2016 period. The increase was reflective of an increase in average loan balances of $2.9 billion and an increase in the overall loan yield of 36 basis points to 4.93 percent from 4.57 percent. Gross loan yields, excluding loan interest recoveries and loan fees, increased 37 basis points to 4.30 percent from 3.93 percent, reflective primarily of the benefit of interest rate increases. Loan fee yields were flat at 61 basis points for both the three months ended September 30, 2017 and 2016.
◦
A $27.0 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 earning cash and short-term investment securities. The increase was due primarily to an increase of $0.9 billion in average interest-earning cash balances as a result of a $6.1 billion increase in average deposit balances and from the impact of the recent increases in the Federal Funds target rate.
The main factors affecting interest income and interest expense for the ninethree months ended SeptemberJune 30, 2017,2021, compared to the comparable 20162020 period are discussed below:
•Interest incomefor the ninethree months endedSeptember June 30, 20172021 increased by $174.6$230 million due primarily to:
◦A $122 million increase in interest income from our fixed income investment securities due primarily to an increase of $46.4 billion in average fixed income investment securities. The increase in interest income from growth of our average fixed income investment securities was partially offset by declines in yields earned on these investments reflective of the lower interest rate market environment, and
◦
A $128.5 million increase in interest income on loans to $746.0 million for the nine months endedSeptember 30, 2017, compared to $617.5 million for the comparable 2016 period. The increase was reflective of an increase in average loan balances of $2.8 billion and an increase in the overall loan yield
◦A $107 million increase in interest income on loans to $472 million for the three months ended June 30, 2021, compared to $365 million for the comparable 2020 period. The increase was reflective of an increase in average loan balances of $13.3 billion, partially offset by a decrease in overall loan yields of 22 basis points to 4.81 percent from 4.59 percent. Gross loan yields, excluding loan interest recoveries and loan fees, increased to 4.18 percent from 3.99 percent, reflective of the benefit of interest rate increases, partially offset by the strong growth of our lower yielding private equity/venture capital and Private Bank loan portfolios. Our private equity/venture capital loan portfolio represented 43.1 percent and 38.8 percent of our total gross loan portfolio at September 30, 2017 and 2016, respectively. Our Private Bank loan portfolio represented 11.2 percent 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 603.80 percent from 4.02 percent. Gross loan yields, excluding loan interest recoveries and loan fees, decreased 22 basis points to 3.26 percent from 58 basis points3.48 percent, driven by growth in our higher credit quality Global Fund Banking portfolio.
•Interest expense for the three months ended June 30, 2021 increased by $12 million due primarily to:
◦A $6 million increase in interest expense on deposits due primarily to an increase in average interest-bearing money market deposits balance, and
68

◦A $6 million increase in interest expense on borrowings due primarily to interest expense on our 3.125% Senior Notes issued in June 2020, our 1.800% Senior Notes issued in February 2021 and our 2.100% Senior Notes issued in May 2021.
Six months ended June 30, 2021 and 2020
•Interest income for the six months ended June 30, 2021 increased by $344 million due primarily to:
◦A $202 million increase in interest income from our fixed income investment securities due primarily to an increase of $36.5 billion in average fixed income investment securities. The increase in interest income from growth of our average fixed income investment securities was partially offset by declines in yields earned on these investments reflective of the lower interest rate market environment, and
◦A $155 million increase in interest income on loans to $903 million for the six months ended June 30, 2021, compared to $748 million for the comparable 20162020 period. The increase was reflective of an increase in average loan feebalances of $13.0 billion, partially offset by a decrease in overall loan yields was primarily a result of 50 basis points to 3.79 percent from 4.29 percent. Gross loan yields, excluding loan interest recoveries and loan fees, decreased 53 basis points to 3.26 percent from 3.79 percent, driven by growth in our higher income from loan prepayments.credit quality Global Fund Banking portfolio as well as decreases in Federal Funds rates in the first quarter of 2020.
◦
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 million increase in interest income from our interest earning cash and short-term investment securities. The increase was due primarily to an increase of $1.1 billion in average interest-earning cash balances as a result of a $3.6 billion increase in average deposit balances. We also saw a benefit from the impact of the recent increases in the Federal Funds target rate.
•Interest expensefor the ninesix months endedSeptember June 30, 2017 increased2021 decreased by $1.3$12 million due primarily to:
◦A $21 million decrease in interest expense on deposits due to:primarily to a decrease in interest paid on our interest-bearing money market deposits due to the decreases in market rates, partially offset by
◦A $9 million increase in interest expense on borrowings due primarily to interest expense on our 3.125% Senior Notes issued in June 2020, our 1.800% Senior Notes issued in February 2021 and our 2.100% Senior Notes issued in May 2021.
◦An increase in deposits interest expense of $2.2 million, due primarily to an increase in interest paid on our interest-bearing money market deposits as a result of market rate adjustments.
Net Interest Margin (Fully Taxable Equivalent Basis)
Three months ended SeptemberJune 30, 20172021 and 20162020
•Our net interest margin increaseddecreased by 3574 basis points to 3.102.06 percent for the three months endedSeptember June 30, 2017,2021, compared to 2.752.80 percent for the comparable 20162020 period. The lower margin for the three months ended June 30, 2021 was due primarily to higher margin duringgrowth in our lower-yielding cash and investment securities portfolio relative to the third quarter of 2017 wasgrowth in our loan portfolio driven by significant growth in our average deposits, and a decrease in yields on loans reflective primarily of the increasesshift in the Federal Funds target rate sinceloan mix as discussed above. Average loans represented 34.8 percent of average interest earnings assets for the third quarter of 2016.
Ninethree months ended SeptemberJune 30, 20172021, compared to 49.3 percent for the comparable 2020 period.
Six months ended June 30, 2021 and 20162020
•Our net interest margin increaseddecreased by 2779 basis points to 2.992.16 percent for the ninesix months endedSeptember June 30, 2017,2021, 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 432.95 percent for the comparable 20162020 period.
The lower margin for the six months ended June 30, 2021 was due primarily to higher growth in our lower-yielding cash and investment securities portfolio relative to the growth in our loan portfolio driven by significant growth in our average deposits, as well as a decrease in yields on loans reflective of the shift in the loan mix as mentioned above. Average loans represented 36.8 percent of average interest earnings assets for the six months ended June 30, 2021, compared to 49.3 percent for the comparable 2020 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, preferred stock, 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 ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:


69

Average Balances, Rates and Yields for the Three Months Ended SeptemberJune 30, 20172021 and 20162020
 Three months ended June 30,
 20212020
(Dollars in millions)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)$21,069 $4 0.08 %$11,920 $3 0.08 %
Investment securities: (2)
AFS securities:
Taxable24,358 73 1.20 12,784 69 2.18 
HTM securities:
Taxable43,352 178 1.65 10,887 73 2.67 
Non-taxable (3)4,562 31 2.73 2,153 18 3.42 
Total loans, amortized cost (4) (5)49,812 472 3.80 36,512 365 4.02 
Total interest-earning assets143,153 758 2.12 74,256 528 2.85 
Cash and due from banks2,108 895 
ACL(411)(561)
Other assets (6)5,867 3,843 
Total assets$150,717 $78,433 
Funding sources:
Interest-bearing liabilities:
Interest bearing checking and savings accounts$3,096 $1 0.11 %$2,175 $2 0.31 %
Money market deposits36,452 10 0.11 17,531 4 0.08 
Money market deposits in foreign offices787 — 0.01 291 — 0.04 
Time deposits631 1 0.37 187 — 0.75 
Sweep deposits in foreign offices1,264 — 0.01 1,645 — 0.02 
Total interest-bearing deposits42,230 12 0.11 21,829 6 0.10 
Short-term borrowings39 — 0.19 618 1 0.38 
2.100% Senior Notes267 2 2.35 — — — 
1.800% Senior Notes494 2 1.92 — — — 
3.125% Senior Notes495 4 3.25 142 1 3.29 
3.50% Senior Notes348 3 3.63 348 3 3.64 
Total interest-bearing liabilities43,873 23 0.21 22,937 11 0.19 
Portion of noninterest-bearing funding sources99,280 51,319 
Total funding sources143,153 23 0.06 74,256 11 0.05 
Noninterest-bearing funding sources:
Demand deposits91,530 46,088 
Other liabilities4,200 2,024 
Preferred stock1,610 340 
SVBFG common stockholders’ equity9,283 6,894 
Noncontrolling interests221 150 
Portion used to fund interest-earning assets(99,280)(51,319)
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity$150,717 $78,433 
Net interest income and margin$735 2.06 %$517 2.80 %
Total deposits$133,760 $67,917 
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis(7)(4)
Net interest income, as reported$728 $513 
  Three months ended September 30,
  2017 2016
(Dollars in thousands) 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
Interest-earning assets:
            
Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1) $3,291,908
 $6,211
 0.75% $2,404,006
 $2,196
 0.36%
Investment securities: (2)            
Available-for-sale securities:            
Taxable 12,674,610
 52,825
 1.65
 12,743,715
 44,741
 1.40
Held-to-maturity securities:            
Taxable 10,249,131
 56,618
 2.19
 7,947,983
 38,727
 1.94
Non-taxable (3) 218,339
 1,803
 3.28
 55,842
 803
 5.72
Total loans, net of unearned income (4) (5) 21,584,892
 268,445
 4.93
 18,647,194
 214,227
 4.57
Total interest-earning assets 48,018,880
 385,902
 3.19
 41,798,740
 300,694
 2.86
Cash and due from banks 371,373
     317,044
    
Allowance for loan losses (246,210)     (247,657)    
Other assets (6) 1,651,323
     1,583,202
    
Total assets $49,795,366
     $43,451,329
    
Funding sources:
            
Interest-bearing liabilities:            
Interest bearing checking and savings accounts $442,518
 $86
 0.08% $308,345
 $60
 0.08%
Money market deposits 5,774,281
 2,079
 0.14
 5,592,603
 1,316
 0.09
Money market deposits in foreign offices 187,183
 21
 0.04
 199,539
 20
 0.04
Time deposits 51,406
 17
 0.13
 50,351
 12
 0.09
Sweep deposits in foreign offices 1,008,675
 101
 0.04
 1,236,602
 127
 0.04
Total interest-bearing deposits 7,464,063
 2,304
 0.12
 7,387,440
 1,535
 0.08
Short-term borrowings 48,614
 164
 1.34
 513,446
 663
 0.51
3.50% Senior Notes 347,168
 3,144
 3.59
 346,848
 3,141
 3.60
5.375% Senior Notes 347,934
 4,854
 5.53
 347,345
 4,847
 5.55
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
Portion of noninterest-bearing funding sources 39,756,710
     33,101,674
    
Total funding sources 48,018,880
 11,297
 0.09
 41,798,740
 11,252
 0.11
Noninterest-bearing funding sources:
            
Demand deposits 36,578,779
     30,522,314
    
Other liabilities 773,586
     517,066
    
SVBFG stockholders’ equity 4,041,218
     3,586,196
    
Noncontrolling interests 139,613
     128,687
    
Portion used to fund interest-earning assets (39,756,710)     (33,101,674)    
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity $49,795,366
     $43,451,329
    
Net interest income and margin   $374,605
 3.10%   $289,442
 2.75%
Total deposits $44,042,842
     $37,909,754
    
Reconciliation to reported net interest income:
            
Adjustments for taxable equivalent basis   (631)     (281)  
Net interest income, as reported   $373,974
     $289,161
  
(1)
Includes average interest-earning deposits in other financial institutions of $1.3 billion and $0.8 billion for the three months endedSeptember 30, 2017 and 2016, respectively. For the three months endedSeptember 30, 2017 and 2016, balances also include $1.9 billion and $1.6 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 are presented on a fully taxable-equivalent basis using the federal statutory income tax rate of 35.0 percent for all periods presented.
(4)Nonaccrual loans are reflected in the average balances of loans.
(5)
Interest income includes loan fees of $33.4 million and $28.4 million for the three months ended September 30, 2017 and 2016, respectively.
(6)
Average investment securities of $692 million and $804 million for the three months ended September 30, 2017 and 2016, respectively, were classified as other assets as they were noninterest-earning assets. These investments consisted primarily of non-marketable and other securities.

(1)Includes average interest-earning deposits in other financial institutions of $1.9 billion and $855 million for the three months ended June 30, 2021 and 2020, respectively. For the three months ended June 30, 2021 and 2020, balances also include $16.7 billion and $10.0 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 is presented on a fully taxable equivalent basis using the federal statutory tax rate of 21.0 percent for all periods presented.
(4)Nonaccrual loans are reflected in the average balances of loans.
(5)Interest income includes loan fees of $68 million and $50 million for the three months ended June 30, 2021 and 2020, respectively.
(6)Average investment securities of $3.4 billion and $1.9 billion for the three months ended June 30, 2021 and 2020, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable and other equity securities.

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Average Balances, Rates and Yields for the Nine MonthsSix months Ended SeptemberJune 30, 20172021 and 20162020
 Six months ended June 30,
 June 30, 2021June 30, 2020
(Dollars in millions)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)$19,635 $7 0.07 %$9,614 $20 0.42 %
Investment securities: (2)
AFS securities:
Taxable26,292 197 1.51 13,175 146 2.23 
HTM securities:
Taxable32,531 278 1.72 11,281 150 2.67 
Non-taxable (3)4,136 57 2.78 2,027 34 3.43 
Total loans, amortized cost (4) (5)48,056 903 3.79 35,086 748 4.29 
Total interest-earning assets130,650 1,442 2.22 71,183 1,098 3.10 
Cash and due from banks1,823 847 
ACL(448)(444)
Other assets (6)5,812 3,834 
Total assets$137,837 $75,420 
Funding sources:
Interest-bearing liabilities:
Interest bearing checking and savings accounts$3,377 $2 0.10 %$1,361 $2 0.26 %
Money market deposits33,721 19 0.11 17,572 36 0.42 
Money market deposits in foreign offices830 — 0.04 279 — 0.04 
Time deposits644 1 0.35 175 1 0.89 
Sweep deposits in foreign offices1,244 — 0.02 1,764 4 0.45 
Total interest-bearing deposits39,816 22 0.11 21,151 43 0.41 
Short-term borrowings26 — 0.16 794 3 0.84 
2.100% Senior Notes134 2 2.35 — — — 
1.800% Senior Notes407 4 1.94 — — — 
3.125% Senior Notes495 8 3.27 71 2 3.29 
3.50% Senior Notes348 6 3.65 348 6 3.64 
Total interest-bearing liabilities41,226 42 0.21 22,364 54 0.48 
Portion of noninterest-bearing funding sources89,424 48,819 
Total funding sources130,650 42 0.06 71,183 54 0.15 
Noninterest-bearing funding sources:
Demand deposits82,432 43,712 
Other liabilities4,111 2,151 
Preferred stock1,216 340 
SVBFG common stockholders’ equity8,636 6,703 
Noncontrolling interests216 150 
Portion used to fund interest-earning assets(89,424)(48,819)
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity$137,837 $75,420 
Net interest income and margin$1,400 2.16 %$1,044 2.95 %
Total deposits$122,248 $64,863 
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis(12)(7)
Net interest income, as reported$1,388 $1,037 
  Nine months ended September 30,
  2017 2016
(Dollars in thousands) 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
Interest-earning assets:
            
Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1) $3,235,628
 $16,670
 0.69% $2,111,619
 $5,793
 0.37%
Investment securities: (2)            
Available-for-sale securities:            
Taxable 12,539,773
 146,803
 1.57
 13,608,722
 140,932
 1.38
Held-to-maturity securities:            
Taxable
9,242,953
 147,965
 2.14
 8,287,043
 120,189
 1.94
Non-taxable (3)
162,572
 4,158
 3.42
 60,147
 2,605
 5.79
Total loans, net of unearned income (4) (5) 20,726,467
 745,983
 4.81
 17,955,497
 617,456
 4.59
Total interest-earning assets 45,907,393
 1,061,579
 3.09
 42,023,028
 886,975
 2.82
Cash and due from banks 361,041
     326,144
    
Allowance for loan losses (243,594)     (237,613)    
Other assets (6) 1,540,211
     1,558,157
    
Total assets $47,565,051
     $43,669,716
    
Funding sources:
            
Interest-bearing liabilities:            
Interest bearing checking and savings accounts $420,680
 $242
 0.08% $310,505
 $181
 0.08%
Money market deposits 5,664,082
 5,544
 0.13
 5,887,627
 3,297
 0.07
Money market deposits in foreign offices 183,040
 59
 0.04
 153,593
 50
 0.04
Time deposits 50,855
 49
 0.13
 59,069
 51
 0.12
Sweep deposits in foreign offices 1,089,714
 324
 0.04
 1,339,077
 405
 0.04
Total interest-bearing deposits 7,408,371
 6,218
 0.11
 7,749,871
 3,984
 0.07
Short-term borrowings 39,523
 295
 1.00
 287,735
 1,065
 0.49
3.5% Senior Notes 347,088
 9,429
 3.63
 346,771
 9,421
 3.63
5.375% Senior Notes 347,786
 14,558
 5.60
 347,205
 14,534
 5.59
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
Portion of noninterest-bearing funding sources 37,684,550
     33,188,977
    
Total funding sources 45,907,393
 33,461
 0.10
 42,023,028
 32,145
 0.10
Noninterest-bearing funding sources:
            
Demand deposits 34,653,264
     30,694,119
    
Other liabilities 668,417
     556,568
    
SVBFG stockholders’ equity 3,883,876
     3,453,904
    
Noncontrolling interests 136,651
     131,074
    
Portion used to fund interest-earning assets (37,684,550)     (33,188,977)    
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity $47,565,051
     $43,669,716
    
Net interest income and margin   $1,028,118
 2.99%   $854,830
 2.72%
Total deposits $42,061,635
     $38,443,990
    
Reconciliation to reported net interest income:
            
Adjustments for taxable equivalent basis   (1,455)     (912)  
Net interest income, as reported   $1,026,663
     $853,918
  
(1)Includes average interest-earning deposits in other financial institutions of $1.8 billion and $898 million for the six months ended June 30, 2021 and 2020, respectively. The balance also includes $15.8 billion and $7.8 billion deposited at the FRB, earning interest at the Federal Funds target rate for the six months ended June 30, 2021 and 2020, respectively.
(1)
Includes average interest-earning deposits in other financial institutions of $1.0 billion and $0.7 billion for the nine months ended September 30, 2017 and 2016, respectively. The balance also includes $2.1 billion and $1.4 billion deposited at the FRB, earning interest at the Federal Funds target rate for the nine months ended September 30, 2017 and 2016, 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 AFS securities is presented on a fully taxable-equivalent basis using the federal statutory tax rate of 21.0 percent for all periods presented.
(4)Nonaccrual loans are reflected in the average balances of loans.
(5)Interest income includes loan fees of $126 million and $86 million for the six months ended June 30, 2021 and 2020, respectively.
(6)Average investment securities of $3.4 billion and $1.7 billion for the six months ended June 30, 2021 and 2020, respectively, were classified as other assets as they were noninterest-earning assets. These investments consisted primarily of non-marketable and other equity securities.

