Edgar Filing: SVB FINANCIAL GROUP

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2010

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

For the transition period from to .

Commission File Number: 000-15637

SVB FINANCIAL GROUP

(Exact name of registrant as specified in its charter)

Delaware

91-1962278

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)


3003 Tasman Drive, Santa Clara, California		95054-1191
(Address of principal executive offices)		(Zip Code)

(408) 654-7400

(Registrant’s telephone number, including area code)

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

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

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

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

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

At October 29, 2010, 41,992,519 shares of the registrant’s common stock ($0.001 par value) were outstanding.

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION			3

Item 1.	Interim Consolidated Financial Statements (unaudited)		3

	Interim Consolidated Balance Sheets (unaudited) as of September 30, 2010 and December 31, 2009		3

	Interim Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2010 and 2009		4

	Interim Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2010 and 2009		5

	Interim Consolidated Statements of Stockholders’ Equity (unaudited) for the nine months ended September 30, 2010 and 2009		6

	Interim Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2010 and 2009		7

	Notes to Interim Consolidated Financial Statements (unaudited)		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		36

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		70

Item 4.	Controls and Procedures		71

PART II - OTHER INFORMATION			72

Item 1.	Legal Proceedings		72

Item 1A.	Risk Factors		72

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		80

Item 3.	Defaults Upon Senior Securities		81

Item 4.	(Removed and Reserved)		81

Item 5.	Other Information		81

Item 6.	Exhibits		81

SIGNATURES			82

INDEX TO EXHIBITS			83

PART I - FINANCIAL INFORMATION

ITEM 1.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(Dollars in thousands, except par value and share data)	September 30, 2010			December 31, 2009
Assets
Cash and due from banks	$	3,387,204		$	3,454,611
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities		391,165			58,242

Cash and cash equivalents		3,778,369			3,512,853

Available-for-sale securities		6,003,198			3,938,188
Non-marketable securities		656,067			553,531

Investment securities		6,659,265			4,491,719

Loans, net of unearned income		4,859,205			4,548,094
Allowance for loan losses		(74,369	)		(72,450	)

Net loans		4,784,836			4,475,644

Premises and equipment, net of accumulated depreciation and amortization		41,917			31,736
Accrued interest receivable and other assets		395,682			329,447

Total assets	$	15,660,069		$	12,841,399


Liabilities and total equity
Liabilities:
Deposits:
Noninterest-bearing demand	$	7,449,081		$	6,298,988
Negotiable order of withdrawal (NOW)		38,134			53,200
Money market		2,067,620			1,292,215
Money market deposits in foreign offices		76,795			49,722
Time		378,687			332,310
Sweep		2,404,628			2,305,502

Total deposits		12,414,945			10,331,937

Short-term borrowings		59,735			38,755
Other liabilities		263,283			139,947
Long-term debt		1,225,810			856,650

Total liabilities		13,963,773			11,367,289

Commitments and contingencies (Note 12)

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; 41,964,764 shares and 41,338,389 shares outstanding, respectively		42			41
Additional paid-in capital		410,590			389,490
Retained earnings		810,379			732,907
Accumulated other comprehensive income		47,600			5,905
Total SVBFG stockholders’ equity		1,268,611			1,128,343
Noncontrolling interests		427,685			345,767

Total equity		1,696,296			1,474,110

Total liabilities and total equity	$	15,660,069		$	12,841,399

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

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands, except per share amounts)	2010			2009			2010			2009
Interest income:
Loans	$	80,716		$	83,049		$	230,216		$	255,548
Available-for-sale securities:
Taxable		32,375			21,562			101,493			53,207
Non-taxable		948			1,008			2,869			3,098
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities		2,719			2,367			8,444			7,228

Total interest income		116,758			107,986			343,022			319,081

Interest expense:
Deposits		3,783			4,801			11,315			17,253
Borrowings		6,634			6,367			18,090			21,818

Total interest expense		10,417			11,168			29,405			39,071

Net interest income		106,341			96,818			313,617			280,010
Provision for loan losses		10,971			8,030			29,124			72,889

Net interest income after provision for loan losses		95,370			88,788			284,493			207,121

Noninterest income:
Gains (losses) on investment securities, net		46,611			3,905			67,420			(37,890	)
Foreign exchange fees		9,091			7,491			26,207			22,574
Deposit service charges		7,324			6,906			22,283			20,319
Client investment fees		4,681			5,527			13,562			17,355
Credit card fees		3,139			2,300			8,853			6,696
Letters of credit and standby letters of credit income		2,752			3,019			7,869			8,240
Gains (losses) on derivative instruments, net		1,257			(1,090	)		4,565			(2,123	)
Other		11,381			6,249			24,907			21,830

Total noninterest income		86,236			34,307			175,666			57,001

Noninterest expense:
Compensation and benefits		62,170			45,815			181,993			141,042
Professional services		12,618			12,109			37,358			35,452
Premises and equipment		5,548			5,892			16,651			16,993
Business development and travel		5,153			2,902			14,542			9,578
Net occupancy		5,131			4,198			14,468			13,346
FDIC assessments		2,637			2,589			13,273			13,853
Correspondent bank fees		2,228			2,118			6,132			5,994
Provision for (reduction of) unfunded credit commitments		1,692			65			2,561			(3,366	)
Impairment of goodwill		—			—			—			4,092
Other		6,994			4,119			19,949			18,975

Total noninterest expense		104,171			79,807			306,927			255,959

Income before income tax expense		77,435			43,288			153,232			8,163
Income tax expense		24,996			16,879			50,397			21,605

Net income (loss) before noncontrolling interests		52,439			26,409			102,835			(13,442	)
Net (income) loss attributable to noncontrolling interests		(14,652	)		(2,246	)		(25,371	)		40,708

Net income attributable to SVBFG	$	37,787		$	24,163		$	77,464		$	27,266

Preferred stock dividend and discount accretion		—			(3,555	)		—			(10,636	)

Net income available to common stockholders	$	37,787		$	20,608		$	77,464		$	16,630


Earnings per common share—basic	$	0.90		$	0.62		$	1.86		$	0.50
Earnings per common share—diluted		0.89			0.61			1.83			0.50

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

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2010			2009			2010			2009
Net income (loss) before noncontrolling interests	$	52,439		$	26,409		$	102,835		$	(13,442	)
Other comprehensive income, net of tax:
Change in cumulative translation gains (losses):
Foreign currency translation gains (losses)		2,113			455			1,961			(87	)
Related tax (expense) benefit		(862	)		(184	)		(800	)		28
Change in unrealized gains (losses) on available-for-sale investment securities:
Unrealized holding gains		634			35,068			92,923			52,927
Related tax expense		(259	)		(14,291	)		(37,901	)		(21,581	)
Reclassification adjustment for (gains) losses included in net income (loss)		(23,605	)		(8	)		(24,473	)		26
Related tax benefit (expense)		9,631			3			9,985			(11	)

Other comprehensive (loss) income, net of tax		(12,348	)		21,043			41,695			31,302

Comprehensive income		40,091			47,452			144,530			17,860
Comprehensive (income) loss attributable to noncontrolling interests		(14,652	)		(2,246	)		(25,371	)		40,708

Comprehensive income attributable to SVBFG	$	25,439		$	45,206		$	119,159		$	58,568

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

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)


	Preferred Stock				Common Stock				Additional Paid-in Capital			Retained			Accumulated Other Comprehensive			Total SVBFG Stockholders’			Noncontrolling			Total Equity
(Dollars in thousands)	Shares		Amount		Shares		Amount		Additional Paid-in Capital			Earnings			Income (Loss)			Equity			Interests			Total Equity
Balance at December 31, 2008		235,000	$	221,185		32,917,007	$	33	$	66,201		$	709,726		$	(5,789	)	$	991,356		$	320,356		$	1,311,712

Common stock issued under employee benefit plans, net of restricted stock cancellations		—		—		285,380		—		4,116			—			—			4,116			—			4,116
Income tax expense from stock options exercised, vesting of restricted stock and other		—		—		—		—		(590	)		—			—			(590	)		—			(590	)
Net income (loss)		—		—		—		—		—			27,266			—			27,266			(40,708	)		(13,442	)
Capital calls and (distributions), net		—		—		—		—		—			—			—			—			45,747			45,747
Net change in unrealized losses on available-for-sale investment securities, net of tax		—		—		—		—		—			—			31,361			31,361			—			31,361
Foreign currency translation adjustments, net of tax		—		—		—		—		—			—			(59	)		(59	)		—			(59	)
Stock-based compensation expense		—		—		—		—		11,051			—			—			11,051			—			11,051
Income tax benefit from original issue discount related to 3.875% convertible senior notes		—		—		—		—		10,745			—			—			10,745			—			10,745
Preferred stock dividend and discount accretion		—		1,824		—		—		—			(10,636	)		—			(8,812	)		—			(8,812	)
Other-net		—		—		—		—		844			99			—			943			—			943

Balance at September 30, 2009		235,000	$	223,009		33,202,387	$	33	$	92,367		$	726,455		$	25,513		$	1,067,377		$	325,395		$	1,392,772

Balance at December 31, 2009		—	$	—		41,338,389	$	41	$	389,490		$	732,907		$	5,905		$	1,128,343		$	345,767		$	1,474,110

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

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

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

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine months ended September 30,
(Dollars in thousands)	2010			2009
Cash flows from operating activities:
Net income (loss) before noncontrolling interests	$	102,835		$	(13,442	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairment of goodwill		—			4,092
Provision for loan losses		29,124			72,889
Provision for (reduction of) unfunded credit commitments		2,561			(3,366	)
Changes in fair values of derivatives, net		1,556			2,734
(Gains) losses on investment securities, net		(67,420	)		37,890
Depreciation and amortization		14,447			15,597
Amortization of premiums (accretion of discounts) on investment securities, net		18,700			10,199
Tax benefit of original issue discount		—			10,745
Tax expense from stock exercises		(306	)		(927	)
Amortization of share-based compensation		9,904			11,177
Amortization of deferred warrant-related loan fees		(4,923	)		(6,125	)
Deferred income tax expense (benefit)		1,794			(1,859	)
Losses on sale of and valuation adjustments to other real estate owned property		24			117
Changes in other assets and liabilities:
Accrued interest, net		5,817			(2,235	)
Accounts receivable		(10,768	)		3,378
Income tax receivable, net		23,933			(21,169	)
Accrued compensation		22,567			(5,742	)
Foreign exchange spot contracts, net		4,849			(9,282	)
Other, net		21,897			(1,870	)

