x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 91-1962278 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3003 Tasman Drive, Santa Clara, California | 95054-1191 | |
(Address of principal executive offices) | (Zip Code) |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
(Dollars in thousands, except par value and share data) | September 30, 2013 | December 31, 2012 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 1,942,744 | $ | 1,008,983 | ||||
Available-for-sale securities | 10,209,917 | 11,343,177 | ||||||
Non-marketable and other securities | 1,425,138 | 1,184,265 | ||||||
Investment securities | 11,635,055 | 12,527,442 | ||||||
Loans, net of unearned income | 9,824,982 | 8,946,933 | ||||||
Allowance for loan losses | (124,734 | ) | (110,651 | ) | ||||
Net loans | 9,700,248 | 8,836,282 | ||||||
Premises and equipment, net of accumulated depreciation and amortization | 65,385 | 66,545 | ||||||
Accrued interest receivable and other assets | 397,432 | 326,871 | ||||||
Total assets | $ | 23,740,864 | $ | 22,766,123 | ||||
Liabilities and total equity | ||||||||
Liabilities: | ||||||||
Noninterest-bearing demand deposits | $ | 14,105,728 | $ | 13,875,275 | ||||
Interest-bearing deposits | 5,891,263 | 5,301,177 | ||||||
Total deposits | 19,996,991 | 19,176,452 | ||||||
Short-term borrowings | 5,580 | 166,110 | ||||||
Other liabilities | 358,905 | 360,566 | ||||||
Long-term debt | 455,744 | 457,762 | ||||||
Total liabilities | 20,817,220 | 20,160,890 | ||||||
Commitments and contingencies (Note 11 and Note 14) | ||||||||
SVBFG stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value, 20,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
Common stock, $0.001 par value, 150,000,000 shares authorized; 45,608,370 shares and 44,627,182 shares outstanding, respectively | 46 | 45 | ||||||
Additional paid-in capital | 607,463 | 547,079 | ||||||
Retained earnings | 1,331,975 | 1,174,878 | ||||||
Accumulated other comprehensive income | 5,443 | 108,553 | ||||||
Total SVBFG stockholders’ equity | 1,944,927 | 1,830,555 | ||||||
Noncontrolling interests | 978,717 | 774,678 | ||||||
Total equity | 2,923,644 | 2,605,233 | ||||||
Total liabilities and total equity | $ | 23,740,864 | $ | 22,766,123 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(Dollars in thousands, except per share amounts) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest income: | ||||||||||||||||
Loans | $ | 139,687 | $ | 121,446 | $ | 395,216 | $ | 344,842 | ||||||||
Available-for-sale securities: | ||||||||||||||||
Taxable | 43,604 | 38,493 | 134,013 | 129,940 | ||||||||||||
Non-taxable | 797 | 894 | 2,403 | 2,693 | ||||||||||||
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities | 1,152 | 1,125 | 2,605 | 3,075 | ||||||||||||
Total interest income | 185,240 | 161,958 | 534,237 | 480,550 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 2,397 | 1,740 | 6,533 | 4,835 | ||||||||||||
Borrowings | 5,747 | 5,788 | 17,358 | 18,414 | ||||||||||||
Total interest expense | 8,144 | 7,528 | 23,891 | 23,249 | ||||||||||||
Net interest income | 177,096 | 154,430 | 510,346 | 457,301 | ||||||||||||
Provision for loan losses | 10,638 | 6,788 | 35,023 | 29,316 | ||||||||||||
Net interest income after provision for loan losses | 166,458 | 147,642 | 475,323 | 427,985 | ||||||||||||
Noninterest income: | ||||||||||||||||
Gains on investment securities, net | 187,862 | 20,228 | 255,861 | 53,876 | ||||||||||||
Foreign exchange fees | 12,887 | 12,211 | 39,113 | 36,345 | ||||||||||||
Gains on derivative instruments, net | 10,202 | 1,111 | 30,218 | 15,800 | ||||||||||||
Deposit service charges | 8,902 | 8,369 | 26,602 | 24,834 | ||||||||||||
