0000719739 sivb:OtherDerivativeInstrumentsMember us-gaap:NondesignatedMember sivb:OtherNoninterestIncomeMember sivb:ForeignExchangeForwardContractsNetMember 2019-01-01 2019-06-30
Table of Contents

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

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JuneSeptember 30, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________ 
 
Commission File Number: 000-15637
SVB FINANCIAL GROUP
(Exact name of registrant as specified in its charter)
  
Delaware91-1962278
(State or other jurisdiction of

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

Identification No.)
3003 Tasman Drive,, Santa Clara,, California95054-1191
(Address of principal executive offices) (Zip Code)
(408) (408) 654-7400
(Registrant’s telephone number, including area code) 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    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.
Large accelerated filer☒             Accelerated filer        ☐    
Non-accelerated filer        ☐                 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  ☒
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 JulyOctober 31, 2020, 51,760,93951,796,902 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 INFORMATIONItem 1.
4
Item 1.
Interim Consolidated Financial Statements
4
Interim Consolidated Balance Sheets as of JuneSeptember 30, 2020 and December 31, 2019 (Unaudited)
4
Interim Consolidated Statements of Income for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 (Unaudited)
5
Interim Consolidated Statements of Comprehensive Income for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 (Unaudited)
6
Interim Consolidated Statements of Stockholders' Equity for the sixnine months ended JuneSeptember 30, 2020 and 2019 (Unaudited)
7
Interim Consolidated Statements of Cash Flows for the sixnine months ended JuneSeptember 30, 2020 and 2019 (Unaudited)
8
Notes to Interim Consolidated Financial Statements (Unaudited)
89
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
7175
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
122127
Item 4.
Controls and Procedures
125130
127131
Item 1.
Legal Proceedings
127131
Item 1A.
Risk Factors
127131
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
129133
Item 3.
Defaults Upon Senior Securities
130134
Item 4.
Mine Safety Disclosures
130134
Item 5.
Other Information
130134
Item 6.
Exhibits
131135
132136

2
Table of Contents
Glossary of Acronyms that may be used in this Report
AFS— Available-for-Sale
ASC— Accounting Standards Codification
ASU— Accounting Standards Update
CECL — Current Expected Credit Losses
CET— Common Equity Tier
EHOP— Employee Home Ownership Program of the Company
EPS— Earnings Per Share
ERI— Energy and Resource Innovation
ESOP— Employee Stock Ownership Plan of the Company
ESPP— 1999 Employee Stock Purchase Plan of the Company
FASB— Financial Accounting Standards Board
FDIC— Federal Deposit Insurance Corporation
FHLB— Federal Home Loan Bank
FRB— Federal Reserve Bank
FTE— Full-Time Employee
FTP— Funds Transfer Pricing
GAAP— Accounting principles generally accepted in the United States of America
HTM— Held-to-Maturity
IASB— International Accounting Standards Board
IPO— Initial Public Offering
IRS— Internal Revenue Service
IT— Information Technology
LIBOR— London Interbank Offered Rate
M&A— Merger and Acquisition
PPP — Paycheck Protection Program
SEC— Securities and Exchange Commission
SPD-SVB— SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China)
TDR— Troubled Debt Restructuring
UK— United Kingdom
VIE— Variable Interest Entity

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)
June 30,
2020
December 31,
2019
Assets:



Cash and cash equivalents
$14,202,106

$6,781,783
Available-for-sale securities, at fair value (cost of $17,800,589 and $13,894,348, respectively)
18,451,913

14,014,919
Held-to-maturity securities, at amortized cost and net of allowance for credit losses of $222 and $0 (fair value of $13,541,461 and $14,115,272, respectively) (1)
12,858,823

13,842,946
Non-marketable and other equity securities
1,270,578

1,213,829
Total investment securities
32,581,314

29,071,694
Loans, amortized cost
36,727,222

33,164,636
Allowance for credit losses: loans
(589,828)
(304,924)
Net loans
36,137,394

32,859,712
Premises and equipment, net of accumulated depreciation and amortization
169,313

161,876
Goodwill 137,823
 137,823
Other intangible assets, net 46,726
 49,417
Lease right-of-use assets 215,319
 197,365
Accrued interest receivable and other assets
2,240,990

1,745,233
Total assets
$85,730,985

$71,004,903
Liabilities and total equity:



Liabilities:



Noninterest-bearing demand deposits
$49,160,880

$40,841,570
Interest-bearing deposits
25,344,884

20,916,237
Total deposits
74,505,764

61,757,807
Short-term borrowings
50,924

17,430
Lease liabilities 239,357
 218,847
Other liabilities
2,623,407

2,041,752
Long-term debt
843,220

347,987
Total liabilities
78,262,672

64,383,823
Commitments and contingencies (Note 15 and Note 18)




SVBFG stockholders’ equity:



Preferred stock, $0.001 par value, 20,000,000 shares authorized; 350,000 shares issued and outstanding
340,138

340,138
Common stock, $0.001 par value, 150,000,000 shares authorized; 51,740,714 shares and 51,655,607 shares issued and outstanding, respectively
52

52
Additional paid-in capital
1,522,728

1,470,071
Retained earnings
4,841,720

4,575,601
Accumulated other comprehensive income
614,735

84,445
Total SVBFG stockholders’ equity
7,319,373

6,470,307
Noncontrolling interests
148,940

150,773
Total equity
7,468,313

6,621,080
Total liabilities and total equity
$85,730,985

$71,004,903

(Dollars in thousands, except par value and share data)September 30,
2020		December 31,
2019
Assets:
Cash and cash equivalents$15,687,776 $6,781,783 
Available-for-sale securities, at fair value (cost of $25,237,540 and $13,894,348, respectively)25,904,324 14,014,919 
Held-to-maturity securities, at amortized cost and net of allowance for credit losses of $291 and $0 (fair value of $13,612,463 and $14,115,272, respectively) (1)12,982,223 13,842,946 
Non-marketable and other equity securities1,547,363 1,213,829 
Total investment securities40,433,910 29,071,694 
Loans, amortized cost38,413,891 33,164,636 
Allowance for credit losses: loans(512,958)(304,924)
Net loans37,900,933 32,859,712 
Premises and equipment, net of accumulated depreciation and amortization173,477 161,876 
Goodwill137,823 137,823 
Other intangible assets, net45,380 49,417 
Lease right-of-use assets220,493 197,365 
Accrued interest receivable and other assets2,316,979 1,745,233 
Total assets$96,916,771 $71,004,903 
Liabilities and total equity:
Liabilities:
Noninterest-bearing demand deposits$57,508,229 $40,841,570 
Interest-bearing deposits27,264,791 20,916,237 
Total deposits84,773,020 61,757,807 
Short-term borrowings19,068 17,430 
Lease liabilities246,652 218,847 
Other liabilities3,067,221 2,041,752 
Long-term debt843,430 347,987 
Total liabilities88,949,391 64,383,823 
Commitments and contingencies (Note 15 and Note 18)
SVBFG stockholders’ equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized; 350,000 shares issued and outstanding340,138 340,138 
Common stock, $0.001 par value, 150,000,000 shares authorized; 51,787,972 shares and 51,655,607 shares issued and outstanding, respectively52 52 
Additional paid-in capital1,548,918 1,470,071 
Retained earnings5,283,433 4,575,601 
Accumulated other comprehensive income620,394 84,445 
Total SVBFG stockholders’ equity7,792,935 6,470,307 
Noncontrolling interests174,445 150,773 
Total equity7,967,380 6,621,080 
Total liabilities and total equity$96,916,771 $71,004,903 
(1)
(1)Prior to our adoption of Accounting Standard Update (ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments) on January 1, 2020, the allowance for credit losses (ACL) related to held-to-maturity (HTM) securities was not applicable and is therefore presented as $0 at December 31, 2019. See "Adoption of New Accounting Standards" in Note 1 — “Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details.
See accompanying notes to interim consolidated financial statements (unaudited).

4
Table of Contents
SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

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 amounts)
2020
2019
2020
2019(Dollars in thousands, except per share amounts)2020201920202019
Interest income:







Interest income:
Loans
$365,110

$414,077

$747,679

$808,221
Loans$368,981 $394,246 $1,116,660 $1,202,467 
Investment securities:







Investment securities:
Taxable
141,547

134,395

295,932

261,112
Taxable156,517 149,656 452,449 410,768 
Non-taxable
14,464

10,931

27,288

21,868
Non-taxable14,912 11,123 42,200 32,991 
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities
2,402

26,364

20,026

45,580
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities2,717 28,867 22,743 74,447 
Total interest income
523,523

585,767

1,090,925

1,136,781
Total interest income543,127 583,892 1,634,052 1,720,673 
Interest expense:







Interest expense:
Deposits
5,694

47,150

43,092

75,057
Deposits8,218 55,106 51,310 130,163 
Borrowings
4,902

9,214

10,769

19,435
Borrowings7,169 8,142 17,938 27,577 
Total interest expense
10,596

56,364

53,861

94,492
Total interest expense15,387 63,248 69,248 157,740 
Net interest income
512,927

529,403

1,037,064

1,042,289
Net interest income527,740 520,644 1,564,804 1,562,933 
Provision for credit losses
66,481

23,946

309,961

52,497
(Reduction) provision for credit losses(Reduction) provision for credit losses(52,018)36,536 257,943 89,033 
Net interest income after provision for credit losses
446,446

505,457

727,103

989,792
Net interest income after provision for credit losses579,758 484,108 1,306,861 1,473,900 
Noninterest income:







Noninterest income:
Gains on investment securities, net
34,868

47,698

80,923

76,726
Gains on investment securities, net189,837 29,849 270,760 106,575 
Gains on equity warrant assets, net
26,506

48,347

39,901

69,652
Gains on equity warrant assets, net53,766 37,561 93,667 107,213 
Client investment fees 31,885
 45,744
 75,278
 90,226
Client investment fees31,914 46,679 107,192 136,905 
Foreign exchange fees
36,256

38,506

83,761

76,554
Foreign exchange fees43,881 40,309 127,642 116,863 
Credit card fees
21,288

28,790

49,592

56,273
Credit card fees22,756 30,158 72,348 86,431 
Deposit service charges
20,511

22,075

45,100

43,014
Deposit service charges22,015 22,482 67,115 65,496 
Lending related fees
11,164

11,213

24,289

25,150
Lending related fees13,562 11,707 37,851 36,857 
Letters of credit and standby letters of credit fees
11,421

11,009

22,963

20,363
Letters of credit and standby letters of credit fees12,192 10,842 35,155 31,205 
Investment banking revenue 141,503
 48,694
 188,370
 98,489
Investment banking revenue92,181 38,516 280,551 137,005 
Commissions 16,918
 14,429
 32,940
 28,537
Commissions16,257 12,275 49,197 40,812 
Other
16,528

17,245

27,665

29,142
Other49,222 13,631 76,887 42,773 
Total noninterest income
368,848

333,750

670,782

614,126
Total noninterest income547,583 294,009 1,218,365 908,135 
Noninterest expense:







Noninterest expense:
Compensation and benefits
319,797

243,172

575,383

481,233
Compensation and benefits327,369 233,840 902,752 715,073 
Professional services
63,828

40,830

102,533

77,816
Professional services67,215 55,202 169,748 133,018 
Premises and equipment
27,708

23,911

54,648

45,611
Premises and equipment30,772 26,775 85,420 72,386 
Net occupancy
18,845

16,687

37,191

32,735
Net occupancy18,965 16,981 56,156 49,716 
Business development and travel
2,992

17,022

17,063

32,376
Business development and travel2,214 19,539 19,277 51,915 
FDIC and state assessments
6,819

4,483

12,053

8,462
FDIC and state assessments6,933 4,881 18,986 13,343 
Other
39,647

37,417

80,350

70,953
Other37,553 34,106 117,903 105,059 
Total noninterest expense
479,636

383,522

879,221

749,186
Total noninterest expense491,021 391,324 1,370,242 1,140,510 
Income before income tax expense
335,658

455,685

518,664

854,732
Income before income tax expense636,320 386,793 1,154,984 1,241,525 
Income tax expense
87,869

119,114

137,226

226,549
Income tax expense162,265 105,075 299,491 331,624 
Net income before noncontrolling interests
247,789

336,571

381,438

628,183
Net income before noncontrolling interests474,055 281,718 855,493 909,901 
Net income attributable to noncontrolling interests
(14,260)
(18,584)
(12,287)
(21,464)Net income attributable to noncontrolling interests(27,748)(14,437)(40,035)(35,901)
Preferred stock dividends (4,594) —
 (7,963) —
Preferred stock dividends(4,594)0 (12,557)0 
Net income available to common stockholders
$228,935

$317,987

$361,188

$606,719
Net income available to common stockholders$441,713 $267,281 $802,901 $874,000 
Earnings per common share—basic
$4.44

$6.12

$7.00

$11.61
Earnings per common share—basic$8.53 $5.19 $15.55 $16.80 
Earnings per common share—diluted
4.42

6.08

6.97

11.51
Earnings per common share—diluted8.47 5.15 15.46 16.67 
See accompanying notes to interim consolidated financial statements (unaudited).

5
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 thousands)
2020
2019
2020
2019
Net income before noncontrolling interests
$247,789

$336,571

$381,438

$628,183
Other comprehensive income, net of tax:
   



Change in foreign currency cumulative translation gains and losses:
   



Foreign currency translation gains (losses)
164

(2,900)
(8,956)
(94)
Related tax (expense) benefit
(204)
808

2,352

26
Change in unrealized gains and losses on available-for-sale securities:
   



Unrealized holding gains
46,738

119,182

590,619

166,018
Related tax expense
(12,954)
(33,194)
(163,700)
(46,239)
Reclassification adjustment for losses (gains) included in net income
—

275

(61,165)
3,905
Related tax (benefit) expense
—

(77)
16,953

(1,087)
Amortization of unrealized holding gains on securities transferred from available-for-sale to held-to-maturity
(138)
(719)
(690)
(1,393)
Related tax benefit
38

200

191

388
Change in unrealized gains and losses on cash flow hedges:        
Unrealized gains —
 17,554
 231,920
 18,656
Related tax expense —
 (4,890) (64,281) (5,197)
Reclassification adjustment for (gains) losses included in net income (15,831) 508
 (17,920) 511
Related tax expense (benefit) 4,388
 (141) 4,967
 (142)
Other comprehensive income, net of tax
22,201

96,606

530,290

135,352
Comprehensive income
269,990

433,177

911,728

763,535
Comprehensive income attributable to noncontrolling interests
(14,260)
(18,584)
(12,287)
(21,464)
Comprehensive income attributable to SVBFG
$255,730

$414,593

$899,441

$742,071

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Net income before noncontrolling interests$474,055 $281,718 $855,493 $909,901 
Other comprehensive income, net of tax:
Change in foreign currency cumulative translation gains and losses:
Foreign currency translation gains (losses)10,279 (6,213)1,323 (6,307)
Related tax (expense) benefit(2,804)1,731 (452)1,757 
Change in unrealized gains and losses on available-for-sale securities:
Unrealized holding gains13,860 70,185 604,479 236,203 
Related tax expense(3,842)(19,547)(167,542)(65,786)
Reclassification adjustment for losses (gains) included in net income0 0 (61,165)3,905 
Related tax (benefit) expense0 0 16,953 (1,087)
Amortization of unrealized holding gains on securities transferred from available-for-sale to held-to-maturity(368)(374)(1,058)(1,767)
Related tax benefit102 104 293 492 
Change in unrealized gains and losses on cash flow hedges:
Unrealized gains0 9,810 231,920 28,466 
Related tax expense0 (2,733)(64,281)(7,930)
Reclassification adjustment for (gains) losses included in net income(16,004)2,713 (33,924)3,224 
Related tax expense (benefit)4,436 (755)9,403 (897)
Other comprehensive income, net of tax5,659 54,921 535,949 190,273 
Comprehensive income479,714 336,639 1,391,442 1,100,174 
Comprehensive income attributable to noncontrolling interests(27,748)(14,437)(40,035)(35,901)
Comprehensive income attributable to SVBFG$451,966 $322,202 $1,351,407 $1,064,273 
See accompanying notes to interim consolidated financial statements (unaudited).

6
Table of Contents
SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
 
Preferred Stock Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss)
Total SVBFG
Stockholders’ Equity
Noncontrolling Interests
Total Equity
(Dollars in thousands)
 Shares
Amount





Balance at December 31, 2018
$—
 52,586,498
 $53
 $1,378,438
 $3,791,838
 $(54,120)
$5,116,209

$148,634

$5,264,843
Cumulative adjustment for the adoption of premium amortization on purchased callable debt securities, net of tax (ASU 2017-08) (1)
—
 —
 —
 —
 (583) —

(583)
—

(583)
Acquisition of SVB Leerink
—
 —
 —
 —
 —
 —

—

5,256

5,256
Common stock issued under employee benefit plans, net of restricted stock cancellations
—
 467,427
 —
 7,853
 —
 —

7,853

—

7,853
Common stock issued under ESOP
—
 14,442
 —
 3,506
 —
 —

3,506

—

3,506
Net income
—
 —
 —
 —
 606,719
 —

606,719

21,464

628,183
Capital calls and distributions, net
—
 —
 —
 —
 —
 —

—

(23,222)
(23,222)
Net change in unrealized gains and losses on AFS securities, net of tax
—
 —
 —
 —
 —
 122,597

122,597

—

122,597
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax —
 —
 —
 —
 —
 (1,005) (1,005) —
 (1,005)
Foreign currency translation adjustments, net of tax —
 —
 —
 —
 —
 (68) (68) —
 (68)
Net change in unrealized gains and losses on cash flow hedges, net of tax

 —
 —
 —
 —
 —
 13,828
 13,828
 —
 13,828
Share-based compensation, net —
 —
 —
 31,768
 —
 —
 31,768
 —
 31,768
Common stock repurchases —
 (1,506,648) (1) —
 (346,780) —
 (346,781) —
 (346,781)
Balance at June 30, 2019
$—
 51,561,719

$52

$1,421,565

$4,051,194

$81,232

$5,554,043

$152,132

$5,706,175
Balance at December 31, 2019
$340,138
 51,655,607
 $52
 $1,470,071
 $4,575,601
 $84,445
 $6,470,307
 $150,773
 $6,621,080
Cumulative adjustment for the day one adoption of ASC 326, net of tax (1) —
 —
 —
 —
 (35,049) —
 (35,049) —
 (35,049)
Common stock issued under employee benefit plans, net of restricted stock cancellations
—
 317,236
 —
 10,894
 —
 —

10,894

—

10,894
Common stock issued under ESOP
—
 12,094
 —
 2,447
 —
 —

2,447

—

2,447
Net income
—
 —
 —
 —
 369,151
 —

369,151

12,287

381,438
Capital calls and distributions, net
—
 —
 —
 —
 —
 —

—

(14,120)
(14,120)
Net change in unrealized gains and losses on AFS securities, net of tax
—
 —
 —
 —
 —
 382,707

382,707

—

382,707
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax
—
 —
 —
 —
 —
 (499)
(499)
—

(499)
Foreign currency translation adjustments, net of tax
—
 —
 —
 —
 —
 (6,604)
(6,604)
—

(6,604)
Net change in unrealized gains and losses on cash flow hedges, net of tax —
 —
 —
 —
 —
 154,686
 154,686
 —
 154,686
Share-based compensation, net
—
 —
 —
 39,325
 —
 —

39,325

—

39,325
Common stock repurchases —
 (244,223) —
 —
 (60,020) —
 (60,020) —
 (60,020)
Dividends on preferred stock —
 —
 —
 —
 (7,963) —
 (7,963) —
 (7,963)
Other, net —
 —
 —
 (9) —
 —
 (9) —
 (9)
Balance at June 30, 2020
$340,138
 51,740,714

$52

$1,522,728

$4,841,720

$614,735

$7,319,373

$148,940

$7,468,313

 Preferred StockCommon StockAdditional
Paid-in Capital		Retained EarningsAccumulated
Other
Comprehensive Income (Loss)		Total SVBFG
Stockholders’ Equity		Noncontrolling InterestsTotal Equity
(Dollars in thousands)SharesAmount
Balance at December 31, 2018$0 52,586,498 $53 $1,378,438 $3,791,838 $(54,120)$5,116,209 $148,634 $5,264,843 
Cumulative adjustment for the adoption of premium amortization on purchased callable debt securities, net of tax (ASU 2017-08)— — — — (583)— (583)— (583)
Acquisition of SVB Leerink— — — — — — — 5,256 5,256 
Common stock issued under employee benefit plans, net of restricted stock cancellations— 487,101 0 9,236 — — 9,236 — 9,236 
Common stock issued under ESOP— 14,442 — 3,506 — — 3,506 — 3,506 
Net income— — — — 874,000 — 874,000 35,901 909,901 
Capital calls and distributions, net— — — — — — — (32,002)(32,002)
Net change in unrealized gains and losses on AFS securities, net of tax— — — — — 173,235 173,235 — 173,235 
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax— — — — — (1,275)(1,275)— (1,275)
Foreign currency translation adjustments, net of tax— — — — — (4,550)(4,550)— (4,550)
Net change in unrealized gains and losses on cash flow hedges, net of tax— — — — — 22,863 22,863 — 22,863 
Share-based compensation, net— — — 50,550 — — 50,550 — 50,550 
Common stock repurchases— (1,532,210)(1)— (352,510)— (352,511)— (352,511)
Balance at September 30, 2019$0 51,555,831 $52 $1,441,730 $4,312,745 $136,153 $5,890,680 $157,789 $6,048,469 
Balance at December 31, 2019$340,138 51,655,607 $52 $1,470,071 $4,575,601 $84,445 $6,470,307 $150,773 $6,621,080 
Cumulative adjustment for the day one adoption of ASC 326, net of tax (1)— — — — (35,049)— (35,049)— (35,049)
Common stock issued under employee benefit plans, net of restricted stock cancellations— 364,494 0 15,691 — — 15,691 — 15,691 
Common stock issued under ESOP— 12,094 — 2,447 — — 2,447 — 2,447 
Net income— — — — 815,458 — 815,458 40,035 855,493 
Capital calls and distributions, net— — — — — — — (16,363)(16,363)
Net change in unrealized gains and losses on AFS securities, net of tax— — — — — 392,725 392,725 — 392,725 
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax— — — — — (765)(765)— (765)
Foreign currency translation adjustments, net of tax— — — — — 871 871 — 871 
Net change in unrealized gains and losses on cash flow hedges, net of tax— — — — — 143,118 143,118 — 143,118 
Share-based compensation, net— — — 60,733 — — 60,733 — 60,733 
Common stock repurchases— (244,223)0 — (60,020)— (60,020)— (60,020)
Dividends on preferred stock— — — — (12,557)— (12,557)— (12,557)
Other, net— — — (24)— — (24)— (24)
Balance at September 30, 2020$340,138 51,787,972 $52 $1,548,918 $5,283,433 $620,394 $7,792,935 $174,445 $7,967,380 
(1)
(1)See "Adoption of New Accounting Standards" in Note 1 — “Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional details.
  See accompanying notes to interim consolidated financial statements (unaudited).

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SVB FINANCIAL GROUP AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six months ended June 30, Nine months ended September 30,
(Dollars in thousands)
2020
2019(Dollars in thousands)20202019
Cash flows from operating activities:



Cash flows from operating activities:
Net income before noncontrolling interests
$381,438

$628,183
Net income before noncontrolling interests$855,493 $909,901 
Adjustments to reconcile net income to net cash provided by operating activities:



Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses
309,961

52,497
Provision for credit losses257,943 89,033 
Changes in fair values of equity warrant assets, net of proceeds from exercises
20,632
 (825)Changes in fair values of equity warrant assets, net of proceeds from exercises(4,270)12,801 
Changes in fair values of derivatives, net
(58,776)
(9,958)Changes in fair values of derivatives, net(87,740)(29,472)
Gains on investment securities, net
(80,923) (76,726)Gains on investment securities, net(270,760)(106,575)
Distributions of earnings from non-marketable and other equity securities 49,125
 40,584
Distributions of earnings from non-marketable and other equity securities64,703 77,584 
Depreciation and amortization
49,650

40,824
Depreciation and amortization73,607 60,408 
Amortization of premiums and discounts on investment securities, net
29,633

4,993
Amortization of premiums and discounts on investment securities, net54,918 9,646 
Amortization of share-based compensation
39,325

31,768
Amortization of share-based compensation60,733 50,550 
Amortization of deferred loan fees
(78,042)
(76,712)Amortization of deferred loan fees(123,305)(112,383)
Deferred income tax benefit
(72,755)
(3,854)Deferred income tax benefit(4,124)(1,720)
Excess tax benefit from exercise of stock options and vesting of restricted shares (2,181) (7,369)Excess tax benefit from exercise of stock options and vesting of restricted shares(3,449)(7,931)
Losses from the write-off of premises and equipment —
 185
Losses from the write-off of premises and equipment0 185 
Changes in other assets and liabilities:



Changes in other assets and liabilities:
Accrued interest receivable and payable, net
16,606

(3,850)Accrued interest receivable and payable, net15,565 (10,429)
Accounts receivable and payable, net
2,770

22,308
Accounts receivable and payable, net17,534 (18,278)
Income tax receivable and payable, net
131,253

(87,097)Income tax receivable and payable, net(15,267)(59,527)
Accrued compensation
(115,203)
(175,469)Accrued compensation(634)(109,837)
Foreign exchange spot contracts, net
(5,900)
108,307
Foreign exchange spot contracts, net147,021 34,304 
Proceeds from termination of interest rate swaps 227,500
 —
Proceeds from termination of interest rate swaps227,500 0 
Other, net
(98,635)
(37,218)Other, net(212,177)(78,516)
Net cash provided by operating activities
745,478

450,571
Net cash provided by operating activities1,053,291 709,744 
Cash flows from investing activities:



Cash flows from investing activities:
Purchases of available-for-sale securities
(8,071,014)
(2,553,326)Purchases of available-for-sale securities(16,614,960)(7,832,282)
Proceeds from sales of available-for-sale securities
2,654,212

2,189,087
Proceeds from sales of available-for-sale securities2,654,212 2,189,087 
Proceeds from maturities and paydowns of available-for-sale securities
1,550,220

382,054
Proceeds from maturities and paydowns of available-for-sale securities2,634,123 801,605 
Purchases of held-to-maturity securities
(568,002)
(277,889)Purchases of held-to-maturity securities(1,756,920)(408,479)
Proceeds from maturities and paydowns of held-to-maturity securities
1,543,942

888,943
Proceeds from maturities and paydowns of held-to-maturity securities2,833,290 1,516,340 
Purchases of non-marketable and other equity securities
(118,737)
(39,287)Purchases of non-marketable and other equity securities(163,817)(100,068)
Proceeds from sales and distributions of capital of non-marketable and other equity securities
57,745

59,187
Proceeds from sales and distributions of capital of non-marketable and other equity securities84,850 90,371 
Net increase in loans
(3,530,020)
(844,830)Net increase in loans(5,193,146)(2,685,151)
Purchases of premises and equipment
(51,214)
(18,632)Purchases of premises and equipment(66,003)(33,871)
Acquisition of SVB Leerink, net of cash acquired —
 (102,328)Acquisition of SVB Leerink, net of cash acquired0 (102,328)
Net cash used for investing activities
(6,532,868)
(317,021)Net cash used for investing activities(15,588,371)(6,564,776)
Cash flows from financing activities:



Cash flows from financing activities:
Net increase in deposits
12,747,957

6,281,640
Net increase in deposits23,015,213 10,213,974 
Net increase (decrease) in short-term borrowings
33,494

(607,160)Net increase (decrease) in short-term borrowings1,638 (612,514)
Proceeds from issuance of 3.125% Senior Notes 495,024
 —
Proceeds from issuance of 3.125% Senior Notes495,024 0 
(Distributions to noncontrolling interests), net of contributions from noncontrolling interests
(14,120)
(23,222)(Distributions to noncontrolling interests), net of contributions from noncontrolling interests(16,363)(32,002)
Payment of preferred stock dividend (7,963) —
Payment of preferred stock dividend(12,557)0 
Common stock repurchases (60,020) (346,781)Common stock repurchases(60,020)(352,511)
Proceeds from issuance of common stock, ESPP and ESOP, net of restricted stock awards
13,341

11,359
Proceeds from issuance of common stock, ESPP and ESOP, net of restricted stock awards18,138 12,742 
Net cash provided by financing activities
13,207,713

5,315,836
Net cash provided by financing activities23,441,073 9,229,689 
Net increase in cash and cash equivalents
7,420,323

5,449,386
Net increase in cash and cash equivalents8,905,993 3,374,657 
Cash and cash equivalents at beginning of period
6,781,783

3,571,539
Cash and cash equivalents at beginning of period6,781,783 3,571,539 
Cash and cash equivalents at end of period
$14,202,106

$9,020,925
Cash and cash equivalents at end of period$15,687,776 $6,946,196 
Supplemental disclosures:



Supplemental disclosures:
Cash paid during the period for:



Cash paid during the period for:
Interest
$67,493

$94,851
Interest$67,012 $164,503 
Income taxes
57,539

310,604
Income taxes287,098 379,579 
Noncash items during the period:



Noncash items during the period:
Changes in unrealized gains and losses on available-for-sale securities, net of tax
$382,707

$122,597
Changes in unrealized gains and losses on available-for-sale securities, net of tax$392,725 $173,235 
Distributions of stock from investments
11,093

6,747
Distributions of stock from investments11,574 7,770 
See accompanying notes to interim consolidated financial statements (unaudited).
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SVB FINANCIAL GROUP AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.Basis of Presentation
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 diverse 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," 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 sixnine months ended JuneSeptember 30, 2020 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, 2019 (“2019 Form 10-K”).
Use of Estimates and 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 items that are subject to such estimates include measurements of fair value, the valuation of non-marketable and other equity securities, the valuation of equity warrant assets and the adequacy of the allowance for credit losses for loans and for unfunded credit commitments.
Principles of Consolidation and Presentation
Our unaudited interim consolidated financial statements include the accounts of SVB Financial Group and consolidated entities. We consolidate voting entities in which we have control through voting interests or entities through which we have a controlling financial interest in a variable interest entity (“VIE”). We determine whether we have a controlling financial interest in a VIE by determining if we have: (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses or (c) the right to receive the expected returns of the entity. Generally, we have significant variable interests if our commitments to a limited partnership investment represent a significant amount of the total commitments to the entity. We also evaluate the impact of related parties on our determination of variable interests in our consolidation conclusions. We consolidate VIEs in which we are the primary beneficiary based on a controlling financial interest. If we are not the primary beneficiary of a VIE, we record our pro-rata interests based on 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.

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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.
Reclassifications
Certain prior period amounts primarily related to the adoption of the Accounting Standard Update (ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments) ("("ASU 2016-13" 2016-13" or "CECL" "CECL") as mentioned below have been reclassified to conform to current period presentations.
Summary of Significant Accounting Policies
With the exception of the updated accounting policies listed below, 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 2019 Form 10-K.
Loans
Loans are reported at amortized cost which consists of the principal amount outstanding, net of unearned loan fees. Unearned loan fees reflect unamortized deferred loan origination and commitment fees net of unamortized deferred loan origination costs. In addition to cash loan fees, we often obtain equity warrant assets that give us an option to purchase a position in a client company's stock in consideration for providing credit facilities. The grant date fair values of these equity warrant assets are deemed to be loan fees and are deferred as unearned income and recognized as an adjustment of loan yield through loan interest income. The net amount of unearned loan fees is amortized into loan interest income over the contractual terms of the underlying loans and commitments using the constant effective yield method, adjusted for actual loan prepayment experience, or the straight-line method, as applicable.
Allowance for Credit Losses: Loans
The allowance for credit losses for loans considers credit risk and is adjusted by a provision for expected credit losses ("ECL") charged to expense and reduced by the charge-off of loan amounts, net of recoveries. Our allowance for credit losses is an estimate of expected losses inherent with the Company's existing loans at the balance sheet date. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain.
Portfolio Segments and Risk-Based Segments
The estimation ofprocess to estimate the ECL on loans process involves procedures to appropriately consider the unique characteristics of our sevensix loan portfolio segments. Our sevensix portfolio segments are determined by using the following risk dimensions: (i) underwriting methodology, (ii) industry niche and (iii) life stage. The 76 portfolio segments are further disaggregated into 11 classes of financing receivable, or risk-based segments, and represents the level at which credit risk is monitored. Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process to estimate ECL. Additionally, all of our loan and allowance for credit loss disclosures are presented at the risk-based segment level of disaggregation. For further information refer to Note 7 — “Loans and Allowance for Credit Losses: Loans and Unfunded Credit Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report. The following provides additional information regarding our sevensix portfolio segments and the additional disaggregation of our 11 risk-based segments:
(i)Investor Dependent - Accelerator (Early-Stage) and Growth (Mid-Stage and Later-Stage)
Global Fund Banking
The vast majority of our Global Fund Banking (formerly Private Equity/Venture Capital) portfolio segment 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 certain private equity and venture capital firms. These facilities are generally governed by meaningful financial covenants oriented towards ensuring that the funds' remaining callable capital is sufficient to repay the loan, and larger commitments (typically provided to larger private equity funds) are often secured by an assignment of the general partner's right to call capital from the fund's limited partner investors.
Investor Dependent - Accelerator (Early-Stage) and Growth (Mid-Stage and Later-Stage)
Investor Dependent loans are comprised of 2 portfolio segments: (i) Accelerator, which is comprised of Early-Stage clients, and (ii) Growth, which is comprised of Mid-Stage and Later-Stage clients. Our Investor Dependent loans are made primarily to technology and life science/healthcare companies in both our Accelerator (Early-Stage) and Growth practices (Mid-Stage and Later-Stage).companies. Investor Dependent loans typically have modest or negative cash flows and no established record of profitable operations. Repayment of these loans may be dependent
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upon receipt by borrowers of additional equity financing from venture capital firms or others, or in some cases, a successful sale to a third party or an IPO. Venture capital firms may provide financing selectively, at reduced amounts, or on less favorable terms, which may have an adverse effect on our borrowers' ability to repay their loans to us. When repayment is dependent upon the next round of venture investment and there is an indication that further investment is unlikely or will not occur, it is often likely that the company would need to be sold to repay the debt in full. If reasonable efforts have not yielded a likely buyer willing to repay all debt at the close of the sale or on commercially viable terms, the account will most likely be deemed to be impaired andnon-performing or charged-off.
We further disaggregate Investor Dependent loans into three subcategories.Our Accelerator, or Early-Stage, portfolio segment consists of pre-revenue, development-stage companies and companies that are in the early phases of commercialization, with revenues of up to $5 million. Our Growth portfolio segment is disaggregated into two risk-based segments for disclosure purposes; Mid-Stage and Later-Stage. Mid-Stage companies consist of growth-stage enterprises with revenues of between $5 million and $15 million or, in the case of biotechnology, pre-revenue clinical-stage companies. Later-Stage consists of companies with revenues of $15 million or more. This disaggregation of our Investor Dependent loans is based in part on the materially different historical loss rate we

have experienced with each cohort,risk-based segment, with historical loss rates being the highest in the Early-Stage portfolio segment, and declining in the Mid-Stage and Later-Stage risk-based segments, as a function of the relatively higher enterprise value and asset coverage that is created as a company progresses through the various stages of development.
(ii)Cash Flow Dependent
Cash Flow and Balance Sheet Dependent
Our Cash Flow and Balance Sheet Dependent portfolio segment is disaggregated into Cash Flow Dependent and Balance Sheet Dependent loans. Additionally, our Cash Flow Dependent loans are disaggregated into two risk-based segments for disclosure purposes: (i) Sponsor Led Buyout and (ii) Other. Our Cash Flow Dependent loans are made primarily to technology and life science/healthcare companies which include Sponsor Led Buyout lending, and 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. Sponsor Led Buyout loans are typically used to assist a select group of experienced private equity sponsors with the acquisition of businesses, and 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 andwith loan structures that include meaningful financial covenants. The sponsor's equity contribution is often 50 percent or more of the acquisition price.
(iii)     Balance Sheet Dependent
Balance Sheet Dependent loans are made primarily to technology and life science/healthcare companies, which include asset-based loans, and 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. The repayment of these arrangements is dependent on the financial condition, and payment ability, of third parties with whom our clients do business. As a result of the adoption of CECL and in connection with the revised approach to portfolio disaggregation discussed above, certain loans that were previously considered to be Balance Sheet Dependent have been reclassified as Investor Dependent - Later-Stage.
(iv)Private Equity/Venture Capital
The vast majority of our Private Equity/Venture Capital portfolio consists of capital call lines of credit, the repayment of which is dependent on the payment of capital calls by the underlying limited partner investors in the funds managed by these firms. These facilities are generally governed by meaningful financial covenants oriented towards ensuring that the funds' remaining callable capital is sufficient to repay the loan, and larger commitments (typically provided to larger private equity funds) are often secured by an assignment of the general partner's right to call capital from the fund's limited partner investors.Bank
(v)Private Bank
Our Private Bank clients are primarily private equity/venture capital professionals and senior executives in 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, real estate secured home equity capital call lines of credit, lines of credit against liquid assets and other secured and unsecured lending products, as well as cash and wealth management services. In addition, we provide owner occupied commercial mortgages to Private Bank clients and real estate secured loans to eligible employees through our Employee Home Ownership Program.EHOP.
(vi)Premium Wine and Other
Other
Our Other portfolio segment consists of two risk-based segments for disclosure purposes: (i) Premium Wine and (ii) Other. Our Premium Wine clients primarily consist of premium wine producers, vineyards and wine industry or hospitality related businesses across the Western United States, primarily in California's Napa Valley, Sonoma County and Central Coast regions, as well as the Pacific Northwest. Our other loan portfolioOther risk-based segment primarily includes our community development loans made as part of our responsibilities under the Community Reinvestment Act.
(vii)SBA lending
We participated in theSBA Loans
The U.S. Small Business Administration’s ("SBA") loans are included across allof our six portfolio segments and are separately disclosed as a single risk-based segment. We participated in the SBA's Paycheck Protection Program ("PPP") to support small businesses across the United States. Under this program, the SBA provides a guarantee to banks making unsecured term loans of up to $10 million for qualified small businesses, as defined by the SBA. We are no longer taking
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applications for this program and are preparing for the second phase,have begun accepting forgiveness applications from clients, whereby clients apply for loans to be forgiven (paid off) by the SBA. Loans funded under this program were primarily made to clients in the technology, life science/healthcare, premium wine and energy resource industries. While the recipients were located across the United States, more than half were made to clients that applied from the western region.United States. 
We maintain a systematic process for the evaluation of individual loans and portfolio segments for inherent risk of estimated credit losses for loans. At the time of approval, each loan in our portfolio is assigned a credit risk rating. Credit risk ratings are assigned on a scale of 1 to 10, with 1 representing loans with a low risk of nonpayment, 9 representing loans with the highest risk of nonpayment and 10 representing loans which have been charged-off. The credit risk ratings for each loan are monitored

and updated on an ongoing basis. This credit risk rating process includes, but is not limited to, consideration of such factors as payment status, the financial condition and operating performance of the borrower, borrower compliance with loan covenants, underlying collateral values and performance trends, the degree of access to additional capital, the presence of credit enhancements such as third party guarantees (where applicable), the degree to which the borrower is sensitive to external factors and the depth and experience of the borrower's management team. Our policies require a committee of senior management to review, at least quarterly, credit relationships with a credit risk rating of 5 through 9 that exceed specific dollar values.
Expected Credit Loss Measurement
The methodology for estimating the amount of ECL reported in the allowance for credit losses hasis the sum of two main components: (1) ECL assessed on a collective basis for pools of loans that share similar risk characteristics which includes a qualitative adjustment based on management’s assessment of the risks that may lead to a future loan loss experience different from our historical loan loss experience and (2) ECL assessed for individual loans that do not share similar risk characteristics with other loans. We do not estimate ECL on accrued interest receivable ("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 $107.2$109.3 million at JuneSeptember 30, 2020 and $119.1 million at December 31, 2019 and is reported in "Accrued interest receivable and other assets" in our unaudited interim consolidated balance sheets.
While the evaluation process of our allowance for credit losses on loans uses historical and other objective information, the classification of loans and the estimate of the allowance for credit losses for loans rely on the judgment and experience of our management. A committee comprised of senior management evaluates the adequacy of the allowance for credit losses for loans, which includes review of loan portfolio segmentation, quantitative models, internal and external data inputs, economic forecasts, credit risk ratings and qualitative adjustments.
Loans That Share Similar Risk Characteristics Withwith Other Loans
We derive an estimated ECL assumption from a non-discounted cash flow approachapproach based on our portfolio segments discussed above. This approach incorporates:incorporates a calculation of three predictive metrics: (1) probability of default ("PD"), (2) loss givengiven default ("LGD") and (3) exposure at default ("EAD"), over the estimated life of the exposure. PD and LGD assumptions are developed based on quantitative models and inherent risk of credit loss, both of which involve significant judgement.judgment. Renewals and extensions within our control are not considered in the estimated contractual term of a loan. However, we include potential extensions if management has a reasonable expectation that we will execute a TDR with the borrower. The quantitative models are based on historical credit loss experience, adjusted for probability-weighted economic scenarios. These scenarios are used to support a reasonable and supportable forecast period of three years for all portfolio segments. To the extent the remaining contractual lives of loans in the portfolio extend beyond this three-year period, we revert to historical averages using an autoregressive model of mean reversion that will continue to gradually trend towards the mean historical loss over the remaining contractual lives, adjusted for prepayments. The macroeconomic scenarios are reviewed on a quarterly basis.    
We also apply a qualitative factor adjustment to the results obtained through our quantitative ECL models to consider relevant qualitativemodel imprecision, emerging risk assessments, trends and other subjective factors that relate tomay not be adequately represented in the environment in which the entity operates and are specific to the borrower.quantitative ECL models. These adjustments are based uponreflect our assessment of the risksextent that may lead to a future loan loss experience differentcurrent conditions and reasonable and supportable forecasts differ from ourconditions that existed during the period over which historical loan loss experience.information was evaluated. These risksadjustments are aggregated to become our qualitative allocation. Based on our qualitative assessment estimate of changing risks in the lending environment, the qualitative allocation may vary significantly from period to period and may include, but is not limited to, consideration of the following factors:
•Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;
•Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments;
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•Changes in the nature and volume of the portfolio and in the terms of loans;
•Changes in the experience, ability and depth of lending management and other relevant staff;
•Changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans;
•Changes in the quality of the institution’sour loan review system;
•Changes in the value of underlying collateral for collateral-dependent loans;
•The existence and effect of any concentrations of credit, and changes in the level of such concentrations;
•The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’sour existing portfolio; and
•The effect of limitations of available data, model imprecision and recent macro-economic factors that may not be reflected in the forecast information.

Loans That Do Not Share Similar Risk Characteristics
We monitor our loan pools to ensure all assets therein continue to share similar risk characteristics with other financial assets inside the pool. Changes in credit risk, borrower circumstances or the recognition of write-offs may indicate that a loan's risk profile has changed, and the asset should be removed from its current pool. For a loan that does not share risk characteristics with other loans, expected credit loss is measured based on the net realizable value, that is, the difference between the discounted value of the expected future cash flows and the amortized cost basis of the loan. When a loan is collateral-dependent and the repayment is expected to be provided substantially through the operation or sale of the collateral, the ECL is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of the collateral will be determined by the most recent appraisal, as adjusted to reflect a reasonable marketing period for the sale of the asset(s) and an estimate of reasonable selling expenses. Collateral-dependent loans will have independent appraisals completed and accepted at least annually.
Allowance for Credit Losses: Unfunded Credit Commitments
We maintain a separate allowance for credit losses for unfunded credit commitments which is included in other liabilities and the related ECL in our provision for credit losses. We estimate the amount of expected losses by using historical trends to calculate a probability of an unfunded credit commitment being funded and derive historical lifetime expected loss factors for each portfolio segment similar to our funded loan ECL. The collectively assessed ECL for unfunded credit commitments also includes the same qualitative allocations applied for our funded loan ECL. For unfunded credit commitments related to loans that do not share similar risk characteristics with other loans, where applicable, a separate estimate of ECL will be included in our total allowance for credit losses on unfunded credit commitments. Loan commitments that are determined to be unconditionally cancellable by the Company do not require an allowance for credit losses.losses on unfunded commitments.
Investment Securities
Available-for-Sale Securities and the Allowance for Credit Losses on Available-for-Sale Securities
Our available-for-sale securities portfolio is a fixed income investment portfolio that is managed to earn an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and credit diversification and meeting our asset/liability management objectives. Unrealized gains and losses on available-for-sale securities, net of applicable taxes, are reported in accumulated other comprehensive income, which is a separate component of SVBFG's stockholders' equity, until realized.
We analyze available-for-sale securities for impairment related to credit losses each quarter. Market valuations represent the current fair value of a security at a specified point in time and incorporates the risk of timing of interest due and the return of principal over the contractual life of each security. Gains and losses on securities are realized when there is a sale of the security prior to maturity. A credit impairment is recognized through a valuation allowance against the security with an offset through earnings; the allowance is limited to the amount that fair value, calculated as the present value of expected future cash flow discounted at the security’s effective interest rate, is less than the amortized cost basis. We separate the amount of the impairment related to credit losses, if any, and the amount due to all other factors. The credit loss component is recognized in earnings and recorded as an allowance for credit losses for AFS securities.
Held-to-Maturity Securities and the Allowance for Credit Losses on Held-to-Maturity Securities
Debt securities purchased with the positive intent and ability to hold to maturity are classified as held-to-maturity securities and are recorded at amortized cost, net of any allowance for credit losses.
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We measure ECL on held-to-maturity securities on a collective basis by major security type and standard credit rating. Our held-to-maturity securities portfolio, with the exception of our municipal bond portfolio, are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. With respect to these securities, we consider the risk of credit loss to be zero and, therefore, we do not record an ECL. Our municipal bond portfolio primarily consists of highly rated bonds and currently carry ratings no lower than Aa3. The estimate of ECL on our municipal bond portfolio considers historical credit loss information and severity of loss in the event of default and leverages external data adjusted for current conditions. A reasonable and supportable forecast period of one year is applied to our municipal bond portfolio, with immediate reversion to long-term average historical loss rates when remaining contractual lives of securities exceed one year. We do not estimate ECL on accrued interest receivable ("AIR")AIR from held-to-maturity securities as AIR is reversed or written off when the full collection of the AIR related to a security becomes doubtful. AIR from held-to-maturity securities totaled $45.4$39.4 million at JuneSeptember 30, 2020 and $45.2 million at December 31, 2019 and is reported in "Accrued interest receivable and other assets" in our unaudited interim consolidated balance sheets.

Expected credit loss on municipal bonds that do not share common risk characteristics with our collective portfolio are individually measured based on net realizable value, or the difference between the discounted value of the expected future cash flows and the recorded amortized cost basis of the security.

Adoption of New Accounting Standards
Financial Instruments - Credit Losses
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 a current expected credit loss measurement to estimate the allowance for credit losses over the contractual life of the financial assets (including loans, unfunded credit commitments and HTM securities) and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. While the CECL model does not apply to available-for-sale debt securities, ASU 2016-13 does require entities to record an allowance for credit losses when recognizing credit losses for available-for-sale securities, rather than reduce the amortized cost of the securities by direct write-offs, which allows for reversal of credit impairments in future periods based on improvements in credit. We adopted the guidance on January 1, 2020, using a modified retrospective approach. We recognized the cumulative effect of initially applying CECL as an adjustment to the opening balance of retained earnings, net of tax. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
We completed a comprehensive implementation process that included loss forecasting model development, evaluation of technical accounting topics, updates to our allowance for credit loss accounting policies, reporting processes and related internal controls, overall operational readiness for our adoption of CECL as well as parallel runs for CECL alongside our previous allowance process. We provided quarterly updates to senior management and to the Audit and Credit Committees of the Board of Directors throughout the implementation process. For additional details regarding our allowance for credit losses methodology, see Note 7 — “Loans and Allowance for Credit Losses: Loans and Unfunded Credit Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
Based on our loan, unfunded credit commitment, and HTM security portfolios composition at December 31, 2019, and the then current economic environment, the cumulative effect of the changes to our consolidated balance sheets at January 1, 2020, for the adoption of CECL were as follows:

(Dollars in thousands)
 Balance at December 31, 2019 Adjustments Due to Adoption of ASC 326 
Balance at
January 1, 2020
Assets:      
Allowance for credit losses: loans $304,924
 $25,464
 $330,388
Allowance for credit losses: held-to-maturity securities —
 174
 174
Deferred tax assets 28,433
 13,415
 41,848
Other liabilities:      
Allowance for credit losses: unfunded credit commitments 67,656
 22,826
 90,482
Stockholders' equity:      
Retained earnings, net of tax 4,575,601
 (35,049) 4,540,552


(Dollars in thousands)		Balance at December 31, 2019Adjustments Due to Adoption of ASC 326Balance at
January 1, 2020
Assets:
Allowance for credit losses: loans$304,924 $25,464 $330,388 
Allowance for credit losses: held-to-maturity securities0 174 174 
Deferred tax assets28,433 13,415 41,848 
Other liabilities:
Allowance for credit losses: unfunded credit commitments67,656 22,826 90,482 
Stockholders' equity:
Retained earnings, net of tax4,575,601 (35,049)4,540,552 
In light of the economic disruptions and operational challenges related to the Coronavirus Disease 2019 pandemic (“COVID-19”), in March 2020 the federal banking agencies provided transitional relief to banking organizations with respect to the impact of CECL on regulatory capital (the “2020 CECL Transition Rule”). Under the 2020 CECL Transition Rule, banking
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organizations that adopt CECL during the 2020 calendar year, such as SVB Financial and the Bank, 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. The rule prescribes a methodology for estimating the impact of differences in credit loss allowances reflected under CECL versus under the incurred loss methodology during the five-year transition period. We have elected to use the five-year transition option under the 2020 CECL Transition Rule. Refer to the "Capital Resources" section under Part I, Item 2 of this report for additional details.
Additionally, under the prior guidance, our loan portfolio and credit quality disclosures were disaggregated based on client market segments. Upon adoption of CECL, our technology (software/internet and hardware) and life science/healthcare market segments are disclosed by thedisaggregated risk-based segments determined by portfolio segmentsegments that alignsalign with their respective underwriting methodology and the level at which credit risk is now monitored by management. The primary underwriting method for our technology and life science/healthcare portfolios are classified as investor dependent (early-stageInvestor Dependent - Accelerator (Early-Stage) and growth), cash flow dependent or balance sheet

dependent,Growth (Mid-Stage and Later-Stage) and Cash Flow (Sponsor Led Buyout and Other) and Balance Sheet Dependent, as noted above, and prior period amounts were reclassified for comparability. There are no other material changes to our current market segments.
Other Adopted Accounting Pronouncements
In August 2018, the FASB issued a new Accounting Standard Update (ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement). The ASU primarily modifies certain disclosures with respect to Level 3 fair value measurements. We adopted the guidance on January 1, 2020. The adoption did not have an impact on our consolidated financial position or results of operations and did not have a material impact on the disclosures in our notes to our unaudited interim consolidated financial statements.
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2.Stockholders' Equity and EPS
2.    Stockholders' Equity and EPS
Accumulated Other Comprehensive Income
The following table summarizes the items reclassified out of accumulated other comprehensive income into the Consolidated Statements of Income (unaudited) for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
    Three months ended June 30, Six months ended June 30,
(Dollars in thousands) Income Statement Location 2020 2019 2020 2019
Reclassification adjustment for losses (gains) on available-for-sale securities included in net income Gains on investment securities, net $—
 $275
 $(61,165) $3,905
Related tax (benefit) expense Income tax expense —
 (77) 16,953
 (1,087)
Reclassification adjustment for (gains) losses on cash flow hedges included in net income Net interest income (15,831) 508
 (17,920) 511
Related tax expense (benefit) Income tax expense 4,388
 (141) 4,967
 (142)
Total reclassification adjustment for (gains) losses included in net income, net of tax   $(11,443) $565
 $(57,165) $3,187

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)Income Statement Location2020201920202019
Reclassification adjustment for (gains) losses on available-for-sale securities included in net incomeGains on investment securities, net$0 $0 $(61,165)$3,905 
Related tax expense (benefit)Income tax expense0 0 16,953 (1,087)
Reclassification adjustment for (gains) losses on cash flow hedges included in net incomeNet interest income(16,004)2,713 (33,924)3,224 
Related tax expense (benefit)Income tax expense4,436 (755)9,403 (897)
Total reclassification adjustment for (gains) losses included in net income, net of tax$(11,568)$1,958 $(68,733)$5,145 
The table below summarizes the activity relating to net gains and losses on our cash flow hedges included in accumulated other comprehensive income for the three and sixnine months ended JuneSeptember 30, 2020 and 2019. Refer to Note 11 — “Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional information regarding the termination of our cash flow hedges during the three monthsquarter ended March 31, 2020. Over the next 12 months, we expect that approximately $63.5 million in accumulated other comprehensive income ("AOCI") at JuneSeptember 30, 2020, related to unrealized gains will be reclassified out of AOCI and recognized in net income.
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Balance, beginning of period, net of tax$152,556 $13,828 $(2,130)$0 
Net increase in fair value, net of tax0 7,077 167,639 20,536 
Net realized (gain) loss reclassified to net income, net of tax(11,568)1,958 (24,521)2,327 
Balance, end of period, net of tax$140,988 $22,863 $140,988 $22,863 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Balance, beginning of period, net of tax $163,999
 $797
 $(2,130) $—
Net increase in fair value, net of tax —
 12,664
 167,639
 13,459
Net realized (gain) loss reclassified to net income, net of tax (11,443) 367
 (12,953) 369
Balance, end of period, net of tax $152,556
 $13,828
 $152,556
 $13,828
EPS

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 unit 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.

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The following is a reconciliation of basic EPS to diluted EPS for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
 Three months ended September 30,Nine months ended September 30,
(Dollars and shares in thousands, except per share amounts)2020201920202019
Numerator:
Net income available to common stockholders$441,713 $267,281 $802,901 $874,000 
Denominator:
Weighted average common shares outstanding—basic51,773 51,545 51,640 52,025 
Weighted average effect of dilutive securities:
Stock options and ESPP141 203 147 238 
Restricted stock units and awards232 110 163 168 
Weighted average common shares outstanding—diluted52,146 51,858 51,950 52,431 
Earnings per common share:
Basic$8.53 $5.19 $15.55 $16.80 
Diluted8.47 5.15 15.46 16.67 
  Three months ended June 30, Six months ended June 30,
(Dollars and shares in thousands, except per share amounts) 2020 2019 2020 2019
Numerator:        
Net income available to common stockholders $228,935
 $317,987
 $361,188
 $606,719
Denominator:        
Weighted average common shares outstanding—basic 51,581
 51,955
 51,573
 52,269
Weighted average effect of dilutive securities:        
Stock options and ESPP 114
 235
 140
 254
Restricted stock units and awards 100
 146
 135
 192
Weighted average common shares outstanding—diluted 51,795
 52,336
 51,848
 52,715
Earnings per common share:        
Basic $4.44
 $6.12
 $7.00
 $11.61
Diluted 4.42
 6.08
 6.97
 11.51


The following table summarizes the weighted-average common shares excluded from the diluted EPS calculation due to the antidilutive effect for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
  Three months ended June 30, Six months ended June 30,
(Shares in thousands) 2020 2019 2020 2019
Stock options 288
 166
 247
 128
Restricted stock units 312
 333
 310
 228
Total 600
 499
 557
 356

 Three months ended September 30,Nine months ended September 30,
(Shares in thousands)2020201920202019
Stock options319 213 269 154 
Restricted stock units55 432 83 294 
Total374 645 352 448 
Stock Repurchase Program
On October 24, 2019, our Board of Directors authorized a new stock repurchase program that enables us to repurchase up to $350 million of our outstanding common stock. This program expires on October 29, 2020. We have temporarily paused our stock repurchase program and will reassess this decision once the economic environment becomes more stable. For the three months ended JuneSeptember 30, 2020, we did not repurchase any shares of our outstanding common stock under the new stock repurchase program.program as the program remained on pause during the quarter end period. For the sixnine months ended JuneSeptember 30, 2020, we had repurchased 244,223 shares of our outstanding common stock for $60.0 million under the stock repurchase program. The program expired on October 29, 2020.
Preferred Stock
On December 9, 2019, the Company issued depositary shares representing an ownership interest in 350,000 shares of Series A Preferred Stock with $0.001 par value and liquidation preference of $1,000 per share, or $25 per depositary share. All preferred shares were issued in the form of depositary shares, with each depositary share representing a 1/40th ownership interest in a share of the preferred stock. The Series A Preferred Stock has no stated maturity and is not subject to any sinking fund or other obligation of the Company. Dividends are approved by the Board of Directors and, if declared, are payable quarterly, in arrears, at a rate per annum equal to 5.25 percent. The Series A Preferred Stock is redeemable at the Company’s option, in whole or in part, on or after February 15, 2025. Prior to February 15, 2025, the Series A Preferred Stock is redeemable at the Company’s option, in whole and not in part, following any change in laws or regulations that would not allow the Company to treat the full liquidation value of the Series A Preferred Stock as Tier 1 capital for purposes of the capital adequacy guidelines of the Board of Governors of the Federal Reserve System ("the Federal Reserve"). The redemption amount is computed at the per share liquidation preference plus any declared but unpaid dividends. Redemptions are subject to certain regulatory provisions, including approval of the Federal Reserve.
As of JuneSeptember 30, 2020, there were 350,000 shares issued and outstanding of Series A Preferred Shares, which had a carrying value of $340.1 million and liquidation preference of $350.0 million.