Net cash provided by operating activities		176,591			102,801

Cash flows from investing activities:
Purchases of available-for-sale securities		(4,167,462	)		(2,115,015	)
Proceeds from sales of available-for-sale securities		653,122			195
Proceeds from maturities and pay downs of available-for-sale securities		1,526,562			499,493
Purchases of nonmarketable securities (cost and equity method accounting)		(36,847	)		(33,882	)
Proceeds from sales of nonmarketable securities (cost and equity method accounting)		12,185			3,363
Purchases of nonmarketable securities (investment fair value accounting)		(78,667	)		(43,849	)
Proceeds from sales of nonmarketable securities (investment fair value accounting)		25,866			11,760
Net (increase) decrease in loans		(354,452	)		729,876
Proceeds from recoveries of charged-off loans		13,397			16,892
Proceeds from sale of other real estate owned		196			693
Payment for acquisition of intangibles, net of cash acquired		(360	)		—
Purchases of premises and equipment		(21,031	)		(11,545	)

Net cash used for investing activities		(2,427,491	)		(942,019	)

Cash flows from financing activities:
Net increase in deposits		2,083,008			2,582,160
Principal payments of other long-term debt		—			(101,272	)
Increase (decrease) in short-term borrowings		20,980			(9,835	)
Proceeds from issuance of 5.375% Senior Notes, net of discount and issuance cost		344,294			—
Capital contributions from noncontrolling interests, net of distributions		56,547			45,747
Tax benefit from stock exercises		3,197			337
Dividends paid on preferred stock		—			(7,932	)
Proceeds from issuance of common stock		15,210			4,116
Repurchase of warrant under Capital Purchase Program		(6,820	)		—

Net cash provided by financing activities		2,516,416			2,513,321

Net increase in cash and cash equivalents		265,516			1,674,103
Cash and cash equivalents at beginning of period		3,512,853			2,436,725

Cash and cash equivalents at end of period	$	3,778,369		$	4,110,828

Supplemental disclosures:
Cash paid during the period for:
Interest	$	22,903		$	35,852
Income taxes		21,360			35,824
Noncash items during the period:
Preferred stock dividends accrued, not yet paid	$	—		$	1,469
Unrealized gains on available-for-sale securities, net of tax		40,534			31,361
Net change in fair value of interest rate swaps		20,362			(37,914	)

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

SVB FINANCIAL GROUP AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

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

The accompanying interim consolidated financial statements reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary to fairly present our financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Such interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The results of operations for the three and nine months ended September 30, 2010 are not necessarily indicative of results to be expected for any future periods. These interim consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2009 (“2009 Form 10-K”) and as updated to reflect revised segment financial reporting in our Current Report on form 8-K filed on September 15, 2010.

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 2009 Form 10-K, and with the accounting pronouncements adopted during the nine months ended September 30, 2010, as discussed below.

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

Principles of Consolidation and Presentation

Our consolidated financial statements include the accounts of SVB Financial Group and our majority-owned subsidiaries and variable interest entities (“VIEs”) for which we are the primary beneficiary and our investments in which we have a majority owned voting interest. All significant intercompany accounts and transactions have been eliminated.

We determine whether we have a controlling financial interest in an entity by evaluating whether the entity is a VIE for which we are the primary beneficiary. We consider the following factors in evaluating whether our involvement with the VIE is significant and designates us as the primary beneficiary:

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

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

We reassess our initial evaluation of whether an entity is a VIE upon the occurrence of certain events, such as changes in an entity’s capital structure or in its activities, known as reconsideration events. Our evaluation of whether we are the primary beneficiary of a VIE is not limited to the occurrence of certain reconsideration events but is instead reassessed on an ongoing basis. We have not provided financial or other support during the periods presented to any VIE that we were not previously contractually required to provide. We are variable interest holders in certain partnerships for which we are the primary beneficiary.

Current Accounting Developments

In the first quarter of 2010, we adopted new guidance related to the following topics:

•

ASU No. 2009-16, Accounting for Transfers of Financial Assets

•

ASU No. 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities

•

ASU No. 2010-06, Improving Disclosures about Fair Value Measurements

No new accounting guidance was adopted during the second or third quarters of 2010.

Information about these pronouncements is described in more detail below.

Impact of Adopting ASU No. 2009-16

In June 2009, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard which defines the term “participating interest” to establish specific conditions for reporting a transfer of a portion of a financial asset as a sale. This standard also removes the concept of a qualifying special-purpose entity (“QSPE”) for accounting purposes. Our adoption of this standard as of January 1, 2010 did not have a material impact on our financial position, results of operations or stockholders’ equity as we have not historically made sales or transfers of assets to QSPEs. However, we do engage from time to time in selling our loans. Historically, our participating interests in those sales have the same priority and are not subordinated to the other participating interest holders’ interest. Therefore, the change in the standard of removing the QSPE concept and the new definition of participating interest did not have an impact on our sales treatment.

Impact of Adopting ASU No. 2009-17

In June 2009, the FASB issued a new accounting standard which replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling interest in a VIE, with an approach focused on which enterprise has both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our adoption of this standard as of January 1, 2010 required us to de-consolidate Gold Hill Venture Lending Partners 03, LLC (“GHLLC”), which resulted in a reduction of total assets and total equity of $1.1 million. The identification of VIE’s or changes in our consolidation of entities did not have a material impact on our financial position, results of operations or stockholders’ equity.

Impact of Adopting ASU No. 2010-06

In January 2010, the FASB issued a new accounting standard which requires the addition of new disclosures and clarifies existing disclosure requirements already included in the guidance for fair value measurements. The new disclosures related to significant transfers in and out of Level 1, Level 2 and Level 3 fair value measurements and the reasons for the transfers, as well as the clarifications of existing disclosures were effective for interim or annual reporting periods beginning after December 15, 2009 and were therefore adopted as of January 1, 2010. The new disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements are effective for interim or annual reporting periods beginning after December 15, 2010. This standard clarified and increased the disclosure requirements for fair value measurements and did not have an impact on our financial position, results of operations or stockholders’ equity. See Note 14- “Fair Value of Financial Instruments” for further details.

Recent Accounting Pronouncements

In July 2010, the FASB issued a new accounting standard (ASU No. 2010-20), which requires the addition of new disclosures and enhances existing disclosure requirements already included in the guidance for credit quality and the allowance for credit losses. The statement requires enhancements to disclosures for the allowance for credit losses on a disaggregated basis. The statement defines two levels of disaggregation: 1) portfolio segment and 2) class of financing receivable. Additionally, the statement requires multiple new disclosures regarding an entity’s financing receivables, such as credit quality indicators, aging of past due receivables, troubled debt restructurings, and significant purchases and sales. The new disclosures and amendments to existing disclosures are effective for interim and annual reporting periods ending on or after December 15, 2010. This standard will enhance and increase the disclosure requirements for credit quality and the allowance for credit losses and will not have an impact on our financial position, results of operations or stockholders’ equity.

Reclassifications

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

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

Common Stock

On June 16, 2010, we repurchased in its entirety the warrant previously issued to the U.S. Treasury in connection with our prior participation in the U.S. Treasury’s Capital Purchase Program (“CPP”). The total cash repurchase price paid to the U.S. Treasury was $6.8 million for the aggregate warrant. At the time of issuance, the warrant was initially exercisable for 708,116 shares of our common stock at an exercise price of $49.78 per share. However, due to our completion of a qualified equity offering during the fourth quarter of 2009, the number of shares of common stock exercisable under the warrant was reduced to 354,058 pursuant to applicable CPP rules. The repurchase of the warrant reduced our stockholders’ equity by the total cash price of $6.8 million, and did not have any impact on our net income available to common stockholders or diluted earnings per share for the nine months ended September 30, 2010.

Earnings Per Share

Basic earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issued pursuant to stock options and restricted stock units under our equity incentive plan, stock purchases under our employee stock purchase plan, our 3.875% convertible senior notes (“2008 Convertible Notes”) and related warrants and note hedge. Potentially dilutive common shares are excluded from the computation of dilutive earnings per share in periods in which the effect would be antidilutive. The following is a reconciliation of basic EPS to diluted EPS for the three and nine months ended September 30, 2010 and 2009, respectively:


	Three months ended September 30,					Nine months ended September 30,
(Dollars and shares in thousands, except per share amounts)	2010		2009			2010		2009
Numerator:
Net income attributable to SVBFG	$	37,787	$	24,163		$	77,464	$	27,266
Preferred stock dividend and discount accretion		—		(3,555	)		—		(10,636	)

Net income available to common stockholders	$	37,787	$	20,608		$	77,464	$	16,630

Denominator:
Weighted average common shares outstanding-basic		41,930		33,177			41,679		33,033
Weighted average effect of dilutive securities:
Stock options		511		495			652		215
Restricted stock units		72		—			70		—

Denominator for diluted calculation		42,513		33,672			42,401		33,248

Net income per common share:
Basic	$	0.90	$	0.62		$	1.86	$	0.50

Diluted	$	0.89	$	0.61		$	1.83	$	0.50

Any dilutive effect of our 2008 Convertible Notes are included in the calculation of diluted EPS using the treasury stock method. The 2008 Convertible Notes did not impact our weighted average diluted common shares total as the applicable conversion price was higher than the average daily closing price for the three and nine month periods. Our warrant associated with the 2008 Convertible Notes did not impact our weighted average diluted common shares total as the exercise price was higher than the average daily closing price for the three and nine month periods.

The following table summarizes the common shares excluded from the diluted EPS calculation as they were deemed to be anti-dilutive for the three and nine months ended September 30, 2010 and 2009, respectively:


	Three months ended September 30,				Nine months ended September 30,
(Shares in thousands)	2010		2009		2010		2009
Stock options		6		1,718		8		2,485
Restricted stock units		5		90		4		499
Warrant associated with Capital Purchase Program (1)		—		275		—		597

Total		11		2,083		12		3,581

(1)	On June 16, 2010, we repurchased in its entirety the warrant previously issued to the U.S. Treasury in connection with our prior participation in the CPP.