Credit card fees | 8,188 | 6,348 | 23,245 | 18,185 | ||||||||||||
Letters of credit and standby letters of credit income | 3,790 | 3,495 | 10,879 | 10,427 | ||||||||||||
Client investment fees | 3,393 | 3,954 | 10,392 | 10,226 | ||||||||||||
Other | 22,426 | 13,423 | 38,183 | 39,165 | ||||||||||||
Total noninterest income | 257,650 | 69,139 | 434,493 | 208,858 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Compensation and benefits | 96,869 | 79,262 | 270,315 | 243,384 | ||||||||||||
Professional services | 18,966 | 17,759 | 52,759 | 48,880 | ||||||||||||
Premises and equipment | 12,171 | 11,247 | 34,298 | 28,230 | ||||||||||||
Business development and travel | 7,378 | 6,838 | 23,433 | 21,743 | ||||||||||||
Net occupancy | 5,898 | 5,666 | 17,460 | 16,667 | ||||||||||||
FDIC assessments | 2,913 | 2,836 | 9,148 | 8,065 | ||||||||||||
Correspondent bank fees | 2,906 | 3,000 | 9,009 | 8,528 | ||||||||||||
Provision for (reduction of) unfunded credit commitments | 2,774 | (400 | ) | 6,135 | 1,264 | |||||||||||
Other | 10,649 | 8,963 | 30,273 | 26,188 | ||||||||||||
Total noninterest expense | 160,524 | 135,171 | 452,830 | 402,949 | ||||||||||||
Income before income tax expense | 263,584 | 81,610 | 456,986 | 233,894 | ||||||||||||
Income tax expense | 47,404 | 28,470 | 103,773 | 83,743 | ||||||||||||
Net income before noncontrolling interests | 216,180 | 53,140 | 353,213 | 150,151 | ||||||||||||
Net income attributable to noncontrolling interests | (148,559 | ) | (10,851 | ) | (196,117 | ) | (25,469 | ) | ||||||||
Net income available to common stockholders | $ | 67,621 | $ | 42,289 | $ | 157,096 | $ | 124,682 | ||||||||
Earnings per common share—basic | $ | 1.48 | $ | 0.95 | $ | 3.48 | $ | 2.82 | ||||||||
Earnings per common share—diluted | 1.46 | 0.94 | 3.43 | 2.79 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(Dollars in thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income before noncontrolling interests | $ | 216,180 | $ | 53,140 | $ | 353,213 | $ | 150,151 | ||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Change in cumulative translation (loss) income: | ||||||||||||||||
Foreign currency translation (loss) income | (1,540 | ) | 2,940 | (6,341 | ) | 755 | ||||||||||
Related tax benefit (expense) | 631 | (1,190 | ) | 2,539 | (314 | ) | ||||||||||
Change in unrealized gains (losses) on available-for-sale securities: | ||||||||||||||||
Unrealized holding gains (losses) | 27,289 | 27,596 | (167,021 | ) | 64,631 | |||||||||||
Related tax (expense) benefit | (11,032 | ) | (11,473 | ) | 68,299 | (26,290 | ) | |||||||||
Reclassification adjustment for (gains) losses included in net income | (219 | ) | 101 | (949 | ) | (3,592 | ) | |||||||||
Related tax benefit (expense) | 85 | (41 | ) | 363 | 1,421 | |||||||||||
Other comprehensive income (loss), net of tax | 15,214 | 17,933 | (103,110 | ) | 36,611 | |||||||||||
Comprehensive income | 231,394 | 71,073 | 250,103 | 186,762 | ||||||||||||
Comprehensive income attributable to noncontrolling interests | (148,559 | ) | (10,851 | ) | (196,117 | ) | (25,469 | ) | ||||||||
Comprehensive income attributable to SVBFG | $ | 82,835 | $ | 60,222 | $ | 53,986 | $ | 161,293 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total SVBFG Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||
(Dollars in thousands) | Shares | Amount | |||||||||||||||||||||||||||||
Balance at December 31, 2011 | 43,507,932 | $ | 44 | $ | 484,216 | $ | 999,733 | $ | 85,399 | $ | 1,569,392 | $ | 680,997 | $ | 2,250,389 | ||||||||||||||||
Common stock issued under employee benefit plans, net of restricted stock cancellations | 929,032 | 1 | 27,350 | — | — | 27,351 | — | 27,351 | |||||||||||||||||||||||