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The following table summarizes our preferred stock at JuneSeptember 30, 2020:
SeriesDescriptionAmount outstanding (in millions)Carrying value
(in millions)		Shares issued and outstandingPar ValueOwnership interest per depository shareLiquidation preference per depository share2020 dividends paid per depository share
Series A5.250% Fixed-Rate Non-Cumulative Perpetual Preferred Stock$350 $340.1 350,000$0.001 1/40th$25 $0.90 
Series Description Amount outstanding (in millions) 
Carrying value
(in millions)
 Shares issued and outstanding Par Value Ownership interest per depository share Liquidation preference per depository share 2020 dividends paid per depository share
Series A 5.250% Fixed-Rate Non-Cumulative Perpetual Preferred Stock $350
 $340.1
 350,000 $0.001
 1/40th $25
 $0.57
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Consolidated Statement of Changes in Equity
The following table summarizes the changes in our consolidated equity for the three months ended JuneSeptember 30, 2020 and 2019:
 Preferred StockCommon StockAdditional
Paid-in Capital		Retained EarningsAccumulated
Other
Comprehensive Income		Total SVBFG
Stockholders’ Equity		Noncontrolling InterestsTotal Equity
(Dollars in thousands)SharesAmount
Balance at June 30, 2019$0 51,561,719 $52 $1,421,565 $4,051,194 $81,232 $5,554,043 $152,132 $5,706,175 
Common stock issued under employee benefit plans, net of restricted stock cancellations— 19,674 — 1,383 — — 1,383 — 1,383 
Net income— — — — 267,281 — 267,281 14,437 281,718 
Capital calls and distributions, net— — — — — — — (8,780)(8,780)
Net change in unrealized gains and losses on AFS securities, net of tax— — — — — 50,638 50,638 — 50,638 
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax— — — — — (270)(270)— (270)
Foreign currency translation adjustments, net of tax— — — — — (4,482)(4,482)— (4,482)
Net change in unrealized gains and losses on cash flow hedges, net of tax— — 9,035 9,035 9,035 
Share-based compensation, net— — — 18,782 — — 18,782 — 18,782 
Common stock repurchases— (25,562)— — (5,730)— (5,730)— (5,730)
Balance at September 30, 2019$0 51,555,831 $52 $1,441,730 $4,312,745 $136,153 $5,890,680 $157,789 $6,048,469 
Balance at June 30, 2020$340,138 51,740,714 $52 $1,522,728 $4,841,720 $614,735 $7,319,373 $148,940 $7,468,313 
Common stock issued under employee benefit plans, net of restricted stock cancellations— 47,258 — 4,797 — — 4,797 — 4,797 
Net income— — — — 446,307 — 446,307 27,748 474,055 
Capital calls and distributions, net— — — — — — — (2,243)(2,243)
Net change in unrealized gains and losses on AFS securities, net of tax— — — — — 10,018 10,018 — 10,018 
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax— — — — — (266)(266)— (266)
Foreign currency translation adjustments, net of tax— — — — — 7,475 7,475 — 7,475 
Net change in unrealized gains and losses on cash flow hedges, net of tax— — — — — (11,568)(11,568)— (11,568)
Share-based compensation, net— — — 21,408 — — 21,408 — 21,408 
Preferred stock dividends— — — — (4,594)— (4,594)— (4,594)
Other, net— — — (15)— — (15)— (15)
Balance at September 30, 2020$340,138 51,787,972 $52 $1,548,918 $5,283,433 $620,394 $7,792,935 $174,445 $7,967,380 

19
  Preferred Stock Common Stock 
Additional
Paid-in Capital
 Retained Earnings 
Accumulated
Other
Comprehensive Income (Loss)
 
Total SVBFG
Stockholders’ Equity
 Noncontrolling Interests Total Equity
(Dollars in thousands)  Shares Amount      
Balance at March 31, 2019 $—
 52,322,105
 $52
 $1,394,130
 $3,963,965
 $(15,374) $5,342,773
 $141,050
 $5,483,823
Common stock issued under employee benefit plans, net of restricted stock cancellations —
 257,684
 —
 10,789
 —
 —
 10,789
 —
 10,789
Net income —
 —
 —
 —
 317,987
 —
 317,987
 18,584
 336,571
Capital calls and distributions, net —
 —
 —
 —
 —
 —
 —
 (7,502) (7,502)
Net change in unrealized gains and losses on AFS securities, net of tax —
 —
 —
 —
 —
 86,186
 86,186
 —
 86,186
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax —
 —
 —
 —
 —
 (519) (519) —
 (519)
Foreign currency translation adjustments, net of tax —
 —
 —
 —
 —
 (2,092) (2,092) —
 (2,092)
Net change in unrealized gains and losses on cash flow hedges, net of tax —
 —
       13,031
 13,031
   13,031
Share-based compensation, net —
 —
 —
 16,646
 —
 —
 16,646
 —
 16,646
Common stock repurchases   (1,018,070)     (230,758)   (230,758)   (230,758)
Balance at June 30, 2019 $—
 51,561,719
 $52
 $1,421,565
 $4,051,194
 $81,232
 $5,554,043
 $152,132
 $5,706,175
Balance at March 31, 2020 $340,138
 51,490,342
 $52
 $1,489,240
 $4,612,785
 $592,534
 $7,034,749
 $148,472
 $7,183,221
Common stock issued under employee benefit plans, net of restricted stock cancellations —
 250,372
 —
 13,925
 —
 —
 13,925
 —
 13,925
Net income —
 —
 —
 —
 233,529
 —
 233,529
 14,260
 247,789
Capital calls and distributions, net —
 —
 —
 —
 —
 —
 —
 (13,792) (13,792)
Net change in unrealized gains and losses on AFS securities, net of tax —
 —
 —
 —
 —
 33,784
 33,784
 —
 33,784
Amortization of unrealized holding gains on securities transferred from AFS to HTM, net of tax —
 —
 —
 —
 —
 (100) (100) —
 (100)
Foreign currency translation adjustments, net of tax —
 —
 —
 —
 —
 (40) (40) —
 (40)
Net change in unrealized gains and losses on cash flow hedges, net of tax —
 —
 —
 —
 —
 (11,443) (11,443) —
 (11,443)
Share-based compensation, net —
 —
 —
 20,154
 —
 —
 20,154
 —
 20,154
Preferred stock dividends —
 —
 —
 —
 (4,594) —
 (4,594) —
 (4,594)
Other, net —
 —
 —
 (591) —
 —
 (591) —
 (591)
Balance at June 30, 2020 $340,138
 51,740,714
 $52
 $1,522,728
 $4,841,720
 $614,735
 $7,319,373
 $148,940
 $7,468,313
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3.Share-Based Compensation

3.Share-Based Compensation
For the three and sixnine months ended JuneSeptember 30, 2020 and 2019, we recorded share-based compensation and related tax benefits as follows: 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Share-based compensation expense $20,154
 $16,646
 $39,325
 $31,768
Income tax benefit related to share-based compensation expense (4,727) (3,817) (9,167) (7,144)

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Share-based compensation expense$21,408 $18,782 $60,733 $50,550 
Income tax benefit related to share-based compensation expense(5,560)(4,883)(14,726)(12,028)
Unrecognized Compensation Expense
As of JuneSeptember 30, 2020, unrecognized share-based compensation expense was as follows:
(Dollars in thousands) 
  Unrecognized  
Expense
 
Weighted Average Expected
Recognition Period 
- in Years  
Stock options $17,048
 2.78
Restricted stock units and awards 134,908
 2.85
Total unrecognized share-based compensation expense $151,956
  

(Dollars in thousands)  Unrecognized  
Expense		Weighted Average Expected
Recognition Period 
- in Years  
Stock options$15,541 2.60
Restricted stock units and awards125,321 2.68
Total unrecognized share-based compensation expense$140,862 
Share-Based Payment Award Activity
The table below provides stock option information related to the 2006 Equity Incentive Plan for the sixnine months ended JuneSeptember 30, 2020:
  Options 
Weighted
Average
 Exercise Price 
 Weighted Average Remaining Contractual Life - in Years   
Aggregate
  Intrinsic Value  
of In-The-
Money
Options
Outstanding at December 31, 2019 625,407
 $169.33
    
Granted 119,472
 185.52
    
Exercised (82,896) 89.71
    
Forfeited (11,585) 226.95
    
Expired (1,030) 71.11
    
Outstanding at June 30, 2020 649,368
 181.60
 4.11 $32,958,101
Vested and expected to vest at June 30, 2020 622,501
 180.01
 4.02 32,492,850
Exercisable at June 30, 2020 367,008
 148.46
 2.67 28,597,666

OptionsWeighted
Average
 Exercise Price 		Weighted Average Remaining Contractual Life - in Years  Aggregate
  Intrinsic Value  
of In-The-
Money
Options
Outstanding at December 31, 2019625,407 $169.33 
Granted123,301 186.83 
Exercised(130,330)99.72 
Forfeited(15,460)231.75 
Expired(1,030)71.11 
Outstanding at September 30, 2020601,888 186.55 4.08$38,405,994 
Vested and expected to vest at September 30, 2020578,024 185.26 4.00$37,654,264 
Exercisable at September 30, 2020317,896 152.61 2.59$30,524,026 
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 $215.53$240.62 as of JuneSeptember 30, 2020. The total intrinsic value of options exercised during the three and sixnine months ended JuneSeptember 30, 2020was $3.3$5.6 million and $11.6$17.2 million, compared to $6.9$1.6 million and $14.4$16.0 million for the comparable 2019 period.periods, respectively.
The table below provides information for restricted stock units and awards under the 2006 Equity Incentive Plan for the sixnine months endedJune September 30, 2020:2020:
Shares    Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019847,972 $236.54 
Granted426,071 190.79 
Vested(247,370)207.82 
Forfeited(49,272)226.32 
Nonvested at September 30, 2020977,401 224.38 
  Shares     Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019 847,972
 $236.54
Granted 402,546
 188.64
Vested (238,460) 207.50
Forfeited (39,817) 227.23
Nonvested at June 30, 2020 972,241
 224.21
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4.    Variable Interest Entities
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 qualified affordable housing projects.
The following table presents the carrying amounts and classification of significant variable interests in consolidated and unconsolidated VIEs as of JuneSeptember 30, 2020 and December 31, 2019:
(Dollars in thousands)Consolidated VIEsUnconsolidated VIEsMaximum Exposure to Loss in Unconsolidated VIEs
September 30, 2020:
Assets:
Cash and cash equivalents$14,082 $0 $— 
Non-marketable and other equity securities (1)318,356 771,329 771,329 
Accrued interest receivable and other assets853 0 — 
Total assets$333,291 $771,329 $771,329 
Liabilities:
Other liabilities (1)1,500 332,031 — 
Total liabilities$1,500 $332,031 $— 
December 31, 2019:
Assets:
Cash and cash equivalents$7,629 $0 $— 
Non-marketable and other equity securities (1)270,057 689,360 689,360 
Accrued interest receivable and other assets1,117 0 — 
Total assets$278,803 $689,360 $689,360 
Liabilities:
Other liabilities (1)2,854 302,031 — 
Total liabilities$2,854 $302,031 $— 
(Dollars in thousands) Consolidated VIEs Unconsolidated VIEs Maximum Exposure to Loss in Unconsolidated VIEs
June 30, 2020:      
Assets:      
Cash and cash equivalents $9,363
 $—
 $—
Non-marketable and other equity securities (1) 274,685
 726,879
 726,879
Accrued interest receivable and other assets 607
 —
 —
Total assets $284,655
 $726,879
 $726,879
Liabilities:      
Other liabilities (1) 1,447
 332,935
 —
Total liabilities $1,447
 $332,935
 $—
December 31, 2019:      
Assets:      
Cash and cash equivalents $7,629
 $—
 $—
Non-marketable and other equity securities (1) 270,057
 689,360
 689,360
Accrued interest receivable and other assets 1,117
 —
 —
Total assets $278,803
 $689,360
 $689,360
Liabilities:      
Other liabilities (1) 2,854
 302,031
 —
Total liabilities $2,854
 $302,031
 $—
(1)    Included in our unconsolidated non-marketable and other equity securities portfolio at September 30, 2020 and December 31, 2019 are investments in qualified affordable housing projects of $561.0 million and $458.5 million, respectively, and related other liabilities consisting of unfunded commitments of $332.0 million and $302.0 million, respectively.

(1)Included in our unconsolidated non-marketable and other equity securities portfolio at June 30, 2020 and December 31, 2019 are investments in qualified affordable housing projects of $533.2 million and $458.5 million, respectively, and related other liabilities consisting of unfunded commitments of $332.9 million and $302.0 million, respectively.

Non-marketable and other equity securities
Our non-marketable and other equity securities portfolio primarily represents investments in venture capital and private equity funds, SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China (“SPD-SVB”)), debt funds, private and public portfolio companies and qualified affordable housing projects. A majorityMany of these are investments 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 4 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 15 — “Off-Balance Sheet Arrangements, Guarantees and Other Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
The Bank also has variable interests in low income housing tax credit funds, in connection with fulfilling its responsibilities under the Community Reinvestment Act (“CRA”),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
21
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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.
As of JuneSeptember 30, 2020, our exposure to loss with respect to the consolidated VIEs is limited to our net assets of $283.2$331.8 million and our exposure to loss for our unconsolidated VIEs is equal to our investment in these assets of $726.9$771.3 million.
5.Cash and Cash Equivalents
5.    Cash and Cash Equivalents
The following table details our cash and cash equivalents at JuneSeptember 30, 2020 and December 31, 2019:
(Dollars in thousands)September 30, 2020December 31, 2019
Cash and due from banks (1)$15,237,612 $6,492,443 
Securities purchased under agreements to resell (2)450,164 289,340 
Total cash and cash equivalents$15,687,776 $6,781,783 
(Dollars in thousands) June 30, 2020
December 31, 2019
Cash and due from banks (1) $13,885,058
 $6,492,443
Securities purchased under agreements to resell (2) 317,048
 289,340
Total cash and cash equivalents $14,202,106
 $6,781,783
(1)At September 30, 2020 and December 31, 2019, $11.9 billion and $3.7 billion, respectively, of our cash and due from banks was deposited at the Federal Reserve Bank and was earning interest at the Federal Funds target rate, and interest-earning deposits in other financial institutions were $2.7 billion and $2.1 billion, respectively.
(1)
At June 30, 2020 and December 31, 2019, $11.0 billion and $3.7 billion, respectively, of our cash and due from banks was deposited at the Federal Reserve Bank and was earning interest at the Federal Funds target rate, and interest-earning deposits in other financial institutions were $2.0 billion and $2.1 billion, respectively.
(2)At September 30, 2020 and December 31, 2019, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fair values of $459.1 million and $295.3 million, respectively. None of these securities were sold or repledged as of September 30, 2020 and December 31, 2019.
6.    Investment Securities
(2)
At June 30, 2020 and December 31, 2019, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fair values of $323.5 million and $295.3 million, respectively. None of these securities were sold or repledged as of June 30, 2020 and December 31, 2019.

6.Investment Securities
Our investment securities portfolio consists of: (i) an available-for-sale securities portfolio and a held-to-maturity securities portfolio, both of which represent interest-earning investment securities, and (ii) a non-marketable and other equity securities portfolio, which primarily represents investments managed as part of our funds management business, investments in qualified affordable housing projects, as well as public equity securities held as a result of equity warrant assets exercised.
Available-for-Sale Securities
The major components of our available-for-sale investment securities portfolio at JuneSeptember 30, 2020 and December 31, 2019 are as follows:
 September 30, 2020
(Dollars in thousands)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Carrying
Value
Available-for-sale securities, at fair value:
U.S. Treasury securities$4,251,342 $295,952 $0 $4,547,294 
U.S. agency debentures150,000 2,526 0 152,526 
Foreign government debt securities23,452 0 (3)23,449 
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities9,569,724 200,691 (102)9,770,313 
Agency-issued collateralized mortgage obligations—fixed rate7,277,652 45,809 (7,488)7,315,973 
Agency-issued commercial mortgage-backed securities3,965,370 130,384 (985)4,094,769 
Total available-for-sale securities$25,237,540 $675,362 $(8,578)$25,904,324 


22
  June 30, 2020
(Dollars in thousands) 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Carrying
Value
Available-for-sale securities, at fair value:        
U.S. Treasury securities $4,229,988
 $305,252
 $(5) $4,535,235
U.S. agency debentures 100,000
 2,659
 —
 102,659
Foreign government debt securities 22,540
 —
 (15) 22,525
Residential mortgage-backed securities:        
Agency-issued mortgage-backed securities 7,465,130
 193,484
 (3,058) 7,655,556
Agency-issued collateralized mortgage obligations—fixed rate 2,949,805
 31,229
 (1,494) 2,979,540
Agency-issued commercial mortgage-backed securities 3,033,126
 123,276
 (4) 3,156,398
Total available-for-sale securities $17,800,589
 $655,900
 $(4,576) $18,451,913

  December 31, 2019
(Dollars in thousands) 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Carrying
Value
Available-for-sale securities, at fair value:        
U.S. Treasury securities $6,815,874
 $82,267
 $(4,131) $6,894,010
U.S. agency debentures 100,000
 —
 (453) 99,547
Foreign government debt securities 9,037
 1
 —
 9,038
Residential mortgage-backed securities:        
Agency-issued mortgage-backed securities 4,109,372
 39,438
 (19) 4,148,791
Agency-issued collateralized mortgage obligations—fixed rate 1,520,414
 17,929
 —
 1,538,343
Agency-issued commercial mortgage-backed securities 1,339,651
 1,078
 (15,539) 1,325,190
Total available-for-sale securities $13,894,348
 $140,713
 $(20,142) $14,014,919

 December 31, 2019
(Dollars in thousands)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Carrying
Value
Available-for-sale securities, at fair value:
U.S. Treasury securities$6,815,874 $82,267 $(4,131)$6,894,010 
U.S. agency debentures100,000 0 (453)99,547 
Foreign government debt securities9,037 1 0 9,038 
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities4,109,372 39,438 (19)4,148,791 
Agency-issued collateralized mortgage obligations—fixed rate1,520,414 17,929 0 1,538,343 
Agency-issued commercial mortgage-backed securities1,339,651 1,078 (15,539)1,325,190 
Total available-for-sale securities$13,894,348 $140,713 $(20,142)$14,014,919 
The following table summarizes sale activity of available-for-sale securities during the three and sixnine months ended JuneSeptember 30, 2020 and 2019 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 thousands) 2020
2019 2020 2019
Sales proceeds $—
 $1,017,523
 $2,654,212
 $2,189,087
Net realized gains and losses:     
 
Gross realized gains —
 1,250
 61,165
 1,250
Gross realized losses —
 (1,525) —
 (5,155)
Net realized gains (losses) $—
 $(275) $61,165
 $(3,905)

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Sales proceeds$0 $0 $2,654,212 $2,189,087 
Net realized gains and losses:
Gross realized gains0 0 61,165 1,250 
Gross realized losses0 0 0 (5,155)
Net realized gains (losses)$0 $0 $61,165 $(3,905)
The following tables summarize our available-for-sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded and summarized into categories of less than 12 months, or 12 months or longer, as of JuneSeptember 30, 2020 and December 31, 2019:

 September 30, 2020
 Less than 12 months12 months or longer (1)Total
(Dollars in thousands)Fair Value of
Investments		Unrealized
Losses		Fair Value of
Investments		Unrealized
Losses		Fair Value of
Investments		Unrealized
Losses
Available-for-sale securities:
Foreign government debt securities$23,449 $(3)$0 $0 $23,449 $(3)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities179,050 (102)0 0 179,050 (102)
Agency-issued collateralized mortgage obligations—fixed rate1,772,593 (7,488)0 0 1,772,593 (7,488)
Agency-issued commercial mortgage-backed securities518,223 (985)0 0 518,223 (985)
Total available-for-sale securities (1)$2,493,315 $(8,578)$0 $0 $2,493,315 $(8,578)

  June 30, 2020
  Less than 12 months 12 months or longer (1) Total
(Dollars in thousands) 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
Available-for-sale securities:            
U.S. Treasury securities $10,057
 $(5) $—
 $—
 $10,057
 $(5)
Foreign government debt securities 22,525
 (15) —
 —
 22,525
 (15)
Residential mortgage-backed securities:            
Agency-issued mortgage-backed securities 1,424,857
 (3,058) —
 —
 1,424,857
 (3,058)
Agency-issued collateralized mortgage obligations—fixed rate 474,025
 (1,494) —
 —
 474,025
 (1,494)
Agency-issued commercial mortgage-backed securities 101,480
 (4) —
 —
 101,480
 (4)
Total available-for-sale securities (1) $2,032,944
 $(4,576) $—
 $—
 $2,032,944
 $(4,576)
(1)As of September 30, 2020, we identified a total of 57 investments that were in unrealized loss positions with 0 investment 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 September 30, 2020, 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 available-for-sale securities portfolio are reviewed and monitored on a quarterly basis. As of September 30, 2020, 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 available-for-sale securities portfolio were past due as of September 30, 2020.
23
 December 31, 2019
 Less than 12 months12 months or longer (1)Total
(Dollars in thousands)Fair Value of
Investments		Unrealized
Losses		Fair Value of
Investments		Unrealized
Losses		Fair Value of
Investments		Unrealized
Losses
Available-for-sale securities:
U.S. Treasury securities$971,572 $(3,996)$449,850 $(135)$1,421,422 $(4,131)
U.S. agency debentures99,547 (453)0 0 99,547 (453)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities4,014 (19)0 0 4,014 (19)
Agency-issued commercial mortgage-backed securities1,027,232 (15,539)0 0 1,027,232 (15,539)
Total available-for-sale securities (1)$2,102,365 $(20,007)$449,850 $(135)$2,552,215 $(20,142)
(1)
As of June 30, 2020, we identified a total of 50 investments that were in unrealized loss positions with no investment 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, 2020, 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 available-for-sale securities portfolio are reviewed and monitored on a quarterly basis. As of June 30, 2020, 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 available-for-sale securities portfolio were past due as of June 30, 2020.
  December 31, 2019
  Less than 12 months 12 months or longer (1) Total
(Dollars in thousands) 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
 
Fair Value of
Investments
 
Unrealized
Losses
Available-for-sale securities:            
U.S. Treasury securities $971,572
 $(3,996) $449,850
 $(135) $1,421,422
 $(4,131)
U.S. agency debentures 99,547
 (453) —
 —
 99,547
 (453)
Residential mortgage-backed securities:            
Agency-issued mortgage-backed securities 4,014
 (19) —
 —
 4,014
 (19)
Agency-issued commercial mortgage-backed securities 1,027,232
 (15,539) —
 —
 1,027,232
 (15,539)
Total available-for-sale securities (1) $2,102,365
 $(20,007) $449,850
 $(135) $2,552,215
 $(20,142)
(1)
As of December 31, 2019, we identified a total of 58 investments that were in unrealized loss positions, of which 12 investments totaling $0.4 billion with unrealized losses of $0.1 millionAs of December 31, 2019, we identified a total of 58 investments that were in unrealized loss positions, of which 12 investments totaling $0.4 billion with unrealized losses of $0.1 million have been in an unrealized loss position for a period of time greater than 12 months.
The following table summarizes the fixed income securities, carried at fair value, classified as available-for-sale as of JuneSeptember 30, 2020 by the remaining contractual principal maturities. For U.S. Treasury securities, U.S. agency debentures and foreign government debt securities, the expected maturity is the actual contractual maturity of the notes. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as available-for-sale typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower interest rate environments.

 September 30, 2020
(Dollars in thousands)TotalOne Year
or Less		After One
Year to
Five Years		After Five
Years to
Ten Years		After
Ten Years
U.S. Treasury securities$4,547,294 $60,221 $2,989,181 $1,497,892 $0 
U.S. agency debentures152,526 0 0 152,526 0 
Foreign government debt securities23,449 23,449 0 0 0 
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities9,770,313 0 0 0 9,770,313 
Agency-issued collateralized mortgage obligations—fixed rate7,315,973 0 0 0 7,315,973 
Agency-issued commercial mortgage-backed securities4,094,769 0 0 1,431,547 2,663,222 
Total$25,904,324 $83,670 $2,989,181 $3,081,965 $19,749,508 
  June 30, 2020
(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 $4,535,235
 $85,518
 $2,613,342
 $1,836,375
 $—
U.S. agency debentures 102,659
 —
 —
 102,659
 —
Foreign government debt securities 22,525
 22,525
 —
 —
 —
Residential mortgage-backed securities:          
Agency-issued mortgage-backed securities 7,655,556
 —
 —
 —
 7,655,556
Agency-issued collateralized mortgage obligations—fixed rate 2,979,540
 —
 491
 —
 2,979,049
Agency-issued commercial mortgage-backed securities 3,156,398
 —
 —
 1,347,235
 1,809,163
Total $18,451,913
 $108,043
 $2,613,833
 $3,286,269
 $12,443,768
24
Held-to-Maturity Securities

The components of our held-to-maturity investment securities portfolio at JuneSeptember 30, 2020 and December 31, 2019 are as follows:
 September 30, 2020
(Dollars in thousands)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Fair ValueAllowance for Credit Losses (2)
Held-to-maturity securities, at cost:
U.S. agency debentures (1)$402,346 $19,496 $0 $421,842 $0 
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities5,363,541 266,455 (62)5,629,934 0 
Agency-issued collateralized mortgage obligations —fixed rate1,909,965 26,601 (437)1,936,129 0 
Agency-issued collateralized mortgage obligations—variable rate147,714 362 0 148,076 0 
Agency-issued commercial mortgage-backed securities2,229,811 154,061 0 2,383,872 0 
Municipal bonds and notes2,929,137 171,591 (8,118)3,092,610 291 
Total held-to-maturity securities$12,982,514 $638,566 $(8,617)$13,612,463 $291 
  June 30, 2020
(Dollars in thousands) 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 Fair Value Allowance for Credit Losses (2)
Held-to-maturity securities, at cost:          
U.S. agency debentures (1) $453,280
 $20,657
 $—
 $473,937
 $—
Residential mortgage-backed securities:          
Agency-issued mortgage-backed securities 6,086,154
 310,266
 (46) 6,396,374
 —
Agency-issued collateralized mortgage obligations —fixed rate 1,518,848
 26,124
 —
 1,544,972
 —
Agency-issued collateralized mortgage obligations—variable rate 162,250
 1,403
 (223) 163,430
 —
Agency-issued commercial mortgage-backed securities 2,484,072
 162,042
 —
 2,646,114
 —
Municipal bonds and notes 2,154,441
 162,193
 —
 2,316,634
 222
Total held-to-maturity securities $12,859,045
 $682,685
 $(269) $13,541,461
 $222
(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.
(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.
(2) Refer to Note 1 - "Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements (unaudited)" under Part i, Item 1 of this report for more information on our credit loss methodology.
 December 31, 2019
(Dollars in thousands)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Fair Value
Held-to-maturity securities, at amortized cost:
U.S. agency debentures (1)$518,728 $6,640 $(668)$524,700 
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities6,992,009 142,209 (2,066)7,132,152 
Agency-issued collateralized mortgage obligations—fixed rate1,608,032 592 (8,502)1,600,122 
Agency-issued collateralized mortgage obligations—variable rate178,611 94 (259)178,446 
Agency-issued commercial mortgage-backed securities2,759,615 56,914 (4,508)2,812,021 
Municipal bonds and notes1,785,951 83,314 (1,434)1,867,831 
Total held-to-maturity securities$13,842,946 $289,763 $(17,437)$14,115,272 
  December 31, 2019
(Dollars in thousands) Amortized
Cost		 Unrealized
Gains		 Unrealized
Losses		 Fair Value
Held-to-maturity securities, at amortized cost:        
U.S. agency debentures (1) $518,728
 $6,640
 $(668) $524,700
Residential mortgage-backed securities:        
Agency-issued mortgage-backed securities 6,992,009
 142,209
 (2,066) 7,132,152
Agency-issued collateralized mortgage obligations—fixed rate 1,608,032
 592
 (8,502) 1,600,122
Agency-issued collateralized mortgage obligations—variable rate 178,611
 94
 (259) 178,446
Agency-issued commercial mortgage-backed securities 2,759,615
 56,914
 (4,508) 2,812,021
Municipal bonds and notes 1,785,951
 83,314
 (1,434) 1,867,831
Total held-to-maturity securities $13,842,946
 $289,763
 $(17,437) $14,115,272
(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.

Allowance for Credit Losses for HTM Securities
The following table summarizes the activity relating to our allowance for credit losses for HTM securities for the three and sixnine months ended JuneSeptember 30, 2020:
Three months ended September 30,Beginning Balance June 30, 2020Provision for Credit LossesEnding Balance September 30, 2020
(Dollars in thousands)
Municipal bonds and notes$222 $69 $291 
Total allowance for credit losses$222 $69 $291 
25
Three months ended June 30, 2020 Beginning Balance March 31, 2020 Day One Impact of adopting ASC 326 Provision for Credit Losses Ending Balance June 30, 2020
(Dollars in thousands)    
Municipal bonds and notes $230
 $—
 $(8) $222
Total allowance for credit losses $230
 $—
 $(8) $222
Six months ended June 30, 2020 Beginning Balance December 31, 2019 Day One Impact of adopting ASC 326 Provision for Credit Losses Ending Balance June 30, 2020
(Dollars in thousands)    
Municipal bonds and notes $—
 $174
 $48
 $222
Total allowance for credit losses $—
 $174
 $48
 $222

Nine months ended September 30,Beginning Balance December 31, 2019Day One Impact of adopting ASC 326Provision for Credit LossesEnding Balance September 30, 2020
(Dollars in thousands)
Municipal bonds and notes$0 $174 $117 $291 
Total allowance for credit losses$0 $174 $117 $291 
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 JuneSeptember 30, 2020:
(Dollars in thousands)September 30, 2020
Municipal bonds and notes:
Aaa$1,732,450 
Aa1935,970 
Aa2259,767 
Aa3950 
Total$2,929,137 
(Dollars in thousands) June 30, 2020
Municipal bonds and notes:  
Aaa $1,456,716
Aa1 475,395
Aa2 220,960
Aa3 1,370
Total $2,154,441


26

The following table summarizes the remaining contractual principal maturities on fixed income investment securities classified as held-to-maturity as of JuneSeptember 30, 2020. For U.S. agency debentures, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for certain U.S. agency debentures may occur earlier than their contractual maturities because the note issuers have the right to call outstanding amounts ahead of their contractual maturity. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as held-to-maturity typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower interest rate environments.
 September 30, 2020
 TotalOne Year
or Less		After One Year to
Five Years		After Five Years to
Ten Years		After
Ten Years
(Dollars in thousands)Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
U.S. agency debentures$402,346 $421,842 $4,675 $4,720 $148,559 $153,787 $249,112 $263,335 $0 $0 
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities5,363,541 5,629,934 7,113 7,432 28,722 29,739 588,606 609,151 4,739,100 4,983,612 
Agency-issued collateralized mortgage obligations—fixed rate
1,909,965 1,936,129 0 0 0 0 551,213 563,127 1,358,752 1,373,002 
Agency-issued collateralized mortgage obligations—variable rate
147,714 148,076 0 0 0 0 0 0 147,714 148,076 
Agency-issued commercial mortgage-backed securities2,229,811 2,383,872 0 0 0 0 102,428 120,085 2,127,383 2,263,787 
Municipal bonds and notes2,929,137 3,092,610 44,340 44,839 134,029 140,191 540,308 587,096 2,210,460 2,320,484 
Total$12,982,514 $13,612,463 $56,128 $56,991 $311,310 $323,717 $2,031,667 $2,142,794 $10,583,409 $11,088,961 
  June 30, 2020
  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 $453,280
 $473,937
 $2,622
 $2,666
 $142,917
 $147,089
 $307,741
 $324,182
 $—
 $—
Residential mortgage-backed securities:                    
Agency-issued mortgage-backed securities 6,086,154
 6,396,374
 8,369
 8,467
 40,337
 41,199
 640,876
 664,186
 5,396,572
 5,682,522
Agency-issued collateralized mortgage obligations—fixed rate
 1,518,848
 1,544,972
 —
 —
 —
 —
 612,478
 625,694
 906,370
 919,278
Agency-issued collateralized mortgage obligations—variable rate
 162,250
 163,430
 —
 —
 —
 —
 —
 —
 162,250
 163,430
Agency-issued commercial mortgage-backed securities 2,484,072
 2,646,114
 —
 —
 —
 —
 102,497
 120,165
 2,381,575
 2,525,949
Municipal bonds and notes 2,154,441
 2,316,634
 31,814
 32,094
 142,152
 147,934
 479,079
 517,215
 1,501,396
 1,619,391
Total $12,859,045
 $13,541,461
 $42,805
 $43,227
 $325,406
 $336,222
 $2,142,671
 $2,251,442
 $10,348,163
 $10,910,570


27

Non-marketable and Other Equity Securities
The major components of our non-marketable and other equity securities portfolio at JuneSeptember 30, 2020 and December 31, 2019 are as follows:
(Dollars in thousands) June 30, 2020 December 31, 2019
Non-marketable and other equity securities:    
Non-marketable securities (fair value accounting):    
Consolidated venture capital and private equity fund investments (1) 68,214
 $87,180
Unconsolidated venture capital and private equity fund investments (2) 145,122
 178,217
Other investments without a readily determinable fair value (3) 56,206
 55,255
Other equity securities in public companies (fair value accounting) (4) 45,288
 59,200
Non-marketable securities (equity method accounting) (5):    
Venture capital and private equity fund investments 233,996
 215,367
Debt funds 7,004
 7,271
Other investments 181,543
 152,863
Investments in qualified affordable housing projects, net (6) 533,205
 458,476
Total non-marketable and other equity securities $1,270,578
 $1,213,829
(Dollars in thousands)September 30, 2020December 31, 2019
Non-marketable and other equity securities:
Non-marketable securities (fair value accounting):
Consolidated venture capital and private equity fund investments (1)$74,293 $87,180 
Unconsolidated venture capital and private equity fund investments (2)152,367 178,217 
Other investments without a readily determinable fair value (3)56,008 55,255 
Other equity securities in public companies (fair value accounting) (4)229,297 59,200 
Non-marketable securities (equity method accounting) (5):
Venture capital and private equity fund investments274,721 215,367 
Debt funds6,918 7,271 
Other investments192,776 152,863 
Investments in qualified affordable housing projects, net (6)560,983 458,476 
Total non-marketable and other equity securities$1,547,363 $1,213,829 
(1)
(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, 2020 and December 31, 2019 (fair value accounting):
 September 30, 2020December 31, 2019
(Dollars in thousands)AmountOwnership %AmountOwnership %
Strategic Investors Fund, LP$4,646 12.6 %$5,729 12.6 %
Capital Preferred Return Fund, LP39,246 20.0 45,341 20.0 
Growth Partners, LP30,267 33.0 35,976 33.0 
CP I, LP134 10.7 134 10.7 
Total consolidated venture capital and private equity fund investments$74,293 $87,180 
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, 2020 and December 31, 2019 (fair value accounting):
  June 30, 2020 December 31, 2019
(Dollars in thousands) Amount Ownership % Amount Ownership %
Strategic Investors Fund, LP $4,414
 12.6% $5,729
 12.6%
Capital Preferred Return Fund, LP 36,890
 20.0
 45,341
 20.0
Growth Partners, LP 26,776
 33.0
 35,976
 33.0
CP I, LP 134
 10.7
 134
 10.7
Total consolidated venture capital and private equity fund investments $68,214
   $87,180
  


(2)
The carrying value represents investments in 191(2)The carrying value represents investments in 179 and 205 funds (primarily venture capital funds) at September 30, 2020 and December 31, 2019, 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 June 30th for our September 30th and 205 funds (primarily venture capital funds) at June 30, 2020 and December 31, 2019, 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.
28
(3)These investments include direct equity investments in private companies. The carrying value is based on the price at which the investment was acquired plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies, financing transactions subsequent to the acquisition of the investment and a discount for certain investments that have lock-up restrictions or other features that indicate a discount to fair value is warranted.

The following table shows the changes to the carrying amount of other investments without a readily determinable fair value for the sixnine months ended JuneSeptember 30, 2020:
(Dollars in thousands)Nine months ended September 30, 2020Cumulative Adjustments
Measurement alternative:
Carrying value at September 30, 2020$56,008 
Carrying value adjustments:
Impairment$(487)$(947)
Upward changes for observable prices1,438 2,236 
Downward changes for observable prices(6,210)(8,918)
(Dollars in thousands) Six months ended June 30, 2020 Cumulative Adjustments
Measurement alternative:    
Carrying value at June 30, 2020 $56,206
  
Carrying value adjustments:    
Impairment $—
 $(460)
Upward changes for observable prices —
 1,810
Downward changes for observable prices (3,076) (7,671)
(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. This amount includes total unrealized gains of $108.4 million in BigCommerce Holdings, Inc. ("BigCommerce") which is currently subject to a lock-up agreement.
(5)The following table shows the carrying value and our ownership percentage of each investment at September 30, 2020 and December 31, 2019 (equity method accounting):
 September 30, 2020December 31, 2019
(Dollars in thousands)AmountOwnership %AmountOwnership %
Venture capital and private equity fund investments:
Strategic Investors Fund II, LP$3,519 8.6 %$3,612 8.6 %
Strategic Investors Fund III, LP14,984 5.9 15,668 5.9 
Strategic Investors Fund IV, LP25,451 5.0 27,064 5.0 
Strategic Investors Fund V funds52,575 Various46,830 Various
CP II, LP (i)4,773 5.1 5,907 5.1 
Other venture capital and private equity fund investments173,419 Various116,286 Various
 Total venture capital and private equity fund investments$274,721 $215,367 
Debt funds:
Gold Hill Capital 2008, LP (ii)$5,317 15.5 %$5,525 15.5 %
Other debt funds1,601 Various1,746 Various
Total debt funds$6,918 $7,271 
Other investments:
SPD Silicon Valley Bank Co., Ltd.$107,969 50.0 %$74,190 50.0 %
Other investments84,807 Various78,673 Various
Total other investments$192,776 $152,863 
(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, 2020 and December 31, 2019 (equity method accounting):
  June 30, 2020 December 31, 2019
(Dollars in thousands) Amount Ownership % Amount Ownership %
Venture capital and private equity fund investments:        
Strategic Investors Fund II, LP $3,083
 8.6% $3,612
 8.6%
Strategic Investors Fund III, LP 14,211
 5.9
 15,668
 5.9
Strategic Investors Fund IV, LP 24,743
 5.0
 27,064
 5.0
Strategic Investors Fund V funds 47,734
 Various
 46,830
 Various
CP II, LP (i) 4,646
 5.1
 5,907
 5.1
Other venture capital and private equity fund investments 139,579
 Various
 116,286
 Various
 Total venture capital and private equity fund investments $233,996
   $215,367
  
Debt funds:        
Gold Hill Capital 2008, LP (ii) $5,334
 15.5% $5,525
 15.5%
Other debt funds 1,670
 Various
 1,746
 Various
Total debt funds $7,004
   $7,271
  
Other investments:        
SPD Silicon Valley Bank Co., Ltd. $105,863
 50.0% $74,190
 50.0%
Other investments 75,680
 Various
 78,673
 Various
Total other investments $181,543
   $152,863
  

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

(6)The following table presents the balances of our investments in qualified affordable housing projects and related unfunded commitments included as a component of “Other liabilities” on our consolidated balance sheets at September 30, 2020 and December 31, 2019:
(Dollars in thousands)September 30, 2020December 31, 2019
Investments in qualified affordable housing projects, net$560,983 $458,476 
Other liabilities332,031 302,031 

(ii)
Our ownership includes direct ownership interest of 11.5 percent in the fund and an indirect interest in the fund through our investment in Gold Hill Capital 2008, LLC of 4.0 percent.

(6)
The following table presents the balances of our investments in qualified affordable housing projects and related unfunded commitments included as a component of “Other liabilities” on our consolidated balance sheets at June 30, 2020 and December 31, 2019:
29
(Dollars in thousands) June 30, 2020 December 31, 2019
Investments in qualified affordable housing projects, net $533,205
 $458,476
Other liabilities 332,935
 302,031


The following table presents other information relating to our investments in qualified affordable housing projects for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Tax credits and other tax benefits recognized$15,290 $8,705 $46,772 $28,950 
Amortization expense included in provision for income taxes (i)10,222 6,042 32,081 20,436 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020
2019 2020 2019
Tax credits and other tax benefits recognized $19,723
 $10,988
 $31,482
 $20,245
Amortization expense included in provision for income taxes (i) 10,388
 6,758
 21,859
 14,394
(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 net gains and losses on non-marketable and other equity securities for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 as recorded in the line item “Gains on investment securities, net," a component of noninterest income:
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Net gains (losses) on non-marketable and other equity securities:
Non-marketable securities (fair value accounting):
Consolidated venture capital and private equity fund investments$8,778 $4,555 $13,168 $22,674 
Unconsolidated venture capital and private equity fund investments16,400 8,530 15,187 26,688 
Other investments without a readily determinable fair value217 (471)(3,619)4,701 
Other equity securities in public companies (fair value accounting)112,615 (11,979)118,099 106 
Non-marketable securities (equity method accounting):
Venture capital and private equity fund investments51,334 29,049 69,681 54,189 
Debt funds15 187 (253)1,529 
Other investments478 (22)(2,668)593 
Total net gains on non-marketable and other equity securities$189,837 $29,849 $209,595 $110,480 
Less: realized net gains on sales of non-marketable and other equity securities5,262 277 5,477 12,637 
Net gains on non-marketable and other equity securities still held$184,575 $29,572 $204,118 $97,843 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Net gains (losses) on non-marketable and other equity securities:        
Non-marketable securities (fair value accounting):        
Consolidated venture capital and private equity fund investments $1,277
 $14,830
 $4,390
 $18,119
Unconsolidated venture capital and private equity fund investments (2,465) 10,152
 (1,213) 18,158
Other investments without a readily determinable fair value (893) 167
 (3,836) 5,172
Other equity securities in public companies (fair value accounting) 12,988
 282
 5,484
 12,085
Non-marketable securities (equity method accounting):        
Venture capital and private equity fund investments 26,393
 22,351
 18,347
 25,140
Debt funds 94
 1,342
 (268) 1,342
Other investments (2,526) (1,151) (3,146) 615
Total net gains on non-marketable and other equity securities $34,868
 $47,973
 $19,758
 $80,631
Less: realized net gains on sales of non-marketable and other equity securities 264
 2,524
 215
 12,359
Net gains on non-marketable and other equity securities still held $34,604
 $45,449
 $19,543
 $68,272


7.    Loans and Allowance for Credit Losses: Loans and Unfunded Credit Commitments
7.Loans and Allowance for Credit Losses: Loans and 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 (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”). 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 (previously Private Equity/Venture Capital) 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.
30
We also provide community development loans made as part of our responsibilities under the Community Reinvestment Act.CRA. These loans are included within “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 (the "CARES Act") and originated loans to qualified small businesses.

CECL Adoption
On January 1, 2020, we adopted the new credit loss guidance, CECL, and all related amendments. Our loan portfolio was pooled into six6 portfolio segments that share similar risk characteristics and represent the level at which we developed our systematic methodology to determine our allowance for credit losses. Further, our portfolio segments were disaggregated and grouped into ten10 classes of financing receivable that represent the level at which we monitor and assess credit risk, which we refer to as "risk-based segments". As such, our funded loans and credit quality disclosures below are presented at the risk-based segment level of disaggregation. As of JuneSeptember 30, 2020, we have seven6 portfolio segments and eleven classes of financing receivable11 risk-based segments reflective of the funding of SBA loans under the PPP. The comparative information below has been reclassified to conform to current period risk-based segment presentations. However, the financial results continue to be reported under the accounting standards in effect for those periods. Certain prior period credit quality disclosures related to impaired loans and our individually and collectively evaluated loan portfolio have been superseded with the current guidance and have not been included below, please refer to Note 10 - “Loans, Allowance for Loan Losses and Allowance for Unfunded Credit Commitments" under Part II, Item 8 of our 2019 Form 10-K for additional prior period information.
Refer to Note 1 — “Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional information regarding the adoption of CECL.
The composition of loans at amortized cost basis broken out by risk-based segment at JuneSeptember 30, 2020 and December 31, 2019 is presented in the following table:
(Dollars in thousands) June 30, 2020 December 31, 2019
Private equity/venture capital $17,901,117
 $17,696,794
Investor dependent:    
Early stage 1,797,576
 1,624,221
Mid stage 1,435,772
 1,047,398
Later stage 1,905,528
 1,663,576
Total investor dependent 5,138,876
 4,335,195
Cash flow dependent:    
Sponsor led buyout 2,057,439
 2,185,497
Other 2,787,807
 2,238,741
Total cash flow dependent 4,845,246
 4,424,238
Private bank (4) 3,816,277
 3,492,269
Balance sheet dependent 1,693,071
 1,286,153
Premium wine (4) 1,039,456
 1,062,264
Other (4) 457,234
 867,723
SBA loans 1,835,945
 —
Total loans (1) (2) (3) $36,727,222
 $33,164,636
Allowance for credit losses (589,828) (304,924)
Net loans $36,137,394
 $32,859,712
(Dollars in thousands)September 30, 2020December 31, 2019
Global fund banking$19,584,518 $17,696,794 
Investor dependent:
Early stage1,470,941 1,624,221 
Mid stage1,626,794 1,047,398 
Later stage2,013,934 1,663,576 
Total investor dependent5,111,669 4,335,195 
Cash flow dependent:
Sponsor led buyout2,062,243 2,185,497 
Other2,600,157 2,238,741 
Total cash flow dependent4,662,400 4,424,238 
Private bank (1) (5)4,424,899 3,492,269 
Balance sheet dependent1,698,220 1,286,153 
Premium wine (1) (5)1,081,963 1,062,264 
Other (1) (5)48,206 867,723 
SBA loans1,802,016 0 
Total loans (2) (3) (4)$38,413,891 $33,164,636 
Allowance for credit losses(512,958)(304,924)
Net loans$37,900,933 $32,859,712 
(1)Total loans at amortized cost is net of unearned income of $220 million and $163 million at June 30, 2020 and December 31, 2019, respectively.
(2)
(1)    As of September 30, 2020, as a result of enhanced portfolio characteristic definitions for our risk-based segments, loans in the amount of $411.2 million and $50.3 million that would have been reported in Other under historical definitions, are now being reported in our Private Bank and Premium Wine risk-based segments, respectively.
(2)    Total loans at amortized cost is net of unearned income of$222 million and $163 million at September 30, 2020 and December 31, 2019, respectively.
(3) Included within our total loan portfolio are credit card loans of$329 million and $395 million at September 30, 2020 and December 31, 2019, respectively.
(4)     Included within our total loan portfolio are construction loans of $118 million and $183 million at September 30, 2020 and December 31, 2019, respectively.
(5)     Of our total loan portfolio are credit card loans of $280 million and $395 million at June 30, 2020 and December 31, 2019, respectively.
(3)
Included within our total loan portfolio are construction loans of$147 million and $183 million at June 30, 2020 and December 31, 2019, respectively.
(4)     Our total loans, the table below includes those secured by real estate at amortized cost at JuneSeptember 30, 2020 and
31
December 31, 2019 and were comprised of the following:

(Dollars in thousands) June 30, 2020 December 31, 2019
Real estate secured loans:    
Private bank:    
Loans for personal residence $2,714,069
 $2,829,880
Loans to eligible employees 439,006
 401,396
Home equity lines of credit 58,284
 55,461
Other 42,464
 38,880
Total private bank loans secured by real estate $3,253,823
 $3,325,617
Premium wine 777,560
 820,730
Other 470,567
 —
Total real estate secured loans $4,501,950
 $4,146,347

(Dollars in thousands)September 30, 2020December 31, 2019
Real estate secured loans:
Private bank:
Loans for personal residence$3,179,148 $2,829,880 
Loans to eligible employees449,551 401,396 
Home equity lines of credit50,929 55,461 
Other137,320 38,880 
Total private bank loans secured by real estate$3,816,948 $3,325,617 
Premium wine831,182 820,730 
Other60,501 0 
Total real estate secured loans$4,708,631 $4,146,347 
Credit Quality Indicators
For each individual client, we establish an internal credit risk rating for that loan, which is used for assessing and monitoring credit risk as well as performance of the loan and the overall portfolio. Our internal credit risk ratings are also used to summarize the risk of loss due to failure by an individual borrower to repay the loan. For our internal credit risk ratings, each individual loan is given a risk rating of 1 through 10. Loans risk-rated 1 through 4 are performing loans and translate to an internal rating of “Pass,” with loans risk-rated 1 being cash secured. Loans risk-rated 5 through 7 are performing 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 “Criticized.” All of our nonaccrual loans are risk-rated 8 or 9 and are classified under the nonperforming category. 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 allowance for credit losses for loans.

32
The following table summarizes the credit quality indicators, broken out by risk-based segment, as of JuneSeptember 30, 2020 and December 31, 2019:
(Dollars in thousands)PassCriticizedNonperforming (Nonaccrual)Total
September 30, 2020:
Global fund banking$19,576,723 $7,782 $13 $19,584,518 
Investor dependent:
Early stage1,296,789 154,420 19,732 1,470,941 
Mid stage1,449,525 165,642 11,627 1,626,794 
Later stage1,795,229 180,130 38,575 2,013,934 
Total investor dependent4,541,543 500,192 69,934 5,111,669 
Cash flow dependent:
Sponsor led buyout1,827,943 212,708 21,592 2,062,243 
Other2,314,453 279,419 6,285 2,600,157 
Total cash flow dependent4,142,396 492,127 27,877 4,662,400 
Private bank4,395,531 23,936 5,432 4,424,899 
Balance sheet dependent1,565,597 131,947 676 1,698,220 
Premium wine941,511 138,777 1,675 1,081,963 
Other48,041 61 104 48,206 
SBA loans1,663,383 138,633 0 1,802,016 
Total loans (1)$36,874,725 $1,433,455 $105,711 $38,413,891 
December 31, 2019:
Global fund banking$17,708,550 $4,247 $0 $17,712,797 
Investor dependent
Early stage1,436,022 206,310 11,093 1,653,425 
Mid stage924,002 125,451 17,330 1,066,783 
Later stage1,490,561 201,819 6,296 1,698,676 
Total investor dependent3,850,585 533,580 34,719 4,418,884 
Cash flow dependent
Sponsor led buyout2,039,847 118,588 44,585 2,203,020 
Other2,141,766 93,400 17,681 2,252,847 
Total cash flow dependent4,181,613 211,988 62,266 4,455,867 
Private bank3,472,138 11,601 5,480 3,489,219 
Balance sheet dependent1,231,961 65,343 0 1,297,304 
Premium wine1,026,973 36,335 204 1,063,512 
Other890,059 62 0 890,121 
Total loans (1)$32,361,879 $863,156 $102,669 $33,327,704 
(Dollars in thousands) Pass Criticized Nonperforming (Nonaccrual) Total
June 30, 2020:        
Private equity/venture capital $17,892,840
 $8,268
 $9
 $17,901,117
Investor dependent:        
Early stage 1,549,222
 223,932
 24,422
 1,797,576
Mid stage 1,259,442
 168,211
 8,119
 1,435,772
Later stage 1,719,152
 175,878
 10,498
 1,905,528
Total investor dependent 4,527,816
 568,021
 43,039
 5,138,876
Cash flow dependent:        
Sponsor led buyout 1,819,253
 216,528
 21,658
 2,057,439
Other 2,441,376
 341,114
 5,317
 2,787,807
Total cash flow dependent 4,260,629
 557,642
 26,975
 4,845,246
Private bank 3,787,830
 21,930
 6,517
 3,816,277
Balance sheet dependent 1,588,207
 93,022
 11,842
 1,693,071
Premium wine 926,549
 111,226
 1,681
 1,039,456
Other 456,947
 226
 61
 457,234
SBA loans 1,688,030
 143,713
 4,202
 1,835,945
Total loans (1) $35,128,848
 $1,504,048
 $94,326
 $36,727,222
December 31, 2019:        
Private equity/venture capital $17,708,550
 $4,247
 $—
 $17,712,797
Investor dependent        
Early stage 1,436,022
 206,310
 11,093
 1,653,425
Mid stage 924,002
 125,451
 17,330
 1,066,783
Later stage 1,490,561
 201,819
 6,296
 1,698,676
Total investor dependent 3,850,585
 533,580
 34,719
 4,418,884
Cash flow dependent        
Sponsor led buyout 2,039,847
 118,588
 44,585
 2,203,020
Other 2,141,766
 93,400
 17,681
 2,252,847
Total cash flow dependent 4,181,613
 211,988
 62,266
 4,455,867
Private bank 3,472,138
 11,601
 5,480
 3,489,219
Balance sheet dependent 1,231,961
 65,343
 —
 1,297,304
Premium wine 1,026,973
 36,335
 204
 1,063,512
Other 890,059
 62
 —
 890,121
Total loans (1) $32,361,879
 $863,156
 $102,669
 $33,327,704
(1)As of September 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
(1)For the quarter ended June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.


33
The following table summarizes the credit quality indicators, broken out by risk-based segmentssegment and vintage year, as of JuneSeptember 30, 2020:
Term Loans by Origination Year
(Dollars in thousands)20202019201820172016PriorRevolving LoansRevolving Loans Converted to Term LoansTotal
Global fund banking:
Risk rating:
Pass$271,164 $156,714 $70,084 $36,907 $2,552 $11,588 $19,022,934 $4,780 $19,576,723 
Criticized8 0 0 0 0 0 994 6,780 7,782 
Nonperforming0 8 0 0 0 0 5 0 13 
Total global fund banking$271,172 $156,722 $70,084 $36,907 $2,552 $11,588 $19,023,933 $11,560 $19,584,518 
Investor dependent:
Early stage:
Risk rating:
Pass$589,224 $452,550 $140,448 $37,911 $2,430 $390 $73,199 $637 $1,296,789 
Criticized20,744 68,381 36,841 10,878 2,530 363 13,750 933 154,420
Nonperforming2,466 8,870 6,956 463 0 4 973 0 19,732
Total early stage$612,434 $529,801 $184,245 $49,252 $4,960 $757 $87,922 $1,570 $1,470,941 
Mid stage:
Risk rating:
Pass$726,708 $344,458 $209,372 $39,603 $7,510 $2,725 $116,655 $2,494 $1,449,525 
Criticized59,623 43,386 32,668 12,725 1,966 0 15,274 0 165,642
Nonperforming2 2,558 5,405 3,519 0 0 143 0 11,627
Total mid stage$786,333 $390,402 $247,445 $55,847 $9,476 $2,725 $132,072 $2,494 $1,626,794 
Later stage:
Risk rating:
Pass$790,085 $473,800 $178,768 $60,009 $562 $9,110 $277,911 $4,984 $1,795,229 
Criticized17,108 72,028 30,280 2,666 0 8,708 49,340 0 180,130
Nonperforming17,506 1,886 12,434 0 0 0 6,749 0 38,575
Total later stage$824,699 $547,714 $221,482 $62,675 $562 $17,818 $334,000 $4,984 $2,013,934 
Total investor dependent$2,223,466 $1,467,917 $653,172 $167,774 $14,998 $21,300 $553,994 $9,048 $5,111,669 
Cash flow dependent:
Sponsor led buyout:
Risk rating:
Pass$534,579 $601,938 $326,172 $226,326 $50,267 $0 $88,661 $0 $1,827,943 
Criticized43,221 70,050 53,043 21,400 12,238 0 12,756 0 212,708
Nonperforming33 11,907 0 7,200 0 0 2,452 0 21,592
Total sponsor led buyout$577,833 $683,895 $379,215 $254,926 $62,505 $0 $103,869 $0 $2,062,243 
Other
Risk rating:
Pass$465,243 $574,231 $189,501 $116,918 $39,627 $346 $928,587 $0 $2,314,453 
Criticized9,589 55,118 74,916 956 416 0 138,424 0 279,419
Nonperforming0 0 3,845 0 0 0 2,440 0 6,285
Total other$474,832 $629,349 $268,262 $117,874 $40,043 $346 $1,069,451 $0 $2,600,157 
Total cash flow dependent$1,052,665 $1,313,244 $647,477 $372,800 $102,548 $346 $1,173,320 $0 $4,662,400 
Private bank:
Risk rating:
Pass$1,191,024 $1,212,000 $420,440 $397,847 $342,594 $463,198 $368,107 $321 $4,395,531 
Criticized1,456 5,549 3,040 1,201 5,101 6,802 787 0 23,936 
Nonperforming0 520 2,475 0 0 1,702 735 0 5,432 
Total private bank$1,192,480 $1,218,069 $425,955 $399,048 $347,695 $471,702 $369,629 $321 $4,424,899 
Balance sheet dependent:
Risk rating:
  Term Loans by Origination Year      
(Dollars in thousands) 2020 2019 2018 2017 2016 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
Private equity/venture capital:                  
Risk rating:                  
Pass $339,398
 $188,421
 $71,803
 $39,857
 $3,577
 $16,055
 $17,228,948
 $4,781
 $17,892,840
Criticized 54
 —
 —
 —
 —
 —
 8,214
 —
 8,268
Nonperforming —
 9
 —
 —
 —
 —
 —
 —
 9
Total private equity/venture capital $339,452
 $188,430
 $71,803
 $39,857
 $3,577
 $16,055
 $17,237,162
 $4,781
 $17,901,117
Investor dependent:                  
Early stage:                  
Risk rating:                  
Pass $576,597
 $614,464
 $216,902
 $53,103
 $4,304
 $355
 $83,497
 $—
 $1,549,222
Criticized 38,123
 93,416
 53,065
 12,949
 6,555
 5,702
 14,122
 —
 223,932
Nonperforming 2,085
 8,670
 7,542
 2,771
 2,197
 —
 1,157
 —
 24,422
Total early stage $616,805
 $716,550
 $277,509
 $68,823
 $13,056
 $6,057
 $98,776
 $—
 $1,797,576
Mid stage:                  
Risk rating:                  
Pass $527,905
 $342,149
 $194,287
 $59,075
 $1,502
 $4,448
 $130,076
 $—
 $1,259,442
Criticized 32,514
 53,500
 48,379
 13,833
 3,345
 2,907
 13,733
 —
 168,211
Nonperforming —
 210
 5,646
 2,041
 —
 —
 222
 —
 8,119
Total mid stage $560,419
 $395,859
 $248,312
 $74,949
 $4,847
 $7,355
 $144,031
 $—
 $1,435,772
Later stage:                  
Risk rating:                  
Pass $495,546
 $564,400
 $188,404
 $73,703
 $6,539
 $7,860
 $382,700
 $—
 $1,719,152
Criticized 32,347
 25,890
 53,707
 7,074
 —
 6,506
 50,354
 —
 175,878
Nonperforming —
 1,435
 2,374
 3,885
 —
 —
 2,804
 —
 10,498
Total later stage $527,893
 $591,725
 $244,485
 $84,662
 $6,539
 $14,366
 $435,858
 $—
 $1,905,528
Total investor dependent $1,705,117
 $1,704,134
 $770,306
 $228,434
 $24,442
 $27,778
 $678,665
 $—
 $5,138,876
Cash flow dependent:                  
Sponsor led buyout:                  
Risk rating:                  
Pass $374,547
 $637,287
 $357,322
 $262,844
 $58,014
 $—
 $129,239
 $—
 $1,819,253
Criticized 33,714
 69,764
 51,479
 31,801
 11,958
 —
 17,812
 —
 216,528
Nonperforming 19
 11,937
 —
 7,218
 —
 —
 2,484
 —
 21,658
Total sponsor led buyout $408,280
 $718,988
 $408,801
 $301,863
 $69,972
 $—
 $149,535
 $—
 $2,057,439
Other                  
Risk rating:                  
Pass $339,862
 $639,167
 $193,797
 $114,650
 $41,605
 $347
 $1,111,948
 $—
 $2,441,376
Criticized 14,326
 71,911
 88,065
 2,807
 581
 —
 163,424
 —
 341,114
Nonperforming —
 —
 1,140
 —
 —
 —
 4,177
 —
 5,317
Total other $354,188
 $711,078
 $283,002
 $117,457
 $42,186
 $347
 $1,279,549
 $—
 $2,787,807
Total cash flow dependent $762,468
 $1,430,066
 $691,803
 $419,320
 $112,158
 $347
 $1,429,084
 $—
 $4,845,246
Private bank:                  
Risk rating:                  
Pass $596,908
 $1,062,779
 $443,164
 $440,490
 $363,380
 $531,090
 $277,942
 $72,077
 $3,787,830
Criticized —
 5,859
 2,926
 1,805
 2,500
 8,238
 602
 —
 21,930
Nonperforming —
 —
 —
 1,570
 —
 2,901
 2,046
 —
 6,517
Total private bank $596,908
 $1,068,638
 $446,090
 $443,865
 $365,880
 $542,229
 $280,590
 $72,077
 $3,816,277
34
Pass$374,768 $202,185 $237,529 $31,838 $0 $0 $717,771 $1,506 $1,565,597 
Criticized60,238 8,877 5,559 610 0 0 56,663 0 131,947 
Nonperforming0 0 0 0 0 675 1 0 676 
Total balance sheet dependent$435,006 $211,062 $243,088 $32,448 $0 $675 $774,435 $1,506 $1,698,220 
Premium wine:
Risk rating:
Pass$154,624 $181,416 $70,297 $84,221 $102,297 $156,397 $154,685 $37,574 $941,511 
Criticized14,001 26,446 35,898 338 13,674 8,210 40,210 0 138,777 
Nonperforming00001,662 0 13 0 1,675 
Total Premium wine$168,625 $207,862 $106,195 $84,559 $117,633 $164,607 $194,908 $37,574 $1,081,963 
Other:
Risk rating:
Pass$1,474 $23,286 $13,092 $1,900 $0 $80 $8,209 $0 $48,041 
Criticized22 0 0 0 0 0 39 0 61 
Nonperforming01040000 0 0 104 
Total other$1,496 $23,390 $13,092 $1,900 $0 $80 $8,248 $0 $48,206 
SBA loans:
Risk rating:
Pass$1,663,383 $0 $0 $0 $0 $0 $0 $0 $1,663,383 
Criticized138,633 0 0 0 0 0 0 0 138,633 
Nonperforming000000 0 0 0 
Total SBA loans$1,802,016 $0 $0 $0 $0 $0 $0 $0 $1,802,016 
Total loans$7,146,926 $4,598,266 $2,159,063 $1,095,436 $585,426 $670,298 $22,098,467 $60,009 $38,413,891 
35


Allowance for Credit Losses: Loans
Balance sheet dependent:                  
Risk rating:                  
Pass $216,879
 $221,481
 $247,818
 $33,048
 $4,545
 $—
 $864,436
 $—
 $1,588,207
Criticized —
 8,627
 2,494
 1,464
 —
 —
 80,437
 —
 93,022
Nonperforming 14
 —
 —
 —
 —
 —
 11,828
 —
 11,842
Total balance sheet dependent $216,893
 $230,108
 $250,312
 $34,512
 $4,545
 $—
 $956,701
 $—
 $1,693,071
Premium wine:                  
Risk rating:                  
Pass $85,177
 $237,520
 $73,632
 $92,594
 $93,214
 $177,246
 $167,166
 $—
 $926,549
Criticized 2,042
 12,674
 35,964
 353
 3,980
 13,327
 42,886
 —
 111,226
Nonperforming —
 —
 —
 —
 1,668
 —
 13
 —
 1,681
Total Premium wine $87,219
 $250,194
 $109,596
 $92,947
 $98,862
 $190,573
 $210,065
 $—
 $1,039,456
Other:                  
Risk rating:                  
Pass $21,785
 $240,902
 $40,279
 $38,752
 $58,554
 $33,212
 $23,256
 $207
 $456,947
Criticized 100
 —
 —
 —
 —
 —
 126
 —
 226
Nonperforming —
 61
 —
 —
 —
 —
 —
 —
 61
Total other $21,885
 $240,963
 $40,279
 $38,752
 $58,554
 $33,212
 $23,382
 $207
 $457,234
SBA loans:                  
Risk rating:                  
Pass $1,688,030
 $—
 $—
 $—
 $—
 $—
 $—
 $—
 $1,688,030
Criticized 143,713
 —
 —
 —
 —
 —
 —
 —
 143,713
Nonperforming 4,202
 —
 —
 —
 —
 —
 —
 —
 4,202
Total SBA loans $1,835,945
 $—
 $—
 $—
 $—
 $—
 $—
 $—
 $1,835,945
Total loans $5,565,887
 $5,112,533
 $2,380,189
 $1,297,687
 $668,018
 $810,194
 $20,815,649
 $77,065
 $36,727,222

In the third quarter of 2020, ACL for loans decreased $76.9 million primarily driven by an improved economic forecast in Moody’s Analytics September 2020 forecast utilized in our quantitative model, as compared to the forecast utilized in June 2020. Those assumptions included an improvement in the unemployment rate as a result of businesses re-opening and the effect of government aid programs. The gross domestic product contraction rate also improved in the September 2020 forecast. We determined the above 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 September 2020 forecast, we addressed the risk through management's qualitative adjustments to our ACL.
The following tables summarize the activity relating to our allowance for credit losses for loans for the three and sixnine months ended JuneSeptember 30, 2020 and 2019, broken out by risk-based segment:
Three months ended September 30, 2020Beginning Balance June 30, 2020Charge-offsRecoveries(Reduction) Provision for Credit LossesForeign Currency Translation AdjustmentsEnding Balance September 30, 2020
(Dollars in thousands)
Global fund banking$53,723 $0 $0 $(14,734)$0 $38,989 
Investor dependent:
Early stage148,270 (14,950)2,511 (33,171)(101)102,559 
Mid stage56,393 (7,162)697 12,578 (88)62,418 
Later stage87,604 (6,205)600 15,792 (80)97,711 
Total investor dependent292,267 (28,317)3,808 (4,801)(269)262,688 
Cash flow dependent:
Sponsor led buyout54,853 (130)0 (3,062)0 51,661 
Other43,100 0 0 (2,779)0 40,321 
Total cash flow dependent97,953 (130)0 (5,841)0 91,982 
Private bank91,345 0 15 (14,881)0 76,479 
Balance sheet dependent24,728 0 0 4,341 0 29,069 
Premium wine12,319 0 0 (1,914)0 10,405 
Other13,635 (2)531 (14,898)1,600 866 
SBA loans3,858 0 0 (1,378)0 2,480 
Total allowance for credit losses$589,828 $(28,449)$4,354 $(54,106)$1,331 $512,958 
36
Three months ended June 30, 2020 Beginning Balance March 31, 2020 Charge-offs Recoveries Provision for (Reduction of) Credit Losses Foreign Currency Translation Adjustments Ending Balance June 30, 2020
Three months ended September 30, 2019Three months ended September 30, 2019Beginning Balance June 30, 2019Charge-offsRecoveriesProvision for (Reduction) Credit LossesForeign Currency Translation AdjustmentsEnding Balance September 30, 2019
(Dollars in thousands) Beginning Balance March 31, 2020 Charge-offs Recoveries Provision for (Reduction of) Credit Losses Foreign Currency Translation Adjustments Ending Balance June 30, 2020(Dollars in thousands)
Private equity/venture capital 
Global fund bankingGlobal fund banking$101,253 $0 $1,200 $1,485 $(22)$103,916 
Investor dependent:            Investor dependent:
Early stage 127,189
 (1,764) 2,390
 20,451
 4
 148,270
Early stage30,969 (7,524)1,760 5,783 (85)30,903 
Mid stage 51,962
 (3,653) 1,269
 6,861
 (46) 56,393
Mid stage28,264 (16,581)385 5,778 (85)17,761 
Later stage 96,550
 —
 —
 (8,950) 4
 87,604
Later stage37,940 (11,449)276 17,513 (259)44,021 
Total investor dependent 275,701
 (5,417) 3,659
 18,362
 (38) 292,267
Total investor dependent97,173 (35,554)2,421 29,074 (429)92,685 
Cash flow dependent:            Cash flow dependent:
Sponsor led buyout 42,091
 —
 —
 12,763
 (1) 54,853
Sponsor led buyout32,131 0 0 9,663 (143)41,651 
Other 39,416
 (3,385) 1
 7,068
 —
 43,100
Other24,551 0 250 (3,199)47 21,649 
Total cash flow dependent 81,507
 (3,385) 1
 19,831
 (1) 97,953
Total cash flow dependent56,682 0 250 6,464 (96)63,300 
Private bank 87,795
 (1,035) —
 4,585
 —
 91,345
Private BankPrivate Bank20,397 0 15 1,307 (19)21,700 
Balance sheet dependent 23,235
 (4,900) —
 6,393
 —
 24,728
Balance sheet dependent17,256 0 0 (2,496)37 14,797 
Premium wine 12,377
 —
 —
 (58) —
 12,319
Premium wine4,227 0 0 27 0 4,254 
Other 11,574
 (318) 413
 1,979
 (13) 13,635
Other4,900 (1,266)2 124 (2)3,758 
SBA loans —
 —
 —
 3,858
 —
 3,858
Total allowance for credit losses $548,963
 $(15,055) $4,073
 $51,899
 $(52) $589,828
Total allowance for credit losses$301,888 $(36,820)$3,888 $35,985 $(531)$304,410 