In addition to the above, at September 30, 2010, 4.7 million shares of our 2008 Convertible Notes and associated warrants were outstanding but also excluded from the diluted EPS calculation as they were deemed to be anti-dilutive. Concurrent with the issuance

of our 2008 Convertible Notes, we entered into a convertible note hedge and warrant agreement. For information on our 2008 Convertible Notes and associated convertible note hedge and warrant agreement, see our Consolidated Financial Statements and Supplementary Data- Note 12- “Short-Term Borrowings and Long-Term Debt” and Note 13- “Derivative Financial Instruments” and under Part II, Item 8 of our 2009 Form 10-K.

3. Share-Based Compensation

For the three and nine months ended September 30, 2010, we recorded share-based compensation expense of $3.6 million and $9.9 million, respectively, resulting in the recognition of $0.9 million and $2.4 million, respectively, in related tax benefits. For the three and nine months ended September 30, 2009, we recorded share-based compensation expense of $3.4 million and $11.2 million, respectively, resulting in the recognition of $0.8 million and $2.7 million, respectively, in related tax benefits.

Unrecognized Compensation Expense

At September 30, 2010, unrecognized share-based compensation expense was as follows:


(Dollars in thousands)	Unrecognized Expense		Average Expected Recognition Period - in Years
Stock options	$	11,644		2.93
Restricted stock units		12,926		2.39

Total unrecognized share-based compensation expense	$	24,570

Share-Based Payment Award Activity

The table below provides stock option information related to the 1997 Equity Incentive Plan and the 2006 Equity Incentive Plan for the nine months ended September 30, 2010:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value of In-The- Money Options
Outstanding at December 31, 2009		3,500,723		$	35.31
Granted		452,324			47.85
Exercised		(470,876	)		28.63
Forfeited		(98,100	)		40.71
Expired		(57,925	)		50.01

Outstanding at September 30, 2010		3,326,146			37.53		3.27	$	25,518,512

Vested and expected to vest at September 30, 2010		3,168,894			37.41		3.13		24,508,490

Exercisable at September 30, 2010		2,225,405			36.83		2.05		17,646,011

The aggregate intrinsic value of outstanding options shown in the table above represents the pretax intrinsic value based on our closing stock price of $42.32 as of September 30, 2010. The total intrinsic value of options exercised during the three and nine months ended September 30, 2010 was $1.3 million and $8.5 million, respectively, compared to $0.8 million and $1.0 million for the comparable 2009 periods.

The table below provides information for restricted stock units under the 1997 Equity Incentive Plan and the 2006 Equity Incentive Plan for the nine months ended September 30, 2010:


	Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2009		336,806		$	39.55
Granted		219,750			46.99
Vested		(95,948	)		39.67
Forfeited		(35,685	)		33.91

Nonvested at September 30, 2010		424,923			43.90

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

The following table details the securities purchased under agreements to resell and other short-term investment securities at September 30, 2010 and December 31, 2009, respectively:


(Dollars in thousands)	September 30, 2010		December 31, 2009
Securities purchased under agreements to resell	$	48,115	$	58,242
Short-term agency discount notes		330,197		—
Other short-term investment securities		12,853		—

Total securities purchased under agreements to resell and other short-term investment securities	$	391,165	$	58,242

In addition, as of September 30, 2010 and December 31, 2009, $2.9 billion and $3.1 billion, respectively, of our cash and due from banks was deposited at the Federal Reserve Bank and was earning interest at the Federal Funds target rate, and interest-earning deposits in other financial institutions were $261.0 million and $171.6 million, respectively.

5. Investment Securities

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

The major components of our investment securities portfolio at September 30, 2010 and December 31, 2009 are as follows:


	September 30, 2010									December 31, 2009
(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	$	25,452	$	1,222	$	—		$	26,674	$	25,583	$	464	$	—		$	26,047
U.S. agency debentures		1,711,241		10,848		(369	)		1,721,720		887,008		5,188		(443	)		891,753
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		1,150,836		33,030		—			1,183,866		1,413,817		14,050		(17,237	)		1,410,630
Agency-issued collateralized mortgage obligations - fixed rate		966,492		25,500		(11	)		991,981		1,360,790		17,142		(5,557	)		1,372,375
Agency-issued collateralized mortgage obligations - variable rate		1,972,194		4,426		(923	)		1,975,697		—		—		—			—
Non-agency mortgage-backed securities (1)		—		—		—			—		89,155		48		(5,507	)		83,696
Commercial mortgage-backed securities (1)		—		—		—			—		48,440		468		(107	)		48,801
Municipal bonds and notes		96,980		5,792		(15	)		102,757		100,504		2,429		(56	)		102,877
Equity securities		444		92		(33	)		503		1,795		219		(5	)		2,009

Total available-for-sale securities	$	5,923,639	$	80,910	$	(1,351	)	$	6,003,198	$	3,927,092	$	40,008	$	(28,912	)	$	3,938,188

Non-marketable securities:
Non-marketable securities (investment company fair value accounting):
Private equity fund investments (2)									365,742									271,316
Other private equity investments (3)									84,535									96,577
Other investments (4)									962									1,143
Non-marketable securities (equity method accounting):
Other investments (5)									63,198									59,660
Low income housing tax credit funds									28,690									26,797
Non-marketable securities (cost method accounting):
Private equity fund investments (6)									100,110									86,019
Other private equity investments									12,830									12,019

Total non-marketable securities									656,067									553,531

Total investment securities								$	6,659,265								$	4,491,719

(1)	During the second quarter of 2010, we sold all of our non-agency residential and commercial mortgage-backed securities totaling $123.3 million and agency-issued collateralized mortgage obligations totaling $34.6 million.

(2)	The following table shows the amount of private equity fund investments by the following consolidated funds and our ownership of each fund at September 30, 2010 and December 31, 2009:


	September 30, 2010					December 31, 2009
(Dollars in thousands)	Amount		Ownership %			Amount		Ownership %
SVB Strategic Investors Fund, LP	$	47,026		12.6	%	$	50,508		12.6	%
SVB Strategic Investors Fund II, LP		94,922		8.6			85,820		8.6
SVB Strategic Investors Fund III, LP		135,631		5.9			102,568		5.9
SVB Strategic Investors Fund IV, LP		31,050		5.0			13,677		5.0
SVB Capital Preferred Return Fund, LP		19,730		19.5			8,330		20.0
SVB Capital—NT Growth Partners, LP		24,456		33.0			10,413		33.0
SVB Capital Partners II, LP (i)		4,631		5.1			—		N/A
Other Private Equity Fund (ii)		8,296		60.5			—		N/A

Total private equity fund investments	$	365,742				$	271,316

(i)

At September 30, 2010, we had a direct ownership interest of 1.3% and an indirect ownership interest of 3.8% in the fund through our ownership interest of SVB Strategic Investors Fund II, LP.

(ii)

At September 30, 2010, we had a direct ownership interest of 44.5% and an indirect ownership interest of 12.6% and 3.4% in the fund through our ownership interests of SVB Capital—NT Growth Partners, LP and SVB Capital Preferred Return Fund, LP, respectively.

(3)	The following table shows the amount of private equity investments by the following consolidated funds and our ownership of each fund at September 30, 2010 and December 31, 2009:


	September 30, 2010					December 31, 2009
(Dollars in thousands)	Amount		Ownership %			Amount		Ownership %
Silicon Valley BancVentures, LP	$	19,598		10.7	%	$	24,023		10.7	%
SVB Capital Partners II, LP		38,052		5.1			36,847		5.1
SVB India Capital Partners I, LP		26,885		14.4			35,707		14.4

Total other private equity investments	$	84,535				$	96,577

(4)

Other investments within non-marketable securities (investment company fair value accounting) include our ownership in Partners for Growth, LP, a consolidated sponsored debt fund. At September 30, 2010 and December 31, 2009 we had a majority ownership interest of slightly more than 50.0% in the fund. Partners for Growth, LP is managed by a third party, and we do not have an ownership interest in the general partner of this fund.

(5)	The following table shows the amount of investments and our ownership of each fund at September 30, 2010 and December 31, 2009:


	September 30, 2010					December 31, 2009
(Dollars in thousands)	Amount		Ownership %			Amount		Ownership %
Gold Hill Venture Lending 03, LP (i)	$	12,096		9.3	%	$	16,134		9.3	%
Partners for Growth II, LP		9,720		24.2			13,059		24.2
Other investments		41,382		N/A			30,467		N/A

Total other investments	$	63,198				$	59,660

(i)

At September 30, 2010, we had a direct ownership interest of 4.8% in the fund and an indirect interest in the fund through our investment in GHLLC of 4.5%. Our aggregate direct and indirect ownership in the fund is 9.3%.

(6)

Represents investments in 344 and 349 venture capital/private equity funds at September 30, 2010 and December 31, 2009, respectively, where our ownership interest is less than 5% of the voting interests of each such fund. For the three months ended September 30, 2010, we recognized other- than- temporary impairment (“OTTI”) losses of $0.5 million resulting from other- than- temporary declines in value for 16 of the 344 investments. For the nine months ended September 30, 2010, we recognized OTTI losses of $1.5 million resulting from other- than- temporary declines in value for 54 of the 344 investments. The OTTI losses are included in net gains (losses) on investment securities, a component of noninterest income. For the remaining 290 investments at September 30, 2010, we concluded that declines in value, if any, were temporary and as such, no OTTI was required to be recognized. At September 30, 2010, the carrying value of these venture capital/private equity fund investments (cost method accounting) was $100.1 million, and the estimated fair value was $101.1 million.

The following table summarizes our unrealized losses on our available-for-sale securities into categories of less than 12 months, or 12 months or longer, at September 30, 2010:


	September 30, 2010
	Less than 12 months					12 months or longer				Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses		Fair Value of Investments		Unrealized Losses
U.S. agency debentures	$	249,672	$	(369	)	$	—	$	—	$	249,672	$	(369	)
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations—fixed rate		6,260		(11	)		—		—		6,260		(11	)
Agency-issued collateralized mortgage obligations—variable rate		559,152		(923	)		—		—		559,152		(923	)
Municipal bonds and notes		3,509		(15	)		—		—		3,509		(15	)
Equity securities		32		(33	)		—		—		32		(33	)

Total temporarily impaired securities (1)	$	818,625	$	(1,351	)	$	—	$	—	$	818,625	$	(1,351	)

(1)

As of September 30, 2010, we identified a total of 36 investments that were in unrealized loss positions. There were no investments with unrealized losses that have been in an impaired position for a period of time greater than 12 months. Unrealized losses are due primarily to increases in market rates relative to rates at the time of purchase. Based on the underlying credit quality of the investments, we do not intend to sell any of our securities prior to recovery of our adjusted cost basis and as of September 30, 2010, it is more likely than not that we will not be required to sell any of our debt securities prior to recovery of our adjusted cost basis. Based on our analysis we deem all impairments to be temporary and changes in value for our temporarily impaired securities as of September 30, 2010 are included in other comprehensive income. Market valuations and impairment analyses on assets in the investment securities portfolio are reviewed and monitored on a quarterly basis.