Common stock issued under ESOP | 73,560 | — | 4,345 | — | — | 4,345 | — | 4,345 | |||||||||||||||||||||||
Income tax benefit from stock options exercised, vesting of restricted stock and other | — | — | 6,312 | — | — | 6,312 | — | 6,312 | |||||||||||||||||||||||
Net income | — | — | — | 124,682 | — | 124,682 | 25,469 | 150,151 | |||||||||||||||||||||||
Capital calls and distributions, net | — | — | — | — | — | — | 63,956 | 63,956 | |||||||||||||||||||||||
Net change in unrealized gains on available-for-sale securities, net of tax | — | — | — | — | 36,170 | 36,170 | — | 36,170 | |||||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | — | — | 441 | 441 | — | 441 | |||||||||||||||||||||||
Share-based compensation expense | — | — | 16,231 | — | — | 16,231 | — | 16,231 | |||||||||||||||||||||||
Balance at September 30, 2012 | 44,510,524 | $ | 45 | $ | 538,454 | $ | 1,124,415 | $ | 122,010 | $ | 1,784,924 | $ | 770,422 | $ | 2,555,346 | ||||||||||||||||
Balance at December 31, 2012 | 44,627,182 | $ | 45 | $ | 547,079 | $ | 1,174,878 | $ | 108,553 | $ | 1,830,555 | $ | 774,678 | $ | 2,605,233 | ||||||||||||||||
Common stock issued under employee benefit plans, net of restricted stock cancellations | 906,242 | 1 | 33,241 | — | — | 33,242 | — | 33,242 | |||||||||||||||||||||||
Common stock issued under ESOP | 74,946 | — | 5,166 | — | — | 5,166 | — | 5,166 | |||||||||||||||||||||||
Income tax benefit from stock options exercised, vesting of restricted stock and other | — | — | 3,148 | — | — | 3,148 | — | 3,148 | |||||||||||||||||||||||
Net income | — | — | — | 157,096 | — | 157,096 | 196,117 | 353,213 | |||||||||||||||||||||||
Capital calls and distributions, net | — | — | — | — | — | — | 7,922 | 7,922 | |||||||||||||||||||||||
Net change in unrealized losses on available-for-sale securities, net of tax | — | — | — | — | (99,308 | ) | (99,308 | ) | — | (99,308 | ) | ||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | — | — | (3,802 | ) | (3,802 | ) | — | (3,802 | ) | ||||||||||||||||||||
Share-based compensation expense | — | — | 18,826 | — | — | 18,826 | — | 18,826 | |||||||||||||||||||||||
Other, net | — | — | 3 | 1 | — | 4 | — | 4 | |||||||||||||||||||||||
Balance at September 30, 2013 | 45,608,370 | $ | 46 | $ | 607,463 | $ | 1,331,975 | $ | 5,443 | $ | 1,944,927 | $ | 978,717 | $ | 2,923,644 |
Nine months ended September 30, | ||||||||
(Dollars in thousands) | 2013 | 2012 | ||||||
Cash flows from operating activities: | ||||||||
Net income before noncontrolling interests | $ | 353,213 | $ | 150,151 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Provision for loan losses | 35,023 | 29,316 | ||||||
Provision for unfunded credit commitments | 6,135 | 1,264 | ||||||
Changes in fair values of derivatives, net | (16,594 | ) | (4,411 | ) | ||||
Gains on investment securities, net | (255,861 | ) | (53,876 | ) | ||||
Depreciation and amortization | 26,474 | 22,651 | ||||||
Amortization of premiums and discounts on available-for-sale securities, net | 21,040 | 42,511 | ||||||
Tax (expense) benefit from stock exercises | (1,353 | ) | 1,245 | |||||
Amortization of share-based compensation | 18,945 | 16,594 | ||||||
Amortization of deferred loan fees | (51,941 | ) | (42,308 | ) | ||||
Deferred income tax expense | (3,488 | ) | (997 | ) | ||||
Gain on the sale of certain assets related to our equity services management business | — | (4,243 | ) | |||||
Losses from the write-off of premises and equipment | 1,273 | 1,941 | ||||||
Changes in other assets and liabilities: | ||||||||
Accrued interest receivable and payable, net | (5,183 | ) | (9,084 | ) | ||||