71

(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 35.0 percent for all periods presented.
(4)Nonaccrual loans are reflected in the average balances of loans.
(5)
Interest income includes loan fees of $93.5 million and $78.1 million for the nine months ended September 30, 2017 and 2016, respectively.
(6)
Average investment securities of $674 million and $803 million for the nine months ended September 30, 2017 and 2016, 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(i) the provision for loan losses andloans, (ii) the provision for unfunded credit commitments. Ourcommitments and (iii) the 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.HTM securities. 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 allowanceACL for loan losses and the allowance forloans, unfunded credit commitments and HTM securities for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands, except ratios) 2017 2016 2017 2016
Allowance for loan losses, beginning balance $236,496
 $244,723
 $225,366
 $217,613
Provision for loan losses (1) 22,409
 18,950
 67,273
 88,624
Gross loan charge-offs (12,338) (24,616) (51,449) (71,466)
Loan recoveries 1,828
 2,084
 6,155
 8,158
Foreign currency translation adjustments 615
 (576) 1,665
 (2,364)
Allowance for loan losses, ending balance $249,010
 $240,565
 $249,010
 $240,565
         
Allowance for unfunded credit commitments, beginning balance $47,000
 $34,889
 $45,265
 $34,415
Provision for unfunded credit commitments (1)
 1,113
 1,054
 2,789
 1,601
Foreign currency translation adjustments 59
 (19) 118
 (92)
Allowance for unfunded credit commitments, ending balance (2) $48,172
 $35,924
 $48,172
 $35,924
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%
Gross loan charge-offs as a percentage of average total gross loans (annualized) 0.23
 0.52
 0.33
 0.53
Net loan charge-offs as a percentage of average total gross loans (annualized) 0.19
 0.48
 0.29
 0.47
Allowance for loan losses as a percentage of period-end total gross loans 1.12
 1.25
 1.12
 1.25
Provision for credit losses (1) $23,522
 $20,004
 $70,062
 $90,225
Period-end total gross loans 22,329,829
 19,228,928
 22,329,829
 19,228,928
Average total gross loans 21,712,866
 18,762,144
 20,850,468
 18,067,893
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2021202020212020
ACL, beginning balance$392 $549 $448 $305 
Day one impact of adopting ASC 326— — — 25 
Provision for loans16 52 50 301 
Gross loan charge-offs (1)(15)(15)(110)(52)
Loan recoveries3 4 8 12 
Foreign currency translation adjustments— — — (1)
ACL, ending balance$396 $590 $396 $590 
ACL for unfunded credit commitments, beginning balance105 85 121 67 
Day one impact of adopting ASC 326— — — 23 
Provision (reduction) for unfunded credit commitments15 14 (1)9 
ACL for unfunded credit commitments, ending balance (2)$120 $99 $120 $99 
ACL for HTM securities, beginning balance1 — — — 
Provision for HTM securities4 — 5 — 
ACL for HTM securities, ending balance (3)$5 $— $5 $— 
Ratios and other information:
Provision for loans as a percentage of period-end total loans (annualized)0.13 %0.57 %0.20 %1.65 %
Gross loan charge-offs as a percentage of average total loans (annualized)0.12 0.17 0.46 0.30 
Net loan charge-offs as a percentage of average total loans (annualized)0.10 0.12 0.43 0.23 
ACL for loans as a percentage of period-end total loans0.78 1.61 0.78 1.61 
Provision for credit losses$35 $66 $54 $310 
Period-end total loans50,754 36,727 50,754 36,727 
Average total loans49,812 36,512 48,056 35,086 
Allowance for loan losses for nonaccrual loans38 54 38 54 
Nonaccrual loans79 94 79 94 
(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.”

Three(1)Gross loan charge-offs for the six months ended SeptemberJune 30, 20172021 includes the impact of an $80 million charge-off related to potentially fraudulent activity as disclosed in previous filings.
(2)The “ACL for unfunded credit commitments” is included as a component of “Other liabilities” on our consolidated balance sheets.
(3)The "ACL for HTM securities" is included as a component of "HTM securities" and 2016presented net in our consolidated financial statements.
Our
Provision for Loans
We had a provision for credit losses was $23.5for loans of $16 million and $50 million for the three and six months ended June 30, 2021, respectively, compared to a provision of $52 million and $301 million for the three and six months ended June 30, 2020. The provision for loans of $16 million for the three months ended SeptemberJune 30, 2017, consisting of2021 was driven primarily by a $15 million provision for growth in our performing loans portfolio, as well as $4 million for charge-offs not specifically reserved for at March 31, 2021, and $7 million for new nonperforming loans. These provisions were partially offset by $3 million of recoveries and a $7 million reduction in performing reserves as a result of the ongoing improvement of economic scenarios in our forecast models.
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The provision for credit losses for loans of $52 million for the three months ended June 30, 2020, was driven primarily by $26 million in additional reserves for our performing loans based on our forecast models of the period's economic environment under the CECL methodology adopted January 1, 2020, including qualitative adjustments to account for unprecedented economic forecast volatility, $24 million for net new nonaccrual loans and $11 million for charge-offs not specifically reserved for at March 31, 2020, partially offset by a $5 million decrease related to changes in loan composition within our portfolio segments and $4 million of recoveries.
The provision for credit losses for loans of $22.4$50 million for the six months ended June 30, 2021, was driven primarily by a $33 million increase for growth in our performing loan portfolioand $90 million of charge-offs not specifically reserved for at December, 31, 2020, of which $80 million was related to a single instance of potentially fraudulent activity as disclosed in previous filings. These increases in the provision were partially offset by $8 million of recoveries and a $68 million reduction in performing reserves as a result of the ongoing improvement of economic scenarios in our forecast models.
The provision for credit losses for loans of $301 million for the six months ended June 30, 2020 was driven primarily by $217 million in additional reserves for our performing loans based on our forecast models of the current economic environment under the CECL methodology adopted January 1, 2020, including the impact of the COVID-19 pandemic, as well as changes in loan composition within our portfolio segments, $36 million in additional reserves for period-end loan growth, $24 million for charge-offs not specifically reserved for at December 31, 2019 and $35 million in net new nonaccrual loans, partially offset by $12 million of recoveries.
Provision for Unfunded Credit Commitments
We recorded a provision for unfunded credit commitments of $1.1 million. Our$15 million and a reduction in provision of $1 million for credit losses was $20.0the three and six months ended June 30, 2021, respectively, compared to a provision of $14 million and $9 million for the three and six months ended June 30, 2020. The provision of $15 million for the three months ended SeptemberJune 30, 2016, consisting of2021 was driven primarily by growth in our outstanding commitments, as well changes in our unfunded portfolio composition that resulted in a provision for loan losses of $19.0 millionlonger portfolio lifetime and a provision for unfunded credit commitments of $1.0 million.
The provision for loan losses of $22.4 million for the three months ended September 30, 2017 primarily reflects $13.8 million in net new specific reserves for nonaccrual loans and a $10.9 million increase in reserves for period-end loan growth,

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 for loan losses 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 million for the nine months ended September 30, 2017, consisting of a provision for loan losses of $67.3 million and a provision for unfunded credit commitments of $2.8 million. Our provision for credit losses was $90.2 million for the third quarter of 2016, consisting of a provision for loan losses of $88.6 million and a provision for unfunded credit commitments of $1.6 million.
The provision for loan losses of $67.3 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 for loan losses of $88.6 million for the nine months ended September 30, 2016 was reflective of $33.0 million 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.corresponding provision.
The provision for unfunded credit commitments of $2.8$14 million for ninethe three months ended SeptemberJune 30, 20172020, was driven primarily by qualitative allocations based onthe forecast models of the current economic environment under the CECL methodology adopted January 1, 2020, as well as changes in the unfunded credit commitments composition within our loan portfolio being comprised of larger loans. Oursegments.
The reduction in provision for unfunded credit commitments was $1.6of $1 million for ninethe six months ended SeptemberJune 30, 2016.2021, was driven primarily by improved economic scenarios in our forecast models, partially offset by growth in our outstanding commitments and changes in the unfunded credit commitments composition within our portfolio segments.
The provision for unfunded credit commitments of $9 million for the six months ended June 30, 2020, was driven primarily by a decrease in the expected future commitments for milestone tranches, which are tied to company performance or additional funding rounds, based on our forecast models of the economic environment, including the impact of the COVID-19 pandemic.
Gross Loan Charge-Offs
Gross loan charge-offs of $51.4were $15 million for the ninethree months ended SeptemberJune 30, 2017 included $27.82021, of which $4 million was not specifically reserved for at March 31, 2021. Gross loan charge-offs were partly driven by a $6 million charge-off from one Cash Flow Dependent client. The remaining $9 million gross loan charge-offs were driven primarily by our Investor Dependent and Cash Flow Dependent loan portfolios.
Gross loan charge-offs were $15 million for the three months ended June 30, 2020, of which $11 million was not specifically reserved for at March 31, 2020. Gross loan charge-offs were partly driven by $5 million charge-offs for our Investor Dependent clients and a $5 million charge-off from one Balance Sheet Dependent client. The remaining charge-offs came primarily from our early-stageCash Flow Dependent risk-based segment.
Gross loan portfoliocharge-offs were $110 million for the six months ended June 30, 2021, of which $90 million was not specifically reserved for in prior quarters. Gross loan charge-offs not previously reserved for were primarily driven by $80 million related to a single instance of potentially fraudulent activity disclosed in previous filings. The remaining $30 million of gross loan charge-offs came primarily from our Investor Dependent and $13.0Cash Flow Dependent loan portfolios.
Gross loan charge-offs were $52 million from two Corporate Finance client loans. Thesefor the six months ended June 30, 2020, of which $24 million was not specifically reserved for in prior quarters. Gross loan charge-offs were primarily driven by $39 million charge-offs for our Investor Dependent clients and a $5 million charge-off from our software/internet loan portfolio. Gross loanone Balance Sheet Dependent client. The remaining charge-offs of $71.5 million for the nine months ended September 30, 2016 included $35.4 million from our early-stage portfolio and $27.6 million from four late-stage client loans. These charge-offs werecame primarily from our software/internet loan portfolio.Cash Flow Dependent risk-based segment.
See “Consolidated Financial Condition—Credit Quality and Allowance for Loan Losses”Credit Losses for Loans and for Unfunded Credit Commitments” below and Note 7—“Loans6 — “Loans and Allowance for Loan LossesCredit Losses: Loans and Allowance for Unfunded Credit
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Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for further details on our allowanceACL for loan losses.loans and unfunded credit commitments.
Provision for HTM Securities
We recorded a provision for credit losses for HTM securities of $4 million and $5 million for the three and six months ended June 30, 2021, respectively. Our provision for HTM securities for the second quarter of June 30, 2021 was driven primarily by the continued expansion of our corporate bond portfolio. Our HTM portfolio as of June 30, 2021 was entirely made up of A2 or better rated bonds, all considered investment grade.
We recorded a provision for credit losses for HTM securities of less than $1 million for the three and six months ended June 30, 2020, which was driven primarily by our forecast models of the economic environment, including the impact of the COVID-19 pandemic. Our HTM portfolio as of June 30, 2020 was entirely made up of Aa3 or better rated bonds, all considered investment grade.
See Note 5 — “Investment Securities" of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for further details on our ACL for HTM securities.
Noninterest Income
For the three and ninesix months ended SeptemberJune 30, 2017,2021, noninterest income was $158.8$761 million and $405.0 million,$1.5 billion, respectively, compared to $144.1$369 million and $343.1$670 million for the comparable 20162020 periods. For the three and ninesix months ended SeptemberJune 30, 2017,2021, non-GAAP noninterest income, net of noncontrolling interests was $153.2$648 million and $383.3 million,$1.4 billion, respectively, compared to $139.5$355 million and $339.4$658 million for the comparable 20162020 periods. For the three and ninesix months ended SeptemberJune 30, 2017,2021, non-GAAP core fee income plus SVB Leerink revenue was $292 million and $617 million, respectively, compared to $291 million and $522 million for the comparable 2020 periods. For the three and six months ended June 30, 2021, non-GAAP core fee income was $102.7$172 million and $272.6$331 million, respectively, compared to $80.5$132 million and $231.5$301 million for the comparable 20162020 periods. (See reconciliations of non-GAAP measures used below under “Use of Non-GAAP Financial Measures”.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 SVB Leerink revenue, non-GAAP core fee income plus SVB Leerink revenue, non-GAAP noninterest income, non-GAAP net gains on investment securities)securities, non-GAAP noninterest expense and non-GAAP financial ratios). 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 (i) excluding items that represent income attributable to investors other than us and our subsidiaries and (ii) providing additional information used by management that is not otherwise required by GAAP or other certain non-recurring items.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, 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—“Basis1 — “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 (i) SVB Leerink revenue, (ii) 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, and (iii) other noninterest income. Core fee income includesrepresents 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 standby letters of credit fees.
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SVB Leerink revenue is a non-GAAP financial measure, which represents noninterest income but excludes (i) Core fee income, and (ii) certain line items where performance is typically subject to market or other conditions beyond our control, primarily our net gains (losses) on investment securities and equity warrant assets, and other noninterest income. SVB Leerink revenue represents investment banking revenue and commissions.
Core fee income plus SVB Leerink revenue 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, primarily our net gains (losses) on investment securities and equity warrant assets, and other noninterest income. Core fee income plus SVB Leerink revenue represents core fee income plus investment banking revenue and commissions.
The following table provides a reconciliation of GAAP noninterest income to non-GAAP noninterest income, net of noncontrolling interests, for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
GAAP noninterest income$761 $369 106.2 %$1,505 $670 124.6 %
Less: income attributable to noncontrolling interests, including carried interest allocation113 14 NM138 12 NM
Non-GAAP noninterest income, net of noncontrolling interests$648 $355 82.5 $1,367 $658 107.8 
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
GAAP noninterest income $158,778

$144,140
 10.2% $404,965

$343,050
 18.0%
Less: income attributable to noncontrolling interests, including carried interest allocation 5,614
 4,679
 20.0
 21,709
 3,627
 NM
Non-GAAP noninterest income, net of noncontrolling interests $153,164
 $139,461
 9.8
 $383,256
 $339,423
 12.9
NM—Not meaningful
The following table provides a reconciliation of GAAP noninterest income to non-GAAP core fee income for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
GAAP noninterest income $158,778
 $144,140
 10.2 % $404,965
 $343,050
 18.0%
Less: gains on investment securities, net 15,238
 23,178
 (34.3) 48,838
 41,764
 16.9
Less: gains on equity warrant assets, net 24,922
 21,558
 15.6
 42,432
 33,253
 27.6
Less: other noninterest income 15,896
 18,878
 (15.8) 41,128
 36,511
 12.6
Non-GAAP core fee income (1) $102,722
 $80,526
 27.6
 $272,567
 $231,522
 17.7
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
GAAP noninterest income$761 $369 106.2 %$1,505 $670 124.6 %
Less: gains on investment securities, net305 35 NM472 81 NM
Less: gains on equity warrant assets, net122 27 NM344 40 NM
Less: other noninterest income42 16 162.5 72 27 166.7 
Non-GAAP core fee income plus SVB Leerink revenue (1)$292 $291 0.3 $617 $522 18.2 
Investment banking revenue103 142 (27.5)245 188 30.3 
Commissions17 17 — 41 33 24.2 
Non-GAAP SVB Leerink revenue (2)$120 $159 (24.5)$286 $221 29.4 
Non-GAAP core fee income (3)$172 $132 30.3 $331 $301 10.0 
(1)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 and includes foreign exchange fees, credit card fees, deposit service charges, lending related fees, client investment fees and letters of credit fees.
(1)Non-GAAP core fee income plus SVB Leerink revenue represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control and other noninterest income. Core fee income plus SVB Leerink revenue is non-GAAP core fee income (as defined in footnote (3) below) with the addition of investment banking revenue and commissions.
(2)Non-GAAP SVB Leerink revenue represents investment banking revenue and commissions, but excludes certain line items where performance is typically subject to market or other conditions beyond our control and other noninterest income.
(3)Non-GAAP core fee income represents noninterest income, but excludes (i) certain line items where performance is typically subject to market or other conditions beyond our control, (ii) our investment banking revenue and commissions and (iii) other noninterest income. Non-GAAP core fee income includes client investment fees, foreign exchange fees, credit card fees, deposit service charges, lending related 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”)),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
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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 SeptemberJune 30, 20172021 and 20162020
For the three months ended SeptemberJune 30, 2017,2021, we had net gains on investment securities of $15.2$305 million, compared to $23.2$35 million for the comparable 20162020 period. Non-GAAP net gains on investment securities, net of noncontrolling interests, were $9.7$192 million for the three months ended SeptemberJune 30, 2017,2021, compared to $18.4non-GAAP net gains, net of controlling interest of $21 million for the comparable 20162020 period.
Non-GAAP net gains on investment securities, net of noncontrolling interests, of $9.7$192 million for the three months ended SeptemberJune 30, 20172021 were driven by the following:
•Gains of $3.7$110 million from our strategicmanaged fund of funds portfolio driven by unrealized valuations increases of private and other investments, comprisedpublic positions as well as fund distributions driven primarily ofby realized gains from distributionsone public company position, and
•Gains of $16 million from our strategic venture capital fundpublic equity securities investments, reflectivedriven primarily by realized gains of M&A activity,
$38 million from the sale of Coinbase Global, Inc. ("Coinbase") common stock, offset by valuation decreases of positions held.
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.
NineSix months ended SeptemberJune 30, 20172021 and 20162020
For the ninesix months ended SeptemberJune 30, 2017,2021, we had net gains on investment securities of $48.8$472 million, compared to $41.8$81 million for the comparable 20162020 period. Non-GAAP net gains on investment securities, net of noncontrolling interests, were $27.4$334 million for the ninesix months endedSeptember June 30, 2017,2021, compared to net gains of $38.1$68 million for the comparable 20162020 period.
Non-GAAP net gains, net of noncontrolling interests, of $27.4$334 million for the ninesix months ended SeptemberJune 30, 20172021 were driven primarily by the following:
•Gains of $14.2$128 million from our managed fund of funds portfolio driven by unrealized valuations increases of private and public positions as well as fund distributions driven primarily by realized gains from one public company position,
•Gains of $88 million from our public equity securities investments, driven primarily by realized gains of $43 million from the sale of Big Commerce, Inc. common stock and $38 million from the sale of Coinbase common stock, and
•Gains of $56 million from our strategic and other investments attributabledriven 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 toby 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.
increases.
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 ninesix months ended SeptemberJune 30, 20172021 and 2016:

2020:
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(Dollars in thousands) 
Managed
Funds of
Funds
 
Managed
Direct
Venture
Funds
 
Debt
Funds
 
Available-
For-Sale
Securities
 
Strategic
and Other
Investments
 Total
Three months ended September 30, 2017            
Total gains (losses) on investment securities, net $8,446
 $729
 $2,445
 $(101) $3,719
 $15,238
Less: income attributable to noncontrolling interests, including carried interest allocation 5,335
 161
 —
 —
 —
 5,496
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests $3,111
 $568
 $2,445
 $(101) $3,719
 $9,742
            
Three months ended September 30, 2016            
Total gains (losses) on investment securities, net $8,931
 $390
 $166
 $(15) $13,706
 $23,178
Less: income attributable to noncontrolling interests, including carried interest allocation 4,615
 130
 —
 —
 —
 4,745
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests $4,316
 $260
 $166
 $(15) $13,706
 $18,433
            
Nine months ended September 30, 2017            
(Dollars in millions)(Dollars in millions)Managed
Funds of
Funds		Managed
Direct
Venture
Funds		Managed Credit FundsPublic Equity SecuritiesDebt
Funds		Sales of AFS Debt SecuritiesStrategic
and Other
Investments		SVB LeerinkTotal
Three months ended June 30, 2021Three months ended June 30, 2021
Total gains on investment securities, net $30,624
 $894
 $2,696
 $384
 $14,240
 $48,838
Total gains on investment securities, net$197 $19 $6 $16 $1 $— $22 $44 $305 
Less: income attributable to noncontrolling interests, including carried interest allocation 21,245
 178
 —
 —
 —
 21,423
Less: income attributable to noncontrolling interests, including carried interest allocation87 8 1 — — — — 17 113 
Non-GAAP net gains on investment securities, net of noncontrolling interests $9,379
 $716
 $2,696
 $384
 $14,240
 $27,415
Non-GAAP net gains on investment securities, net of noncontrolling interests$110 $11 $5 $16 $1 $— $22 $27 $192 
            