Nine months ended September 30, 2020Beginning Balance December 31, 2019Impact of adopting ASC 326Charge-offsRecoveriesProvision for (Reduction) Credit LossesForeign Currency Translation AdjustmentsEnding Balance September 30, 2020
(Dollars in thousands)
Global fund banking$107,285 $(69,888)$0 $0 $1,772 $(180)$38,989 
Investor dependent:
Early stage26,245 39,911 (26,897)6,474 57,494 (668)102,559 
Mid stage15,936 6,963 (20,147)5,303 54,584 (221)62,418 
Later stage40,189 24,750 (20,189)600 52,880 (519)97,711 
Total investor dependent82,370 71,624 (67,233)12,377 164,958 (1,408)262,688 
Cash flow dependent:
Sponsor led buyout42,939 3,151 (2,754)2,845 5,613 (133)51,661 
Other25,159 (3,056)(3,385)1 21,727 (125)40,321 
Total cash flow dependent68,098 95 (6,139)2,846 27,340 (258)91,982 
Private bank21,551 12,615 (1,616)15 44,194 (280)76,479 
Balance sheet dependent12,722 (1,364)(4,900)0 22,685 (74)29,069 
Premium wine5,296 3,650 (192)0 1,691 (40)10,405 
Other7,602 8,732 (320)944 (18,426)2,334 866 
SBA loans0 0 0 0 2,480 0 2,480 
Total allowance for credit losses$304,924 $25,464 $(80,400)$16,182 $246,694 $94 $512,958 
37
Three months ended June 30, 2019 Beginning Balance March 31, 2019 Charge-offs Recoveries Provision for (Reduction of) Credit Losses Foreign Currency Translation Adjustments Ending Balance June 30, 2019
Nine months ended September 30, 2019Nine months ended September 30, 2019Beginning Balance December 31, 2018Charge-offsRecoveriesProvision for (Reduction) Credit LossesForeign Currency Translation AdjustmentsEnding Balance September 30, 2019
(Dollars in thousands) Beginning Balance March 31, 2019 Charge-offs Recoveries Provision for (Reduction of) Credit Losses Foreign Currency Translation Adjustments Ending Balance June 30, 2019(Dollars in thousands)
Private equity/venture capital 
Global fund bankingGlobal fund banking$93,781 $(2,047)$1,200 $11,304 $(322)$103,916 
Investor dependent:            Investor dependent:
Early stage 26,730
 (7,627) 3,357
 8,878
 (369) 30,969
Early stage25,885 (16,819)5,685 16,547 (395)30,903 
Mid stage 38,163
 (13,395) 900
 2,708
 (112) 28,264
Mid stage20,999 (36,492)1,288 31,443 523 17,761 
Later stage 30,163
 —
 1,133
 6,932
 (288) 37,940
Later stage25,217 (11,449)2,053 28,616 (416)44,021 
Total investor dependent 95,056
 (21,022) 5,390
 18,518
 (769) 97,173
Total investor dependent72,101 (64,760)9,026 76,606 (288)92,685 
Cash flow dependent:            Cash flow dependent:
Sponsor led buyout 40,933
 (2,402) —
 (6,677) 277
 32,131
Sponsor led buyout44,274 (2,402)0 (253)32 41,651 
Other 20,514
 —
 4,397
 (376) 16
 24,551
Other21,754 (716)4,647 (4,083)47 21,649 
Total cash flow dependent 61,447
 (2,402) 4,397
 (7,053) 293
 56,682
Total cash flow dependent66,028 (3,118)4,647 (4,336)79 63,300 
Private Bank 19,964
 (960) 15
 1,438
 (60) 20,397
Private Bank20,583 (1,019)240 1,999 (103)21,700 
Balance sheet dependent 21,632
 —
 —
 (4,566) 190
 17,256
Balance sheet dependent21,707 0 0 (7,135)225 14,797 
Premium wine 3,949
 —
 —
 290
 (12) 4,227
Premium wine3,646 0 0 611 (3)4,254 
Other 2,792
 (4) 18
 2,185
 (91) 4,900
Other3,057 (1,311)20 1,905 87 3,758 
Total allowance for credit losses $300,151
 $(26,435) $9,820
 $19,148
 $(796) $301,888
Total allowance for credit losses$280,903 $(72,255)$15,133 $80,954 $(325)$304,410 
Six months ended June 30, 2020 Beginning Balance December 31, 2019 Impact of adopting ASC 326 Charge-offs Recoveries Provision for (Reduction of) Credit Losses Foreign Currency Translation Adjustments Ending Balance June 30, 2020
(Dollars in thousands)       
Private equity/venture capital $107,285
 $(69,888) $—
 $—
 $16,506
 $(180) $53,723
Investor dependent:              
Early stage 26,245
 39,911
 (11,947) 3,963
 90,665
 (567) 148,270
Mid stage 15,936
 6,963
 (12,985) 4,606
 42,006
 (133) 56,393
Later stage 40,189
 24,750
 (13,984) —
 37,088
 (439) 87,604
Total investor dependent 82,370
 71,624
 (38,916) 8,569
 169,759
 (1,139) 292,267
Cash flow dependent:              
Sponsor led buyout 42,939
 3,151
 (2,624) 2,845
 8,675
 (133) 54,853
Other 25,159
 (3,056) (3,385) 1
 24,506
 (125) 43,100
Total cash flow dependent 68,098
 95
 (6,009) 2,846
 33,181
 (258) 97,953
Private bank 21,551
 12,615
 (1,616) —
 59,075
 (280) 91,345
Balance sheet dependent 12,722
 (1,364) (4,900) —
 18,344
 (74) 24,728
Premium wine 5,296
 3,650
 (192) —
 3,605
 (40) 12,319
Other 7,602
 8,732
 (318) 413
 (3,528) 734
 13,635
SBA loans —
 —
 —
 —
 3,858
 —
 3,858
Total allowance for credit losses $304,924
 $25,464
 $(51,951) $11,828
 $300,800
 $(1,237) $589,828

Six months ended June 30, 2019 Beginning Balance December 31, 2018 Charge-offs Recoveries Provision for (Reduction of) Credit Losses Foreign Currency Translation Adjustments Ending Balance June 30, 2019
(Dollars in thousands)      
Private equity/venture capital $93,781
 $(2,047) $—
 $9,819
 $(300) $101,253
Investor dependent:            
Early stage 25,885
 (9,295) 3,925
 10,764
 (310) 30,969
Mid stage 20,999
 (19,911) 903
 25,665
 608
 28,264
Later stage 25,217
 —
 1,777
 11,103
 (157) 37,940
Total investor dependent 72,101
 (29,206) 6,605
 47,532
 141
 97,173
Cash flow dependent:            
Sponsor led buyout 44,274
 (2,402) —
 (9,916) 175
 32,131
Other 21,754
 (716) 4,397
 (884) —
 24,551
Total cash flow dependent 66,028
 (3,118) 4,397
 (10,800) 175
 56,682
Private Bank 20,583
 (1,019) 225
 692
 (84) 20,397
Balance sheet dependent 21,707
 —
 —
 (4,639) 188
 17,256
Premium wine 3,646
 —
 —
 584
 (3) 4,227
Other 3,057
 (45) 18
 1,781
 89
 4,900
Total allowance for credit losses $280,903
 $(35,435) $11,245
 $44,969
 $206
 $301,888





38

The following table summarizes the aging of our loans broken out by risk-based segmentssegment as of JuneSeptember 30, 2020 and December 31, 2019:
(Dollars in thousands)30 - 59
  Days Past  
Due		60 - 89
  Days Past  
Due		Equal to or Greater
Than 90
  Days Past  
Due		  Total Past  
Due		Current  Total  Loans Past Due
90 Days or
More Still
Accruing
Interest
September 30, 2020:
Global fund banking$6,285 $0 $14 $6,299 $19,578,219 $19,584,518 $0 
Investor dependent:
Early stage605 323 367 1,295 1,469,646 1,470,941 0 
Mid stage250 145 211 606 1,626,188 1,626,794 0 
Later stage51 0 0 51 2,013,883 2,013,934 0 
Total investor dependent906 468 578 1,952 5,109,717 5,111,669 0 
Cash flow dependent:
Sponsor led buyout0 0 0 0 2,062,243 2,062,243 0 
Other742 3 0 745 2,599,412 2,600,157 0 
Total cash flow dependent742 3 0 745 4,661,655 4,662,400 0 
Private bank4 4 0 8 4,424,891 4,424,899 0 
Balance sheet dependent2,851 7 0 2,858 1,695,362 1,698,220 0 
Premium wine3,117 4,355 0 7,472 1,074,491 1,081,963 0 
Other23 0 155 178 48,028 48,206 0 
SBA loans0 0 0 0 1,802,016 1,802,016 0 
Total loans (1)$13,928 $4,837 $747 $19,512 $38,394,379 $38,413,891 $0 
December 31, 2019:
Global fund banking$97,739 $383 $3,150 $101,272 $17,611,525 $17,712,797 $3,150 
Investor dependent:
Early stage1,307 22,062 723 24,092 1,629,333 1,653,425 0 
Mid stage10,025 6,999 0 17,024 1,049,759 1,066,783 0 
Later stage8,113 500 10,569 19,182 1,679,494 1,698,676 0 
Total investor dependent19,445 29,561 11,292 60,298 4,358,586 4,418,884 0 
Cash flow dependent
Sponsor led buyout0 0 0 0 2,203,020 2,203,020 0 
Other2,426 3,061 2 5,489 2,247,358 2,252,847 0 
Total cash flow dependent2,426 3,061 2 5,489 4,450,378 4,455,867 0 
Private bank6,582 2,049 1,544 10,175 3,479,044 3,489,219 365 
Balance sheet dependent2,731 0 0 2,731 1,294,573 1,297,304 0 
Premium wine8,435 3,170 0 11,605 1,051,907 1,063,512 0 
Other17 0 0 17 890,104 890,121 0 
Total loans (1)$137,375 $38,224 $15,988 $191,587 $33,136,117 $33,327,704 $3,515 
(Dollars in thousands) 
30 - 59
  Days Past  
Due
 
60 - 89
  Days Past  
Due
 
Equal to or Greater
Than 90
  Days Past  
Due
 
  Total Past  
Due
 Current   Total 
  Loans Past Due  
90 Days or
More Still
Accruing
Interest
June 30, 2020:              
Private equity/venture capital $54
 $10
 $9
 $73
 $17,901,044
 $17,901,117
 $—
Investor dependent:              
Early stage 742
 316
 2,809
 3,867
 1,793,709
 1,797,576
 73
Mid stage 4,190
 3,157
 5,493
 12,840
 1,422,932
 1,435,772
 —
Later stage 2,502
 3,900
 —
 6,402
 1,899,126
 1,905,528
 —
Total investor dependent 7,434
 7,373
 8,302
 23,109
 5,115,767
 5,138,876
 73
Cash flow dependent:              
Sponsor led buyout 46
 14
 —
 60
 2,057,379
 2,057,439
 —
Other 2,316
 183
 3,988
 6,487
 2,781,320
 2,787,807
 —
Total cash flow dependent 2,362
 197
 3,988
 6,547
 4,838,699
 4,845,246
 —
Private bank 601
 —
 2,749
 3,350
 3,812,927
 3,816,277
 —
Balance sheet dependent 4,777
 255
 —
 5,032
 1,688,039
 1,693,071
 —
Premium wine 1
 —
 —
 1
 1,039,455
 1,039,456
 —
Other 1
 39
 82
 122
 457,112
 457,234
 3
SBA loans —
 —
 —
 —
 1,835,945
 1,835,945
 —
Total loans (1) $15,230
 $7,874
 $15,130
 $38,234
 $36,688,988
 $36,727,222
 $76
December 31, 2019:              
Private equity/venture capital $97,739
 $383
 $3,150
 $101,272
 $17,611,525
 17,712,797
 $3,150
Investor dependent:              
Early stage 1,307
 22,062
 723
 24,092
 1,629,333
 1,653,425
 —
Mid stage 10,025
 6,999
 —
 17,024
 1,049,759
 1,066,783
 —
Later stage 8,113
 500
 10,569
 19,182
 1,679,494
 1,698,676
 —
Total investor dependent 19,445
 29,561
 11,292
 60,298
 4,358,586
 4,418,884
 —
Cash flow dependent              
Sponsor led buyout —
 —
 —
 —
 2,203,020
 2,203,020
 —
Other 2,426
 3,061
 2
 5,489
 2,247,358
 2,252,847
 —
Total cash flow dependent 2,426
 3,061
 2
 5,489
 4,450,378
 4,455,867
 —
Private bank 6,582
 2,049
 1,544
 10,175
 3,479,044
 3,489,219
 365
Balance sheet dependent 2,731
 —
 —
 2,731
 1,294,573
 1,297,304
 —
Premium wine 8,435
 3,170
 —
 11,605
 1,051,907
 1,063,512
 —
Other 17
 —
 —
 17
 890,104
 890,121
 —
Total loans (1) $137,375
 $38,224
 $15,988
 $191,587
 $33,136,117
 $33,327,704
 $3,515
(1)As of September 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
(1)For the quarter ended June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.


39
Nonaccrual Loans
The following tables summarize our nonaccrual loan activity by risk-based segment for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
Three months ended September 30, 2020Beginning Balance June 30, 2020AdditionsPaydowns and Other ReductionsCharge-offsEnding Balance September 30, 2020
(Dollars in thousands)
Global fund banking$9 $6 $(2)$0 $13 
Investor dependent:
Early stage24,422 6,269 (2,790)(8,169)19,732 
Mid stage8,119 10,290 (292)(6,490)11,627 
Later stage10,498 36,779 (3,500)(5,202)38,575 
Total investor dependent43,039 53,338 (6,582)(19,861)69,934 
Cash flow dependent:
Sponsor led buyout21,658 172 (238)0 21,592 
Other5,317 12,356 (11,388)0 6,285 
Total cash flow dependent26,975 12,528 (11,626)0 27,877 
Private bank6,517 3,348 (4,433)0 5,432 
Balance sheet dependent11,842 675 (11,841)0 676 
Premium wine1,681 0 (6)0 1,675 
Other61 105 (62)0 104 
SBA loans4,202 0 (4,202)0 0 
Total nonaccrual loans$94,326 $70,000 $(38,754)$(19,861)$105,711 

Three months ended September 30, 2019Beginning Balance June 30, 2019AdditionsPaydowns and Other ReductionsCharge-offsEnding Balance September 30, 2019
(Dollars in thousands)
Global fund banking$0 $0 $0 $0 $0 
Investor dependent:
Early stage10,290 12,409 (2,172)(1,569)18,958 
Mid stage28,699 6 (8,151)(15,323)5,231 
Later stage38,346 2,216 (6,462)(6,837)27,263 
Total investor dependent77,335 14,631 (16,785)(23,729)51,452 
Cash flow dependent:
Sponsor led buyout8,365 37,294 (640)0 45,019 
Other79 13 0 0 92 
Total cash flow dependent8,444 37,307 (640)0 45,111 
Private bank5,644 1,531 (86)0 7,089 
Balance sheet dependent4,974 0 (4,974)0 0 
Premium wine244 174 (25)0 393 
Other0 0 0 0 0 
Total nonaccrual loans (1)$96,641 $53,643 $(22,510)$(23,729)$104,045 

40
Three months ended June 30, 2020 Beginning Balance March 31, 2020 Additions Paydowns and Other Reductions Charge-offs Ending Balance June 30, 2020
Nine months ended September 30, 2020Nine months ended September 30, 2020Beginning Balance December 31, 2019AdditionsPaydowns and Other ReductionsCharge-offsEnding Balance September 30, 2020
(Dollars in thousands) Beginning Balance March 31, 2020 Additions Paydowns and Other Reductions Charge-offs Ending Balance June 30, 2020(Dollars in thousands)
Private equity/venture capital 
Global fund bankingGlobal fund banking$0 $15 $(2)$0 $13 
Investor dependent:          Investor dependent:
Early stage 18,414
 9,606
 (3,141) (457) 24,422
Early stage11,093 28,218 (8,695)(10,884)19,732 
Mid stage 12,180
 494
 (399) (4,156) 8,119
Mid stage17,330 22,875 (1,079)(27,499)11,627 
Later stage 14,443
 959
 (4,904) —
 10,498
Later stage6,296 48,962 (8,276)(8,407)38,575 
Total investor dependent 45,037
 11,059
 (8,444) (4,613) 43,039
Total investor dependent34,719 100,055 (18,050)(46,790)69,934 
Cash flow dependent:          Cash flow dependent:
Sponsor led buyout —
 21,658
 —
 —
 21,658
Sponsor led buyout44,585 21,830 (42,199)(2,624)21,592 
Other 13
 8,580
 (3,276) —
 5,317
Other17,681 20,936 (32,314)(18)6,285 
Total cash flow dependent 13
 30,238
 (3,276) —
 26,975
Total cash flow dependent62,266 42,766 (74,513)(2,642)27,877 
Private bank 4,857
 2,634
 (974) —
 6,517
Private bank5,480 5,982 (5,449)(581)5,432 
Balance sheet dependent —
 16,742
 (4,900) —
 11,842
Balance sheet dependent0 17,417 (16,741)0 676 
Premium wine 700
 998
 (17) —
 1,681
Premium wine204 1,686 (23)(192)1,675 
Other —
 234
 (173) —
 61
Other0 339 (235)0 104 
SBA loans —
 4,202
 —
 —
 4,202
SBA loans0 4,202 (4,202)0 0 
Total nonaccrual loans $50,607
 $66,116
 $(17,784) $(4,613) $94,326
Total nonaccrual loans (1)Total nonaccrual loans (1)$102,669 $172,462 $(119,215)$(50,205)$105,711 


Nine months ended September 30, 2019Beginning Balance December 31, 2018AdditionsPaydowns and Other ReductionsCharge-offsEnding Balance September 30, 2019
(Dollars in thousands)
Global fund banking$3,700 $2,247 $(3,900)$(2,047)$0 
Investor dependent:
Early stage7,616 25,221 (10,615)(3,264)18,958 
Mid stage4,751 42,497 (9,541)(32,476)5,231 
Later stage11,385 32,786 (10,071)(6,837)27,263 
Total investor dependent23,752 100,504 (30,227)(42,577)51,452 
Cash flow dependent:
Sponsor led buyout39,534 37,294 (29,407)(2,402)45,019 
Other17,156 92 (16,690)(466)92 
Total cash flow dependent56,690 37,386 (46,097)(2,868)45,111 
Private bank3,919 3,411 (174)(67)7,089 
Balance sheet dependent5,004 238 (5,242)0 0 
Premium wine285 174 (66)0 393 
Other792 0 (792)0 0 
Total nonaccrual loans (1)$94,142 $143,960 $(86,498)$(47,559)$104,045 
Three months ended June 30, 2019 Beginning Balance March 31, 2019 Additions Paydowns and Other Reductions Charge-offs Ending Balance June 30, 2019
(Dollars in thousands)     
Private equity/venture capital $5,947
 $—
 $(3,900) $(2,047) $—
Investor dependent:          
Early stage 8,697
 8,379
 (5,231) (1,555) 10,290
Mid stage 32,099
 10,392
 (869) (12,923) 28,699
Later stage 23,140
 18,507
 (3,301) —
 38,346
Total investor dependent 63,936
 37,278
 (9,401) (14,478) 77,335
Cash flow dependent:          
Sponsor led buyout 38,237
 —
 (27,470) (2,402) 8,365
Other 16,690
 79
 (16,690) —
 79
Total cash flow dependent 54,927
 79
 (44,160) (2,402) 8,444
Private bank 3,809
 1,865
 (22) (8) 5,644
Balance sheet dependent 4,736
 238
 —
 —
 4,974
Premium wine 268
 —
 (24) —
 244
Other —
 —
 —
 —
 —
Total nonaccrual loans (1) $133,623
 $39,460
 $(57,507) $(18,935) $96,641
(1)For the three and nine months ended September 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

(1)For the quarter ended June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
Six months ended June 30, 2020 Beginning Balance December 31, 2019 Additions Paydowns and Other Reductions Charge-offs Ending Balance June 30, 2020
(Dollars in thousands)     
Private equity/venture capital $—
 $9
 $—
 $—
 $9
Investor dependent:          
Early stage 11,093
 21,949
 (5,905) (2,715) 24,422
Mid stage 17,330
 12,585
 (787) (21,009) 8,119
Later stage 6,296
 12,183
 (4,776) (3,205) 10,498
Total investor dependent 34,719
 46,717
 (11,468) (26,929) 43,039
Cash flow dependent:          
Sponsor led buyout 44,585
 21,658
 (41,961) (2,624) 21,658
Other 17,681
 8,580
 (20,926) (18) 5,317
Total cash flow dependent 62,266
 30,238
 (62,887) (2,642) 26,975
Private bank 5,480
 2,634
 (1,016) (581) 6,517
Balance sheet dependent —
 16,742
 (4,900) —
 11,842
Premium wine 204
 1,686
 (17) (192) 1,681
Other —
 234
 (173) —
 61
SBA loans —
 4,202
 —
 —
 4,202
Total nonaccrual loans (1) $102,669
 $102,462
 $(80,461) $(30,344) $94,326

41
(1)For the quarter ended June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Six months ended June 30, 2019 Beginning Balance December 31, 2018 Additions Paydowns and Other Reductions Charge-offs Ending Balance June 30, 2019
(Dollars in thousands)     
Private equity/venture capital $3,700
 $2,247
 $(3,900) $(2,047) $—
Investor dependent:          
Early stage 7,616
 12,812
 (8,443) (1,695) 10,290
Mid stage 4,751
 42,491
 (1,390) (17,153) 28,699
Later stage 11,385
 30,570
 (3,609) —
 38,346
Total investor dependent 23,752
 85,873
 (13,442) (18,848) 77,335
Cash flow dependent:          
Sponsor led buyout 39,534
 —
 (28,767) (2,402) 8,365
Other 17,156
 79
 (16,690) (466) 79
Total cash flow dependent 56,690
 79
 (45,457) (2,868) 8,444
Private bank 3,919
 1,880
 (88) (67) 5,644
Balance sheet dependent 5,004
 238
 (268) —
 4,974
Premium wine 285
 —
 (41) —
 244
Other 792
 —
 (792) —
 —
Total nonaccrual loans (1) $94,142
 $90,317
 $(63,988) $(23,830) $96,641
(1)For the quarter ended June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.


The following table summarizes our nonaccrual loans with no allowance for credit loss at JuneSeptember 30, 2020 and December 31, 2019:
 June 30, 2020 December 31, 2019September 30, 2020December 31, 2019
(Dollars in thousands) Nonaccrual Loans Nonaccrual Loans with no Allowance for Credit Loss Nonaccrual Loans Nonaccrual Loans with no Allowance for Credit Loss(Dollars in thousands)Nonaccrual LoansNonaccrual Loans with no Allowance for Credit LossNonaccrual LoansNonaccrual Loans with no Allowance for Credit Loss
Private equity/venture capital $9
 $9
 $—
 $—
Global fund bankingGlobal fund banking$13 $8 $0 $0 
Investor dependent:        Investor dependent:
Early stage 24,422
 —
 11,093
 460
Early stage19,732 10 11,093 460 
Mid stage 8,119
 368
 17,330
 274
Mid stage11,627 0 17,330 274 
Later stage 10,498
 4
 6,296
 —
Later stage38,575 0 6,296 0 
Total investor dependent 43,039
 372
 34,719
 734
Total investor dependent69,934 10 34,719 734 
Cash flow dependent:        Cash flow dependent:
Sponsor led buyout 21,658
 —
 44,585
 —
Sponsor led buyout21,592 0 44,585 0 
Other 5,317
 —
 17,681
 2,782
Other6,285 705 17,681 2,782 
Total cash flow dependent 26,975
 —
 62,266
 2,782
Total cash flow dependent27,877 705 62,266 2,782 
Private bank 6,517
 6,517
 5,480
 3,714
Private bank5,432 4,912 5,480 3,714 
Balance sheet dependent 11,842
 —
 —
 —
Balance sheet dependent676 0 0 0 
Premium wine 1,681
 997
 204
 —
Premium wine1,675 998 204 0 
Other 61
 61
 —
 —
Other104 104 0 0 
SBA loans 4,202
 —
 —
 —
SBA loans0 0 0 0 
Total nonaccrual loans (1) $94,326
 $7,956
 $102,669
 $7,230
Total nonaccrual loans (1)$105,711 $6,737 $102,669 $7,230 
(1)As of September 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
(1)For the quarter ended June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Troubled Debt Restructurings
As of JuneSeptember 30, 2020, we had 1816 TDRs with a total carrying value of $56.3$50.5 million where concessions have been granted to borrowers experiencing financial difficulties, in an attempt to maximize collection. There were $0.4 million of0 unfunded commitments available for funding to the clients associated with these TDRs as of JuneSeptember 30, 2020.

42
The following table summarizes our loans modified in TDRs, broken out by risk-based segment, at JuneSeptember 30, 2020 and December 31, 2019:
(Dollars in thousands) June 30, 2020 December 31, 2019(Dollars in thousands)September 30, 2020December 31, 2019
Loans modified in TDRs:    Loans modified in TDRs:
Private equity/venture capital $—
 $—
Investor dependent    
Global fund bankingGlobal fund banking$0 $0 
Investor dependent:Investor dependent:
Early stage 5,354
 9,471
Early stage7,771 9,471 
Mid stage 11,130
 5,189
Mid stage3,781 5,189 
Later stage 10,595
 23,318
Later stage3,297 23,318 
Total investor dependent 27,079
 37,978
Total investor dependent14,849 37,978 
Cash flow dependent    
Cash flow dependent:Cash flow dependent:
Sponsor led buyout 10,350
 55,443
Sponsor led buyout30,799 55,443 
Other 5,326
 —
Other855 0 
Total cash flow dependent 15,676
 55,443
Total cash flow dependent31,654 55,443 
Private bank 1,318
 2,104
Private bank0 2,104 
Balance sheet dependent —
 —
Balance sheet dependent675 0 
Premium wine 12,208
 13,457
Premium wine3,341 13,457 
Other —
 —
Other0 0 
SBA loans —
 —
SBA loans0 0 
Total loans modified in TDRs (1) $56,281
 $108,982
Total loans modified in TDRs (1)$50,519 $108,982 
(1)
(1)
For the quarter ended JuneAs of September 30, 2020,, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
The following table summarizes the recorded investment in loans modified in TDRs, broken out by risk-based segment, for modifications made during the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Loans modified in TDRs during the period:
Global fund banking$0 $0 $0 $0 
Investor dependent:
Early stage4,043 2,205 4,193 2,205 
Mid stage0 0 209 3,480 
Later stage0 6,361 3,297 17,324 
Total investor dependent4,043 8,566 7,699 23,009 
Cash flow dependent:
Sponsor led buyout21,611 0 21,611 48,604 
Other0 0 855 0 
Total cash flow dependent21,611 0 22,466 48,604 
Private bank0 0 0 1,826 
Balance sheet dependent675 0 675 0 
Premium wine0 0 998 0 
Other0 0 0 0 
SBA loans0 0 0 0 
Total loans modified in TDRs during the period (1) (2)$26,329 $8,566 $31,838 $73,439 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020
2019 2020 2019
Loans modified in TDRs during the period:        
Private equity/venture capital $—
 $—
 $—
 $—
Investor dependent        
Early stage 93
 —
 93
 616
Mid stage 5,281
 3,521
 11,130
 3,521
Later stage 3,966
 14,214
 6,710
 14,214
Total investor dependent 9,340
 17,735
 17,933
 18,351
Cash flow dependent        
Sponsor led buyout —
 48,557
 —
 48,557
Other 3,986
 —
 3,986
 —
Total cash flow dependent 3,986
 48,557
 3,986
 48,557
Private bank —
 1,865
 —
 1,865
Balance sheet dependent —
 —
 —
 —
Premium wine 997
 —
 998
 —
Other —
 —
 —
 —
SBA loans —
 —
 —
 —
Total loans modified in TDRs during the period (1) (2) $14,323
 $68,157
 $22,917
 $68,773
43
(1)For the three and nine months ended September 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

(2)There were $13.6 million and $31.1 million of partial charge-offs for the three and nine months ended September 30, 2020, respectively, and $3.7 million and $9.2 million of partial charge-offs for the three and nine months ended September 30, 2019.
(1)
For the quarter ended

June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
(2)
There were $5.0 million and $17.5 million of partial charge-offs for the three and six months endedJune 30, 2020, respectively and $3.4 million and $5.6 million of partial charge-offs for the three and six months endedJune 30, 2019.

During the three months ended June 30, 2020, all new TDRs of $14.3 million were modified through payment deferrals granted to our clients. During the six months ended JuneSeptember 30, 2020, new TDRs of $22.5$25.6 million were modified through payment deferrals granted to our clients and $0.4$0.7 million were modified through forgiveness of principal. During the nine months ended September 30, 2020, new TDRs of $30.9 million were modified through payment deferrals granted to our clients and $0.9 million were modified through forgiveness of principal. During the three and sixnine months ended JuneSeptember 30, 2019, $66.36.4 million and $66.9$69.4 million, respectively, were modified through payment deferrals granted to our clients. During the three and sixnine months ended JuneSeptember 30, 2019, $1.9$2.2 million and $4.0 million, respectively, were modified through partial forgiveness of principal for both periods presented.principal.
The following table summarizes the recorded investment in loans modified in TDRs within the previous 12 months that subsequently defaulted during the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
 Three months ended June 30, Six months ended June 30, Three months ended September 30,Nine months ended September 30,
(Dollars in thousands) 2020 2019 2020 2019(Dollars in thousands)2020201920202019
TDRs modified within the previous 12 months that defaulted during the period:        TDRs modified within the previous 12 months that defaulted during the period:
Private equity/venture capital $—
 $—
 $—
 $—
Investor dependent        
Global fund bankingGlobal fund banking$0 $0 $0 $0 
Investor dependent:Investor dependent:
Early stage —
 —
 —
 —
Early stage0 0 0 0 
Mid stage —
 —
 —
 —
Mid stage0 0 0 0 
Later stage —
 —
 —
 —
Later stage0 10,963 0 10,963 
Total investor dependent —
 —
 —
 —
Total investor dependent0 10,963 0 10,963 
Cash flow dependent        
Cash flow dependent:Cash flow dependent:
Sponsor led buyout 10,350
 —
 10,350
 —
Sponsor led buyout0 37,294 0 37,294 
Other —
 —
 —
 —
Other0 0 0 0 
Total cash flow dependent 10,350
 —
 10,350
 —
Total cash flow dependent0 37,294 0 37,294 
Private bank —
 —
 —
 —
Private bank0 0 0 0 
Balance sheet dependent —
 —
 —
 —
Balance sheet dependent0 0 0 0 
Premium wine —
 —
 —
 —
Premium wine998 0 998 0 
Other —
 —
 —
 —
Other0 0 0 0 
SBA loans —
 —
 —
 —
SBA loans0 0 0 0 
Total TDRs modified within the previous 12 months that defaulted in the period (1) $10,350
 $—
 $10,350
 $—
Total TDRs modified within the previous 12 months that defaulted in the period (1)$998 $48,257 $998 $48,257 
(1)For the three and nine months ended September 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
(1)
For the quarter ended

June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Charge-offs and defaults on previously restructured loans are evaluated to determine the impact to the allowance for credit losses for loans, if any. The evaluation of these defaults may impact the assumptions used in calculating the reserve on other TDRs and nonaccrual loans as well as management’s overall outlook of macroeconomic factors that affect the reserve on the loan portfolio as a whole. After evaluating the charge-offs and defaults experienced on our TDRs we determined that no change to our reserving methodology for TDRs was necessary to determine the allowance for credit losses for loans as of JuneSeptember 30, 2020.
Allowance for Credit Losses: Unfunded Credit Commitments

We maintain a separate allowance for credit losses for unfunded credit commitments that is determined using a methodology that is inherently similar to the methodology used for calculating the allowance for credit losses for loans. At September 30, 2020, our ACL estimates utilized the improved Moody's economic forecasts from September 2020 as mentioned above.

44
The following table summarizes the activity relating to our allowance for credit losses for unfunded credit commitments for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Allowance for credit losses: unfunded credit commitments, beginning balance $84,690
 $57,970
 $67,656
 $55,183
Impact of adopting ASC 326 —
 —
 22,826
 —
Provision for credit losses 14,590
 4,798
 9,113
 7,528
Foreign currency translation adjustments 14
 (104) (301) (47)
Allowance for credit losses: unfunded credit commitments, ending balance (1) $99,294
 $62,664
 $99,294
 $62,664
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Allowance for credit losses: unfunded credit commitments, beginning balance$99,294 $62,664 $67,656 $55,183 
Impact of adopting ASC 3260 0 22,826 0 
Provision for credit losses2,019 551 11,132 8,079 
Foreign currency translation adjustments202 (107)(99)(154)
Allowance for credit losses: unfunded credit commitments, ending balance (1)$101,515 $63,108 $101,515 $63,108 
(1)
(1)The “allowance for credit losses: unfunded credit commitments” is included as a component of “other liabilities” on our unaudited interim consolidated balance sheets. See Note 15 — “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.
8.     Leases
8.
Leases
We have operating leases for our corporate offices and certain equipment utilized at those properties. We are obligated under a number of noncancelable operating leases for premises and equipment that expire at various dates, through 2030, and in most instances, include options to renew or extend at market rates and terms. Such leases may provide for periodic adjustments of rent during the term of the lease based on changes in various economic indicators.
At the inception of the lease, the lease is evaluated to determine whether the lease will be accounted for as an operating or a finance lease. There were no significant assumptions or judgments required upon applying the new lease standard. Operating lease right-of-use assets and operating lease liabilities are included in our consolidated balance sheets. We have no leases that meet the definition of a finance lease under ASC 842 and our lessor accounting treatment for subleases is not material.
Total recorded balances for the lease assets and liabilities are as follows:
(Dollars in thousands)September 30, 2020December 31, 2019
Assets:
Right-of-use assets - operating leases$220,493 $197,365 
Liabilities:
Lease liabilities - operating leases246,652 218,847 

45
(Dollars in thousands) June 30, 2020
December 31, 2019
Assets:    
Right-of-use assets - operating leases $215,319
 $197,365
Liabilities:    
Lease liabilities - operating leases 239,357
 218,847


The components of our lease cost and supplemental cash flow information related to leases for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 were 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) 2020 2019 2020 2019 (Dollars in thousands)2020201920202019
Operating lease cost $11,605
 $9,462
 $22,969
 $18,980
Operating lease cost$11,998 $10,120 $35,040 $29,099 
Short-term lease cost 420
 582
 759
 845
Short-term lease cost333 370 1,092 1,214 
Variable lease cost 1,198
 933
 1,791
 1,779
Variable lease cost830 903 2,548 2,683 
Less: sublease income (155) (1,115) (1,287) (2,223)Less: sublease income(346)(1,140)(1,633)(3,363)
Total lease cost, net $13,068
 $9,862
 $24,232
 $19,381
Total lease cost, net$12,815 $10,253 $37,047 $29,633 
Supplemental cash flows information:        Supplemental cash flows information:
Cash paid for amounts included in the measurement of lease liabilities:        Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for operating leases $12,130
 10,884
 $24,351
 $21,238
Cash paid for operating leases$12,273 $11,514 $36,753 $32,752 
Noncash items during the period:        Noncash items during the period:
Lease obligations in exchange for obtaining Right-of-use assets        
Lease obligations in exchange for obtaining Right-of-use assets:Lease obligations in exchange for obtaining Right-of-use assets:
Operating leases $18,850
 —
 $40,463
 $—
Operating leases$14,741 $7,770 $55,316 $7,770 
The table below presents additional information related to the Company's leases as of JuneSeptember 30, 2020 and December 31, 2019:
  June 30, 2020 December 31, 2019
Weighted-average remaining term (in years) - operating leases 6.00
 6.29
Weighted-average discount rate - operating leases (1) 2.64% 2.92%
September 30, 2020December 31, 2019
Weighted-average remaining term (in years) - operating leases6.136.29
Weighted-average discount rate - operating leases (1)2.54 %2.92 %
(1)The incremental borrowing rate used to calculate the lease liability was determined based on the facts and circumstances of the economic environment and the Company’s credit standing as of the effective date of ASC 842. Additionally, the total lease term and total lease payments were also considered in determining the rate. Based on these considerations the Company identified credit terms available under its existing credit lines which represent a collateralized borrowing rate that has varying credit terms that could be matched to total lease terms and total lease payments in ultimately determining the implied borrowing rate in each lease contract.
(1)The incremental borrowing rate used to calculate the lease liability was determined based on the facts and circumstances of the economic environment and the Company’s credit standing as of the effective date of ASC 842. Additionally, the total lease term and total lease payments were also considered in determining the rate. Based on these considerations the Company identified credit terms available under its existing credit lines which represent a collateralized borrowing rate that has varying credit terms that could be matched to total lease terms and total lease payments in ultimately determining the implied borrowing rate in each lease contract.

The following table presents our undiscounted future cash payments for our operating lease liabilities as of JuneSeptember 30, 2020:
Years ended December 31,
(Dollars in thousands)
 Operating Leases
2020 (excluding the six months ended June 30, 2020) $24,477
2021 48,887
2022 43,698
2023 42,602
2024 36,648
2025 and thereafter 63,684
Total future lease payments (1) $259,996
Less: imputed interest (20,639)
Total lease liabilities $239,357
Years ended December 31,
(Dollars in thousands)		Operating Leases
2020 (excluding the nine months ended September 30, 2020)$12,782 
202150,271 
202245,430 
202344,337 
202438,437 
2025 and thereafter75,799 
Total future lease payments (1)$267,056 
Less: imputed interest(20,404)
Total lease liabilities$246,652 
(1)
As of June
(1)As of September 30, 2020, we have additional leases that have not yet commenced. We estimate that we will record additional lease liabilities of $2.8 million upon commencement. These leases will commence in 2020 with lease terms of two years to ten years.
46
9.     Goodwill and Other Intangible Assets

$18.5 million upon commencement. These leases will commence in 2020 with lease terms of two years to ten years.

9.
Goodwill and Other Intangible Assets

Goodwill
Goodwill at both JuneSeptember 30, 2020 and December 31, 2019 was $137.8 million, which was a result of revenue generating synergies expected from our acquisition of SVB Leerink in 2019. Due to the economic uncertainty caused by COVID-19, we conducted an evaluation in the first quarter of 2020 and determined that it was more likely than not that the fair value of SVB Leerink was not less than its carrying amount; therefore, no impairment was recognized on goodwill as of March 31, 2020. We determined that an evaluation was not necessary for the second quarter of 2020 as a result of the strong performance of SVB Leerink for the three months ended June 30, 2020. All reported goodwill amounts have been allocated to the SVB Leerink reporting segment and are expected to be deductible for tax purposes. Refer to Note 14 — “Segment Reporting” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional information.
Other Intangible Assets
The components of net other intangible assets related to the acquisition of SVB Leerink were as follows:
September 30, 2020December 31, 2019
(Dollars in thousands)Gross AmountAccumulated AmortizationNet Carrying AmountGross AmountAccumulated AmortizationNet Carrying Amount
Other intangible assets:
Customer relationships$42,000 $6,682 $35,318 $42,000 $3,818 $38,182 
Other18,900 8,838 10,062 18,900 7,665 11,235 
Total other intangible assets$60,900 $15,520 $45,380 $60,900 $11,483 $49,417 
  June 30, 2020 December 31, 2019
(Dollars in thousands) Gross Amount Accumulated Amortization Net Carrying Amount Gross Amount Accumulated Amortization Net Carrying Amount
Other intangible assets:            
Customer relationships $42,000
��$5,727
 $36,273
 $42,000
 $3,818
 $38,182
Other 18,900
 8,447
 10,453
 18,900
 7,665
 11,235
Total other intangible assets $60,900
 $14,174
 $46,726
 $60,900
 $11,483
 $49,417


For the sixnine months ended JuneSeptember 30, 2020, we recorded amortization expense of $2.7$4.0 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 JuneSeptember 30, 2020:
Years ended December 31,
(Dollars in thousands)
 
Other
Intangible Assets
2020 (excluding the six months ended June 30, 2020) $2,691
2021 4,732
2022 4,732
2023 4,732
2024 4,732
2025 and thereafter 25,107
Total future amortization expense $46,726

Years ended December 31,
(Dollars in thousands)		Other
Intangible Assets
2020 (excluding the nine months ended September 30, 2020)$1,345 
20214,732 
20224,732 
20234,732 
20244,732 
2025 and thereafter25,107 
Total future amortization expense$45,380 

10.Short-Term Borrowings and Long-Term Debt
10.    Short-Term Borrowings and Long-Term Debt
The following table represents outstanding short-term borrowings and long-term debt at JuneSeptember 30, 2020 and December 31, 2019:2019:
   Carrying Value
(Dollars in thousands)MaturityPrincipal value at September 30, 2020September 30,
2020		December 31,
2019
Short-term borrowings:
Other short-term borrowings(1)$19,068 $19,068 17,430 
Total short-term borrowings$19,068 $17,430 
Long-term debt:
3.50% Senior NotesJanuary 29, 2025$350,000 $348,257 $347,987 
3.125% Senior NotesJune 5, 2030500,000 495,173 0 
Total long-term debt$843,430 $347,987 
      Carrying Value
(Dollars in thousands) Maturity Principal value at June 30, 2020 June 30,
2020		 December 31,
2019
Short-term borrowings:        
Other short-term borrowings (1) $50,924
 50,924
 17,430
Total short-term borrowings     $50,924
 $17,430
Long-term debt:        
3.50% Senior Notes January 29, 2025 $350,000
 $348,166
 $347,987
3.125% Senior Notes June 5, 2030 500,000
 495,054
 —
Total long-term debt     $843,220
 $347,987
(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.

47
Interest expense related to short-term borrowings and long-term debt was $4.9$7.2 million and $10.8$17.9 million for the three and sixnine months ended JuneSeptember 30, 2020 and $9.2$8.1 million and $19.4$27.6 million for the three and sixnine months ended JuneSeptember 30, 2019. The weighted average interest rate associated with our short-term borrowings was 0.08 percent as of JuneSeptember 30, 2020 and 1.55 percent as of as of December 31, 2019.
Short-term Borrowings
We have certain facilities in place to enable us to access short-term borrowings on a secured and unsecured basis. Our secured facilities include collateral pledged to the FHLB of San Francisco and the discount window at the FRB (using both fixed income securities and loans as collateral). Our unsecured facility consists of our uncommitted federal funds lines. As of JuneSeptember 30, 2020, collateral pledged to the FHLB of San Francisco was comprised primarily of fixed income investment securities and loans and had a carrying value of $6.5$6.6 billion, of which $5.6$5.5 billion was available to support additional borrowings. As of JuneSeptember 30, 2020, collateral pledged to the discount window at the 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. Our total unused and available borrowing capacity for our uncommitted federal funds lines totaled $1.9 billion at JuneSeptember 30, 2020. Our total unused and available borrowing capacity under our master repurchase agreements with various financial institutions totaled $3.3 billion at JuneSeptember 30, 2020.
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 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 $495.4 million after deducting underwriting discounts and commissions and issuance costs. The balance of our 3.125% Senior Notes at JuneSeptember 30, 2020 was $495.0$495.2 million, which is reflective of $4.4 million of debt issuance costs and a $0.4 million discount.
11.Derivative Financial Instruments
11.    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, 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 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, Derivatives and Hedging ("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 accumulated other comprehensive income 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 to ensure hedge accounting under ASC 815 can be applied. If the hedging relationship no longer exists or no longer qualifies as a hedge per ASC 815, any amounts remaining as gain or loss in accumulated other comprehensive income are reclassified into earnings in the line item "Loans" as part of interest income, a component of consolidated net income. As of March 31, 2020, all derivatives previously classified as hedges with notional balances totaling $5.0 billion and a net asset fair value of $227.5 million were terminated. As of JuneSeptember 30, 2020, the total unrealized gains on terminated cash flow hedges remaining in AOCI is $211.1$195.0 million, $152.6$141.0 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 five 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
48
currency rates on foreign currency denominated instruments are recorded in the line item “other” as part of noninterest income, a component of consolidated net income. We may experience ineffectiveness in the economic hedging relationship, because the instruments are revalued based upon changes in the currency’s spot rate on the principal value, while the forwards are revalued on a discounted cash flow basis. We record forward agreements in gain positions in other assets and loss positions in other liabilities, while net changes in fair value are recorded in the line item “other” as part of noninterest income, a component of consolidated net income.
Other Derivative Instruments
Also included in our derivative instruments are equity warrant assets and client forward and option contracts, and client interest rate contracts. For further description of these other derivative instruments, refer to Note 2 — “Summary of Significant Accounting Policies" under Part II, Item 8 of our 2019 Form 10-K.
Counterparty Credit Risk
We are exposed to credit risk if counterparties to our derivative contracts do not perform as expected. We mitigate counterparty credit risk through credit approvals, limits, monitoring procedures and obtaining collateral, as appropriate. With respect to measuring counterparty credit risk for derivative instruments, we measure the fair value of a group of financial assets and financial liabilities on a net risk basis by counterparty portfolio.

The total notional or contractual amounts and fair value of our derivative financial instruments at JuneSeptember 30, 2020 and December 31, 2019 were as follows:
 September 30, 2020December 31, 2019
Notional or
Contractual
Amount		Fair ValueNotional or
Contractual
Amount		Fair Value
(Dollars in thousands)Derivative Assets (1)Derivative Liabilities (1)Derivative Assets (1)Derivative Liabilities (1)
Derivatives designated as hedging instruments:
 Interest rate risks:
Interest rate swaps$0 $0 $— $1,915,000 $22,676 $— 
Interest rate swaps0 — 0 3,085,000 — 25,623 
Derivatives not designated as hedging instruments:
 Currency exchange risks:
Foreign exchange forwards462,765 4,083 — — — — 
Foreign exchange forwards59,992 — 278 300,250 — 2,154 
 Other derivative instruments:
Equity warrant assets256,774 202,184 — 225,893 165,473 — 
Client foreign exchange forwards6,955,487 138,522 — 4,661,517 114,546 — 
Client foreign exchange forwards5,754,213 — 108,959 4,326,059 — 94,745 
Client foreign currency options111,107 2,986 — 154,985 1,308 — 
Client foreign currency options111,107 — 2,986 154,985 — 1,308 
Client interest rate derivatives916,573 79,270 — 1,275,190 28,811 — 
Client interest rate derivatives (2)1,048,715 — 25,558 1,372,914 — 14,154 
Total derivatives not designated as hedging instruments427,045 137,781 310,138 112,361 
Total derivatives$427,045 $137,781 $332,814 $137,984 
  June 30, 2020 December 31, 2019
  
Notional or
Contractual
Amount
 Fair Value 
Notional or
Contractual
Amount
 Fair Value
(Dollars in thousands) 
Derivative Assets (1)
Derivative Liabilities (1)  Derivative Assets (1)
Derivative Liabilities (1)
Derivatives designated as hedging instruments:            
 Interest rate risks:            
Interest rate swaps $—
 $—
 $—
 $1,915,000
 $22,676
 $—
Interest rate swaps —
 —
 —
 3,085,000
 —
 25,623
Derivatives not designated as hedging instruments: 




 
  

 Currency exchange risks:
 




 
  

Foreign exchange forwards 308,975

—

10,471
 300,250
 —

2,154
 Other derivative instruments: 

 
  
  
 
Equity warrant assets 249,399

171,082

—
 225,893
 165,473

—
Client foreign exchange forwards 6,937,993

179,166

—
 4,661,517
 114,546

—
Client foreign exchange forwards 6,339,390

—

139,140
 4,326,059
 —

94,745
Client foreign currency options 155,412

2,927

—
 154,985
 1,308

—
Client foreign currency options 155,412

—

2,927
 154,985
 —

1,308
Client interest rate derivatives 870,885

87,255

—
 1,275,190
 28,811

—
Client interest rate derivatives (2) 977,084

—

28,676
 1,372,914
 —

14,154
Total derivatives not designated as hedging instruments   440,430

181,214
   310,138

112,361
Total derivatives   $440,430
 $181,214
   $332,814
 $137,984
(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 $59.2 million and $17.4 million of derivative liabilities at September 30, 2020 and December 31, 2019, respectively, reflecting variation margin treated as settlement of the related derivative fair values for legal and accounting purposes as required by central clearing houses.
(1)
Derivative assets and liabilities are included in "accrued interest receivable and other assets" and "other liabilities", respectively, on our consolidated balance sheets.
49
(2)
The amount reported reflects reductions of approximately $65.1 million and $17.4 million of derivative liabilities at June 30, 2020 and December 31, 2019, respectively, reflecting variation margin treated as settlement of the related derivative fair values for legal and accounting purposes as required by central clearing houses.

A summary of our derivative activity and the related impact on our consolidated statements of income for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
  Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)Statement of income location   2020201920202019
Derivatives designated as hedging instruments:
 Interest rate risks:
Amounts reclassified from accumulated other comprehensive income into incomeInterest income - loans$16,004 $(2,713)$33,924 $(3,224)
Derivatives not designated as hedging instruments:
 Currency exchange risks:
Gains (losses) on revaluations of internal foreign currency instruments, netOther noninterest income$17,085 $(8,724)$20,138 $(5,183)
(Losses) gains on internal foreign exchange forward contracts, netOther noninterest income(19,344)8,660 (20,010)4,917 
Net (losses) gains associated with internal currency risk$(2,259)$(64)$128 $(266)
 Other derivative instruments:
Gains (losses) on revaluations of client foreign currency instruments, netOther noninterest income$71 $(2,181)$(3,302)$(14,793)
Gains on client foreign exchange forward contracts, netOther noninterest income1,641 2,167 2,582 15,232 
Net gains (losses) associated with client currency risk$1,712 $(14)$(720)$439 
Net gains on equity warrant assetsGains on equity warrant assets, net$53,766 $37,561 $93,667 $107,213 
Net gains (losses) on other derivativesOther noninterest income$31,151 $(1,123)$26,533 $(2,619)
    Three months ended June 30, Six months ended June 30,
(Dollars in thousands) Statement of income location    2020 2019 2020 2019
Derivatives designated as hedging instruments:          
 Interest rate risks:
          
Amounts reclassified from accumulated other comprehensive income into income Interest income - loans $15,831
 $(508) $17,920
 $(511)
Derivatives not designated as hedging instruments:          
 Currency exchange risks:
          
Gains on revaluations of internal foreign currency instruments, net Other noninterest income $11,428
 $2,491
 $3,053
 $3,541
Losses on internal foreign exchange forward contracts, net Other noninterest income (9,334) (3,274) (666) (3,743)
Net gains (losses) associated with internal currency risk   $2,094
 $(783) $2,387
 $(202)
 Other derivative instruments:
          
Gains (losses) on revaluations of client foreign currency instruments, net Other noninterest income $4,911
 $959
 $(3,373) $(12,612)
(Losses) gains on client foreign exchange forward contracts, net Other noninterest income (6,806) 411
 941
 13,065
Net (losses) gains associated with client currency risk   $(1,895) $1,370
 $(2,432) $453
Net gains on equity warrant assets Gains on equity warrant assets, net $26,506
 $48,347
 $39,901
 $69,652
Net losses on other derivatives Other noninterest income $(273) $(1,131) $(4,618) $(1,496)
50

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 JuneSeptember 30, 2020 and December 31, 2019:2019:
 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 AmountGross 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 thousands) Financial Instruments Cash Collateral Received (1) (Dollars in thousands)Financial InstrumentsCash Collateral Received (1)
June 30, 2020            
September 30, 2020September 30, 2020
Derivative assets:            Derivative assets:
Interest rate swaps $—
 $—
 $—
 $—
 $—
 $—
Interest rate swaps$0 $0 $0 $0 $0 $0 
Foreign exchange forwards 179,166
 —
 179,166
 (76,065) (49,755) 53,346
Foreign exchange forwards142,605 0 142,605 (56,584)(19,049)66,972 
Foreign currency options 2,927
 —
 2,927
 (1,055) (1,169) 703
 Foreign currency options2,986 0 2,986 (2,323)(19)644 
Client interest rate derivatives 87,255
 —
 87,255
 (87,255) —
 —
 Client interest rate derivatives79,270 0 79,270 (79,270)0 0 
Total derivative assets 269,348
 —
 269,348
 (164,375) (50,924) 54,049
Total derivative assets224,861 0 224,861 (138,177)(19,068)67,616 
Reverse repurchase, securities borrowing, and similar arrangements 317,048
 —
 317,048
 (317,048) —
 —
Reverse repurchase, securities borrowing, and similar arrangements450,164 0 450,164 (450,164)0 0 
Total $586,396
 $—
 $586,396
 $(481,423) $(50,924) $54,049
Total$675,025 $0 $675,025 $(588,341)$(19,068)$67,616 
December 31, 2019            December 31, 2019
Derivative assets:            Derivative assets:
Interest rate swaps $22,676
 $—
 $22,676
 $(22,598) $—
 $78
 Interest rate swaps$22,676 $0 $22,676 $(22,598)$0 $78 
Foreign exchange forwards 114,546
 —
 114,546
 (36,855) (17,095) 60,596
Foreign exchange forwards114,546 0 114,546 (36,855)(17,095)60,596 
Foreign currency options 1,308
 —
 1,308
 (848) (335) 125
 Foreign currency options1,308 0 1,308 (848)(335)125 
Client interest rate derivatives 28,811
 —
 28,811
 (28,811) —
 —
 Client interest rate derivatives28,811 0 28,811 (28,811)0 0 
Total derivative assets 167,341
 —
 167,341
 (89,112) (17,430) 60,799
Total derivative assets167,341 0 167,341 (89,112)(17,430)60,799 
Reverse repurchase, securities borrowing, and similar arrangements 289,340
 —
 289,340
 (289,340) —
 —
Reverse repurchase, securities borrowing, and similar arrangements289,340 0 289,340 (289,340)0 0 
Total $456,681
 $—
 $456,681
 $(378,452) $(17,430) $60,799
Total$456,681 $0 $456,681 $(378,452)$(17,430)$60,799 

(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.

(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.
51
The following table summarizes our liabilities subject to enforceable master netting arrangements as of JuneSeptember 30, 2020 and December 31, 2019:2019:
 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 AmountGross 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 thousands) Financial Instruments Cash Collateral Pledged (1) (Dollars in thousands)Financial InstrumentsCash Collateral Pledged (1)
June 30, 2020            
September 30, 2020September 30, 2020
Derivative liabilities:            Derivative liabilities:
Interest rate swaps $—
 $—
 $—
 $—
 $—
 $—
Interest rate swaps$0 $0 $0 $0 $0 $0 
Foreign exchange forwards 149,611
 —
 149,611
 (54,867) (14,031) 80,713
 Foreign exchange forwards109,237 0 109,237 (49,862)(12,918)46,457 
Foreign currency options 2,927
 —
 2,927
 (987) —
 1,940
 Foreign currency options2,986 0 2,986 (644)0 2,342 
Client interest rate derivatives 28,676
 —
 28,676
 (6,566) (21,376) 734
 Client interest rate derivatives25,558 0 25,558 0 (24,898)660 
Total derivative liabilities 181,214
 —
 181,214
 (62,420) (35,407) 83,387
Total derivative liabilities137,781 0 137,781 (50,506)(37,816)49,459 
Repurchase, securities lending, and similar arrangements —
 —
 —
 —
 —
 —
Repurchase, securities lending, and similar arrangements0 0 0 0 0 0 
Total $181,214
 $—
 $181,214
 $(62,420) $(35,407) $83,387
Total$137,781 $0 $137,781 $(50,506)$(37,816)$49,459 
December 31, 2019            December 31, 2019
Derivative liabilities:            Derivative liabilities:
Interest rate swaps 25,623
 —
 25,623
 (22,676) (2,947) —
 Interest rate swaps$25,623 $0 $25,623 $(22,676)$(2,947)$0 
Foreign exchange forwards 96,899
 —
 96,899
 (33,314) (22,030) 41,555
 Foreign exchange forwards96,899 0 96,899 (33,314)(22,030)41,555 
Foreign currency options 1,308
 —
 1,308
 (531) —
 777
 Foreign currency options1,308 0 1,308 (531)0 777 
Client interest rate derivatives 14,154
 —
 14,154
 —
 (13,936) 218
 Client interest rate derivatives14,154 0 14,154 0 (13,936)218 
Total derivative liabilities 137,984
 —
 137,984
 (56,521) (38,913) 42,550
Total derivative liabilities137,984 0 137,984 (56,521)(38,913)42,550 
Repurchase, securities lending, and similar arrangements —
 —
 —
 —
 —
 —
Repurchase, securities lending, and similar arrangements0 0 0 0 0 0 
Total $137,984
 $—
 $137,984
 $(56,521) $(38,913) $42,550
Total$137,984 $0 $137,984 $(56,521)$(38,913)$42,550 

(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.
(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.
12.    Noninterest Income
12.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 sixnine months ended JuneSeptember 30, 2020 and 2019:
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Noninterest income:
Gains on investment securities, net$189,837 $29,849 $270,760 $106,575 
Gains on equity warrant assets, net53,766 37,561 93,667 107,213 
Client investment fees31,914 46,679 107,192 136,905 
Foreign exchange fees43,881 40,309 127,642 116,863 
Credit card fees22,756 30,158 72,348 86,431 
Deposit service charges22,015 22,482 67,115 65,496 
Lending related fees13,562 11,707 37,851 36,857 
Letters of credit and standby letters of credit fees12,192 10,842 35,155 31,205 
Investment banking revenue92,181 38,516 280,551 137,005 
Commissions16,257 12,275 49,197 40,812 
Other49,222 13,631 76,887 42,773 
Total noninterest income$547,583 $294,009 $1,218,365 $908,135 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Noninterest income:        
Gains on investment securities, net $34,868
 $47,698
 $80,923
 $76,726
Gains on equity warrant assets, net 26,506
 48,347
 39,901
 69,652
Client investment fees 31,885
 45,744
 75,278
 90,226
Foreign exchange fees 36,256
 38,506
 83,761
 76,554
Credit card fees 21,288
 28,790
 49,592
 56,273
Deposit service charges 20,511
 22,075
 45,100
 43,014
Lending related fees 11,164
 11,213
 24,289
 25,150
Letters of credit and standby letters of credit fees 11,421
 11,009
 22,963
 20,363
Investment banking revenue 141,503
 48,694
 188,370
 98,489
Commissions 16,918
 14,429
 32,940
 28,537
Other 16,528
 17,245
 27,665
 29,142
Total noninterest income $368,848
 $333,750
 $670,782
 $614,126
52

Gains on investment securities, net
Net gains on investment securities include both gains and losses from our non-marketable and other equity securities, which include public equity securities held as a result of exercised equity warrant assets, gains and losses from sales of our AFS debt securities portfolio, when applicable, and carried interest.
Our non-marketable and other equity securities portfolio primarily represents investments in venture capital and private equity funds, our China Joint Venture, debt funds, private and public portfolio companies, which include public equity securities held as a result of exercised equity warrant assets and qualified affordable housing projects. We experience variability in the performance of our non-marketable and other equity securities from period to period, which results in net gains or losses on investment securities (both realized and unrealized). This variability is due to a number of factors, including unrealized changes in the values of our investments, changes in the amount of realized gains from distributions, changes in liquidity events and general economic and market conditions. Unrealized gains from non-marketable and other equity securities for any single period are typically driven by valuation changes.
The extent to which any unrealized gains or losses will become realized is subject to a variety of factors, including, among other things, the expiration of certain sales restrictions to which these equity securities may be subject to (i.e.(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 available-for-sale securities portfolio is a fixed income investment portfolio that is managed with the objective of earning an appropriate portfolio yield over the long-term while maintaining sufficient liquidity and credit diversification as well as addressing our asset/liability management objectives. Though infrequent, sales of debt securities in our AFS securities portfolio may result in net gains or losses and are conducted pursuant to the guidelines of our investment policy related to the management of our liquidity position and interest rate risk.
Gains on investment securities are recognized outside of the scope of ASC 606 as it explicitly excludes noninterest income earned from our investment-related activities. A summary of gains and losses on investment securities for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
  Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Gains on non-marketable and other equity securities, net$189,837 $29,849 $209,595 $110,480 
Gains (losses) on sales of available-for-sale securities, net— 0 61,165 (3,905)
Total gains on investment securities, net$189,837 $29,849 $270,760 $106,575 
   Three months ended June 30,
Six months ended June 30,
(Dollars in thousands) 2020
2019
2020
2019
Gains on non-marketable and other equity securities, net $34,868
 $47,973
 $19,758
 $80,631
(Losses) gains on sales of available-for-sale securities, net —
 (275) 61,165
 (3,905)
Total gains on investment securities, net $34,868
 $47,698
 $80,923
 $76,726
53

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 sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
   Three months ended June 30,
Six months ended June 30,
(Dollars in thousands) 2020
2019
2020
2019
Equity warrant assets:        
Gains on exercises, net $9,435
 $40,226
 $32,730
 $49,180
Terminations (439) (1,045) (872) (1,884)
Changes in fair value, net 17,510
 9,166
 8,043
 22,356
Total net gains on equity warrant assets $26,506
 $48,347
 $39,901
 $69,652

  Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Equity warrant assets:
Gains on exercises, net$23,940 $30,047 $59,370 $90,357 
Terminations(361)(481)(1,332)(2,931)
Changes in fair value, net30,187 7,995 35,629 19,787 
Total net gains on equity warrant assets$53,766 $37,561 $93,667 $107,213 
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 sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Client investment fees by type:
Sweep money market fees$18,155 $26,202 $60,617 $79,698 
Asset management fees (1)12,172 7,256 32,905 20,883 
Repurchase agreement fees1,587 13,221 13,670 36,324 
Total client investment fees (2)$31,914 $46,679 $107,192 $136,905 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Client investment fees by type:        
Sweep money market fees $19,413
 $26,952
 $42,462
 $53,496
Asset management fees (1) 11,596
 6,956
 20,733
 13,628
Repurchase agreement fees 876
 11,836
 12,083
 23,102
Total client investment fees (2) $31,885
 $45,744
 $75,278
 $90,226
(1)Represents fees earned from investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(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.
(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.