Accounts receivable and payable, net | 1,463 | 33,277 | ||||||
Income tax payable and receivable, net | (7,787 | ) | 6,223 | |||||
Accrued compensation | (7,481 | ) | (40,600 | ) | ||||
Foreign exchange spot contracts, net | 12,442 | (41,188 | ) | |||||
Other, net | (27,005 | ) | 19,140 | |||||
Net cash provided by operating activities | 99,315 | 127,606 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of available-for-sale securities | (906,495 | ) | (2,859,155 | ) | ||||
Proceeds from sales of available-for-sale securities | 10,207 | 326,178 | ||||||
Proceeds from maturities and pay downs of available-for-sale securities | 1,879,424 | 2,047,753 | ||||||
Purchases of non-marketable and other securities (cost and equity method accounting) | (20,019 | ) | (114,134 | ) | ||||
Proceeds from sales of non-marketable and other securities (cost and equity method accounting) | 47,069 | 31,903 | ||||||
Purchases of non-marketable and other securities (fair value accounting) | (108,663 | ) | (99,062 | ) | ||||
Proceeds from sales and distributions of non-marketable and other securities (fair value accounting) | 103,105 | 94,188 | ||||||
Net increase in loans | (867,075 | ) | (1,218,366 | ) | ||||
Proceeds from recoveries of charged-off loans | 8,163 | 8,018 | ||||||
Purchases of premises and equipment | (22,110 | ) | (33,489 | ) | ||||
Proceeds from the sale of certain assets related to our equity services management business | — | 2,870 | ||||||
Net cash provided by (used for) investing activities | 123,606 | (1,813,296 | ) | |||||
Cash flows from financing activities: | ||||||||
Net increase in deposits | 820,539 | 1,015,530 | ||||||
(Decrease) increase in short-term borrowings | (160,530 | ) | 508,170 | |||||
Principal payments of other long term debt | — | (1,222 | ) | |||||
Capital contributions from noncontrolling interests, net of distributions | 7,922 | 63,956 | ||||||
Tax benefit from stock exercises | 4,501 | 5,067 | ||||||
Proceeds from issuance of common stock and ESPP | 38,408 | 27,350 | ||||||
Principal payments of 5.70% Senior Notes | — | (141,429 | ) | |||||
Net cash provided by financing activities | 710,840 | 1,477,422 | ||||||
Net increase (decrease) in cash and cash equivalents | 933,761 | (208,268 | ) | |||||
Cash and cash equivalents at beginning of period | 1,008,983 | 1,114,948 | ||||||
Cash and cash equivalents at end of period | $ | 1,942,744 | $ | 906,680 | ||||
Supplemental disclosures: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 28,339 | $ | 28,000 | ||||
Income taxes | 107,282 | 69,094 | ||||||
Noncash items during the period: | ||||||||
Unrealized (losses) gains on available-for-sale securities, net of tax | $ | (99,308 | ) | $ | 36,170 |
1. | Basis of Presentation |
1. | We have the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; |
2. | The aggregate indirect and direct variable interests held by the Company have the obligation to absorb losses or the right to receive benefits from the entity that could be significant to the VIE; and, |
3. | Qualitative and quantitative factors regarding the nature, size, and form of our involvement with the VIE. |
2. | Stockholders’ Equity and EPS |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(Dollars and shares in thousands, except per share amounts) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Numerator: | ||||||||||||||||
Net income available to common stockholders | $ | 67,621 | $ | 42,289 | $ | 157,096 | $ | 124,682 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding-basic | 45,580 | 44,449 | 45,180 | 44,147 | ||||||||||||
Weighted average effect of dilutive securities: | ||||||||||||||||
Stock options and ESPP | 429 | 346 | 405 | 402 | ||||||||||||