Nine months ended September 30, 2016            
Three months ended June 30, 2020Three months ended June 30, 2020
Total gains (losses) on investment securities, net $5,830
 $(411) $801
 $11,567
 $23,977
 $41,764
Total gains (losses) on investment securities, net$14 $15 $— $8 $— $— $(5)$3 $35 
Less: income (losses) attributable to noncontrolling interests, including carried interest allocation 3,668
 (17) —
 —
 —
 3,651
Less: income attributable to noncontrolling interests, including carried interest allocationLess: income attributable to noncontrolling interests, including carried interest allocation7 7 — — — — — — 14 
Non-GAAP net gains (loss) on investment securities, net of noncontrolling interestsNon-GAAP net gains (loss) on investment securities, net of noncontrolling interests$7 $8 $— $8 $— $— $(5)$3 $21 
Six months ended June 30, 2021Six months ended June 30, 2021
Total gains on investment securities, netTotal gains on investment securities, net$228 $37 $13 $88 $2 $— $56 $48 $472 
Less: income attributable to noncontrolling interests, including carried interest allocationLess: income attributable to noncontrolling interests, including carried interest allocation100 17 2 — — — — 19 138 
Non-GAAP net gains on investment securities, net of noncontrolling interestsNon-GAAP net gains on investment securities, net of noncontrolling interests$128 $20 $11 $88 $2 $— $56 $29 $334 
Six months ended June 30, 2020Six months ended June 30, 2020
Total gains (losses) on investment securities, netTotal gains (losses) on investment securities, net$11 $13 $— $4 $— $61 $(9)$1 $81 
Less: income attributable to noncontrolling interests, including carried interest allocationLess: income attributable to noncontrolling interests, including carried interest allocation7 6 — — — — — — 13 
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests $2,162
 $(394) $801
 $11,567
 $23,977
 $38,113
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests$4 $7 $— $4 $— $61 $(9)$1 $68 


Gains on Equity Warrant Assets, Net
Three months ended June 30, 2021 and 2020
Net gains on equity warrant assets were $122 million for the three months ended June 30, 2021, compared to net gains of $27 million for the comparable June 30, 2020 period. Net gains on equity warrant assets for the three months ended June 30, 2021 consisted of:
•Net gains on warrant exercises of $78 million driven primarily by IPO activity during the quarter, and
•Net gains of $45 million from warrant valuations increases, driven by our private company portfolio reflective of pricing updates and pending exit activity.
Six months ended June 30, 2021 and 2020
Net gains on equity warrant assets were $344 million for the six months ended June 30, 2021, compared to net gains of $40 million for the comparable June 30, 2020 period. Net gains on equity warrant assets for the six months ended June 30, 2021 consisted of:
•Net gains on warrant exercises of $251 million reflective of $116 million in gains related to Coinbase's direct listing, with the remaining gains driven primarily by IPO activity, and
•Net gains of $94 million from warrant valuations increases, driven by our private company portfolio reflective of pricing updates and pending exit activity.
77

A summary of gains on equity warrant assets, net, for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 is as follows:
  Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Equity warrant assets (1):
Gains on exercises, net$78 $9 NM$251 $33 NM
Terminations(1)— NM(1)(1)— 
Changes in fair value, net45 18 150.0 94 8 NM
Total gains on equity warrant assets, net$122 $27 NM$344 $40 NM
   Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
Equity warrant assets (1)            
Gains on exercises, net $7,449
 $5,931
 25.6 % $22,482
 $13,808
 62.8%
Cancellations and expirations (757) (1,161) (34.8) (3,614) (2,544) 42.1
Changes in fair value, net 18,230
 16,788
 8.6
 23,564
 21,989
 7.2
Gains on equity warrant assets, net $24,922
 $21,558
 15.6
 $42,432
 $33,253
 27.6
(1)
At September 30, 2017, we held warrants in 1,842
(1)    At June 30, 2021, we held warrants in 2,718 companies, compared to 1,719 companies at September 30, 2016. The total fair value of our warrant portfolio was $142 million at September 30, 2017 and $145 million at September 30, 2016. Warrants in 16 companies each had fair values greater than $1.0 million and collectively represented $51.7 million, or 36.5 percent, of the fair value of the total warrant portfolio at September 30, 2017.
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 gains2,419 companies at June 30, 2020. The total fair value 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 reflectivewas $266 million at June 30, 2021 and $171 million at June 30, 2020. Warrants in 53 companies each had fair values greater than $1 million and collectively represented $137 million, or 51.7 percent, of M&A exit activity during the nine months endedSeptemberfair value of the total warrant portfolio at June 30, 2017.2021. Warrants in 20 companies each had fair values greater than $1 million and collectively represented $51 million, or 29.6 percent, of the fair value of the total warrant portfolio at June 30, 2020.
Non-GAAP Core Fee Income
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
Non-GAAP core fee income (1):            
Foreign exchange fees $29,671
 $25,944
 14.4% $82,026
 $76,998
 6.5%
Credit card fees 20,270
 18,295
 10.8
 56,099
 49,226
 14.0
Deposit service charges 14,508
 13,356
 8.6
 43,046
 39,142
 10.0
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
Letters of credit and standby letters of credit fees 7,306
 6,811
 7.3
 20,951
 18,414
 13.8
Total non-GAAP core fee income (1) $102,722
 $80,526
 27.6
 $272,567
 $231,522
 17.7
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Non-GAAP core fee income (1):
Client investment fees$15 $32 (53.1)%$35 $75 (53.3)%
Foreign exchange fees67 36 86.1 124 84 47.6 
Credit card fees31 21 47.6 59 50 18.0 
Deposit service charges28 21 33.3 53 45 17.8 
Lending related fees18 11 63.6 34 24 41.7 
Letters of credit and standby letters of credit fees13 11 18.2 26 23 13.0 
Total non-GAAP core fee income (1)$172 $132 30.3 $331 $301 10.0 
Investment banking revenue103 142 (27.5)245 188 30.3 
Commissions17 17 — 41 33 24.2 
Total non-GAAP Leerink revenue (2)$120 $159 (24.5)$286 $221 29.4 
Total non-GAAP core fee income plus SVB Leerink revenue (3)$292 $291 0.3 $617 $522 18.2 
(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.

(1)This non-GAAP measure represents noninterest income, but excludes (i) certain line items where performance is typically subject to market or other conditions beyond our control, (ii) our investment banking revenue and commissions and (iii) other noninterest income. See “Use of Non-GAAP Measures” above.
Foreign Exchange Fees
Foreign exchange fees were $29.7 million and $82.0 million for the three and nine months ended September 30, 2017, compared(2)Non-GAAP SVB Leerink revenue represents noninterest income, but excludes (i) certain line items where performance is typically subject to $25.9 million and $77.0 million for the comparable 2016 periods. The increases in foreign exchange fees were driven bymarket or other conditions beyond 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 interchangecontrol, (ii) non-GAAP core fee income, driven by an increase in transaction volume reflectiveand (iii) other noninterest income. See “Use 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 interchangeNon-GAAP Measures” above.
(3)Non-GAAP core fee income were partially offset by increases in rebate/rewards expense for the threeplus SVB Leerink revenue represents noninterest income, but excludes (i) certain line items where performance is typically subject to market or other conditions beyond our control, 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 2016 periods. The increases were reflective(ii) other noninterest income. See “Use 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.Non-GAAP Measures” above.
Client Investment Fees
Client investment fees were $15.6$15 million and $37.6$35 million for the three and ninesix months ended SeptemberJune 30, 2017,2021 compared to $8.0$32 million and $24.0$75 million for the comparable 2016June 30, 2020 periods. The increasesdecreases were attributable primarily toreflective of a reduction in fee margin resulting from lower short-term market rates, offset by large increases in average off-balance sheet client investment fund balances driven byfunds. Given our clients’ increased utilizationexpectations of off-balance sheet products managed by SVB Asset Management and third-party sweep money market funds, as well as from improved spreads on oura continued low rate environment, we generally expect client investment funds duefees in 2021 to increases in general market ratesbe lower than 2020.
A summary of client investment fees by instrument type for the three and the reintroductionsix months ended June 30, 2021 and 2020 is as follows:
78

 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Client investment fees by type:
Sweep money market fees$7 $19 (63.2)%$18 $42 (57.1)%
Asset management fees8 12 (33.3)16 21 (23.8)
Repurchase agreement fees— 1 (100.0)1 12 (91.7)
Total client investment fees$15 $32 (53.1)$35 $75 (53.3)
The following table summarizes average client investment funds for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Sweep money market funds$82,573 $47,561 73.6 %$74,856 $45,303 65.2 %
Client investment assets under management (1)77,733 51,801 50.1 75,106 51,223 46.6 
Repurchase agreements14,021 9,898 41.7 12,992 9,849 31.9 
Total average client investment funds (2)$174,327 $109,260 59.6 $162,954 $106,375 53.2 
  Three months ended September 30, Nine months ended September 30,
(Dollars in millions) 2017 2016 % Change 2017 2016 % Change
Client directed investment assets (1) $6,985
 $6,846
 2.0% $6,190
 $7,137
 (13.3)%
Client investment assets under management (2) 26,123
 20,692
 26.2
 24,531
 21,215
 15.6
Sweep money market funds 20,165
 15,567
 29.5
 18,783
 14,468
 29.8
Total average client investment funds (3) $53,273
 $43,105
 23.6
 $49,504
 $42,820
 15.6
(1)These funds represent investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(2)Client investment funds are maintained at third-party financial institutions and are not recorded on our balance sheet.
(1)
Comprised of mutual funds and Repurchase Agreement Program assets.
(2)These funds represent investments in third party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(3)Client investment funds are maintained at third party financial institutions and are not recorded on our balance sheet.
The following table summarizes period-end client investment funds at SeptemberJune 30, 20172021 and December 31, 2016:2020:
(Dollars in millions)June 30, 2021December 31, 2020% Change
Sweep money market funds$90,402 $59,844 51.1 %
Client investment assets under management (1)78,698 70,671 11.4 
Repurchase agreements14,067 10,538 33.5 
Total period-end client investment funds (2)$183,167 $141,053 29.9 
(Dollars in millions) September 30, 2017 December 31, 2016 % Change
Client directed investment assets (1) $6,860
 $5,510
 24.5%
Client investment assets under management (2) 26,718
 23,115
 15.6
Sweep money market funds 20,664
 17,173
 20.3
Total period-end client investment funds (3) $54,242
 $45,798
 18.4
(1)Comprised of mutual funds and Repurchase Agreement Program assets.
(2)These funds represent investments in third party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(3)Client investment funds are maintained at third party financial institutions and are not recorded on our balance sheet.

(1)These funds represent investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.
Other Noninterest Income(2)Client investment funds are maintained at third-party financial institutions and are not recorded on our balance sheet.
Foreign Exchange Fees
Foreign exchange fees were $67 million and $124 million for the three and six months ended June 30, 2021 compared to $36 million and $84 million for the comparable June 30, 2020 periods. The increases in foreign exchange fees were driven primarily by increases in spot contract commissions reflective of the increased volume of trades for the three and six months ended June 30, 2021 compared to the 2020 period, which had a significant slowdown impact due to the COVID-19 pandemic.
A summary of otherforeign exchange fee income by instrument type for the three and six months ended June 30, 2021 and 2020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Foreign exchange fees by instrument type:
Spot contract commissions$60 $33 81.8 %$115 $74 55.4 %
Forward contract commissions6 3 100.0 8 10 (20.0)
Option premium fees1 — — 1 — — 
Total foreign exchange fees$67 $36 86.1 $124 $84 47.6 
Credit Card Fees
Credit card fees were $31 million and $59 million for the three and six months endedJune 30, 2021, compared to $21 million and $50 million for the comparable 2020 periods. Credit card fees increased due to higher transaction volumes reflective of higher utilization, new client growth, and relationship expansion.
79

A summary of credit card fees by instrument type for the three and six months ended June 30, 2021 and 2020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Credit card fees by instrument type:
Card interchange fees, net$26 $15 73.3 %$49 $37 32.4 %
Merchant service fees4 5 (20.0)8 10 (20.0)
Card service fees1 1 — 2 3 (33.3)
Total credit card fees$31 $21 47.6 $59 $50 18.0 
Deposit Service Charges
Deposit service charges were $28 million and $53 million for the three and six months ended June 30, 2021 compared to $21 million and $45 million for the comparable 2020 periods. Deposit service charges increased due to the increases in product revenues from strong deposit growth and higher transaction volumes.
Lending Related Fees
Lending related fees were $18 million and $34 million for the three and six months ended June 30, 2021 compared to $11 million and $24 million for the comparable 2020 periods. The increase was primarily due to increases in fees earned from unused lines of credit due to strong client liquidity.
A summary of lending related fees by type for the three and six months ended June 30, 2021 and 2020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Lending related fees by instrument type:
Unused commitment fees$15 $8 87.5 %$28 $17 64.7 %
Other3 3 — 6 7 (14.3)
Total lending related fees$18 $11 63.6 $34 $24 41.7 
Letters of Credit and Standby Letters of Credit Fees
Letters of credit and standby letters of credit fees were $13 million and $26 million for the three and six months ended June 30, 2021, compared to $11 million and $23 million for the comparable 2020 periods. The increases were driven primarily by an increase in deferred fee income reflective of larger letter of credit issuances.
Investment Banking Revenue
Investment banking revenue was $103 million and $245 million for the three and six months ended June 30, 2021, compared to $142 million and $188 million for the comparable 2020 periods. The decrease for the three months ended June 30, 2021 compared to the comparable 2020 period, was reflective of lower completed deal volume in the second quarter of 2021 compared to 2020. The increase for the six months ended June 30, 2021 compared to the 2020 period was attributable to overall exceptional levels of funding activity in the life science/healthcare markets, resulting in an increase in public equity underwriting fees.
A summary of investment banking revenue by type for the six months ended June 30, 2021 and 2020 is as follows:
  Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Investment banking revenue:
Underwriting fees$84 $131 (35.9)$209 $162 29.0 %
Advisory fees9 9 — 13 24 (45.8)
Private placements and other10 2 NM23 2 NM
Total investment banking revenue$103 $142 (27.5)$245 $188 30.3 
80

Commissions
Commissions for the three and six months ended June 30, 2021 were $17 million and $41 million, compared to $17 million and $33 million for the comparable 2020 periods. Commissions include commissions received from clients for the execution of agency-based brokerage transactions in listed and over-the-counter equities. Commissions were relatively flat when comparing the three months ended June 30, 2021 to the comparable period for 2020, reflective of trading activity. The increase for six months ended June 30, 2021 compared to the comparable period for 2020, was driven by higher trade volume as well as strategic hires made in the third quarter of 2020 to drive growth in derivatives and convertible revenue.
Other
Other noninterest income for the three and ninesix months ended SeptemberJune 30, 20172021 was $42 million and 2016 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
NM—Not meaningful
(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.
(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 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$72 million, compared to $2.0$16 million and $27 million for the comparable 2016 period.2020 periods. The $1.5 million decrease was primarily due to the sale of our equity valuation services business during the third quarter of 2017,increases for three 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 six months ended June 30, 2021 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 was2020 periods, were driven primarily by higher fund management fees due to the following:
Fund management fees of $15.9 million compared to fees of $14.1 million for the comparable 2016 period. Theadditional funds managed, an 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 clientin 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 wastrading exposure as well as higher performance fees received from certain funds reflective 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.
liquidation of equity interests in BigCommerce Holdings, Inc.
Noninterest Expense
A summary of noninterest expense for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Compensation and benefits$425 $320 32.8 %$870 $575 51.3 %
Professional services97 64 51.6 178 103 72.8 
Premises and equipment37 28 32.1 70 55 27.3 
Net occupancy17 19 (10.5)35 37 (5.4)
Business development and travel3 3 — 7 17 (58.8)
FDIC and state assessments10 7 42.9 20 12 66.7 
Merger-related charges19 — — 19 — — 
Other45 39 15.4 90 80 12.5 
Total noninterest expense$653 $480 36.0 $1,289 $879 46.6 
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017
2016 % Change 2017 2016 % Change
Compensation and benefits $153,263
 $136,568
 12.2% $449,412
 $374,410
 20.0%
Professional services 32,987
 23,443
 40.7
 86,331
 67,959
 27.0
Premises and equipment 18,937
 16,291
 16.2
 53,753
 47,861
 12.3
Business development and travel 10,329
 8,504
 21.5
 30,913
 30,077
 2.8
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
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
Total noninterest expense (1) $257,761
 $220,773
 16.8
 $746,640
 $624,611
 19.5
(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, SVB Leerink, merger-related charges and other non-recurring expenses. 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.


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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 ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands, except ratios) 2017
2016 % Change 2017 2016 % Change
GAAP noninterest expense $257,761
 $220,773
 16.8 % $746,640
 $624,611
 19.5 %
Less: amounts attributable to noncontrolling interests 125
 117
 6.8
 517
 284
 82.0
Non-GAAP noninterest expense, net of noncontrolling interests $257,636
 $220,656
 16.8
 $746,123
 $624,327
 19.5
             
GAAP net interest income $373,974
 $289,161
 29.3
 $1,026,663
 $853,918
 20.2
Adjustments for taxable equivalent basis 631
 281
 124.6
 1,455
 912
 59.5
Non-GAAP taxable equivalent net interest income $374,605
 $289,442
 29.4
 $1,028,118
 $854,830
 20.3
Less: income attributable to noncontrolling interests 9
 4
 125.0
 26
 62
 (58.1)
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests $374,596
 $289,438
 29.4
 $1,028,092
 $854,768
 20.3
             
GAAP noninterest income $158,778
 $144,140
 10.2
 $404,965
 $343,050
 18.0
Less: income attributable to noncontrolling interests 5,614
 4,679
 20.0
 21,709
 3,627
 NM
Non-GAAP noninterest income, net of noncontrolling interests $153,164
 $139,461
 9.8
 $383,256
 $339,423
 12.9
             
GAAP total revenue $532,752
 $433,301
 23.0
 $1,431,628
 $1,196,968
 19.6
Non-GAAP taxable equivalent revenue, net of noncontrolling interests $527,760
 $428,899
 23.0
 $1,411,348
 $1,194,191
 18.2
GAAP operating efficiency ratio 48.38% 50.95% (5.0) 52.15% 52.18% (0.1)
Non-GAAP operating efficiency ratio (1) 48.82
 51.45
 (5.1) 52.87
 52.28
 1.1
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
GAAP noninterest expense$653 $48036.0 %$1,289$87946.6 %
Less: expense attributable to SVB Leerink99 109(9.2)235 17137.4 
Less: Merger-related charges19 —— 19 —— 
Non-GAAP noninterest expense, net of SVB Leerink and other non-recurring expenses$535 $37144.2 $1,035 $70846.2 
GAAP net interest income$728 $51341.9 $1,388 $1,03733.8 
Adjustments for taxable equivalent basis7 475.0 12 771.4 
Non-GAAP taxable equivalent net interest income$735 $51742.2 $1,400 $1,04434.1 
GAAP noninterest income$761 $369106.2 $1,505 $670124.6 
Less: income attributable to noncontrolling interests, including carried interest allocation113 14NM138 12NM
Non-GAAP noninterest income, net of noncontrolling interests648 35582.5 1,367 658107.8 
Less: non-GAAP net gains on investment securities, net of noncontrolling interests192 21NM334 69NM
Less: net gains on equity warrant assets122 27NM344 40NM
Less: investment banking revenue103 142(27.5)245 18830.3 
Less: commissions17 17— 41 3324.2 
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$214 $14844.6 $403 $32822.9 
GAAP total revenue$1,489 $88268.8 $2,893 $1,70769.5 
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$949 $66542.7 $1,803 $1,37231.4 
Operating efficiency ratio43.85 %54.39 %(19.4)44.56 %51.48 %(13.4)
Non-GAAP core operating efficiency ratio (1)56.38 55.70 1.2 57.40 51.59 11.3 
(1) The non-GAAP core operating efficiency ratio is calculated by dividing noninterest expense after adjusting for noninterest expense attributable to SVB Leerink, merger-related charges and other non-recurring expenses by total revenue after adjusting for net interest 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.
NM—Not meaningful
(1)The non-GAAP operating efficiency ratio is calculated by dividing non-GAAP noninterest expense, net of noncontrolling interests, by non-GAAP taxable-equivalent revenue, net of noncontrolling interests.