The following table summarizes our unrealized losses on our available-for-sale securities portfolio into categories of less than 12 months, or 12 months or longer, as of December 31, 2009:


	December 31, 2009
	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	$	287,621	$	(443	)	$	—	$	—		$	287,621	$	(443	)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		1,034,781		(17,237	)		—		—			1,034,781		(17,237	)
Agency-issued collateralized mortgage obligations—fixed rate		321,388		(5,535	)		1,392		(22	)		322,780		(5,557	)
Non-agency mortgage-backed securities		23,966		(195	)		51,276		(5,312	)		75,242		(5,507	)
Commercial mortgage-backed securities		14,968		(107	)		—		—			14,968		(107	)
Municipal bonds and notes		11,908		(56	)		—		—			11,908		(56	)
Marketable Equity securities		3		(5	)		—		—			3		(5	)

Total temporarily impaired securities	$	1,694,635	$	(23,578	)	$	52,668	$	(5,334	)	$	1,747,303	$	(28,912	)

The following table summarizes the remaining contractual principal maturities and fully taxable equivalent yields on debt securities classified as available-for-sale as of September 30, 2010. Interest income on certain municipal bonds and notes (non-taxable investments) are presented on a fully taxable equivalent basis using the federal statutory tax rate of 35.0 percent. The weighted average yield is computed using the amortized cost of debt securities, which are reported at fair value. For U.S. treasury securities, the expected maturity is the actual contractual maturity of the notes. Expected remaining maturities for most U.S. agency debentures may occur earlier than their contractual maturities because the note issuers have the right to call outstanding amounts ahead of their contractual maturity. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities typically have original contractual maturities from 15 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure.


	September 30, 2010
	Total					One Year or Less					After One Year to Five Years					After Five Years to Ten Years					After Ten Years
(Dollars in thousands)	Carrying Value		Weighted- Average Yield			Carrying Value		Weighted- Average Yield			Carrying Value		Weighted- Average Yield			Carrying Value		Weighted- Average Yield			Carrying Value		Weighted- Average Yield
U.S. treasury securities	$	26,674		2.39	%	$	—		—	%	$	26,674		2.39	%	$	—		—	%	$	—		—	%
U.S. agency debentures		1,721,720		1.77			86,651		2.36			1,635,069		1.74			—		—			—		—
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		1,183,866		3.68			—		—			—		—			1,038		7.50			1,182,828		3.68
Agency-issued collateralized mortgage obligations—fixed rate		991,981		3.38			—		—			—		—			—		—			991,981		3.38
Agency-issued collateralized mortgage obligations—variable rate		1,975,697		0.72			—		—			—		—			—		—			1,975,697		0.72
Municipal bonds and notes		102,756		6.02			1,143		6.50			7,171		5.38			42,397		5.90			52,045		6.20

Total	$	6,002,694		2.14		$	87,794		2.41		$	1,668,914		1.76		$	43,435		5.94		$	4,202,551		2.25

The cost of investment securities is determined on a specific identification basis. The following table presents the components of gains and losses on investment securities for the three and nine months ended September 30, 2010 and 2009:


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2010			2009			2010			2009
Gross gains on investment securities:
Available-for-sale securities, at fair value	$	23,605		$	8		$	26,737		$	15
Marketable securities (investment company fair value accounting)		8,109			111			8,160			1,290
Non-marketable securities (investment company fair value accounting):
Private equity fund investments		19,014			7,101			47,659			8,370
Other private equity investments		2,321			4,531			7,258			4,724
Other investments		9			71			36			684
Non-marketable securities (equity method accounting):
Other investments		2,663			2,361			4,804			5,170
Non-marketable securities (cost method accounting):
Private equity fund investments		222			15			780			316
Other private equity investments		—			—			—			22
Other investments		242			—			344			—

Total gross gains on investment securities		56,185			14,198			95,778			20,591


Gross losses on investment securities:
Available-for-sale securities, at fair value		—			—			(2,264	)		(41	)
Marketable securities (investment company fair value accounting)		—			(16	)		(57	)		(409	)
Non-marketable securities (investment company fair value accounting):
Private equity fund investments		(6,171	)		(4,321	)		(15,291	)		(41,081	)
Other private equity investments		(2,877	)		(2,072	)		(8,589	)		(10,104	)
Other investments		—			—			(79	)		—
Non-marketable securities (equity method accounting):
Other investments		(1	)		(1,690	)		(614	)		(2,973	)
Non-marketable securities (cost method accounting):
Private equity fund investments		(516	)		(2,105	)		(1,455	)		(3,754	)
Other private equity investments		(9	)		(89	)		(9	)		(119	)

Total gross losses on investment securities		(9,574	)		(10,293	)		(28,358	)		(58,481	)

Gains (losses) on investment securities, net	$	46,611		$	3,905		$	67,420		$	(37,890	)

Gains (losses) attributable to noncontrolling interests, including carried interest	$	16,817		$	4,880		$	33,159		$	(32,491	)

6. Loans and Allowance for Loan Losses

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

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

We also provide community development loans, which are low income housing loans made as part of our responsibilities under the Community Reinvestment Act. These loans are construction loans and are primarily secured by real estate.

The composition of loans, net of unearned income of $40.9 million and $34.9 million at September 30, 2010 and December 31, 2009, respectively, is presented in the following table:


(Dollars in thousands)	September 30, 2010		December 31, 2009
Commercial loans:
Software	$	1,601,950	$	1,381,669
Hardware		540,423		551,545
Clean Technology		146,160		71,550
Venture Capital/Private Equity		746,822		925,330
Life Science		601,429		514,879
Premium Wine		145,696		143,062
All other sectors		225,623		158,666

Commercial loans (1)		4,008,103		3,746,701

Real estate secured loans:
Premium Wine		320,908		298,839
Consumer loans (2)		297,410		241,284

Real estate secured loans		618,318		540,123

Construction loans		49,976		59,926
Consumer loans		182,808		201,344

Total loans, net of unearned income	$	4,859,205	$	4,548,094

(1)	Included within our commercial loans portfolio are business credit card loans to commercial clients. At September 30, 2010 and December 31, 2009, our business credit card loans portfolio totaled $32.9 million and $24.6 million, respectively.

(2)	Consumer loans secured by real estate at September 30, 2010, and December 31, 2009 were comprised of the following:


(Dollars in thousands)	September 30, 2010		December 31, 2009
Loans for personal residence	$	122,304	$	64,678
Home equity lines of credit		88,325		90,459
Loans to eligible employees		86,781		86,147

Consumer loans secured by real estate	$	297,410	$	241,284

The activity in the allowance for loan losses for the three and nine months ended September 30, 2010 and 2009 was as follows:


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2010			2009			2010			2009
Allowance for loan losses, beginning balance	$	71,789		$	110,473		$	72,450		$	107,396
Gross charge-offs:
Commercial loans:
Software		(4,401	)		(12,603	)		(10,897	)		(25,867	)
Hardware		(835	)		(8,284	)		(9,782	)		(43,328	)
Clean Technology		(59	)		—			(2,242	)		—
Venture Capital/Private Equity		—			(10,455	)		—			(10,455	)
Life Science		(6,977	)		(6,807	)		(16,627	)		(15,424	)
Premium Wine		(15	)		(17	)		(516	)		(2,333	)
All other sectors		(1	)		(1,698	)		(49	)		(1,698	)

Commercial loans		(12,288	)		(39,864	)		(40,113	)		(99,105	)

Real estate secured loans:
Premium Wine		—			—			(1	)		—
Consumer loans		(1	)		(449	)		(487	)		(449	)

Real estate secured loans		(1	)		(449	)		(488	)		(449	)

Construction loans		—			—			—			(96	)
Consumer loans		—			(6,240	)		(1	)		(10,814	)

Total gross charge-offs	$	(12,289	)	$	(46,553	)	$	(40,602	)	$	(110,464	)

Recoveries:
Commercial loans:
Software	$	1,164		$	836		$	4,189		$	1,820
Hardware		1,512			11,525			3,782			12,363
Clean Technology		32			—			903			—
Life Science		965			2,260			3,264			2,374
Premium Wine		60			43			158			48
All other sectors		91			61			626			95

Commercial loans		3,824			14,725			12,922			16,700

Real estate secured loans:
Consumer loans		6			—			6			2

Real estate secured loans		6			—			6			2

Construction loans		—			4			5			10
Consumer loans		68			34			464			180

Total recoveries	$	3,898		$	14,763		$	13,397		$	16,892

Net charge-offs		(8,391	)		(31,790	)		(27,205	)		(93,572	)
Provision for loan losses		10,971			8,030			29,124			72,889

Allowance for loan losses, ending balance	$	74,369		$	86,713		$	74,369		$	86,713

Impaired Loans and Troubled Debt Restructurings

A loan is considered impaired when, based upon currently known information, it is deemed probable that we will be unable to collect all amounts due according to the contractual terms of the agreement. The recorded investment in impaired loans totaled $45.0 million and $50.2 million at September 30, 2010 and December 31, 2009, respectively. The recorded investment in impaired loans for which there was a related allowance for loan losses was $34.5 million and $47.0 million at September 30, 2010 and December 31, 2009, respectively, with related allowance for loan losses of $6.5 million and $8.9 million, respectively. The recorded investment in impaired loans for which there was no related allowance for loan losses was $10.5 million and $3.2 million at September 30, 2010 and December 31, 2009, respectively. Average impaired loans for the three and nine months ended September 30, 2010 totaled $45.5 million and $48.9 million, respectively. Cash payments received related to these loans totaled $0.5 million and $1.4 million for the three and nine months ended September 30, 2010, respectively. Average impaired loans for the three and nine months ended September 30, 2009 totaled $95.1 million and $98.6 million, respectively. Cash payments received related to these loans totaled $0.5 million and $1.2 million for the three and nine months ended September 30, 2009, respectively. These payments were applied against the outstanding principal balance of the loans. We did not recognize any interest income related to impaired loans in either of the three and nine months ended September 30, 2010 or 2009 during the time period that the loans were impaired. There were no loans past due 90 days or more still accruing interest at September 30, 2010 compared to $2.5 million at December 31, 2009.