Restricted stock units | 193 | 120 | 180 | 143 | ||||||||||||
Denominator for diluted calculation | 46,202 | 44,915 | 45,765 | 44,692 | ||||||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 1.48 | $ | 0.95 | $ | 3.48 | $ | 2.82 | ||||||||
Diluted | $ | 1.46 | $ | 0.94 | $ | 3.43 | $ | 2.79 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||
(Shares in thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||
Stock options | 343 | 795 | 546 | 658 | ||||||||
Restricted stock units | — | 220 | 1 | — | ||||||||
Total | 343 | 1,015 | 547 | 658 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||
(Dollars in thousands) | Income Statement Location | 2013 | 2012 | 2013 | 2012 | |||||||||||||
Reclassification adjustment for (gains) losses included in net income | Gains on investment securities, net | $ | (219 | ) | $ | 101 | $ | (949 | ) | $ | (3,592 | ) | ||||||
Related tax benefit (expense) | Income tax expense | 85 | (41 | ) | 363 | 1,421 | ||||||||||||
Total reclassification adjustment for gains included in net income, net of tax | $ | (134 | ) | $ | 60 | $ | (586 | ) | $ | (2,171 | ) |
3. | Share-Based Compensation |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(Dollars in thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Share-based compensation expense | $ | 6,723 | $ | 5,617 | $ | 18,945 | $ | 16,594 | ||||||||
Income tax benefit related to share-based compensation expense | (2,243 | ) | (1,720 | ) | (5,801 | ) | (4,408 | ) |
(Dollars in thousands) | Unrecognized Expense | Average Expected Recognition Period - in Years | ||||
Stock options | $ | 17,195 | 2.67 | |||
Restricted stock units | 34,357 | 2.72 | ||||
Total unrecognized share-based compensation expense | $ | 51,552 |
Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value of In-The- Money Options | ||||||||||
Outstanding at December 31, 2012 | 2,060,413 | $ | 49.15 | ||||||||||
Granted | 311,692 | 71.54 | |||||||||||
Exercised | (661,216 | ) | 45.97 | ||||||||||
Forfeited | (44,330 | ) | 55.85 | ||||||||||
Expired | (953 | ) | 51.86 | ||||||||||
Outstanding at September 30, 2013 | 1,665,606 | 54.42 | 4.33 years | $ | 53,233,391 | ||||||||
Vested and expected to vest at September 30, 2013 | 1,610,512 | 54.02 | 4.28 years | 52,113,576 | |||||||||
Exercisable at September 30, 2013 | 789,760 | 44.89 | 3.15 years | 32,761,622 |
Shares | Weighted Average Grant Date Fair Value | ||||||
Nonvested at December 31, 2012 | 585,543 | $ | 59.42 | ||||
Granted | 328,245 | 71.52 | |||||
Vested | (166,617 | ) | 56.41 | ||||
Forfeited | (34,351 | ) | 61.35 | ||||
Nonvested at September 30, 2013 | 712,820 | 65.60 |
4. | Cash and Cash Equivalents |
(Dollars in thousands) | September 30, 2013 | December 31, 2012 | ||||||
Cash and due from banks (1) | $ | 1,770,123 | $ | 752,056 | ||||
Securities purchased under agreements to resell (2) | 168,026 | 133,357 | ||||||
Other short-term investment securities | 4,595 | 123,570 | ||||||
Total cash and cash equivalents | $ | 1,942,744 | $ | 1,008,983 |
(1) | At September 30, 2013 and December 31, 2012, $1.2 billion and $72 million, 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 $222 million and $283 million, respectively. |
(2) | At September 30, 2013 and December 31, 2012, securities purchased under agreements to resell were collateralized by U.S. treasury securities and U.S. agency securities with aggregate fair values of $171 million and $136 million, respectively. None of these securities received as collateral were sold or repledged as of September 30, 2013 or December 31, 2012. |
5. | Investment Securities |