Our GAAP operating efficiency ratio for the three and six months ended June 30, 2021 improved from the comparable 2020 periods, primarily as a result of (i) an increase in net interest income due to our fixed income investment securities and loans as a result of higher average balances and (ii) an increase in noninterest income due to higher net gains on investment securities and equity warrant assets, partially offset by an increase in noninterest expense due to higher compensation and benefits expense and professional services expense.
82

Compensation and Benefits Expense
The following table provides a summary of our compensation and benefits expense for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Compensation and benefits:
Salaries and wages$146 $124 17.7 %$309 $240 28.8 %
Incentive compensation plans162 121 33.9 312 187 66.8 
Other employee incentives and benefits (1)117 75 56.0 249 148 68.2 
Total compensation and benefits$425 $320 32.8 $870 $575 51.3 
Period-end full-time equivalent employees4,9323,98423.8 4,9323,98423.8 
Average full-time equivalent employees4,8083,85524.7 4,7053,76425.0 
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands, except employees) 2017 2016 % Change 2017 2016 % Change
Compensation and benefits:            
Salaries and wages $72,799
 $62,636
 16.2 % $207,687
 $182,375
 13.9%
Incentive compensation & ESOP 37,668
 38,255
 (1.5) 108,310
 87,162
 24.3
Other employee incentives and benefits (1) 42,796
 35,677
 20.0
 133,415
 104,873
 27.2
Total compensation and benefits $153,263
 $136,568
 12.2
 $449,412
 $374,410
 20.0
Period-end full-time equivalent employees 2,433
 2,280
 6.7
 2,433
 2,280
 6.7
Average full-time equivalent employees 2,434
 2,255
 7.9
 2,384
 2,199
 8.4
(1)Other employee incentives and benefits includes employer payroll taxes, group health and life insurance, share-based compensation, 401(k), ESOP, warrant incentive and retention plans, agency fees and other employee-related expenses.

(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$425 million and $870 million for the three and six months ended SeptemberJune 30, 2017,2021, compared to $136.6$320 million and $575 million for the comparable 2016 period.June 30, 2020 periods. The key factors affecting changes in factors affecting compensation and benefits expense were as follows:
•An increase of $10.2$22 million and $69 million in salaries and wages reflective primarily of the increase in the number of average FTE driven by strong hiring for in-sourcing, product development and revenue growth, as well as annual pay raises,
•An increase of $41 million and $125 million in incentive compensation plans expense related primarily to higher incentive compensation plan accruals as a result of an improved financial outlook and 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$42 million in total other employee incentives and benefits, 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$101 million in other employee incentives and benefits also includesdriven primarily by an increase of $2.7 million in the warrant incentive plan expenses reflectivedue to strong warrant gains during the first half of our quarterly equity warrant portfolio performance as well as2021, 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.
Compensationpayroll taxes and benefits expense was $449.4 million for the nine months ended September 30, 2017, compared to $374.4 million for the comparable 2016 period. The key changes in factors affecting compensation and benefits expense were as follows:

An increase of $28.5 million in total other employee incentives 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 taxes 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 compared to our estimate for the nine months ended September 30, 2016, reflective of the increase in our stock price relative to our peers.
An increase of $25.3 million in salaries and wages, reflective primarily of an increase in the number of average FTE by 185 to 2,384 FTEs during the nine months ended Septemberequity awards granted since June 30, 2017 compared to the same period in 2016, and annual pay raises.2020.
An increase of $21.1 million in 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.
Our variable compensation plans consist primarily of our Incentive Compensation Plan, Direct Drive Incentive Compensation Plan, Retention Program, Warrant Incentive Plan, Deferred Compensation Plan, 401(k) and ESOP Plan, SVB Leerink Incentive Compensation Plan and SVB Leerink Retention Program and Warrant Incentive PlanAward (see descriptions in our 20162020 Form 10-K). Total costs incurred under these plans were $45.9$191 million and $133.3$393 million for the three and ninesix months ended SeptemberJune 30, 2017,2021 compared to $43.7$133 million and $105.9$218 million for the comparable 2016June 30, 2020 periods. These amounts are included in total compensation and benefits expense discussed above.
Professional Services
Professional services expense was $33.0$97 million and $86.3$178 million for the three and ninesix months ended SeptemberJune 30, 2017,2021, compared to $23.4$64 million and $68.0$103 million for the comparable 2016June 30, 2020 periods. The increases wereincrease was driven primarily by higher consulting fees related to enhancementsour continued investments in our infrastructure, initiatives related to our regulatory riskprograms and compliance infrastructureoperating projects to support our momentum as we continue to growpresence 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.internationally.
Premises and Equipment
Premises and equipment expense was $18.9$37 million and $53.8$70 million for the three and ninesix months ended SeptemberJune 30, 2017,2021, compared to $16.3$28 million and $47.9$55 million for the comparable 2016 periods.June 30, 2020 period. The increases were primarily related to investments to projects, systemsincreased depreciation and technology to support our revenue growth and related initiatives as well as other operating costs.

computer maintenance expenses.
Net Occupancy
Net occupancy expense was $12.7$17 million and $35.4$35 million for the three and ninesix months ended SeptemberJune 30, 2017,2021, compared to $9.5$19 million and $28.9$37 million for the comparable 2016June 30, 2020 periods. The increasesdecreases were primarily driven by our decision to vacate certain leased office spaces in the fourth quarter of 2020.
83

Business Development and Travel
Business development and travel expense was $3 million and $7 million for the three and six months ended June 30, 2021, compared to $3 million and $17 million for the comparable June 30, 2020 periods. The decrease was primarily due to lease renewals at higher costs, reflectivethe continued impact of market conditions,the COVID-19 pandemic on domestic and the expansion of certain offices to support our growth.international travel.
FDIC and State Assessments
FDIC and state assessments expense was $8.4$10 million and $26.4$20 million for the three and ninesix months ended SeptemberJune 30, 2017,2021, compared to $7.8$7 million and $21.6$12 million for the comparable 2016June 30, 2020 periods. The increases were due primarily to the increasesincrease in our average assets.assets.
Other Noninterest ExpenseMerger-Related Charges
A summary of other noninterest expenseMerger-related charges were $19 million for the threesecond quarter of 2021 and nine months ended September 30, 2017consisted primarily of professional services and 2016 is as follows:systems integration expenses related to the acquisition of Boston Private.
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
Lending and other client related processing costs $6,935
 $5,885
 17.8% $18,806
 $13,721
 37.1 %
Telephone 2,518
 2,460
 2.4
 7,892
 7,109
 11.0
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
Postage and supplies 612
 598
 2.3
 2,013
 2,172
 (7.3)
Other 4,872
 3,644
 33.7
 16,350
 12,679
 29.0
Total other noninterest expense $18,064
 $15,533
 16.3
 $54,670
 $44,292
 23.4
Net Income Attributable to Noncontrolling Interests
Included in net income is income and expense attributable to noncontrolling interests. The relevant amounts allocated to investors in our consolidated subsidiaries, other than us, are reflected under “Net“net income attributable to noncontrolling interests” on our statements of income.
In the table below, noninterest income consists primarily of net investment gains and losses from our consolidated funds. Noninterest expense is primarily related to management fees paid by our managed funds to SVB Financial’s subsidiaries as the managed funds’ general partners. A summary of net income attributable to noncontrolling interests for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 is as follows:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Net interest income (1)$— $— — $— $— — 
Noninterest income (1)(36)(6)NM(52)(3)NM
Noninterest expense (1)— — — — — — 
Carried interest allocation (2)(77)(8)NM(86)(9)NM
Net income attributable to noncontrolling interests$(113)$(14)NM$(138)$(12)NM
  Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
Net interest income (1) $(9) $(4) 125.0% $(26) $(62) (58.1)%
Noninterest income (1) (4,341) (3,721) 16.7
 (19,059) (1,144) NM
Noninterest expense (1) 125
 117
 6.8
 517
 284
 82.0
Carried interest allocation (2) (1,273) (958) 32.9
 (2,650) (2,483) 6.7
Net income attributable to noncontrolling interests $(5,498) $(4,566) 20.4
 $(21,218) $(3,405) NM
(1)Represents noncontrolling interests’ share in net interest income, noninterest income or loss and noninterest expense.
NM—Not meaningful(2)Represents the preferred allocation of income (or change in income) earned by us as the general partner of certain consolidated funds.
(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 SeptemberJune 30, 20172021 and 20162020

Net income attributable to noncontrolling interests was $5.5113 million for the three months ended SeptemberJune 30, 2017,2021, compared to $4.6net income of $14 million for the comparable 20162020 period. Net income attributable to noncontrolling interests of $5.5$113 million for the three months ended SeptemberJune 30, 20172021 was driven primarily a result ofby net gains on investment securities (including carried interest allocation) from our managed funds of funds portfolio due to net unrealized valuation increasesand our managed direct venture funds portfolios reflective of investments held by the funds driven primarily by IPO and M&A activity.overall market performance during the second quarter of 2021. See “Results of Operations—Noninterest Income—Gains on Investment Securities, Net”.Net.”
NineSix months ended SeptemberJune 30, 20172021 and 20162020
Net income attributable to noncontrolling interests was $21.2$138 million for the ninesix months ended SeptemberJune 30, 2017,2021, compared to $3.4net income of $12 million for the comparable 20162020 period. Net income attributable to noncontrolling interests of $21.2$138 million for the ninesix months ended SeptemberJune 30, 20172021 was driven primarily a result ofby net gains on investment securities (including carried interest allocation) from our managed funds of funds portfolio due to net unrealized valuation increasesand our managed direct venture funds portfolios reflective of investments held by the funds driven by IPO, M&A and private equity-backed financing activity.overall market performance for the six months ended June 30, 2021. See “Results of Operations—Noninterest Income—Gains on Investment Securities, Net”.Net.”
84

Income Taxes
Our effective income tax expense rate was 39.625.1 percent and 37.125.5 percent for the three and ninesix months ended SeptemberJune 30, 2017, respectively,2021, compared to 40.927.3 percent and 40.827.1 percent for the three and nine months ended September 30, 2016, respectively.comparable 2020 periods. The decreases in our effective tax rate were driven primarily by an increase in the recognition of excess tax benefits from share-based compensation which is reflective of the annual vesting of our restricted stock units as well as an increase in our stock price. 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 reductions in the effective tax rate for the three and nine months ended September 30, 2017 resulted from the recognition of a tax benefit of $1.3 million and $14.4 million, respectively, due to the adoption and implementation of Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting, in the first quarter 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.
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.
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—“Segment12 — “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 ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:
Global Commercial Bank
Three months ended June 30,Six months ended June 30,
 Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
(Dollars in millions)(Dollars in millions)20212020% Change20212020% Change
Net interest income $337,860
 $262,484
 28.7% $924,789
 $773,342
 19.6 %Net interest income$715 $485 47.4 %$1,334 $949 40.6 %
Provision for credit losses (20,874) (16,974) 23.0
 (65,007) (86,143) (24.5)Provision for credit losses(11)(44)(75.0)(56)(238)(76.5)
Noninterest income 97,227
 79,226
 22.7
 260,650
 231,295
 12.7
Noninterest income174 133 30.8 333 300 11.0 
Noninterest expense (176,964) (159,479) 11.0
 (525,043) (462,234) 13.6
Noninterest expense(307)(241)27.4 (585)(466)25.5 
Income before income tax expense $237,249
 $165,257
 43.6
 $595,389
 $456,260
 30.5
Income before income tax expense$571 $333 71.5 $1,026 $545 88.3 
Total average loans, net of unearned income $18,807,616
 $16,357,099
 15.0
 $18,125,020
 $15,769,964
 14.9
Total average loans, amortized costTotal average loans, amortized cost$42,727 $30,472 40.2 $41,016 $29,805 37.6 
Total average assets 47,817,114
 40,828,549
 17.1
 45,414,432
 41,020,808
 10.7
Total average assets131,885 67,936 94.1 120,470 64,871 85.7 
Total average deposits 42,376,024
 36,484,125
 16.1
 40,398,413
 37,002,027
 9.2
Total average deposits128,918 65,091 98.1 117,655 62,153 89.3 
Three months ended SeptemberJune 30, 20172021 and 20162020
Income before income tax expense from our Global Commercial Bank (“GCB”)GCB increased to $237.2$571 million for the three months ended SeptemberJune 30, 2017,2021, compared to $165.3$333 million for the comparable 2016 period, which reflected the continued acquisition of new clients and growth of our core commercial business.2020 period. The key components of GCB's performance for the three months ended SeptemberJune 30, 20172021 compared to the comparable 20162020 period are discussed below.
Net interest income from GCB increased by $75.4$230 million for the three months ended SeptemberJune 30, 2017,2021, due primarily to an increase in loan interest income resulting mainlyprimarily from higher average loan balances, as well as from an increasepartially offset by a decrease in loan yields as a result of the shift in the loan mix. In addition, strong deposit growth provided a higher earnings credit and a low rate increases.environment produced a lower earnings charge for funded loans creating a benefit of a higher net FTP earnings credit.
GCB had aThe provision for credit losses of $20.9decreased to $11 million for the three months ended SeptemberJune 30, 2017,2021, compared to $17.0$44 million for the comparable 20162020 period. The provision of $20.9$11 million for the three months ended SeptemberJune 30, 20172021was driven primarily reflected $13.8by a $13 million increase related to loan growth, $9 million in net new specific reserves for nonaccrual loans and a $10.9$4 million increase in reserves for period-end loan growth,charge-offs not specifically reserved for at March 31, 2021, partially offset by a benefit from overall improved credit quality$9 million reduction in reserves for our performing loans based on our forecast models of our loan portfoliothe economic environment and the continued shift in our loan portfolio to private equity/venture capital loans, which tend to be$3 million of higher credit quality.recoveries.
The provision for credit losses of $17.0$44 million for the three months ended SeptemberJune 30, 20162020 was driven primarily reflected $8.0by $26 million ofin additional reserves for our performing loans $5.5based on our forecast models of the current economic environment under the CECL methodology adopted January 1, 2020, $22 million in charge-offs that did not previously have a specific reserve, $3.0 millionfor net reserves fornew nonaccrual loans and $2.8$11 million for charge-offs not specifically reserved for at March 31, 2020, partially offset by a $10 million decrease related to changes in loan growth.composition within our portfolio segments and $4 million of recoveries.
Noninterest income increased by $18.0$41 million for the three months ended SeptemberJune 30, 2017,2021 related primarily to an overall increase acrossin our non-GAAP core fee income (higher foreign exchange fees, credit card fees, lending related fees and deposit service charges, partially offset by lower client investment fees and credit card fees). ThisThe overall increase was due primarily to higher foreign
85

exchange, credit card and deposit transaction volumes, an increase in unused commitment fees and an increase in average client fund balances, partially offset by the continued growthimpact of ourthe federal funds rate decreases on client base and work with larger global companies reflective of investments in our platform, capabilities and global reach.investment fee yields.
Noninterest expense increased by $17.5$66 million for the three months ended SeptemberJune 30, 2017,2021, due primarily to increased professional services expense and compensation and benefits expense. Professional services expenses were higher due to enhancements in our riskexpense, other noninterest expense and compliance infrastructure to support our momentum as we continue to grow both domesticallypremises and globally as well as investments made in projects, systems and technology to support our revenue growth and related initiatives and other operating costs.equipment expense. Compensation and benefits expense increased $56 million as a result of increasedhigher incentive compensation expense and higher salaries and wages and other employee benefits.expenses. Incentive compensation expense increased due primarily to an increase in our 2021 full-year projected financial performance. The increase in GCB salaries and wages was due primarily to an increase in the average number of FTEs at GCB, which increased by 111 to 1,8813,328 FTEs for the three months ended SeptemberJune 30, 2017, compared to 1,7702021, from 2,822 FTEs for the comparable 20162020 period. TheOther noninterest expense increased due to an increase in total other employee benefits was relatedFDIC and state assessments expense driven by higher average assets. Premises and equipment expense increased due to various expenses, particularly personnel contracting expenses, to support our growth both domesticallyincreased depreciation and globally, and employer payroll taxes reflective of our increased headcount since the third quarter 2016.computer maintenance expenses.
NineSix months ended SeptemberJune 30, 20172021 and 20162020
Net interest income from our GCB increased by $151.4$385 million for the ninesix months ended SeptemberJune 30, 2017,2021, due primarily to an increase in loan interest income resulting mainly from higher average loan balances, as well as from an increasepartially offset by a decrease in loan yields as a result of growth in our higher credit quality Global Fund Banking portfolio as well as rate increases.decreases. In addition, strong deposit growth provided a higher earnings credit and a low rate environment produced a lower earnings charge for funded loans, creating a benefit of a higher net FTP earnings credit.

GCB had a provision for credit losses of $65.0$56 million for the ninesix months ended SeptemberJune 30, 2017,2021, compared to a provision of $86.1$238 million for the comparable 20162020 period. The provision of $65.0$56 million for the ninesix months ended SeptemberJune 30, 20172021was driven primarily by $90 million for charge-offs not specifically reserved for at December 31, 2020, of which $80 million was related to the single instance of potentially fraudulent activity discussed in prior filings, a $30 million increase related to loan growth and $3 million in net new nonaccrual loans, partially offset by a $56 million reduction in reserves for our performing loans based on our forecast models of the economic environment and $8 million of recoveries.
The provision of $238 million for the six months ended June 30, 2020 was reflective primarily of $51.9$167 million in additional reserves for our performing loans based on our forecast models of the current economic environment under the CECL methodology adopted January 1, 2020, including the impact of the COVID-19 pandemic, as well as changes in loan composition within our portfolio segments, $27 million in additional reserves for period-end loan growth, $24 million for charge-offs not specifically reserved for at December 31, 2019 and $33 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$12 million 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.recoveries.
Noninterest income increased by $29.4$33 million for the ninesix months ended SeptemberJune 30, 2017,2021, related primarily to an overall increase acrossin our non-GAAP core fee income, (higherdue primarily to higher foreign exchange fees, lending related fees, credit card fees and deposit service charges, partially offset by lower client investment fees). Thisfees. The overall increase was due primarily to higher foreign exchange, credit card and deposit transaction volumes, an increase in unused commitment fees and an increase in average client fund balances, partially offset by the continued growthimpact of ourthe federal funds rate decreases on client base and work with larger global companies reflective of investments in our platform, capabilities and global reach.investment fee yields.
Noninterest expense increased by $62.8$119 million for the ninesix months ended SeptemberJune 30, 2017,2021, due primarily to increased expenses for compensation and benefits expense, other noninterest expense and professional services.premises and equipment expense. Compensation and benefits expense increased $102 million as a result of higher incentive compensation expenses, increasedexpense and higher salaries and wages and higher other employee benefits.expenses. Incentive compensation expense increased due primarily to an increase in our 2021 full-year projected financial performance. The increase in incentive compensation expenses was due to the expectation of our performance to exceed budget for 2017. The increase in ourGCB salaries and wages expenses was due primarily to an increase in the average number of FTEs at GCB, which increased by 124 to 1,8573,275 FTEs for the ninesix months ended SeptemberJune 30, 2017, compared to 1,7332021, from 2,757 FTEs for the comparable 20162020 period. TheOther noninterest expense increased due to an increase in total other employee incentivesFDIC and benefits was related to various expenses, particularly personnel contracting expenses, to support our growth both domesticallystate assessments expense driven by higher average assets. Premises and globally as well as group health and life insurance and employer payroll taxes reflective of ourequipment expense increased headcount since the nine months ended September 30, 2016. Professional services expenses were higher due to enhancements in our riskincreased depreciation 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.computer maintenance expenses.
86

SVB Private Bank
Three months ended June 30,Six months ended June 30,
 Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
(Dollars in millions)(Dollars in millions)20212020% Change20212020% Change
Net interest income $14,600
 $13,298
 9.8 % $42,952
 $40,508
 6.0 %Net interest income$29 $19 52.6 %$56 $34 64.7 %
Provision for credit losses (1,535) (1,976) (22.3) (2,266) (2,481) (8.7)
(Provision for) reduction of credit losses(Provision for) reduction of credit losses(5)(4)25.0 4 (59)(106.8)
Noninterest income 460
 664
 (30.7) 1,715
 2,052
 (16.4)Noninterest income1 1 — 2 1 100.0 
Noninterest expense (4,706) (3,122) 50.7
 (12,675) (9,481) 33.7
Noninterest expense(15)(10)50.0 (28)(20)40.0 
Income before income tax expense $8,819
 $8,864
 (0.5) $29,726
 $30,598
 (2.8)
Total average loans, net of unearned income $2,499,507
 $2,074,982
 20.5
 $2,371,027
 $1,978,175
 19.9
Income (loss) before income tax expenseIncome (loss) before income tax expense$10 $6 66.7 $34 $(44)(177.3)
Total average loans, amortized costTotal average loans, amortized cost$5,154 $4,036 27.7 $5,066 $3,946 28.4 
Total average assets 2,538,400
 2,096,237
 21.1
 2,403,777
 1,999,455
 20.2
Total average assets5,199 4,072 27.7 5,114 3,982 28.4 
Total average deposits 1,231,390
 1,115,446
 10.4
 1,289,990
 1,120,575
 15.1
Total average deposits3,977 2,120 87.6 3,636 2,021 79.9 

Three months ended SeptemberJune 30, 20172021 and 20162020
Net interest income from our SVB Private Bank increased by $1.3$10 million for the three months ended SeptemberJune 30, 2017,2021, due primarily to higher interest income duethe increase in average loans for the three months ended June 30, 2021 as compared to loan growth,the June 30, 2020 comparable period, partially offset by decreases in loan yields as a higher funding chargeresult of overall market rate decreases.
The provision for loans funded as loan growth exceeded deposit growth.
Noninterest expense increased by $1.6credit losses of $5 million for the three months ended SeptemberJune 30, 2017, due2021 was reflective primarily of an increase in reserves for our performing loans based on our forecast models of the economic environment and loan growth partially offset by net new nonaccrual loans.
Noninterest expense increased by $5 million for the three months ended June 30, 2021, related primarily to increased compensation and benefits expense. Compensation and benefits expense increased $4 million as a result of increasedhigher incentive compensation and salaries and wages reflective primarily of annual pay raises, and higher incentive compensation expenses due primarily to the expectationan increase in our 2021 full-year projected financial performance and an increase in average number of our performance to exceed budget for 2017.FTEs.
NineSix months ended SeptemberJune 30, 20172021 and 20162020
Net interest income from our SVB Private Bank increased by $2.4$22 million for the ninesix months ended SeptemberJune 30, 2017,2021 due primarily to higher interest income duethe increase in average loans for the six months ended June 30, 2021 as compared to loan growth,the June 30, 2020 comparable period, partially offset by decreases in loan yields as a higher funding charge for loans funded as loan growth exceeded deposit growth.result of overall market rate decreases.