Included in the $45.0 million of impaired loans at September 30, 2010 are loans modified in troubled debt restructurings (“TDR’s”), where concessions have been granted to borrowers experiencing financial difficulties, in an attempt to maximize collection. As of September 30, 2010, we had TDR’s of $24.0 million, which were comprised of $20.1 million in consumer loans secured by real estate, $1.8 million in software loans, $1.0 in construction loans and $1.1 million in other commercial loans. In order for these loan balances to return to accrual status, the borrower must demonstrate a sustained period of timely payments. There were no commitments available for funding to the clients associated with these TDR’s as of September 30, 2010.

7. Goodwill

During the first quarter of 2009, we conducted an assessment of goodwill of eProsper, a data management services company in which we own a 65% interest, based on eProsper’s revised forecast of discounted net cash flows for that reporting unit. We concluded that we had an impairment of goodwill resulting from changes in our outlook for eProsper’s future financial performance. As a result, $4.1 million of goodwill was expensed as a noncash non tax-deductible charge to continuing operations during the first quarter of 2009. There was no remaining goodwill on our balance sheet as of September 30, 2010 or December 31, 2009 and has not been since the first quarter of 2009.

8. Short-Term Borrowings and Long-Term Debt

The following table represents outstanding short-term borrowings and long-term debt at September 30, 2010 and December 31, 2009:


(Dollars in thousands)	Maturity	September 30, 2010		December 31, 2009
Short-term borrowings:
Other short-term borrowings	(1)	$	59,735	$	38,755

Total short-term borrowings		$	59,735	$	38,755

Long-term debt:
5.375% senior notes	September 15, 2020	$	347,555	$	—
5.70% senior notes (2)	June 1, 2012		268,503		269,793
6.05% subordinated notes (3)	June 1, 2017		298,263		276,541
3.875% convertible senior notes	April 15, 2011		248,715		246,991
7.0% junior subordinated debentures	October 15, 2033		55,592		55,986
4.99% long-term notes payable	(4)		7,182		7,339

Total long-term debt		$	1,225,810	$	856,650

(1)	Represents cash collateral received from counterparties for our interest rate swap agreements related to our senior and subordinated notes.

(2)	At September 30, 2010 and December 31, 2009, included in the carrying value of our 5.70% senior notes are $18.6 million and $19.9 million, respectively, related to the fair value of the interest rate swap associated with the notes.

(3)	At September 30, 2010 and December 31, 2009, included in the carrying value of our 6.05% subordinated notes are $48.7 million and $27.0 million, respectively, related to the fair value of the interest rate swap associated with the notes.

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

Interest expense related to short-term borrowings and long-term debt was $6.6 million and $18.1 million for the three and nine months ended September 30, 2010, respectively, and $6.4 million and $21.8 million for the three and nine months ended September 30, 2009, respectively. Interest expense shown is net of the cash flow impact from our interest rate swap agreements. The weighted average interest rates associated with our short-term borrowings as of September 30, 2010 and December 31, 2009 were 0.15 percent and 0.05 percent, respectively.

5.375% Senior Notes

In September 2010, we issued $350 million of 5.375% senior notes due in September 2020 (“5.375% Senior Notes”). We received net proceeds of $344.3 million after deducting underwriting discounts and commissions and other estimated expenses. We intend to use approximately $250 million of the net proceeds from the sale of the notes to meet obligations due on the unconverted portion of our 2008 Convertible Notes due on April 15, 2011 (see “2008 Convertible Notes” section below for further details). The remaining net proceeds will be used for general corporate purposes, including working capital.

2008 Convertible Notes

In April 2008, we issued our 2008 Convertible Notes, due April 15, 2011, in the aggregate principal amount of $250 million to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The issuance costs related to the 2008 Convertible Notes were $6.8 million, and the net proceeds from the offering were $243.2 million. The 2008 Convertible Notes are initially convertible, subject to certain conditions, into cash up to the principal amount of notes and, into shares of our common stock or cash or any combination thereof for any excess conversion value, at our option. Holders may convert their 2008 Convertible Notes beginning any fiscal quarter commencing after June 30, 2008, if: (i) the price of our common stock issuable upon conversion of the note reaches a specific threshold, (ii) specified corporate transactions occur, or (iii) the trading price for the note falls below certain thresholds. The notes have an initial conversion rate of 18.8525 shares of common stock per $1,000 principal amount of notes, which represents an initial effective conversion price of $53.04 per share. Upon conversion of a note, we will pay the outstanding principal amount in cash as required by the terms of the notes, and to the extent that the conversion value exceeds the principal amount, we have the option to pay cash or shares of our common stock (or a combination of cash and shares) in respect of the excess amount.

Concurrent with the issuance of our 2008 Convertible Notes, we entered into a convertible note hedge and warrant agreement (see Note 9- “Derivative Financial Instruments”), which effectively increased the economic conversion price of our 2008 Convertible Notes to $64.43 per share of common stock. The terms of the hedge and warrant agreement are not part of the terms of the notes and will not affect the rights of the holders of the notes.

For the three and nine months ended September 30, 2010, the effective interest rate for our 2008 Convertible Notes was 5.66 percent and 5.72 percent, respectively, and interest expense was $3.5 million and $10.6 million, respectively. For the three and nine months ended September 30, 2009, the effective interest rate for our 2008 Convertible Notes was 5.66 percent and 5.73 percent, respectively, and interest expense was $3.5 million and $10.5 million, respectively. At September 30, 2010, the unamortized debt discount totaled $1.3 million, and will be amortized over the remaining contractual term of the debt.

Available Lines of Credit

We have certain facilities in place to enable us to access short-term borrowings on a secured (using available-for-sale securities as collateral) and an unsecured basis. These include repurchase agreements and uncommitted federal funds lines with various financial institutions. As of September 30, 2010, we had not borrowed against any of our repurchase lines or uncommitted federal funds lines. We also pledge securities to the Federal Home Loan Bank of San Francisco and the discount window at the Federal Reserve Bank. The market value of collateral pledged to the Federal Home Loan Bank of San Francisco (comprised entirely of U.S. agency debentures) at September 30, 2010 totaled $1.0 billion, all of which was unused and available to support additional borrowings. The market value of collateral pledged at the discount window of the Federal Reserve Bank at September 30, 2010 totaled $88.7 million, all of which was unused and available to support additional borrowings.

9. Derivative Financial Instruments

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

Interest Rate Risk

Interest rate risk is our primary market risk and can result from timing and volume differences in the repricing of our interest rate-sensitive assets and liabilities and changes in market interest rates. To manage interest rate risk for our 5.70% senior notes and our 6.05% subordinated notes, we entered into receive-fixed for pay-floating interest rate swap agreements at the time of debt issuance. The interest rate swaps have matched-terms with the respective notes and effectively swap fixed rate coupons on the notes to variable rate coupons based upon London Interbank Offered Rates (“LIBOR”). We use the shortcut method to assess hedge effectiveness and evaluate the hedging relationships for qualification under the shortcut method requirements for each reporting period.

For more information on our 5.70% senior notes and our 6.05% subordinated notes, see our Consolidated Financial Statements and Supplementary Data-Note 12- “Short-Term Borrowings and Long-Term Debt” under Part II, Item 8 of our 2009 Form 10-K.

Net cash benefits associated with our interest rate swaps are recorded in “Interest Expense: Borrowings”, a component of net interest income. The fair values of our interest rate swaps are calculated using discounted cash flow methods and are adjusted for credit valuation associated with counterparty risk. Increases from changes in fair value are included in “Other Assets” and decreases from changes in fair value are included in “Other Liabilities”. Although we do not expect any changes in the matched-terms on the notes and associated interest rate swaps, any differences associated with or arising from hedge ineffectiveness are recorded through net gains (losses) on derivative instruments, in noninterest income, a component of consolidated net income.

Currency Exchange Risk

We enter into foreign exchange forward contracts to hedge against exposures of our loans that are denominated in foreign currencies to our clients, primarily in Pound Sterling, Euro, and Japanese Yen. We do not designate any foreign exchange forward contracts as derivative instruments that qualify for hedge accounting. Changes in currency rates on the loans are included in other noninterest income, a component of noninterest income. We may experience ineffectiveness in the economic hedging relationship,

because the loans are revalued based upon changes in the currency’s spot rate on the principal value, while the forwards are revalued on a discounted cash flow basis. We record forward agreements in gain positions in “Other Assets” and loss positions in “Other Liabilities”, while net changes in fair value are recorded through net gains (losses) on derivative instruments, in noninterest income, a component of consolidated net income.

Equity Market Price Risk

We have convertible debt instruments that contain conversion options that enable the holders to convert the instruments, subject to certain conditions. Specifically, we currently have outstanding our 2008 Convertible Notes. Upon conversion of a note, we will pay the outstanding principal amount in cash as required by the terms of the notes, and to the extent that the conversion value exceeds the principal amount, we have the option to pay cash or shares of our common stock (or a combination of cash and shares) in respect of the excess amount. The conversion option represents an equity risk exposure for the excess conversion value and is an equity derivative classified in stockholders’ equity. We manage equity market price risk of our convertible debt instruments by entering into convertible note hedge and warrant agreements to increase the economic conversion price of our convertible debt instruments and to decrease potential dilution to stockholders resulting from the conversion option.

Concurrent with the issuance of our 2008 Convertible Notes, we entered into a convertible note hedge and warrant agreement at a net cost of $20.6 million, which effectively increased the economic conversion price from $53.04 per common share to $64.43 per common share. Similar to the conversion option of the excess value of the note, the hedge and warrant agreements are equity derivatives classified in stockholders’ equity. For the three and nine months ended September 30, 2010 and 2009, there were no note conversions or exercises under the warrant agreement as the notes were not convertible.

For more information on the 2008 Convertible Notes, see our Consolidated Financial Statements and Supplementary Data-Note 12- “Short-Term Borrowings and Long-Term Debt” under Part II, Item 8 of our 2009 Form 10-K.