September 30, 2013 | December 31, 2012 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Carrying Value | Amortized Cost | Unrealized Gains | Unrealized Losses | Carrying Value | ||||||||||||||||||||||||
Available-for-sale securities, at fair value: | ||||||||||||||||||||||||||||||||
U.S. treasury securities | $ | — | $ | — | $ | — | $ | — | $ | 25,057 | $ | 190 | $ | — | $ | 25,247 | ||||||||||||||||
U.S. agency debentures | 3,602,585 | 46,412 | (24,177 | ) | 3,624,820 | 3,370,455 | 77,173 | — | 3,447,628 | |||||||||||||||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||||||||||
Agency-issued mortgage-backed securities | 1,493,666 | 28,013 | (2,981 | ) | 1,518,698 | 1,428,682 | 44,858 | (107 | ) | 1,473,433 | ||||||||||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 3,269,966 | 21,699 | (44,188 | ) | 3,247,477 | 4,063,020 | 41,949 | (995 | ) | 4,103,974 | ||||||||||||||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 1,286,547 | 3,452 | (149 | ) | 1,289,850 | 1,760,551 | 12,201 | (4 | ) | 1,772,748 | ||||||||||||||||||||||
Agency-issued commercial mortgage-backed securities | 445,336 | 1,381 | (10,785 | ) | 435,932 | 416,487 | 6,100 | (489 | ) | 422,098 | ||||||||||||||||||||||
Municipal bonds and notes | 82,039 | 4,540 | — | 86,579 | 85,790 | 7,750 | (11 | ) | 93,529 | |||||||||||||||||||||||
Equity securities | 6,722 | 807 | (968 | ) | 6,561 | 2,108 | 2,739 | (327 | ) | 4,520 | ||||||||||||||||||||||
Total available-for-sale securities | $ | 10,186,861 | $ | 106,304 | $ | (83,248 | ) | $ | 10,209,917 | $ | 11,152,150 | $ | 192,960 | $ | (1,933 | ) | $ | 11,343,177 | ||||||||||||||
Non-marketable and other securities: | ||||||||||||||||||||||||||||||||
Non-marketable securities (fair value accounting): | ||||||||||||||||||||||||||||||||
Venture capital and private equity fund investments (1) | 773,499 | 665,921 | ||||||||||||||||||||||||||||||
Other venture capital investments (2) | 55,359 | 127,091 | ||||||||||||||||||||||||||||||
Other securities (fair value accounting) (3) | 219,600 | — | ||||||||||||||||||||||||||||||
Non-marketable securities (equity method accounting): | ||||||||||||||||||||||||||||||||
Other investments (4) | 142,571 | 139,330 | ||||||||||||||||||||||||||||||
Low income housing tax credit funds | 70,092 | 70,318 | ||||||||||||||||||||||||||||||
Non-marketable securities (cost method accounting): | ||||||||||||||||||||||||||||||||
Venture capital and private equity fund investments (5) | 149,602 | 161,884 | ||||||||||||||||||||||||||||||
Other investments | 14,415 | 19,721 | ||||||||||||||||||||||||||||||
Total non-marketable and other securities | 1,425,138 | 1,184,265 | ||||||||||||||||||||||||||||||
Total investment securities | $ | 11,635,055 | $ | 12,527,442 |
(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, 2013 and December 31, 2012 (fair value accounting): |
September 30, 2013 | December 31, 2012 | |||||||||||||
(Dollars in thousands) | Amount | Ownership % | Amount | Ownership % | ||||||||||
SVB Strategic Investors Fund, LP | $ | 30,265 | 12.6 | % | $ | 32,850 | 12.6 | % | ||||||
SVB Strategic Investors Fund II, LP | 96,595 | 8.6 | 91,294 | 8.6 | ||||||||||
SVB Strategic Investors Fund III, LP | 226,123 | 5.9 | 209,696 | 5.9 | ||||||||||
SVB Strategic Investors Fund IV, LP | 209,368 | 5.0 | 169,931 | 5.0 | ||||||||||
Strategic Investors Fund V Funds | 89,410 | Various | 40,622 | Various | ||||||||||
Strategic Investors Fund VI Funds | 4,681 | 0.2 | — | — | ||||||||||
SVB Capital Preferred Return Fund, LP | 55,721 | 20.0 | 53,643 | 20.0 | ||||||||||
SVB Capital—NT Growth Partners, LP | 55,836 | 33.0 | 60,120 | 33.0 | ||||||||||
SVB Capital Partners II, LP (i) | 716 | 5.1 | 1,303 | 5.1 | ||||||||||