SVB Private Bank had a provision forThe reduction of credit losses of $2.3$4 million for the ninesix months ended SeptemberJune 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 due2021 was reflective primarily toof a reduction in reserves for period-endour performing loans based on our forecast models of the economic environment partially, offset by loan growth.
Noninterest expense increased by $3.2$8 million for the ninesix months ended SeptemberJune 30, 2017, due2021, related primarily to increased compensation and benefits expense. Compensation and benefits expense increased $7 million as a result of increasedhigher incentive compensation and salaries and wages reflective primarily of annual pay raises, and higher incentive compensation expenses due primarily to the expectationan increase in our 2021 full-year projected financial performance and an increase in average number of our performance to exceed budget for 2017.

FTEs.
SVB Capital
Three months ended June 30,Six months ended June 30,
 Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 % Change 2017 2016 % Change
Net interest income (expense) $15
 $1
 NM
 $41
 $(51) (180.4)%
(Dollars in millions)(Dollars in millions)20212020% Change20212020% Change
Net interest incomeNet interest income$— $— — $— $— — 
Noninterest income 13,913
 30,619
 (54.6) 45,707
 44,492
 2.7
Noninterest income175 21 NM244 26 NM
Noninterest expense (4,873) (3,924) 24.2
 (14,537) (11,521) 26.2
Noninterest expense(18)(8)125.0 (34)(17)100.0 
Income before income tax expense $9,055
 $26,696
 (66.1) $31,211
 $32,920
 (5.2)Income before income tax expense$157 $13 NM$210 $9 NM
Total average assets $323,417
 $325,321
 (0.6) $333,439
 $334,328
 (0.3)Total average assets$613 $430 42.6 $595 $439 35.5 

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.
87

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. The performance of these securities may be impacted by the effects of the COVID-19 pandemic.
Three months endedSeptember June 30, 20172021 and 20162020
SVB Capital had noninterest income of $13.9$175 million for the three months ended SeptemberJune 30, 2017,2021, compared to $30.6$21 million for the comparable 2016June 30, 2020 period. The decreaseincrease in noninterest income was due primarily to loweran increase in net gains on investment securities for the three months ended June 30, 2021, compared to the comparable 2016June 30, 2020 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$143 million for the three months ended SeptemberJune 30, 20172021, compared to $12 million for the comparable June 30, 2020 period. The net gains on investment securities of $143 million were driven primarily by unrealized net valuation increases of private and 2016.public positions as well as fund distributions driven primarily by realized gains from one public company position.
NineSix months ended SeptemberJune 30, 20172021 and 20162020
SVB Capital had noninterest income of $45.7$244 million for the ninesix months ended SeptemberJune 30, 2017,2021, compared to $44.5$26 million for the comparable 2016June 30, 2020 period. The increase in noninterest income was due primarily to higheran increase in net gains on investment securities for the six months ended June 30, 2021, compared to the comparable 2016June 30, 2020 period. SVB Capital’s components of noninterest income primarily include the following:
•Net gains on investment securities of $28.2$197 million for the ninesix months endedSeptember June 30, 2017,2021, compared to net gains of $23.0$6 million for the comparable 2016June 30, 2020 period. The net gains on investment securities of $28.2$197 million were driven primarily by unrealized net valuation increases of private and public positions as well as fund distributions driven primarily by realized gains from one public company position.


SVB Leerink
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)20212020% Change20212020% Change
Net interest income$— $— — $— $— — 
Noninterest income149 164 (9.1)319 226 41.2 
Noninterest expense(98)(109)(10.1)(235)(171)37.4 
Income before income tax expense$51 $55 (7.3)$84 $55 52.7 
Total average assets$729 $455 60.2 $748 $469 59.5 

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.
88

Three months ended June 30, 2021 and 2020
SVB Leerink had noninterest income of $149 million for the ninethree months endedSeptember June 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 million2021, compared to $14.1$164 million for the comparable 2016June 30, 2020 period. The $15 million decrease in noninterest income was primarily due to a $39 million decrease in investment banking revenue attributable to lower completed deal volume in the second quarter of 2021 compared to 2020, partially offset by a $23 million increase in investment gains driven by a net valuation increase on equity fund investments.
SVB Leerink had noninterest expense of $98 million for the three months ended June 30, 2021, compared to $109 million for the comparable 2020 period. The $11 million decrease in noninterest expense was primarily driven by a decrease of $9 million in compensation and benefit expense due to a decrease in incentive compensation driven by (i) a decrease in revenue as compared to the second quarter of 2020 and (ii) a $3 million decrease in other noninterest expense due to a decrease in corporate finance expense primarily due to lower equity deals as compared to the second quarter of 2020.
Six months ended June 30, 2021 and 2020
SVB Leerink had noninterest income of $319 million for the six months ended June 30, 2021, compared to $226 million for the comparable June 30, 2020 period. The $93 million increase in noninterest income was primarily due to a $57 million increase in investment banking revenue attributable to exceptional levels of funding activity in the life science/healthcare secondary markets resulting in an increase in public equity underwriting fees and a $26 million increase in investment gains driven by a net valuation increase on equity fund investments.
SVB Leerink had noninterest expense of $235 million for the six months ended June 30, 2021, compared to $171 million for the comparable 2020 period. The $64 million increase was due primarily driven by an increase of $60 million in compensation and benefit expense driven primarily by an increase in incentive compensation expense as a result of a strong performance for the six months ended June 30, 2021, as compared to the additionsame period in 2020 and an increase in salaries and wages expense due to strategic hires subsequent to the second quarter of new managed funds at SVB Capital.
2020.
Consolidated Financial Condition
Our total assets, and total liabilities and stockholders' equity, were $50.8$163.4 billion at SeptemberJune 30, 20172021 compared to $44.7$115.5 billion at December 31, 2016,2020, an increase of $6.1$47.9 billion, or 13.641.5 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$24.0 billion at SeptemberJune 30, 2017,2021, an increase of $1.1$6.3 billion, or 39.735.6 percent, compared to $2.5$17.7 billion at December 31, 2016.2020. The increase in period-end cash balances was primarily due todriven by the significant growth in our deposit balances during the nine months ended September 30, 2017.
deposits of $43.8 billion. As of SeptemberJune 30, 2017 and December 31, 2016, $1.62021, $16.4 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$5.8 billion. As of December 31, 2020, $13.7 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 $3.0 billion.
89


Investment Securities
Investment securities totaled $24.3$85.8 billion at SeptemberJune 30, 2017,2021, an increase of $2.6$36.5 billion, or 12.174.0 percent,, compared to $21.7$49.3 billion at December 31, 2016.2020. Our investment securities portfolio consistsis comprised of: (i) an available-for-saleAFS securities portfolio and a held-to-maturityHTM 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, investments in qualified affordable housing projects, as well as public equity securities held as a result of equity warrant assets exercised.

Available-for-SaleAFS Securities
Period-end available-for-saleAFS securities were $12.6$23.9 billion at SeptemberJune 30, 20172021, compared to $12.6$30.9 billion at December 31, 2016,2020, a decrease of $17.1 million,$7.0 billion, or 0.122.8 percent. The $17.1 million$7.0 billion decrease in period-end AFS securities balances from the fourth quarterDecember 31, 2020 to June 30, 2021, was driven primarily by a $5.8 billion re-designation of 2016AFS securities to HTM securities, paydowns and maturities of $2.9 billion and a decrease in fair value of $567 million due to the third quarter of 2017 was due primarily to $2.4 billionincrease in portfolio paydowns and maturitiesinterest rates, partially offset by purchases of $2.4 billion of agency backed mortgage securities and U.S. Treasury securities.
$2.3 billion. Securities classified as available-for-saleAFS 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-saleAFS as of SeptemberJune 30, 2017.2021. 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 securitiesMBS may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securitiesMBS classified as available-for-saleAFS 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.
 June 30, 2021
 TotalOne Year
or Less		After One Year to
Five Years		After Five Years to
Ten Years		After
Ten Years
(Dollars in millions)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$6,235 1.35 %$41 2.08 %$6,037 1.33 %$157 1.72 %$— — %
U.S. agency debentures81 1.49 — — — — 81 1.49 — — 
Foreign government debt securities15 (0.65)15 (0.65)— — — — — — 
Residential MBS:
Agency-issued MBS11,562 1.51 — — — — — — 11,562 1.51 
Agency-issued CMO—fixed rate4,424 1.24 — — — — — — 4,424 1.24 
Agency-issued CMBS1,559 1.75 — — — — 1,559 1.75 — — 
Total$23,876 1.43 $56 1.32 $6,037 1.33 $1,797 1.73 $15,986 1.44 
  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) 
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% $—
 —% $—
 —%
U.S. agency debentures 1,676,169
 1.71
 314,852
 1.45
 1,361,317
 1.77
 —
 —
 —
 —
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
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
Held-to-MaturityHTM Securities
Period-end held-to-maturityHTM securities were $11.1$60.0 billion at SeptemberJune 30, 20172021, compared to $8.4$16.6 billion at December 31, 2016,2020, an increase of $2.7$43.4 billion, or 31.2261.6 percent. The $2.7$43.4 billion increase in period-end HTM security balances from the fourth quarter of 2016December 31, 2020 to the third quarter of 2017June 30, 2021 was due to newdriven by purchases of $3.9$42.9 billion primarily in agency backed mortgageand the re-designation of $5.7 billion of AFS securities to HTM securities, partially offset by $1.2$5.2 billion in portfolio paydowns and maturities. The securities were re-designated for capital management purposes and consisted primarily of agency-issued CMBS and CMO securities with unrealized losses totaling $78 million, which are recorded in AOCI.
90

Securities classified as held-to-maturityHTM are accounted for at cost with no adjustments for changes in fair value. For securities previously re-designated as held-to-maturityHTM from available-for-sale,AFS, the net unrealized gains or losses 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-maturityHTM as of SeptemberJune 30, 2017.2021. 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 mortgage-backed securitiescertain 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 MBS may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securitiesMBS classified as held-to-maturityHTM 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
  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
U.S. agency debentures $660,193
 2.37% $—
 —% $102,581
 2.73% $557,612
 2.30% $—
 —%
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
Agency-issued collateralized mortgage obligations—fixed rate
 3,025,421
 1.78
 —
 —
 —
 —
 437,865
 1.48
 2,587,556
 1.83
Agency-issued collateralized mortgage obligations—variable rate
 269,495
 0.74
 —
 —
 —
 —
 —
 —
 269,495
 0.74
Agency-issued commercial mortgage-backed securities 1,554,220
 2.39
 —
 —
 —
 —
 —
 —
 1,554,220
 2.39
Municipal bonds and notes 380,976
 2.24
 7,560
 4.04
 71,631
 3.06
 159,509
 3.24
 142,276
 0.59
Total $11,055,006
 2.21
 $8,298
 4.35
 $429,487
 2.47
 $1,216,524
 2.12
 $9,400,697
 2.21
 June 30, 2021
 TotalOne Year
or Less		After One Year to
Five Years		After Five Years to
Ten Years		After
Ten Years
(Dollars in millions)Amortized CostWeighted-
Average
Yield		Amortized CostWeighted-
Average
Yield		Amortized CostWeighted-
Average
Yield		Amortized CostWeighted-
Average
Yield		Amortized CostWeighted-
Average
Yield
U.S. agency debentures$552 2.30 %$4 2.76 %$141 2.55 %$407 2.21 %$— — %
Residential MBS:
Agency-issued MBS36,724 1.60 3 1.57 9 2.23 449 2.47 36,263 1.59 
Agency-issued CMO—fixed rate4,474 1.23 — — 5 1.76 404 1.62 4,065 1.19 
Agency-issued CMO—variable rate117 0.74 — — — — — — 117 0.74 
Agency-issued CMBS12,492 1.69 — — — — 535 1.98 11,957 1.67 
Municipal bonds and notes5,265 2.33 61 3.00 113 2.46 833 2.29 4,258 2.36 
Corporate bonds373 1.93 — — — — 373 1.93 — — 
Total$59,997 1.71 $68 2.92 $268 2.49 $3,001 2.48 $56,660 1.68 
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 2.7 years4.5 and 2.53.7 years at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively. The weighted-average duration of our total fixed income securities portfolio including the impact of our fair value swaps was 3.9 years at June 30, 2021. We are focused on shortening AFS portfolio duration to approximately two years to mitigate OCI risk while buying three- to five-year duration HTM securities to support portfolio yields. The weighted-average duration of our AFS securities portfolio was 4.2 years at June 30, 2021 and 3.7 years at December 31, 2020. The weighted-average duration of our AFS securities portfolio including the impact of our fair value swaps was 2.4 years at June 30, 2021. The weighted-average duration of our HTM securities portfolio was 4.6 years at June 30, 2021 and 3.7 years at December 31, 2020. We continue to invest excess on-balance sheet liquidity in high-quality securities (agency MBS/CMBS, municipal and corporate securities), primarily classified as HTM.

91

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”)),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$1.9 billion ($1.6 billion net of noncontrolling interest) at SeptemberJune 30, 20172021 compared to $622.6 million$1.8 billion ($1.6 billion net of noncontrolling interest) at December 31, 2016,2020, an increase of $4.9$141 million, or 0.87.8 percent. Non-marketable and other securities, net of noncontrolling interests were $506.1 million at September 30, 2017, compared to $500.1 million at December 31, 2016. 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 SeptemberJune 30, 20172021 and December 31, 2016:2020:
  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
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):        
Venture capital and private equity fund investments 87,218
 63,465
 82,823
 64,030
Debt funds 17,889
 17,889
 17,020
 17,020
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
Investments in qualified affordable housing projects, net 148,036
 148,036
 112,447
 112,447
Total non-marketable and other securities $627,469
 $506,068
 $622,552
 $500,137
 June 30, 2021December 31, 2020
(Dollars in millions)Carrying value (as reported)Amount attributable to SVBFGCarrying value (as reported)Amount attributable to SVBFG
Non-marketable and other equity securities:
Non-marketable securities (fair value accounting):
Consolidated venture capital and private equity fund investments (1)$108 $29 $89 $23 
Unconsolidated venture capital and private equity fund investments (2)187 187 185 185 
Other investments without a readily determinable fair value (3)79 79 61 61 
Other equity securities in public companies (fair value accounting (4)107 107 281 281 
Non-marketable securities (equity method accounting) (5):
Venture capital and private equity fund investments544 326 362 215 
Debt funds7 7 5 5 
Other investments215 215 203 203 
Investments in qualified affordable housing projects, net696 696 616 616 
Total non-marketable and other equity securities$1,943 $1,646 $1,802 $1,589 
(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 June 30, 2021 and December 31, 2020:
 June 30, 2021December 31, 2020
(Dollars in millions)Carrying value (as reported)Amount attributable to SVBFGCarrying value (as reported)Amount attributable to SVBFG
Strategic Investors Fund, LP$5 $1 $5 $1 
Capital Preferred Return Fund, LP51 11 50 11 
Growth Partners, LP52 17 34 11 
Total consolidated venture capital and private equity fund investments$108 $29 $89 $23 

(2)The carrying value represents investments in 157 and 162 funds (primarily venture capital funds) at June 30, 2021 and December 31, 2020, 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. 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 March 31st for our June 30th consolidated financial statements, adjusted for any
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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 5 — “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.
(5)The following table shows the carrying value and our ownership percentage of each investment at June 30, 2021 and December 31, 2020 (equity method accounting):
 June 30, 2021December 31, 2020
(Dollars in millions)Carrying value (as reported)Amount attributable to SVBFGCarrying value (as reported)Amount attributable to SVBFG
Venture capital and private equity fund investments:
Strategic Investors Fund II, LP$4 $4 $4 $3 
Strategic Investors Fund III, LP28 23 16 13 
Strategic Investors Fund IV, LP36 30 25 21 
Strategic Investors Fund V, LP87 46 67 35 
CP II, LP (1)8 5 8 5 
Other venture capital and private equity fund investments381 218 242 138 
Total venture capital and private equity fund investments$544 $326 $362 $215 
Debt funds:
Gold Hill Capital 2008, LP (2)$5 $5 $4 $4 
Other debt funds2 2 1 1 
Total debt funds$7 $7 $5 $5 
Other investments:
SPD Silicon Valley Bank Co., Ltd.$115 $115 $115 $115 
Other investments100 100 88 88 
Total other investments$215 $215 $203 $203 
(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, 2017 and December 31, 2016:
  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
Strategic Investors Fund, LP $15,624
 $1,963
 $18,459
 $2,319
Capital Preferred Return Fund, LP 55,685
 12,001
 57,627
 12,420
Growth Partners, LP 57,459
 19,128
 59,718
 19,880
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
(i)On January 3, 2017, the other private equity fund was closed resulting in an immaterial impact on the Company's financial statements.

(1)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.

(2)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.