Other Derivative Instruments

Equity Warrant Assets

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

Other Derivatives

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

Counterparty Credit Risk

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

The total notional or contractual amounts, fair value, collateral and net exposure of our derivative financial instruments at September 30, 2010 and December 31, 2009, respectively, were as follows:


			September 30, 2010										December 31, 2009
(Dollars in thousands)	Balance sheet location		Notional or contractual amount		Fair value			Collateral (1)		Net exposure (2)			Notional or contractual amount		Fair value			Collateral (1)		Net exposure (2)
Derivatives designated as hedging instruments:
Interest Rate Risks:
Interest rate swaps		Other assets	$	500,000	$	67,257		$	59,735	$	7,522		$	500,000	$	46,895		$	38,755	$	8,140

Derivatives not designated as hedging instruments:
Currency Exchange Risks:
Foreign exchange forwards		Other assets		11,820		345			—		345			48,276		1,472			—		1,472
Foreign exchange forwards		Other liabilities		54,949		(1,099	)		—		(1,099	)		9,828		(85	)		—		(85	)

Net exposure						(754	)		—		(754	)				1,387			—		1,387

Other Derivative Instruments:
Equity warrant assets		Other assets		121,517		42,569			—		42,569			120,192		41,292			—		41,292

Other derivatives:
Foreign exchange forwards		Other assets		317,509		9,897			—		9,897			316,759		16,772			—		16,772
Foreign exchange forwards		Other liabilities		297,056		(9,782	)		—		(9,782	)		326,116		(15,593	)		—		(15,593	)
Foreign currency options		Other assets		117,473		2,415			—		2,415			1,819		192			—		192
Foreign currency options		Other liabilities		117,473		(2,415	)		—		(2,415	)		1,819		(192	)		—		(192	)
Other derivatives (3)		Other assets		634		274			—		274			—		—			—		—

Net exposure						389			—		389					1,179			—		1,179

Net					$	109,461		$	59,735	$	49,726				$	90,753		$	38,755	$	51,998

(1)	Cash collateral received from counterparties for our interest rate swap agreements is recorded as a component of “short-term borrowings” on our consolidated balance sheets.

(2)

Net exposure for contracts in a gain position reflects the replacement cost in the event of nonperformance by all such counterparties. The credit ratings of our institutional counterparties as of September 30, 2010 remain at “A” or higher and there were no material changes in their credit ratings during the nine months ended September 30, 2010.

(3)	Represents the equity conversion option for a loan included in our life science client portfolio.

A summary of our derivative activity and the related impact on our consolidated statements of income for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


		Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	Statement of income location	2010			2009			2010			2009
Derivatives designated as hedging instruments:
Interest Rate Risks:
Net cash benefit associated with interest rate swaps	Interest expense - borrowings	$	5,943		$	5,741		$	18,531		$	14,874
Changes in fair value of interest rate swap	Net gains (losses) on derivative instruments		—			—			—			(170	)

Net gains associated with interest rate risk derivatives		$	5,943		$	5,741		$	18,531		$	14,704

Derivatives not designated as hedging instruments:
Currency Exchange Risks:
Gains (losses) on foreign currency loan revaluations, net	Other noninterest income	$	2,871		$	(94	)	$	(75	)	$	1,886
(Losses) gains on foreign exchange forward contracts, net	Net gains (losses) on derivative instruments		(2,698	)		(128	)		680			(2,664	)

Net gains (losses) associated with currency risk		$	173		$	(222	)	$	605		$	(778	)

Other Derivative Instruments:
Gains (losses) on equity warrant assets	Net gains (losses) on derivative instruments	$	3,762		$	(1,322	)	$	3,073		$	(593	)

Gains on client foreign exchange forward contracts, net	Net gains (losses) on derivative instruments	$	131		$	360		$	750		$	1,304

Changes in fair value of other derivatives	Net gains (losses) on derivative instruments	$	62		$	—		$	62		$	—

10. Other Noninterest Income and Other Noninterest Expense

A summary of other noninterest income for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,					Nine months ended September 30,
(Dollars in thousands)	2010		2009			2010			2009
Fund management fees	$	2,702	$	2,437		$	8,098		$	7,625
Service-based fee income (1)		1,894		1,700			6,512			5,645
Unused commitment fees		1,352		906			3,959			2,465
Currency revaluation gains		661		275			987			383
Gains (losses) on foreign currency loans revaluation, net		2,871		(94	)		(75	)		1,886
Other		1,901		1,025			5,426			3,826

Total other noninterest income	$	11,381	$	6,249		$	24,907		$	21,830

(1)	Includes income from SVB Analytics and its subsidiary, eProsper.

A summary of other noninterest expense for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,				Nine months ended September 30,
(Dollars in thousands)	2010		2009		2010		2009
Telephone	$	1,208	$	325	$	3,438	$	3,042
Tax credit fund amortization		1,050		1,165		3,107		3,458
Client services		651		670		2,006		1,402
Postage and supplies		571		165		1,645		2,328
Dues and publications		444		325		1,093		1,266
Other		3,070		1,469		8,660		7,479

Total other noninterest expense	$	6,994	$	4,119	$	19,949	$	18,975

11. Segment Reporting

We have four operating segments for management reporting purposes: Global Commercial Bank, Relationship Management, SVB Capital, and Other Business Services. Our Other Business Services group includes Sponsored Debt Funds & Strategic Investments and SVB Analytics. The results of our operating segments are based on our internal management reporting process.

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

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

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.

With respect to our operating segments, only Global Commercial Bank, Relationship Management and SVB Capital were determined to be separate reportable segments as of September 30, 2010.

Changes to Segment Reporting Effective January 1, 2010

Effective January 1, 2010, we changed the way we monitor performance and results for certain of our business lines. We made certain changes to the items reported under our Global Commercial Bank, Relationship Management and Other Business Services segments. These changes do not change the four operating segments we currently report. As a result of these changes, our Global Commercial Bank segment’s income before income tax expense for 2009 was reduced by $41.0 million, as it now includes the operating expenses of the loan and deposit operations, which was previously included as a part of Other Items. Changes to other operating segments were not significant. We have reclassified all prior period segment information to conform to the current presentation of our reportable segments. The following is a description of the services that our four operating segments provide:

•

Global Commercial Bank provides solutions to the financial needs of commercial clients through lending, deposit products, cash management services, and global banking and trade products and services. It also serves the needs of our non-U.S. clients with global banking products, including loans, deposits and global finance, in key foreign entrepreneurial markets, where applicable. Effective January 1, 2010, Global Commercial Bank also includes the results of certain other business units that were previously reported as part of Relationship Management and Other Items.

•

Relationship Management provides banking products and a range of credit services to targeted high-net-worth individuals using both long-term secured and short-term unsecured lines of credit.

•

SVB Capital manages venture capital and private equity funds on behalf of SVB Financial Group and other third party limited partners. The SVB Capital family of funds is comprised of funds of funds and co-investment funds.

•

Other Business Services includes the results of our Sponsored Debt Funds & Strategic Investments segment, which is comprised of (i) our sponsored debt funds: Gold Hill Funds, which provide secured debt to private companies of all stages, and Partners for Growth Funds, which provide secured debt primarily to mid-stage and late-stage clients, and (ii) certain strategic investments held by SVB Financial. Other Business Services also includes the results of SVB Analytics, which provides equity valuation and equity management services to private companies and venture capital firms. Effective January 1, 2010, SVB Analytics also includes the results of certain other business units that were previously reported as part of Other Items.

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

Our segment information for the three and nine months ended September 30, 2010 and 2009 is as follows:


(Dollars in thousands)	Global Commercial Banking			Relationship Management			SVB Capital (1)			Other Business Services (1)			Other Items			Total
Three months ended September 30, 2010
Net interest income (loss)	$	84,775		$	8,543		$	—		$	(16	)	$	13,039		$	106,341
(Provision for) recovery of loan losses		(8,376	)		(2,639	)		—			—			44			(10,971	)
Noninterest income		31,399			360			6,418			2,995			45,064			86,236
Noninterest expense (2)		(58,706	)		(4,785	)		(2,752	)		(3,559	)		(34,369	)		(104,171	)

Income (loss) before income tax expense (3)	$	49,092		$	1,479		$	3,666		$	(580	)	$	23,778		$	77,435

Total average loans, net of unearned income	$	3,485,505		$	982,614		$	—		$	—		$	30,368		$	4,498,487
Total average assets		3,749,453			982,881			119,055			89,362			9,814,887			14,755,638
Total average deposits		11,762,637			176,734			—			—			(20,150	)		11,919,221

Three months ended September 30, 2009
Net interest income (loss)	$	88,596		$	8,582		$	(10	)	$	(76	)	$	(274	)	$	96,818
Provision for loan losses		(3,153	)		(4,855	)		—			—			(22	)		(8,030	)
Noninterest income		27,025			333			3,014			41			3,894			34,307
Noninterest expense		(42,715	)		(2,972	)		(3,355	)		(2,806	)		(27,959	)		(79,807	)

Income (loss) before income tax expense (3)	$	69,753		$	1,088		$	(351	)	$	(2,841	)	$	(24,361	)	$	43,288

Total average loans, net of unearned income	$	3,576,973		$	945,694		$	—		$	—		$	21,843		$	4,544,510
Total average assets		3,697,379			946,811			96,077			87,396			6,582,963			11,410,626
Total average deposits		8,757,704			146,367			—			—			6,351			8,910,422

Nine months ended September 30, 2010
Net interest income (loss)	$	253,044		$	25,017		$	(1	)	$	(108	)	$	35,665		$	313,617
Provision for loan losses		(25,856	)		(3,206	)		—			—			(62	)		(29,124	)
Noninterest income		89,123			1,047			14,270			8,643			62,583			175,666
Noninterest expense (2)		(171,037	)		(14,452	)		(9,654	)		(10,853	)		(100,931	)		(306,927	)

Income (loss) before income tax expense (3)	$	145,274		$	8,406		$	4,615		$	(2,318	)	$	(2,745	)	$	153,232

Total average loans, net of unearned income	$	3,280,358		$	943,969		$	—		$	—		$	19,104		$	4,243,431
Total average assets		3,551,018			945,024			108,449			91,481			9,600,167			14,296,139
Total average deposits		11,420,631			193,030			—			—			(12,878	)		11,600,783

Nine months ended September 30, 2009
Net interest income (loss)	$	273,957		$	25,897		$	(13	)	$	(156	)	$	(19,675	)	$	280,010
Provision for loan losses		(60,862	)		(11,979	)		—			—			(48	)		(72,889	)
Noninterest income (loss)		80,686			944			3,015			4,399			(32,043	)		57,001
Noninterest expense, excluding impairment of goodwill (2)		(131,636	)		(9,858	)		(9,991	)		(8,963	)		(91,419	)		(251,867	)
Impairment of goodwill		—			—			—			(4,092	)		—			(4,092	)

Income (loss) before income tax expense (3)	$	162,145		$	5,004		$	(6,989	)	$	(8,812	)	$	(143,185	)	$	8,163

Total average loans, net of unearned income	$	3,822,200		$	966,939		$	—		$	—		$	22,342		$	4,811,481
Total average assets		3,932,869			968,384			91,412			79,244			5,863,263			10,935,172
Total average deposits		8,265,536			155,679			—			—			5,960			8,427,175

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

(2)	The Global Commercial Bank segment includes direct depreciation and amortization of $1.2 million and $0.9 million for the three months ended September 30, 2010 and 2009, respectively, and $3.4 million and $2.5 million for the nine months ended September 30, 2010 and 2009, respectively.