Other private equity fund (ii) | 4,784 | 58.2 | 6,462 | 58.2 | ||||||||||
Total venture capital and private equity fund investments | $ | 773,499 | $ | 665,921 |
(i) | At September 30, 2013, we had a direct ownership interest of 1.3 percent and an indirect ownership interest of 3.8 percent in the fund through our ownership interest of SVB Strategic Investors Fund II, LP. |
(ii) | At September 30, 2013, we had a direct ownership interest of 41.5 percent and indirect ownership interests of 12.6 percent and 4.1 percent in the fund through our ownership interest of SVB Capital—NT Growth Partners, LP and SVB Capital Preferred Return Fund, LP, respectively. |
(2) | The following table shows the amounts of other venture capital investments held by the following consolidated funds and our ownership percentage of each fund at September 30, 2013 and December 31, 2012 (fair value accounting): |
September 30, 2013 | December 31, 2012 | |||||||||||||
(Dollars in thousands) | Amount | Ownership % | Amount | Ownership % | ||||||||||
Silicon Valley BancVentures, LP | $ | 7,383 | 10.7 | % | $ | 43,493 | 10.7 | % | ||||||
SVB Capital Partners II, LP (i) | 43,682 | 5.1 | 79,761 | 5.1 | ||||||||||
SVB Capital Shanghai Yangpu Venture Capital Fund | 4,294 | 6.8 | 3,837 | 6.8 | ||||||||||
Total other venture capital investments | $ | 55,359 | $ | 127,091 |
(i) | At September 30, 2013, we had a direct ownership interest of 1.3 percent and an indirect ownership interest of 3.8 percent in the fund through our ownership of SVB Strategic Investors Fund II, LP. |
(3) | Investments classified as other securities (fair value accounting) represent certain direct equity investments in public companies held by our consolidated funds. |
(4) | The following table shows the carrying value and our ownership percentage of each investment at September 30, 2013 and December 31, 2012 (equity method accounting): |
September 30, 2013 | December 31, 2012 | |||||||||||||
(Dollars in thousands) | Amount | Ownership % | Amount | Ownership % | ||||||||||
Gold Hill Venture Lending 03, LP (i) | $ | 8,734 | 9.3 | % | $ | 9,413 | 9.3 | % | ||||||
Gold Hill Capital 2008, LP (ii) | 21,318 | 15.5 | 20,893 | 15.5 | ||||||||||
China Joint Venture investment | 80,346 | 50.0 | 78,545 | 50.0 | ||||||||||
Other investments | 32,173 | Various | 30,479 | Various | ||||||||||
Total other investments (equity method accounting) | $ | 142,571 | $ | 139,330 |
(i) | At September 30, 2013, we had a direct ownership interest of 4.8 percent in the fund and an indirect interest in the fund through our investment in Gold Hill Venture Lending Partners 03, LLC (“GHLLC”) of 4.5 percent. |
(ii) | At September 30, 2013, we had a direct ownership interest of 11.5 percent in the fund and an indirect interest in the fund through our investment in Gold Hill Capital 2008, LLC of 4.0 percent. |
(5) | Represents investments in 293 and 324 funds (primarily venture capital funds) at September 30, 2013 and December 31, 2012, 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. For the three months ended September 30, 2013, we recognized OTTI losses of $0.4 million resulting from other-than-temporary declines in value for 12 of the 293 investments. For the nine months ended September 30, 2013, we recognized OTTI losses of $1.2 million resulting from other-than-temporary declines in value for 37 of the investments. The OTTI losses are included in net gains on investment securities, a component of noninterest income. We concluded that any declines in value for the remaining investments were temporary and as such, no OTTI was required to be recognized. At September 30, 2013, the carrying value of these venture capital and private equity fund investments (cost method accounting) was $150 million, and the estimated fair value was $206 million. |