(2)
The following table shows the amounts of other venture capital investments held by the following consolidated funds and amounts attributable to SVBFG for each fund at September 30, 2017 and December 31, 2016:
  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

(3)Investments classified as other securities (fair value accounting) represent direct equity investments in public companies held by our consolidated funds.
(4)
The following table shows the amounts of our other investments (equity method accounting) at September 30, 2017 and December 31, 2016:
  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
OnThe Volcker Rule prohibits, subject to certain exceptions, a banking entity, such as the Company, from sponsoring, investing in, or having certain relationships with covered funds. Under the currently effective regulations implementing the Volcker Rule, covered funds are defined to include many venture capital and private equity funds.
In 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.funds (“Restricted Volcker Investments”). 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 untilby 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,
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There have been various amendments to the Volcker Rule prohibits,in recent years. In particular, certain amendments that became effective October 1, 2020, provide for, among other things, the adoption of new exclusions from the definition of “covered fund” for venture capital funds and credit funds that meet certain criteria. As a result of these amendments, we believe that none of the Restricted Volcker Investments will be required to be disposed of or will otherwise conform to the Volcker Rule requirements. We expect that all of our Restricted Volcker Investments will (i) qualify for these new exclusions; (ii) otherwise be excluded from the definition of "covered fund"; or (iii) be subject to certain exceptions, a banking entity, such as the Company, from sponsoringliquidation 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, such prohibited investments had an estimated aggregate carrying value of approximately $147 million (and an aggregate fair value of approximately $249 million).dissolution process (For more information about the Volcker Rule, see “Business—Supervision“Business—Supervision and Regulation” under Part 1, Item 1 of Part 1 of our 20162020 Form 10-K.)
Loans
Loans, net of unearned incomeamortized cost basis, increased by $2.3$5.6 billion to $22.2$50.8 billion at SeptemberJune 30, 2017,2021, compared to $19.9$45.2 billion at December 31, 2016.2020. Unearned income was $141$248 million at SeptemberJune 30, 20172021 and $125$226 million at December 31, 2016. Total gross loans were $22.3 billion at September 30, 2017, an increase of $2.3 billion, compared to $20.0 billion at December 31, 2016. Period-end2020. The increase in period-end loans increased compared to December 31, 2016,was driven primarily by loan growth in our private equity/venture capital portfolio. Global Fund Banking and Private Bank as well as in the Technology and Life Science/Healthcare portfolios. This growth was partially offset by a decrease in our SBA loans driven by an acceleration of forgiveness of these loans during the second quarter.
The breakdown of total gross loans and total loans as a percentage of total gross loans by categoryrisk-based segment is as follows:

 June 30, 2021December 31, 2020
(Dollars in millions)AmountPercentage AmountPercentage 
Global fund banking$30,630 60.3 %$25,543 56.5 %
Investor dependent:
Early stage1,565 3.1 1,486 3.3 
Mid stage1,708 3.4 1,565 3.5 
Later stage2,055 4.0 1,921 4.2 
Total investor dependent5,328 10.5 4,972 11.0 
Cash flow dependent:
Sponsor led buyout1,917 3.8 1,989 4.4 
Other2,926 5.8 2,945 6.5 
Total cash flow dependent4,843 9.6 4,934 10.9 
Private bank5,297 10.4 4,901 10.9 
Balance sheet dependent2,804 5.5 2,191 4.8 
Premium wine1,002 2.0 1,053 2.3 
Other7 — 28 0.1 
SBA loans843 1.7 1,559 3.5 
Total loans$50,754 100.0 %$45,181 100.0 %
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  September 30, 2017 December 31, 2016
(Dollars in thousands) Amount Percentage  Amount Percentage 
Commercial loans:        
Software/internet $5,851,323
 26.2% $5,668,578
 28.3%
Hardware 1,122,024
 5.0
 1,189,114
 5.9
Private equity/venture capital 9,634,928
 43.1
 7,747,911
 38.7
Life science/healthcare 1,779,200
 8.0
 1,866,685
 9.3
Premium wine 211,822
 1.0
 201,634
 1.0
Other 395,091
 1.8
 396,458
 2.0
Total commercial loans 18,994,388
 85.1
 17,070,380
 85.2
Real estate secured loans:        
Premium wine 713,467
 3.2
 678,745
 3.5
Consumer 2,203,877
 9.9
 1,925,620
 9.6
Other 42,671
 0.2
 43,807
 0.2
Total real estate secured loans 2,960,015
 13.3
 2,648,172
 13.3
Construction loans 75,644
 0.3
 64,957
 0.3
Consumer loans 299,782
 1.3
 241,153
 1.2
Total gross loans $22,329,829
 100.0
 $20,024,662
 100.0

Loan Concentration
The following table provides a summary of total loans by size and category.risk-based segment. The breakout of the categoriesbelow is based on total client balances (individually or in the aggregate) as of SeptemberJune 30, 2017:2021 to any single client:
 June 30, 2021
(Dollars in millions)Less than Five MillionFive to Ten MillionTen to Twenty Million Twenty to Thirty MillionThirty Million or MoreTotal
Global fund banking$1,065 $1,355 $3,314 $2,709 $22,193 $30,636 
Investor dependent:
Early stage1,686 268 107 22 — 2,083 
Mid stage714 523 345 101 128 1,811 
Later stage270 570 664 321 270 2,095 
Total investor dependent2,670 1,361 1,116 444 398 5,989 
Cash flow dependent:
Sponsor led buyout18 72 463 432 940 1,925 
Other282 129 578 431 1,621 3,041 
Total cash flow dependent300 201 1,041 863 2,561 4,966 
Private bank3,725 615 511 160 287 5,298 
Balance sheet dependent231 253 492 351 1,499 2,826 
Premium wine239 271 251 121 142 1,024 
Other— 5 10 — — 15 
Total loans (1)$8,230 $4,061 $6,735 $4,648 $27,080 $50,754 
  September 30, 2017
(Dollars in thousands) 
Less than
Five Million
 
Five to Ten
Million
 
Ten to Twenty
Million
  Twenty to Thirty Million Thirty Million or More Total
Commercial loans:            
Software/internet $1,484,316
 $859,890
 $1,485,139
 $1,144,494
 $877,484
 $5,851,323
Hardware 240,941
 185,029
 215,278
 272,862
 207,914
 1,122,024
Private equity/venture capital 656,327
 766,075
 1,563,788
 971,708
 5,677,030
 9,634,928
Life science/healthcare 330,412
 456,618
 500,453
 325,108
 166,609
 1,779,200
Premium wine 73,551
 42,149
 39,630
 48,492
 8,000
 211,822
Other 150,103
 8,000
 50,885
 69,521
 116,582
 395,091
Commercial loans 2,935,650
 2,317,761
 3,855,173
 2,832,185
 7,053,619
 18,994,388
Real estate secured loans:            
Premium wine 165,085
 191,436
 222,088
 95,440
 39,418
 713,467
Consumer 1,886,402
 234,167
 83,308
 —
 —
 2,203,877
Other 7,826
 —
 14,312
 20,533
 —
 42,671
Real estate secured loans 2,059,313
 425,603
 319,708
 115,973
 39,418
 2,960,015
Construction loans 6,587
 46,164
 —
 22,893
 —
 75,644
Consumer loans 131,676
 49,404
 32,097
 51,755
 34,850
 299,782
Total gross loans $5,133,226
 $2,838,932
 $4,206,978
 $3,022,806
 $7,127,887
 $22,329,829
(1)Included in total loans at amortized cost is approximately $843 million in PPP loans. The PPP loans consist of loans across all of our risk-based segments.
At SeptemberJune 30, 2017, gross2021, loans equal to or greater than $20 million to any single client (individually or in the aggregate) totaled $10.2$31.7 billion, or 45.562.5 percent of our total loan portfolio. These loans represented 257615 clients, and of these loans, $71.6$43 million were on nonaccrual status as of both SeptemberJune 30, 2017 and December 31, 2016.2021.

The following table provides a summary of loans by size and category.risk-based segment. The breakout of the categoriesbelow is based on total client balances (individually or in the aggregate) as of December 31, 2016:2020:
 December 31, 2020
(Dollars in millions)Less than Five MillionFive to Ten MillionTen to Twenty Million Twenty to Thirty MillionThirty Million or MoreTotal
Global fund banking$1,052 $1,360 $2,637 $2,777 $17,723 $25,549 
Investor dependent:
Early stage1,896 221 101 28 — 2,246 
Mid stage814 493 278 95 133 1,813 
Later stage282 597 693 270 174 2,016 
Total investor dependent2,992 1,311 1,072 393 307 6,075 
Cash flow dependent:
Sponsor led buyout18 67 546 654 714 1,999 
Other401 228 536 650 1,486 3,301 
Total cash flow dependent419 295 1,082 1,304 2,200 5,300 
Private bank3,505 597 319 95 385 4,901 
Balance sheet dependent231 333 461 289 926 2,240 
Premium wine242 273 300 121 145 1,081 
Other— 19 16 — — 35 
Total loans (1)$8,441 $4,188 $5,887 $4,979 $21,686 $45,181 
  December 31, 2016
(Dollars in thousands) Less than Five Million Five to Ten Million Ten to Twenty Million  Twenty to Thirty Million Thirty Million or More Total
Commercial loans:            
Software/internet $1,317,707
 $779,986
 $1,657,760
 $1,021,486
 $891,639
 $5,668,578
Hardware 252,339
 160,534
 223,781
 244,988
 307,472
 1,189,114
Private equity/venture capital 635,838
 668,998
 1,182,427
 888,916
 4,371,732
 7,747,911
Life science/healthcare 328,942
 372,171
 457,833
 420,580
 287,159
 1,866,685
Premium wine 76,400
 25,209
 76,609
 15,902
 7,514
 201,634
Other 124,650
 40,950
 61,228
 26,320
 143,310
 396,458
Commercial loans 2,735,876
 2,047,848
 3,659,638
 2,618,192
 6,008,826
 17,070,380
Real estate secured loans:            
Premium wine 151,759
 172,975
 229,750
 101,387
 22,874
 678,745
Consumer loans 1,664,432
 196,345
 64,843
 —
 —
 1,925,620
Other 8,014
 —
 14,660
 21,133
 —
 43,807
Real estate secured loans 1,824,205
 369,320
 309,253
 122,520
 22,874
 2,648,172
Construction loans 23,976
 6,685
 14,016
 20,280
 —
 64,957
Consumer loans 99,119
 29,092
 9,473
 29,089
 74,380
 241,153
Total gross loans $4,683,176
 $2,452,945
 $3,992,380
 $2,790,081
 $6,106,080
 $20,024,662
(1)Included in total loans at amortized cost is approximately $1.6 billion in PPP loans. The PPP loans consist of loans from all risk-based segments.

At December 31, 2016, gross2020, loans equal to or greater than $20 million to any single client (individually or in the aggregate) totaled $8.9$26.7 billion, or 44.459.0 percent of our total loan portfolio. These loans represented 233544 clients, and of these loans, $79.7$65 million were on nonaccrual status as of December 31, 2016.2020.
The credit profile
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Our three main market segments include (i) Global Fund Banking, (ii) technology (software/internet and hardware) and life science/healthcare (ii) private equity/venture capital, and (iii) SVB Private Bank.
(i) Technology and Life Science/HealthcareGlobal Fund Banking
Our technology and life science/healthcareGlobal Fund Banking loan portfolios include loans to clients at all 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, 2017 and December 31, 2016. 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 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 includes asset-based loans, represented 10 percent of total gross loans at September 30, 2017 compared to 13 percent at December 31, 2016. 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, 2017 and five percent and two percent of total gross loans at December 31, 2016, respectively. 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 19 percent of total gross loans at September 30, 2017, compared to 22 percent of total gross loans at December 31, 2016. 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 10 percent of total gross loans at September 30, 2017, compared to 11 percent of total gross loans at December 31, 2016. 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 4360.3 percent of total gross loans compared to 39at June 30, 2021 and 56.5 percent of total gross loans at December 31, 2016.2020. 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 oftentypically secured by an assignment of the general partner's right to call capital from the fund's limited partner investors.


(ii) Technology and Life Science/Healthcare
Our technology and life science/healthcare loan portfolios include loans to clients at the various stages of their life cycles. The risk-based segments for our technology and life science/healthcare market segments are classified as investor dependent, cash flow dependent or balance sheet dependent for reporting purposes.
Investor dependent loans represented 10.5 percent of total loans at June 30, 2021 and 11.0 percent at December 31, 2020. These loans are made to companies in both our Accelerator (early-stage) and Growth practices (mid-stage and later-stage).
Cash flow dependent loans, which include sponsor led buyout lending, represented 9.6 percent of total loans at June 30, 2021 and 10.9 percent at December 31, 2020. Sponsor led buyout loans represented 3.8 percent of total loans at June 30, 2021 and 4.4 percent at December 31, 2020.
Balance sheet dependent loans, which include asset-based loans, represented 5.5 percent of total loans at June 30, 2021 and 4.8 percent at December 31, 2020. Working capital lines and accounts receivable financing, both part of our asset-based lending, each represented one percent and half a percent of total loans, respectively, at both June 30, 2021 and December 31, 2020.

(iii) SVB Private Bank
Our SVB Private Bank clients are primarily private equity/venture capital professionals and executive leaders ofand senior investment professionals in the innovation companies they support.economy. Our lending to SVB Private Bank clients represented 1110.4 percent of total gross loans at both SeptemberJune 30, 20172021 and 10.9 percent at December 31, 2016.2020. Many of these clients have mortgages,our Private Bank products are secured by real estate, which represented 8583.3 percent of this portfolio at SeptemberJune 30, 2017; the balance of this portfolio consisted of2021; these products include mortgage loans, owner occupied commercial mortgage loans, home equity lines of credit and other secured lending products such as real estate secured loans to eligible employees through our EHOP. The remaining balance of our Private Bank portfolio consists of restricted and private stock purchase loans, capital call lines of credit, lines of credit against liquid assets and other secured and unsecured lending.lending products.

Paycheck Protection Program
We accepted applications under the PPP administered by the SBA under the CARES Act, as amended by the Economic Aid Act, and originated loans to qualified small businesses until the loan origination phase of the PPP ended on June 30, 2021. Under the terms of the program, loans funded through the PPP are eligible to be forgiven if certain requirements are met, including using the funds for certain costs relating to payroll, healthcare and qualifying mortgage interest, rent and utility payments. Eligible expenses also include covered operations expenditures, covered property damage costs, covered supplier costs and covered worker protection expenditures. To the extent not forgiven, loans are subject to certain terms including, among others, the following: maximum two-year term for loans issued before June 5, 2020 (unless borrower and lender agree otherwise); a maximum five-year term for loans issued on or after June 5, 2020; an interest rate of 1.0%; deferral of loan payments until a loan forgiveness decision is rendered or until 10 months after the end of a borrower’s forgiveness covered period; and no requirement for any collateral or personal guarantees. PPP borrowers are not required to pay any fees to the government or the lender, and the loans may be repaid by the borrower at any time. The SBA, however, will pay lenders a processing fee based on the size of the PPP loan, ranging from 1% to 5% of the loan for loans made before the enactment of the Economic Aid Act, and thereafter, a processing fee of (1) the lesser of 50% of the loan or $2,500 for loans of not more than $50,000, (2) 5% of the loan for loans above $50,000 but not more than $350,000, and (3) 3% of the loan for loans above $350,000 (and, in case of the first draw PPP loans only, a fee of 1% for the loans at or above $2,000,000). Additional loans were issuable up until June 30, 2021, pursuant to the PPP Extension Act of 2021, and qualifying PPP borrowers were able to
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apply for second draw loans in an amount of up to $2 million. We continued to participate in the PPP in the second quarter of 2021, including the second draw loan and the forgiveness stages of the program.
As of June 30, 2021, we have outstanding PPP loans in the amount of $843 million, as approved by the SBA. This funded amount reflects repayments received as of such date.
Loan Deferral Programs
In April 2020, we implemented three loan payment deferral programs targeted to assist borrowers who were the most impacted by the COVID-19 pandemic. These programs included relief for venture-backed, private bank and wine borrowers who met certain criteria. The three-month private bank and wine deferral programs ended, and payments resumed, in the third quarter of 2020. The six-month venture debt and private bank deferral programs ended, and payments resumed, in the fourth quarter of 2020 for a majority of participants. As of June 30, 2021, loans modified under these programs had outstanding balances of $227 million, all of which is for venture-backed borrowers. These amounts reflect repayments received as of June 30, 2021.
For loans modified under these programs, in accordance with the provisions of Section 4013 of the CARES Act, we elected to not apply TDR classification to borrowers who were current as of December 31, 2019. In addition, for loans modified under these programs that did not meet the CARES Act criteria, we applied the guidance in an interagency statement issued by bank regulatory agencies. Using this guidance, we may find that borrowers are not experiencing financial difficulty that may otherwise result in a TDR classification, in accordance with ASC Subtopic 310-40, if loan modifications are performed in response to the COVID-19 pandemic, provide short-term loan payment deferrals (e.g. six months in duration) and are granted to borrowers who were current as of the implementation date of the loan modification program. We evaluated all loans modified under these programs against the CARES Act and interagency guidance, as applicable, and determined the loan modifications would not be considered TDRs. We did not defer interest income recognition during periods of payment deferral, nor did any qualifying modification trigger nonaccrual status.
State Concentrations
Approximately 31 percent and 1127 percent of our outstanding total gross loan balances at both Septemberas of June 30, 2017 and December 31, 20162021 were to borrowers based in California andcompared to 26 percent as of December 31, 2020. Additionally, as of June 30, 2021, borrowers in New York.York increased to 11 percent compared to 10 percent as of December 31, 2020. Borrowers in Massachusetts decreased to 9 percent at June 30, 2021, compared to 10 percent as of December 31, 2020. Other than California and New York, as of June 30, 2021 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 20162020 Form 10-K.10-K and "Risk Factors" under Part II, Item 1A of this report.


Credit Quality Indicators
As of September 30, 2017 and December 31, 2016, ourOur total criticized loans and impairednonaccrual loans represented four percent and six2 percent of our total gross loans respectively.as of June 30, 2021 and 3 percent at December 31, 2020. Criticized and impairednonaccrual loans to early-stage clients represented 1718 and 15 percent of our total criticized and impairednonaccrual loan balances at both SeptemberJune 30, 20172021 and December 31, 2016.2020, respectively. Loans to early-stage investor dependent clients represent a relatively small percentage of our overall portfolio at six3 percent of total gross loans at Septemberboth June 30, 2017.2021 and at December 31, 2020. 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.
We continue to monitor our loan portfolio for the impact of the COVID-19 pandemic. Vaccine distributions and re-openings have contributed to an improved economic environment, although we continue to watch the emergence of COVID-19 variants and continued spread. Our Global Fund Banking and Private Bank portfolios continue to have strong credit performance, which is consistent with the historically low credit losses we have typically experienced. Wine clients' sales have improved with re-openings, but we are cautious of the potential for fires and crop loss as a result of the current drought and historic high temperatures in the western United States. We have seen robust venture capital investment activity in the technology and life science/healthcare sectors, supporting ongoing improvement of the credit quality of our clients in those spaces.
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Credit Quality, and Allowance for LoanCredit Losses and Nonperforming Assets
Nonperforming assets consist of loans on nonaccrual status, loans past due 90 days or more still accruing interest, and Other Real Estate Owned (“OREO”)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 allowanceACL for loan losses:loans and unfunded credit commitments:

(Dollars in millions)June 30, 2021December 31, 2020
Nonperforming, past due, and restructured loans:
Nonaccrual loans$79 $104 
Loans past due 90 days or more still accruing interest3 — 
Total nonperforming loans82 104 
OREO and other foreclosed assets1 1 
Total nonperforming assets$83 $105 
Performing TDRs$3 $5 
Nonperforming loans as a percentage of total loans0.16 %0.23 %
Nonperforming assets as a percentage of total assets0.05 0.09 
ACL for loans$396 $448 
As a percentage of total loans0.78 %0.99 %
As a percentage of total nonperforming loans482.93 429.54 
ACL for nonaccrual loans$38 $54 
As a percentage of total loans0.07 %0.12 %
As a percentage of total nonperforming loans46.34 51.83 
ACL for total performing loans$358 $394 
As a percentage of total loans0.71 %0.87 %
As a percentage of total performing loans0.71 0.87 
Total loans$50,754 $45,181 
Total performing loans50,672 45,077 
ACL for unfunded credit commitments (1)120 121 
As a percentage of total unfunded credit commitments0.33 %0.38 %
Total unfunded credit commitments (2)$36,385 $31,982 
(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 “ACL 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” for a discussion of the changes to the allowance.
(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” for a discussion of the changes to the allowance.
(2)Includes unfunded loan commitments and letters of credit.

(2)Includes unfunded loan commitments and letters of credit.