54
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 sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
  Three months ended June 30,
Six months ended June 30,
(Dollars in thousands) 2020
2019
2020
2019
Foreign exchange fees by instrument type:        
Spot contract commissions $33,093
 $34,696
 $74,027
 $69,725
Forward contract commissions 3,052
 3,778
 9,391
 6,773
Option premium fees 111
 32
 343
 56
Total foreign exchange fees $36,256
 $38,506
 $83,761
 $76,554

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Foreign exchange fees by instrument type:
Spot contract commissions$38,794 $36,836 $112,821 $106,561 
Forward contract commissions4,613 3,371 14,004 10,144 
Option premium fees474 102 817 158 
Total foreign exchange fees$43,881 $40,309 $127,642 $116,863 
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 sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
  Three months ended June 30,
Six months ended June 30,
(Dollars in thousands) 2020
2019
2020
2019
Credit card fees by instrument type:        
Card interchange fees, net $15,314
 $22,855
 $37,089
 $44,248
Merchant service fees 5,030
 4,286
 10,057
 8,821
Card service fees 944
 1,649
 2,446
 3,204
Total credit card fees $21,288
 $28,790
 $49,592
 $56,273

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Credit card fees by instrument type:
Card interchange fees, net$18,168 $24,560 $55,257 $68,808 
Merchant service fees3,670 3,943 13,727 12,763 
Card service fees918 1,655 3,364 4,860 
Total credit card fees$22,756 $30,158 $72,348 $86,431 
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.

55
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 sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
  Three months ended June 30,
Six months ended June 30,
(Dollars in thousands) 2020
2019
2020
2019
Lending related fees by instrument type:        
Unused commitment fees $8,324
 $7,051
 $16,730
 $16,721
Other 2,840
 4,162
 7,559
 8,429
Total lending related fees $11,164
 $11,213
 $24,289
 $25,150

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Lending related fees by instrument type:
Unused commitment fees$9,872 $8,339 $26,602 $25,060 
Other3,690 3,368 11,249 11,797 
Total lending related fees$13,562 $11,707 $37,851 $36,857 
Letters of credit and standby letters of credit fees
Commercial and standby letters of credit represent conditional commitments issued by us on behalf of a client to guarantee the performance of the client to a third party when certain specified future events have occurred. Fees generated from letters of credit and standby letters of credit are deferred as a component of other liabilities and recognized in noninterest income over the commitment period using the straight-line method, based on the likelihood that the commitment being drawn down will be remote. Letters of credit and standby letters of credit fees are recognized outside of the scope of ASC 606 as it explicitly excludes noninterest income earned from our lending related activities.
Investment banking revenue
The Company earns investment banking revenue from clients for providing services related to securities underwriting, private placements and advisory services on strategic matters such as mergers and acquisitions. Underwriting fees are attributable to public and private offerings of equity and debt securities and are recognized at the point in time when the offering has been deemed to be completed by the lead manager of the underwriting group. Once the offering is completed, the performance obligation has been satisfied and the Company recognizes the applicable management fee as well the underwriting fee, net of consideration payable to customers. The Company recognizes private placement fees at the point in time when the private placement is completed, which is generally when the client accepts capital from the fund raise. Advisory fees from mergers and acquisitions engagements are generally recognized at the point in time when the related transaction is completed. Expenses are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other deal-related expenses are expensed as incurred. The Company has determined that it acts as principal in the majority of these transactions and therefore presents expenses gross within other operating expenses.
A summary of investment banking revenue by instrument type for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
   Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Investment banking revenue:        
Underwriting fees $131,085
 $42,584
 $162,375
 $78,356
Advisory fees 8,922
 5,315
 24,409
 17,588
Private placements and other 1,496
 795
 1,586
 2,545
Total investment banking revenue $141,503
 $48,694
 $188,370
 $98,489

  Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Investment banking revenue:
Underwriting fees$85,009 $31,016 $247,384 $109,371 
Advisory fees1,761 5,200 26,170 22,789 
Private placements and other5,411 2,300 6,997 4,845 
Total investment banking revenue$92,181 $38,516 $280,551 $137,005 
Commissions
Commissions include commissions received from customers for the execution of agency-based brokerage transactions in listed and over-the-counter equities. The execution of each trade order represents a distinct performance obligation and the transaction price is fixed at the point in time or trade order execution. Trade execution is satisfied at the point in time that the customer has control of the asset and as such, fees are recorded on a trade date basis. Commissions are presented in the "Disaggregation of revenue from contracts with customers" table below.

56
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 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 sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Other noninterest income by instrument type:        
Fund management fees $8,845
 $7,758
 $16,753
 $15,799
Net gains (losses) on revaluation of foreign currency instruments, net of foreign exchange forward contracts (1) 199
 587
 (45) 251
Other service revenue 7,484
 8,900
 10,957
 13,092
Total other noninterest income $16,528
 $17,245
 $27,665
 $29,142
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Other noninterest income by instrument type:
Fund management fees$9,669 $8,493 $26,422 $24,292 
Net (losses) gains on revaluation of foreign currency instruments, net of foreign exchange forward contracts (1)(547)(78)(592)173 
Gains from conversion of convertible debt options30,018 0 30,018 0 
Other service revenue10,082 5,216 21,039 18,308 
Total other noninterest income$49,222 $13,631 $76,887 $42,773 
(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.
(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.
57
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 sixnine months ended JuneSeptember 30, 2020 and 2019:
Three months ended June 30, 2020
(Dollars in thousands)
 Global
Commercial
Bank (2)		 SVB Private  
Bank		 SVB Capital (2)   SVB
Leerink (2)		 Other Items Total      
Revenue from contracts with customers:            
Client investment fees $31,308
 $577
 $—
 $—
 $—
 $31,885
Spot contract commissions 32,865
 98
 —
 —
 130
 33,093
Card interchange fees, gross 25,930
 5
 —
 —
 291
 26,226
Merchant service fees 5,030
 —
 —
 —
 —
 5,030
Deposit service charges 20,460
 13
 —
 —
 38
 20,511
Investment banking revenue —
 —
 —
 141,503
 —
 141,503
Commissions —
 —
 —
 16,918
 —
 16,918
Fund management fees —
 —
 7,415
 1,430
 —
 8,845
Correspondent bank rebates 1,371
 —
 —
 —
 —
 1,371
Total revenue from contracts with customers $116,964
 $693
 $7,415
 $159,851
 $459
 $285,382
Revenues outside the scope of ASC 606 (1) 16,510
 (23) 14,035
 3,966
 48,978
 83,466
Total noninterest income $133,474
 $670
 $21,450
 $163,817
 $49,437
 $368,848
Three months ended September 30, 2020
(Dollars in thousands)		Global
Commercial
Bank (2)		SVB Private  
Bank		SVB Capital (2)  SVB
Leerink (2)		Other ItemsTotal      
Revenue from contracts with customers:
Client investment fees$31,132 $782 $0 $0 $0 $31,914 
Spot contract commissions38,546 108 0 0 140 38,794 
Card interchange fees, gross29,255 5 0 0 287 29,547 
Merchant service fees3,670 0 0 0 0 3,670 
Deposit service charges21,914 20 0 0 81 22,015 
Investment banking revenue0 0 0 92,181 0 92,181 
Commissions0 0 0 16,257 0 16,257 
Fund management fees0 0 8,239 1,430 0 9,669 
Performance fees0 0 1,613 0 0 1,613 
Correspondent bank rebates1,377 0 0 0 0 1,377 
Total revenue from contracts with customers$125,894 $915 $9,852 $109,868 $508 $247,037 
Revenues outside the scope of ASC 606 (1)21,700 1 50,528 3,783 224,534 300,546 
Total noninterest income$147,594 $916 $60,380 $113,651 $225,042 $547,583 
(1)Amounts are accounted for under separate guidance than ASC 606.
(2)Global Commercial Bank’s, SVB Capital’s and SVB Leerink's components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."
Three months ended September 30, 2019
(Dollars in thousands)		Global
Commercial
Bank (2)		SVB Private  
Bank		SVB Capital (2)  SVB
Leerink (2)		Other ItemsTotal      
Revenue from contracts with customers:
Client investment fees$46,171 $508 $0 $0 $0 $46,679 
Spot contract commissions36,644 89 0 0 103 36,836 
Card interchange fees, gross34,867 0 0 0 181 35,048 
Merchant service fees3,943 0 0 0 0 3,943 
Deposit service charges22,263 36 0 0 183 22,482 
Investment banking revenue0 0 0 38,516 0 38,516 
Commissions0 0 0 12,275 0 12,275 
Fund management fees0 0 7,063 1,430 0 8,493 
Correspondent bank rebates1,633 0 0 0 0 1,633 
Total revenue from contracts with customers$145,521 $633 $7,063 $52,221 $467 $205,905 
Revenues outside the scope of ASC 606 (1)15,508 1 27,892 726 43,977 88,104 
Total noninterest income$161,029 $634 $34,955 $52,947 $44,444 $294,009 
(1)Amounts are accounted for under separate guidance than ASC 606.

(1)Amounts are accounted for under separate guidance than ASC 606.
(2)Global Commercial Bank’s and SVB Capital’s components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."
58
Nine months ended September 30, 2020
(Dollars in thousands)		Global
Commercial
Bank (2)		SVB Private  
Bank		SVB Capital (2)  SVB
Leerink (2)		Other ItemsTotal      
Revenue from contracts with customers:
Client investment fees$105,176 $2,016 $0 $0 $0 $107,192 
Spot contract commissions112,086 367 0 0 368 112,821 
Card interchange fees, gross90,909 17 0 0 1,144 92,070 
Merchant service fees13,727 0 0 0 0 13,727 
Deposit service charges66,612 60 0 0 443 67,115 
Investment banking revenue0 0 0 280,551 0 280,551 
Commissions0 0 0 49,197 0 49,197 
Fund management fees0 0 22,132 4,290 0 26,422 
Performance fees0 0 3,601 0 0 3,601 
Correspondent bank rebates4,151 0 0 0 0 4,151 
Total revenue from contracts with customers$392,661 $2,460 $25,733 $334,038 $1,955 $756,847 
Revenues outside the scope of ASC 606 (1)55,241 26 61,015 6,107 339,129 461,518 
Total noninterest income$447,902 $2,486 $86,748 $340,145 $341,084 $1,218,365 
(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, 2019
(Dollars in thousands)
 Global
Commercial
Bank (2)		 SVB Private  
Bank		 SVB Capital (2)   SVB
Leerink (2)		 Other Items Total      
Revenue from contracts with customers:            
Client investment fees (3) $45,278
 $466
 $—
 $—
 $—
 $45,744
Spot contract commissions 34,428
 165
 —
 —
 103
 34,696
Card interchange fees, gross 41,887
 —
 —
 —
 190
 42,077
Merchant service fees 4,286
 —
 —
 —
 —
 4,286
Deposit service charges 21,750
 33
 —
 —
 292
 22,075
Investment banking revenue —
 —
 —
 48,694
 —
 48,694
Commissions —
 —
 —
 14,429
 —
 14,429
Fund management fees —
 —
 6,328
 1,430
 —
 7,758
Correspondent bank rebates 1,612
 —
 —
 —
 —
 1,612
Total revenue from contracts with customers $149,241
 $664
 $6,328
 $64,553
 $585
 $221,371
Revenues outside the scope of ASC 606 (1) 8,364
 22
 33,731
 2,447
 67,815
 112,379
Total noninterest income $157,605
 $686
 $40,059
 $67,000
 $68,400
 $333,750
(1)Amounts are accounted for under separate guidance than ASC 606.
(2)Global Commercial Bank’s, SVB Capital’s and SVB Leerink's components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."
Nine months ended September 30, 2019
(Dollars in thousands)		Global
Commercial
Bank (2)		SVB Private  
Bank		SVB Capital (2)  SVB
Leerink (2)		Other ItemsTotal      
Revenue from contracts with customers:
Client investment fees$135,551 $1,354 $0 $0 $0 $136,905 
Spot contract commissions105,877 376 0 0 308 106,561 
Card interchange fees, gross115,468 0 0 0 518 115,986 
Merchant service fees12,764 0 0 0 0 12,764 
Deposit service charges64,806 104 0 0 586 65,496 
Investment banking revenue0 0 0 137,005 0 137,005 
Commissions0 0 0 40,812 0 40,812 
Fund management fees0 0 20,050 4,242 0 24,292 
Correspondent bank rebates4,712 0 0 0 0 4,712 
Total revenue from contracts with customers$439,178 $1,834 $20,050 $182,059 $1,412 $644,533 
Revenues outside the scope of ASC 606 (1)32,314 (5)79,810 6,005 145,478 263,602 
Total noninterest income$471,492 $1,829 $99,860 $188,064 $146,890 $908,135 
(1)Amounts are accounted for under separate guidance than ASC 606.
(2)Global Commercial Bank’s and SVB Capital’s components of noninterest income are shown net of noncontrolling interests. Noncontrolling interest is included within “Other Items."
(3)For the three months ended June 30, 2019, the amount of client investment fees previously reported as "Other Items" has been correctly allocated to the reportable segment "Global Commercial Bank" to properly reflect the source of such revenue. The correction of this immaterial error had no impact on the "Total" amount of client investment fees.
(1)Amounts are accounted for under separate guidance than ASC 606.
Six months ended June 30, 2020
(Dollars in thousands)
 Global
Commercial
Bank (2)		 SVB Private  
Bank		 SVB Capital (2)   SVB
Leerink (2)		 Other Items Total      
Revenue from contracts with customers:            
Client investment fees $74,044
 $1,234
 $—
 $—
 $—
 $75,278
Spot contract commissions 73,540
 259
 —
 —
 228
 74,027
Card interchange fees, gross 61,654
 12
 —
 —
 857
 62,523
Merchant service fees 10,057
 —
 —
 —
 —
 10,057
Deposit service charges 44,698
 40
 —
 —
 362
 45,100
Investment banking revenue —
 —
 —
 188,370
 —
 188,370
Commissions —
 —
 —
 32,940
 —
 32,940
Fund management fees —
 —
 13,893
 2,860
 —
 16,753
Correspondent bank rebates 2,774
 —
 —
 —
 —
 2,774
Total revenue from contracts with customers $266,767
 $1,545
 $13,893
 $224,170
 $1,447
 $507,822
Revenues outside the scope of ASC 606 (1) 33,541
 25
 12,475
 2,324
 114,595
 162,960
Total noninterest income $300,308
 $1,570
 $26,368
 $226,494
 $116,042
 $670,782
(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, 2019
(Dollars in thousands)
 Global
Commercial
Bank (2)		 SVB Private  
Bank		 SVB Capital (2)   SVB
Leerink (2)		 Other Items Total      
Revenue from contracts with customers:            
Client investment fees (3) $89,380
 $846
 $—
 $—
 $—
 $90,226
Spot contract commissions 69,233
 288
 —
 —
 204
 69,725
Card interchange fees, gross 80,601
 —
 —
 —
 337
 80,938
Merchant service fees 8,821
 —
 —
 —
 —
 8,821
Deposit service charges 42,543
 68
 —
 —
 403
 43,014
Investment banking revenue —
 —
 —
 98,489
 —
 98,489
Commissions —
 —
 —
 28,537
 —
 28,537
Fund management fees —
 —
 12,987
 2,812
 —
 15,799
Correspondent bank rebates 3,079
 —
 —
 —
 —
 3,079
Total revenue from contracts with customers $293,657
 $1,202
 $12,987
 $129,838
 $944
 $438,628
Revenues outside the scope of ASC 606 (1) 16,808
 (6) 51,917
 5,279
 101,500
 175,498
Total noninterest income $310,465
 $1,196
 $64,904
 $135,117
 $102,444
 $614,126
(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."
(3)For the six months ended June 30, 2019, the amount of client investment fees previously reported as "Other Items" has been correctly allocated to the reportable segment "Global Commercial Bank" to properly reflect the source of such revenue. The correction of this immaterial error had no impact on the "Total" amount of client investment fees.

(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 sixnine months ended JuneSeptember 30, 2020 and 2019, changes in our contract assets, contract liabilities and receivables were not material. Additionally, revenues recognized during the three and sixnine months ended JuneSeptember 30, 2020 and 2019 that were included in the corresponding contract liability balance at the beginning of the periods were not material.
59
13.Other Noninterest Expense
13.    Other Noninterest Expense
A summary of other noninterest expense for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Lending and other client related processing costs $6,803
 $8,763
 $15,961
 $13,940
Correspondent bank fees 3,833
 3,569
 7,819
 7,313
Investment banking activities 7,768
 3,869
 10,798
 8,054
Trade order execution costs 2,614
 2,828
 5,359
 5,344
Data processing services 3,507
 2,659
 6,961
 5,558
Telephone 1,889
 2,422
 4,116
 5,163
Dues and publications 910
 860
 2,040
 2,384
Postage and supplies 723
 678
 1,579
 1,448
Other 11,600
 11,769
 25,717
 21,749
Total other noninterest expense $39,647
 $37,417
 $80,350
 $70,953

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Lending and other client related processing costs$7,194 $7,502 $23,155 $21,442 
Correspondent bank fees3,581 3,657 11,400 10,970 
Investment banking activities2,835 1,864 13,633 9,918 
Trade order execution costs2,806 2,615 8,165 7,959 
Data processing services3,984 3,066 10,945 8,624 
Telephone2,342 2,466 6,458 7,629 
Dues and publications1,159 1,055 3,199 3,439 
Postage and supplies538 720 2,117 2,168 
Other13,114 11,161 38,831 32,910 
Total other noninterest expense$37,553 $34,106 $117,903 $105,059 
14.Segment Reporting
14.    Segment Reporting
We have 4 reportable segments for management reporting purposes: Global Commercial Bank, SVB Private Bank, SVB Capital and SVB Leerink. The results of our 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”), 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 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 tax expense or the provision for unfunded credit commitments (included in provision for credit losses) to our segments. Additionally, our management reporting model is predicated on average asset balances; therefore, period-end asset balances are not presented for segment reporting purposes. Changes in an individual client’s primary relationship designation have resulted, and in the future may result, in the inclusion of certain clients in different segments in different periods.
Unlike financial reporting, which benefits from the comprehensive structure provided by GAAP, our internal management reporting process is highly subjective, as there is no comprehensive, authoritative guidance for management reporting. Our management reporting process measures the performance of our operating segments based on our internal operating structure, which is subject to change from time to time, and is not necessarily comparable with similar information for other financial services companies.
For reporting purposes, SVB Financial Group has 4 operating segments for which we report our financial information:
•
•Global Commercial Bank is comprised of results from the following:
◦Our Commercial Bank products and services are provided by the Bank and its subsidiaries to commercial clients in 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 (formerly Private Equity) 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. 
◦Debt Fund Investments is comprised of our investments in certain debt funds in which we are a strategic investor.
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•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 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 Employee Home Ownership Program.
•SVB Capital is the funds management business of SVB Financial Group, which focuses primarily on venture capital investments. SVB Capital manages funds (primarily venture capital funds) on behalf of third-party limited partners and, on a more limited basis, SVB Financial Group. The SVB Capital family of funds is comprised of direct venture funds that invest in companies and funds of funds that invest in other venture capital funds. SVB Capital generates income for the Company primarily from investment returns (including carried interest allocations) and management fees.
•is comprised of results from the following:
◦
Our Commercial Bank products and services are provided by the Bank and its subsidiaries to commercial clients in the technology, life science/healthcare and private equity/venture capital industries. The Bank provides solutions to the financial needs of commercial clients through credit, treasury management, foreign exchange, trade finance, and other services. We broadly serve clients within the U.S., as well as non-U.S. clients in key international innovation markets. In addition, the Bank and its subsidiaries offer a variety of investment services and solutions to its clients that enable them to effectively manage their assets. 
◦
Our Global Funds Banking (formerly Private Equity) 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. 
◦
Debt Fund Investments is comprised of our investments in certain debt funds in which we are a strategic investor.
•
SVB Private Bank is the private banking division of the Bank, which provides a range of personal financial solutions for consumers. Our clients are primarily private equity/venture capital professionals and executive leaders of the innovation companies they support. We offer a customized suite of private banking services, including mortgages, home equity lines of credit, restricted stock purchase loans, capital call lines of credit and other secured and unsecured lending products, as well as cash and wealth management services.  In addition, we provide real estate secured loans to eligible employees through our Employee Home Ownership Program.
•
SVB Capital is the funds management business of SVB Financial Group, which focuses primarily on venture capital investments. SVB Capital manages funds (primarily venture capital funds) on behalf of third-party limited partners and, on a more limited basis, SVB Financial Group. The SVB Capital family of funds is comprised of direct venture funds that invest in companies and funds of funds that invest in other venture capital funds. SVB Capital generates income for the Company primarily from investment returns (including carried interest allocations) and management fees.
•
SVB Leerink is an investment bank specializing in the equity and convertible capital markets, mergers and acquisitions, equity research and sales and trading for growth and innovation-minded healthcare and life science companies and operates as a wholly-owned subsidiary of SVB Financial. SVB Leerink provides investment banking services across all subsectors of healthcare including: biotechnology, pharmaceuticals, medical devices, diagnostic and life science tools, healthcare services and digital health. SVB Leerink focuses on two primary lines of business: (i) investment banking focused on providing companies with capital-raising services, financial advice on mergers and acquisitions, sales and trading services and equity research, and (ii) sponsorship of private investment funds.
The summary financial results of our operating segments are presented along with a reconciliation to our consolidated interim results.

61
Our segment information for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
(Dollars in thousands)Global
Commercial
Bank (1)		SVB Private  
Bank		SVB Capital (1)  SVB
Leerink (1)		Other Items (2)      Total      
Three months ended September 30, 2020
Net interest income (loss)$512,963 $19,145 $2 $175 $(4,545)$527,740 
Reduction (provision for) credit losses37,847 14,881 — — (710)52,018 
Noninterest income147,594 916 60,380 113,651 225,042 547,583 
Noninterest expense (3)(258,035)(12,293)(11,198)(77,567)(131,928)(491,021)
Income before income tax expense (4)$440,369 $22,649 $49,184 $36,259 $87,859 $636,320 
Total average loans, amortized cost$30,763,715 $4,263,324 $0 $0 $2,291,561 $37,318,600 
Total average assets (5) (6)77,802,730 4,297,011 413,882 605,263 5,229,480 88,348,366 
Total average deposits74,825,725 2,163,903 0 0 690,388 77,680,016 
Three months ended September 30, 2019
Net interest income$455,161 $12,772 $9 $277 $52,425 $520,644 
Provision for credit losses(34,075)(1,910)0 0 (551)(36,536)
Noninterest income161,029 634 34,955 52,947 44,444 294,009 
Noninterest expense (3)(213,786)(11,638)(8,129)(55,200)(102,571)(391,324)
Income (loss) before income tax expense (4)$368,329 $(142)$26,835 $(1,976)$(6,253)$386,793 
Total average loans, amortized cost$25,839,647 $3,400,889 $0 $0 $581,890 $29,822,426 
Total average assets (5) (6) (8)58,384,473 3,431,313 396,031 428,848 2,687,083 65,327,748 
Total average deposits55,250,154 1,497,303 0 0 487,512 57,234,969 
Nine months ended September 30, 2020
Net interest income$1,461,768 $52,952 $28 $373 $49,683 $1,564,804 
Provision for credit losses(200,020)(44,194)0 0 (13,729)(257,943)
Noninterest income447,902 2,486 86,748 340,145 341,084 1,218,365 
Noninterest expense (3)(724,233)(32,547)(28,040)(248,254)(337,168)(1,370,242)
Income (loss) before income tax expense (4)$985,417 $(21,303)$58,736 $92,264 $39,870 $1,154,984 
Total average loans, net of unearned income$30,126,870 $4,053,018 $0 $0 $1,656,039 $35,835,927 
Total average assets (5) (6)69,212,733 4,087,786 430,391 514,836 5,514,904 79,760,650 
Total average deposits66,408,359 2,069,196 0 0 688,509 69,166,064 
Nine months ended September 30, 2019
Net interest income$1,360,997 $37,200 $20 $961 $163,755 $1,562,933 
Provision for credit losses(79,175)(1,779)0 0 (8,079)(89,033)
Noninterest income471,492 1,829 99,860 188,064 146,890 908,135 
Noninterest expense (3)(617,933)(30,015)(21,794)(177,675)(293,093)(1,140,510)
Income before income tax expense (4)$1,135,381 $7,235 $78,086 $11,350 $9,473 $1,241,525 
Total average loans, net of unearned income$25,457,997 $3,235,943 $0 $0 $517,020 $29,210,960 
Total average assets (5) (6)54,196,976 3,264,071 382,707 380,290 2,990,088 61,214,132 
Total average deposits51,352,644 1,461,170 0 0 517,530 53,331,344 
(Dollars in thousands) 
Global
Commercial
Bank (1)
 
SVB Private  
Bank
 SVB Capital (1)   
SVB
Leerink (1)
 Other Items (2)       Total      
Three months ended June 30, 2020            
Net interest income (loss) $484,969
 $18,644
 $5
 $(3) $9,312
 $512,927
Provision for credit losses (43,456) (4,585) —
 —
 (18,440) (66,481)
Noninterest income (7) 133,474
 670
 21,450
 163,817
 49,437
 368,848
Noninterest expense (3) (241,343) (10,164) (8,256) (108,650) (111,223) (479,636)
Income (loss) before income tax expense (4) $333,644
 $4,565
 $13,199
 $55,164
 $(70,914) $335,658
Total average loans, amortized cost $30,472,414
 $4,035,940
 $—
 $—
 $2,003,805
 $36,512,159
Total average assets (5) (6) (8) 67,936,486
 4,071,648
 430,272
 454,603
 5,538,993
 78,432,002
Total average deposits 65,090,982
 2,119,983
 —
 —
 705,416
 67,916,381
Three months ended June 30, 2019            
Net interest income $461,752
 $12,277
 $6
 $242
 $55,126
 $529,403
Provision for credit losses (18,295) (853) —
 —
 (4,798) (23,946)
Noninterest income (7) 157,605
 686
 40,059
 67,000
 68,400
 333,750
Noninterest expense (3) (206,902) (9,526) (7,883) (61,935) (97,276) (383,522)
Income before income tax expense (4) $394,160
 $2,584
 $32,182
 $5,307
 $21,452
 $455,685
Total average loans, amortized cost $25,724,704
 $3,217,597
 $—
 $—
 $464,319
 $29,406,620
Total average assets (5) (6) (8) 53,965,699
 3,247,557
 373,167
 410,279
 2,703,784
 60,700,486
Total average deposits 51,126,806
 1,394,905
 —
 —
 440,497
 52,962,208
Six months ended June 30, 2020            
Net interest income $948,805
 $33,808
 $26
 $198
 $54,227
 $1,037,064
Provision for credit losses (237,867) (59,075) —
 —
 (13,019) (309,961)
Noninterest income (7) 300,308
 1,570
 26,368
 226,494
 116,042
 670,782
Noninterest expense (3) (466,198) (20,254) (16,842) (170,687) (205,240) (879,221)
Income (loss) before income tax expense (4) $545,048
 $(43,951) $9,552
 $56,005
 $(47,990) $518,664
Total average loans, net of unearned income $29,804,949
 $3,946,709
 $—
 $—
 $1,334,786
 $35,086,444
Total average assets (5) (6) (8) 64,870,536
 3,982,024
 438,737
 469,126
 5,659,162
 75,419,585
Total average deposits 62,153,426
 2,021,323
 —
 —
 687,557
 64,862,306
Six months ended June 30, 2019            
Net interest income $907,628
 $24,258
 $12
 $684
 $109,707
 $1,042,289
(Provision for) reduction of credit losses (45,100) 131
 —
 —
 (7,528) (52,497)
Noninterest income (7) 310,465
 1,196
 64,904
 135,117
 102,444
 614,126
Noninterest expense (3) (404,147) (18,378) (13,665) (122,475) (190,521) (749,186)
Income before income tax expense (4) $768,846
 $7,207
 $51,251
 $13,326
 $14,102
 $854,732
Total average loans, net of unearned income $25,264,010
 $3,152,104
 $—
 $—
 $484,046
 $28,900,160
Total average assets (5) (6) (8) 52,068,609
 3,179,064
 375,934
 355,609
 3,144,018
 59,123,234
Total average deposits 49,371,589
 1,442,803
 —
 —
 532,788
 51,347,180
(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, 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."
(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 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.

(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 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.
(3)
The Global Commercial Bank segment includes direct depreciation and amortization of $5.8 million and $4.8 million for the three months ended June 30, 2020 and 2019, respectively, and $11.3 million and $9.6 million for the six months ended June 30, 2020 and 2019.
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(3)The Global Commercial Bank segment includes direct depreciation and amortization of $6.4 million and $5.1 million for the three months ended September 30, 2020 and 2019, respectively, and $17.7 million and $14.8 million for the nine months ended September 30, 2020 and 2019.
(4)The internal reporting model used by management to assess segment performance does not calculate income tax expense by segment. Our effective tax rate is a reasonable approximation of the segment rates.
(5)Total average assets equal the greater of total average assets or the sum of total average liabilities and total average stockholders' equity for each segment to reconcile the results to the consolidated financial statements prepared in conformity with GAAP.
(6)Included in the total average assets for SVB Leerink is goodwill of $137.8 million for the three and nine months ended September 30, 2020 and 2019.
15.    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.
(6)
Included in the total average assets for SVB Leerink is goodwill of $137.8 million for the three and six months ended June 30, 2020 and 2019.
(7)For the three and six months ended June 30, 2019, amounts of client investment fees included in the line item "Noninterest Income" previously reported as "Other Items" have been correctly allocated to our reportable segment "Global Commercial Bank" to properly reflect the source of such revenue. The correction of this immaterial error had no impact on the "Total" amount of noninterest income.
(8)For the three and six months ended June 30, 2019, amounts for average assets previously reported as "Other Items" have been correctly allocated to the reportable segments "Global Commercial Bank" and “Private Bank” to properly reflect the greater of total average assets or the sum of total average liabilities and total average stockholders’ equity for “Global Commercial Bank” and “Private Bank.” The correction of this immaterial error had no impact on the "Total" amount of average assets.
15.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 JuneSeptember 30, 2020 and December 31, 2019:2019:
(Dollars in thousands)September 30, 2020December 31, 2019
Loan commitments available for funding: (1)
Fixed interest rate commitments$2,474,804 $2,434,042 
Variable interest rate commitments24,796,923 19,309,317 
Total loan commitments available for funding27,271,727 21,743,359 
Commercial and standby letters of credit (2)3,058,069 2,778,561 
Total unfunded credit commitments$30,329,796 $24,521,920 
Commitments unavailable for funding (3)$2,519,517 $3,051,075 
Allowance for unfunded credit commitments (4)101,515 67,656 
(Dollars in thousands) June 30, 2020 December 31, 2019
Loan commitments available for funding: (1)    
Fixed interest rate commitments $2,298,264
 $2,434,042
Variable interest rate commitments 22,895,069
 19,309,317
Total loan commitments available for funding 25,193,333
 21,743,359
Commercial and standby letters of credit (2) 2,933,896
 2,778,561
Total unfunded credit commitments $28,127,229
 $24,521,920
Commitments unavailable for funding (3) $2,412,910
 $3,051,075
Allowance for unfunded credit commitments (4) 99,294
 67,656
(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 credit losses 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)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 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 JuneSeptember 30, 2020.2020. The maximum potential amount of future payments represents the amount that could be remitted under letters of credit if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or from the collateral held or pledged.

(Dollars in thousands)Expires in One
Year or Less		Expires After
One Year		Total Amount
Outstanding		Maximum Amount
of Future Payments
Financial standby letters of credit$2,838,280 $90,452 $2,928,732 $2,928,732 
Performance standby letters of credit109,224 18,057 127,281 127,281 
Commercial letters of credit2,056 0 2,056 2,056 
Total$2,949,560 $108,509 $3,058,069 $3,058,069 
(Dollars in thousands) 
Expires In One
Year or Less
 
Expires After
One Year
 
Total Amount
Outstanding
 
Maximum Amount
of Future Payments
Financial standby letters of credit $2,723,597
 $80,267
 $2,803,864
 $2,803,864
Performance standby letters of credit 109,279
 17,787
 127,066
 127,066
Commercial letters of credit 2,870
 96
 2,966
 2,966
Total $2,835,746
 $98,150
 $2,933,896
 $2,933,896
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Deferred fees related to financial and performance standby letters of credit were $16.1$16.5 million at JuneSeptember 30, 2020 and $17.2 million at December 31, 2019. At JuneSeptember 30, 2020, collateral in the form of cash of $1.6$1.7 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
We make commitments to invest in venture capital and private equity funds, which generally make 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 JuneSeptember 30, 2020:2020:
(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 
Capital Preferred Return Fund, LP12,688 0 20.0 
Growth Partners, LP24,670 1,340 33.0 
Strategic Investors Fund, LP15,300 688 12.6 
Strategic Investors Fund II, LP15,000 1,050 8.6 
Strategic Investors Fund III, LP15,000 1,275 5.9 
Strategic Investors Fund IV, LP12,239 2,325 5.0 
Strategic Investors Fund V funds515 131 Various
Other venture capital and private equity fund investments (equity method accounting)25,197 6,258 Various
Debt funds (equity method accounting)58,733 240 Various
Other fund investments (2)278,339 5,614 Various
Total$464,881 $19,353 
(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
Capital Preferred Return Fund, LP 12,688
 —
 20.0
Growth Partners, LP 24,670
 1,340
 33.0
Strategic Investors Fund, LP 15,300
 688
 12.6
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
 2,235
 5.0
Strategic Investors Fund V funds 515
 131
 Various
Other venture capital and private equity fund investments (equity method accounting) 21,789
 5,514
 Various
Debt funds (equity method accounting) 58,493
 —
 Various
Other fund investments (2) 281,508
 5,951
 Various
Total $464,402
 $18,616
  
(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 197 funds (primarily venture capital funds) where our ownership interest is generally less than 5 percent of the voting interests of each such fund.
(3)We are subject to the Volcker Rule, which restricts investments in “covered funds”. Under revised regulations that will become effective on October 1, 2020, venture capital and credit funds that meet certain criteria will no longer be considered covered funds. We believe that, as a result of these changes, we will not be required to sell or otherwise conform certain of our fund investments. See the “Volcker Rule” section under Part I, Item 2 of this report for additional details.


(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 185 funds (primarily venture capital funds) where our ownership interest is generally less than 5 percent of the voting interests of each such fund.
(3)We are subject to the Volcker Rule, which restricts investments in “covered funds”. Under revised regulations that became effective on October 1, 2020, venture capital and credit funds that meet certain criteria will no longer be considered covered funds. We believe that, as a result of these changes, we will not be required to sell or otherwise conform certain of our fund investments. See the “Volcker Rule” section under Part I, Item 2 of this report for additional details.

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 JuneSeptember 30, 2020:2020:
(Dollars in thousands) Unfunded Commitments    
Strategic Investors Fund, LP $376
Capital Preferred Return Fund, LP 1,517
Growth Partners, LP 2,504
Total $4,397

16.(Dollars in thousands)Income TaxesUnfunded Commitments    
Strategic Investors Fund, LP$376 
Capital Preferred Return Fund, LP1,517 
Growth Partners, LP2,513 
Total$4,406 
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16.    Income Taxes
We are subject to income tax and non-income based taxes by the U.S. federal tax authorities as well as various state and foreign tax authorities. We have identified the U.S. federal and California state jurisdictions as major tax filings. All U.S. federal and California state tax returns remain open to full examination for 2016 and subsequent tax years.
At JuneSeptember 30, 2020, our unrecognized tax benefit was $13.6$15.0 million, the recognition of which would reduce our income tax expense by $10.7$11.8 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 sixnine months ended JuneSeptember 30, 2020.
17.Fair Value of Financial Instruments
17.    Fair Value of Financial Instruments
Fair Value Measurements
Our available-for-sale securities, derivative instruments and certain non-marketable and other equity securities are financial instruments recorded at fair value on a recurring basis. We make estimates regarding valuation of assets and liabilities measured at fair value in preparing our interim consolidated financial statements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (the “exit price”) in an orderly transaction between market participants at the measurement date. There is a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable and on the significance of those inputs in the fair value measurement. Observable inputs reflect market-derived or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data and views of market participants. The three levels for measuring fair value are based on the reliability of inputs and are as follows:
Level 1
Fair value measurements based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment. Assets utilizing Level 1 inputs include U.S. Treasury securities, foreign government debt securities, exchange-traded equity securities and certain marketable securities accounted for under fair value accounting.
Level 2
Fair value measurements based on quoted prices in markets that are not active or for which all significant inputs are observable, directly or indirectly. Valuations for the available-for-sale securities are provided by independent pricing service providers who have experience in valuing these securities and by comparison to and/or average of quoted market prices obtained from independent brokers. We perform a monthly analysis on the values received from third parties to ensure that the prices represent a reasonable estimate of the fair value. The procedures include, but are not limited to, initial and ongoing review of third-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: Agency-issued mortgage-backed securities are pools of individual conventional mortgage loans underwritten to U.S. agency standards with similar coupon rates, tenor, and other attributes such as geographic location, loan size and origination vintage. Fair value measurements of these securities are based on observable price adjustments relative to benchmark market interest rates taking into consideration estimated loan prepayment speeds.
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Agency-issued collateralized mortgage obligations: Agency-issued collateralized mortgage obligations are structured into classes or tranches with defined cash flow characteristics and are collateralized by U.S. agency-issued mortgage pass-through securities. Fair value measurements of these securities incorporate similar characteristics of mortgage pass-through securities such as coupon rate, tenor, geographic location, loan size and origination vintage, in addition to incorporating the effect of estimated prepayment speeds on the cash flow structure of the class or tranche. These measurements incorporate observable market spreads over an estimated average life after considering the inputs listed above.
Agency-issued commercial mortgage-backed securities: Fair value measurements of these securities are based on spreads to benchmark market interest rates (usually U.S. Treasury rates or rates observable in the swaps market), prepayment speeds, loan default rate assumptions and loan loss severity assumptions on underlying loans.
Foreign exchange forward and option contract assets and liabilities: Fair value measurements of these assets and liabilities are priced based on spot and forward foreign currency rates and option volatility assumptions.
Interest rate derivative and interest rate swap assets and liabilities: Fair value measurements of interest rate derivatives and interest rate swaps are priced considering the coupon rate of the fixed leg of the contract and the 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.
Other equity securities: Fair value measurements of equity securities of public companies are priced based on quoted market prices less a discount if the securities are subject to certain sales restrictions. Certain sales restriction discounts generally range from 10 percent to 20 percent depending on the duration of the sale restrictions which typically range from three to six months.
Equity warrant assets (public portfolio): Fair value measurements of equity warrant assets of publicly-traded portfolio companies are valued based on the Black-Scholes option pricing model. The model uses the price of publicly-traded companies (underlying stock price), stated strike prices, warrant expiration dates, the risk-free interest rate and market-observable option volatility assumptions.
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:
Venture capital 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; 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.
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 certain sales restrictions or other features that indicate a discount to fair value is warranted. As sale restrictions are lifted, discounts are adjusted downward to zero 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
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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.

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 JuneSeptember 30, 2020:
(Dollars in thousands)Level 1Level 2Level 3Balance at September 30, 2020
Assets:
Available-for-sale securities:
U.S. Treasury securities$4,547,294 $0 $0 $4,547,294 
U.S. agency debentures0 152,526 0 152,526 
Foreign government debt securities23,449 0 0 23,449 
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities0 9,770,313 0 9,770,313 
Agency-issued collateralized mortgage obligations—fixed rate
0 7,315,973 0 7,315,973 
Agency-issued commercial mortgage-backed securities0 4,094,769 0 4,094,769 
Total available-for-sale securities4,570,743 21,333,581 0 25,904,324 
Non-marketable and other equity securities (fair value accounting):
Non-marketable securities:
Venture capital and private equity fund investments measured at net asset value— — — 226,526 
Venture capital and private equity fund investments not measured at net asset value (1)0 0 134 134 
Other equity securities in public companies26,205 203,092 0 229,297 
Total non-marketable and other equity securities (fair value accounting)26,205 203,092 134 455,957 
Other assets:
Foreign exchange forward and option contracts0 145,591 0 145,591 
Equity warrant assets0 9,501 192,683 202,184 
Client interest rate derivatives0 79,270 0 79,270 
Total assets$4,596,948 $21,771,035 $192,817 $26,787,326 
Liabilities:
Foreign exchange forward and option contracts$0 $112,223 $0 $112,223 
Client interest rate derivatives0 25,558 0 25,558 
Total liabilities$0 $137,781 $0 $137,781 
(Dollars in thousands) Level 1 Level 2 Level 3 Balance at June 30, 2020
Assets:        
Available-for-sale securities:        
U.S. Treasury securities $4,535,235
 $—
 $—
 $4,535,235
U.S. agency debentures —
 102,659
 —
 102,659
Foreign government debt securities 22,525
 —
 —
 22,525
Residential mortgage-backed securities:        
Agency-issued mortgage-backed securities —
 7,655,556
 —
 7,655,556
Agency-issued collateralized mortgage obligations—fixed rate
 —
 2,979,540
 —
 2,979,540
Agency-issued commercial mortgage-backed securities —
 3,156,398
 —
 3,156,398
Total available-for-sale securities 4,557,760
 13,894,153
 —
 18,451,913
Non-marketable and other equity securities (fair value accounting):        
Non-marketable securities:        
Venture capital and private equity fund investments measured at net asset value —
 —
 —
 213,201
Venture capital and private equity fund investments not measured at net asset value (1) —
 —
 134
 134
Other equity securities in public companies 25,233
 20,055
 —
 45,288
Total non-marketable and other equity securities (fair value accounting) 25,233
 20,055
 134
 258,623
Other assets:        
Foreign exchange forward and option contracts —
 182,093
 —
 182,093
Equity warrant assets —
 5,857
 165,225
 171,082
Client interest rate derivatives —
 87,255
 —
 87,255
Total assets $4,582,993
 $14,189,413
 $165,359
 $19,150,966
Liabilities:        
Foreign exchange forward and option contracts $—
 $152,538
 $—
 $152,538
Client interest rate derivatives —
 28,676
 —
 28,676
Total liabilities $—
 $181,214
 $—
 $181,214
(1)Included in Level 3 assets is $120 thousand attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.
(1)
Included in Level 3 assets is $120 thousand attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

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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, 2019:
(Dollars in thousands)Level 1Level 2Level 3Balance at December 31, 2019
Assets:
Available-for-sale securities:
U.S. Treasury securities$6,894,010 $0 $0 $6,894,010 
U.S. agency debentures0 99,547 0 99,547 
Foreign government debt securities9,038 0 0 9,038 
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities0 4,148,791 0 4,148,791 
Agency-issued collateralized mortgage obligations—fixed rate0 1,538,343 0 1,538,343 
Agency-issued commercial mortgage-backed securities0 1,325,190 0 1,325,190 
Total available-for-sale securities6,903,048 7,111,871 0 14,014,919 
Non-marketable and other equity securities (fair value accounting):
Non-marketable securities:
Venture capital and private equity fund investments measured at net asset value— — — 265,263 
Venture capital and private equity fund investments not measured at net asset value (1)0 0 134 134 
Other equity securities in public companies17,290 41,910 0 59,200 
Total non-marketable and other equity securities (fair value accounting)17,290 41,910 134 324,597 
Other assets:
Foreign exchange forward and option contracts0 115,854 0 115,854 
Equity warrant assets0 4,435 161,038 165,473 
Interest rate swaps0 22,676 0 22,676 
Client interest rate derivatives0 28,811 0 28,811 
Total assets$6,920,338 $7,325,557 $161,172 $14,672,330 
Liabilities:
Foreign exchange forward and option contracts$0 $98,207 $0 $98,207 
Interest rate swaps0 25,623 0 25,623 
Client interest rate derivatives0 14,154 0 14,154 
Total liabilities$0 $137,984 $0 $137,984 
(Dollars in thousands) Level 1 Level 2 Level 3 Balance at December 31, 2019
Assets:        
Available-for-sale securities:        
U.S. Treasury securities $6,894,010
 $—
 $—
 $6,894,010
U.S. agency debentures —
 99,547
 —
 99,547
Foreign government debt securities 9,038
 —
 —
 9,038
Residential mortgage-backed securities:        
Agency-issued mortgage-backed securities —
 4,148,791
 —
 4,148,791
Agency-issued collateralized mortgage obligations—fixed rate —
 1,538,343
 —
 1,538,343
Agency-issued commercial mortgage-backed securities —
 1,325,190
 —
 1,325,190
Total available-for-sale securities 6,903,048
 7,111,871
 —
 14,014,919
Non-marketable and other equity securities (fair value accounting):        
Non-marketable securities:        
Venture capital and private equity fund investments measured at net asset value —
 —
 —
 265,263
Venture capital and private equity fund investments not measured at net asset value (1) —
 —
 134
 134
Other equity securities in public companies 17,290
 41,910
 —
 59,200
Total non-marketable and other equity securities (fair value accounting) 17,290
 41,910
 134
 324,597
Other assets:        
Foreign exchange forward and option contracts —
 115,854
 —
 115,854
Equity warrant assets —
 4,435
 161,038
 165,473
Interest rate swaps —
 22,676
 —
 22,676
Client interest rate derivatives —
 28,811
 —
 28,811
Total assets $6,920,338
 $7,325,557
 $161,172
 $14,672,330
Liabilities:        
Foreign exchange forward and option contracts $—
 $98,207
 $—
 $98,207
Interest rate swaps —
 25,623
 —
 25,623
Client interest rate derivatives —
 14,154
 —
 14,154
Total liabilities $—
 $137,984
 $—
 $137,984
(1)
Included in Level 3 assets is $120 thousand attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

(1)Included in Level 3 assets is $120 thousand attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.
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The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:2019:
(Dollars in thousands)Beginning BalanceTotal Net Gains Included in
Net Income		PurchasesSales/ExitsIssuances  Distributions and Other SettlementsTransfers Out of Level 3Ending Balance
Three months ended September 30, 2020
Non-marketable and other equity securities (fair value accounting):
Venture capital and private equity fund investments not measured at net asset value (1)$134 $0 $0 $0 $0 $0 $0 $134 
Other assets:
Equity warrant assets (2)165,225 52,537 0 (28,760)4,605 0 (924)192,683 
Total assets$165,359 $52,537 $0 $(28,760)$4,605 $0 $(924)$192,817 
Three months ended September 30, 2019
Non-marketable and other equity securities (fair value accounting):
Venture capital and private equity fund investments not measured at net asset value (1)$441 $57 $0 $(364)$0 $0 $0 $134 
Other assets:
Equity warrant assets (2)147,770 39,527 0 (45,270)4,130 0 (1,116)145,041 
Total assets$148,211 $39,584 $0 $(45,634)$4,130 $0 $(1,116)$145,175 
Nine months ended September 30, 2020
Non-marketable and other equity securities (fair value accounting):
Venture capital and private equity fund investments not measured at net asset value (1)$134 $5 $0 $(5)$0 $0 $0 $134 
Other assets:
Equity warrant assets (2)161,038 91,224 0 (74,110)15,894 0 (1,363)192,683 
Total assets$161,172 $91,229 $0 $(74,115)$15,894 $0 $(1,363)$192,817 
Nine months ended September 30, 2019
Non-marketable and other equity securities (fair value accounting):
Venture capital and private equity fund investments not measured at net asset value (1)$1,079 $12 $0 $(960)$0 $3 $0 $134 
Other assets:
Equity warrant assets (2)145,199 105,338 575 (113,143)11,714 0 (4,642)145,041 
Total assets$146,278 $105,350 $575 $(114,103)$11,714 $3 $(4,642)$145,175 
(Dollars in thousands) Beginning Balance 
Total Net Gains (Losses) Included in
Net Income
 Purchases Sales/Exits Issuances   Distributions and Other Settlements Transfers Out of Level 3 Ending Balance
Three months ended June 30, 2020                
Non-marketable and other equity securities (fair value accounting):                
Venture capital and private equity fund investments not measured at net asset value (1) $134
 $—
 $—
 $—
 $—
 $—
 $—
 $134
Other assets:                
Equity warrant assets (2) 149,858
 24,086
 —
 (15,316) 6,770
 —
 (173) 165,225
Total assets $149,992
 $24,086
 $—
 $(15,316) $6,770
 $—
 $(173) $165,359
Three months ended June 30, 2019                
Non-marketable and other equity securities (fair value accounting):                
Venture capital and private equity fund investments not measured at net asset value (1) $1,035
 $2
 $—
 $(596) $—
 $—
 $—
 $441
Other assets:                
Equity warrant assets (2) 156,749
 46,645
 —
 (55,568) 3,041
 —
 (3,097) 147,770
Total assets $157,784
 $46,647
 $—
 $(56,164) $3,041
 $—
 $(3,097) $148,211
Six months ended June 30, 2020                
Non-marketable and other equity securities (fair value accounting):                
Venture capital and private equity fund investments not measured at net asset value (1) $134
 $5
 $—
 $(5) $—
 $—
 $—
 $134
Other assets:                
Equity warrant assets (2) 161,038
 38,687
 —
 (45,350) 11,289
 —
 (439) 165,225
Total assets $161,172
 $38,692
 $—
 $(45,355) $11,289
 $—
 $(439) $165,359
Six months ended June 30, 2019                
Non-marketable and other equity securities (fair value accounting):                
Venture capital and private equity fund investments not measured at net asset value (1) $1,079
 $(45) $—
 $(596) $—
 $3
 $—
 $441
Other assets:                
Equity warrant assets (2) 145,199
 65,811
 575
 (67,873) 7,584
 —
 (3,526) 147,770
Total assets $146,278
 $65,766
 $575
 $(68,469) $7,584
 $3
 $(3,526) $148,211
(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 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.


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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 JuneSeptember 30, 2020 and 2019:2019:
 Three months ended June 30, Six months ended June 30,Three months ended September 30,Nine months ended September 30,
(Dollars in thousands) 2020 2019 2020 2019(Dollars in thousands)2020201920202019
Non-marketable and other equity securities (fair value accounting):        Non-marketable and other equity securities (fair value accounting):
Venture capital and private equity fund investments not measured at net asset value (1) $—
 $2
 $—
 $(45)Venture capital and private equity fund investments not measured at net asset value (1)$0 $57 $0 $12 
Other assets:        Other assets:
Equity warrant assets (2) 11,267
 4,416
 7,122
 19,188
Equity warrant assets (2)26,360 (727)33,469 21,041 
Total unrealized (losses) gains, net $11,267
 $4,418
 $7,122
 $19,143
Total unrealized gains (losses) , netTotal unrealized gains (losses) , net$26,360 $(670)$33,469 $21,053 
Unrealized losses attributable to noncontrolling interests (1) $—
 $(1) $—
 $(40)Unrealized losses attributable to noncontrolling interests (1)$0 $(158)$0 $(199)

(1)Unrealized gains (losses) are recorded in the line item “Gains on investment securities, net," a component of noninterest income.
(1)
Unrealized gains (losses) are recorded in the line item “Gains on investment securities,
(2)Unrealized gains (losses) are recorded in the line item “Gains on equity warrant assets, 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 JuneSeptember 30, 2020 and December 31, 2019. We have not included in this table our venture capital and private equity fund investments (fair value accounting) as we use net asset value per share (as obtained from the general partners of the investments) as a practical expedient to determine fair value.
(Dollars in thousands)Fair valueValuation TechniqueSignificant Unobservable InputsInput RangeWeighted 
Average
September 30, 2020:
Venture capital and private equity fund investments (fair value accounting)$134 Private company equity pricing(1)(1)(1)
Equity warrant assets (public portfolio)1,166 Black-Scholes option pricing modelVolatility45.1% - 56.8%51.9 %
Risk-Free interest rate0.3- 0.70.6 
Sales restrictions discount (2)10.0 - 20.015.9 
Equity warrant assets (private portfolio)191,517 Black-Scholes option pricing modelVolatility23.9 - 56.843.6 
Risk-Free interest rate0.01 - 0.690.2 
Marketability discount (3)22.122.1 
Remaining life assumption (4)45.045.0 
December 31, 2019:
Venture capital and private equity fund investments (fair value accounting)$134 Private company equity pricing(1)(1)(1)
Equity warrant assets (public portfolio)346 Black-Scholes option pricing modelVolatility39.2% - 54.8%50.7 %
Risk-Free interest rate1.91.9 
Sales restrictions discount (2)10.0 - 20.013.6 
Equity warrant assets (private portfolio)160,692 Black-Scholes option pricing modelVolatility23.6 - 54.838.2 
Risk-Free interest rate0.5 - 1.91.6 
Marketability discount (3)17.517.5 
Remaining life assumption (4)45.045.0 
(Dollars in thousands) Fair value Valuation Technique Significant Unobservable Inputs Input Range 
Weighted 
Average
June 30, 2020:          
Venture capital and private equity fund investments (fair value accounting) $134
 Private company equity pricing (1) (1) (1)
Equity warrant assets (public portfolio) 1,085
 Black-Scholes option pricing model Volatility 56.6% 56.6%
    Risk-Free interest rate 0.7 0.7
    Sales restrictions discount (2) 10.0 - 20.0 14.4
Equity warrant assets (private portfolio) 164,140
 Black-Scholes option pricing model Volatility 23.1% - 56.6% 43.1
    Risk-Free interest rate 0.01 - 0.66 0.2
    Marketability discount (3) 21.8 21.8
    Remaining life assumption (4) 45.0 45.0
December 31, 2019:          
Venture capital and private equity fund investments (fair value accounting) $134
 Private company equity pricing (1) (1) (1)
Equity warrant assets (public portfolio) 346
 Black-Scholes option pricing model Volatility 39.2% - 54.8% 50.7%
    Risk-Free interest rate 1.9 1.9
    Sales restrictions discount (2) 10.0 - 20.0 13.6
Equity warrant assets (private portfolio) 160,692
 Black-Scholes option pricing model Volatility 23.6% - 54.8% 38.2
    Risk-Free interest rate 0.5 - 1.9 1.6
    Marketability discount (3) 17.5 17.5
    Remaining life assumption (4) 45.0 45.0
(1)In determining the fair value of our venture capital and private equity fund investment portfolio (not measured at net asset value), we evaluate a variety of factors related to each underlying private portfolio company including, but not limited to, actual and forecasted results, cash position, recent or planned transactions and market comparable
(1)In determining the fair value of our venture capital and private equity fund investment portfolio (not measured at net asset value), we evaluate a variety of factors related to each underlying private portfolio company including, but not limited to, actual and forecasted results, cash position, recent or planned transactions and market comparable
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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 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.
(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 terminations and exercises. At June 30, 2020, the weighted average contractual remaining term was 6.2 years, compared to our estimated remaining life of 2.8We 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.
(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 terminations and exercises. At September 30, 2020, the weighted average contractual remaining term was 6.2 years, compared to our estimated remaining life of 2.8 years. On a quarterly basis, a sensitivity analysis is performed on our remaining life assumption.
For the three and sixnine months ended JuneSeptember 30, 2020 and 2019, we did not have any transfers between Level 3 and Level 1. All transfers from Level 3 to Level 2 for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 were due to the transfer of equity warrant assets from our private portfolio to our public portfolio (see our Level 3 reconciliation above).

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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. The following fair value hierarchy table presents the estimated fair values of our financial instruments that are not carried at fair value at JuneSeptember 30, 2020 and December 31, 2019:2019:
  Estimated Fair Value
(Dollars in thousands)Carrying AmountTotalLevel 1Level 2Level 3
September 30, 2020:
Financial assets:
Cash and cash equivalents$15,687,776 $15,687,776 $15,687,776 $0 $0 
Held-to-maturity securities12,982,223 13,612,463 0 13,612,463 0 
Non-marketable securities not measured at net asset value228,564 228,564 0 0 228,564 
Non-marketable securities measured at net asset value293,269 293,269 0 0 0 
Net commercial loans33,552,513 34,091,696 0 0 34,091,696 
Net consumer loans4,348,420 4,418,614 0 0 4,418,614 
FHLB and Federal Reserve Bank stock61,232 61,232 0 0 61,232 
Financial liabilities:
Short-term borrowings19,068 19,068 0 19,068 0 
Non-maturity deposits (1)84,438,332 84,438,332 84,438,332 0 0 
Time deposits334,687 273,785 0 273,785 0 
3.50% Senior Notes348,257 378,606 0 378,606 0 
3.125% Senior Notes495,173 557,495 0 557,495 0 
Off-balance sheet financial assets:
Commitments to extend credit0 34,126 0 0 34,126 
December 31, 2019:
Financial assets:
Cash and cash equivalents$6,781,783 $6,781,783 $6,781,783 $0 $0 
Held-to-maturity securities13,842,946 14,115,272 0 14,115,272 0 
Non-marketable securities not measured at net asset value195,405 195,405 0 0 195,405 
Non-marketable securities measured at net asset value235,351 235,351 0 0 0 
Net commercial loans29,104,532 29,615,176 0 0 29,615,176 
Net consumer loans3,755,180 3,820,804 0 0 3,820,804 
FHLB and Federal Reserve Bank stock60,258 60,258 0 0 60,258 
Financial liabilities:
Short-term borrowings17,430 17,430 0 17,430 0 
Non-maturity deposits (1)61,569,714 61,569,714 61,569,714 0 0 
Time deposits188,093 187,980 0 187,980 0 
3.50% Senior Notes347,987 366,856 0 366,856 0 
Off-balance sheet financial assets:
Commitments to extend credit0 27,197 0 0 27,197 
    Estimated Fair Value
(Dollars in thousands) Carrying Amount Total Level 1 Level 2 Level 3
June 30, 2020:          
Financial assets:          
Cash and cash equivalents $14,202,106
 $14,202,106
 $14,202,106
 $—
 $—
Held-to-maturity securities 12,858,823
 13,541,461
 —
 13,541,461
 —
Non-marketable securities not measured at net asset value 226,236
 226,236
 —
 —
 226,236
Non-marketable securities measured at net asset value 252,513
 252,513
 —
 —
 —
Net commercial loans 32,412,462
 32,728,159
 —
 —
 32,728,159
Net consumer loans 3,724,932
 3,761,539
 —
 —
 3,761,539
FHLB and Federal Reserve Bank stock 60,673
 60,673
 —
 —
 60,673
Financial liabilities:          
Short-term borrowings 50,924
 50,924
 —
 50,924
 —
Non-maturity deposits (1) 74,128,263
 74,128,263
 74,128,263
 —
 —
Time deposits 377,501
 376,762
 —
 376,762
 —
3.50% Senior Notes 348,166
 380,314
 —
 380,314
 —
3.125% Senior Notes 495,054
 537,115
 —
 537,115
 —
Off-balance sheet financial assets:          
Commitments to extend credit —
 31,432
 —
 —
 31,432
December 31, 2019:          
Financial assets:          
Cash and cash equivalents $6,781,783
 $6,781,783
 $6,781,783
 $—
 $—
Held-to-maturity securities 13,842,946
 14,115,272
 —
 14,115,272
 —
Non-marketable securities not measured at net asset value 195,405
 195,405
 —
 —
 195,405
Non-marketable securities measured at net asset value 235,351
 235,351
 —
 —
 —
Net commercial loans 29,104,532
 29,615,176
 —
 —
 29,615,176
Net consumer loans 3,755,180
 3,820,804
 —
 —
 3,820,804
FHLB and Federal Reserve Bank stock 60,258
 60,258
 —
 —
 60,258
Financial liabilities:          
Short-term borrowings 17,430
 17,430
 —
 17,430
 —
Non-maturity deposits (1) 61,569,714
 61,569,714
 61,569,714
 —
 —
Time deposits 188,093
 187,980
 —
 187,980
 —
3.50% Senior Notes 347,987
 366,856
 —
 366,856
 —
Off-balance sheet financial assets:          
Commitments to extend credit —
 27,197
 —
 —
 27,197
(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.

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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 March 31st, for our June 30th for our September 30th consolidated financial statements, adjusted for any contributions paid, distributions received from the investment, and significant fund transactions or market events during the reporting period.
The following table is a summary of the estimated fair values of these investments and remaining unfunded commitments for each major category of these investments as of JuneSeptember 30, 2020:2020:
(Dollars in thousands)Carrying Amount      Fair Value        Unfunded Commitments      
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments (1)$226,524 $226,524 $9,133 
Non-marketable securities (equity method accounting):
Venture capital and private equity fund investments (2)274,721 274,721 11,201 
Debt funds (2)6,918 6,918 240 
Other investments (2)11,629 11,629 886 
Total$519,792 $519,792 $21,460 
(Dollars in thousands) Carrying Amount       Fair Value         Unfunded Commitments      
Non-marketable securities (fair value accounting):      
Venture capital and private equity fund investments (1) $213,201
 $213,201
 $9,462
Non-marketable securities (equity method accounting):      
Venture capital and private equity fund investments (2) 233,996
 233,996
 10,457
Debt funds (2) 7,004
 7,004
 —
Other investments (2) 11,513
 11,513
 886
Total $465,714
 $465,714
 $20,805
(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 $55.0 million and $3.2 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 (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 $50.7 million and $3.2 million, respectively, attributable to noncontrolling interests. It is estimated that we will receive distributions from the fund investments over the next 10 to 13
(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.
18.    Legal Matters
(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.
18.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
73
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.