September 30, 2013 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
(Dollars in thousands) | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | ||||||||||||||||||
U.S. agency debentures | $ | 942,337 | $ | (24,177 | ) | $ | — | $ | — | $ | 942,337 | $ | (24,177 | ) | ||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||
Agency-issued mortgage-backed securities | 261,787 | (2,981 | ) | — | — | 261,787 | (2,981 | ) | ||||||||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 1,886,229 | (42,555 | ) | 79,190 | (1,633 | ) | 1,965,419 | (44,188 | ) | |||||||||||||||
Agency-issued collateralized mortgage obligations—variable rate | 147,218 | (149 | ) | — | — | 147,218 | (149 | ) | ||||||||||||||||
Agency-issued commercial mortgage-backed securities | 232,474 | (10,785 | ) | — | — | 232,474 | (10,785 | ) | ||||||||||||||||
Equity securities | 2,544 | (968 | ) | — | — | 2,544 | (968 | ) | ||||||||||||||||
Total temporarily impaired securities (1) | $ | 3,472,589 | $ | (81,615 | ) | $ | 79,190 | $ | (1,633 | ) | $ | 3,551,779 | $ | (83,248 | ) |
(1) | As of September 30, 2013, we identified a total of 134 investments that were in unrealized loss positions, of which 3 investments totaling $79 million with unrealized losses of $1.6 million have been in an impaired position for a period of time greater than 12 months. As of September 30, 2013, we do not intend to sell any impaired debt or equity securities prior to recovery of our adjusted cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our adjusted cost basis. Based on our analysis as of September 30, 2013, we deem all impairments to be temporary, and therefore changes in value for our temporarily impaired securities as of the same date are included in other comprehensive income. Market valuations and impairment analyses on assets in the available-for-sale securities portfolio are reviewed and monitored on a quarterly basis. |
December 31, 2012 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
(Dollars in thousands) | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | Fair Value of Investments | Unrealized Losses | ||||||||||||||||||
Residential mortgage-backed securities: | ||||||||||||||||||||||||
Agency-issued mortgage-backed securities | $ | 22,831 | $ | (107 | ) | $ | — | $ | — | $ | 22,831 | $ | (107 | ) | ||||||||||
Agency-issued collateralized mortgage obligations—fixed rate | 461,397 | (995 | ) | — | — | 461,397 | (995 | ) | ||||||||||||||||
Agency-issued collateralized mortgage obligations—variable rate | — | — | 7,908 | (4 | ) | 7,908 | (4 | ) | ||||||||||||||||
Agency-issued commercial mortgage-backed securities | 150,581 | (489 | ) | — | — | 150,581 | (489 | ) | ||||||||||||||||
Municipal bonds and notes | 2,098 | (11 | ) | — | — | 2,098 | (11 | ) | ||||||||||||||||
Equity securities | 97 | (61 | ) | 255 | (266 | ) | 352 | (327 | ) | |||||||||||||||
Total temporarily impaired securities | $ | 637,004 | $ | (1,663 | ) | $ | 8,163 | $ | (270 | ) | $ | 645,167 | $ | (1,933 | ) |
September 30, 2013 | |||||||||||||||||||||||||||||||||||
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. agency debentures | $ | 3,624,820 | 1.56 | % | $ | 248,124 | 1.34 | % | $ | 2,607,969 | 1.49 | % | $ | 768,727 | 1.87 | % | $ | — | — | % | |||||||||||||||
Residential mortgage-backed securities: | |||||||||||||||||||||||||||||||||||
Agency-issued mortgage-backed securities | 1,518,698 | 2.38 | — | — | 889 | 7.50 | 1,024,091 | 2.25 | 493,718 | 2.63 | |||||||||||||||||||||||||
Agency-issued collateralize |