To determine the ACL for performing loans as of June 30, 2021 and December 31, 2020, we utilized three scenarios, on a weighted basis, from Moody's Analytics June 2021 and December 2020 forecasts, respectively, in our expected lifetime loss estimate. The baseline scenario, which carries the highest weighting of 40 percent in both periods, reflected an unemployment rate of 5.8 percent as of June 30, 2021, as a result of business re-openings and the effect of government aid programs during the first half of 2021, compared to 6.7 percent as of December 31, 2020. The baseline scenario also included a GDP growth rate of 10.9 percent and 4.0 percent as of June 30, 2021 and December 31, 2020, respectively, reflecting ongoing expected economic recovery as the impact of the COVID-19 pandemic generally appears to be subsiding. In addition to the baseline, we also utilized a more favorable (Moody's S1, Upside) and less favorable (Moody's S3, Downside) economic forecast scenario, each weighted at 30 percent at both June 30, 2021 and December 31, 2020. To the extent we identified credit risk considerations that were not captured by the Moody's Analytics scenarios, we addressed the risk through management's qualitative adjustments to our ACL for performing loans.
Our allowanceACL for loan losses as a percentage of total gross loans decreased one basis point to 1.12 percent at September 30, 2017, compared to 1.13 percent at December 31, 2016. The decrease of one basis point was reflective primarily of the decrease in our allowance for performing loans as a percentage of total gross loans which decreased by two21 basis points to 0.920.78 percent partially offset by an increase of oneat June 30, 2021, compared to 0.99 percent at December 31, 2020. The 21 basis points decrease was due primarily to a 16 basis point in the allowancedecrease for nonaccrualour performing loans reserve as a percentage of total gross loans at September 30, 2017.and a 5 basis point decrease for our nonaccrual individually assessed loans.
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Our allowanceACL for loan losses for nonaccrualperforming loans was $43.8$358 million at SeptemberJune 30, 2017,2021, compared to $37.3$394 million at December 31, 2016.2020. The $6.5$36 million increasedecrease was driven primarily by the improved economic scenarios in our forecast models, reflective of the allowance for nonaccrual loans included $48.0 millionongoing improvement of new nonaccrual loan reserves, partially offset by $41.4 millionthe economic outlooks as the impact of charge-offs and reserve releases. New nonaccrual loan reserves of $48.0 million were mostly attributablethe COVID-19 pandemic generally appears to our software/internet loan portfolio.be subsiding.
The following table presents a summary of changes in nonaccrual loans for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016:2020: 

Three months ended June 30,Six months ended June 30,
 Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
(Dollars in millions)(Dollars in millions)2021202020212020
Balance, beginning of period $120,172
 $124,319
 $118,979
 $123,392
Balance, beginning of period$90 $51 $104 $103 
Additions 29,650
 15,940
 85,990
 73,680
Additions9 66 14 102 
Paydowns (14,183) (14,941) (43,995) (58,376)
Paydowns and other reductionsPaydowns and other reductions(9)(18)(18)(81)
Charge-offs (10,967) (19,102) (36,299) (31,348)Charge-offs(11)(5)(21)(30)
Other reductions —
 —
 (3) (1,132)
Balance, end of period $124,672
 $106,216
 $124,672
 $106,216
Balance, end of period$79 $94 $79 $94 
Our nonaccrual loans as of Septemberloan balance decreased by $25 million to $79 million at June 30, 2017 included $98.02021, compared to $104 million from seven clients (software/internet clients represent $61.3at December 31, 2020. The decrease was driven primarily by $18 million two life science/healthcare clients represent $25.0in repayments and $21 million and one hardware client represents $11.7 million). Two of these loans are sponsored buyout loans that were added to our nonaccrual portfolio in 2015, another is a Corporate Finance client that was added during 2016 and four arecharge-offs, partially offset by new nonaccrual loans added during 2017 spread acrossof $14 million. Repayments were driven primarily by clients in our Accelerator and Growth practices. The total credit exposure for these seven largestInvestor Dependent loan portfolio, as were new nonaccrual loans is $99.0 million, for whichloans. As of June 30, 2021, we have specifically reserved $30.4 million.$38 million for our nonaccrual loans.
Average nonaccrual loans for the three and ninesix months ended SeptemberJune 30, 20172021 were $119.5$84 million and $124.6$107 million, respectively, compared to $111.8$77 million and $113.1$70 million for the comparable 2016 periods.three and six months ended June 30, 2020. The $7.7$7 million increase in average nonaccrual loans for the three months ended SeptemberJune 30, 20172021 compared to SeptemberJune 30, 20162020 was driven primarily from our software/internet and hardware loan portfolios, partially offset by a decreasefewer repayments in our life sciences loan portfolio.2021 than in 2020. If the nonaccrual loans had not been impaired, $1.8 million and $5.6nonperforming, less than $1 million in interest income would have been recorded for the three and nine months ended SeptemberJune 30, 2017, respectively, compared to $1.12021 and June 30, 2020, and $2 million in interest income would have been recorded for the six months ended June 30, 2021 and $3.8$1 million for the comparable 2016 periods.six months ended June 30, 2020.
Accrued Interest Receivable and Other Assets
A summary of accrued interest receivable and other assets at SeptemberJune 30, 20172021 and December 31, 20162020 is as follows:
(Dollars in thousands) September 30, 2017
December 31, 2016 % Change      
Derivative assets, gross (1) $248,556
 $210,070
 18.3%
Foreign exchange spot contract assets, gross 147,304
 53,058
 177.6
Accrued interest receivable 129,451
 111,222
 16.4
FHLB and Federal Reserve Bank stock 58,012
 57,592
 0.7
Accounts receivable 78,242
 62,569
 25.0
Net deferred tax assets 75,043
 71,840
 4.5
Other assets 113,153
 106,337
 6.4
Total accrued interest receivable and other assets $849,761
 $672,688
 26.3
(Dollars in millions)June 30, 2021December 31, 2020% Change      
Derivative assets (1)$524 $488 7.4 %
Foreign exchange spot contract assets, gross1,324 2,108 (37.2)
Accrued interest receivable342 245 39.6 
FHLB and Federal Reserve Bank stock83 61 36.1 
Net deferred tax assets2 1 100.0 
Accounts receivable29 37 (21.6)
Other assets346 266 30.1 
Total accrued interest receivable and other assets$2,650 $3,206 (17.3)
(1)See “Derivatives” section below.
(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 increasedecrease of $94.2$784 million was due primarily to an overalltrade enhancements made during the second quarter of 2021, which consisted of executing rollover trades for our clients using foreign exchange swap products versus our historical foreign exchange spot products.

Accrued Interest Receivable
The increase of $97 million in activityaccrued interest receivable is primarily due to increases in the period-end balances of our HTM investment securities portfolio and loans at period-endJune 30, 2021 as compared to December 31, 2016.2020.
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Other Assets
Other assets includes various asset amounts for other operational transactions. The increase of $80 million was primarily due toa $40 million increase in current taxes receivable, due to higher estimated tax payments during the second quarter, a $19 million increase in capitalized cloud computing costs, reflective of investments in systems and technology to support our revenue growth and related initiatives, and an $8 million increase in prepaid expenses.
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 SeptemberJune 30, 20172021 and December 31, 2016:2020:
(Dollars in thousands) September 30, 2017 December 31, 2016 % Change 
(Dollars in millions)(Dollars in millions)June 30, 2021December 31, 2020% Change 
Assets:      Assets:
Equity warrant assets $141,785
 $131,123
 8.1 %Equity warrant assets$266 $203 31.0 %
Foreign exchange forward and option contracts 94,947
 68,027
 39.6
Foreign exchange forward and option contracts177 217 (18.4)
Client interest rate derivativesClient interest rate derivatives65 68 (4.4)
Interest rate swaps —
 810
 (100.0)Interest rate swaps16 — — 
Client interest rate derivatives 11,824
 10,110
 17.0
Total derivative assets $248,556
 $210,070
 18.3
Total derivative assets$524 $488 7.4 
Liabilities:      Liabilities:
Foreign exchange forward and option contracts $(88,961) $(54,668) 62.7
Foreign exchange forward and option contracts$157 $210 (25.2)
Client interest rate derivatives (11,955) (9,770) 22.4
Client interest rate derivatives59 27 118.5 
Interest rate swapsInterest rate swaps2 — — 
Total derivative liabilities $(100,916) $(64,438) 56.6
Total derivative liabilities$218 $237 (8.0)
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 SeptemberJune 30, 2017,2021, we held warrants in 1,8422,718 companies, compared to 1,7392,602 companies at December 31, 2016.2020. Warrants in 1653 companies each had fair values greater than $1.0$1 million and collectively represented $51.7$137 million, or 36.551.7 percent, of the fair value of the total warrant portfolio at SeptemberJune 30, 2017.2021. 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 ninesix months ended SeptemberJune 30, 20172021 and 2016:2020: 
Three months ended June 30,Six months ended June 30,
 Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2017 2016 2017 2016
(Dollars in millions)(Dollars in millions)2021202020212020
Balance, beginning of period $131,750
 $129,800
 $131,123
 $137,105
Balance, beginning of period$244 $153 $203 $165 
New equity warrant assets 3,622
 5,251
 11,114
 9,857
New equity warrant assets6 7 13 12 
Non-cash changes in fair value, net 18,230
 16,788
 23,564
 21,989
Non-cash changes in fair value, net45 18 94 8 
Exercised equity warrant assets (11,060) (5,338) (20,402) (21,066)Exercised equity warrant assets(28)(7)(43)(13)
Terminated equity warrant assets (757) (1,161) (3,614) (2,545)Terminated equity warrant assets(1)— (1)(1)
Balance, end of period $141,785
 $145,340
 $141,785
 $145,340
Balance, end of period$266 $171 $266 $171 
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
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exposure for foreign exchange forward and foreign currency option contracts, net of cash collateral, was $32 million at SeptemberJune 30, 2017 was $1.12021 and $31 million and our net exposure at December 31, 2016 was $0.8 million.2020. For additional information on our foreign exchange forward contracts and foreign currency option contracts, see Note 9—“Derivative9 — “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$24 million at SeptemberJune 30, 20172021 and our net exposure$67 million at December 31, 2016 was $0.3 million.2020. For additional information on our client interest rate derivatives, see Note 9—“Derivative9 — “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 AFS securities portfolio, we enter into pay-fixed, receive-floating interest rate swap contracts to hedge against exposure to changes in the fair value of the securities resulting from changes in interest rates. We designate these interest rate swap contracts as fair value hedges that qualify for hedge accounting under ASC 815 and record them in other assets and other liabilities. Our net exposure for interest rate swaps was $14 million at June 30, 2021. Refer to Note 9 — “Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional information.
Deposits
Deposits were $44.8$145.8 billion at SeptemberJune 30, 2017,2021, an increase of $5.8$43.8 billion, or 15.043.0 percent, compared to $39.0$102.0 billion at December 31, 2016.2020. The increase in deposits was driven primarily by fundsgrowth across all portfolios with the primary contributors coming from both new and existing clients in our Technology Early-Stage, Private Equity Services, and Life Science/Healthcare portfolios driven by strong public and private fundraising, as well as from our Life Sciences portfolios during the nine months ended September 30, 2017 due to healthy venture capital funding and robust secondary public offering market activities.Global Fund Banking portfolio.
At SeptemberJune 30, 2017,2021, the aggregate balance of time deposit accounts individually equal to or greater than $100,000 totaled $38.6$643 million, compared to $48.3$686 million at December 31, 2016.2020. At SeptemberJune 30, 2017, $38.62021, $639 million of 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 12 percent of our total deposits at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively, were from our clients in Asia.
Short-Term Borrowings
We had $4.8 million in short-term borrowings at September 30, 2017, compared 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$1.8 billion at SeptemberJune 30, 20172021 and $795.7$844 million at December 31, 2016.2020. The increase in our long-term debt was due to the issuance of 2.100% Senior Notes during the second quarter of 2021.
As of SeptemberJune 30, 2017,2021, long-term debt included our 3.50%3.500% Senior Notes, 5.375%3.125% Senior Notes, 1.800% Senior Notes and 7.0% Junior Subordinated Debentures.2.100% Senior Notes. For more information on our long-term debt, see Note 8—“Short-Term8 — “Short-Term Borrowings and Long-Term Debt” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
Our 6.05% Subordinated Notes, issued by the Bank, were repaid on June 1, 2017. The interest rate swap agreement relating to this issuance was terminated upon repayment of the notes.
Other Liabilities
A summary of other liabilities at SeptemberJune 30, 20172021 and December 31, 20162020 is as follows:
(Dollars in thousands) September 30, 2017 December 31, 2016 % Change  
Foreign exchange spot contract liabilities, gross $249,175
 $68,018
 NM
Accrued compensation 124,111
 135,842
 (8.6)
Allowance for unfunded credit commitments 48,172
 45,265
 6.4
Derivative liabilities, gross (1) 100,916
 64,438
 56.6
Other 468,124
 304,820
 53.6
Total other liabilities $990,498
 $618,383
 60.2
(Dollars in millions)June 30, 2021December 31, 2020% Change  
Foreign exchange spot contract liabilities, gross$1,626 $2,165 (24.9)%
Accrued compensation408 545 (25.1)
Allowance for unfunded credit commitments120 121 (0.8)
Derivative liabilities (1)218 237 (8.0)
Net deferred tax liabilities22 173 (87.3)
Other liabilities1,055 731 44.3 
Total other liabilities$3,449 $3,972 (13.2)
NM—Not meaningful(1)See “Derivatives” section above.
(1)
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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 increasedecrease of $181.2$539 million was due primarily to increased client trade activity at period-end as comparedoperational improvements implemented during the second quarter of 2021 to December 31, 2016.execute rollover trades for our clients, using foreign exchange swap products versus our historical foreign exchange spot products.

Accrued Compensation
Accrued compensation includes amounts for our Incentive Compensation Plan, Direct Drive Incentive Compensation Plan, Retention Program, Warrant Incentive Plan, ESOP, SVB Leerink Incentive Compensation Plan, SVB Leerink Retention Award and other compensation arrangements. The decrease of $137 million was primarily result of the payout of our 2020 incentive compensation plans during the first quarter of 2021, partially offset by the accrual for the six months ending June 30, 2021.
Allowance for Unfunded Credit Commitments
Allowance for unfunded credit commitments includes an allowance for both our unfunded loan commitments and our letters of credit. The decrease of $1 million was due primarily to a reduction of our credit loss estimate for unfunded credit commitments driven primarily by improved economic scenarios in our forecast models.
Net Deferred Tax Liabilities
Net deferred tax liabilities decreased $151 million due primarily to a decrease in pre-tax unrealized gains recorded to other comprehensive income from the decrease in the fair value of our AFS securities portfolio and the recognition of tax gains on convertible debt, offset partially by timing differences related to fund investments.
Other Liabilities
Other liabilities includes various accrued liability amounts for other operational transactions. The increase of $163.3$324 million was reflectivedriven primarily by $271 million of a $145.3unsettled fixed income investment securities purchases and an $45 million increase in unsettled investment securities purchases at September 30, 2017 as comparedinvestments payable related to December 31, 2016.investments in qualified affordable housing projects.
Noncontrolling Interests
Noncontrolling interests totaled $137.5$300 million and $134.5$213 million at SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively.The $3.0$87 million increase was due primarily to net income attributable to noncontrolling interests of $21.2$138 million, partially offset by net$51 million in distributions of $18.2 million to limited partners from various managed funds of funds for the ninesix months ended SeptemberJune 30, 2017.2021.
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, 2017 and December 31, 2016:
  September 30, 2017 December 31, 2016
(Dollars in thousands) Total Balance   Level 3      Total Balance   Level 3     
Assets carried at fair value $12,982,950
 $140,972
 $12,974,923
 $130,853
As a percentage of total assets 25.6% 0.3% 29.0% 0.3%
Liabilities carried at fair value $100,916
 $—
 $64,438
 $—
As a percentage of total liabilities 0.2% —% 0.2% —%
As a percentage of assets carried at fair value   1.1%   1.0%
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—“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 2016 Form 10-K.
During the three and nine months ended September 30, 2017, the Level 3 assets that are measured at fair value on a recurring basis experienced net realized and unrealized gains of $24.4 million and $41.4 million, primarily due to realized and unrealized net gains on equity warrant assets due primarily to M&A and IPO activity. During the three and nine months ended September 30, 2016, the Level 3 assets that are measured at fair value on a recurring basis experienced net realized and unrealized gains of $21.1 million and $33.1 million, primarily due to 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 allapplicable regulatory capital guidelines.guidelines, including the joint agency rules implementing the "Basel III" capital rules (the "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 withUnder the oversight of the Finance Committee of our Board of Directors, management engages in regular capital planning processes in an effort to optimize the use of the capital available to us and to appropriately plan for our future capital needs. The capital plan considers capital needs for the foreseeable future and allocates capital to both existing and future business activities. Expected future use or activities for which capital may be set aside include balance sheet growth and associated relative increases in market or credit exposure, investment activity, potential product and business expansions, acquisitions and strategic or infrastructure investments. 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$11.7 billion at SeptemberJune 30, 2017,2021, an increase of $417.3 million,$3.4 billion, or 11.541.9 percent,compared to $3.6$8.2 billion at December 31, 2016. This2020.The increase was duedriven primarily toby a $1.1 billion issuance of common stock, a $1.7 billion issuance of preferred stock and $1.1 billion of net income, partially offset by the decrease in AOCI of $373.3$481 million. The decrease in AOCI was driven primarily by a $554 million for(or $400 million net of tax) decrease in the nine months endedSeptember 30, 2017 and an increasefair value of our AFS securities portfolio reflective of increases in additional paid-in capital of $51.8 million attributable primarily to amortization of share-based compensation expense and common stock issued under employee benefit plans.market interest rates.
Funds generated through retained earnings are a significant source of capital and liquidity and are expected to continue to be so in the future.
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Common Stock
On March 22, 2021, to support the continued growth of our balance sheet, we issued and sold 2,000,000 shares of common stock at a price of $500.00 per share. We received net proceeds of $972 million after deducting underwriting discounts and commissions. On April 14, 2021, we issued and sold an additional 300,000 shares of common stock under the full exercise of the underwriter's over-allotment option resulting in additional net proceeds of approximately $146 million after deducting discounts and commissions.
Preferred Stock
On February 2, 2021, SVB Financial Group issued 750,000 depositary shares each representing a 1/100th ownership interest in a share of Series B Preferred Stock with a $0.001 par value and a liquidation preference of $100,000 per share, or $1,000 per depositary share. The Series B Preferred Stock is perpetual and has no stated maturity. Dividends are approved by the Board of Directors and, if declared, are payable quarterly, in arrears, at a rate per annum equal to (i) 4.10 percent from the original issue date to, but excluding, February 15, 2031 and (ii) for the February 15, 2031 dividend date and during each subsequent ten year period, the ten-year treasury rate (calculated three business days prior to each reset date as the five day average of the yields on actively traded U.S. treasury securities adjusted to constant maturity, for ten-year maturities) plus 3.064 percent. As of June 30, 2021, our Series B Preferred Stock had a carrying value of $739 million and a liquidation preference of $750 million.
On May 13, 2021, SVB Financial Group issued 1,000,000 depositary shares each representing a 1/100th ownership interest in a share of Series C Preferred Stock with a $0.001 par value and a liquidation preference of $100,000 per share, or $1,000 per depositary share. The Series C Preferred Stock is perpetual and has no stated maturity. Dividends, if approved and declared by the Board of Directors, are payable quarterly, in arrears, at a rate per annum equal to (i) 4.000 percent from the original issue date to, but excluding, May 15, 2026, and (ii) for the May 15, 2026 dividend date and during each subsequent five years period, the five-year treasury rate (calculated three business days prior to each reset date as the five day average of the yields on actively traded U.S. treasury securities adjusted to constant maturity, for five-year maturities) plus 3.202 percent. As of June 30, 2021, 1,000,000 depositary shares were issued and outstanding, had a carrying value of $985 million and a liquidation preference of $1.0 billion.
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 under the Capital Rules as well as for a well-capitalized"well capitalized" bank holding company and insured depository institution, respectively, as of SeptemberJune 30, 20172021 and December 31, 2016.2020. Capital ratios for SVB Financial and the Bank, compared to the minimum regulatorycapital ratios, applicable to bank holding companies and banks to be considered “well capitalized” and “adequately capitalized”, are set forth below:
      Minimum Ratios under Applicable Regulatory Capital Adequacy Requirements
  September 30,
2017		 December 31, 2016 
“Well
Capitalized”
 
“Adequately 
Capitalized” 
SVB Financial:        
CET 1 risk-based capital ratio 12.96% 12.80% 6.5% 4.5%
Tier 1 risk-based capital ratio 13.32
 13.26
 8.0
 6.0
Total risk-based capital ratio 14.29
 14.21
 10.0
 8.0
Tier 1 leverage ratio 8.34
 8.34
 N/A  
 4.0
Tangible common equity to tangible assets ratio (1) 8.00
 8.15
 N/A  
 N/A  
Tangible common equity to risk-weighted assets ratio (1) 13.01
 12.89
 N/A  
 N/A  
Bank:        
CET 1 risk-based capital ratio 12.41% 12.65% 6.5% 4.5%
Tier 1 risk-based capital ratio 12.41
 12.65
 8.0
 6.0
Total risk-based capital ratio 13.40
 13.66
 10.0
 8.0
Tier 1 leverage ratio 7.59
 7.67
 5.0
 4.0
Tangible common equity to tangible assets ratio (1) 7.47
 7.77
 N/A  
 N/A  
Tangible common equity to risk-weighted assets ratio (1) 12.44
 12.75
 N/A  
 N/A  
June 30, 2021December 31, 2020Required Minimum (1)Well Capitalized Minimum
SVB Financial:
CET 1 risk-based capital ratio (2)(3)11.93 %11.04 %7.0 %N/A
Tier 1 risk-based capital ratio (3)14.95 11.89 8.5 6.0 
Total risk-based capital ratio (3)15.53 12.64 10.5 10.0 
Tier 1 leverage ratio (2)(3)7.77 7.45 4.0 N/A  
Tangible common equity to tangible assets ratio (4)(5)5.76 6.66 N/A  N/A  
Tangible common equity to risk-weighted assets ratio (4)(5)12.02 11.87 N/A  N/A  
Bank:
CET 1 risk-based capital ratio (3)13.66 %10.70 %7.0 %6.5 %
Tier 1 risk-based capital ratio (3)13.66 10.70 8.5 8.0 
Total risk-based capital ratio (3)14.26 11.49 10.5 10.0 
Tier 1 leverage ratio (3)6.96 6.43 4.0 5.0 
Tangible common equity to tangible assets ratio (4)(5)6.47 6.24 N/A  N/A  
Tangible common equity to risk-weighted assets ratio (4)(5)13.76 11.58 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.