19.Related Parties
19.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 17 — “Employee Compensation and Benefit Plans" under Part II, Item 8 of our 2019 Form 10-K.
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20.
Subsequent Events
We currently hold approximately 2.8 million shares of common stock (or warrants to acquire common stock) of BigCommerce Holdings, Inc. (“BIGC”), which recently completed its initial public offering in early August 2020. The valuation of BIGC has increased due to its IPO, as well as post-IPO share price increases. Based on these share holdings and on the closing price of BIGC’s common stock of $93.51 as of August 6, 2020, we currently estimate, on a pre-tax basis, a total of approximately $172 million to be recognized between: (i) unrealized gains on investments securities, net; (ii) gains on equity warrant assets, net; and (iii) other noninterest income. This total estimated amount is subject to change based on BIGC’s stock performance. Additionally, we have certain carried interest rights in certain funds that hold equity interests in BIGC, which may result in additional gains, but is also subject to BIGC’s stock performance.
BIGC’s valuation and its financial impact on the Company (including the extent of any gains) are subject to change based on market conditions and other factors. Additionally, gains are currently unrealized, and the extent to which such gains will become realized is subject to a variety of factors, including, among other things, the expiration of current lock-up agreements to which the securities are subject, the timing of any actual sales of the securities, changes in the valuation of the securities, and market conditions. Gains relating to our carried interest rights are further subject to the extent and timing of distributions based on the underlying funds’ general partner discretion and overall fund performance.

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q, including in particular “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part I, Item 2 of this report, contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, management has in the past and might in the future make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements are statements that are not historical facts. Broadly speaking, forward-looking statements include, but are not limited to, the following:
•Financial projections, including with respect to our net interest income, noninterest income, earnings per share, noninterest expenses (including professional services, compliance, compensation and other costs), cash flows, balance sheet positions, capital expenditures, liquidity and capitalization or other financial items;
•Descriptions of our strategic initiatives, plans or objectives for future operations, including pending sales or acquisitions;
•Forecasts of private equity/venture capital funding and investment levels;
•Forecasts of future interest rates, economic performance, and income from investments;
•Forecasts of expected levels of provisions for credit losses, nonperforming loans, loan growth and client funds;

•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," “predict,” “potential,” “continue,” “anticipate,” “believe,” “estimate,” “assume,” “seek,” “expect,” “plan,” “intend,” the negative of such words, or comparable terminology. Forward-looking statements are neither historical facts nor assurances of future performance. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we have based these expectations on our current beliefs as well as our assumptions, and such expectations may prove to be incorrect. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results of operations and financial performance could differ significantly from those expressed in or implied by our management’s forward-looking statements. Important factors that could cause our actual results and financial condition to differ from the expectations stated in the forward-looking statements include, among others:
•Market and economic conditions, including the interest rate environment, and the associated impact on us;
•The credit profile and credit quality of our loan portfolio and volatility of our levels of nonperforming assets and charge-offs;
•The COVID-19 pandemic and its effects on the economic and business environments in which we operate;
•The impact of the upcoming U.S. elections on the economic environment, capital markets and regulatory landscape, including monetary, tax and other trade policies;
•The adequacy of our allowance for credit losses and the need to make provisions for credit losses for any period;
•The borrowing needs of our clients;
•The sufficiency of our capital and liquidity positions;
•The levels of loans, deposits and client investment fund balances;
•The performance of our portfolio investments; the general condition of the public and private equity and mergers and acquisitions markets and their impact on our investments, including equity warrant assets, venture capital and private equity funds and direct equity investments;
•Our overall investment plans and strategies; the realization, timing, valuation and performance of our equity or other investments;
•The levels of public offerings, mergers and acquisitions and venture capital investment activity of our clients that may impact the borrowing needs of our clients;
•The occurrence of fraudulent activity, including breaches of our information security or cyber security-related incidents;
•Business disruptions and interruptions due to natural disasters and other external events;
•The impact on our reputation and business from our interactions with business partners, counterparties, service providers and other third parties;
•Expansion of our business internationally, and the impact of international market and economic events on us;
•The impact of governmental policy, legal requirements and regulations, including regulations promulgated by the Board of Governors of the Federal Reserve System (the "Federal Reserve"), and other regulatory requirements;
•The impact of lawsuits and claims, as well as legal or regulatory proceedings;
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•The impact of changes in accounting standards and tax laws;
•The levels of equity capital available to our client or portfolio companies;
•The effectiveness of our risk management framework and quantitative models;
•Our ability to maintain or increase our market share, including through successfully implementing our business strategy and undertaking new business initiatives, including through the integration of SVB Leerink; and
•
•Other factors as discussed in “Risk Factors” under Part I, Item 1A in our 2019 Form 10-K and under Part II, Item 1A of this report.

2019 Form 10-K and under Part II, Item 1A of this report.

We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this Quarterly Report on Form 10-Q. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this filing are made only as of the date of this filing. We assume no obligation and do not intend to revise or update any forward-looking statements contained in this Quarterly Report on Form 10-Q, except as required by law.
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited interim consolidated financial statements and accompanying notes as presented in Part I, Item 1 of this report and in conjunction with our 2019 Form 10-K.
Reclassifications
Certain prior period amounts primarily related to the adoption of ASU 2016-13, CECL, have been reclassified to conform to current period presentations.

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Management’s Overview of SecondThird Quarter 2020 Performance
Our secondthird quarter 2020 performance reflected continued effective execution and the resilience of our markets.  Comparedmarkets and our ability to execute effectively. We had an outstanding quarter driven by outstanding balance sheet growth, higher core fee income, strong investment banking revenue, outsized gains related to client IPO activity and solid credit from improved model economic scenarios and strong performance in our Private Bank portfolio segment resulting in a reduction of reserves. During the firstthird quarter of 2020, we saw outstanding balance sheet growth, exceptional client liquidity, low credit losses, record investment banking revenues and healthy market related gains in spite of the continuing challenging economic conditions.  Compared to the second quarter of 2019, however, we saw lower income levels due to the impact of lower market rates and higher reserves.We continued to manage through the current COVID-19 pandemic, utilizing our business continuity plans to maintain client service while most of our employees and partners continue to work from home. We continue to support and engage with clients virtually, including the hosting of remote events designed to facilitate our response to the business needs of our clients within the innovation ecosystem. We also continued to successfully executedadminister client support initiatives, to allowsuch as those which allowed temporary payment deferrals and other relief as well as participated in government relief programs, specificallyprovided through the Paycheck Protection Program.PPP. We continue to provide employees extended benefits, as well as practical support for working atfrom home. Additionally, we continue to commit financial support for local, regional and global activities focused on health security, food security and shelter, and small business owner relief during this unprecedented time.As the broader economic picture remains uncertain, we continue to believe our solid financial foundation of strong capital, ample liquidity and a high-quality balance sheet makes us well-positioned to continue to support and lend to our clients and manage the impact of a weaker economy while investing in our long-term growth.
Recent Developments - COVID-19
The current global health crisis created by the 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, and are likely to continue to adversely affect, our business, financial condition and results of operations. We cannot predict at this time the scope and duration of the pandemic, as COVID-19 has not yet been contained and the number of cases continues to increase in many locations, including in the United States and other international locations in which we operate. Moreover, the impact of COVID-19 on economic, market and business conditions is likely to be exacerbated if uncontained for a prolonged period of time, and even if it is contained, there may be a seasonal or other resurgence of the pandemic as we have seen domestically and internationally. While there have been varying governmental and other responses to slow or control the spread of COVID-19 and to mitigate the adverse impact of COVID-19, such as stay at home orders, restrictions on business activities, economic relief for individuals and businesses, and monetary policy measures, such responses have met varying degrees of success, and it remains uncertain whether these actions will be successful.successful as the pandemic continues.
The global spread of COVID-19 accelerated in March 2020 at which time it was declared a pandemic by the World Health Organization. Since then, we have been focused on our business and human response to the crisis --- managing and operating our business as seamlessly as possible, and supporting our clients, employees and communities as we weather the crisis together.
During this volatile time, we remain focused on our capital and liquidity. We are “well-capitalized,” remaining above all applicable regulatory capital requirements. We have a liquid and high-quality balance sheet, with approximately half of our assets as of JuneSeptember 30, 2020 held in cash and marketable securities, primarily agency-backed mortgage securities and U.S. Treasuries. We also have access to other funding sources, as necessary. Moreover, we have temporarily paused our stock repurchase program, and will reassess this decision once the economic environment becomes more stable.program expired on October 29, 2020. In addition, we have also elected to use a phase-in transitional approach for the estimated impact of CECL on our regulatory capital, as permitted by the 2020 CECL Transition Rule.
The uncertainties of the duration and severity of the effect of COVID-19 on economic, market and business conditions have made it more difficult to forecast our operating results and the macroeconomic conditions to which our business is subject. Some notable negative effects emerged late in the first quarter and continued through the secondthird quarter, as discussed in this Management Discussion and Analysis section, but any longer-term effects or trends remain subject to significant uncertainty. Moreover, we are subject to heightened business, operational (including fraud), market, credit and other risks related to the COVID-19 pandemic, which may have an adverse effect on our business, financial condition and results of operations. (See “Risk Factors” under Part II, Item 1A of this report)
We continue to serve our clients during this difficult time, while managing our credit risk. During the secondthird quarter, we offeredcontinued to provide special debt relief assistance to support certain clients who are experiencing financial hardships related to the COVID-19 pandemic, including offering certain venture-backed companies, Private Bank, Wine and other clients the opportunity to temporarily defer their scheduled loan principal payments. We continue to engage with our clients to understand client needs, and we may implement additional assistance or other relief to support clients across various sectors and life stages. Additionally, we are participatingparticipated as a lender in the PPP under the CARES Act and the U.K. Coronavirus Business Interruption Loan Scheme ("CBILS") and Coronavirus Large Business Interruption Loan Scheme ("CLBILS"), and may participate in other government relief programs in the U.S. or internationally. These government programs are complex and our participation in any of these programs may lead to governmental, regulatory and other scrutiny, litigation, negative publicity and reputation damage for us and our customers who participate. For example, like many other participating banks in the United States, we have been named in various

lawsuits regarding the right to agent fees under the PPP. Overall, these relief
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measures, whether our own programs or our participation in government programs, are new programs for us and we may not be successful in implementing or administering the programs as intended. Further, the extent to which these programs are successful in assisting our clients is uncertain. These relief programs are temporary in nature, such as the PPP, which as currently designed, provides one-time relief, and our loan payment deferral programs, which expire during the second half of the year.year (certain of our programs ended in the third quarter with the remaining ending by year end). Our clients may experience financial difficulties without the continued support from these programs. If these relief measures are not effective, or if they are effective for only a limited period and our clients experience delayed financial hardship, there may be an adverse effect on our revenue and results of operations, including increased provisions in our allowance for credit losses, higher rates of default and increased credit losses in future periods.
We are also prioritizing the safety and well-being of our employees. In March 2020, we activated our business continuity and pandemic plans globally, moving to a work-from-home plan, prohibiting all business travel, postponing or moving online all SVB-hosted events, and enabling remote access to our systems. We have implemented various programs to provide work, life and health-related support for our employees, ranging from expanded time-off, counseling and medical benefits for employees directly impacted by COVID-19, to providing reimbursements and practical support for working from home. In addition, we are also developing a plan for employees to eventually return to work in our offices, which will be subject to a variety of complex considerations. While much of our workforce continues to work from home through the crisis (currently expected until January 2021, subject to further extensions or other changes) and perhaps to some extent beyond the crisis, in the event that we allow an increase in remote working practices even after the pandemic subsides, we will need to continue to provide support to our employees to work effectively in a remote environment, taking into consideration needs relating to technology, physical working conditions, work/life balance, and continued team collaboration.
Moreover, consistent with our tradition of supporting and giving back to our communities, we have also committed $5.5 million to local, regional and global COVID-19 relief activities in various U.S. and international locations where we have offices. This includes corporate contributions to global, national and regional charities, direct community-based giving, and a 3:1 match for employees’ donations to relevant causes. We also announced our intention to donate PPP loan origination fees, net of costs incurred, received from the Small Business Administration tofor COVID-19 relief efforts, currently estimatedefforts. We expect to be approximately $20 million to be donatedmake a donation in the fourth quarter of 2020 (the final number and timingin the estimated amount of payment will depend on actual costs incurred and$20 million, irrespective of when forgiveness amounts are actually received from the timing of forgiveness).SBA.
Although the effects of the pandemic remain uncertain, for the fourth quarter of 2020, we currently expect for the second half of 2020:growth in average on-balance sheet deposit growth, flat to slightly lowerdeposits and average loans and lower core fees. While credit metrics have been stable to date, we continue to monitor our portfolio vigilantly, in light of continued reduced activity in our core fees businesseconomic uncertainty, fading government stimulus and higher credit losses from sectors most impacted by efforts to contain COVID-19.expiring deferral programs. Additionally, we anticipate thatvolatile equity markets, and IPO and M&A activity may be volatile in future quarters, causing volatility inimpact investment banking and market-sensitive revenues. Even after the pandemic subsides, it is possible that the U.S. and other major economies will continue to experience a prolonged recession, which we expect would materially and adversely affect our business, financial condition, liquidity, capital and results of operations.

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A summary of our performance for the three months ended JuneSeptember 30, 2020 (compared to the three months ended JuneSeptember 30, 2019, where applicable) is as follows:
BALANCE SHEETEARNINGS
Assets. $78.4$88.3 billion in average total assets (up 29.2%35.2%). $85.7$96.9 billion in period-end total assets (up 34.4%42.0%).
Loans. $36.537.3 billion in average total loan balances (up 24.2%25.1%). $36.7$38.4 billion in period-end total loan balances (up 25.7%23.7%).
Total Client Funds. (on-balance(on-balance sheet deposits and off-balance sheet client investment funds). $177.2$201.2 billion in average total client fund balances (up 24.2%34.1%). $190.4$211.6 billion in period-end total client fund balances (up 29.4%35.6%).
AFS/HTM Fixed Income Investments. $25.832.6 billion in average fixed income investment securities (up 11.7%29.6%). $31.3$38.9 billion in period-end fixed income investment securities (up 37.3%42.6%).


 EPS.EPS. Earnings per diluted share of $4.42 (down 27.3%$8.47 (up 64.5%).
Net Income. Consolidated net income available to common stockholders of $228.9$441.7 million (down 28.0%(up 65.3%).
- Net interest income of $512.9$527.7 million (down 3.1%(up 1.4%).
- Net-Net interest margin of 2.80%2.53% (down 8881 bps).
- Noninterest-Noninterest income of $368.8$547.6 million (up 10.5%86.3%), non-GAAP core fee income+income+ of $132.5$146.3 million (down 15.8%9.8%) and non-GAAP core fee income plus investment
banking revenue and commissions++ of $290.9$254.8 million (up 32.0%19.6%).
- Noninterest-Noninterest expense of $479.6$491.0 million (up 25.1%25.5%).

ROE. Return on average equity (annualized) (“ROE”) performance of 13.36%24.19%.
Operating Efficiency Ratio. Operating efficiency ratio of 54.39%45.66% with a non-GAAP core operating efficiency ratio of 55.70%56.86%+++.

CAPITALCREDIT QUALITY
Capital++++.Continued strong capital, with all capital ratios considered “well-capitalized” under banking regulations. SVB Financial and Bank capital ratios, respectively, were:
- CET 1 risk-based capital ratio of 12.63%12.31% and 11.08%10.75%.
- Tier 1 risk-based capital ratio of 13.62%13.25% and 11.08%10.75%.
- Total risk-based capital ratio of 14.77%14.19% and 12.28%11.75%.
- Tier 1 leverage ratio of 8.68%8.26% and 6.91%6.45%.

Credit Quality.ContinuedImproved model economic scenarios and continued strong Private Bank performance drive reserve build with low credit losses in an uncertain market environment.release.
- Allowance for credit losses for loans of 1.61%1.34% as a percentage of period-end total loans.
- Provision for loans was a net benefit of 0.57%0.56% as a percentage of period-end total loans (annualized).
- Net loan charge-offs of 0.12%0.26% as a percentage of average total 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 measure. (See the non-GAAP reconciliation under “Results of Operations—Noninterest Income”)
++ Consists of non-GAAP core fee income plus 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 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.



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A summary of our performance for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands, except per share data, employees and ratios)20202019% Change  20202019% Change  
Income Statement:
Diluted earnings per share$8.47 $5.15 64.5 % $15.46 $16.67 (7.3)% 
Net income available to common stockholders441,713 267,281 65.3   802,901 874,000 (8.1)  
Net interest income527,740 520,644 1.4   1,564,804 1,562,933 0.1   
Net interest margin2.53 %3.34 %(81)bps 2.79 %3.60 %(81)bps 
(Reduction) provision for credit losses$(52,018)$36,536 (242.4)%$257,943 $89,033 189.7 %
Noninterest income547,583 294,009 86.2 1,218,365 908,135 34.2 
Noninterest expense491,021 391,324 25.5 1,370,242 1,140,510 20.1   
Non-GAAP core fee income (1)146,320 162,177 (9.8)447,303 473,757 (5.6)
Non-GAAP core fee income, plus investment banking revenue and commissions (1)254,758 212,968 19.6 777,051 651,574 19.3 
Non-GAAP noninterest income, net of noncontrolling interests (1)519,721 279,441 86.0   1,177,972 871,583 35.2   
Non-GAAP noninterest expense, net of noncontrolling interests (2)490,907 391,179 25.5   1,369,858 1,139,818 20.2   
Balance Sheet:
Average available-for-sale securities$20,026,864 $10,600,449 88.9 %$15,475,686 $8,572,314 80.5 %
Average held-to-maturity securities12,553,196 14,534,505 (13.6)13,054,393 14,891,158 (12.3)
Average loans, amortized cost37,318,600 29,822,426 25.1 35,835,927 29,210,960 22.7 
Average noninterest-bearing demand deposits51,543,903 39,146,184 31.7   46,341,335 38,498,971 20.4   
Average interest-bearing deposits26,136,113 18,088,785 44.5   22,824,729 14,832,373 53.9   
Average total deposits77,680,016 57,234,969 35.7   69,166,064 53,331,344 29.7   
Earnings Ratios:
Return on average assets (annualized) (3)1.99 %1.62 %22.8 % 1.34 %1.91 %(29.8)% 
Return on average SVBFG stockholders’ equity (annualized) (4)24.19 18.27 32.4   15.56 21.16 (26.5)  
Asset Quality Ratios:
Allowance for credit losses for loans as a % of total period-end loans (5)1.34 %0.97 %37 bps 1.34 %0.97 %37 bps 
Allowance for credit losses for performing loans as a % of total performing loans (5)1.17 0.81 36   1.17 0.81 36   
Gross loan charge-offs as a % of average total loans (annualized) (5)0.30 0.49 (19)  0.30 0.33 (3)  
Net loan charge-offs as a % of average total loans (annualized) (5)0.26 0.44 (18)  0.24 0.26 (2)  
Capital Ratios:
SVBFG CET 1 risk-based capital ratio12.31 %12.71 %(40)bps12.31 %12.71 %(40)bps
SVBFG tier 1 risk-based capital ratio13.25 12.86 39 13.25 12.86 39 
SVBFG total risk-based capital ratio14.19 13.70 49 14.19 13.70 49 
SVBFG tier 1 leverage ratio8.26 8.64 (38)  8.26 8.64 (38)  
SVBFG tangible common equity to tangible assets (6)7.52 8.38 (86)  7.52 8.38 (86)  
SVBFG tangible common equity to risk-weighted assets (6)13.28 13.04 24   13.28 13.04 24   
Bank CET 1 risk-based capital ratio10.75 11.48 (73)10.75 11.48 (73)
Bank tier 1 risk-based capital ratio10.75 11.48 (73)  10.75 11.48 (73)  
Bank total risk-based capital ratio11.75 12.36 (61)  11.75 12.36 (61)  
Bank tier 1 leverage ratio6.45 7.48 (103)  6.45 7.48 (103)  
Bank tangible common equity to tangible assets (6)6.42 7.36 (94)  6.42 7.36 (94)  
Bank tangible common equity to risk-weighted assets (6)11.79 11.82 (3)  11.79 11.82 (3)  
Other Ratios:
Operating efficiency ratio (7)45.66 %48.04 %(5.0)% 49.23 %46.15 %6.7 % 
Non-GAAP core operating efficiency ratio (2)56.86 48.05 18.3 53.41 46.09 15.9 
Total costs of deposits (annualized) (8)0.04 0.38 (89.5)0.10 0.33 (69.7)
Book value per common share (9)$143.91 $114.26 25.9   $143.91 $114.26 25.9   
Other Statistics:
Average full-time equivalent employees4,2163,41323.5 % 3,9143,30918.3 % 
Period-end full-time equivalent employees4,3363,46025.3   4,3363,46025.3   
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  Three months ended June 30, Six months ended June 30,
(Dollars in thousands, except per share data, employees and ratios) 2020
2019 % Change   2020 2019 % Change  
Income Statement:              
Diluted earnings per share $4.42
 $6.08
 (27.3)%  $6.97
 $11.51
 (39.4)% 
Net income available to common stockholders 228,935
 317,987
 (28.0)   361,188
 606,719
 (40.5)  
Net interest income 512,927
 529,403
 (3.1)   1,037,064
 1,042,289
 (0.5)  
Net interest margin 2.80% 3.68% (88)bps  2.95% 3.74% (79)bps 
Provision for credit losses $66,481
 $23,946
 177.6
% $309,961
 $52,497
 490.4
%
Noninterest income 368,848
 333,750
 10.5
  670,782
 614,126
 9.2
 
Noninterest expense 479,636
 383,522
 25.1
  879,221
 749,186
 17.4
  
Non-GAAP core fee income (1) 132,525
 157,337
 (15.8)  300,983
 311,580
 (3.4) 
Non-GAAP core fee income, plus investment banking revenue and commissions (1) 290,946
 220,460
 32.0
  522,293
 438,606
 19.1
 
Non-GAAP noninterest income, net of noncontrolling interests (1) 354,463
 315,014
 12.5
   658,251
 592,142
 11.2
  
Non-GAAP noninterest expense, net of noncontrolling interests (2) 479,506
 383,354
 25.1
   878,951
 748,639
 17.4
  
Balance Sheet: 
      
     
Average available-for-sale securities $12,784,271
 $8,205,333
 55.8
% $13,175,090
 $7,541,439
 74.7
%
Average held-to-maturity securities 13,039,430
 14,922,589
 (12.6)  13,307,746
 15,072,441
 (11.7) 
Average loans, amortized cost 36,512,159
 29,406,620
 24.2

 35,086,444
 28,900,160
 21.4
 
Average noninterest-bearing demand deposits 46,086,948
 38,117,893
 20.9
   43,711,466
 38,170,001
 14.5
  
Average interest-bearing deposits 21,829,433
 14,844,315
 47.1
   21,150,840
 13,177,179
 60.5
  
Average total deposits 67,916,381
 52,962,208
 28.2
   64,862,306
 51,347,180
 26.3
  
Earnings Ratios: 
      
     
Return on average assets (annualized) (3) 1.17% 2.10% (44.3)%  0.96% 2.07% (53.6)% 
Return on average SVBFG stockholders’ equity (annualized) (4) 13.36
 23.29
 (42.6)   10.84
 22.74
 (52.3)  
Asset Quality Ratios: 
      
     
Allowance for credit losses for loans as a % of total period-end loans (5) 1.61% 1.03% 58
bps  1.61% 1.03% 58
bps 
Allowance for credit losses for performing loans as a % of total performing loans (5) 1.46
 0.85
 61
   1.46
 0.85
 61
  
Gross loan charge-offs as a % of average total loans (annualized) (5) 0.17
 0.36
 (19)   0.30
 0.25
 5
  
Net loan charge-offs as a % of average total loans (annualized) (5) 0.12
 0.23
 (11)   0.23
 0.17
 6
  
Capital Ratios: 
      
     
SVBFG CET 1 risk-based capital ratio 12.63% 12.92% (29)bps 12.63% 12.92% (29)bps
SVBFG tier 1 risk-based capital ratio 13.62
 13.08
 54
  13.62
 13.08
 54
 
SVBFG total risk-based capital ratio 14.77
 13.97
 80
  14.77
 13.97
 80
 
SVBFG tier 1 leverage ratio 8.68
 8.82
 (14)   8.68
 8.82
 (14)  
SVBFG tangible common equity to tangible assets (6) 7.94
 8.43
 (49)   7.94
 8.43
 (49)  
SVBFG tangible common equity to risk-weighted assets (6) 13.68
 13.13
 55
   13.68
 13.13
 55
  
Bank CET 1 risk-based capital ratio 11.08
 12.50
 (142)  11.08
 12.50
 (142) 
Bank tier 1 risk-based capital ratio 11.08
 12.50
 (142)   11.08
 12.50
 (142)  
Bank total risk-based capital ratio 12.28
 13.44
 (116)   12.28
 13.44
 (116)  
Bank tier 1 leverage ratio 6.91
 8.17
 (126)   6.91
 8.17
 (126)  
Bank tangible common equity to tangible assets (6) 6.91
 7.91
 (100)   6.91
 7.91
 (100)  
Bank tangible common equity to risk-weighted assets (6) 12.17
 12.72
 (55)   12.17
 12.72
 (55)  
Other Ratios: 
      
     
Operating efficiency ratio (7) 54.39% 44.43% 22.4
%  51.48% 45.23% 13.8
% 
Non-GAAP core operating efficiency ratio (2) 55.70
 45.49
 22.4
  51.59
 45.11
 14.4
 
Total costs of deposits (annualized) (8) 0.03
 0.36
 (91.7)  0.13
 0.29
 (55.2) 
Book value per common share (9) $134.89
 $107.72
 25.2
   $134.89
 $107.72
 25.2
  
Other Statistics: 
      
     
Average full-time equivalent employees 3,855
 3,287
 17.3
%  3,764
 3,257
 15.6
% 
Period-end full-time equivalent employees 3,984
 3,314
 20.2
   3,984
 3,314
 20.2
  

(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 non-GAAP core fee income plus investment banking revenue and commissions.
(2)See “Results of Operations–Noninterest Expense” for a description and reconciliation of non-GAAP noninterest expense and non-GAAP core operating efficiency ratio.
(3)Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average assets.
(4)Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average SVBFG stockholders’ equity.
(5)
(2)See “Results of Operations–Noninterest Expense” for a description and reconciliation of non-GAAP noninterest expense and non-GAAP core operating efficiency ratio.
(3)Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average assets.
(4)Ratio represents annualized consolidated net income available to common stockholders divided by quarterly average SVBFG stockholders’ equity.
(5)For the three and nine months ended September 30, 2020, the ratios are calculated using the amortized cost basis for total loans as a result of the adoption of CECL. Prior period ratios were calculated using total gross loans in accordance with previous methodology.
(6)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.
(7)The operating efficiency ratio is calculated by dividing total noninterest expense by total net interest income plus noninterest income.
(8)Ratio represents annualized total cost of deposits and is calculated by dividing interest expense from deposits by average total deposits.
(9)Book value per common share is calculated by dividing total SVBFG common stockholders’ equity by total outstanding common shares at period-end.

three and six months endedJune 30, 2020, the ratios are calculated using the amortized cost basis for total loans as a result of the adoption of CECL. Prior period ratios were calculated using total gross loans in accordance with previous methodology.
(6)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.
(7)The operating efficiency ratio is calculated by dividing total noninterest expense by total net interest income plus noninterest income.
(8)Ratio represents annualized total cost of deposits and is calculated by dividing interest expense from deposits by average total deposits.
(9)Book value per common share is calculated by dividing total SVBFG common stockholders’ equity by total outstanding common shares at period-end.

For more information with respect to our capital ratios, please refer to “Capital Ratios” under “Consolidated Financial Condition-Capital Ratios” below.
Critical Accounting Policies and Estimates
The accompanying management’s discussion and analysis of results of operations and financial condition is based upon our unaudited interim consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. Management evaluates estimates and assumptions on an ongoing basis. Management bases its estimates on historical experiences and various other factors and assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.
Except as set forth below, there have been no significant changes during the sixnine months ended JuneSeptember 30, 2020 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 2019 Form 10-K.
We disclose our method and approach for the allowance for credit losses for loans, unfunded credit commitments and HTM securities critical accounting policy in Note 1 - “Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements” under Part I, Item 1 of this report.
Allowance for Credit Losses
We consider this accounting policy to be critical as estimation of expected credit losses involves material management estimates and is susceptible to significant changes in the near-term. Determining the allowance for credit losses for loans, unfunded credit commitments and HTM securities requires us to make forecasts that are highly uncertain and require a high degree of judgment. A committee comprised of senior management evaluates the adequacy of the allowance for credit losses for loans, which includes review of loan portfolio segmentation, quantitative models, internal and external data inputs, economic forecasts, credit risk ratings and qualitative adjustments.
Expected Credit Losses Estimate for Loans
The methodology for estimating the amount of ECL reported in the allowance for credit losses hasis the sum of two main components: (1) ECL assessed on a collective basis for pools of loans that share similar risk characteristics which includes a qualitative adjustment based on our assessment of the risks that may lead to a future loan loss experience different from our historical loan loss experience and (2) ECL assessed for individual loans that do not share similar risk characteristics with other loans.
We derive an estimated ECL assumption from a non-discounted cash flow approach based on our portfolio segments discussed above. This approach incorporates:incorporates a calculation of three predictive metrics: (1) probability of default ("PD"), (2) loss given default ("LGD") and (3) exposure at default ("EAD"), over the estimated life of the exposure. PD and LGD assumptions are developed based on quantitative models and inherent risk of credit loss, both of which involve significant judgement.judgment. Renewals and extensions within our control are not considered in the estimated contractual term of a loan. However, we include potential extensions if management has a reasonable expectation that we will execute a TDR with the borrower. The quantitative models are based on historical credit loss experience, adjusted for probability-weighted economic scenarios. These scenarios are used to support a reasonable and supportable forecast period of three yearsthree-years for all portfolio segments. To the extent the remaining contractual lives of loans in the portfolio extend beyond this three-year period, we revert to historical averages using an autoregressive model of mean reversion that will continue to gradually trend towards the mean historical loss over the remaining contractual lives, adjusted for prepayments. The macroeconomic scenarios are reviewed on a quarterly basis.    
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We also apply a qualitative factor adjustment to the results obtained through our quantitative ECL models to consider relevant qualitativemodel imprecision, emerging risk assessments, trends and other subjective factors that relate tomay not be adequately represented in the environment in which the entity operates and are specific to the borrower.quantitative ECL models. These

adjustments are based uponreflect our assessment of the risksextent that may lead to a future loan loss experience differentcurrent conditions and reasonable and supportable forecasts differ from ourconditions that existed during the period over which historical loan loss experience.information was evaluated. These risksadjustments are aggregated to become our qualitative allocation. Based on our qualitative assessment and prediction or estimate of changing risks in the lending environment, the qualitative allocation may vary significantly from period to period. Refer to Note 1 - “Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements” under Part I, Item I of this report for a summary of the factors we consider for its qualitative adjustments as part of our estimate of the changing risks in the lending environment.
We monitor our loan pools to ensure all assets therein continue to share similar risk characteristics with other financial assets inside the pool. Changes in credit risk, borrower circumstances, or the recognition of write-offs may indicate that a loan's risk profile has changed, and the asset should be removed from its current pool. For a loan that does not share risk characteristics with other loans, expected credit loss is measured based on the net realizable value, that is, the difference between the discounted value of the expected future cash flows and the amortized cost basis of the loan. When a loan is collateral-dependent and the repayment is expected to be provided substantially through the operation or sale of the collateral, the ECL is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of the collateral will be determined by the most recent appraisal, as adjusted to reflect a reasonable marketing period for the sale of the asset(s) and an estimate of reasonable selling expenses. Collateral-dependent loans will have independent appraisals completed and accepted at least annually.
Expected Credit Losses Estimate for Unfunded Credit Commitments
We maintain a separate allowance for credit losses for unfunded credit commitments which is included in other liabilities and the related ECL in our provision for credit losses. We estimate the amount of expected losses by using historical trends to calculate a probability of an unfunded credit commitment being funded and derive historical lifetime expected loss factors for each portfolio segment similar to our funded loan ECL. The collectively assessed ECL for unfunded credit commitments also includes the same qualitative allocations applied for our funded loan ECL. For unfunded credit commitments related to loans that do not share similar risk characteristics with other loans, where applicable, a separate estimate of ECL will be included in our total allowance for credit losses on unfunded credit commitments. Loan commitments that are determined to be unconditionally cancellable by the Bank do not require an allowance for credit losses.
Expected Credit Losses Estimate for Held-to-Maturity Investments
We measure ECL on held-to-maturity securities on a collective basis by major security type and standard credit rating. Our held-to-maturity securities portfolio, with the exception of our municipal bond portfolio, are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. With respect to these securities, we consider the risk of credit loss to be zero and, therefore, we do not record an ECL. The estimate of ECL on our municipal bond portfolio considers historical credit loss information and severity of loss in the event of default and leverages external data adjusted for current conditions. A reasonable and supportable forecast period of one year is applied to our municipal bond portfolio, with immediate reversion to long-term average historical loss rates when remaining contractual lives of securities exceed one year.
Recent Accounting Pronouncements
In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which is part of the FASB’s initiative to reduce cost and complexity related to accounting for income taxes. The ASU eliminates certain exceptions to the general principles of ASC 740, Income Taxes, and simplifies income tax accounting in several areas. The amendments are effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2020, with early adoption permitted. The ASU allows entities to adopt this provision on a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. We do not anticipate a material impact from this ASU on our financial position, results of operations, cash flows and disclosures.
In March 2020, the FASB issued a new Accounting Standard Update (ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting). This ASU provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. For instance, entities can (1) elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination; (2) elect various optional expedients that
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would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met; and (3) make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. This guidance became effective on March 12, 2020 and an entity may elect to prospectively apply each category of

exemption independently, either in the interim period that includes March 12, 2020, or in a subsequent period through December 31, 2022. We have implemented a process to assess the population of contracts that will be impacted by this ASU and to evaluate expedients we will use and when we might apply them. We are currently evaluating the impact this guidance will have on our financial position, results of operations, cash flows and disclosures.
Results of Operations
Net Interest Income and Margin (Fully Taxable Equivalent Basis)
Net interest income is defined as the difference between: (i) interest earned on loans, fixed income investments in our available-for-sale and held-to-maturity securities portfolios and short-term investment securities and (ii) interest paid on funding sources. Net interest margin is defined as annualized net interest income, on a fully taxable equivalent basis, 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 21.0 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 mix of interest-earning assets and interest-bearing liabilities, referred to as “volume change.” Net interest income is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing liabilities, referred to as “rate change.” The following table sets forth changes in interest income for each major category of interest-earning assets and interest expense for each major category of interest-bearing liabilities. The table also reflects the amount of simultaneous changes attributable to both volume and rate changes for the 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.
 2020 Compared to 20192020 Compared to 2019
 Three months ended September 30, increase (decrease) due to change inNine months ended September 30, increase (decrease) due to change in
(Dollars in thousands)VolumeRateTotalVolumeRateTotal
Interest income:
Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities$1,306 $(27,456)$(26,150)$10,986 $(62,690)$(51,704)
Fixed income investment portfolio (taxable)23,710 (16,849)6,861 57,830 (16,149)41,681 
Fixed income investment portfolio (non-taxable)5,452 (656)4,796 13,220 (1,562)11,658 
Loans, amortized cost73,886 (99,151)(25,265)206,671 (292,478)(85,807)
Increase (decrease) in interest income, net104,354 (144,112)(39,758)288,707 (372,879)(84,172)
Interest expense:
Interest bearing checking and savings accounts2,705 231 2,936 3,792 686 4,478 
Money market deposits935 (45,510)(44,575)12,998 (84,069)(71,071)
Money market deposits in foreign offices12 (3)9 34 (6)28 
Time deposits270 (401)(131)755 (310)445 
Sweep deposits in foreign offices(14)(5,113)(5,127)167 (12,900)(12,733)
Total increase (decrease) in deposits expense3,908 (50,796)(46,888)17,746 (96,599)(78,853)
Short-term borrowings— (115)(115)2,147 (2,356)(209)
3.125% Senior Notes4,012 — 4,012 5,171 — 5,171 
3.50% Senior Notes3 — 3 10 — 10 
5.375% Senior Notes(4,873)— (4,873)(14,611)— (14,611)
Total decrease in borrowings expense(858)(115)(973)(7,283)(2,356)(9,639)
Increase (decrease) in interest expense, net3,050 (50,911)(47,861)10,463 (98,955)(88,492)
Increase (decrease) in net interest income$101,304 $(93,201)$8,103 $278,244 $(273,924)$4,320 
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  2020 Compared to 2019 2020 Compared to 2019
  Three months ended June 30, increase (decrease) due to change in Six months ended June 30, increase (decrease) due to change in
(Dollars in thousands) Volume Rate Total Volume Rate Total
Interest income:            
Federal Reserve deposits, federal funds sold, securities purchased under agreements to resell and other short-term investment securities $1,316
 $(25,278) $(23,962) $9,730
 $(35,284) $(25,554)
Fixed income investment portfolio (taxable) 8,443
 (1,291) 7,152
 33,539
 1,281
 34,820
Fixed income investment portfolio (non-taxable) 4,937
 (465) 4,472
 7,742
 (881) 6,861
Loans, amortized cost 70,873
 (119,840) (48,967) 132,298
 (192,840) (60,542)
Increase (decrease) in interest income, net 85,569
 (146,874) (61,305) 183,309
 (227,724) (44,415)
Interest expense:            
Interest bearing checking and savings accounts 1,302
 248
 1,550
 1,109
 433
 1,542
Money market deposits 992
 (38,670) (37,678) 13,917
 (40,413) (26,496)
Money market deposits in foreign offices 11
 (1) 10
 22
 (3) 19
Time deposits 206
 (30) 176
 496
 80
 576
Sweep deposits in foreign offices 10
 (5,524) (5,514) 421
 (8,027) (7,606)
Total increase (decrease) in deposits expense 2,521
 (43,977) (41,456) 15,965
 (47,930) (31,965)
Short-term borrowings 410
 (1,014) (604) 2,177
 (2,270) (93)
3.125% Senior Notes 1,159
 —
 1,159
 1,159
 —
 1,159
3.50% Senior Notes 3
 —
 3
 6
 —
 6
5.375% Senior Notes (4,870) —
 (4,870) (9,738) —
 (9,738)
Total decrease in borrowings expense (3,298) (1,014) (4,312) (6,396) (2,270) (8,666)
(Decrease) increase in interest expense, net (777) (44,991) (45,768) 9,569
 (50,200) (40,631)
Increase (decrease) in net interest income $86,346
 $(101,883) $(15,537) $173,740
 $(177,524) $(3,784)

Net Interest Income (Fully Taxable Equivalent Basis)
Three months ended JuneSeptember 30, 2020 and 2019
Net interest income decreasedincreased by $15.5$8.1 million to $516.8$531.7 million for the three months ended JuneSeptember 30, 2020, compared to $532.3$523.6 million for the comparable 2019 period. Overall, our net interest income decreasedincreased primarily from a decreasean increase in interest earned on interest earning assets from average growth in our fixed income from loans,securities of $7.4 billion and loan balances of $7.5 billion, driven by growth in our deposit balances of $20.4 billion. In addition, the increase was reflective of decreases in interest paid on deposits due to market interest rate decreases. These increases were offset by lower grosscash and cash equivalents, investment and loan yields and a decrease in interest income from short-term investment securities reflective primarily of a decrease in yields on loans reflective of the three 25 basis point Federal Funds rate decreases in the latter half of 2019 as well as the aggregate 150 basis point decrease in March 2020. The overall decrease was partially offset by a decrease in interest paid on our interest-bearing deposits due to market interest rate decreases.
The main factors affecting interest income and interest expense for the three months ended JuneSeptember 30, 2020, compared to the comparable 2019 period are discussed below:
•
Interest income for the three months endedJune 30, 2020 decreased by $61.3 million due primarily to:
◦
A $49.0 million decrease in interest income on loans to $365.1 million for the three months endedJune 30, 2020, compared to $414.1 million for the comparable 2019 period. The decrease was reflective of a decrease in the overall loan yields of 163 basis points to 4.02 percent from 5.65 percent partially offset by an increase in average loan balances of $7.1 billion.Gross loan yields, excluding loan interest recoveries and loan fees, decreased 153 basis points to 3.48 percent from 5.01 percent, reflective primarily of the impact of the decreases in Federal Funds rates as discussed above, partially offset by an increase reflective of the impact of the reclassification of unrealized gains on interest rate swap cash flow hedges that were terminated in the first quarter of 2020 and effective loan floors.
◦A $23.9 million decrease in interest income from our short-term investment securities. The decrease was due primarily to the decrease in Federal Funds rates as discussed above, partially offset by
◦An $11.6 million increase in interest income from our fixed income investment securities. The increase was due primarily to the increase of $2.7 billion in average fixed income investment securities.
•
Interest expense for the three months endedJune 30, 2020 decreased by $45.8 million due primarily to:
◦
A $41.5 million decrease in interest expense on deposits due primarily to a decrease in interest paid on our interest-bearing money market deposits due to the decreases in market rates, and
◦A $4.3 million decrease in interest expense on borrowings due primarily to the extinguishment of our 5.375% Senior Notes in December 2019.
Six•Interest income for the three months ended September 30, 2020 decreased by $39.8 million due primarily to:
◦A $26.2 million decrease in interest income from our interest earning cash and short-term investment securities. The decrease was due primarily to the decrease in Federal Funds rates as discussed above.
◦A $25.3 million decrease in interest income on loans to $369.0 million for the three months ended September 30, 2020, compared to $394.2 million for the comparable 2019 period. The decrease was reflective of a decrease in the overall loan yields of 131 basis points to 3.93 percent from 5.24 percent partially offset by an increase in average loan balances of $7.5 billion.Gross loan yields, excluding loan interest recoveries and loan fees, decreased 131 basis points to 3.41 percent from 4.72 percent, reflective primarily of the impact of the decreases in Federal Funds rates as discussed above, partially offset by an increase reflective of the impact of the reclassification of unrealized gains on interest rate swap cash flow hedges that were terminated in the first quarter of 2020 and effective loan floors, partially offset by
◦An $11.7 million increase in interest income from our fixed income investment securities due primarily to the increase of $7.4 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.
•Interest expense for the three months ended September 30, 2020 decreased by $47.9 million due primarily to:
◦A $46.9 million decrease in interest expense on deposits due primarily to a decrease in interest paid on our interest-bearing money market deposits due to the decreases in market rates, and
◦A $1.0 million decrease in interest expense on borrowings due primarily to the extinguishment of our 5.375% Senior Notes in December 2019, partially offset by interest expense on our 3.125% Senior Notes issued in June 2020.
Nine months ended September 30, 2020 and 2019
The main factors affecting interest income and interest expense for the sixnine months ended JuneSeptember 30, 2020, compared to the comparable 2019 period are discussed below:
•
•Interest income for the nine months ended September 30, 2020 decreased by $84.2 million due primarily to:
◦A $85.8 million decrease in interest income on loans to $1.1 billion for the nine months ended September 30, 2020, compared to $1.2 billion for the comparable 2019 period. The decrease was reflective of a decrease in the overall loan yields of 134 basis points to 4.16 percent from 5.50 percent partially offset by an increase in average loan balances of $6.6 billion. Gross loan yields, excluding loan interest recoveries and loan fees, decreased 129 basis points to 3.66 percent from 4.95 percent, reflective primarily of the impact of the decreases in Federal Funds rates as discussed above, partially offset by an increase reflective of the impact of the reclassification of unrealized gains on interest rate swap cash flow hedges that were terminated in the first quarter of 2020 and effective loan floors, and
◦A $51.7 million decrease in interest income from our interest earning cash and short-term investment securities. The decrease was due primarily to the decrease in Federal Funds interest rates as discussed above, partially offset by growth in average balances of $5.3 billion.
These decreases were offset by the following:
84
◦A $53.3 million increase in interest income from our fixed income investment securities. The increase was due primarily to the increase of $5.1 billion in average fixed income investment securities, partially offset by declines in yields earned on these investments reflective of the lower interest rate market environment.
•Interest expense for the nine months ended September 30, 2020 decreased by $88.5 million primarily due to:
◦A $78.9 million decrease in interest expense on deposits due primarily to a decrease in interest paid on our interest-bearing money market and on-balance sheet sweep deposits reflective of the decreases in market rates. These decreases were partially offset by interest income earned from $5.8 billion of growth in average balances for our interest-bearing money markets deposits.
◦A $9.6 million decrease in interest expense on borrowings due primarily to the extinguishment of our 5.375% Senior Notes, partially offset by interest expense for our 3.125% Senior Notes issued towards the end of the second quarter of 2020. for the six months endedJune 30, 2020 decreased by $44.4 million due primarily to:
◦
A $60.5 million decrease in interest income on loans to $747.7 million for the six months endedJune 30, 2020, compared to $808.2 million for the comparable 2019 period. The decrease was reflective of a decrease in the overall loan yields of 135 basis points to 4.29 percent from 5.64 percent partially offset by an increase in average loan balances of $6.2 billion. Gross loan yields, excluding loan interest recoveries and loan fees, decreased 126 basis points to 3.79 percent from 5.05 percent, reflective primarily of the impact of the decreases in Federal Funds rates as discussed above, partially offset by an increase reflective of the impact of the reclassification of unrealized gains on interest rate swap cash flow hedges that were terminated in the first quarter of 2020 and effective loan floors, and
◦A $25.6 million decrease in interest income from our interest earning cash and short-term investment securities. The decrease was due primarily to the decrease in Federal Funds interest rates as discussed above, partially offset by
◦An $41.7 million increase in interest income from our fixed income investment securities. The increase was due primarily to the increase of $3.9 billion in average fixed income investment securities.
•
Interest expense for the six months endedJune 30, 2020 decreased by $40.6 million primarily due to:
◦A $32.0 million decrease in interest expense on deposits due primarily to a decrease in interest paid on our interest-bearing money market deposits due to the decreases in market rates.

Net Interest Margin (Fully Taxable Equivalent Basis)
Three months ended JuneSeptember 30, 2020 and 2019
•
Our net interest margin decreased by 88 basis points to 2.80
•Our net interest margin decreased by 81 basis points to 2.53 percent for the three months endedJune 30, 2020, compared to 3.68 percent for the comparable 2019 period. The lower margin for the three months ended June 30, 2020 was due primarily to a decrease in yields on loans reflective of the Federal Funds rate decreases as discussed above, as well as a shift in the mix of the growth in our interest-earning assets to lower-yielding short-term investment securities portfolio from our loan portfolio. The decrease in our net interest margin was partially offset by increases from our interest rate swap cash flow hedges which were terminated in the first quarter of 2020 and effective loan floors.Average loans represented 49.3 percent of average interest earnings assets for the three months ended June 30, 2020, compared to 50.8 percent for the comparable 2019 period.
Six months ended JuneSeptember 30, 2020, compared to 3.34 percent for the comparable 2019 period. The lower margin for the three months ended September 30, 2020 was due primarily to a decrease in yields on loans reflective of the Federal Funds rate decreases as discussed above, as well as a shift in the mix of the growth in our interest-earning assets to lower-yielding short-term investment securities portfolio relative to the growth in our loan portfolio. The decrease in our net interest margin was partially offset by increases from our interest rate swap cash flow hedges which were terminated in the first quarter of 2020 and effective loan floors. Average loans represented 44.6 percent of average interest earnings assets for the three months ended September 30, 2020, compared to 48.0 percent for the comparable 2019 period.
Nine months ended September 30, 2020 and 2019
•Our net interest margin decreased by 81 basis points to 2.79 percent for the nine months ended September 30, 2020, compared to 3.60 percent for the comparable 2019 period. The lower margin for the nine months ended September 30, 2020 was reflective primarily of the decreases in the Federal Funds as discussed above, as well as a shift in the mix of the growth in our interest-earning assets to lower-yielding short-term investment securities portfolio relative to the growth in our loan portfolio, partially offset by increases from our interest rate swap cash flow hedges which were terminated in the first quarter of 2020 and effective loan floors. Average loans represented 47.5 percent of year-to-date average interest earnings assets, compared to 50.0 percent for the comparable 2019 period.
•
Our net interest margin decreased by 79 basis points to 2.95 percent for the six months endedJune 30, 2020, compared to 3.74 percent for the comparable 2019 period. The lower margin for the six months endedJune 30, 2020 was reflective primarily of the decreases in the Federal Funds as discussed above, as well as a shift in the mix of the growth in our interest-earning assets to lower-yielding short-term investment securities portfolio from our loan portfolio, partially offset by increases from our interest rate swap cash flow hedges which were terminated in the first quarter of 2020 and effective loan floors. Average loans represented 49.3 percent of year-to-date average interest earnings assets, compared to 51.2 percent for the comparable 2019 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 sixnine months ended JuneSeptember 30, 2020 and 2019:
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Average Balances, Rates and Yields for the Three Months Ended JuneSeptember 30, 2020 and 2019
 Three months ended September 30,
 20202019
(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)$13,817,353 $2,717 0.08 %$7,193,195 $28,867 1.59 %
Investment securities: (2)
Available-for-sale securities:
Taxable20,026,864 87,792 1.74 10,600,449 62,121 2.32 
Held-to-maturity securities:
Taxable10,286,332 68,725 2.66 12,922,438 87,535 2.69 
Non-taxable (3)2,266,864 18,876 3.31 1,612,067 14,080 3.47 
Total loans, amortized cost (4) (5)37,318,600 368,981 3.93 29,822,426 394,246 5.24 
Total interest-earning assets83,716,013 547,091 2.60 62,150,575 586,849 3.74 
Cash and due from banks1,162,156 590,391 
Allowance for credit losses for loans(610,212)(308,609)
Other assets (6)4,080,409 2,895,391 
Total assets$88,348,366 $65,327,748 
Funding sources:
Interest-bearing liabilities:
Interest bearing checking and savings accounts$4,297,874 $3,038 0.28 %$470,601 $102 0.09 %
Money market deposits19,829,441 4,594 0.09 15,805,507 49,169 1.23 
Money market deposits in foreign offices261,903 21 0.03 115,590 12 0.04 
Time deposits380,560 459 0.48 157,218 590 1.49 
Sweep deposits in foreign offices1,366,335 106 0.03 1,539,869 5,233 1.35 
Total interest-bearing deposits26,136,113 8,218 0.13 18,088,785 55,106 1.21 
Short-term borrowings15,335 4 0.10 22,045 119 2.14 
3.125% Senior Notes495,095 4,012 3.22 — — — 
3.50% Senior Notes348,197 3,153 3.60 347,841 3,150 3.59 
5.375% Senior Notes— — — 349,216 4,873 5.54 
Total interest-bearing liabilities26,994,740 15,387 0.23 18,807,887 63,248 1.33 
Portion of noninterest-bearing funding sources56,721,273 43,342,688 
Total funding sources83,716,013 15,387 0.07 62,150,575 63,248 0.40 
Noninterest-bearing funding sources:
Demand deposits51,543,903 39,146,184 
Other liabilities2,055,599 1,417,659 
Preferred stock340,138 — 
SVBFG common stockholders’ equity7,265,863 5,802,907 
Noncontrolling interests148,123 153,111 
Portion used to fund interest-earning assets(56,721,273)(43,342,688)
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity$88,348,366 $65,327,748 
Net interest income and margin$531,704 2.53 %$523,601 3.34 %
Total deposits$77,680,016 $57,234,969 
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis(3,964)(2,957)
Net interest income, as reported$527,740 $520,644 
  Three months ended June 30,
  2020 2019
(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) $11,919,819
 $2,402
 0.08% $5,405,899
 $26,364
 1.96%
Investment securities: (2)            
Available-for-sale securities:            
Taxable 12,784,271
 69,251
 2.18
 8,205,333
 45,347
 2.22
Held-to-maturity securities:            
Taxable 10,886,944
 72,296
 2.67
 13,350,533
 89,048
 2.68
Non-taxable (3) 2,152,486
 18,308
 3.42
 1,572,056
 13,836
 3.53
Total loans, amortized cost (4) (5) 36,512,159
 365,110
 4.02
 29,406,620
 414,077
 5.65
Total interest-earning assets 74,255,679
 527,367
 2.85
 57,940,441
 588,672
 4.07
Cash and due from banks 894,412
     542,345
    
Allowance for credit losses for loans (560,650)     (311,709)    
Other assets (6) 3,842,561
     2,529,409
    
Total assets $78,432,002
     $60,700,486
    
Funding sources:
            
Interest-bearing liabilities:            
Interest bearing checking and savings accounts $2,175,316
 $1,650
 0.31% $459,972
 $100
 0.09%
Money market deposits 17,530,821
 3,571
 0.08
 12,669,422
 41,249
 1.31
Money market deposits in foreign offices 290,992
 26
 0.04
 162,586
 16
 0.04
Time deposits 186,894
 347
 0.75
 75,721
 171
 0.91
Sweep deposits in foreign offices 1,645,410
 100
 0.02
 1,476,614
 5,614
 1.52
Total interest-bearing deposits 21,829,433
 5,694
 0.10
 14,844,315
 47,150
 1.27
Short-term borrowings 618,099
 591
 0.38
 188,998
 1,195
 2.54
3.125% Senior Notes 141,509
 1,159
 3.29
 —
 —
 —
3.50% Senior Notes 348,107
 3,152
 3.64
 347,755
 3,149
 3.63
5.375% Senior Notes —
 —
 —
 349,048
 4,870
 5.60
Total interest-bearing liabilities 22,937,148
 10,596
 0.19
 15,730,116
 56,364
 1.44
Portion of noninterest-bearing funding sources 51,318,531
     42,210,325
    
Total funding sources 74,255,679
 10,596
 0.05
 57,940,441
 56,364
 0.39
Noninterest-bearing funding sources:
            
Demand deposits 46,086,948
     38,117,893
    
Other liabilities 2,024,098
     1,232,464
    
Preferred stock 340,138
     —
    
SVBFG common stockholders’ equity 6,893,986
     5,477,148
    
Noncontrolling interests 149,684
     142,865
    
Portion used to fund interest-earning assets (51,318,531)     (42,210,325)    
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity $78,432,002
     $60,700,486
    
Net interest income and margin   $516,771
 2.80%   $532,308
 3.68%
Total deposits $67,916,381
     $52,962,208
    
Reconciliation to reported net interest income:
            
Adjustments for taxable equivalent basis   (3,844)     (2,905)  
Net interest income, as reported   $512,927
     $529,403
  
(1)
Includes average interest-earning deposits in other financial institutions of $0.9 billion and $0.9 billion for the three months ended June 30, 2020 and 2019, respectively. For the three months ended June 30, 2020 and 2019, balances also include $10.0 billion and $3.7 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 $49.6 million and $44.1 million for the three months ended June 30, 2020 and 2019, respectively.
(6)
Average investment securities of $1.9 billion and $1.0 billion for the three months ended June 30, 2020 and 2019, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable and other equity securities.

(1)Includes average interest-earning deposits in other financial institutions of $1.0 billion and $1.1 billion for the three months ended September 30, 2020 and 2019, respectively. For the three months ended September 30, 2020 and 2019, balances also include $11.3 billion and $5.1 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 $49.5 million and $39.4 million for the three months ended September 30, 2020 and 2019, respectively.
(6)Average investment securities of $2.1 billion and $1.2 billion for the three months ended September 30, 2020 and 2019, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable and other equity securities.
86
Average Balances, Rates and Yields for the SixNine Months Ended JuneSeptember 30, 2020 and 2019
 Nine months ended September 30,
 20202019
(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)$11,025,519 $22,743 0.28 %$5,696,501 $74,447 1.75 %
Investment securities: (2)
Available-for-sale securities:
Taxable15,475,686 234,066 2.02 8,572,314 142,891 2.23 
Held-to-maturity securities:
Taxable10,947,145 218,383 2.66 13,305,424 267,877 2.69 
Non-taxable (3)2,107,248 53,418 3.39 1,585,734 41,760 3.52 
Total loans, amortized cost (4) (5)35,835,927 1,116,660 4.16 29,210,960 1,202,467 5.50 
Total interest-earning assets75,391,525 1,645,270 2.91 58,370,933 1,729,442 3.96 
Cash and due from banks952,118 553,523 
Allowance for credit losses for loans(499,962)(303,154)
Other assets (6)3,916,969 2,592,830 
Total assets$79,760,650 $61,214,132 
Funding sources:
Interest-bearing liabilities:
Interest bearing checking and savings accounts$2,347,019 $4,796 0.27 %$491,663 $318 0.09 %
Money market deposits18,330,106 41,178 0.30 12,540,843 112,249 1.20 
Money market deposits in foreign offices272,940 71 0.03 142,053 43 0.04 
Time deposits244,099 1,235 0.68 94,934 790 1.11 
Sweep deposits in foreign offices1,630,565 4,030 0.33 1,562,880 16,763 1.43 
Total interest-bearing deposits22,824,729 51,310 0.30 14,832,373 130,163 1.17 
Short-term borrowings532,549 3,310 0.83 186,930 3,519 2.52 
3.125% Senior Notes213,234 5,171 3.24 — — — 
3.50% Senior Notes348,108 9,457 3.63 347,756 9,447 3.63 
5.375% Senior Notes— — — 349,050 14,611 5.60 
Total interest-bearing liabilities23,918,620 69,248 0.39 15,716,109 157,740 1.34 
Portion of noninterest-bearing funding sources51,472,905 42,654,824 
Total funding sources75,391,525 69,248 0.12 58,370,933 157,740 0.36 
Noninterest-bearing funding sources:
Demand deposits46,341,335 38,498,971 
Other liabilities2,118,690 1,327,040 
Preferred stock340,148 — 
SVBFG common stockholders’ equity6,892,301 5,523,196 
Noncontrolling interests149,556 148,816 
Portion used to fund interest-earning assets(51,472,905)(42,654,824)
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity$79,760,650 $61,214,132 
Net interest income and margin$1,576,022 2.79 %$1,571,702 3.60 %
Total deposits$69,166,064 $53,331,344 
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis(11,218)(8,769)
Net interest income, as reported$1,564,804 $1,562,933 
  Six months ended June 30,
  2020 2019
(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) $9,614,262
 $20,026
 0.42% $4,935,751
 $45,580
 1.86%
Investment securities: (2)            
Available-for-sale securities:            
Taxable 13,175,090
 146,274
 2.23
 7,541,439
 80,769
 2.16
Held-to-maturity securities:            
Taxable
11,281,183
 149,658
 2.67
 13,500,091
 180,343
 2.69
Non-taxable (3)
2,026,563
 34,541
 3.43
 1,572,350
 27,680
 3.55
Total loans, amortized cost (4) (5) 35,086,444
 747,679
 4.29
 28,900,160
 808,221
 5.64
Total interest-earning assets 71,183,542
 1,098,178
 3.10
 56,449,791
 1,142,593
 4.08
Cash and due from banks 845,945
     534,769
    
Allowance for credit losses for loans (444,231)     (300,381)    
Other assets (6) 3,834,329
     2,439,055
    
Total assets $75,419,585
     $59,123,234
    
Funding sources:
            
Interest-bearing liabilities:            
Interest bearing checking and savings accounts $1,360,871
 $1,758
 0.26% $502,369
 $216
 0.09%
Money market deposits 17,572,200
 36,584
 0.42
 10,881,455
 63,080
 1.17
Money market deposits in foreign offices 278,518
 50
 0.04
 155,503
 31
 0.04
Time deposits 175,119
 776
 0.89
 63,275
 200
 0.64
Sweep deposits in foreign offices 1,764,132
 3,924
 0.45
 1,574,577
 11,530
 1.48
Total interest-bearing deposits 21,150,840
 43,092
 0.41
 13,177,179
 75,057
 1.15
Short-term borrowings 793,998
 3,306
 0.84
 270,740
 3,399
 2.53
3.125% Senior Notes 70,755
 1,159
 3.29
 —
 —
 —
3.50% Senior Notes 348,063
 6,304
 3.64
 347,712
 6,298
 3.65
5.375% Senior Notes —
 —
 —
 348,966
 9,738
 5.63
Total interest-bearing liabilities 22,363,656
 53,861
 0.48
 14,144,597
 94,492
 1.35
Portion of noninterest-bearing funding sources 48,819,886
     42,305,194
    
Total funding sources 71,183,542
 53,861
 0.15
 56,449,791
 94,492
 0.34
Noninterest-bearing funding sources:
            
Demand deposits 43,711,466
     38,170,001
    
Other liabilities 2,150,563
     1,280,981
    
Preferred stock 340,154
     —
    
SVBFG common stockholders’ equity 6,703,466
     5,381,022
    
Noncontrolling interests 150,280
     146,633
    
Portion used to fund interest-earning assets (48,819,886)     (42,305,194)    
Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity $75,419,585
     $59,123,234
    
Net interest income and margin   $1,044,317
 2.95%   $1,048,101
 3.74%
Total deposits $64,862,306
     $51,347,180
    
Reconciliation to reported net interest income:
            
Adjustments for taxable equivalent basis   (7,253)     (5,812)  
Net interest income, as reported   $1,037,064
     $1,042,289
  
(1)Includes average interest-earning deposits in other financial institutions of $0.9 billion and $0.9 billion for the nine months ended September 30, 2020 and 2019, respectively. The balance also includes $8.9 billion and $3.9 billion deposited at the FRB, earning interest at the Federal Funds target rate for the nine months ended September 30, 2020 and 2019, respectively.
(1)
Includes average interest-earning deposits in other financial institutions of
(2)Yields on interest-earning investment securities do not give effect to changes in fair value that are reflected in other comprehensive income.$0.9 billion and $0.8 billionsix months endedJune 30, 2020 and 2019, respectively. The balance also includes $7.8 billion and $3.3 billion deposited at the FRB, earning interest at the Federal Funds target rate for the six months endedJune 30, 2020 and 2019, respectively.
(2)Yields on interest-earning investment securities do not give effect to changes in fair value that are reflected in other comprehensive income.
(3)Interest income on non-taxable available-for-sale securities is presented on a fully taxable-equivalent basis using the federal statutory 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 $86.2 million and $80.8 million for the six months endedJune 30, 2020 and 2019, respectively.
(6)
Average investment securities of $1.7 billion and $1.0 billion for the six months endedJune 30, 2020 and 2019, respectively, were classified as other assets as they were noninterest-earning assets. These investments consisted primarily of non-marketable securities.

(3)Interest income on non-taxable available-for-sale 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 $135.8 million and $120.2 million for the nine months ended September 30, 2020 and 2019, respectively.
(6)Average investment securities of $1.9 billion and $1.1 billion for the nine months ended September 30, 2020 and 2019, respectively, were classified as other assets as they were noninterest-earning assets. These investments consisted primarily of non-marketable and other equity securities.
87
(Reduction) Provision for Credit Losses
The (reduction) provision for credit losses is the combination of (i) the provision for loans, (ii) the provision for unfunded credit commitments and (iii) the provision for HTM securities. Our (reduction) provision for credit losses equals our best estimate of probable credit losses that are inherent in the portfolios at the balance sheet date.
The following table summarizes our allowance for credit losses for loans, unfunded credit commitments and HTM securities for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
 Three months ended June 30, Six months ended June 30, Three months ended September 30,Nine months ended September 30,
(Dollars in thousands, except ratios) 2020 2019 2020 2019(Dollars in thousands, except ratios)2020201920202019
Allowance for credit losses for loans, beginning balance $548,963
 $300,151
 $304,924
 $280,903
Allowance for credit losses for loans, beginning balance$589,828 $301,888 $304,924 $280,903 
Day one impact of adopting ASC 326 —
 —
 25,464
 —
Day one impact of adopting ASC 326— — 25,464 — 
Provision for loans 51,899
 19,148
 300,800
 44,969
(Reduction) provision for loans(Reduction) provision for loans(54,106)35,985 246,694 80,954 
Gross loan charge-offs (15,055) (26,435) (51,951) (35,435)Gross loan charge-offs(28,449)(36,820)(80,400)(72,255)
Loan recoveries 4,073
 9,820
 11,828
 11,245
Loan recoveries4,354 3,888 16,182 15,133 
Foreign currency translation adjustments (52) (796) (1,237) 206
Foreign currency translation adjustments1,331 (531)94 (325)
Allowance for credit losses for loans, ending balance $589,828
 $301,888
 $589,828
 $301,888
Allowance for credit losses for loans, ending balance$512,958 $304,410 $512,958 $304,410 
Allowance for credit losses for unfunded credit commitments, beginning balance 84,690
 57,970
 67,656
 55,183
Allowance for credit losses for unfunded credit commitments, beginning balance99,294 62,664 67,656 55,183 
Day one impact of adopting ASC 326 —
 —
 22,826
 —
Day one impact of adopting ASC 326— — 22,826 — 
Provision for unfunded credit commitments 14,590
 4,798
 9,113
 7,528
Provision for unfunded credit commitments2,019 551 11,132 8,079 
Foreign currency translation adjustments 14
 (104) (301) (47)Foreign currency translation adjustments202 (107)(99)(154)
Allowance for credit losses for unfunded credit commitments, ending balance (1) $99,294
 $62,664
 $99,294
 $62,664
Allowance for credit losses for unfunded credit commitments, ending balance (1)$101,515 $63,108 $101,515 $63,108 
Allowance for credit losses for HTM securities, beginning balance 230
 —
 —
 —
Allowance for credit losses for HTM securities, beginning balance222 — — — 
Day one impact of adopting ASC 326 —
 —
 174
 —
Day one impact of adopting ASC 326— — 174 — 
(Reduction of) provision for HTM securities (8) —
 48
 —
Provision for HTM securitiesProvision for HTM securities69 — 117 — 
Allowance for credit losses for HTM securities, ending balance (2) $222
 $—
 $222
 $—
Allowance for credit losses for HTM securities, ending balance (2)$291 $— $291 $— 
Ratios and other information:        Ratios and other information:
Provision for loans as a percentage of period-end total loans (annualized) (3) 0.57% 0.26% 1.65% 0.31%
(Reduction) provision for loans as a percentage of period-end total loans (annualized) (3)(Reduction) provision for loans as a percentage of period-end total loans (annualized) (3)(0.56)%0.46 %0.86 %0.35 %
Gross loan charge-offs as a percentage of average total loans (annualized) 0.17
 0.36
 0.30
 0.25
Gross loan charge-offs as a percentage of average total loans (annualized)0.30 0.49 0.30 0.33 
Net loan charge-offs as a percentage of average total loans (annualized) 0.12
 0.23
 0.23
 0.17
Net loan charge-offs as a percentage of average total loans (annualized)0.26 0.44 0.24 0.26 
Allowance for credit losses for loans as a percentage of period-end total loans (3) 1.61
 1.03
 1.61
 1.03
Allowance for credit losses for loans as a percentage of period-end total loans (3)1.34 0.97 1.34 0.97 
Provision for credit losses $66,481
 $23,946
 $309,961
 $52,497
(Reduction) provision for credit losses(Reduction) provision for credit losses$(52,018)$36,536 $257,943 $89,033 
Period-end total loans (3) 36,727,222
 29,370,403
 36,727,222
 29,370,403
Period-end total loans (3)38,413,891 31,229,003 38,413,891 31,229,003 
Average total loans (3) 36,512,159
 29,568,968
 35,086,444
 29,065,111
Average total loans (3)37,318,600 29,979,522 35,835,927 29,373,264 
Allowance for loan losses for nonaccrual loans 54,383
 53,067
 54,383
 53,067
Allowance for loan losses for nonaccrual loans64,479 53,728 64,479 53,728 
Nonaccrual loans 94,326
 96,641
 94,326
 96,641
Nonaccrual loans105,711 104,045 105,711 104,045 
(1)The “allowance for credit losses for unfunded credit commitments” is included as a component of “Other liabilities” on our consolidated balance sheets.
(1)The “allowance for credit losses for unfunded credit commitments” is included as a component of “Other liabilities” on our consolidated balance sheets.
(2)The "allowance for credit losses for HTM securities" is included as a component of HTM securities and presented net in our consolidated financial statements.
(3)
For the three and six months endedJune
(2)The "allowance for credit losses for HTM securities" is included as a component of HTM securities and presented net in our consolidated financial statements.
(3)For the three and nine months ended September 30, 2020,, loan amounts are disclosed, and ratios are calculated, using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed, and ratios are calculated, using the gross basis.

88


Three months ended JuneSeptember 30, 2020 and 2019
Our provision forThe reduction of our expected credit losses was $66.5$52.0 million for the three months ended JuneSeptember 30, 2020, consisting of a provisionreduction of our expected credit losses for loans of $51.9$54.1 million, a provision for credit losses for unfunded credit commitments of $14.6$2.0 million and a reduction ofprovision for our expected credit losses for our HTM securities of $8$69 thousand.Our provision for credit losses was $23.9$36.5 million for the three months ended JuneSeptember 30, 2019, consisting of a provision for loans of $19.1$36.0 million and a provision for unfunded credit commitments of $4.8$0.5 million.
The provision forreduction of our expected credit losses for loans of $51.9$54.1 million for the three months ended JuneSeptember 30, 2020 was driven primarily by $26.2an$82.4 million reduction in additional reserves for our performing loans based onreflective of improved economic scenarios in our forecast models, as well as a qualitative adjustment reflective of the current economic environment under the CECL methodology adopted January 1, 2020, including qualitative adjustments to account for unprecedented economic forecast volatility, $24.2 million for net new nonaccrual loans and $10.5 million for charge-offs not specifically reserved for at March 31, 2020, partially offset bystrong credit performance from our Private Bank portfolio segment, a $4.9$4.6 million decrease related to changes in loan composition within our portfolio segments and $4.1$4.4 million of recoveries. These decreases were partially offset by $23.3 million for net new nonaccrual loans and $15.2 million for charge-offs not specifically reserved for at June 30, 2020. The reduction related to improved economic scenarios in our forecast models was driven primarily by our Investor Dependent Early-Stage portfolio segment which is more sensitive to the underlying macro-economic forecasts utilized in our CECL model as compared to the remaining portfolio segments as well as a decrease in balances in that portfolio segment.
A provision for credit losses for unfunded credit commitments of $14.6$2.0 million was driven primarily by the 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 portfolio segments.
The provision for loan losses of $19.1$36.0 million for the three months ended JuneSeptember 30, 2019 reflects an increase of $7.5 million for our performing loans, $10.9$19.1 million for net new nonaccrual loans, $7.3$18.3 million for charge-offs not specifically reserved for and $3.2$15.2 million in additional reserves for period-end loan growth, partially offset by recoveriesa decrease of $9.8 million.$13.0 million for the qualitative component of our performing loans and $3.9 million of recoveries.
The provision for unfunded credit commitments of $4.8$0.5 million was driven primarily by the growth in unfunded credit commitments of $0.7$1.3 billion for the three months ended JuneSeptember 30, 2019.2019, offset by a decrease related to the continued shift in the mix of our unfunded credit facilities to our large, higher credit quality private equity/venture capital clients.
Gross loan charge-offs were $15.1$28.4 million for the secondthird quarter of 2020, of which $10.5$15.2 million was not specifically reserved for at March 31,June 30, 2020. Gross loan charge-offs were partlyprimarily driven by $5.4$28.3 million charge-offs for our investor dependent clients and $4.9 million charge-off from one balance sheet dependent client. The remaining charge-offs came primarily from our cash flow dependent risk-based segment.Investor Dependent clients.
Gross loan charge-offs were $26.4$36.8 million for the three months ended JuneSeptember 30, 2019, of which $7.3$18.3 million was not specifically reserved for in prior quarters. Gross loan charge-offs were primarily driven by a $13.1$9.4 million charge-off for one mid stagemid-stage life science/healthcare portfolio client and $7.6 million for one later-stage software client, both of which were previously included in our nonaccrual loan portfolio. The remaining charge-offs came primarily from our early-stage clients.
SixNine Months Ended JuneSeptember 30, 2020 and 2019
Our provision for credit losses was $310.0$257.9 million for the sixnine months ended JuneSeptember 30, 2020, consisting of a provision for loan losses of $300.8$246.7 million, a provision for unfunded credit commitments of $9.1$11.1 million and a provision for HTM securities of $48$117 thousand.Our provision for credit losses was $52.5$89.0 million for the sixnine months ended JuneSeptember 30, 2019, consisting of a provision for loan losses of $45.0$81.0 million and a provision for unfunded credit commitments of $7.5$8.0 million.
The provision for credit losses for loans of $300.8$246.7 million was driven primarily by $216.9$134.5 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, $36.1$58.1 million in additional reserves for period-end loan growth, $23.6net new nonaccrual loans, $38.8 million for charge-offs not specifically reserved for at December 31, 2019 and $34.8$31.5 million in net new nonaccrual loans,additional reserves for period-end loan growth, partially offset by $11.8$16.2 million of recoveries.
A provision for credit losses for unfunded credit commitments of $9.1$11.1 million was driven primarily by the 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 the unfunded credit commitments composition within our portfolio segments.
The provision for loan losses of $45.0$81.0 million for the sixnine months ended JuneSeptember 30, 2019 was reflective primarily of $38.4$57.5 million in net new specific reserves for nonaccrual loans, $12.2$30.5 million for charge-offs not specifically reserved for in prior quarters and$7.3and $22.4 million from period-end loan growth, partially offset by recoveriesa decrease of $11.2 million.$14.3 million for our performing loans and $15.1 million of recoveries.
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The provision for unfunded credit commitments of $7.5$8.0 million for sixnine months ended JuneSeptember 30, 2019 was driven primarily by growth in unfunded credit commitments of $2.0$3.4 billion.
Gross loan charge-offs were $52.0$80.4 million for the sixnine months ended JuneSeptember 30, 2020, of which $23.6$38.8 million was not specifically reserved for in prior quarters. Gross loan charge-offs were primarily driven by $39.0$67.2 million charge-offs for our investor dependentInvestor Dependent clients and a $4.9 million charge-off from one balance sheet dependentBalance Sheet Dependent client. The remaining charge-offs came primarily from our cash flow dependentCash Flow Dependent risk-based segment.

segments.
Gross loan charge-offs were $35.4$72.3 million for the sixnine months ended JuneSeptember 30, 2019, of which $12.2$30.5 million was not specifically reserved for in prior quarters. Gross loan charge-offs included $17.5$26.9 million from our life science/healthcare loan portfolio and $11.2$38.3 million from our software/internet loan portfolio. Gross loan charge-offs for our life science/healthcare portfolio were driven primarily by $13.1$22.5 million from one mid-stage client. Gross loan charge-offs for our software/internet loan portfolio were driven primarily by our early-stage clients.
See “Consolidated Financial Condition—Credit Quality and Allowance for Credit Losses for Loans and for Unfunded Credit Commitments” below and Note 7 — “Loans and Allowance for Credit Losses: Loans and Unfunded Credit Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for further details on our allowance for credit losses for loans and unfunded credit commitments.
Noninterest Income
For the three and sixnine months ended JuneSeptember 30, 2020, noninterest income was $368.8$547.6 million and $670.8 million,$1.2 billion, respectively, compared to $333.8$294.0 million and $614.1$908.1 million for the comparable 2019 periods. For the three and sixnine months ended JuneSeptember 30, 2020, non-GAAP noninterest income, net of noncontrolling interests was $354.5$519.7 million and $658.3 million,$1.2 billion, respectively, compared to $315.0$279.4 million and $592.1$871.6 million for the comparable 2019 periods. For the three and sixnine months ended JuneSeptember 30, 2020, non-GAAP core fee income plus investment banking revenue and commissions was $290.9$254.8 million and $522.3$777.1 million, respectively compared to $220.5$213.0 million and $438.6$651.6 million for the comparable 2019 periods. For the three and sixnine months ended JuneSeptember 30, 2020, non-GAAP core fee income was $132.5$146.3 million and $301.0$447.3 million, respectively, compared to $157.3$162.2 million and $311.6$473.8 million for the comparable 2019 periods. (See reconciliations of non-GAAP measures used below under “Use of Non-GAAP Financial Measures”.)
Included in results for three and nine months ended September 30, 2020 are revenues related to our investments in BigCommerce comprised of: (i) $108.4 million from unrealized gains on investment securities; (ii) $10.8 million from gains on equity warrant assets; and (iii) $30.0 million in gains included in other noninterest income as discussed further below.
Use of Non-GAAP Financial Measures
To supplement our unaudited interim consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures of financial performance (including, but not limited to, non-GAAP core fee income, non-GAAP core fee income plus investment banking revenue and commissions, non-GAAP noninterest income, and non-GAAP net gains on investment securities). These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures by other companies in our industry. Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A non-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirement.
We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding items that represent income attributable to investors other than us and our subsidiaries. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. However, these non-GAAP financial measures should be considered in addition to, and not as a substitute for or preferable to, financial measures prepared in accordance with GAAP.
Included in net income is income and expense attributable to noncontrolling interests. We recognize, as part of our investment funds management business through SVB Capital and SVB Leerink, the entire income or loss from funds consolidated in accordance with ASC Topic 810 as discussed in Note 1 — “Basis of Presentation” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report. We are required under GAAP to consolidate 100% of the results of these entities, even though we may own less than 100% of such entities. The relevant amounts attributable to investors other than us are reflected under “Net Income Attributable to Noncontrolling Interests” on our statements of income. Where applicable, the tables below for noninterest income and net gains on investment securities exclude noncontrolling interests.
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Core fee income is a non-GAAP financial measure, which represents GAAP noninterest income, but excludes (i) 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, (ii) our investment banking revenue and commissions, and (iii) other noninterest income. 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.
Core fee income plus investment banking revenue and commissions is a non-GAAP measure, which represents GAAP noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control, primarily our net gains (losses) on investment securities and equity warrant assets, and other noninterest income. Core fee income plus investment banking revenue and commissions includes 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 sixnine months ended JuneSeptember 30, 2020 and 2019:
 Three months ended June 30, Six months ended June 30, Three months ended September 30,Nine months ended September 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change(Dollars in thousands)20202019% Change20202019% Change
GAAP noninterest income $368,848

$333,750
 10.5 % $670,782

$614,126
 9.2 %GAAP noninterest income$547,583 $294,009 86.2 %$1,218,365 $908,135 34.2 %
Less: income attributable to noncontrolling interests, including carried interest allocation 14,385
 18,736
 (23.2) 12,531
 21,984
 (43.0)Less: income attributable to noncontrolling interests, including carried interest allocation27,862 14,568 91.3 40,393 36,552 10.5 
Non-GAAP noninterest income, net of noncontrolling interests $354,463
 $315,014
 12.5
 $658,251
 $592,142
 11.2
Non-GAAP noninterest income, net of noncontrolling interests$519,721 $279,441 86.0 $1,177,972 $871,583 35.2 
The following table provides a reconciliation of GAAP noninterest income to non-GAAP core fee income for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
GAAP noninterest income $368,848
 $333,750
 10.5 % $670,782
 $614,126
 9.2 %
Less: gains on investment securities, net 34,868
 47,698
 (26.9) 80,923
 76,726
 5.5
Less: gains on equity warrant assets, net 26,506
 48,347
 (45.2) 39,901
 69,652
 (42.7)
Less: other noninterest income 16,528
 17,245
 (4.2) 27,665
 29,142
 (5.1)
Non-GAAP core fee income plus investment banking revenue and commissions (1) $290,946
 $220,460
 32.0
 $522,293
 $438,606
 19.1
Less: investment banking revenue 141,503
 48,694
 190.6
 188,370
 98,489
 91.3
Less: commissions 16,918
 14,429
 17.2
 32,940
 28,537
 15.4
Non-GAAP core fee income (2) $132,525
 $157,337
 (15.8) $300,983
 $311,580
 (3.4)
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
GAAP noninterest income$547,583 $294,009 86.2 %$1,218,365 $908,135 34.2 %
Less: gains on investment securities, net189,837 29,849 NM270,760 106,575 154.1 
Less: gains on equity warrant assets, net53,766 37,561 43.1 93,667 107,213 (12.6)
Less: other noninterest income49,222 13,631 NM76,887 42,773 79.8 
Non-GAAP core fee income plus investment banking revenue and commissions (1)$254,758 $212,968 19.6 $777,051 $651,574 19.3 
Less: investment banking revenue92,181 38,516 139.3 280,551 137,005 104.8 
Less: commissions16,257 12,275 32.4 49,197 40,812 20.5 
Non-GAAP core fee income (2)$146,320 $162,177 (9.8)$447,303 $473,757 (5.6)
(1)Non-GAAP core fee income plus investment banking revenue and commissions represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control, and other noninterest income. Core fee income plus investment banking revenue and commissions is Non-GAAP core fee income (as defined in the subsequent footnote) with the addition of investment banking revenue and commissions.
(2)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.
NM—Not meaningful
(1)Non-GAAP core fee income plus investment banking revenue and commissions represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control, and other noninterest income. Core fee income plus investment banking revenue and commissions is Non-GAAP core fee income (as defined in the subsequent footnote) with the addition of investment banking revenue and commissions.
(2)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 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 AFS debt securities portfolio, when applicable.
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 in China (“SPD-SVB”)), debt funds, private and public portfolio companies 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
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(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 (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 JuneSeptember 30, 2020 and 2019
For the three months ended JuneSeptember 30, 2020, we had net gains on investment securities of $34.9$189.8 million, compared to $47.7$29.8 million for the comparable 2019 period. Non-GAAP net gains on investment securities, net of noncontrolling interests, were $20.5$162.1 million for the three months ended JuneSeptember 30, 2020, compared to non-GAAP net gains, net of controlling interest of $29.1$15.2 million for the comparable 2019 period.
Non-GAAP net gains on investment securities, net of noncontrolling interests, of $20.5$162.1 million for the three months ended JuneSeptember 30, 2020 were driven by the following:
•Gains of $8.5$108.4 million from our public equity securities investments, primarily driven by unrealized gains due to increasesour previously announced investments in the value of public equity securities held,BigCommerce, which completed its IPO in August 2020,
•Gains of $7.2 million from our managed direct venture funds driven primarily by unrealized gains of $6.0 million from one portfolio company,
Gains of $6.5$23.1 million from our managed funds of funds portfolio related primarily to unrealized valuation gains, partially offset byand
Losses•Gains of $4.9$18.4 million from our strategic and other investments, comprised primarily ofdriven by net unrealized valuation decreases in private companies heldincreases in our strategic venture capital funds.
Total non-GAAP net gains on investments securities of $20.5 million includes a recovery of the first quarter 2020 downward market valuation adjustment of $17.1 million from our SVB Capital managed funds and strategic direct investments (comprised of our managed funds of funds, managed direct venture funds, debt funds and strategic and other investments components below).
SixNine months ended JuneSeptember 30, 2020 and 2019
For thesix nine months endedJune September 30, 2020, we had net gains on investment securities of $80.9$270.8 million, compared to $76.7$106.6 million for the comparable 2019 period. Non-GAAP net gains on investment securities, net of noncontrolling interests, were $68.1$230.2 million for the sixnine months ended JuneSeptember 30, 2020, compared to $54.7$69.9 million for the comparable 2019 period. Non-GAAP net gains, net of noncontrolling interests, of $68.1$230.2 million for the sixnine months ended JuneSeptember 30, 2020 were driven primarily by the following:

•
Gains of $61.2•Gains of $112.7 million from our AFS debt securities portfolio, resulting from the sale of $2.6 billion of U.S. Treasury securities, and
•
Gains of $6.2 million from managed direct venture funds driven primarily by unrealized gains of $6.0 million from one portfolio company, partially offset by
•
Losses of $8.9 million from strategic and other investments, comprised primarily of net unrealized valuation decreases in private companies held in our strategic venture capital funds.
Notwithstanding the gains from our salepublic equity securities investments, primarily driven by our previously announced investments in BigCommerce, which completed its IPO in August 2020,
•Gains of U.S. Treasury securities in$61.2 million from our AFS debt securities portfolio, resulting from the sale of $2.6 billion of U.S. Treasury securities, and
•Gains of $27.4 million from our total gains on investment securities for the remainingmanaged funds of funds portfolio were negatively impacted by COVID-19 market conditions towards the endrelated primarily to unrealized valuation gains.


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The following tables 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 sixnine months ended JuneSeptember 30, 2020 and 2019:
(Dollars in thousands)Managed
Funds of
Funds		Managed
Direct
Venture
Funds		Public Equity SecuritiesDebt
Funds		Sales of AFS SecuritiesStrategic
and Other
Investments		SVB LeerinkTotal
Three months ended September 30, 2020
Total gains on investment securities, net$42,885 $14,775 $108,417 $15 $— $18,426 $5,319 $189,837 
Less: income attributable to noncontrolling interests, including carried interest allocation19,832 7,492 — — — — 461 27,785 
Non-GAAP net gains on investment securities, net of noncontrolling interests$23,053 $7,283 $108,417 $15 $— $18,426 $4,858 $162,052 
Three months ended September 30, 2019
Total gains (losses) on investment securities, net$22,223 $9,668 $(11,488)$187 $— $8,035 $1,224 $29,849 
Less: income attributable to noncontrolling interests, including carried interest allocation9,676 4,138 — — — — 826 $14,640 
Non-GAAP net gains (loss) on investment securities, net of noncontrolling interests$12,547 $5,530 $(11,488)$187 $— $8,035 $398 $15,209 
Nine months ended September 30, 2020
Total gains (losses) on investment securities, net$53,768 $27,246 $112,744 $(253)$61,165 $9,490 $6,600 $270,760 
Less: income attributable to noncontrolling interests, including carried interest allocation26,344 13,741 — — — — 493 40,578 
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests$27,424 $13,505 $112,744 $(253)$61,165 $9,490 $6,107 $230,182 
Nine months ended September 30, 2019
Total gains (losses) on investment securities, net$60,787 $13,135 $(1,408)$1,529 $(3,905)$30,348 $6,089 $106,575 
Less: income attributable to noncontrolling interests, including carried interest allocation30,273 5,540 — — — — 861 36,674 
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests$30,514 $7,595 $(1,408)$1,529 $(3,905)$30,348 $5,228 $69,901 
(Dollars in thousands) Managed
Funds of
Funds		 Managed
Direct
Venture
Funds		 Public Equity Securities 
Debt
Funds
 Sales of AFS Securities 
Strategic
and Other
Investments
 SVB Leerink Total
Three months ended June 30, 2020                
Total gains (losses) on investment securities, net
$13,347
 $14,743

$8,533

$94

$—

$(4,919) $3,070
 $34,868
Less: income (loss) attributable to noncontrolling interests, including carried interest allocation
6,818
 7,576

—

—

—

—
 (66) 14,328
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests $6,529
 $7,167
 $8,533
 $94
 $—
 $(4,919) $3,136
 $20,540
                 
Three months ended June 30, 2019                
Total gains (losses) on investment securities, net $32,335
 $4,101
 $444
 $1,342
 $(275) $7,311
 $2,440
 $47,698
Less: income (loss) attributable to noncontrolling interests, including carried interest allocation 16,852
 1,711
 —
 —
 —
 —
 35
 $18,598
Non-GAAP net gains (loss) on investment securities, net of noncontrolling interests $15,483
 $2,390
 $444
 $1,342
 $(275) $7,311
 $2,405
 $29,100
                 
Six months ended June 30, 2020                
Total gains (losses) on investment securities, net $10,883
 $12,471
 $4,327
 $(268) $61,165
 $(8,936) $1,281
 $80,923
Less: income attributable to noncontrolling interests, including carried interest allocation 6,512
 6,249
 —
 —
 —
 —
 32
 12,793
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests $4,371
 $6,222
 $4,327
 $(268) $61,165
 $(8,936) $1,249
 $68,130
                 
Six months ended June 30, 2019                
Total gains (losses) on investment securities, net $38,564
 $3,467
 $10,080
 $1,342
 $(3,905) $22,313
 $4,865
 $76,726
Less: income attributable to noncontrolling interests, including carried interest allocation 20,597
 1,402
 —
 —
 —
 —
 35
 22,034
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests $17,967
 $2,065
 $10,080
 $1,342
 $(3,905) $22,313
 $4,830
 $54,692

Gains on Equity Warrant Assets, Net
Three months ended JuneSeptember 30, 2020 and 2019
Net gains on equity warrant assets were $26.5$53.8 million for the three months ended JuneSeptember 30, 2020, compared to net gains of $48.3$37.6 million for the comparable 2019 period. Net gains on equity warrant assets for the three months ended JuneSeptember 30, 2020 consisted of:
•
Net gains of $17.5 million from warrant valuations increases which includes the recovery of the $8.2 million downward market valuations adjustment recognized in the first quarter of 2020, reflective of the overall recovery of the market during the second quarter of 2020,
•Net gains of $30.2 million from warrant valuations increases, driven by valuation increases in our private company warrant portfolio, and
•
Net gains of $9.4 million from the exercise of equity warrant assets driven by IPO and M&A activity.


•Net gains of $23.9 million from the exercise of equity warrant assets driven by IPO and M&A activity, which included $10.8 million from our exercised warrant position in BigCommerce.


Six
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Nine months ended JuneSeptember 30, 2020 and 2019
Net gains on equity warrant assets were $39.9$93.7 million for the sixnine months ended JuneSeptember 30, 2020, compared to net gains of $69.7$107.2 million for the comparable 2019 period. Net gains on equity warrant assets for the sixnine months ended JuneSeptember 30, 2020 consisted of:
•
Net gains of $32.7
•Net gains of $59.4 million from the exercise of equity warrant assets during the six months endedJune 30, 2020, and
•
Net gains of $8.0 million from changes in warrant valuation increases, driven primarily by valuation increases in our private company warrant portfolio during the six months endedJune 30, 2020.
Our equity warrant assets, were also negatively impacteddriven by COVID-19 market conditions towardsIPO and M&A activity, which, included $10.8 million from our exercised warrant position in BigCommerce, and
•Net gains of $35.6 million from warrant valuation increases, driven primarily by valuation increases in our private company warrant portfolio during the end of the first quarter ofnine months ended September 30, 2020. Future performance of our equity warrant asset valuations may be further impacted by the effects of the COVID-19 pandemic.

A summary of gains on equity warrant assets, net, for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
  Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Equity warrant assets (1):
Gains on exercises, net$23,940 $30,047 (20.3)%$59,370 $90,357 (34.3)%
Terminations(361)(481)(24.9)%(1,332)(2,931)(54.6)
Changes in fair value, net30,187 7,995 NM35,629 19,787 80.1 
Total gains on equity warrant assets, net$53,766 $37,561 43.1 $93,667 $107,213 (12.6)
   Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
Equity warrant assets (1):            
Gains on exercises, net $9,435
 $40,226
 (76.5)% $32,730
 $49,180
 (33.4)%
Terminations (439) (1,045) (58.0)% (872) (1,884) (53.7)
Changes in fair value, net 17,510
 9,166
 91.0
 8,043
 22,356
 (64.0)
Total gains on equity warrant assets, net $26,506
 $48,347
 (45.2) $39,901
 $69,652
 (42.7)
NM—Not meaningful
(1)    At September 30, 2020, we held warrants in 2,503 companies, compared to 2,227 companies at September 30, 2019. The total fair value of our warrant portfolio was $202.2 million at September 30, 2020 and $149.1 million at September 30, 2019. Warrants in 28 companies each had fair values greater than $1.0 million and collectively represented $83.0 million, or 41.1 percent, of the fair value of the total warrant portfolio at September 30, 2020. Warrants in 15 companies each had fair values greater than $1.0 million and collectively represented $43.7 million, or 29.3 percent, of the fair value of the total warrant portfolio at September 30, 2019.
Investment in Root, Inc.
As of September 30, 2020, we held investments in Root, Inc. (“Root”), consisting of: (i) approximately 600,000 shares related to warrants held by SVBFG, and (ii) approximately 15.6 million shares directly held by two of our SVB Capital funds (in which SVBFG holds certain carried interests), of which we estimated to be entitled to approximately $24.1 million before taxes in the form of carried interest subject to the fund's performance and assuming the fund exceeds certain performance targets.
In late October 2020, Root completed its initial public offering. As part of the IPO which priced at $27 per share: (i) SVBFG sold all of our warrant shares, which resulted in a pre-tax gain of $5.5 million; and (ii) our SVB Capital funds sold approximately 1.6 million shares, of which SVBFG would be entitled to approximately $3.7 million before taxes in the form of carried interest, assuming the fund exceeds certain performance targets. SVB Capital currently holds approximately 14.0 million shares, which based on the closing price of Root’s common stock of $23.03 as of November 4, 2020, we currently estimate SVBFG to be entitled to approximately $29.8 million before taxes in the form of carried interest, assuming the fund exceeds certain performance targets. Carried interest may be subject to change to the extent fund performance levels fluctuate.
(1)At June 30, 2020, we held warrants in 2,419 companies, compared to 2,173 companies at June 30, 2019. The total fair value of our warrant portfolio was $171.1 million at June 30, 2020 and $158.0 million at June 30, 2019. Warrants in 20 companies each had fair values greater than $1.0 million and collectively represented $50.7 million, or 29.6 percent, of the fair value of the total warrant portfolio at June 30, 2020. Warrants in 22 companies each had fair values greater than $1.0 million and collectively represented $51.8 million, or 32.8 percent, of the fair value of the total warrant portfolio at June 30, 2019.

Gains (or losses) related to our equity securities in public companies such as Root, Inc are based on valuation changes or the sale of any securities, and are subject to such companies’ stock price, which are subject to market conditions and various other factors. Additionally, the public equity investment expected gains and losses, and the extent to which such gains or (losses) will become realized is subject to a variety of factors, including among other factors, changes in prevailing market prices and the timing of any sales of securities, which are subject to our securities sales and governance process, as well as certain sales restrictions (e.g. lock-up agreements). The lock up agreement for common stock shares held in Root, Inc, is scheduled to expire during April 2021.
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Non-GAAP Core Fee Income
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
Non-GAAP core fee income (1):            
Client investment fees $31,885
 $45,744
 (30.3)% $75,278
 $90,226
 (16.6)%
Foreign exchange fees 36,256
 38,506
 (5.8) 83,761
 76,554
 9.4
Credit card fees 21,288
 28,790
 (26.1) 49,592
 56,273
 (11.9)
Deposit service charges 20,511
 22,075
 (7.1) 45,100
 43,014
 4.8
Lending related fees 11,164
 11,213
 (0.4) 24,289
 25,150
 (3.4)
Letters of credit and standby letters of credit fees 11,421
 11,009
 3.7
 22,963
 20,363
 12.8
Total non-GAAP core fee income (1) $132,525
 $157,337
 (15.8) $300,983
 $311,580
 (3.4)
Investment banking revenue 141,503
 48,694
 190.6
 188,370
 98,489
 91.3
Commissions 16,918
 14,429
 17.2
 32,940
 28,537
 15.4
Total non-GAAP core fee income plus investment banking revenue and commissions (2) $290,946
 $220,460
 32.0
 $522,293
 $438,606
 19.1
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Non-GAAP core fee income (1):
Client investment fees$31,914 $46,679 (31.6)%$107,192 $136,905 (21.7)%
Foreign exchange fees43,881 40,309 8.9 127,642 116,863 9.2 
Credit card fees22,756 30,158 (24.5)72,348 86,431 (16.3)
Deposit service charges22,015 22,482 (2.1)67,115 65,496 2.5 
Lending related fees13,562 11,707 15.8 37,851 36,857 2.7 
Letters of credit and standby letters of credit fees12,192 10,842 12.5 35,155 31,205 12.7 
Total non-GAAP core fee income (1)$146,320 $162,177 (9.8)$447,303 $473,757 (5.6)
Investment banking revenue92,181 38,516 139.3 280,551 137,005 104.8 
Commissions16,257 12,275 32.4 49,197 40,812 20.5 
Total non-GAAP core fee income plus investment banking revenue and commissions (2)$254,758 $212,968 19.6 $777,051 $651,574 19.3 
(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.
(2)Non-GAAP core fee income plus investment banking revenue and commissions represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control and other noninterest income. 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.
(2)Non-GAAP core fee income plus investment banking revenue and commissions represents noninterest income, but excludes certain line items where performance is typically subject to market or other conditions beyond our control and other noninterest income. See “Use of Non-GAAP Measures” above.
Client Investment Fees
Client investment fees were $31.9 million and $75.3$107.2 million for the three and sixnine months ended JuneSeptember 30, 2020, compared to $45.7$46.7 million and $90.2$136.9 million for the comparable 2019 periods. The decreases were reflective of lower spreads due to decreases in the Federal Fundsmarket interest rates, offset by large increases in average off-balance sheet client investment funds. Given our expectations of a continued low rate environment, we generally expect client investment fees in 2020 to be lower than 2019.

A summary of client investment fees by instrument type for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 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) 2020 2019 % Change 2020 2019 % Change(Dollars in thousands)20202019% Change20202019% Change
Client investment fees by type:            Client investment fees by type:
Sweep money market fees $19,413
 $26,952
 (28.0)% $42,462
 $53,496
 (20.6)%Sweep money market fees$18,155 $26,202 (30.7)%$60,617 $79,698 (23.9)%
Asset management fees 11,596
 6,956
 66.7
 20,733
 13,628
 52.1
Asset management fees12,172 7,256 67.8 32,905 20,883 57.6 
Repurchase agreement fees 876
 11,836
 (92.6) 12,083
 23,102
 (47.7)Repurchase agreement fees1,587 13,221 (88.0)13,670 36,324 (62.4)
Total client investment fees $31,885
 $45,744
 (30.3) $75,278
 $90,226
 (16.6)Total client investment fees$31,914 $46,679 (31.6)$107,192 $136,905 (21.7)
The following table summarizes average client investment funds for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
 Three months ended September 30,Nine months ended September 30,
(Dollars in millions)20202019% Change20202019% Change
Sweep money market funds$54,495 $40,321 35.2 %$48,367 $40,048 20.8 %
Client investment assets under management (1)59,338 42,834 38.5 53,928 40,969 31.6 
Repurchase agreements9,731 9,670 0.6 9,809 8,947 9.6 
Total average client investment funds (2)$123,564 $92,825 33.1 $112,104 $89,964 24.6 
  Three months ended June 30, Six months ended June 30,
(Dollars in millions) 2020 2019 % Change 2020 2019 % Change
Sweep money market funds $47,561
 $40,017
 18.9% $45,303
 $39,911
 13.5%
Client investment assets under management (1) 51,801
 40,825
 26.9
 51,223
 40,036
 27.9
Repurchase agreements 9,898
 8,810
 12.3
 9,849
 8,586
 14.7
Total average client investment funds (2) $109,260
 $89,652
 21.9
 $106,375
 $88,533
 20.2
(1)These funds represent investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(1)These funds represent investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.

95
(2)Client investment funds are maintained at third-party financial institutions and are not recorded on our balance sheet.
(2)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 JuneSeptember 30, 2020 and December 31, 2019:
(Dollars in millions)September 30, 2020December 31, 2019% Change
Sweep money market funds$56,395 $43,226 30.5 %
Client investment assets under management (1)60,773 46,904 29.6 
Repurchase agreements9,613 9,062 6.1 
Total period-end client investment funds (2)$126,781 $99,192 27.8 
(Dollars in millions) June 30, 2020 December 31, 2019 % Change
Sweep money market funds $49,388
 $43,226
 14.3%
Client investment assets under management (1) 56,023
 46,904
 19.4
Repurchase agreements 10,510
 9,062
 16.0
Total period-end client investment funds (2) $115,921
 $99,192
 16.9
(1)These funds represent investments in third-party money market mutual funds and fixed-income securities managed by SVB Asset Management.
(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.
(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 $36.3$43.9 million and $83.8$127.6 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively, compared to $38.5$40.3 million and $76.6$116.9 million for the comparable 2019 periods. The decrease in foreign exchange feesincrease for the three months ended JuneSeptember 30, 2020, compared to Junethe comparable period ending September 30, 2019, iswas driven by decreasedincreased trade volumes due to the impact of a slower macro-economic environment resulting from the COVID-19 pandemic.reflective primarily by private equity deal activity coupled with quarterly hedging activity. The increase for the sixnine months ended JuneSeptember 30, 2020 compared to JuneSeptember 30, 2019, is reflectivedue primarily byto the overall increase in the number of clients executing spot contracts resulting in higher trade volumes from the previous year. The volumeyear reflective of trades for spot contracts increased five percent for the six months ended June 30, 2020 compared to the comparable period ended June 30, 2019, due primarily to our global expansion initiative and increased client engagement efforts. Foreign exchange fees have been, and may further be, impacted by the effects of the COVID-19 pandemic.
A summary of foreign exchange fee income by instrument type for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Foreign exchange fees by instrument type:
Spot contract commissions$38,794 $36,836 5.3 %$112,821 $106,561 5.9 %
Forward contract commissions4,613 3,371 36.8 14,004 10,144 38.1 
Option premium fees474 102 NM817 158 NM
Total foreign exchange fees$43,881 $40,309 8.9 $127,642 $116,863 9.2 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020
2019
% Change 2020 2019 % Change
Foreign exchange fees by instrument type:            
Spot contract commissions $33,093
 $34,696
 (4.6)% $74,027
 $69,725
 6.2%
Forward contract commissions 3,052
 3,778
 (19.2) 9,391
 6,773
 38.7
Option premium fees 111
 32
 NM
 343
 56
 NM
Total foreign exchange fees $36,256
 $38,506
 (5.8) $83,761
 $76,554
 9.4
NM—Not meaningful

Credit Card Fees
Credit card fees were $21.3$22.8 million and $49.6$72.3 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively, compared to $28.8$30.2 million and $56.3$86.4 million for the comparable 2019 periods. The decreases were primarily due to lower transaction volumes starting in March of 2020 reflective of the COVID-19 pandemic interrupting normal business activity. Credit card fees have been, and may further be, impacted by the effects of the COVID-19 pandemic.
A summary of credit card fees by instrument type for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Credit card fees by instrument type:
Card interchange fees, net$18,168 $24,560 (26.0)%$55,257 $68,808 (19.7)%
Merchant service fees3,670 3,943 (6.9)13,727 12,763 7.6 
Card service fees918 1,655 (44.5)3,364 4,860 (30.8)
Total credit card fees$22,756 $30,158 (24.5)$72,348 $86,431 (16.3)
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  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
Credit card fees by instrument type:            
Card interchange fees, net $15,314
 $22,855
 (33.0)% $37,089
 $44,248
 (16.2)%
Merchant service fees 5,030
 4,286
 17.4
 10,057
 8,821
 14.0
Card service fees 944
 1,649
 (42.8) 2,446
 3,204
 (23.7)
Total credit card fees $21,288
 $28,790
 (26.1) $49,592
 $56,273
 (11.9)

Deposit Service Charges
Deposit service charges were $20.5$22.0 million and $45.1$67.1 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively, compared to $22.1$22.5 million and $43.0$65.5 million for the comparable 2019 periods. The decrease in deposit service charges for the three months ended JuneSeptember 30, 2020, compared to the comparable period ending JuneSeptember 30, 2019, was reflective of the decrease in client activity including the impact of a slower macro-economic environment resulting from the COVID-19 pandemic as well as increased earnings credit partly attributed to client participatingcredits reflective of growth in the PPP and placing increased funds in their deposit demand accounts from clients conserving cash resulting in qualifying balances to offset service charges. The increase for the sixnine months ended JuneSeptember 30, 2020 compared to the comparable period ending JuneSeptember 30, 2019, was reflective of higher deposit client counts as well as higher volumes of our transaction-based fee products from the previous year. Deposit service charges have been, and may further be, impacted by the effects of the COVID-19 pandemic.
Lending Related Fees
Lending related fees were $11.2$13.6 million and $24.3$37.9 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively, compared to $11.2$11.7 million and $25.2$36.9 million for the comparable 2019 periods. Lending relatedThe increases were primarily due to increases in fees remained flat to slightly lower for the three and six months ended June 30, 2020 compared to June 30, 2019, respectively, reflectiveearned from unused lines of an increase in unused commitment fees partially offset by lower other lending related fees. The decrease in in other lending related fees is reflective primarily of lower syndication volumes resulting in decreased syndication fee income.credit.
A summary of lending related fees by type for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 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) 2020 2019 % Change 2020 2019 % Change(Dollars in thousands)20202019% Change20202019% Change
Lending related fees by instrument type:            Lending related fees by instrument type:
Unused commitment fees $8,324
 $7,051
 18.1 % $16,730
 $16,721
 0.1 %Unused commitment fees$9,872 $8,339 18.4 %$26,602 $25,060 6.2 %
Other 2,840
 4,162
 (31.8) 7,559
 8,429
 (10.3)Other3,690 3,368 9.6 11,249 11,797 (4.6)
Total lending related fees $11,164
 $11,213
 (0.4) $24,289
 $25,150
 (3.4)Total lending related fees$13,562 $11,707 15.8 $37,851 $36,857 2.7 
Letters of Credit and Standby Letters of Credit Fees
Letters of credit and standby letters of credit fees were $11.4$12.2 million and $23.0$35.2 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively, compared to $11.0$10.8 million and $20.4$31.2 millionfor the comparable2019 periods. The increases were primarily driven by an increase in deferred fee income reflective of larger letter of credit issuances. We generally expect lower fees in 2020 due to reduced international trade activities.
Investment Banking Revenue
Investment banking revenue was $141.5$92.2 million and $188.4$280.6 million for the three and sixnine months ended JuneSeptember 30, 2020, respectively, compared to $48.7$38.5 million and $98.5$137.0 million for the comparable 2019 periods. The increases were attributable to higher levels of funding activity in the life science/healthcare secondary markets and by the increase in public equity underwriting fees. The revenue generated by investment banking has been, and may further be, impacted by the effects of the COVID-19 pandemic.
A summary of investment banking revenue by type for the sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
   Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
Investment banking revenue:            
Underwriting fees $131,085
 $42,584
 NM $162,375
 $78,356
 107.2 %
Advisory fees 8,922
 5,315
 67.9 24,409
 17,588
 38.8
Private placements and other 1,496
 795
 88.2 1,586
 2,545
 (37.7)
Total investment banking revenue $141,503
 $48,694
 190.6 $188,370
 $98,489
 91.3
NM—Not meaningful

  Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Investment banking revenue:
Underwriting fees$85,009 $31,016 174.1 $247,384 $109,371 126.2 %
Advisory fees1,761 5,200 (66.1)26,170 22,789 14.8 
Private placements and other5,411 2,300 135.3 6,997 4,845 44.4 
Total investment banking revenue$92,181 $38,516 139.3 $280,551 $137,005 104.8 
Commissions
Commissions for the three and sixnine months ended JuneSeptember 30, 2020 were $16.9$16.3 million and $32.9$49.2 million, respectively, compared to $14.4$12.3 million and $28.5$40.8 million for the comparable 2019 periods.periods. The increases were driven by client trading activity, consistent

with market volumes. Commissions include commissions received from clients for the execution of agency-based brokerage transactions in listed and over-the-counter equities.
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Other
Other noninterest income for the three and nine months ended September 30, 2020 were $49.2 million and $76.9 million, respectively, compared to $13.6 million and $42.8 million for the comparable 2019 periods. The revenue generatedincreases were primarily driven by investment banking has been,a $30.0 million recognized gain upon the exercise and may further be, impacted byconversion of our convertible debt option for BigCommerce during the effectsthird quarter of the COVID-19 pandemic.2020.
Noninterest Expense
A summary of noninterest expense for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 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) 2020
2019 % Change 2020 2019 % Change(Dollars in thousands)20202019% Change20202019% Change
Compensation and benefits $319,797
 $243,172
 31.5 % $575,383
 $481,233
 19.6 %Compensation and benefits$327,369 $233,840 40.0 %$902,752 $715,073 26.2 %
Professional services 63,828
 40,830
 56.3
 102,533
 77,816
 31.8
Professional services67,215 55,202 21.8 169,748 133,018 27.6 
Premises and equipment 27,708
 23,911
 15.9
 54,648
 45,611
 19.8
Premises and equipment30,772 26,775 14.9 85,420 72,386 18.0 
Net occupancy 18,845
 16,687
 12.9
 37,191
 32,735
 13.6
Net occupancy18,965 16,981 11.7 56,156 49,716 13.0 
Business development and travel 2,992
 17,022
 (82.4) 17,063
 32,376
 (47.3)Business development and travel2,214 19,539 (88.7)19,277 51,915 (62.9)
FDIC and state assessments 6,819
 4,483
 52.1
 12,053
 8,462
 42.4
FDIC and state assessments6,933 4,881 42.0 18,986 13,343 42.3 
Other 39,647
 37,417
 6.0
 80,350
 70,953
 13.2
Other37,553 34,106 10.1 117,903 105,059 12.2 
Total noninterest expense $479,636
 $383,522
 25.1
 $879,221
 $749,186
 17.4
Total noninterest expense$491,021 $391,324 25.5 $1,370,242 $1,140,510 20.1 
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 and SVB Leerink. We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by: (i) excluding certain items that represent expenses attributable to investors other than us and our subsidiaries, or certain items that do not occur every reporting period; or (ii) providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or preferable to, financial measures prepared in accordance with GAAP.


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The table below provides a summary of non-GAAP noninterest expense and non-GAAP core operating efficiency ratio for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
  Three months ended June 30, Six months ended June 30,
Non-GAAP core operating efficiency ratio (Dollars in thousands, except ratios) 2020
2019 % Change 2020 2019 % Change
GAAP noninterest expense $479,636
 $383,522
 25.1 % $879,221
 $749,186
 17.4 %
Less: expense attributable to noncontrolling interests 130
 168
 (22.6) 270
 547
 (50.6)
Non-GAAP noninterest expense, net of noncontrolling interests 479,506
 383,354
 25.1
 878,951
 748,639
 17.4
Less: expense attributable to SVB Leerink 108,650
 61,935
 75.4
 170,687
 122,475
 39.4
Non-GAAP noninterest expense, net of noncontrolling interests and SVB Leerink $370,856
 $321,419
 15.4
 $708,264
 $626,164
 13.1
             
GAAP net interest income $512,927
 $529,403
 (3.1) $1,037,064
 $1,042,289
 (0.5)
Adjustments for taxable equivalent basis 3,844
 2,905
 32.3
 7,253
 5,812
 24.8
Non-GAAP taxable equivalent net interest income 516,771
 532,308
 (2.9) 1,044,317
 1,048,101
 (0.4)
Less: income attributable to noncontrolling interests 5
 16
 (68.8) 26
 27
 (3.7)
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests 516,766
 532,292
 (2.9) 1,044,291
 1,048,074
 (0.4)
Less: net interest income attributable to SVB Leerink (3) 242
 (101.2) 198
 684
 (71.1)
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests and SVB Leerink $516,769
 $532,050
 (2.9) $1,044,093
 $1,047,390
 (0.3)
             
GAAP noninterest income $368,848
 $333,750
 10.5
 $670,782
 $614,126
 9.2
Less: (loss) income attributable to noncontrolling interests, including carried interest allocation 14,385
 18,736
 (23.2) 12,531
 21,984
 (43.0)
Non-GAAP noninterest income, net of noncontrolling interests 354,463
 315,014
 12.5
 658,251
 592,142
 11.2
Less: non-GAAP net gains on investment securities, net of noncontrolling interests 20,540
 29,100
 (29.4) 68,130
 54,692
 24.6
Less: net gains on equity warrant assets 26,506
 48,347
 (45.2) 39,901
 69,652
 (42.7)
Less: investment banking revenue 141,503
 48,694
 190.6
 188,370
 98,489
 91.3
Less: commissions 16,918
 14,429
 17.2
 32,940
 28,537
 15.4
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 $148,996
 $174,444
 (14.6) $328,910
 $340,772
 (3.5)
             
GAAP total revenue $881,775
 $863,153
 2.2
 $1,707,846
 $1,656,415
 3.1
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 $665,765
 $706,494
 (5.8) $1,373,003
 $1,388,162
 (1.1)
             
Operating efficiency ratio 54.39% 44.43% 22.4
 51.48% 45.23% 13.8
Non-GAAP core operating efficiency ratio (1) 55.70
 45.49
 22.4
 51.59
 45.11
 14.4
 Three months ended September 30,Nine months ended September 30,
Non-GAAP core operating efficiency ratio (Dollars in thousands, except ratios)20202019% Change20202019% Change
GAAP noninterest expense$491,021 $391,32425.5 %$1,370,242 $1,140,51020.1 %
Less: expense attributable to noncontrolling interests114 145(21.4)384 692(44.5)
Non-GAAP noninterest expense, net of noncontrolling interests490,907 391,17925.5 1,369,858 1,139,81820.2 
Less: expense attributable to SVB Leerink77,567 55,20040.5 248,254 177,67539.7 
Non-GAAP noninterest expense, net of noncontrolling interests and SVB Leerink$413,340 $335,97923.0 $1,121,604 $962,14316.6 
GAAP net interest income$527,740 $520,6441.4 $1,564,804 $1,562,9330.1 
Adjustments for taxable equivalent basis3,964 2,95734.1 11,218 8,76927.9 
Non-GAAP taxable equivalent net interest income531,704 523,6011.5 1,576,022 1,571,7020.3 
Less: income attributable to noncontrolling interests— 14(100.0)26 41(36.6)
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests531,704 523,5871.6 1,575,996 1,571,6610.3 
Less: net interest income attributable to SVB Leerink175 277(36.8)373 961(61.2)
Non-GAAP taxable equivalent net interest income, net of noncontrolling interests and SVB Leerink$531,529 $523,3101.6 $1,575,623 $1,570,7000.3 
GAAP noninterest income$547,583 $294,00986.2 $1,218,365 $908,13534.2 
Less: income attributable to noncontrolling interests, including carried interest allocation27,862 14,56891.3 40,393 36,55210.5 
Non-GAAP noninterest income, net of noncontrolling interests519,721 279,44186.0 1,177,972 871,58335.2 
Less: non-GAAP net gains on investment securities, net of noncontrolling interests162,052 15,209NM230,182 69,901NM
Less: net gains on equity warrant assets53,766 37,56143.1 93,667 107,213(12.6)
Less: investment banking revenue92,181 38,516139.3 280,551 137,005104.8 
Less: commissions16,257 12,27532.4 49,197 40,81220.5 
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$195,465 $175,88011.1 $524,375 $516,6521.5 
GAAP total revenue$1,075,323 $814,65332.0 $2,783,169 $2,471,06812.6 
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$726,994 $699,1904.0 $2,099,998 $2,087,3520.6 
Operating efficiency ratio45.66 %48.04 %(5.0)49.23 %46.15 %6.7 
Non-GAAP core operating efficiency ratio (1)56.86 48.05 18.3 53.41 46.09 15.9 

99
NM—Not meaningful
(1)The non-GAAP core operating efficiency ratio is calculated by dividing noninterest expense after adjusting for noninterest expense attributable to SVB Leerink 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.
(1)The non-GAAP core operating efficiency ratio is calculated by dividing noninterest expense after adjusting for noninterest expense attributable to SVB Leerink 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.
Compensation and Benefits Expense
The following table provides a summary of our compensation and benefits expense for the three and sixnine months ended JuneSeptember 30, 2020 and 2019:
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands, except employees)20202019% Change20202019% Change
Compensation and benefits:
Salaries and wages$135,705 $109,473 24.0 %$375,844 $316,472 18.8 %
Incentive compensation plans103,898 59,602 74.3 291,101 200,483 45.2 
Other employee incentives and benefits (1)87,766 64,765 35.5 235,807 198,118 19.0 
Total compensation and benefits$327,369 $233,840 40.0 $902,752 $715,073 26.2 
Period-end full-time equivalent employees4,3363,46025.3 4,3363,46025.3 
Average full-time equivalent employees4,2163,41323.5 3,9143,30918.3 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands, except employees) 2020 2019 % Change 2020 2019 % Change
Compensation and benefits:            
Salaries and wages $124,525
 $105,799
 17.7% $240,139
 $206,999
 16.0%
Incentive compensation plans 120,529
 71,492
 68.6
 187,203
 140,881
 32.9
Other employee incentives and benefits (1) 74,743
 65,881
 13.5
 148,041
 133,353
 11.0
Total compensation and benefits $319,797
 $243,172
 31.5
 $575,383
 $481,233
 19.6
Period-end full-time equivalent employees 3,984
 3,314
 20.2
 3,984
 3,314
 20.2
Average full-time equivalent employees 3,855
 3,287
 17.3
 3,764
 3,257
 15.6
(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), ESOP, warrant incentive and retention plans, agency fees and other employee-related expenses.
Compensation and benefits expense was $319.8$327.4 million for the three months ended JuneSeptember 30, 2020, compared to $243.2$233.8 million for the comparable 2019 period. The key changes in factors affecting compensation and benefits expense were as follows:
•An increase of $18.7$26.2 million in salaries and wages reflective primarily of the increase in the number of average FTE to 3,8554,216 for the secondthird quarter of 2020 compared to 3,2873,413 for the second quarter of 2019, driven by strong hiring for in-sourcing, product development and revenue growth, as well as annual pay raises,
•An increase of $49.0$44.3 million in incentive compensation plans expense attributable primarily to an increase in SVB Leerink incentive compensation expense as a result of a strong secondthird quarter performance as compared to the same period in 2019,
•An increase of $8.9$23.0 million in other employee incentives and benefits primarily driven by an increase in agency feeswarrant incentive plan of $4.1$5.7 million, an increase in payroll taxes of $2.7 million and an increase of $3.5$2.6 million in share-based compensation expense due to the increased restricted stock awards granted during 2020.
Compensation and benefits expense was $575.4$902.8 million for the sixnine months ended JuneSeptember 30, 2020, compared to $481.2$715.1 million for the comparable 2019 period. The key changes in factors affecting compensation and benefits expense were as follows:
•An increase of $33.1$59.4 million in salaries and wages reflective primarily of the increase in the number of average FTE to 3,7643,914 for the sixnine months ended JuneSeptember 30, 2020 from 3,2573,309 for the sixnine months ended JuneSeptember 30, 2019, as well as annual pay raises,
•An increase of $46.3$90.6 million in incentive compensation reflective primarily of the Leerink incentive compensation for the sixnine months ended JuneSeptember 30, 2020, and
•An increase of $14.7$37.7 million in other employee incentives and benefits primarily driven by an increase in agency fees of $8.5$10.6 million and an increase of $7.6$10.2 million in share-based compensation expense due to the increased restricted stock awards granted during 2020.
100
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 Award (see descriptions in our 2019 Form 10-K). Total costs incurred under these plans were $132.6$127.2 million and $217.8$345.1 million for the three and sixnine months ended JuneSeptember 30, 2020 compared to $87.0$74.5 million and $174.6$249.1 million for the comparable 2019 periods. These amounts are included in total compensation and benefits expense discussed above.

We anticipate higher incentive compensation expenses in 2020, compared to 2019, primarily due to strong SVB Leerink performance, although this performance may be impacted by the effects of the COVID-19 pandemic during the second half of 2020.performance.
Professional Services
Professional services expense was $63.8$67.2 million and $102.5$169.7 million for the three and sixnine months ended JuneSeptember 30, 2020, compared to $40.8$55.2 million and $77.8$133.0 million for the comparable 2019 periods. The increases were primarily related to loan processingcosts to support for the PPP during the second and third quarters of 2020 as well as our continued effort towards investments in our infrastructure, initiatives, and operating projects to support our presence both domestically and globally.
Premises and Equipment
Premises and equipment expense was $27.7$30.8 million and $54.6$85.4 million for the three and sixnine months ended JuneSeptember 30, 2020, compared to $23.9$26.8 million and $45.6$72.4 million for the comparable 2019 periods. The increases were related to investments in projects, systems and technology to support our revenue growth and related initiatives as well as other operating costs.
Net Occupancy
Net occupancy expense was $18.8$19.0 million and $37.2$56.2 million for the three and sixnine months ended JuneSeptember 30, 2020, compared to $16.7$17.0 million and $32.7$49.7 million for the comparable 2019 periods. The increases were primarily due to the expansion of certain offices to support our growth and lease renewals at higher costs, reflective of market conditions.
Business Development and Travel
Business development and travel expense was $3.0$2.2 million and $17.1$19.3 million for the three and sixnine months ended JuneSeptember 30, 2020, compared to $17.0$19.5 million and $32.4$51.9 million for the comparable 2019 periods. The decreases were primarily due to the impact of COVID-19 on the global economy and our restrictions placed on domestic and international travel beginning March 2020. In light of the economic impact of COVID-19 and the continuing travel restrictions, we expect our business development and travel expense to becontinue to remain lower infor the remainder of 2020 thancompared to 2019.
FDIC and State Assessments
FDIC and state assessments expense was $6.8$6.9 million and $12.1$19.0 million for the three and sixnine months ended JuneSeptember 30, 2020, compared to $4.5$4.9 million and $8.5$13.3 million for the comparable 2019 periods. The increases were due primarily to the increase in our average assets.
Other Noninterest Expense
Total other noninterest expense was $39.6$37.6 million and $80.4$117.9 million for the three and sixnine months ended JuneSeptember 30, 2020, compared to $37.4$34.1 millionand $71.0and $105.1 million for the comparable 2019 periods. The increases were driven primarily by the increase in investment banking expenses due to the strong investment banking activity. A summary of other noninterest expense for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
Lending and other client related processing costs $6,803
 $8,763
 (22.4)% $15,961
 $13,940
 14.5 %
Correspondent bank fees 3,833
 3,569
 7.4
 7,819
 7,313
 6.9
Investment banking activities 7,768
 3,869
 100.8
 10,798
 8,054
 34.1
Trade order execution costs 2,614
 2,828
 (7.6) 5,359
 5,344
 0.3
Data processing services 3,507
 2,659
 31.9
 6,961
 5,558
 25.2
Telephone 1,889
 2,422
 (22.0) 4,116
 5,163
 (20.3)
Dues and publications 910
 860
 5.8
 2,040
 2,384
 (14.4)
Postage and supplies 723
 678
 6.6
 1,579
 1,448
 9.0
Other 11,600
 11,769
 (1.4) 25,717
 21,749
 18.2
Total other noninterest expense $39,647
 $37,417
 6.0
 $80,350
 $70,953
 13.2
101

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Lending and other client related processing costs$7,194 $7,502 (4.1)%$23,155 $21,442 8.0 %
Correspondent bank fees3,581 3,657 (2.1)11,400 10,970 3.9 
Investment banking activities2,835 1,864 52.1 13,633 9,918 37.5 
Trade order execution costs2,806 2,615 7.3 8,165 7,959 2.6 
Data processing services3,984 3,066 29.9 10,945 8,624 26.9 
Telephone2,342 2,466 (5.0)6,458 7,629 (15.3)
Dues and publications1,159 1,055 9.9 3,199 3,439 (7.0)
Postage and supplies538 720 (25.3)2,117 2,168 (2.4)
Other13,114 11,161 17.5 38,831 32,910 18.0 
Total other noninterest expense$37,553 $34,106 10.1 $117,903 $105,059 12.2 
Net Income Attributable to Noncontrolling Interests
Included in net income is income and expense attributable to noncontrolling interests. The relevant amounts allocated to investors in our consolidated subsidiaries, other than us, are reflected under “net income attributable to noncontrolling interests” on our statements of income.
In the table below, noninterest income consists primarily of net investment gains and losses from our consolidated funds. Noninterest expense is primarily related to management fees paid by our managed funds to SVB Financial’s subsidiaries as the managed funds’ general partners. A summary of net income attributable to noncontrolling interests for the three and sixnine months ended JuneSeptember 30, 2020 and 2019 is as follows:
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Net interest income (1)$— $(14)(100.0)%$(26)$(41)(36.6)%
Noninterest income (1)(8,620)(4,910)75.6 (12,033)(19,586)(38.6)
Noninterest expense (1)114 145 (21.4)384 692 (44.5)
Carried interest allocation (2)(19,242)(9,658)99.2 (28,360)(16,966)67.2 
Net income attributable to noncontrolling interests$(27,748)$(14,437)92.2 $(40,035)$(35,901)11.5 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
Net interest income (1) $(5) $(16) (68.8)% $(26) $(27) (3.7)%
Noninterest income (1) (5,904) (12,406) (52.4) (3,413) (14,676) (76.7)
Noninterest expense (1) 130
 168
 (22.6) 270
 547
 (50.6)
Carried interest allocation (2) (8,481) (6,330) 34.0
 (9,118) (7,308) 24.8
Net income attributable to noncontrolling interests $(14,260) $(18,584) (23.3) $(12,287) $(21,464) (42.8)
(1)Represents noncontrolling interests’ share in net interest income, noninterest income or loss and noninterest expense.
NMNot meaningful
(1)Represents noncontrolling interests’ share in net interest income, noninterest income or loss and noninterest expense.
(2)Represents the preferred allocation of income (or change in income) earned by us as the general partner of certain consolidated funds.
(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 JuneSeptember 30, 2020 and 2019
Net income attributable to noncontrolling interests was $14.327.7 million for the three months ended JuneSeptember 30, 2020, compared to net income of $18.6$14.4 million for the comparable 2019 period. Net income attributable to noncontrolling interests of $14.3$27.7 million for the three months ended JuneSeptember 30, 2020 was primarily driven by net gains on investments securities (including carried interest allocation) from our managed funds of funds and our managed direct venture funds portfolios reflective of the overall market performance during the secondthird quarter of 2020. See “Results of Operations—Noninterest Income—Gains on Investment Securities, Net”.
SixNine months ended JuneSeptember 30, 2020 and 2019
Net income attributable to noncontrolling interests was $12.3$40.0 million for the sixnine months ended JuneSeptember 30, 2020, compared to net income of $21.5$35.9 million for the comparable 2019 period. Net income attributable to noncontrolling interests of $12.3$40.0 million for the sixnine months ended JuneSeptember 30, 2020 was primarily a result of net gains on investment securities (including carried interest allocation) from our managed funds of funds and our managed direct funds portfolios related primarily to net unrealized valuation increases. See “Results of Operations—Noninterest Income—Gains on Investment Securities, Net”.
102
Income Taxes
Our effective income tax rate was 27.326.7 percent and 27.126.9 percent for the three and sixnine months ended JuneSeptember 30, 2020, asrespectively, compared to 27.328.2 percent and 27.227.5 percent for the comparable 2019 periods. The effective tax rates are consistent year over year as tax adjustments impacting the effective tax rate have been proportional to changes in pre-tax income. Our effective tax rate is calculated by dividing income tax expense by the sum of income before income tax expense and the net income attributable to noncontrolling interests.
Operating Segment Results
We have four segments for which we report our financial information: Global Commercial Bank, SVB Private Bank, SVB Capital and SVB Leerink.
We report segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reporting segments. Please refer to Note 14 — “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 sixnine months ended JuneSeptember 30, 2020 and 2019:2019:
Global Commercial Bank
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Net interest income$512,963 $455,161 12.7 %$1,461,768 $1,360,997 7.4 %
Reduction (provision for) credit losses37,847 (34,075)NM(200,020)(79,175)152.6 
Noninterest income147,594 161,029 (8.3)447,902 471,492 (5.0)
Noninterest expense(258,035)(213,786)20.7 (724,233)(617,933)17.2 
Income before income tax expense$440,369 $368,329 19.6 $985,417 $1,135,381 (13.2)
Total average loans, amortized cost$30,763,715 $25,839,647 19.1 $30,126,870 $25,457,997 18.3 
Total average assets77,802,730 58,384,473 33.3 69,212,733 54,196,976 27.7 
Total average deposits74,825,725 55,250,154 35.4 66,408,359 51,352,644 29.3 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
Net interest income $484,969
 $461,752
 5.0 % $948,805
 $907,628
 4.5 %
Provision for credit losses (43,456) (18,295) 137.5
 (237,867) (45,100) NM
Noninterest income 133,474
 157,605
 (15.3) 300,308
 310,465
 (3.3)
Noninterest expense (241,343) (206,902) 16.6
 (466,198) (404,147) 15.4
Income before income tax expense $333,644
 $394,160
 (15.4) $545,048
 $768,846
 (29.1)
Total average loans, amortized cost $30,472,414
 $25,724,704
 18.5
 $29,804,949
 $25,264,010
 18.0
Total average assets 67,936,486
 53,965,699
 25.9
 64,870,536
 52,068,609
 24.6
Total average deposits 65,090,982
 51,126,806
 27.3
 62,153,426
 49,371,589
 25.9
NM—Not meaningful

Three months ended JuneSeptember 30, 2020 and 2019
Income before income tax expense from our Global Commercial Bank (“GCB”) decreasedincreased to $333.6$440.4 million for the three months ended JuneSeptember 30, 2020, compared to $394.2$368.3 million for the comparable 2019 period. The key components of GCB's performance for the three months ended JuneSeptember 30, 2020 compared to the comparable 2019 period are discussed below.
Net interest income from GCB increased by $23.2$57.8 million for the three months ended June 30, 2020, due primarily to an increase in loan interest income resulting mainly from higher average loan balances.
GCB had a provision for credit losses of $43.5 million for the three months ended June 30, 2020,compared to $18.3 million for the comparable 2019 period. The provision of $43.5 million for the three months ended June 30, 2020 was driven primarily by $26.2 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, $22.0 million for net new nonaccrual loans and $10.5 million for charge-offs not specifically reserved for at March 31, 2020, partially offset by a $10.1 million decrease related to changes in loan composition within our portfolio segments and $4.1 million of recoveries.
The provision of $18.3 million for the three months ended June 30, 2019 primarily reflects an increase of $7.5 million for our performing loans, $10.9 million for net new nonaccrual loans, $7.3 million for charge-offs not specifically reserved for and $3.2 million in additional reserves for period-end loan growth, partially offset by recoveries of $9.8 million.
Noninterest income decreased by $24.1 million for the three months ended June 30, 2020 related primarily to an overall decrease in our non-GAAP core fee income (lower client investment fees, credit card fees and foreign exchange fees). These decreases were due primarily to the impact of the federal rate cuts on yield rates affecting client investment fees as well as a decrease in transactional volume for credit cards and foreign exchanges.
Noninterest expense increased by $34.4 million for the three months ended June 30, 2020, due primarily to compensation and benefits expense and professional services expense. Compensation and benefits expense increased $22.3 million as a result of higher salaries and wages expenses. The increase in GCB salaries and wages was due primarily to an increase in the average number of FTEs at GCB, which increased to 2,822 FTEs for the three months ended June 30, 2020, from 2,261 FTEs for the comparable 2019 period. Professional services expense increased due to higher expenses primarily related to loan processing support for the PPP as well as our continued effort towards investments in our infrastructure, initiatives and operating projects to support our presence both domestically and globally.
Six Months EndedJune 30, 2020 and 2019

Net interest income from our GCB increased by $41.2 million for the six months ended JuneSeptember 30, 2020, due primarily to an increase in loan interest income resulting mainly from higher average loan balances, partially offset by a decrease in loan yields as a result of rate decreases.