(1)Percentages represent the minimum capital ratios plus, as applicable, the fully phased-in 2.5% CET1 capital conservation buffer under the Capital Rules.
Capital ratios (CET(2)"Well Capitalized Minimum" CET 1 tier 1, total risk-based capital and tierTier 1 leverage)leverage ratios are not formally defined under applicable banking regulations for bank holding companies.
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(3)Capital ratios include regulatory capital phase-in of the ACL under the 2020 CECL Transition Rule.
(4)See below for a reconciliation of non-GAAP tangible common equity to tangible assets and tangible common equity to risk-weighted assets.
(5)The Federal Reserve has not issued any minimum guidelines for the tangible common equity to tangible assets ratio or the tangible common equity to risk-weighted assets ratio, however, we believe these ratios provide meaningful supplemental information regarding our capital levels and are therefore provided above.
Our risk-based capital ratios and leverage ratios increased for both SVB Financial and Silicon Valley Bank as of June 30, 2021, compared to December 31, 2020. The increase in capital ratios was driven primarily by increases in our capital, partially offset by increases in our risk-weighted and average assets. The increase in capital for SVB Financial increased as of September 30, 2017, compared to the same ratios as of December 31, 2016. The changes werewas driven by anthe issuance of common and preferred stock and net income. The increase in capital for Silicon Valley Bank was driven by a $3.3 billion downstream capital infusion from our bank holding company during the ninesix months ended SeptemberJune 30, 2017, primarily from net income. An2021. The increase in additional paid-in 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-weightedaverage assets due to period-end loan growth and higher investment and cash balanceswas driven by increases in deposits.
Capital ratios (CET 1, tier 1, total risk-based capitalour fixed income investments and tier 1 leverage) for the Bank decreased as of September 30, 2017, compared to the same ratios as of December 31, 2016. The decrease in the Bank's capital ratios reflected $60.0 million of cash dividends paid by the Bank to our bank holding company, SVB Financial, during the nine months ended September 30, 2017.loan portfolios. All of our reported capital ratios remain above the levels considered to be “well capitalized” under applicable banking regulations.
The tangible common equity, or tangible book value, 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 SeptemberJune 30, 20172021 and December 31, 2016:2020:
 SVB FinancialBank
(Dollars in millions)June 30, 2021December 31, 2020June 30, 2021December 31, 2020
GAAP SVBFG stockholders’ equity$11,667 $8,220 $10,428 $7,069 
Less: preferred stock2,064 340 — — 
Less: intangible assets200 204 — — 
Tangible common equity$9,403 $7,676 $10,428 $7,069 
GAAP total assets$163,399 $115,511 $161,197 $113,303 
Less: intangible assets200 204 — — 
Tangible assets$163,199 $115,307 $161,197 $113,303 
Risk-weighted assets$78,231 $64,681 $75,795 $61,023 
Non-GAAP tangible common equity to tangible assets5.76 %6.66 %6.47 %6.24 %
Non-GAAP tangible common equity to risk-weighted assets12.02 11.87 13.76 11.58 
  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
GAAP SVBFG stockholders’ equity $4,059,813
 $3,642,554
 $3,728,890
 $3,423,427
Tangible common equity $4,059,813
 $3,642,554
 $3,728,890
 $3,423,427
GAAP total assets $50,754,287
 $44,683,660
 $49,937,343
 $44,059,340
Tangible assets $50,754,287
 $44,683,660
 $49,937,343
 $44,059,340
Risk-weighted assets $31,208,081
 $28,248,750
 $29,970,913
 $26,856,850
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
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 million in cash dividends paid by the Bank to our bank holding company, SVB Financial, during the nine months ended September 30, 2017. See “SVBFG Stockholders’ Equity” above for further details on changes to the individual components of our equity balance.
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—“Off-Balance13 — “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
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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—“Off-Balance13 — “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”),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 hasHistorically, client deposits have 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 SeptemberJune 30, 2017,2021, our period-end total deposit balances were $44.8$145.8 billion, compared to $39.0$102.0 billion at December 31, 2016.2020.
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-saleAFS 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 June 30, 2021, collateral pledged to the FHLB of San Francisco (comprisedwas comprised primarily of U.S. Treasury securities)fixed income investment securities and loans and had a carrying value of $7.1 billion, of which $5.9 billion was available to support additional borrowings. As of June 30, 2021, collateral pledged to the discount window at September 30, 2017 totaled $1.9the FRB was comprised of fixed income investment securities and had a carrying value of $0.9 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 borrowing capacity for our uncommitted federal funds lines totaled $1.9 billion at June 30, 2021. Our total unused and available borrowing capacity under our master repurchase agreements with various financial institutions totaled $4.0 billion at June 30, 2021.
In connection with our participation in the PPP under the CARES Act as discussed, we considered participating in the Federal Reserve’s PPPLF. The PPPLF was established to support additional borrowings.allow participating institutions to facilitate lending under the PPP and extends credit to eligible PPP loan originators on a non-recourse basis, taking PPP loans as collateral at face value. Ultimately, we were able to extend credit to PPP borrowers without relying on the PPPLF. Additionally, interim final capital rules issued by federal bank regulatory agencies have neutralized the regulatory capital effects of participating in the PPP, in that loans outstanding are assessed a zero percent risk weight for regulatory capital purposes.
As a banking organization, our liquidity is subject to supervision by our banking regulators. Because we are a Category IV firm with less than $50 billion in average weighted short-term wholesale funding, we currently are not subject to the Federal Reserve’s LCR or net stable funding ratio NSFR requirements, either on a full or reduced basis. It is possible that we may become subject to LCR and NSFR requirements or other heightened liquidity requirements in the future as a result of further growth, which would require us to maintain high-quality liquid assets in accordance with specific quantitative requirements and increase the use of long-term debt as a funding source.
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. 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, the dividend amount paid was $20 million and $60 million, respectively.
capital. The ability of the Bank to pay dividends is subject to certain regulations described in “Business—Supervision and Regulation—Restriction on Dividends” under Part I, Item 1 of our 20162020 Form 10-K.
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Consolidated Summary of Cash Flows
Below is a summary of our average cash position and statement of cash flows for the ninesix months ended SeptemberJune 30, 20172021 and 2016.2020. For further details, see our “Interim Consolidated Statements of Cash Flows (Unaudited)” under Part I, Item 1 of this report.

Six months ended June 30,
 Nine months ended September 30,
(Dollars in thousands) 2017 2016
(Dollars in millions)(Dollars in millions)20212020
Average cash and cash equivalents $3,596,669
 $2,437,763
Average cash and cash equivalents$21,458 $10,460 
Percentage of total average assets 7.6% 5.6%Percentage of total average assets15.6 %13.9 %
Net cash provided by operating activities $468,032
 $273,004
Net cash provided by operating activities$695 $745 
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 activitiesNet cash used for investing activities(42,041)(6,533)
Net cash provided by financing activitiesNet cash provided by financing activities47,630 13,208 
Net increase in cash and cash equivalents $1,009,821
 $1,018,062
Net increase in cash and cash equivalents$6,284 $7,420 
Average cash and cash equivalents increased by $1.2$11.0 billion, or 47.5105.1 percent, to $3.6$21.5 billion for the ninesix months ended SeptemberJune 30, 2017,2021, compared to $2.4$10.5 billion for the comparable 20162020 period.
Cash provided by operating activities was $468.0$695 million for the ninesix months ended SeptemberJune 30, 2017,2021, reflective primarily of net income before noncontrolling interests and dividends of $394.5 million.$1.2 billion, partially offset by changes in other assets and liabilities of $318 million and $177 million from adjustments to reconcile net income to net cash.
Cash used for investing activities of $4.7$42.0 billion for the ninesix months ended SeptemberJune 30, 20172021 was driven by $6.2$45.0 billion in purchases of fixed income investment securities and a $5.6 billion increase in loan balances, partially offset by $3.7$8.1 billion ofin proceeds from maturities and principal paydownspay downs from our fixed income investment securities portfolio. Additionally, $2.3 billionportfolio and $568 million in cash outflows were used to fund loan growth during the nine months ended September 30, 2017.proceeds from sales and distributions of capital from our nonmarketable and other equity securities.
Cash provided by financing activities was $5.3$47.6 billion for the ninesix months endedSeptember June 30, 2017,2021, reflective primarily of a net$43.9 billion increase of $5.8in deposits, $2.8 billion in deposits, partially offsetcapital raised by $507.8our preferred and common stock issuances, and $990 million increase from the issuance of payments on our overnight short-term borrowings and $46.2 million for the repayment of our 6.05% Subordinated Notes upon maturity.long-term debt.
Cash and cash equivalents were $3.6$24.0 billion and $2.5$14.2 billion, respectively, at SeptemberJune 30, 20172021 and September 30, 2016.2020.
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.interest rates. 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 and equity price risk including(including the effect of competition on product pricing. While all of thesepricing). These risks and related impacts are important market considerations allbut are inherently difficult to predict, and it is equally difficult to assess the impact of each on the overallthrough 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 modeled 12-month forward lookingprojections 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
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dynamic assessment of interest rate sensitivity which is embedded within our balance sheet whichsheet. Rate sensitivity 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 our economic value of equity (“EVE”).the 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”)NII assuming a static balance sheet, in both size and composition, as of the period-end reporting date. Meaning,In the NII simulation, the level of market interest rates and 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 balance 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,
Both EVE and NII measures rely upon the assumed weighted deposituse of models to simulate cash flow behavior for loans and deposits. These models were developed internally and are based on historical balance and rate observations. Investment portfolio cash flow is based on a combination of third-party prepayment models and internally managed prepayment vectors depending on security type. As part of our ongoing governance structure, each of these models and assumptions are periodically reviewed and recalibrated as needed to ensure that they are representative of our understanding of existing behaviors.
Simulation results presented include an "asymmetric" beta on interest bearing depositsassumption that is approximately 35.0 percent, which meansapplied in the NII and EVE simulation models for interest-bearing deposits. This reflects management expectations that deposit repricing is assumed tobehavior in a falling rate environment would be different than repricing behavior in a rising rate environment. This model assumes the overall beta for interest-bearing deposits in 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. ThisThe deposit beta assumption for an increasing rate environment is 50 percent. These repricing isassumptions are reflected as a changechanges in interest expense on interest bearinginterest-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.
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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 pointsbps at SeptemberJune 30, 20172021 and at December 31, 2016 (as revised based on the assumptions noted above):2020.
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)
                    
(Dollars in millions)
EstimatedEstimated Increase/(Decrease) in EVEEstimatedEstimated Increase/(Decrease) in NII
EVEAmountPercentNIIAmountPercent
June 30, 2021:
+200$11,920 $(3,521)(22.8)%$4,153 $1,046 33.7 %
+10013,754 (1,687)(10.9)3,612 505 16.3 
—15,441 — — 3,107 — — 
-10016,300 859 5.6 2,997 (110)(3.5)
-20016,207 766 5.0 2,979 (128)(4.1)
December 31, 2020:
+200$9,500 $(1,724)(15.4)%$3,063 $691 29.1 %
+10010,558 (666)(5.9)2,729 357 15.1 
—11,224 — — 2,372 — — 
-10011,582 358 3.2 2,310 (62)(2.6)
-20011,534 310 2.8 2,306 (66)(2.8)
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 SeptemberJune 30, 20172021 increased $4.2 billion from December 31, 20162020, driven by $0.8 billion primarily due tooverall balance sheet mix changesgrowth as well as a steepening of the assumption model changes discussed above. Asyield curve during the first half of September2021. For the period ended June 30, 2017, period-end loans, net of unearned income increased $2.3 billion as2021, compared to December 31, 2016. Comparing the same periods, period-end total2020, cash balances increased by $6.3 billion, fixed income investment securities increased $2.6investments in our AFS portfolio decreased by $7.0 billion and period-end cash and cash equivalents increased by $1.0$43.4 billion drivenin our HTM portfolio while loan balances increased by $5.6 billion. Funding for these assets came primarily by anfrom growth of $43.9 billion in total deposits, which consisted of a $34.8 billion and $9.1 billion increase in noninterest-bearing and interest-bearing accounts, respectively. The mix of noninterest-bearing and interest-bearing deposits balances of $5.8 billion.
Higher short-term LIBOR rates as of Septemberto total deposits increased slightly by 4 bps at June 30, 2017, with marginally lower long-term rates, contributed to a flattening of the yield curve2021, compared to December 31, 2016. Changes in nominal rates2020.
Rapid deposit growth has exceeded the pace of our loan growth, and as a change inresult, a significant amount of excess deposits not used to fund loan growth have contributed to the shapegrowth of our cash and investments balances. Much of the yield curve resultedinvestment portfolio is held in fixed rate MBS and CMO's which generally have a higher market value sensitivity than variable rate loans or cash. Thus, under an upward rate shock scenario, the market value of investments changes more than the market value of deposits decreasing proportionally higher than assets. However, as notedresulting in a negative EVE sensitivity in those scenarios.
In March 2021 we purchased interest rate swaps to offset some of the additional EVE sensitivity that has resulted from rapid balance sheet growth. As of June 30, 2021, the estimated change in EVE in an up 100 bps rate shock would be -13.7 percent without any hedging applied. The addition of pay fixed swaps reduces this exposure to -10.9 percent in the same scenario. The EVE exposures shown in the table above non-maturity deposit modeling assumption changes wereinclude the primary driverimpact of a higher base case EVE asour hedging activity.
Due to low rates at the short end of September 30, 2017. Compared to December 31, 2016, proportional growth in loans, investments, and deposits did not significantly impactthe yield curve, EVE sensitivity measures in the +100 bps-100 and +200-200 bps rate shock scenarios asdo not represent the full magnitude of Septemberrate shocks at certain points on the curve because we assume that U.S. rates are floored at zero. As a result, the June 30, 2017. The2021 EVE sensitivity of the -100 and -200 bps rate shock scenarios are similar.
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Ongoing balance sheet growth and a steepening yield curve were the primary contributing factors to the overall change in EVE sensitivity can be attributed primarily to the non-maturity assumptions changes as described above.sensitivity.
12-Month Net Interest Income Simulation
Our simulated 12-month base case NII 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.
NII sensitivity is measured as of Septemberthe percentage change in projected 12-month net interest income earned in +/-100 and +/-200 basis point interest rate shock scenarios compared to a base scenario where balances and interest rates are held constant over the forecast horizon. At June 30, 20172021, NII sensitivity was 16.3 percent in the +100 and -100 bps interest rate shock scenarios is nearly symmetricalscenario, compared to 15.1 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, 2020. Our NII sensitivity in the +200 and -200 bps interest rate shock scenarios still shows asymmetry, with lessscenario was 33.7 percent compared to 29.1 percent at December 31, 2020. NII sensitivity in the -100 bps scenario of negative 3.5 percent was higher at June 30, 2021, compared to a negative 2.6 percent at December 31, 2020. The -200 bps scenario currently indicates a higher percentage change in NII of negative 4.1 percent at June 30, 2021, compared to negative 2.8 percent at December 31, 2020. However, as noted above, the -100 and -200 bps scenarios are not complete rate shocks in this rate environment, since rates are assumed to be floored at zero. The June 30, 2021 NII sensitivity percentages are inclusive of the realized income or expense associated with interest rate swaps that were unwound reflective of the macro hedging process initiated in 2019 to reduce the impact of decreasing rates on NII as well as unrealized income associated with more recent hedging activity that has been undertaken to reduce EVE exposure. 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 June 30, 2021 increased compared to floorsDecember 31, 2020 by $735 million, driven primarily by the growth in the balance sheet that has taken place year-to-date. Specifically, a large portion of asset growth has been deployed in the fixed income investment securities portfolio as noted above. As of June 30, 2021, we also held a relatively high cash position which we expect to be invested in the near future.
A majority of our loans are indexed to Prime and LIBOR. In the upward 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 downward 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.
For the interest rate scenarios, the simulation model used in the above analysis incorporates embedded rate floors on loans, in our interest rate scenarios,where present, which preventprevents model benchmark rates from moving below zero percent in the down rate scenarios. The embedded rate floors are also a factor in the up rateup-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
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.
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PART II–OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Please refer to Note 15—“Legal16 — “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 20162020 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.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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Table of Contents

ITEM 6. EXHIBITS
Exhibit NumberExhibit DescriptionIncorporated by ReferenceFiled Herewith
FormFile No.ExhibitFiling Date
3.18-K001-391543.1May 13, 2021
31.1X
31.2X
32.1X
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documentX
101.SCHXBRL Taxonomy Extension Schema DocumentX
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentX
101.LABXBRL Taxonomy Extension Label Linkbase DocumentX
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentX
104Cover Page Interactive Data File (embedded within the Inline XBRL document)X

Note: Other instruments defining the rights of holders of the Company’s long-term debt are omitted pursuant to Section(b)(4)(iii) of Item 601 of Regulation S-K. The Company hereby agrees to furnish copies of these instruments to the Securities and Exchange Commission upon request.



111
Exhibit
Number    
Exhibit DescriptionIncorporated by Reference
 Filed
 Herewith  
FormFile No.Exhibit  Filing Date
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.INSXBRL Instance DocumentX
101.SCHXBRL Taxonomy Extension Schema DocumentX
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentX
101.LABXBRL Taxonomy Extension Label Linkbase DocumentX
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentX



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, 2017August 6, 2021/s/ DANIEL BECK
Daniel Beck
Chief Financial Officer
(Principal Financial Officer)
SVB Financial Group
Date: November 8, 2017August 6, 2021/s/ KAMRAN HUSAINKAREN HON
Kamran HusainKaren Hon
Chief Accounting Officer
(Principal Accounting Officer)

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