GCB had a reduction of credit losses of $37.8 million for the three months ended September 30, 2020, compared to a provision of $34.1 million for the comparable 2019 period. The reduction of $37.8 million for the three months ended September 30, 2020 was driven primarily by a $57.7 million reduction in reserves for our performing loans based on our forecast models of the current economic environment under the CECL methodology adopted January 1, 2020, a $15.1 million decrease related to changes in loan composition within our portfolio segments and $4.4 million of recoveries, partially offset by $25.4 million for net new nonaccrual loans and $15.2 million for charge-offs not specifically reserved for at June 30, 2020.
The provision of $34.1 million for the three months ended September 30, 2019 primarily reflects an increase of $19.1 million for net new nonaccrual loans, $18.3 million for charge-offs not specifically reserved for and $15.2 million in additional reserves for period-end loan growth, partially offset by a decrease of $13.0 million for the qualitative component of our performing loans and $3.9 million of recoveries.
103
Noninterest income decreased by $13.4 million for the three months ended September 30, 2020 related primarily to an overall decrease in our non-GAAP core fee income (lower client investment fees and credit card fees).These decreases were due primarily to the impact of the federal rate cuts on yield rates affecting client investment fees as well as a decrease in transactional volume for credit cards.
Noninterest expense increased by $44.2 million for the three months ended September 30, 2020, due primarily to compensation and benefits expense and professional services expense, partially offset by a decrease in business development and travel expense. Compensation and benefits expense increased $41.5 million as a result of higher salaries and wages expenses and higher incentive compensation expense. The increase in GCB salaries and wages was due primarily to an increase in the average number of FTEs at GCB, which increased to 3,102 FTEs for the three months ended September 30, 2020, from 2,364 FTEs for the comparable 2019 period. Incentive compensation expense increased due primarily to an increase in our 2020 full-year projected financial performance. Professional services expense increased due to higher expenses primarily related to our continued effort towards investments in our infrastructure, initiatives and operating projects to support our presence both domestically and globally. Business development and travel expense decreased primarily due to the impact of COVID-19 on the global economy and our restrictions placed on domestic and international travel beginning March 2020.
Nine Months Ended September 30, 2020 and 2019
Net interest income from our GCB increased by $100.8 million for the nine months ended September 30, 2020, due primarily to an increase in loan interest income resulting mainly from higher average loan balances, partially offset by a decrease in loan yields as a result of rate decreases.

GCB had a provision for credit losses of $237.9$200.0 million for the sixnine months ended JuneSeptember 30, 2020, compared to a provision of $45.1$79.2 million for the comparable 2019 period. The provision of $237.9$200.0 million for the sixnine months ended JuneSeptember 30, 2020was reflective primarily of $166.6$108.8 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, $27.3$12.2 million in additional reserves for period-end loan growth, $23.6$38.8 million for charge-offs not specifically reserved for at December 31, 2019 and $32.9$58.3 million in net new nonaccrual loans, partially offset by $11.8$16.2 million of recoveries.
The provision of $45.1$79.2 million for the sixnine months ended JuneSeptember 30, 2019 was reflective primarily of $38.4$57.5 million in net new specific reserves for nonaccrual loans, $12.2$30.5 million for charge-offs not specifically reserved for in prior quarters, $7.3and $22.4 million for period-end loan growth, partially offset by recoveriesa decrease of $11.2 million.$14.3 million for our performing loans and $15.1 million of recoveries.
Noninterest income decreased by $10.2$23.6 million for the sixnine months ended JuneSeptember 30, 2020, related primarily to an overall decrease in our non-GAAP core fee income (lower client investment fees and credit card fees partially offset by an increase in foreign exchange fees). The decreases were due primarily to the impact of the federal rate cuts on yield rates affecting client investment fees as well as a decrease in transactional volume on credit cards. The increase in foreign exchange fees was duedriven primarily to the continued growth of our client base and workby private equity deal activity coupled with larger global companiesquarterly hedging activity.
Noninterest expense increased by $62.1$106.3 million for the sixnine months ended JuneSeptember 30, 2020, due primarily to increased expenses for compensation and benefits expense and professional services expense, partially offset by a decrease in business development and other noninteresttravel expense. Compensation and benefits expense increased by $36.7$78.2 million primarily as a result of increased salaries and wages. The increase in GCB salaries and wages was due primarily to an increase in the average number of FTEs at GCB, which increased to 2,7572,872 FTEs for the sixnine months ended JuneSeptember 30, 2020 from 2,2422,283 FTEs for the comparable 2019 period. Professional services expense increased $18.6$24.1 million due to higher expenses primarily related to loan processing support for the PPP as well as our continued effort towards investments in our infrastructure, initiatives and operating projects to support our presence both domestically and globally. Business development and travel expense decreased by $21.3 million primarily due to the impact of COVID-19 on the global economy and our restrictions placed on domestic and international travel beginning March 2020.
104
SVB Private Bank
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
Net interest income $18,644
 $12,277
 51.9 % $33,808
 $24,258
 39.4%
(Provision for) reduction of credit losses (4,585) (853) NM
 (59,075) 131
 NM
Noninterest income 670
 686
 (2.3) 1,570
 1,196
 31.3
Noninterest expense (10,164) (9,526) 6.7
 (20,254) (18,378) 10.2
Income (loss) before income tax expense $4,565
 $2,584
 76.7
 $(43,951) $7,207
 NM
Total average loans, amortized cost $4,035,940
 $3,217,597
 25.4
 $3,946,709
 $3,152,104
 25.2
Total average assets 4,071,648
 3,247,557
 25.4
 3,982,024
 3,179,064
 25.3
Total average deposits 2,119,983
 1,394,905
 52.0
 2,021,323
 1,442,803
 40.1
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Net interest income$19,145 $12,772 49.9 %$52,952 $37,200 42.3 %
Reduction (provision for) credit losses14,881 (1,910)NM(44,194)(1,779)NM
Noninterest income916 634 44.5 2,486 1,829 35.9 
Noninterest expense(12,293)(11,638)5.6 (32,547)(30,015)8.4 
Income (loss) before income tax expense$22,649 $(142)NM$(21,303)$7,235 NM
Total average loans, amortized cost$4,263,324 $3,400,889 25.4 $4,053,018 $3,235,943 25.2 
Total average assets4,297,011 3,431,313 25.2 4,087,786 3,264,071 25.2 
Total average deposits2,163,903 1,497,303 44.5 2,069,196 1,461,170 41.6 
NM—Not meaningful

Three months ended JuneSeptember 30, 2020 and 2019
Net interest income from our SVB Private Bank increased by $6.4 million for the three months ended JuneSeptember 30, 2020, due primarily to the increase in average loans for the three months ended JuneSeptember 30, 2020 as compared to the 2019 comparable period, partially offset by decreases in loan yields as a result of overall market rate decreases.
The reduction of credit losses of $14.9 million for the three months ended September 30, 2020, was reflective primarily of improved economic scenarios in our forecast models as well as a qualitative adjustment reflective of strong credit performance, partially offset by loan growth.
Nine Months EndedSeptember 30, 2020 and 2019
Net interest income from our SVB Private Bank increased by $15.8 million for the nine months ended September 30, 2020, due primarily to the increase in average loans for the nine months ended September 30, 2020 as compared to the 2019 comparable period, partially offset by decreases in loan yields as a result of overall market rate decreases.
The provision for credit losses increased by $3.7$42.4 million for the threenine months ended June 30, 2020, due primarily to loan growth.
Six Months EndedJune 30, 2020 and 2019
Net interest income from our SVB Private Bank increased by $9.6 million for the six months ended June 30, 2020, due primarily to the increase in average loans for the six months ended June 30, 2020 as compared to the 2019 comparable period, partially offset by decreases in loan yields as a result of overall market rate decreases.
The provision for credit losses increased by $59.2 million for the six months ended JuneSeptember 30, 2020, due primarily to a $50.3$24.9 million increase in additional reserves for our performing loans.loans and a $17.6 million increase due to loan growth. The increase for our performing loans is reflective of the increases in reserves required for longer duration mortgage loans as well as the 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.

SVB Capital
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change
Net interest income $5
 $6
 (16.7)% $26
 $12
 116.7 %
Noninterest income 21,450
 40,059
 (46.5) 26,368
 64,904
 (59.4)
Noninterest expense (8,256) (7,883) 4.7
 (16,842) (13,665) 23.2
Income before income tax expense $13,199
 $32,182
 (59.0) $9,552
 $51,251
 (81.4)
Total average assets $430,272
 $373,167
 15.3
 $438,737
 $375,934
 16.7

 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)20202019% Change20202019% Change
Net interest income$2 $9 (77.8)%$28 $20 40.0 %
Noninterest income60,380 34,955 72.7 86,748 99,860 (13.1)
Noninterest expense(11,198)(8,129)37.8 (28,040)(21,794)28.7 
Income before income tax expense$49,184 $26,835 83.3 $58,736 $78,086 (24.8)
Total average assets$413,882 $396,031 4.5 $430,391 $382,707 12.5 
 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 discussed below are net of noncontrolling interests.
We experience variability in the performance of SVB Capital from quarter to quarter due to a number of factors, including changes in the values of our funds’ underlying investments, changes in the amount of distributions and general economic and market conditions. Such variability may lead to volatility in the gains and losses from investment securities and cause our results to differ from period to period. The performance of these securities has been, and may further be, impacted by the effects of the COVID-19 pandemic.
105
Three months ended September 30, 2020 and 2019
SVB Capital had noninterest income of $60.4 million for the three months ended September 30, 2020, compared to $35.0 million for the comparable 2019 period. The increase in noninterest income was due primarily to an increase in net gains on investment securities for the three months ended September 30, 2020, compared to net gains for the comparable 2019 period. SVB Capital’s components of noninterest income primarily include the following:
•Net gains on investment securities of $47.5 million for the three months ended September 30, 2020, compared to net gains of $26.0 million for the comparable 2019 period. The net gains on investment securities of $47.5 million were primarily driven by unrealized net valuation increases from private company investments held in our strategic venture capital funds as well as in our managed funds of funds portfolio.

Nine Months Ended JuneSeptember 30, 2020 and 2019

SVB Capital had noninterest income of $21.5$86.7 million for the threenine months ended JuneSeptember 30, 2020, compared to $40.1$99.9 million for the comparable 2019 period. The decrease in noninterest income was due primarily to a decrease in net gains on investment securities for the threenine months ended June 30, 2020, compared to net gains for the comparable 2019 period. SVB Capital’s components of noninterest income primarily include the following:
•
Net gains on investment securities of $12.1 million for the three months endedJune 30, 2020, compared to net gains of $27.9 million for the comparable 2019 period. The net gains on investment securities of $12.1 million were primarily driven by unrealized net valuation increases from private company investments held in our strategic venture capital funds as well as in our managed funds of funds portfolio.

Six Months EndedJune 30, 2020 and 2019

SVB Capital had noninterest income of $26.4 million for the six months ended June 30, 2020, compared to $64.9 million for the comparable 2019 period. The decrease in noninterest income was due primarily to a decrease in net gains on investment securities for the six months ended JuneSeptember 30, 2020, compared to the comparable 2019 period. SVB Capital’s components of noninterest income primarily include the following:
•Net gains on investment securities of $6.3$53.6 million for the sixnine months ended JuneSeptember 30, 2020, compared to net gains of $44.0$70.0 million for the comparable 2019 period. The net gains on investment securities of $6.3$53.6 million were primarily driven by a downward valuation adjustment for illiquid investments held in the private managed funds and companies of our portfolios due to the current market volatility. The downward valuation adjustment was offset by unrealized net valuation increases from private company investments held in our strategic venture capitalmanaged funds of funds portfolio as well as in our managed funds of fundsdirect venture fund portfolio.

SVB Leerink
 Three months ended June 30, Six months ended June 30, Three months ended September 30,Nine months ended September 30,
(Dollars in thousands) 2020 2019 % Change 2020 2019 % Change(Dollars in thousands)20202019% Change20202019% Change
Net interest (loss) income $(3) $242
 (101.2)% $198
 $684
 (71.1)%
Net interest incomeNet interest income$175 $277 (36.8)%$373 $961 (61.2)%
Noninterest income 163,817
 67,000
 144.5
 226,494
 135,117
 67.6
Noninterest income113,651 52,947 114.7 340,145 188,064 80.9 
Noninterest expense (108,650) (61,935) 75.4
 (170,687) (122,475) 39.4
Noninterest expense(77,567)(55,200)40.5 (248,254)(177,675)39.7 
Income before income tax expense $55,164
 $5,307
 NM
 $56,005
 $13,326
 NM
Income (loss) before income tax expenseIncome (loss) before income tax expense$36,259 $(1,976)NM$92,264 $11,350 NM
Total average assets $454,603
 $410,279
 10.8
 $469,126
 $355,609
 31.9
Total average assets$605,263 $428,848 41.1 $514,836 $380,290 35.4 
NM—Not meaningful

SVB Leerink’s components of noninterest income primarily include investment banking revenue, commissions and net gains and losses on non-marketable and other equity securities, carried interest and fund management fees. All components of income before income tax expense discussed below are net of noncontrolling interests.
Three months ended June September 30, 2020 and 2019
SVB Leerink had noninterest income of $163.8$113.7 million for the three months ended JuneSeptember 30, 2020, compared to $67.0$52.9 million for the comparable 2019 period. The $96.8$60.8 million increase in noninterest income was primarily due to a $92.8$53.7 million increase in investment banking revenues attributable to higher levels of funding activity in the life science/healthcare secondary markets and by the increase in public equity underwriting fees.
SVB Leerink had noninterest expense of $108.7$77.6 million for the three months ended JuneSeptember 30, 2020, compared to $61.9$55.2 million for the comparable 2019 period. The $46.7$22.4 million increase in noninterest expense was primarily driven by an increase of $47.0$26.2 million in compensation and benefit expense due to an increase in salaries and wages reflectiveincentive plan expense as a result of merit increases as well as an increasea strong performance in share-based compensation.the third quarter of 2020.
SixNine Months Ended JuneSeptember 30, 2020 and 2019
SVB Leerink had noninterest income of $226.5$340.1 million for the sixnine months ended JuneSeptember 30, 2020, compared to $135.1$188.1 million for the comparable 2019 period. The $91.4$152.0 million increase was primarily driven by a $89.9$143.5 million increase investment banking revenues attributable to higher levels of funding activity in the life science/healthcare secondary markets and by the increase in public equity underwriting fees.
106
SVB Leerink had noninterest expense of $170.7$248.3 million for the sixnine months ended JuneSeptember 30, 2020, compared to $122.5$177.7 million for the comparable 2019 period.The $48.2$70.6 million increase was primarily driven by an increase of $50.6$76.8 million in compensation and benefit expense due to an increase in salaries and wages reflectiveincentive plan expense as a result of merit increases as well as an increase in share-based compensation,a strong performance during 2020, partially offset by a $1.9$6.6 million decrease in business travel expense due to the impact of travel restrictions put in place in response to the COVID-19 pandemic towards the end of the first quarter of 2020.

Consolidated Financial Condition
Our total assets, and total liabilities and stockholders' equity, were $85.7$96.9 billion at JuneSeptember 30, 2020 compared to $71.0 billion at December 31, 2019, anincrease of $14.7$25.9 billion, or 20.736.5 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 $14.2$15.7 billion at JuneSeptember 30, 2020, an increase of $7.4$8.9 billion, or 109.4131.3 percent, compared to $6.8 billion at December 31, 2019. The increase was driven by the significant growth in deposits of $12.7$23.0 billion. We have also raised our cash target level to between $7.0 billion and $9.0 billion in response to the current economic environment. As of JuneSeptember 30, 2020, $11.0$11.9 billion 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 $2.0$2.7 billion. As of December 31, 2019, $3.7 billion 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 $2.1 billion.


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Investment Securities
Investment securities totaled $32.6$40.4 billion at JuneSeptember 30, 2020, an increase of $3.5$11.3 billion, or 12.139.1 percent, compared to $29.1 billion at December 31, 2019. Our investment securities portfolio is comprised of: (i) an available-for-sale securities portfolio and a held-to-maturity securities portfolio, both of which represent 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, investments in qualified affordable housing projects, as well as public equity securities held as a result of equity warrant assets exercised.
The valuations of our nonmarketable and other equity securities were negatively impacted by COVID-19 market conditions towards the end of the first quarter. We expect continued pressure on the valuation of our nonmarketable and other equity securities in 2020 as we anticipate public markets to continue to fluctuate, as well as a slowdown in IPO, M&A and other private market activities, due to the COVID-19 pandemic.
Available-for-Sale Securities
Period-end available-for-sale securities were $18.5$25.9 billion at JuneSeptember 30, 2020, compared to $14.0 billion at December 31, 2019, an increase of $4.5$11.9 billion, or 31.784.8 percent. The $4.5$11.9 billion increase in period-end AFS securities balances from December 31, 2019 to JuneSeptember 30, 2020, was primarily driven by the purchase of $8.1$16.6 billion of securities and a $0.5 billion increase in our AFS portfolio reflective of the 150 basis point decrease in Federal Funds interest rates, partially offset by the sale of $2.6 billion of securities and $1.5$2.6 billion of portfolio cash flows. Securities classified as available-for-sale are carried at fair value with changes in fair value recorded as unrealized gains or losses in a separate component of stockholders' equity.
The following table summarizes the remaining contractual principal maturities and fully taxable equivalent yields on fixed income securities, carried at fair value, classified as available-for-sale as of JuneSeptember 30, 2020. 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, U.S. agency debentures and foreign government debt securities, the expected maturity is the actual contractual maturity of the notes. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as available-for-sale typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower interest rate environments. 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, 2020
 TotalOne 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$4,547,294 1.86 %$60,221 1.57 %$2,989,181 1.84 %$1,497,892 1.91 %$— — %
U.S. agency debentures152,526 1.52 — — — — 152,526 1.52 — — 
Foreign government debt securities23,449 (0.82)23,449 (0.82)— — — — — — 
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities9,770,313 1.84 — — — — — — 9,770,313 1.84 
Agency-issued collateralized mortgage obligations—fixed rate7,315,973 1.32 — — — — — — 7,315,973 1.32 
Agency-issued commercial mortgage-backed securities4,094,769 1.80 — — — — 1,431,547 1.81 2,663,222 1.80 
Total$25,904,324 1.69 $83,670 0.90 $2,989,181 1.84 $3,081,965 1.84 $19,749,508 1.64 
  June 30, 2020
  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 $4,535,235
 1.87 % $85,518
 1.57 % $2,613,342
 1.84% $1,836,375
 1.94% $—
 —%
U.S. agency debentures 102,659
 2.28
 —
 —
 —
 —
 102,659
 2.28
 —
 —
Foreign government debt securities 22,525
 (0.82) 22,525
 (0.82) —
 —
 —
 —
 —
 —
Residential mortgage-backed securities:                    
Agency-issued mortgage-backed securities 7,655,556
 2.13
 —
 —
 —
 —
 —
 —
 7,655,556
 2.13
Agency-issued collateralized mortgage obligations—fixed rate 2,979,540
 1.74
 —
 —
 491
 3.26
 —
 —
 2,979,049
 1.74
Agency-issued commercial mortgage-backed securities 3,156,398
 2.00
 —
 —
 —
 —
 1,347,235
 1.86
 1,809,163
 2.11
Total $18,451,913
 1.98
 $108,043
 1.07
 $2,613,833
 1.84
 $3,286,269
 1.91
 $12,443,768
 2.04

Held-to-Maturity Securities
Period-end held-to-maturity securities were $12.9$13.0 billion at JuneSeptember 30, 2020, compared to $13.8 billion at December 31, 2019, a decrease of $0.9$0.8 billion, or 7.16.2 percent. The $0.9$0.8 billion decrease in period-end HTM security balances from December 31, 2019 to JuneSeptember 30, 2020 was due primarily to pay downs and maturities of $1.5$2.8 billion, partially offset by the purchase of $0.6$2.0 billion of securities.
108
Securities classified as held-to-maturity are accounted for at cost with no adjustments for changes in fair value. For securities previously re-designated as held-to-maturity from available-for-sale, the net unrealized gains at the date of transfer will continue to be reported as a separate component of shareholders' equity and amortized over the life of the securities in a manner consistent with the amortization of a premium or discount.
The following table summarizes the remaining contractual principal maturities and fully taxable equivalent yields on fixed income investment securities classified as held-to-maturity as of JuneSeptember 30, 2020. 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 21.0 percent. The weighted average yield is computed using the amortized cost of fixed income investment securities. For U.S. agency debentures, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for certain U.S. agency debentures may occur earlier than their contractual maturities because the note issuers have the right to call outstanding amounts ahead of their contractual maturity. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as held-to-maturity typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower interest rate environments. The weighted average yield on mortgage-backed securities is based on prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments.
 June 30, 2020 September 30, 2020
 Total 
One Year
or Less
 
After One Year to
Five Years
 
After Five Years to
Ten Years
 
After
Ten Years
 TotalOne 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
(Dollars in thousands)Amortized CostWeighted-
Average
Yield		Amortized CostWeighted-
Average
Yield		Amortized CostWeighted-
Average
Yield		Amortized CostWeighted-
Average
Yield		Amortized CostWeighted-
Average
Yield
U.S. agency debentures $453,280
 2.62% $2,622
 4.07% $142,917
 2.52% $307,741
 2.69% $—
 —%U.S. agency debentures$402,346 2.61 %$4,675 3.22 %$148,559 2.59 %$249,112 2.67 %$— — %
Residential mortgage-backed securities:                    Residential mortgage-backed securities:
Agency-issued mortgage-backed securities 6,086,154
 2.88
 8,369
 2.68
 40,337
 1.89
 640,876
 2.47
 5,396,572
 2.94
Agency-issued mortgage-backed securities5,363,541 2.86 7,113 2.39 28,722 1.89 588,606 2.47 4,739,100 2.92 
Agency-issued collateralized mortgage obligations—fixed rate
 1,518,848
 1.69
 —
 —
 —
 —
 612,478
 1.62
 906,370
 1.74
Agency-issued collateralized mortgage obligations—fixed rate
1,909,965 1.50 — — — — 551,213 1.62 1,358,752 1.45 
Agency-issued collateralized mortgage obligations—variable rate
 162,250
 0.75
 —
 —
 —
 —
 —
 —
 162,250
 0.75
Agency-issued collateralized mortgage obligations—variable rate
147,714 0.74 — — — — — — 147,714 0.74 
Agency-issued commercial mortgage-backed securities 2,484,072
 3.06
 —
 —
 —
 —
 102,497
 3.56
 2,381,575
 3.04
Agency-issued commercial mortgage-backed securities2,229,811 3.08 — — — — 102,428 3.56 2,127,383 3.06 
Municipal bonds and notes 2,154,441
 3.54
 31,814
 2.22
 142,152
 2.66
 479,079
 3.11
 1,501,396
 3.79
Municipal bonds and notes2,929,137 3.21 44,340 2.52 134,029 2.63 540,308 3.20 2,210,460 3.26 
Total $12,859,045
 2.85
 $42,805
 2.43
 $325,406
 2.50
 $2,142,671
 2.46
 $10,348,163
 2.95
Total$12,982,514 2.75 $56,128 2.56 $311,310 2.54 $2,031,667 2.51 $10,583,409 2.80 
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. The estimated weighted-average duration of our fixed income investment securities portfolio was 3.44.1 years and 3.9 years at JuneSeptember 30, 2020 and December 31, 2019, respectively.

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Non-Marketable and Other Equity Securities
Our non-marketable and other equity securities portfolio primarily represents investments in venture capital and private equity funds, SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China (“SPD-SVB”)), debt funds, private and public portfolio companies, including public equity securities held as a result of equity warrant assets exercised, and 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 $1.3$1.5 billion ($1.4 billion net of noncontrolling interest) at JuneSeptember 30, 2020 compared to $1.2 billion ($1.1 billion net of noncontrolling interest) at December 31, 2019, an increase of $56.7 million,$0.3 billion, or 4.727.5 percent. Non-marketable and other equity securities, net of noncontrolling interests were $1.1 billion at June 30, 2020 and December 31, 2019, respectively.The increase in period end non-marketable and other equity securities of $0.1$0.3 billion was primarily attributable to the increase in other equity securities in public companies of $0.2 billion, driven by our investment in BigCommerce, private equity fund investments driven by an increase in valuations, and new investments within our qualified housing projects portfolio and further investment in SPD Silicon Valley Bank Co., Ltd (the Bank's joint venture bank in China) partially offset by distributions from our consolidated and unconsolidated venture capital and private equity funds investments.portfolio. 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 JuneSeptember 30, 2020 and December 31, 2019:
 September 30, 2020December 31, 2019
(Dollars in thousands)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)$74,293 $19,132 $87,180 $22,482 
Unconsolidated venture capital and private equity fund investments (2)152,367 152,367 178,217 178,217 
Other investments without a readily determinable fair value (3)56,008 56,008 55,255 55,255 
Other equity securities in public companies (fair value accounting (4)229,297 229,151 59,200 59,056 
Non-marketable securities (equity method accounting) (5):
Venture capital and private equity fund investments274,721 161,699 215,367 131,403 
Debt funds6,918 6,918 7,271 7,271 
Other investments192,776 192,776 152,863 152,863 
Investments in qualified affordable housing projects, net560,983 560,983 458,476 458,476 
Total non-marketable and other equity securities$1,547,363 $1,379,034 $1,213,829 $1,065,023 
(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, 2020 and December 31, 2019:
 September 30, 2020December 31, 2019
(Dollars in thousands)Carrying value (as reported)Amount attributable to SVBFGCarrying value (as reported)Amount attributable to SVBFG
Strategic Investors Fund, LP$4,646 $584 $5,729 $720 
Capital Preferred Return Fund, LP39,246 8,458 45,341 9,772 
Growth Partners, LP30,267 10,076 35,976 11,976 
CP I, LP134 14 134 14 
Total consolidated venture capital and private equity fund investments$74,293 $19,132 $87,180 $22,482 

(2)The carrying value represents investments in 179 and 205 funds (primarily venture capital funds) at September 30, 2020 and December 31, 2019, 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
110
  June 30, 2020 December 31, 2019
(Dollars in thousands) Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG
Non-marketable and other equity securities:        
Non-marketable securities (fair value accounting):        
Consolidated venture capital and private equity fund investments (1) $68,214
 $17,433
 $87,180
 $22,482
Unconsolidated venture capital and private equity fund investments (2) 145,122
 145,122
 178,217
 178,217
Other investments without a readily determinable fair value (3) 56,206
 56,205
 55,255
 55,255
Other equity securities in public companies (fair value accounting (4) 45,288
 43,493
 59,200
 59,056
Non-marketable securities (equity method accounting) (5):        
Venture capital and private equity fund investments 233,996
 139,628
 215,367
 131,403
Debt funds 7,004
 7,004
 7,271
 7,271
Other investments 181,543
 181,543
 152,863
 152,863
Investments in qualified affordable housing projects, net 533,205
 533,205
 458,476
 458,476
Total non-marketable and other equity securities $1,270,578
 $1,123,633
 $1,213,829
 $1,065,023
(1)
The following table shows the amounts of venture capitalactivities and private equity fund investments held by the following consolidated funds and amounts attributable to SVBFG for each fund at June 30, 2020 and December 31, 2019:
  June 30, 2020 December 31, 2019
(Dollars in thousands) Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG
Strategic Investors Fund, LP $4,414
 $555
 $5,729
 $720
Capital Preferred Return Fund, LP 36,890
 7,950
 45,341
 9,772
Growth Partners, LP 26,776
 8,914
 35,976
 11,976
CP I, LP 134
 14
 134
 14
Total consolidated venture capital and private equity fund investments $68,214
 $17,433
 $87,180
 $22,482

(2)
The carrying value represents investments in 191 and 205 funds (primarily venture capital funds) at June 30, 2020 and December 31, 2019, 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 31June 30stth, for our JuneSeptember 30th consolidated financial statements, adjusted for any contributions paid, distributions received from the investment, and significant fund transactions or market events during the reporting period.
(3)Investments classified as "Other investments without a readily determinable fair value" include direct equity investments in private companies. The carrying value is based on the price at which the investment was acquired plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. We consider a range of factors when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies, financing transactions subsequent to the acquisition of the investment and a discount for certain investments that have lock-up restrictions or other features that indicate a discount to fair value is warranted. For further details on the carrying value of these investments refer to Note 6 — “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 September 30, 2020 and December 31, 2019 (equity method accounting):
 September 30, 2020December 31, 2019
(Dollars in thousands)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$3,519 $3,271 $3,612 $3,387 
Strategic Investors Fund III, LP14,984 12,113 15,668 12,701 
Strategic Investors Fund IV, LP25,451 21,399 27,064 22,780 
Strategic Investors Fund V, LP52,575 27,602 46,830 24,586 
CP II, LP (i)4,773 2,871 5,907 3,567 
Other venture capital and private equity fund investments173,419 94,443 116,286 64,382 
Total venture capital and private equity fund investments$274,721 $161,699 $215,367 $131,403 
Debt funds:
Gold Hill Capital 2008, LP (ii)$5,317 $5,317 $5,525 $5,525 
Other debt funds1,601 1,601 1,746 1,746 
Total debt funds$6,918 $6,918 $7,271 $7,271 
Other investments:
SPD Silicon Valley Bank Co., Ltd.$107,969 $107,969 $74,190 $74,190 
Other investments84,807 84,807 78,673 78,673 
Total other investments$192,776 $192,776 $152,863 $152,863 
(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 6 — “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, 2020 and December 31, 2019 (equity method accounting):
  June 30, 2020 December 31, 2019
(Dollars in thousands) Carrying value (as reported) Amount attributable to SVBFG Carrying value (as reported) Amount attributable to SVBFG
Venture capital and private equity fund investments:        
Strategic Investors Fund II, LP $3,083
 $2,875
 $3,612
 $3,387
Strategic Investors Fund III, LP 14,211
 11,518
 15,668
 12,701
Strategic Investors Fund IV, LP 24,743
 20,842
 27,064
 22,780
Strategic Investors Fund V, LP 47,734
 25,060
 46,830
 24,586
CP II, LP (i) 4,646
 2,798
 5,907
 3,567
Other venture capital and private equity fund investments 139,579
 76,535
 116,286
 64,382
Total venture capital and private equity fund investments $233,996
 $139,628
 $215,367
 $131,403
Debt funds:        
Gold Hill Capital 2008, LP (ii) $5,334
 $5,334
 $5,525
 $5,525
Other debt funds 1,670
 1,670
 1,746
 1,746
Total debt funds $7,004
 $7,004
 $7,271
 $7,271
Other investments:        
SPD Silicon Valley Bank Co., Ltd. $105,863
 $105,863
 $74,190
 $74,190
Other investments 75,680
 75,680
 78,673
 78,673
Total other investments $181,543
 $181,543
 $152,863
 $152,863
(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.
(i)
(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.

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.

Volcker Rule
The 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.
111
On June 6, 2017, we received notice that the Federal Reserve approved the Company’s application for an extension of the permitted conformance period for the Company’s investments in “illiquid” covered funds. The Company must sell, divest,

restructure or otherwise conform such investments to the provisions of the Volcker Rule by 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 of September 30, 2020, such investments had an estimated aggregate carrying value and fair value of approximately $185 million. (For more information about the Volcker Rule, see “Business—Supervision and Regulation” under Part 1, Item 1 of our 2019 Form 10-K.)
On June 25, 2020, the Federal Reserve and other agencies finalized revisions to the regulations implementing the Volcker Rule (“2020 Volcker Amendments”), which will becomebecame effective on October 1, 2020. AmongThe amendments include, among other things, the 2020 Volcker Amendments adopt new exclusions from the definition of “covered fund” for credit funds, venture capital funds, family wealth management vehicles and creditcustomer facilitation vehicles; revisions to existing exclusions for foreign public funds, that meet certain criteria.loan securitizations and public welfare and small business funds; and modifications to the Super 23A provisions of the Volcker Rule. We believe that effective October 1, 2020, certain venture capital funds and credit funds in which we have investments will qualify for these new exclusions, and, as a result, we will not be required to sell or otherwise conform such portion of our “illiquid”"illiquid" fund holdings that are subject to the extension from the Federal Reserve as discussed above. We are continuing to assess the impact of the 2020 Volcker Amendments on the Company’sCompany's existing fund investments and our future funds business.
Investment in BigCommerce Holdings, Inc.
As of JuneSeptember 30, 2020 such investments had an estimated aggregate carrying valuewe held approximately 2.8 million shares of common stock in BigCommerce comprised of: (i) common stock issued pursuant to our exercise of certain warrants, and fair value(ii) common stock acquired through debt conversion. With respect to these securities and transactions, during the three months ending September 30, 2020, we recognized a $30.0 million gain upon the exercise and conversion of approximately $211 million. (For more information about the Volcker Rule, see “Business—Supervisionconvertible debt option (included in other noninterest income), a $10.8 million warrant gain from the exercise and Regulation” under Part 1, Item 1conversion of our 2019 Form 10-K.)warrants, and a $108.4 million unrealized investment gain on the quarter-end valuation of equity shares at a price of $83.30.
Gains (or losses) related to our equity securities in public companies such as BigCommerce are based on valuation changes or the sale of any securities, and are subject to such companies' stock price, which are subject to market conditions and various other factors. Additionally, the public equity investment expected gains and losses, and the extent to which such gains (or losses) will become realized is subject to a variety of factors, including among other factors, changes in prevailing market prices and the timing of any sales of securities, which are subject to our securities sales and governance process as well as certain sales restrictions (e.g. lock-up agreements). The lock-up agreement for common stock shares held in BigCommerce is scheduled to expire during February 2021.

Loans
Loans, amortized cost basis, increased by $3.4$5.2 billion to $36.7$38.4 billion at JuneSeptember 30, 2020, compared to $33.2 billion at December 31, 2019. Unearned income was $220$222 million at JuneSeptember 30, 2020 and $163 million at December 31, 2019. Period-end loans increased compared to December 31, 2019, driven primarily by our Global Fund Banking, SBA, Investor Dependent and Balance Sheet Dependent loan portfolios.risk-based segments. The increase in portfoliosrisk-based segments was primarily driven by participation in the Paycheck Protection Program and increased credit line utilization. Our Investor Dependent and Balance Sheet Dependent loan portfolios are primarily made up of our technology and life sciences/healthcare clients.
The breakdown of total loans and loans as a percentage of total loans by risk-based segment is as follows:
  June 30, 2020 December 31, 2019
(Dollars in thousands) Amount Percentage  Amount Percentage 
Private equity/venture capital $17,901,117
 48.7% $17,712,797
 53.1%
Investor dependent:   

   

Early stage 1,797,576
 4.9
 1,653,425
 5.0
Mid stage 1,435,772
 3.9
 1,066,783
 3.2
Later stage 1,905,528
 5.2
 1,698,676
 5.1
Total investor dependent 5,138,876
 14.0
 4,418,884
 13.3
Cash flow dependent:   

   

Sponsor led buyout 2,057,439
 5.6
 2,203,020
 6.6
Other 2,787,807
 7.6
 2,252,847
 6.8
Total cash flow dependent 4,845,246
 13.2
 4,455,867
 13.4
Private bank 3,816,277
 10.4
 3,489,219
 10.4
Balance sheet dependent 1,693,071
 4.6
 1,297,304
 3.9
Premium wine 1,039,456
 2.8
 1,063,512
 3.2
Other 457,234
 1.3
 890,121
 2.7
SBA loans 1,835,945
 5.0
 —
 —
Total loans (1) $36,727,222
 100.0
 $33,327,704
 100.0
112
 September 30, 2020December 31, 2019
(Dollars in thousands)AmountPercentage AmountPercentage 
Global fund banking$19,584,518 51.0 %$17,712,797 53.1 %
Investor dependent:
Early stage1,470,941 3.8 1,653,425 5.0 
Mid stage1,626,794 4.2 1,066,783 3.2 
Later stage2,013,934 5.3 1,698,676 5.1 
Total investor dependent5,111,669 13.3 4,418,884 13.3 
Cash flow dependent:
Sponsor led buyout2,062,243 5.4 2,203,020 6.6 
Other2,600,157 6.8 2,252,847 6.8 
Total cash flow dependent4,662,400 12.2 4,455,867 13.4 
Private bank (1)4,424,899 11.5 3,489,219 10.4 
Balance sheet dependent1,698,220 4.4 1,297,304 3.9 
Premium wine (1)1,081,963 2.8 1,063,512 3.2 
Other (1)48,206 0.1 890,121 2.7 
SBA loans1,802,016 4.7 — — 
Total loans (2)$38,413,891 100.0 $33,327,704 100.0 
(1)As of September 30, 2020, as a result of enhanced portfolio characteristic definitions for our risk-based segments, loans in the amount of $411.2 million and $50.3 million that would have been reported in Other under historical definitions, are now being reported in our Private Bank and Premium Wine risk-based segments, respectively.
(1)
For the quarter ended June
(2)As of September 30, 2020,, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Loan Concentration
The following table provides a summary of total loans by size and risk-based segment. The breakout below is based on total client balances (individually or in the aggregate) as of JuneSeptember 30, 2020 to any single client:
 September 30, 2020
(Dollars in thousands)Less than Five MillionFive to Ten MillionTen to Twenty Million Twenty to Thirty MillionThirty Million or MoreTotal
Global fund banking$1,050,604 $1,360,678 $2,705,859 $1,983,241 $12,492,083 $19,592,465 
Investor dependent:
Early stage1,988,463 226,895 84,560 27,738 34,818 2,362,474 
Mid stage880,423 542,855 210,759 197,162 92,895 1,924,094 
Later stage302,248 502,367 742,294 325,919 236,584 2,109,412 
Total investor dependent3,171,134 1,272,117 1,037,613 550,819 364,297 6,395,980 
Cash flow dependent:
Sponsor led buyout13,838 77,169 500,763 658,535 821,589 2,071,894 
Other426,605 255,151 620,051 587,133 1,119,861 3,008,801 
Total cash flow dependent440,443 332,320 1,120,814 1,245,668 1,941,450 5,080,695 
Private bank (1)3,398,733 492,804 297,444 23,651 213,233 4,425,865 
Balance sheet dependent205,838 370,864 380,100 209,427 581,967 1,748,196 
Premium wine (1)249,620 247,718 330,815 125,283 160,868 1,114,304 
Other (1)9,328 7,583 39,475 — — 56,386 
Total loans (2) (3)$8,525,700 $4,084,084 $5,912,120 $4,138,089 $15,753,898 $38,413,891 
  June 30, 2020
(Dollars in thousands) Less than Five Million Five to Ten Million Ten to Twenty Million  Twenty to Thirty Million Thirty Million or More Total
Private equity/venture capital $1,069,179
 $1,284,736
 $2,427,604
 $1,830,511
 $11,297,045
 $17,909,075
Investor dependent:           
Early stage 2,156,040
 321,585
 122,008
 29,150
 114,919
 2,743,702
Mid stage 814,360
 512,861
 199,537
 122,545
 94,770
 1,744,073
Later stage 195,014
 446,575
 754,682
 272,984
 315,484
 1,984,739
Total investor dependent 3,165,414
 1,281,021
 1,076,227
 424,679
 525,173
 6,472,514
Cash flow dependent:            
Sponsor led buyout 12,892
 62,777
 480,219
 674,082
 837,197
 2,067,167
Other 368,504
 310,756
 571,255
 733,571
 1,200,345
 3,184,431
Total cash flow dependent 381,396
 373,533
 1,051,474
 1,407,653
 2,037,542
 5,251,598
Private bank 3,034,081
 405,009
 213,509
 51,387
 112,527
 3,816,513
Balance sheet dependent 222,058
 379,156
 390,410
 279,684
 470,059
 1,741,367
Premium wine 254,698
 240,736
 329,758
 95,536
 146,973
 1,067,701
Other 158,091
 46,590
 138,818
 55,143
 69,812
 468,454
Total loans (1) (2) $8,284,917
 $4,010,781
 $5,627,800
 $4,144,593
 $14,659,131
 $36,727,222
(1)As of September 30, 2020, as a result of enhanced portfolio characteristic definitions for our risk-based segments, loans in the amount of $411.2 million and $50.3 million that would have been reported in Other under historical definitions, are now being reported in our Private Bank and Premium Wine risk-based segments, respectively.
(1)
For the quarter ended
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(2)As of September 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
(3)Included in total loans at amortized cost is approximately $1.8 billion in PPP loans. The PPP loans consist of loans across all of our risk-based segments.June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
(2)Included in total loans at amortized cost is approximately $1.8 billion in PPP loans. The PPP loans consist of loans from all risk-based segments.

At JuneSeptember 30, 2020, loans equal to or greater than $20 million to any single client (individually or in the aggregate) totaled $18.8$19.9 billion, or 51.251.8 percent of our total loan portfolio. These loans represented 425433 clients, and of these loans, $21.7$45.8 million were on nonaccrual status as of JuneSeptember 30, 2020.
The following table provides a summary of loans by size and risk-based segment. The breakout below is based on total client balances (individually or in the aggregate) as of December 31, 2019:2019:
 December 31, 2019
(Dollars in thousands)Less than Five MillionFive to Ten MillionTen to Twenty Million Twenty to Thirty MillionThirty Million or MoreTotal
Global fund banking$1,016,051 $1,082,201 $2,559,384 $2,029,547 $11,025,614 $17,712,797 
Investor dependent:
Early stage1,090,852 260,685 191,661 76,542 33,685 1,653,425 
Mid stage544,167 316,617 156,418 49,581 — 1,066,783 
Later stage167,500 348,832 648,382 304,373 229,589 1,698,676 
Total investor dependent1,802,519 926,134 996,461 430,496 263,274 4,418,884 
Cash flow dependent:
Sponsor led buyout16,034 97,458 550,753 723,737 815,038 2,203,020 
Other206,209 86,929 465,304 463,073 1,031,332 2,252,847 
Total cash flow dependent222,243 184,387 1,016,057 1,186,810 1,846,370 4,455,867 
Private bank2,791,587 359,429 191,979 49,996 96,228 3,489,219 
Balance sheet dependent256,247 269,744 404,356 78,197 288,760 1,297,304 
Premium wine243,094 267,389 261,951 148,469 142,609 1,063,512 
Other526,850 40,511 106,247 112,764 103,749 890,121 
Total loans (1)$6,858,591 $3,129,795 $5,536,435 $4,036,279 $13,766,604 $33,327,704 
  December 31, 2019
(Dollars in thousands) Less than Five Million Five to Ten Million Ten to Twenty Million  Twenty to Thirty Million Thirty Million or More Total
Private equity/venture capital $1,016,051
 $1,082,201
 $2,559,384
 $2,029,547
 $11,025,614
 $17,712,797
Investor dependent            
Early stage 1,090,852
 260,685
 191,661
 76,542
 33,685
 1,653,425
Mid stage 544,167
 316,617
 156,418
 49,581
 —
 1,066,783
Later stage 167,500
 348,832
 648,382
 304,373
 229,589
 1,698,676
Total investor dependent 1,802,519
 926,134
 996,461
 430,496
 263,274
 4,418,884
Cash flow dependent            
Sponsor led buyout 16,034
 97,458
 550,753
 723,737
 815,038
 2,203,020
Other 206,209
 86,929
 465,304
 463,073
 1,031,332
 2,252,847
Total cash flow dependent 222,243
 184,387
 1,016,057
 1,186,810
 1,846,370
 4,455,867
Private bank 2,791,587
 359,429
 191,979
 49,996
 96,228
 3,489,219
Balance sheet dependent 256,247
 269,744
 404,356
 78,197
 288,760
 1,297,304
Premium wine 243,094
 267,389
 261,951
 148,469
 142,609
 1,063,512
Other 526,850
 40,511
 106,247
 112,764
 103,749
 890,121
Total loans (1) $6,858,591
 $3,129,795
 $5,536,435
 $4,036,279
 $13,766,604
 $33,327,704
(1)As of September 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
(1)
For the quarter ended

June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

At December 31, 2019, loans equal to or greater than $20 million to any single client (individually or in the aggregate) totaled $17.8 billion, or 53.4 percent of our total loan portfolio. These loans represented 397 clients, and of these loans, $37.3 million were on nonaccrual status as of December 31, 2019.
Our three main market segments include (i) Global Fund Banking (formerly private equity/venture capital), (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 the various stages of their life cycles and represent the largest segments of our loan portfolio. The primary underwriting method for our technology and life science/healthcare portfolios are classified as investor dependent, balance sheet dependent or cash flow dependent.
Investor dependent loans represent a relatively small percentage of our overall portfolio at 14 percent of total loans at June 30, 2020 and 13 percent at December 31, 2019. These loans are made to companies in both our Accelerator (early-stage) and Growth practices (mid-stage and later-stage).
Balance sheet dependent loans, which include asset-based loans, represented five percent of total loans at June 30, 2020 and four percent at December 31, 2019. Working capital lines and accounts receivable financing, both part of our asset-based lending, represented one percent of total loans each, respectively, at June 30, 2020 and two percent and one percent of total loans, respectively, at December 31, 2019.
Cash flow dependent loans, which include sponsor led buyout lending, represented 13 percent of total loans at both June 30, 2020 and December 31, 2019. Sponsor led buyout loans represented six percent of total loans at June 30, 2020, compared to seven percent at December 31, 2019.

(ii) Private Equity/Venture Capital
We also provideincludes financial services to clients in the private equity/venture capital community. Our lending to private equity/venture capital firms and funds represented 4951 percent of total loans at JuneSeptember 30, 2020 and 53 percent at December 31, 2019. The vast majority of this portfolio consists of capital call lines of credit, the repayment of which is dependent on the payment of capital calls by the underlying limited partner investors in the funds managed by these firms. These facilities are

generally governed by meaningful financial covenants oriented towards ensuring that the funds' remaining callable capital is sufficient to repay the loan, and larger commitments (typically provided to larger private equity funds) are often secured by an assignment of the general partner's right to call capital from the fund's limited partner investors.

(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 13 percent of total loans at both September 30, 2020 and December 31, 2019. These loans are made to companies in both our Accelerator (early-stage) and Growth practices (mid-stage and later-stage).
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Cash flow dependent loans, which include sponsor led buyout lending, represented 12 percent of total loans at September 30, 2020 and 13 percent at December 31, 2019. Sponsor led buyout loans represented five percent of total loans at September 30, 2020, compared to seven percent at December 31, 2019.
Balance sheet dependent loans, which include asset-based loans, represented four percent of total loans at both September 30, 2020 and December 31, 2019. Working capital lines and accounts receivable financing, both part of our asset-based lending, represented one percent of total loans each, respectively, at September 30, 2020 and two percent and one percent of total loans, respectively, at December 31, 2019.

(iii) SVB Private Bank
Our SVB Private Bank clients are primarily private equity/venture capital professionals and senior executives of the innovation companies they support. Our lending to SVB Private Bank clients represented 1012 percent of total loans at both JuneSeptember 30, 2020 and 10 percent at December 31, 2019. Many of these clients have mortgages, which represented 8586 percent of this portfolio at JuneSeptember 30, 2020; the balance of this portfolio consisted of home equity lines of credit, 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. In addition, we provide owner occupied commercial mortgages to Private Bank clients and real estate secured loans to eligible employees through our Employee Home Ownership Program.EHOP.
We expect lending activity in 2020, to be impacted by strong borrowing from technology and life science/healthcare companies looking to bolster their liquidity positions, particularly during the first half of the year, followed by more muted borrowing, as well as prepayment or reduced utilization of capital call lines of credit by private equity/venture capital firms due to a slowdown in investment activities.
Paycheck Protection Program
Beginning in April 2020, we accepted applications under the PPP administered by the U.S. Small Business Association (“SBA”) under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and originated loans to qualified small businesses. 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. 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.
As of JuneSeptember 30, 2020, we have over 4,400 outstanding PPP loans in the amount of $1.8 billion, as approved by the SBA. This funded amount reflects repayments received as of such date.
Additionally, we announced in April 2020 that we intendour intention to donate any processingPPP loan origination fees, we receivenet of costs incurred, received from the SBA net of our costs incurred, to charitableCOVID-19 relief efforts, relatingcurrently estimated to COVID-19. Forgiveness of PPP loans is expectedbe approximately $20 million to beginbe donated in the third or fourth quarter of 2020 which will impactirrespective of when forgiveness amounts are actually received from the timing of PPP donation (because lender fees are received upon forgiveness).SBA.
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 threethree-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 are outlined below:
•
Venture debt: The venture debt relief program was offeredexpected to end, and payments to eligible borrowers during the month of April 2020. The program defers principal payments for six-months or, if the loan is in an interest-only period, extends the interest-only period for six-months. Interest continues to be accrued and billed. The maturity dates on the loans are extended and principal payments resume, based on original payment schedules. Clients with investor dependent commercial term loans that were fully funded as of March 31, 2020, and with an aggregate commitment of less than or equal to $10 million, were eligible for the program. As of June 30, 2020, loans modified under this program had outstanding balances of $2.1 billion. This amount reflects repayments received as of June 30, 2020.
•
Private Bank: The Private Bank relief program was offered to eligible borrowers beginning April 1, 2020, through June 30, 2020. The program defers principal and interest payments for the lesser of three months or the remaining loan period. The maturity date of the loans is not extended, and deferred interest is not capitalized into principal but added to final payment upon maturity. The principal balance continues to accrue interest during the deferral period. Clients who were current, less than 30 days past due, as of March 31, 2020, were eligible for the program. As of June 30, 2020, loans modified under this program had outstanding balances of $204.3 million. This amount reflects repayments received as of June 30, 2020.
•
Wine: The wine relief program was offered to eligible borrowers during the month of April 2020. Depending on the loan structure, principal and interest payments are deferred for three months or principal is deferred for six months. Interest

continues to be accrued during the deferral period. Maturity dates are not extended, resulting in a larger final payment at maturity. All wine borrowers were eligible to participate in the program.fourth quarter of 2020. As of JuneSeptember 30, 2020, loans modified under this programthese programs had outstanding balances of $594.9 million. This amount reflects$1.9 billion, $13.6 million and $73.3 million, for venture-backed, private bank and wine borrowers, respectively. These amounts reflect repayments received as of JuneSeptember 30, 2020.
For loans modified under these programs, in accordance with the provisions of Section 4013 of the CARES Act, we elected to not apply troubled debt restructuring 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 assume that borrowers are not experiencing financial difficulty if loan modifications a) are performed in response to the COVID-19 pandemic, b) provide loan payment deferrals that are up to six months in duration and c) 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 do not expect to defer interest income recognition during periods of payment deferral, nor do we expect any qualifying modification to trigger nonaccrual status. The effectiveness of our programs is uncertain considering the unknown duration and impact of the COVID-19 pandemic.
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State Concentrations
Approximately 2827 percent of our outstanding total loan balances as of Juneboth September 30, 2020 and December 31, 2019 were to borrowers based in California compared to 27 percent as of December 31, 2019.California. Additionally, as of JuneSeptember 30, 2020, borrowers in Massachusetts and New York and Massachusetts increased to 11 percent and 10 percent of our outstanding total loan balances each as of JuneSeptember 30, 2020, respectively, compared to nine percent each as of December 31, 2019. Other than California, Massachusetts and New York, and Massachusetts, as of JuneSeptember 30, 2020, there are no states with loan balances greater than or equal to 10 percent.
See generally “Risk Factors–Credit Risks” set forth under Part I, Item 1A in our 2019 Form 10-K and "Risk Factors" under Part II, Item 1A of this report.

Credit Quality Indicators
As of JuneSeptember 30, 2020 and December 31, 2019, our total criticized loans and nonaccrual loans represented four and three percent of our total loans, respectively. Criticized and nonaccrual loans to early-stage clients represented 1611 and 23 percent of our total criticized and nonaccrual loan balances at JuneSeptember 30, 2020 and December 31, 2019, respectively. Loans to early-stage clients represent a relatively small percentage of our overall portfolio at fivefour percent of total loans at both JuneSeptember 30, 2020 and five percent at December 31, 2019. 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.
More specifically, given the economic environment in light of the COVID-19 pandemic, we are closely monitoring our loan portfolio. Notwithstanding the increase of our allowance for credit losses in the first quarter which was largely attributable to longer duration mortgage loans based on our forecast models, we currently expect particularly for 2020 continued strong credit performance for our Private Bank and private equity/ventureGlobal Fund Banking portfolios, consistent with the historic low credit losses we have typically experienced. However, we expect that our technology, life science/healthcare and premium wine portfolios will be likelier to be impacted negatively by the challenging economic environment in 2020. Particular areas of credit focus include: early-stage companies; Sponsor Finance clients; consumer internet and advertising technology clients; life science/healthcare companies that require clinical trials or provide elective services; and wine clients who are dependent on tasting room or restaurant sales.

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Credit Quality and Allowance for Credit Losses for Loans and for Unfunded Credit Commitments
Nonperforming assets consist of loans on nonaccrual status, loans past due 90 days or more still accruing interest, and Other Real Estate Owned (“OREO”) and other foreclosed assets. We measure all loans placed on nonaccrual status for impairment based on the fair value of the underlying collateral or the net present value of the expected cash flows. The table below sets forth certain data and ratios between nonperforming loans, nonperforming assets and the allowance for credit losses for loans and unfunded credit commitments:
(Dollars in thousands) June 30, 2020 December 31, 2019(Dollars in thousands)September 30, 2020December 31, 2019
Nonperforming, past due, and restructured loans:    Nonperforming, past due, and restructured loans:
Nonaccrual loans $94,326
 $102,669
Nonaccrual loans$105,711 $102,669 
Loans past due 90 days or more still accruing interest 76
 3,515
Loans past due 90 days or more still accruing interest— 3,515 
Total nonperforming loans (1) 94,402
 106,184
Total nonperforming loans (1)105,711 106,184 
OREO and other foreclosed assets —
 —
OREO and other foreclosed assets1,179 — 
Total nonperforming assets $94,402
 $106,184
Total nonperforming assets$106,890 $106,184 
Performing TDRs $56,281
 $31,990
Performing TDRs$14,163 $31,990 
Nonperforming loans as a percentage of total loans (1) 0.26% 0.32%Nonperforming loans as a percentage of total loans (1)0.28 %0.32 %
Nonperforming assets as a percentage of total assets 0.11
 0.15
Nonperforming assets as a percentage of total assets0.11 0.15 
Allowance for credit losses for loans $589,828
 $304,924
Allowance for credit losses for loans$512,958 $304,924 
As a percentage of total loans (1) 1.61% 0.91%As a percentage of total loans (1)1.34 %0.91 %
As a percentage of total nonperforming loans (1) 624.80
 287.17
As a percentage of total nonperforming loans (1)485.25 287.17 
Allowance for credit losses for nonaccrual loans $54,383
 $44,859
Allowance for credit losses for nonaccrual loans$64,479 $44,859 
As a percentage of total loans (1) 0.15% 0.13%As a percentage of total loans (1)0.17 %0.13 %
As a percentage of total nonperforming loans (1) 57.61
 42.25
As a percentage of total nonperforming loans (1)61.00 42.25 
Allowance for credit losses for total performing loans $535,445
 $260,065
Allowance for credit losses for total performing loans$448,479 $260,065 
As a percentage of total loans (1) 1.46% 0.78%As a percentage of total loans (1)1.17 %0.78 %
As a percentage of total performing loans (1) 1.46
 0.78
As a percentage of total performing loans (1)1.17 0.78 
Total loans (1) $36,727,222
 $33,327,704
Total loans (1)$38,413,891 $33,327,704 
Total performing loans (1) 36,632,820
 33,221,520
Total performing loans (1)38,308,180 33,221,520 
Allowance for credit losses for unfunded credit commitments (2) 99,294
 67,656
Allowance for credit losses for unfunded credit commitments (2)101,515 67,656 
As a percentage of total unfunded credit commitments 0.35% 0.28%As a percentage of total unfunded credit commitments0.33 %0.28 %
Total unfunded credit commitments (3) $28,127,229
 $24,521,920
Total unfunded credit commitments (3)$30,329,796 $24,521,920 
(1)As of September 30, 2020, loan amounts are disclosed, and ratios are calculated, using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed, and ratios calculated, using the gross basis.
(1)
For the quarter ended
(2)The “allowance for credit losses for unfunded credit commitments” is included as a component of other liabilities and any provision is included in the “(reduction) provision for credit losses” in the statement of income. See “(Reduction) Provision for Credit Losses” for a discussion of the changes to the allowance.
(3)Includes unfunded loan commitments and letters of credit.

June 30, 2020, loan amounts are disclosed, and ratios are calculated, using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed, and ratios calculated, using the gross basis.
(2)The “allowance for credit losses 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.
(3)Includes unfunded loan commitments and letters of credit.

Our allowance for credit losses for loans as a percentage of total loans increased 7043 basis points to 1.611.34 percent at JuneSeptember 30, 2020, compared to 0.91 percent at December 31, 2019. The 7043 basis points increase was due primarily to a 6839 basis points increase for our performing loan reserve as a percentage of total loans and a twofour basis points increase for nonaccrual loans.
Our allowance for credit losses for performing loans was $535.4$448.5 million at JuneSeptember 30, 2020, compared to $260.1 million at December 31, 2019. Included in the allowance for credit losses at JuneSeptember 30, 2020 is the day one impact of adopting CECL of $22.4 million driven by an increase in our expected credit loss for our Investor Dependent loan portfolio given the higher relative risk and longer-duration, which is taken into account under the CECL methodology, partially offset by a decrease for our Private Equity/Venture CapitalGlobal Fund Banking loan portfolio, given its higher historical credit quality and shorter duration. The remaining $252.9$166.0 million increase was due primarily to an increase of $216.9$134.5 million related to the expected credit losses for our performing loan reserves based on our forecast models of the current economic environment and $36.1$31.5 million related to period-end loan growth of $3.4$5.2 billion.

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To determine the allowance for credit losses for performing loans as of September 30, 2020, we utilized three scenarios, on a weighted basis, from Moody’s Analytics September 2020 forecast in our expected lifetime loss estimates. The baseline scenario, which carries the highest weighting, reflected an improvement in the economic forecast utilized for our ACL as of June 30, 2020. Those assumptions included an improvement in the unemployment rate from 13 percent as of June 30, 2020, to 9 percent as of September 30, 2020, as a result of businesses re-opening and the effect of government aid programs. The gross domestic product ("GDP") contraction rate improved from 33 percent as of June 30, 2020 to 27 percent as of September 30, 2020.. We also utilized a more favorable (Moody’s S1, Upside) and a less favorable (Moody’s S3, Downside) economic forecast scenario, in addition to the baseline. To the extent we identified credit risk considerations that were not captured by the Moody's Analytics September 2020 scenarios, we addressed the risk through management's qualitative adjustments to our ACL for performing loans.
Our allowance for credit losses for nonaccrual loans was $54.4$64.5 million at JuneSeptember 30, 2020, compared to $44.9 million at December 31, 2019.The $9.5$19.6 million increase was due primarily to $54.3$90.4 million in reserves for new nonaccrual loans as noted abovebelow and $3.1 million due to the day one impact of adopting CECL, partially offset by $24.9$34.6 million in repayments and $23.0$39.3 million in charge-offs. Reserves for new nonaccruals were primarily driven by reserves of $31.7 million for five Investor Dependent clients and $14.1 million for one Sponsor Led Buyout client and $9.8 million for two Investor Dependent clients.client. Repayments were primarily driven by $12.9 million for one Sponsor Led Buyout client that was added to our nonaccrual loan portfolio during the third quarter of 2019.
The following table presents a summary of changes in nonaccrual loans for the sixnine months ended JuneSeptember 30, 2020 and 2019: 
 Three months ended June 30, Six months ended June 30, Three months ended September 30,Nine months ended September 30,
(Dollars in thousands) 2020 2019 2020 2019(Dollars in thousands)2020201920202019
Balance, beginning of period (1) $50,607
 $133,623
 $102,669
 $94,142
Balance, beginning of period (1)$94,326 $96,641 $102,669 $94,142 
Additions 66,116
 39,460
 102,462
 90,317
Additions70,000 53,643 172,462 143,960 
Paydowns and other reductions (17,784) (57,507) (80,461) (63,937)Paydowns and other reductions(38,754)(22,493)(119,215)(86,430)
Charge-offs (4,613) (18,935) (30,344) (23,830)Charge-offs(19,861)(23,729)(50,205)(47,559)
Other reductions —
 —
 —
 (51)Other reductions— (17)— (68)
Balance, end of period (1) $94,326
 $96,641
 $94,326
 $96,641
Balance, end of period (1)$105,711 $104,045 $105,711 $104,045 
(1)For the quarter ended September 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.
(1)
For the quarter ended

June 30, 2020, loan amounts are disclosed using the amortized cost basis as a result of the adoption of CECL. Prior period loan amounts are disclosed using the gross basis.

Nonaccrual loans were $94.3$105.7 million at JuneSeptember 30, 2020, compared to $102.7 million at December 31, 2019. Our nonaccrual loan balance decreased $8.4increased $3.0 million primarily driven by $80.5$172.4 million in new nonaccrual loans, partially offset by $119.2 million in paydowns and other reductions and $30.3$50.2 million charge-offs, partially offsetcharge-offs. New nonaccrual loans were driven primarily by $102.4$57.4 million for six clients in new nonaccrual loans.our Investor Dependent portfolio, $21.8 million for one client in our Sponsor Led Buyout portfolio and $14.8 million for one client in our Balance Sheet Dependent portfolio. Repayments were primarily driven by $34.5 million for one Sponsor Led Buyout client that was added to our nonaccrual loan portfolio during the third quarter of 2019. New nonaccrual loans were driven primarily by $21.82019 and $11.7 million for one Balance Sheet Dependent client that was added in our Sponsor Led Buyout portfolio, $14.8 million for one client in our balance sheet dependent portfolio and $12.3 million for one client in our Investor Dependent portfolio.the second quarter of 2020. As of JuneSeptember 30, 2020, we have specifically reserved $54.4$64.5 million for our nonaccrual loans.
Average nonaccrual loans for the three and sixnine months ended JuneSeptember 30, 2020 were $76.8$96.1 million and $70.3$78.9 million, respectively, compared to $97.6$90.3 million and $102.0$98.1 million for the comparable 2019 period. The $20.8$5.8 million decreaseincrease in average nonaccrual loans for the three months ended JuneSeptember 30, 2020 compared to JuneSeptember 30, 2019was primarily driven by large paydowns in the first quarter of 2020 and the new nonaccruals occurring in the latter part of the second quarter and third quarter. If the nonaccrual loans had not been nonperforming, $0.6$0.7 million and $1.0$1.7 million in interest income would have been recorded for the three and sixnine months ended JuneSeptember 30, 2020, respectively, compared to $1.4$1.0 million and $3.1$4.1 million for the comparable 2019 period.
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Accrued Interest Receivable and Other Assets
A summary of accrued interest receivable and other assets at JuneSeptember 30, 2020 and December 31, 2019 is as follows:
(Dollars in thousands) June 30, 2020
December 31, 2019 % Change      
Derivative assets (1) $440,430
 $332,814
 32.3 %
Foreign exchange spot contract assets, gross 1,205,821
 810,275
 48.8
Accrued interest receivable 201,274
 216,962
 (7.2)
FHLB and Federal Reserve Bank stock 60,673
 60,258
 0.7
Net deferred tax assets (2) 577
 28,433
 (98.0)
Accounts receivable 45,501
 47,663
 (4.5)
Other assets 286,714
 248,828
 15.2
Total accrued interest receivable and other assets $2,240,990
 $1,745,233
 28.4
(Dollars in thousands)September 30, 2020December 31, 2019% Change      
Derivative assets (1)$427,044 $332,814 28.3 %
Foreign exchange spot contract assets, gross1,243,419 810,275 53.5 
Accrued interest receivable203,633 216,962 (6.1)
FHLB and Federal Reserve Bank stock61,232 60,258 1.6 
Net deferred tax assets (2)347 28,433 (98.8)
Accounts receivable33,320 47,663 (30.1)
Other assets347,984 248,828 39.8 
Total accrued interest receivable and other assets$2,316,979 $1,745,233 32.8 
(1)See "Derivatives" section below.
(2)See "Other Liabilities" section below.

(1)See "Derivatives" section below.

(2)See "Other Liabilities" section below.

Foreign Exchange Spot Contract Assets
Foreign exchange spot contract assets represent unsettled client trades at the end of the period. The increase of $395.5$433.1 million was primarily due to an overall increase in the amount of unsettled spot trades at period-end as compared to December 31, 2019.
Accrued Interest Receivable
The decrease of $15.7$13.3 million in accrued interest receivable is reflective of lower accrued interest receivables on loans and fixed income investmentsinvestment securities from lower overall market rates offset by an increase in accrued interest receivable reflective of growth in period-end fixed income investment securities of $3.5$11.0 billion at JuneSeptember 30, 2020 as compared to December 31, 2019.
Other Assets
Other assets includes various asset amounts for other operational transactions. The increase of $37.9$99.2 million was primarily due to a $49.5$31.9 million increase in Leerink trade receivables reflective of increased investment banking activity during the sixnine months ended JuneSeptember 30, 2020.
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 at JuneSeptember 30, 2020 and December 31, 2019:
(Dollars in thousands) June 30, 2020 December 31, 2019 % Change 
Assets:      
Equity warrant assets $171,082
 $165,473
 3.4%
Foreign exchange forward and option contracts 182,093
 115,854
 57.2
Client interest rate derivatives 87,255
 28,811
 NM
Interest rate swaps —
 22,676
 —
Total derivative assets $440,430
 $332,814
 32.3
Liabilities:      
Foreign exchange forward and option contracts $152,538
 $98,207
 55.3
Client interest rate derivatives 28,676
 14,154
 102.6
Interest rate swaps —
 25,623
 —
Total derivative liabilities $181,214
 $137,984
 31.3
(Dollars in thousands)September 30, 2020December 31, 2019% Change 
Assets:
Equity warrant assets$202,184 $165,473 22.2 %
Foreign exchange forward and option contracts145,591 115,854 25.7 
Client interest rate derivatives79,270 28,811 175.1 
Interest rate swaps— 22,676 — 
Total derivative assets$427,045 $332,814 28.3 
Liabilities:
Foreign exchange forward and option contracts$112,223 $98,207 14.3 
Client interest rate derivatives25,558 14,154 80.6 
Interest rate swaps— 25,623 — 
Total derivative liabilities$137,781 $137,984 (0.1)
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NM—Not meaningful

Equity Warrant Assets
In connection with negotiating credit facilities and certain other services, we often obtain rights to acquire stock in the form of equity warrant assets in primarily private, venture-backed companies in the technology and life science/healthcare industries. At JuneSeptember 30, 2020, we held warrants in 2,4192,503 companies, compared to 2,268 companies at December 31, 2019. Warrants in 2028 companies each had fair values greater than $1.0 million and collectively represented $50.7$83.0 million, or 29.6%,41.1 percent, of the fair value of the total warrant portfolio at JuneSeptember 30, 2020. The change in fair value of equity warrant assets is recorded in "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 sixthree and nine months ended JuneSeptember 30, 2020 and 2019: 
 Three months ended September 30,Nine months ended September 30,
(Dollars in thousands)2020201920202019
Balance, beginning of period$171,082 $158,048 $165,473 $149,238 
New equity warrant assets4,726 3,843 16,598 11,365 
Non-cash changes in fair value, net30,187 7,995 35,629 19,787 
Exercised equity warrant assets(3,450)(20,292)(14,184)(28,346)
Terminated equity warrant assets(361)(481)(1,332)(2,931)
Balance, end of period$202,184 $149,113 $202,184 $149,113 
  Three months ended June 30, Six months ended June 30,
(Dollars in thousands) 2020 2019 2020 2019
Balance, beginning of period $152,710
 $162,215
 $165,473
 $149,238
New equity warrant assets 7,353
 3,051
 11,872
 7,521
Non-cash changes in fair value, net 17,510
 9,166
 8,043
 22,356
Exercised equity warrant assets (6,052) (15,339) (13,434) (19,183)
Terminated equity warrant assets (439) (1,045) (872) (1,884)
Balance, end of period $171,082
 $158,048
 $171,082
 $158,048

Foreign Exchange Forward and Foreign Currency Option Contracts
We enter into foreign exchange forward contracts and foreign currency option contracts with clients involved in foreign activities, either as the purchaser or seller, depending upon the clients’ needs. For each forward or option contract entered into with our clients, we enter into an opposite way forward or option contract with a correspondent bank, which mitigates the risk of fluctuations in currency rates. We also enter into forward contracts with correspondent banks to economically reduce our foreign exchange exposure related to certain foreign currency denominated instruments. Net gains and losses on the revaluation of foreign currency denominated instruments are recorded in the line item “Other” as part of noninterest income, a component of consolidated net income. We have not experienced nonperformance by any of our counterparties and therefore have not incurred any related losses. Further, we anticipate performance by all counterparties. Our net exposure for foreign exchange forward and foreign currency option contracts, net of cash collateral, was zero$27.2 million at JuneSeptember 30, 2020 and $22.2 million at December 31, 2019. For additional information on our foreign exchange forward contracts and foreign currency option contracts, see Note 11 — “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 $86.5$78.6 million at JuneSeptember 30, 2020 and $28.6 million at December 31, 2019. For additional information on our client interest rate derivatives, see Note 11 — “Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
Interest Rate Swaps
To manage interest rate risk on our variable-interest rate loan portfolio, we enter into interest rate swap contracts to hedge against future changes in interest rates by using hedging instruments to lock in future cash inflows that would otherwise be impacted by movements in the market interest rates. We designate these interest rate swap contracts as cash flow hedges that qualify for hedge accounting under ASC 815 and record them in other assets and other liabilities. Refer to Note 11 — “Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for additional information regarding the termination of our interest rate swap cash flow hedges at June 30,during the first quarter of 2020.
Deposits
Deposits were $74.5$84.8 billion at JuneSeptember 30, 2020, an increase of $12.7$23.0 billion, or 20.637.3 percent, compared to $61.8 billion at December 31, 2019. The increase in deposits was driven by strong public and private fundraising as well as from clients conserving cash.
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At JuneSeptember 30, 2020, the aggregate balance of time deposit accounts individually equal to or greater than $100,000 totaled $374$332 million, compared to $185 million at December 31, 2019. At JuneSeptember 30, 2020, $373$331 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 1211 percent and 13 percent of our total deposits at JuneSeptember 30, 2020 and December 31, 2019, respectively, were from our clients in Asia.
We expect in 2020 that our deposit growth will be impacted by:by slower cash burn rates as clients look to conserve cash; shifting of off-balance investments to on-balance deposits by clients to preserve flexibility; and a slowdown in investment and exit activities impacting client liquidity levels and potential private equity/venture capital firm distributions to their partners.cash.

Short-Term Borrowings
As of June 30, 2020, we had $50.9 million in short-term borrowings, compared to $17.4 million as of December 31, 2019. The increase was due to an increase in collateral held from our counterparties in relation to exposures in our favor on outstanding derivative contracts. For more information on our short-term debt, see Note 10 — “Short-Term Borrowings and Long-Term Debt” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
Long-Term Debt
Our long-term debt was $843.2$843.4 million at JuneSeptember 30, 2020 and $348.0 million at December 31, 2019. The increase in our long-term debt was due to the issuance of 3.125% Senior Notes during the second quarter of 2020.
As of JuneSeptember 30, 2020, long-term debt included our 3.50% Senior Notes and 3.125% Senior Notes. For more information on our long-term debt, see Note 10 — “Short-Term Borrowings and Long-Term Debt” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

Other Liabilities
A summary of other liabilities at JuneSeptember 30, 2020 and December 31, 2019 is as follows:
(Dollars in thousands) June 30, 2020 December 31, 2019 % Change  
Foreign exchange spot contract liabilities, gross $1,278,006
 $888,360
 43.9
Accrued compensation 239,190
 354,393
 (32.5)
Allowance for unfunded credit commitments 99,294
 67,656
 46.8
Derivative liabilities (1) 181,214
 137,984
 31.3
Net deferred tax liabilities 89,457
 —
 —
Other liabilities 736,246
 593,359
 24.1
Total other liabilities $2,623,407
 $2,041,752
 28.5
(Dollars in thousands)September 30, 2020December 31, 2019% Change  
Foreign exchange spot contract liabilities, gross$1,468,525 $888,360 65.3 
Accrued compensation353,759 354,393 (0.2)
Allowance for unfunded credit commitments101,515 67,656 50.0 
Derivative liabilities (1)137,781 137,984 (0.1)
Net deferred tax liabilities159,967 — — 
Other liabilities845,674 593,359 42.5 
Total other liabilities$3,067,221 $2,041,752 50.2 
(1)See “Derivatives” section above.
See “Derivatives” section above.
Foreign Exchange Spot Contract Liabilities
Foreign exchange spot contract liabilities represent unsettled client trades at the end of the period. The increase of $389.6$580.2 million was due primarily to an increase in the fair value of unsettled spot trades at JuneSeptember 30, 2020 as compared to December 31, 2019.
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 $115.2 million was primarily the result of the payout of our 2019 incentive compensation plans during the first quarter of 2020, partially offset by the accrual for the six months ended June 30, 2020 related primarily toaccruals remained relatively flat, as the increase in the number of average FTEs for the first halfnine months ended of 2020 as well as the SVB Leerink incentive compensation resulting from strong second quarteryear-to-date performance offsets the decrease in incentive compensation accrued for the nine months ended September 30, 2020, reflective of strong prior year performance compared to the current year forecasted performance.
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 increase of $31.6$33.9 million was due primarily to the day one impact of the adoption of CECL of $22.8 million as well as a $9.1an $11.1 million increase for the sixnine months ended JuneSeptember 30, 2020, driven primarily by growth in unfunded credit commitments of $3.6$5.8 billion.
Net Deferred Tax Liabilities
Net deferred tax liabilities increased to $160.0 million due to the recording of pre-taxan increase in unrealized gains recorded to accumulated other comprehensive income from our available-for-sale securities and the termination of our interest rate swap cash flow hedge contracts, as well as gains from conversion of convertible debt options, partially offset by timing differences related to warrants and fund investments.an increase in allowance for credit losses for loans.
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Other Liabilities
Other liabilities includes various accrued liability amounts for other operational transactions. The increase of $142.9$252.3 million was reflective primarily of a $80.1$225.1 million increase in current taxesinvestment securities payable as well as a $34.0 million increase in syndicate payables,due to unsettled purchases of fixed income investment securities and a $30.9$30.0 million increase in new commitments for our qualified affordable tax credit funds.
Noncontrolling Interests
Noncontrolling interests totaled $148.9$174.4 million and $150.8 million at JuneSeptember 30, 2020 and December 31, 2019, respectively. The $1.9$23.6 million decreaseincrease was due primarily to distributions of $14.1 million, partially offset by net income attributable to noncontrolling interests of $12.3$40.0 million, partially offset by $16.4 million in distributions for the sixnine months ended JuneSeptember 30, 2020.

Fair Value Measurements
The following table summarizes our financial assets and liabilities that are measured at fair value on a recurring basis as of JuneSeptember 30, 2020 and December 31, 2019:2019:
 June 30, 2020 December 31, 2019 September 30, 2020December 31, 2019
(Dollars in thousands) Total Balance   Level 3      Total Balance   Level 3     (Dollars in thousands)Total Balance  Level 3     Total Balance  Level 3     
Assets carried at fair value $19,150,966
 $165,359
 $14,672,330
 $161,172
Assets carried at fair value$26,787,326 $192,817 $14,672,330 $161,172 
As a percentage of total assets 22.3% 0.2% 20.7% 0.2%As a percentage of total assets27.6 %0.2 %20.7 %0.2 %
As a percentage of assets carried at fair value   0.9
   1.1
As a percentage of assets carried at fair value0.7 1.1 
Liabilities carried at fair value $181,214
 $—
 $137,984
 $—
Liabilities carried at fair value$137,781 $— $137,984 $— 
As a percentage of total liabilities 0.2% —% 0.2% —%As a percentage of total liabilities0.2 %— %0.2 %— %
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 17 — “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 generally “Risk Factors” set forth under Part I, Item 1A in our 2019 Form 10-K, and under Part II, Item 1A of this report.
During the three and sixnine months ended JuneSeptember 30, 2020, the Level 3 assets that are measured at fair value on a recurring basis experienced net realized and unrealized gains of $24.1$52.5 million and $38.7$91.2 million, respectively, primarily reflective of net gains realized on exercised warrant assets. During the three and sixnine months ended JuneSeptember 30, 2019, the Level 3 assets that are measured at fair value on a recurring basis experienced net realized and unrealized gains of $46.6$39.6 million and $65.8$105.4 million, respectively, primarily reflective of valuation increases from our private company warrant portfolio driven by net gains realized on exercised warrant assets.
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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 applicable regulatory capital 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. Under 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 $7.3$7.8 billion at JuneSeptember 30, 2020, an increase of $0.8$1.3 billion, or 13.120.4 percent, compared to $6.5 billion at December 31, 2019. This increase was due primarily to net income available to common stockholders of $361.2$802.9 million and an increase in other comprehensive income of $535.9 million. The increase in other comprehensive income was driven primarily by a $590.6$604.5 million ($426.9436.9 million net of tax) increase in the fair value of our AFS securities portfolio reflective of decreases in market interest rates and a $214.0$198.0 million ($154.7143.1 million net of tax) remaining gain from the termination of our interest rate swap cash flow hedge contracts, partially offset by a reclassification to net income for realized gains of $61.2 million ($44.2 million net of tax) attributable to sales of AFS securities.
Funds generated through retained earnings are a significant source of capital and liquidity and are expected to continue to be so in the future.

Capital Ratios
Both SVB Financial and the Bank are subject to various regulatory capital requirements administered by state and federal banking agencies.
Regulatory capital ratios for SVB Financial and the Bank exceeded minimum federal regulatory guidelines under the Capital Rules as well as for a "well capitalized" bank holding company and insured depository institution, respectively, as of JuneSeptember 30, 2020 and December 31, 2019. Capital ratios for SVB Financial and the Bank, compared to the minimum capital ratios, are set forth below:
 June 30,
2020		 December 31, 2019 Required Minimum (1) Well Capitalized MinimumSeptember 30,
2020		December 31, 2019Required Minimum (1)Well Capitalized Minimum
SVB Financial:        SVB Financial:
CET 1 risk-based capital ratio (2)(3) 12.63% 12.58% 7.0% N/A
CET 1 risk-based capital ratio (2)(3)12.31 %12.58 %7.0 %N/A
Tier 1 risk-based capital ratio (3) 13.62
 13.43
 8.5
 6.0
Tier 1 risk-based capital ratio (3)13.25 13.43 8.5 6.0 
Total risk-based capital ratio (3) 14.77
 14.23
 10.5
 10.0
Total risk-based capital ratio (3)14.19 14.23 10.5 10.0 
Tier 1 leverage ratio (2)(3) 8.68
 9.06
 4.0
 N/A  
Tier 1 leverage ratio (2)(3)8.26 9.06 4.0N/A  
Tangible common equity to tangible assets ratio (4)(5) 7.94
 8.39
 N/A  
 N/A  
Tangible common equity to tangible assets ratio (4)(5)7.52 8.39 N/A  N/A  
Tangible common equity to risk-weighted assets ratio (4)(5) 13.68
 12.76
 N/A  
 N/A  
Tangible common equity to risk-weighted assets ratio (4)(5)13.28 12.76 N/A  N/A  
Bank:        Bank:
CET 1 risk-based capital ratio (3) 11.08% 11.12% 7.0% 6.5%CET 1 risk-based capital ratio (3)10.75 %11.12 %7.0 %6.5 %
Tier 1 risk-based capital ratio (3) 11.08
 11.12
 8.5
 8.0
Tier 1 risk-based capital ratio (3)10.75 11.12 8.5 8.0 
Total risk-based capital ratio (3) 12.28
 11.96
 10.5
 10.0
Total risk-based capital ratio (3)11.75 11.96 10.5 10.0 
Tier 1 leverage ratio (3) 6.91
 7.30
 4.0
 5.0
Tier 1 leverage ratio (3)6.45 7.30 4.0 5.0 
Tangible common equity to tangible assets ratio (4)(5) 6.91
 7.24
 N/A  
 N/A  
Tangible common equity to tangible assets ratio (4)(5)6.42 7.24 N/A  N/A  
Tangible common equity to risk-weighted assets ratio (4)(5) 12.17
 11.31
 N/A  
 N/A  
Tangible common equity to risk-weighted assets ratio (4)(5)11.79 11.31 N/A  N/A  
(1)Percentages represent the minimum capital ratios plus, as applicable, the fully phased-in 2.5% CET1 capital conservation buffer under the Capital Rules.
(1)Percentages represent the minimum capital ratios plus, as applicable, the fully phased-in 2.5% CET1 capital conservation buffer under the Capital Rules.
(2)"Well-Capitalized Minimum" CET 1 risk-based capital and Tier 1 leverage ratios are not formally defined under applicable banking regulations for bank holding companies.
(3)Capital ratios include regulatory capital phase-in of the allowance for credit losses under the 2020 CECL Transition Rule for periods beginning March 31, 2020.
(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.
(2)"Well-Capitalized Minimum" CET 1 risk-based capital and Tier 1 leverage ratios are not formally defined under applicable banking regulations for bank holding companies.
(3)Capital ratios include regulatory capital phase-in of the allowance for credit losses under the 2020 CECL Transition Rule for periods beginning March 31, 2020.
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(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.
Regulatory Capital Phase-In under the 2020 CECL Transition Rule
In March 2020, the federal banking agencies issued the 2020 CECL Transition Rule, which provides transitional relief to banking organizations with respect to the impact of CECL on regulatory capital. Under the rule, banking organizations that adopt CECL during the 2020 calendar year, such as SVB Financial and the Bank, 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. The rule prescribes a methodology for estimating the impact of differences in credit loss allowances reflected under CECL versus under the incurred loss methodology during the five-year transition period. We have elected to use the five-year transition option under the 2020 CECL Transition Rule.
Capital Simplification Rules
In July 2019, the federal banking agencies adopted final rules intended to simplify compliance with capital rules for non-advanced approaches banking organizations (the “Capital Simplification Rules”), such as SVB Financial and the Bank. The Capital Simplification Rules took effect for SVB Financial as of January 1, 2020 and simplify the capital treatment of mortgage servicing assets, certain deferred tax assets, investments in unconsolidated financial institutions and minority interests for banking organizations.
Our total risk-based capital ratios, for SVBFG and our Tier 1 risk-based capital ratio for SVBFG as of June 30, 2020 increased compared to December 31, 2019 as a result of an increase in capital, offset by an increase in our risk-weighted assets. The increase in capital was due to net income, an increase in our allowance for credits losses for loans and HTM securities and an increase in

minority interest for SVBFG reflective of the implementation of the Capital Simplification Rules. The increase in risk-weighted assets was primarily driven by our robust period-end loan growth and increase in our fixed income securities portfolio.
Our tier 1 risk-based capital ratioratios and leverage ratios decreased for theboth SVB Financial and Silicon Valley Bank as of June 30, 2020 remained relatively flat, as the increase in capital was proportional to the increase in our risk-weighted assets.
Our tier 1 leverage ratios for both SVBFG and the Bank as of June 30, 2020 decreased compared to December 31, 2019 driven primarily by an increase in risk-weighted and average assets, offset by an increase in tier 1 capital. The increase in risk-weighted and average assets was driven primarily by loan growth, increased cash and cash equivalents and increased fixed income investment securities. The increase in tier 1 capital for the Bank was driven primarily by net income. The increase in tier 1 capital for SVBFG was driven primarily by net income and an increase in minority interest due to the Capital Simplification Rules, offset by a decrease in retained earnings due to common stock repurchases under our stock repurchase program.
Our CET 1 capital ratio remained relatively flat for both SVBFG and the Bank as of JuneSeptember 30, 2020, compared to December 31, 2019 as a result of an increase2019. The decrease in capital ratios is primarily driven by increases in our risk-weighted, and average, assets, partially offset by the increasenet income. The increases in risk-weighted assets was driven by increases in our risk-weighted assets.loan and fixed income investment security portfolios. The increase in capitalaverage assets was due to net income and an increase in the allowance for credit losses for loans and HTM securities. Thesedriven by increases in capital were partially offset by the increase in risk weighted assets, driven by our robust period-end loan growth and increase in our fixed income securities portfolio.
investments and cash and cash equivalents, as well as loan growth. All of our reported capital ratios remain above the levels considered to be “well capitalized” under applicable banking regulations.
The tangible common equity to tangible assets ratio and the tangible common equity to risk-weighted assets ratios are not required by GAAP or applicable bank regulatory requirements. However, we believe these ratios provide meaningful supplemental information regarding our capital levels. Our management uses, and believes that investors benefit from referring to, these ratios in evaluating the adequacy of the Company’s capital levels; however, these financial measures should be considered in addition to, not as a substitute for or preferable to, comparable financial measures prepared in accordance with GAAP. These ratios are calculated by dividing total SVBFG stockholders' equity, by total period-end assets and risk-weighted assets, after reducing both amounts by acquired intangibles, if any. The manner in which this ratio is calculated varies among companies. Accordingly, our ratio is not necessarily comparable to similar measures of other companies.
The following table provides a reconciliation of non-GAAP financial measures with financial measures defined by GAAP for SVB Financial and the Bank for the periods ended JuneSeptember 30, 2020 and December 31, 2019:
 SVB FinancialBank
Non-GAAP tangible common equity and tangible assets
   (Dollars in thousands, except ratios)
September 30,
2020		December 31,
2019		September 30,
2020		December 31,
2019
GAAP SVBFG stockholders’ equity$7,792,935 $6,470,307 $6,104,361 $5,034,095 
Less: preferred stock340,138 340,138 — — 
Less: intangible assets183,203 187,240 — — 
Tangible common equity$7,269,594 $5,942,929 $6,104,361 $5,034,095 
GAAP total assets$96,916,771 $71,004,903 $95,012,287 $69,563,817 
Less: intangible assets183,203 187,240 — — 
Tangible assets$96,733,568 $70,817,663 $95,012,287 $69,563,817 
Risk-weighted assets$54,738,028 $46,577,485 $51,792,822 $44,502,150 
Non-GAAP tangible common equity to tangible assets7.52 %8.39 %6.42 %7.24 %
Non-GAAP tangible common equity to risk-weighted assets13.28 12.76 11.79 11.31 
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  SVB Financial Bank
Non-GAAP tangible common equity and tangible assets
   (Dollars in thousands, except ratios)
 June 30,
2020		 December 31,
2019		 June 30,
2020		 December 31,
2019
GAAP SVBFG stockholders’ equity $7,319,373
 $6,470,307
 $5,821,224
 $5,034,095
Less: preferred stock 340,138
 340,138
 —
 —
Less: intangible assets 184,549
 187,240
 —
 —
Tangible common equity $6,794,686
 $5,942,929
 $5,821,224
 $5,034,095
GAAP total assets $85,730,985
 $71,004,903
 $84,214,926
 $69,563,817
Less: intangible assets 184,549
 187,240
 —
 —
Tangible assets $85,546,436
 $70,817,663
 $84,214,926
 $69,563,817
Risk-weighted assets $49,682,026
 $46,577,485
 $47,838,181
 $44,502,150
Non-GAAP tangible common equity to tangible assets 7.94% 8.39% 6.91% 7.24%
Non-GAAP tangible common equity to risk-weighted assets 13.68
 12.76
 12.17
 11.31
The tangible common equity to tangible assets ratio decreased for SVBFG and the Bank during the nine months ended September 30, 2020. The tangible common equity to tangible assets ratio decreased as a result of the growth in our period-end assets due to increases in cash and cash equivalents and the fixed income investment security portfolio.
The tangible common equity to risk weighted assets ratio increased for SVBFG and the Bank during the sixnine months ended JuneSeptember 30, 2020. The tangible common equity to risk-weighted assets ratio increased as a result of increase in equity due to unrealized gains on AFS securities and unrealized gains due to the termination of our interest rate swap cash flow hedge contracts as mentioned above.during the first quarter of 2020. The growth in period-end risk-weighted assets was primarily due to increases in cash and cash equivalents and an increase in the fixed income portfolio.investments.
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 15 — “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 commitments to invest in venture capital and private equity funds, which in turn make investments generally in, or in some cases make loans to, privately-held companies. Commitments to invest in these funds are generally made for a 10-year period from the inception of the fund. Although the limited partnership agreements governing these investments typically do not restrict the general partners from calling 100% of committed capital in one year, it is customary for these funds to generally call most of the capital commitments over 5 to 7 years; however, in certain cases, the funds may not call 100% of committed capital over the life of the fund. The actual timing of future cash requirements to fund these commitments is generally dependent upon the investment cycle, overall market conditions, and the nature and type of industry in which the privately held companies operate.
For further details on our commitments to invest in venture capital and private equity funds, refer to Note 15 — “Off-Balance Sheet Arrangements, Guarantees and Other Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
Liquidity
The objective of liquidity management is to ensure that funds are available in a timely manner to meet our financial obligations, including, as necessary, paying creditors, meeting depositors’ needs, accommodating loan demand and growth, funding investments, repurchasing securities and other operating or capital needs, without incurring undue cost or risk, or causing a disruption to normal operating conditions.
We regularly assess the amount and likelihood of projected funding requirements through a review of factors such as historical deposit volatility and funding patterns, present and forecasted market and economic conditions, individual client funding needs, and existing and planned business activities. Our Asset/Liability Committee (“ALCO”), which is a management committee, provides oversight to the liquidity management process and recommends policy guidelines for the approval of the Finance Committee of our Board of Directors, and courses of action to address our actual and projected liquidity needs. Additionally, we routinely conduct liquidity stress testing as part of our liquidity management practices.
Historically, 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 JuneSeptember 30, 2020, our period-end total deposit balances were $74.5$84.8 billion, compared to $61.8 billion at December 31, 2019.
Our liquidity requirements can also be met through the use of our portfolio of liquid assets. Our definition of liquid assets includes cash and cash equivalents in excess of the minimum levels necessary to carry out normal business operations, short-term investment securities maturing within one year, available-for-sale securities eligible and available for financing or pledging purposes with a maturity in excess of one year and anticipated near-term cash flows from investments.
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We have certain facilities in place to enable us to access short-term borrowings on a secured and unsecured basis. Our secured facilities include collateral pledged to the FHLB of San Francisco and the discount window at the FRB (using both fixed income securities and loans as collateral). Our unsecured facility consists of our uncommitted federal funds lines. As of JuneSeptember 30, 2020, collateral pledged to the FHLB of San Francisco was comprised primarily of fixed income investment securities and loans and had a carrying value of $6.5$6.6 billion, of which $5.6$5.5 billion was available to support additional borrowings. As of JuneSeptember 30, 2020, collateral pledged to the discount window at the 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. Our total unused and available borrowing capacity for our uncommitted federal funds lines totaled $1.9 billion at JuneSeptember 30, 2020. Our total unused and available borrowing capacity under our master repurchase agreements with various financial institutions totaled $3.3 billion at JuneSeptember 30, 2020.
In connection with our participation in the PPP under the CARES Act as discussed, we considered participating in the Federal Reserve’s Paycheck Protection Program Lending Facility ("PPPLF"). The PPPLF was established to 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.

On a stand-alone basis, SVB Financial’s primary liquidity channels include dividends from the Bank, its portfolio of liquid assets, and its ability to raise debt and capital. Consistent with recent prior quarters, the Bank has paid a quarterly dividend to SVB Financial. For the three months ended JuneSeptember 30, 2020, no dividend was paid to SVB Financial, and for the sixnine months ended JuneSeptember 30, 2020, $50.0 million was paid. 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 2019 Form 10-K.
Consolidated Summary of Cash Flows
Below is a summary of our average cash position and statement of cash flows for the sixnine months ended JuneSeptember 30, 2020 and 2019. 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) 2020 2019(Dollars in thousands)20202019
Average cash and cash equivalents $10,460,207
 $5,470,520
Average cash and cash equivalents$11,977,637 $6,250,024 
Percentage of total average assets 13.9% 9.3%Percentage of total average assets15.0 %10.2 %
Net cash provided by operating activities $745,478
 $450,571
Net cash provided by operating activities$1,053,291 $709,744 
Net cash (used for) provided by investing activities (6,532,868) (317,021)
Net cash used for investing activitiesNet cash used for investing activities(15,588,371)(6,564,776)
Net cash provided by financing activities 13,207,713
 5,315,836
Net cash provided by financing activities23,441,073 9,229,689 
Net increase in cash and cash equivalents $7,420,323
 $5,449,386
Net increase in cash and cash equivalents$8,905,993 $3,374,657 
Average cash and cash equivalents increased by $5.0$5.7 billion, or 91.291.6 percent, to $10.5$12.0 billion for the sixnine months ended JuneSeptember 30, 2020, compared to $5.5$6.3 billion for the comparable 2019 period.
Cash provided by operating activities was $745.5 million$1.1 billion for the sixnine months ended JuneSeptember 30, 2020, reflective primarily of net income before noncontrolling interests and dividends of $381.4$855.5 million and a net increase of $364.0$197.8 million in adjustments to reconcile net income to net cash primarily driven by the provision for credit losses.
Cash used for investing activities of $6.5$15.6 billion for the sixnine months ended JuneSeptember 30, 2020 was driven by $8.6$18.4 billion in purchases of fixed income investment securities and a $3.5$5.2 billion increase in loan balances, partially offset by $2.7 billion in proceeds from the sale of AFS securities and $3.1$5.5 billion of proceeds from maturities and principle pay downs from our fixed income investment securities portfolio.
Cash provided by financing activities was $13.2$23.4 billion for the sixnine months ended JuneSeptember 30, 2020, reflective primarily of a $12.7$23.0 billion increase in deposits and $0.5 billion increase from the issuance of long termlong-term debt.
Cash and cash equivalents were $14.2$15.7 billion and $9.0$6.9 billion, respectively, at JuneSeptember 30, 2020 and 2019.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk Management
Market risk is defined as the risk of adverse fluctuations in the market value of financial instruments due to changes in market interest rates. Interest rate risk is our primary market risk and can result from timing and volume differences in the repricing of our rate-sensitive assets and liabilities, widening or tightening of credit spreads, changes in the general level of market interest rates and changes in the shape and level of the benchmark LIBOR/SWAP yield curve. Additionally, changes in interest rates can influence the rate of principal prepayments on mortgage securities, which affects the rate of amortization of purchase premiums and discounts. Other market risks include foreign currency exchange risk and equity price risk (including the effect of competition on product pricing). All these risks are important considerations but are also inherently difficult to predict and to assess the impact of each on simulation results. Consequently, simulations used to analyze the sensitivity of net interest income to changes in interest rates will differ from actual results due to differences in the timing and frequency of rate resets, the magnitude of changes in market rates, the impact of competition, fluctuating business conditions, and the impact of strategies taken by management to mitigate these risks.
Interest rate risk is managed by our ALCO. ALCO reviews the sensitivity of the market valuation on earning assets and funding liabilities and the modeled 12-month projection of net interest income from changes in interest rates, structural changes in investment and funding portfolios, loan and deposit activity and current market conditions. Relevant metrics and guidelines, which are approved by the Finance Committee of our Board of Directors and are included in our Interest Rate Risk Policy, are monitored on an ongoing basis.

Interest rate risk is managed 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 with managing interest rate risk.
We utilize a simulation model to perform sensitivity analysis on the economic value of equity and net interest income under a variety of interest rate scenarios, balance sheet forecasts and business strategies. The simulation model provides a dynamic assessment of interest rate sensitivity 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 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 the economic value of equity (“EVE”). EVE is defined as the market value of assets, less the market value of liabilities. Another application of the simulation model measures the impact of changes in market interest rates on net interest income (“NII”) assuming a static balance sheet size and composition as of the period-end reporting date. In the NII simulation, the level of market interest rates as well as the size and composition of the 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 maintains the balance sheet at its current size and composition. Yield and spread assumptions on cash and investment balances reflect current market rates and the shape of the yield curve. Yield and spread assumptions on loans reflect recent market impacts on product pricing. Similarly, we make certain deposit decay rate assumptions on demand deposits and interest-bearing deposits, which are replenished to hold the level and mix of funding liabilities constant. Changes in market interest rates that affect net interest income are principally short-term interest rates and include the following benchmark indexes: (i) the National Prime 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 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.
During the third quarter of 2020, ALCO approved a modeling change to our Funds Transfer Pricing (“FTP”) model used in the simulation of NII and EVE sensitivity measures. Model changes focused on assumed deposit balance behaviors, which primarily impacted the EVE sensitivity profile. The NIIremaining underlying assumptions in our FTP model for the valuation of loans, investments, and deposits were not changed.
The key deposit assumption change that drives the difference between the EVE metrics in the revised model is the treatment of core balances. Core balances represent the portion of deposits we assume to be present over an extended time period and can be relied upon as a longer-term source of funding. The revised model generally assumes a lower core deposit balance than the previous model leading to a lower duration of deposits. In the previous model, the higher core balance assumption for deposits resulted in a larger liability duration contribution to EVE sensitivity. A lower core deposit balance reflective of the model changes simulates a lower duration of liabilities that contributes to a greater EVE sensitivity compared
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to the previous model. Since our non-maturity deposits constitute such a large portion of the balance sheet, any changes to the market value sensitivity profile can have a significant impact on our overall EVE results.
The EVE simulation results using the revised model changes the EVE sensitivity profile from being liability sensitive to being asset sensitive. The EVE sensitivity is greater with the model changes in both the up and down rate shock scenarios. Our December 31, 2019 NII sensitivity results were also affected by this change, but to a lesser degree.
Simulation results presented here include an "asymmetric" beta assumption that is applied in the NII and EVE simulation models for interest-bearing deposits. This reflects management expectations that deposit repricing behavior 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 60 percent. That is, overall changes in interest-bearing deposit rates would be approximately 60 percent of the change in short-term market rates. The deposit beta assumption for an increasing rate environment is 50 percent. These repricing assumptions are reflected as changes in interest expense on interest-bearing deposit balances.


The following table presents our EVE and NII sensitivity exposure related to an instantaneous and sustained parallel shift in market interest rates of 100 and 200 basis points ("bps") at JuneSeptember 30, 2020 and December 31, 2019:2019. Net Interest Income sensitivity and the modeled Economic Value of Equity for December 31, 2019 has been revised to reflect the revised model assumptions for comparability purposes.
Change in interest rates (bps)
(Dollars in thousands)
 Estimated Estimated Increase/(Decrease) in EVE Estimated Estimated Increase/(Decrease) in NII
Change in interest rates (bps)
(Dollars in thousands)
EstimatedEstimated Increase/(Decrease) in EVEEstimatedEstimated Increase/(Decrease) in NII
EVE Amount Percent NII Amount PercentEVEAmountPercentNIIAmountPercent
June 30, 2020:            
September 30, 2020:September 30, 2020:
+200 $10,617,433
 $46,816
 0.4 % $2,580,576
 $645,203
 33.3 %+200$9,759,888 $(2,974,849)(23.4)%$2,598,515 $556,572 27.3 %
+100 10,686,185
 115,568
 1.1
 2,251,632
 316,259
 16.3
+10011,314,703 (1,420,034)(11.2)2,310,317 268,374 13.1 
— 10,570,617
 —
 —
 1,935,373
 —
 —
—12,734,737 — — 2,041,943 — — 
-100 10,659,364
 88,747
 0.8
 1,857,782
 (77,591) (4.0)-10014,039,442 1,304,705 10.2 2,017,397 (24,546)(1.2)
-200 10,659,364
 88,747
 0.8
 1,852,890
 (82,483) (4.3)-20014,134,314 1,399,577 11.0 2,011,461 (30,482)(1.5)
            
December 31, 2019:            
December 31, 2019: (as revised)December 31, 2019: (as revised)
+200 $9,930,270
 $(253,659) (2.5)% $2,528,158
 $421,358
 20.0 %+200$7,269,359 $(1,509,966)(17.2)%$2,588,319 $523,423 25.3 %
+100 10,056,711
 (127,218) (1.2) 2,314,686
 207,886
 9.9
+1008,039,360 (739,965)(8.4)2,326,428 261,532 12.7 
— 10,183,929
 —
 —
 2,106,800
 —
 —
—8,779,325 — — 2,064,896 — — 
-100 10,138,558
 (45,371) (0.4) 1,927,801
 (178,999) (8.5)-1009,254,622 475,297 5.4 1,789,625 (275,271)(13.3)
-200 10,000,585
 (183,344) (1.8) 1,760,283
 (346,517) (16.4)-2009,779,377 1,000,052 11.4 1,514,354 (550,542)(26.7)
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-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 EVE or forecast of NII.
Our base EVE as of JuneSeptember 30, 2020 increased $387 million$4.0 billion from December 31, 2019, driven by overall balance sheet growth.growth and a significant decrease in market rates since the first quarter of 2020. For the period ended JuneSeptember 30, 2020, compared to December 31, 2019, cash balances increased by $7.4 billion and loan balances increased by $3.6 billion. Fixedfixed income investments in our AFS and HTM portfolioportfolios increased by $3.5$8.9 billion and $11.0 billion, respectively, while loan balances increased by $5.2 billion. TotalFunding for these assets came
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primarily from growth of $23.0 billion in total deposits, increased significantly with an $8.3which consisted of a $16.7 billion and $6.3 billion increase in noninterest bearing and interest-bearing accounts, and $4.4 billion in interest bearing accounts; however, therespectively. The mix of noninterest bearing and interest bearinginterest-bearing deposits to total deposits remained relatively unchanged at JuneSeptember 30, 2020, compared to December 31, 2019. Borrowings increased by $529 million, driven primarily by
Rapid deposit growth has exceeded the issuancepace of new long-term debt.
Overall deposit balanceour loan growth, resultedand as a result, a significant amount of excess deposits not used to fund loan growth have contributed to the growth of our cash and investments balances. Much of the investment portfolio is held in high levels of cash balancesfixed rate MBS and CMOs which reducegenerally have a higher market value sensitivity onthan loans or cash. Thus, under an upward rate shock scenario, the asset side of the balance sheet. Cash balances at June 30, 2020, were $14.2 billion compared to $6.8 billion at December 31, 2019 amounting to 16.6 percent and 9.6 percent of total assets, respectively. This fundamental shift in the balance sheet structure caused total asset market value sensitivity to be lowerof investments changes more than total liability sensitivitythe market value of deposits resulting in a positivenegative EVE sensitivity in the +100 and +200 rate shockthose scenarios. However, due to the significant increase in deposits relative to loans and fixed income investments, as interest rates continue to rise, the higher proportion of deposit balances to total interest earning assets causes a decline in the EVE from the +100 bps rate shock scenario to the +200 bps rate shock scenario. Furthermore, the decrease in duration and yield on our fixed income securities portfolio to 3.4 years from 3.9 years and to 2.49 percent from 2.58 percent, respectively, at June 30, 2020 compared to December 31, 2019, results in further declines in our EVE from the +100 bps rate shock scenario to the +200 bps rate shock scenario.
Due to the sudden decrease in market rates that occurred in March 2020, EVE sensitivity measures in the -100 and -200 bps rate shock scenarios do not represent the full magnitude of those rate shocks because we assume that U.S. Federal Fund rates are floored at zero. As a result, the September 30, 2020 EVE sensitivity of the -100 and -200 bps rate shock scenarios are virtually identical.similar.

The modeling assumption change described above fundamentally changed the view of deposits from a market value perspective, which results in an asset sensitive EVE risk profile. However, continued balance sheet growth combined with a lower rate environment are also contributing factors to the overall change in mix in the composition of our balance sheet as discussed, results in an EVE profile that experiences positive changes as rates rise, and represents a typical profile for a cash-heavy balance sheet that includes a rate-sensitive loan portfolio funded by a much larger noninterest-bearing deposit base.sensitivity.
12-Month Net Interest Income Simulation
NII sensitivity is measured as the percentage change in projected 12-month net interest income earned in +/-100 and +/-200 basis point interest rate shock scenarios compared to a base scenario where balances and interest rates are held constant over the forecast horizon. At JuneSeptember 30,2020, NII sensitivity was 16.313.1 percent in the +100 bps interest rate scenario, compared to 9.912.7 percent at December 31, 2019. Our NII sensitivity in the +200 bps interest rate shock scenario was 33.327.3 percent compared to 20.025.3 percent at December 31, 2019. NII sensitivity in the -100 bps scenario of negative 4.01.2 percent was lower at JuneSeptember 30, 2020, compared to a negative 8.513.3 percent at December 31, 2019. The -200 bps scenario currently indicates a lower percentage change in NII of negative 4.31.5 percent at JuneSeptember 30, 2020, compared to negative 16.426.7 percent at December 31, 2019. 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. Therefore, the sensitivity measures in these scenarios essentially reflect results similar to what would be seen in a -25 to -50 bps rate shock range. The JuneSeptember 30, 2020 NII sensitivity percentages are inclusive of the realized income or expense associated with interest rate swaps that were partially unwound reflective of the macro hedging process initiated in 2019 to reduce the impact of decreasing rates on NII. The changes in NII sensitivity are primarily the result of the changes in balance sheet composition described previously, combined with the impact of hedges in the respective parallel rate shock scenarios.
Our base case static 12-month NII forecast at JuneSeptember 30, 2020 decreased compared tothan December 31, 2019 by $171$23 million, primarily driven by the growth in the balance sheet that has taken place year-to-date combined with an overall relatively lower rate environment, reflective of the decrease in the Fed Funds rate during March 2020, compared to last year. Specifically, a large portion of the loan portfolio is indexed to the Prime rate, which decreased 150 bps due to actions undertaken by the Federal Reserve in March of 2020 to mitigate a possible economic downturn. The adverse impact of changes in interest rates on NII was partially tempered to a certain degree by continued growth in the loan portfolio.portfolio, as well as continued balance sheet growth as previously described. The adverse impact of changes in interest rates on NII was tempered by continued growth in the balance sheet.
A majority of our loans are indexed to Prime and LIBOR. In the positiveupward parallel simulated rate shock scenarios, interest income on 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 negativedownward rate shock scenarios.
The 12-month NII simulations include repricing assumptions on our interest-bearing deposit products which we set at our discretion based on client needs and our overall funding mix. Repricing of interest-bearing deposits impacts estimated interest expense. As noted previously, repricing deposit rates are generally assumed to be approximately 60 percent of
In interest rate scenarios, the amount of simulated changes in short-term market interest rates.
The simulation model used in the above analysis incorporates embedded rate floors on loans, where present, in our interest rate scenarios, 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-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 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.

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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
Except as set forth below, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Beginning January 1, 2020, we adopted and implemented ASC 326, CECL and have implemented changes to our processes, systems and control activities related to the modeling and recognition of our allowance for credit loss estimates. The key changes to our processes and control activities included data management, economic forecasting, modeling, qualitative framework, governance and gathering of information provided for disclosures.


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PART II–OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Please refer to Note 18 — “Legal Matters” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.
ITEM 1A. RISK FACTORS
With the exception of the additional risk factor due to ongoing outbreak of COVID-19 below, there are no material changes to the risk factors set forth in our 2019 Annual Report on Form 10-K.
Our business, financial condition, liquidity, capital and results of operations have been, and will likely continue to be, adversely affected by the COVID-19 pandemic.
The COVID-19 pandemic has created significant economic and financial disruptions that have adversely affected, and are likely to continue to adversely affect, our business, financial condition, liquidity, capital and results of operations. We remain unable to predict the extent to which the COVID-19 pandemic will continue to negatively affect our business, financial condition, liquidity, capital and results of operations. The extent of any continued or future adverse effects of the COVID-19 pandemic will depend on future developments, which are highly uncertain and outside our control, including the scope and duration of the pandemic, the direct and indirect impact of the pandemic on our employees, clients, customers, counterparties and service providers, as well as other market participants, actions taken by governmental authorities and other third parties in response to the pandemic, and the scope and duration of future phases or outbreaks, or seasonal or other resurgences, of the disease.
The COVID-19 pandemic has contributed to, among other things (i) increased unemployment and decreased consumer confidence and business generally, leading to an increased risk of delinquencies, defaults and foreclosures; (ii) sudden and significant declines, and significant increases in volatility, in financial markets; (iii) ratings downgrades, credit deterioration and defaults in many industries; (iv) significant draws on credit lines as clients seek to increase liquidity; (v) significant reductions in the targeted federal funds rate; and (vi) heightened cybersecurity, information security and operational risks as a result of work-from-home arrangements and the current environment, including increased fraudulent activity. In addition, we also face an increased risk of client disputes, litigation and governmental and regulatory scrutiny as a result of the effects of COVID-19 on market and economic conditions, actions that governmental authorities take in response to those conditions, and our implementation of and participation in special financial relief programs, such as the Paycheck Protection Program ("PPP"). Moreover, we have focused resources and management attention towards managing the impacts of the COVID-19 pandemic, and we have and likely will have to continue to prioritize managing these impacts over certain growth initiatives and other investments in the near term.
We are prioritizing the safety of our employees. During the first quarter of 2020, we moved to a work-from-home plan, prohibited all business travel, postponed or moved online all SVB-hosted events, and enabled remote access to our systems. Although, our work-from-home plan has been effective thus far, we may experience negative effects of a prolonged work-from-home arrangement, such as increasing risks of systems access or connectivity issues, cybersecurity or information security breaches, or imbalances between work and home life, which may lead to reduced productivity and/or significant disruptions in our business operations. We are also continuing to provide support for our workforce related to technology, physical working conditions, work/life balance and remote collaboration. If these support measures are not effective over a prolonged period, our employees or business may not operate effectively. Moreover, we are developing a plan for employees to eventually return to work in our offices, the manner and timing of which are unclear. Our return to office plan will be subject to a variety of complex considerations including, among others, international, federal, state and local government and health organization guidance, health and safety implications (including potential health testing requirements), employee needs, and the practical requirements of potential office reconfigurations or a phased return. It is also possible that our current extended work-from-home model may affect or change our prior work-in-the-office model, as we may allow an increase in remote working practices.
Many of our counterparties and third-party service providers have also been, and may further be, affected by “stay-at-home” orders, market volatility and other factors that increase their risks of business disruption or that may otherwise affect their ability to perform under the terms of any agreements with us or provide essential services. As a result, our operational and other risks are generally expected to increase until the pandemic subsides.
During the secondthird quarter, we offeredcontinued to provide special financial assistance to support certain clients who are experiencing financial hardships related to the COVID-19 pandemic, including offering certain venture-backed companies, Private Bank, Wine and other clients the opportunity to temporarily defer their scheduled loan principal payments. We
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continue to engage with our clients to understand client needs, and we may implement additional assistance or other relief to supporting clients across various sectors and life stages. Additionally, we are participatingparticipated as a lender in the PPP under CARES Act and the U.K. CBILS and CLBILS, and may participate in other government relief programs in the U.S. or internationally. These government programs are complex and our

participation in any of these programs may lead to governmental, regulatory and other scrutiny, litigation and negative publicity and reputation damage for us and our customers who participate. For example, like many other participating banks, we have been named in various lawsuits regarding the right to agent fees under the PPP. Overall, these relief measures, whether our own programs or our participation in government programs, are new programs for us (with new or revised regulatory guidance for the government programs that may be issued at different times throughout the process) and we may not be successful in implementing or administering the programs as intended. Further, the extent to which these programs are successful in assisting our clients is uncertain. These relief programs are temporary in nature, as the PPP, as currently designed, provideprovides one-time relief, and our loan payment deferral programs expire during the second half of the year.year (certain of our programs ended in the third quarter with the remaining ending by year end). Our clients may experience financial difficulties without the continued support from these programs. If these relief measures are not effective, or if these relief measures are effective for only a limited period and our clients experience delayed financial hardship, there may be an adverse effect on our revenue and results of operations, including increased provisions in our allowance for credit losses, higher rates of default and increased credit losses in future periods.
Certain industries where the Company has credit exposure, including the technology, life science/healthcare and premium wine industries, have experienced, and are expected to continue to experience, significant operational and financial challenges as a result of COVID-19. As examples, many of our early-stage clients have limited cash on hand with limited or no financing sources available. Although these challenges have been somewhat offset by relief programs and decreased cash utilization, many of these companies may experience difficulties sustaining their businesses over time. In addition, our premium wine industry clients have and may continue to be impacted by the loss of restaurant and winery sales and have needed to alter their sales strategies to offset these declines, which may or may not be successful. These negative effects have resulted in a number of clients making higher than usual draws on outstanding lines of credit, which may negatively affect our liquidity if current economic conditions persist. The effects of COVID-19 may also cause our clients to be unable to pay their loans as they come due or decrease the value of collateral, such as accounts receivable, which we expect would cause significant increases in our credit losses. For certain early-stage and mid-stage clients, repayment of loans is dependent upon receipt of additional financing from venture capitalists or others, or in some cases, upon a successful sale to a third party, public offering or other form of liquidity or “exit” event. Further, many of our private equity/venture capital loans are dependent on the payment of capital calls or management fees by underlying limited partner investors in funds managed by private equity and venture capital firm clients. The effects of the COVID-19 pandemic have caused certain client valuations to drop, reduced the rate of financing or other “exit” events and impaired the ability of investors to meet their financial obligations to our clients, all of which has had and may continue to have an adverse effect on certain of our clients’ ability to repay their loans to us.
In connection with negotiated 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, life science and healthcare industries subject to applicable regulatory limits. We have also made investments through SVB Financial, SVB Leerink and our SVB Capital family of funds in venture capital funds and direct investments in companies, many of which are required to be carried at fair value or are impacted by changes in fair value. Due to the negative effects of the COVID-19 pandemic as well as recent declines, and significant increases in volatility, in financial markets, the value of these assets has decreased, and may continue to decrease (potentially in a significant manner). Additionally, because valuations of private companies are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value for private companies may differ materially from the values that would have been used if a ready market for these securities existed.
The effects of the COVID-19 pandemic have led to a significant slowdown in IPO and M&A activity in many industries. Although there was strong capital markets activity in the healthcare and life sciences sector in the secondthird quarter of 2020, a decline in this activity in future quarters could lead to decreased revenues of SVB Leerink, our investment banking business, as such revenues stem primarily from underwriting and advisory fees associated with capital markets and M&A transactions. The IPO and M&A slowdown in other industries, including the technology industry, also impacts our ability to monetize and realize gains from our equity warrant assets and other nonmarketable securities. Additionally, a slowdown in overall private equity and venture capital investment levels may reduce the need for our clients to borrow from our capital call lines of credit, which are typically utilized by our private equity and venture capital fund clients to make investments prior to receipt of capital called from their respective limited partners.
Our earnings and cash flows are dependent to a large degree on net interest income (the difference between interest income from loans and investments and interest expense on deposits and borrowings). Net interest income is significantly affected by market rates of interest. The significant reductions to the federal funds rate have led to a decrease in the rates and yields on U.S. Treasury securities, in some cases declining below zero. If interest rates are reduced further in response to COVID-19, we expect that our net interest income will decline, perhaps significantly. The overall effect of lower interest rates
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cannot be predicted at this time and depends on future actions the Federal Reserve may take to increase or reduce the targeted federal funds rate in response to the COVID-19 pandemic, and resulting economic conditions. Our net interest income is also impacted by our loan volume. If our loan levels were to decline, our net interest income would also be negatively impacted. Specifically, PPP loans, of which we had $1.8 billion as of JuneSeptember 30, 2020, will be eligible to be forgiven during the second half of the year. Although the

ultimate timing and amount of loans forgiven is uncertain and depends on when borrowers apply and how long the SBA takes to process forgiveness applications, we currently estimate that 75%10% of PPP loans will be forgiven by year end.
Our core fee income has been and may continue to be negatively affected by decreasing business activity due to the COVID-19 pandemic. For example, credit card activity and fees have declined, and may continue to decline in the future. Foreign exchange fees and letters of credit and standby letters of credit fees may also decline if the negative effect on business activity persists for a prolonged period of time. Additionally, our deposit levels may fluctuate during the current environment. Although our deposit levels grew during the second quarterand third quarters of 2020, it is difficult to predict client liquidity in a challenging economic environment, as clients may increase their draws on their lines of credit to bolster their cash positions, or clients may not be able to obtain additional financing which may lead to the depletion of their cash positions. Declines in client deposit levels may negatively affect our liquidity, as well as our net interest income.
The effects of the COVID-19 pandemic on economic and market conditions have increased demands on our liquidity as we meet our clients’ needs. In addition, these adverse developments may negatively affect our capital and leverage ratios. We have temporarily suspended our stock repurchases and will reevaluate the program once the economic environment is more stable. We will continue to exercise prudent capital management and monitor the business environment.
Governmental authorities worldwide have taken unprecedented measures to stabilize the markets and support economic growth. The success of these measures is unknown and they may not be sufficient to address the negative effects of COVID-19 or avert severe and prolonged reductions in economic activity.
Other negative effects of COVID-19 that may impact our business, financial condition, liquidity, capital and results of operations cannot be predicted at this time, but it is likely that our business, financial condition, liquidity, capital and results of operations will continue to be adversely affected until the pandemic subsides and the U.S. economy begins to recover. Further, the COVID-19 pandemic may also have the effect of heightening many of the other risks described in the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q. Although the effects of the pandemic remain uncertain, for the fourth quarter of 2020, we currently expect for the second half of 2020:growth in average on-balance sheet deposit growth, flat to slightly lowerdeposits and average loans and lower core fees. While credit metrics have been stable to date, we continue to monitor our portfolio vigilantly, in light of continued reduced activity in our core fees businesseconomic uncertainty, fading government stimulus and higher credit losses from sectors most impacted by efforts to contain COVID-19.expiring deferral programs. Additionally, we anticipate thatvolatile equity markets, and IPO and M&A activity may be volatile in future quarters, causing volatility inimpact investment banking and market-sensitive revenues. Even after the pandemic subsides, it is possible that the U.S. and other major economies will continue to experience a prolonged recession, which we expect would materially and adversely affect our business, financial condition, liquidity, capital and results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
Stock repurchase activity during the three months ended JuneSeptember 30, 2020 was as follows:
Period ended Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced programs Maximum dollar value that may yet be purchased under the programs (1)
April 30, 2020 —
 $—
 —
 $—
May 31, 2020 —
 —
 —
 —
June 30, 2020 —
 —
 —
 —
Total —
 $—
 244,223
 $289,979,534
Period endedTotal number of shares purchasedAverage price paid per shareTotal number of shares purchased as part of publicly announced programsMaximum dollar value that may yet be purchased under the programs (1)
July 31, 2020— $— — $— 
August 31, 2020— — — — 
September 30, 2020— — — — 
Total— $— 244,223 $289,979,534 
(1)
(1)    On October 24, 2019, the Company announced that its Board of Directors had authorized a $350 million common stock repurchase program pursuant to which the Company may, from time to time and on or before the program’s expiration date, repurchase shares of its outstanding common stock in the open market, in privately-negotiated transactions, or otherwise, subject to applicable laws and regulations. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements, availability of funds, and other relevant considerations, as determined by the Company. The Company may, in its discretion, begin, suspend or terminate repurchases at any time prior to the program’s expiration, without any prior notice. Repurchases may also be made pursuant to a trading plan under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased

when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The new stock repurchase program expirespursuant to which the Company may, from time to time and on or before the program’s expiration date, repurchase shares of its outstanding common stock in the open market, in privately-negotiated transactions, or otherwise, subject to applicable laws and regulations. The stock repurchase program expired on October 29, 2020. The
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Company paused its share repurchase program and expects to consider resuming repurchases when conditions warrant and subject to board approval of a new repurchase authority.
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
Number
Exhibit DescriptionIncorporated by Reference
Filed
Herewith
FormFile No.ExhibitFiling Date
X
X
X
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.




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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: August 7,November 5, 2020/s/ DANIEL BECK
Daniel Beck
Chief Financial Officer
(Principal Financial Officer)
SVB Financial Group
Date: August 7,November 5, 2020/s/ KAREN HON
Karen Hon
Chief Accounting Officer
(Principal Accounting Officer)

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