(3)	The internal reporting model used by management to assess segment performance does not calculate income tax expense by segment. Our effective tax rate is a reasonable approximation of the segment rates.

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

Commitments to Extend Credit

The following table summarizes information related to our commitments to extend credit at September 30, 2010 and December 31, 2009, respectively:


(Dollars in thousands)	September 30, 2010		December 31, 2009
Commitments available for funding: (1)
Fixed interest rate commitments	$	426,273	$	539,986
Variable interest rate commitments		5,465,804		4,798,740

Total commitments available for funding	$	5,892,077	$	5,338,726

Commitments unavailable for funding (2)	$	1,014,933	$	1,103,489

Maximum lending limits for accounts receivable factoring arrangements (3)	$	687,364	$	535,257
Reserve for unfunded credit commitments		15,892		13,331

(1)	Represents commitments which are available for funding, due to clients meeting all collateral, compliance, and financial covenants required under loan commitment agreements.

(2)	Represents commitments which are currently unavailable for funding, due to clients failing to meet all collateral, compliance, and financial covenants required under loan commitment agreements.

(3)	We extend credit under accounts receivable factoring arrangements when our clients’ sales invoices are deemed creditworthy under existing underwriting practices.

Commercial and Standby Letters of Credit

The table below summarizes our commercial and standby letters of credit at September 30, 2010. The maximum potential amount of future payments represents the amount that could be remitted under letters of credit if there was 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	$	543,514	$	29,390	$	572,904	$	572,904
Performance standby letters of credit		33,308		9,898		43,206		43,206
Commercial letters of credit		3,786		—		3,786		3,786

Total	$	580,608	$	39,288	$	619,896	$	619,896

At September 30, 2010 and December 31, 2009, deferred fees related to financial and performance standby letters of credit were $4.0 million and $3.9 million, respectively. At September 30, 2010, collateral in the form of cash of $219.1 million and available-for-sale securities of $19.0 million were available to us to reimburse losses, if any, under financial and performance standby letters of credit.

Commitments to Invest in Venture Capital/Private Equity Funds

We make commitments to invest in venture capital and private equity funds, which in turn make investments generally in, or in some cases make loans to, privately-held companies. Commitments to invest in these funds are generally made for a ten-year period from the inception of the fund. Although the limited partnership agreements governing these investments typically do not restrict the general partners from calling 100% of committed capital in one year, it is customary for these funds to generally call most of the capital commitments over 5 to 7 years. The actual timing of future cash requirements to fund these commitments is generally dependent upon the investment cycle, overall market conditions, and the nature and type of industry in which the privately held companies operate. The following table details our total capital commitments, unfunded capital commitments, and our ownership in each fund at September 30, 2010:


Our Ownership in Limited Partnership (Dollars in thousands)	SVBFG Capital Commitments		SVBFG Unfunded Commitments		SVBFG Ownership of each Fund
Silicon Valley BancVentures, LP	$	6,000	$	270		10.7	%
SVB Capital Partners II, LP (1)		1,200		348		5.1
SVB India Capital Partners I, LP		7,750		2,697		14.4
SVB Capital Shanghai Yangpu Venture Capital Fund, LP		867		867		6.8
SVB Strategic Investors Fund, LP		15,300		1,530		12.6
SVB Strategic Investors Fund II, LP		15,000		2,550		8.6
SVB Strategic Investors Fund III, LP		15,000		5,400		5.9
SVB Strategic Investors Fund IV, LP		12,239		10,036		5.0
SVB Capital Preferred Return Fund, LP		12,288		—		19.5
SVB Capital—NT Growth Partners, LP		24,670		4,256		33.0
Other Private Equity Fund (2)		10,013		—		60.5
Partners for Growth, LP		25,000		9,750		50.0
Partners for Growth II, LP		15,000		4,950		24.2
Gold Hill Venture Lending 03, LP (3)		20,000		—		9.3
Other Fund Investments (4)		152,927		41,701		N/A
New Fund Commitments (5)		189,837		122,870		N/A

Total	$	523,091	$	207,225

(1)	Our ownership includes 1.3% direct ownership through SVB Capital Partners II, LLC and SVB Financial Group, and 3.8% indirect ownership through our investment in SVB Strategic Investors Fund II, LP.

(2)	Our ownership includes 44.5% direct ownership and indirect ownership interest of 12.6% and 3.4% in the fund through our ownership interests of SVB Capital—NT Growth Partners, LP and SVB Capital Preferred Return Fund, LP, respectively.

(3)	Our ownership includes 4.8% direct ownership and 4.5% indirect ownership interest through GHLLC.

(4)	Represents commitments to 333 venture capital/private equity funds where our ownership interest is generally less than 5% of the voting interests of each such fund.

(5)

Represents the investment commitments made by SVB Financial which may be transferred to certain new managed funds of funds (“New Fund Commitments”). These New Fund Commitments will remain the obligations of SVB Financial, and will continue to remain as such until we may later decide to transfer, sell or otherwise dispose of the investments, whether to a third party or to a new existing fund managed by us.

The following table details the remaining unfunded commitments to venture capital/private equity funds by our consolidated managed funds of funds at September 30, 2010, which includes SVBFG’s unfunded commitments detailed above:


Limited Partnership (Dollars in thousands)	Unfunded Commitments
SVB Strategic Investors Fund, LP	$	3,012
SVB Strategic Investors Fund II, LP		19,794
SVB Strategic Investors Fund III, LP		102,732
SVB Strategic Investors Fund IV, LP		165,202
SVB Capital Preferred Return Fund, LP		34,977
SVB Capital—NT Growth Partners, LP		45,508
Other Private Equity Fund		9,083

Total	$	380,308

13. Income Taxes

At September 30, 2010, our unrecognized tax benefit was $0.5 million, the recognition of which would reduce our income tax expense by $0.3 million. Total accrued interest and penalties at September 30, 2010 were $0.2 million. We expect that our unrecognized tax benefit will change in the next 12 months, however, we do not expect the change to have a material impact on our financial position or our results of operations.

We are subject to income tax in the U.S. federal jurisdiction and various state and foreign jurisdictions and have identified our federal tax return and tax returns in California and Massachusetts as “major” tax filings. U.S. federal tax examinations through 1998 have been concluded. The U.S. federal tax return for 2006 and subsequent years remain open to examination by the Internal Revenue Service. Our California and Massachusetts tax returns for the years 2005 and 2006, respectively, and subsequent years remain open to examination.

14. Fair Value of Financial Instruments

Fair Value Measurements

We use fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures. Our available-for-sale securities, derivative instruments and certain non-marketable investment securities are financial instruments recorded at fair value on a recurring basis.

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

Level 1

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

Assets utilizing Level 1 inputs include exchange-traded equity securities.

Level 2

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

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

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

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

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

Non-agency mortgage-backed securities: Valuations incorporate observable market spreads over an estimated average life after considering inputs such as coupon rate, tenor, geographic location, loan size and origination vintage, and estimated prepayment speeds. In the second quarter of 2010, we sold all of our remaining non-agency mortgage-backed securities.

Commercial mortgage-backed securities: Valuations of these securities are based on spreads to benchmark market interest rates (usually U.S. treasury rates or rates observable in the swaps market), prepayment speeds, loan default rate assumptions and loan loss severity assumptions on underlying loans. In the second quarter of 2010, we sold all of our remaining commercial mortgage-backed securities.

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

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

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

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

Level 3

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

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

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

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

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

For the three and nine months ended September 30, 2010 and 2009, there were no transfers between Level 1 and Level 2. Transfers from Level 3 to Level 2 during the three and nine months ended September 30, 2010 and 2009 were due to the transfer of equity warrant assets from our private portfolio to our public portfolio. Transfer from Level 3 to Level 1 during the three and nine months ended September 30, 2010 was due to the initial public offering (“IPO”) of one of our portfolio companies.

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

The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not fully available, management judgment is necessary to estimate fair value. For inactive markets,

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

The following fair value hierarchy tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2010:


(Dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of September 30, 2010
Assets
Available-for-sale securities:
U.S. treasury securities	$	—	$	26,674	$	—	$	26,674
U.S. agency debentures		—		1,721,720		—		1,721,720
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		—		1,183,866		—		1,183,866
Agency-issued collateralized mortgage obligations (fixed)		—		991,981		—		991,981
Agency-issued collateralized mortgage obligations (variable)		—		1,975,697		—		1,975,697
Municipal bonds and notes		—		102,757		—		102,757
Equity securities		503		—		—		503

Total available-for-sale securities		503		6,002,695		—		6,003,198

Non-marketable securities (investment company fair value accounting):
Private equity fund investments		—		—		365,742		365,742
Other private equity investments		—		—		84,535		84,535
Other investments		—		—		962		962

Total non-marketable securities (investment company fair value accounting)		—		—		451,239		451,239

Other assets:
Marketable securities		19,045		—		—		19,045
Interest rate swaps		—		67,257		—		67,257
Foreign exchange forward and option contracts		—		12,657		—		12,657
Equity warrant assets		—		2,804		39,765		42,569
Other derivatives		—		274		—		274
Total assets (1)	$	19,548	$	6,085,687	$	491,004	$	6,596,239

Liabilities
Foreign exchange forward and option contracts	$	—	$	13,296	$	—	$	13,296

Total liabilities	$	—	$	13,296	$	—	$	13,296

(1)	Included in Level 1, Level 2 and Level 3 assets are $16.3 million, $0.1 million and $376.1 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

The following fair value hierarchy tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2009:


(Dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2009
Assets
Available-for-sale securities:
U.S. treasury securities	$	—	$	26,047	$	—	$	26,047
U.S. agency debentures		—		891,753		—		891,753
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities		—		1,410,630		—		1,410,630
Agency-issued collateralized mortgage obligations (fixed)		—		1,372,375		—		1,372,375
Non-agency mortgage-backed securities		—		83,696		—		83,696
Commercial mortgage-backed securities		—		48,801		—		48,801
Municipal bonds and notes		—		102,877		—		102,877
Equity securities		2,009		—		—		2,009

Total available-for-sale securities		2,009		3,936,179		—		3,938,188

Non-marketable securities (investment company fair value accounting):
Private equity fund investments		—		—		271,316		271,316
Other private equity investments		—		—		96,577		96,577
Other investments		—		—		1,143		1,143

Total non-marketable securities (investment company fair value accounting)		—		—		369,036		369,036

Other assets:
Marketable securities		33		—		—		33
Interest rate swaps		—		46,895		—		46,895
Foreign exchange forward and option contracts		—		18,436		—		18,436
Equity warrant assets		—		1,173		40,119		41,292

Total assets (1)	$	2,042	$	4,002,683	$	409,155	$	4,413,880


Liabilities
Foreign exchange forward and option contracts	$	—	$	15,870	$	—	$	15,870

Total liabilities	$	—	$	15,870	$	—	$	15,870

(1)	Included in Level 3 assets are $319.9 million attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for the three and nine months ended September 30, 2010 and 2009, respectively:


			Total Realized and Unrealized Gains (Losses) Included in Income						Total Realized and Unrealized Gains (Losses) Included in Income			Purchases, Sales, Other Settlements and Issuances, net
(Dollars in thousands)	Beginning Balance		Realized Gains (Losses) Included in Income			Unrealized Gains (Losses) Included in Income									Transfers Into Level 3		Transfers Out of Level 3			Ending Balance
Three months ended September 30, 2010:
Non-marketable securities (investment company fair value accounting):
Private equity fund investments	$	322,159	$	6,616		$	6,394		$	13,010		$	30,573		$	—	$	—		$	365,742
Other private equity investments		94,980		(3,788	)		3,456			(332	)		678			—		(10,791	)		84,535
Other investments		960		—			9			9			(7	)		—		—			962

Total non-marketable securities (investment company fair value accounting) (1)		418,099		2,828			9,859			12,687			31,244			—		(10,791	)		451,239
Other assets:
Equity warrant assets (2)		38,633		3,462			(332	)		3,130			(1,980	)		—		(18	)		39,765

Total assets	$	456,732	$	6,290		$	9,527		$	15,817		$	29,264		$	—	$	(10,809	)	$	491,004

Three months ended September 30, 2009:
Non-marketable securities (investment company fair value accounting):
Private equity fund investments	$	225,892	$	3,146		$	(366	)	$	2,780		$	3,622		$	—	$	—		$	232,294
Other private equity investments		84,613		(342	)		2,825			2,483			2,872			—		—			89,968
Other investments		1,348		—			71			71			(178	)		—		—			1,241

Total non-marketable securities (investment company fair value accounting) (1)		311,853		2,804			2,530			5,334			6,316			—		—			323,503
Other assets:
Equity warrant assets (2)		41,013		1,715			(1,582	)		133			(1,143	)		—		—			40,003

Total assets	$	352,866	$	4,519		$	948		$	5,467		$	5,173		$	—	$	—		$	363,506

Nine months ended September 30, 2010:
Non-marketable securities (investment company fair value accounting):
Private equity fund investments	$	271,316	$	14,447		$	17,961		$	32,408		$	62,018		$	—	$	—		$	365,742
Other private equity investments		96,577		(4,348	)		3,242			(1,106	)		(145	)		—		(10,791	)		84,535
Other investments		1,143		—			(43	)		(43	)		(138	)		—		—			962

Total non-marketable securities (investment company fair value accounting) (1)		369,036		10,099			21,160			31,259			61,735			—		(10,791	)		451,239
Other assets:
Equity warrant assets (2)		40,119		5,099			(2,511	)		2,588			(2,548	)		—		(394	)		39,765

Total assets	$	409,155	$	15,198		$	18,649		$	33,847		$	59,187		$	—	$	(11,185	)	$	491,004

Nine months ended September 30, 2009:
Non-marketable securities (investment company fair value accounting):
Private equity fund investments	$	242,645	$	5,203		$	(37,914	)	$	(32,711	)	$	22,360		$	—	$	—		$	232,294
Other private equity investments		82,444		(1,772	)		(3,308	)		(5,080	)		12,604			—		—			89,968
Other investments		1,547		—			687			687			(993	)		—		—			1,241

Total non-marketable securities (investment company fair value accounting) (1)		326,636		3,431			(40,535	)		(37,104	)		33,971			—		—			323,503
Other assets:
Equity warrant assets (2)		41,699		1,884			(4,757	)		(2,873	)		1,388			—		(211	)		40,003

Total assets	$	368,335	$	5,315		$	(45,292	)	$	(39,977	)	$	35,359		$	—	$	(211	)	$	363,506

(1)	Realized and unrealized gains (losses) are recorded on the line items “gains (losses) on investment securities, net” and “other noninterest income”, components of noninterest income.

(2)	Realized and unrealized gains (losses) are recorded on the line item “gains (losses) on derivative instruments, net” a component of noninterest income.

The following table presents the amount of unrealized gains (losses) included in earnings attributable to Level 3 assets still held at September 30, 2010:


	Three months ended September 30, 2010			Nine months ended September 30, 2010
Non-marketable securities (investment company fair value accounting):
Private equity fund investments	$	6,394		$	17,961
Other private equity investments		(372	)		1,473
Other investments		9			(43	)

Total non-marketable securities (investment company fair value accounting) (1)		6,031			19,391
Other assets:
Equity warrant assets (2)		188			795

Total unrealized gains	$	6,219		$	20,186

(1)	Unrealized gains are recorded on the line items “gains (losses) on investment securities, net” and “other noninterest income”, components of noninterest income.

(2)	Unrealized gains are recorded on the line item “gains (losses) on derivative instruments, net” a component of noninterest income.

Financial Instruments not Carried at Fair Value

FASB issued guidance over financial instruments (ASC 825-10-65) requires that we disclose estimated fair values for our financial instruments not carried at fair value. Fair value estimates, methods and assumptions, set forth below for our financial instruments, are made solely to comply with the requirements of ASC 825.

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

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

Short-Term Financial Assets

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

Non-Marketable Securities (Cost and Equity Method Accounting)

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

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

Loans

The fair value of fixed and variable rate loans is estimated by discounting contractual cash flows using discount rates that reflect our current pricing for loans and the forward yield curve.

Deposits

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

Short-Term Borrowings

Short-term borrowings at September 30, 2010 and December 31, 2009 include cash collateral received from counterparties for our interest rate swap agreements related to our 5.70% senior and 6.05% subordinated notes. The carrying amount is a reasonable estimate of fair value.

Long-Term Debt

Long-term debt includes our 5.375% Senior Notes, 2008 Convertible Notes, junior subordinated debentures, senior and subordinated notes, and other long-term debt (see Note 8- “Short-Term Borrowings and Long-Term Debt”). The fair value of long-term debt is generally based on quoted market prices, when available, or is estimated based on calculations utilizing third-party pricing services and current market spread, price indications from reputable dealers or observable market prices of the underlying instrument(s), whichever is deemed more reliable.

Off-Balance Sheet Financial Instruments

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

Letters of credit are carried at their fair value, which is equivalent to the residual premium or fee at September 30, 2010 and December 31, 2009. Commitments to extend credit and letters of credit typically result in loans with a market interest rate if funded.

The information presented herein is based on pertinent information available to us as of September 30, 2010 and December 31, 2009. The following table is a summary of the estimated fair values of our financial instruments that are not carried at fair value at September 30, 2010 and December 31, 2009.


	September 30, 2010				December 31, 2009
(Dollars in thousands)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Non-marketable securities (cost and equity method accounting)	$	204,828	$	213,569	$	184,495	$	186,065
Net loans		4,784,836		4,835,548		4,475,644		4,499,058
Financial liabilities:
Other short-term borrowings		59,735		59,735		38,755		38,755
Deposits		12,414,945		12,414,584		10,331,937		10,331,381
5.375% senior notes		347,555		356,234		—		—
5.70% senior notes (1) (2)		268,503		282,368		269,793		273,843
6.05% subordinated notes (1) (2)		298,263		312,125		276,541		259,598
3.875% convertible senior notes		248,715		256,975		246,991		264,595
7.0% junior subordinated debentures		55,592		50,907		55,986		42,082
Other long-term debt		7,182		7,182		7,339		7,339
Off-balance sheet financial assets:
Commitments to extend credit		—		17,749		—		15,398

(1)	At September 30, 2010, included in the carrying value and estimated fair value of our 5.70% senior notes and 6.05% subordinated notes, are $18.6 million and $48.7 million, respectively related to the fair value of the interest rate swaps associated with the notes.

(2)	At December 31, 2009, included in the carrying value and estimated fair value of our 5.70% senior notes and 6.05% subordinated notes, are $19.9 million and $27.0 million, respectively related to the fair value of the interest rate swaps associated with the notes.

Investments in Entities that Calculate Net Asset Value Per Share

FASB issued guidance over certain fund investments (FASB Accounting Standards Update No. 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)) 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 private equity fund investments generally cannot be redeemed. Alternatively, we expect distributions to be received through initial public offerings (“IPOs”) and merger and acquisition (“M&A”) activity of the underlying assets of the fund. We currently do not have any plans to sell any of these fund investments. If we decide to sell these investments in the future, the investee fund’s management must approve of the buyer before the sale of the investments can be completed. The fair values of the fund investments have been estimated using the net asset value per share of the investments, adjusted for any differences between our measurement date and the date of the fund investment’s net asset value by using the most recently available financial information from the investee general partner, for example June 30th, for our September 30th interim consolidated financial statements, adjusted for any contributions paid during the third quarter, distributions received from the investment during the third quarter, or significant fund transactions or market events.

The following table is a summary of the estimated fair values of these investments and remaining unfunded commitments for each major category of these investments as of September 30, 2010:


(Dollars in thousands)	Fair Value		Unfunded Commitments
Non-marketable securities (investment company fair value accounting):
Private equity fund investments (1)	$	365,742	$	380,309
Non-marketable securities (equity method accounting):
Other investments (2)		58,896		17,414
Non-marketable securities (cost method accounting):
Private equity fund investments (3)		101,071		152,107

Total	$	525,709	$	549,830

(1)

Private equity fund investments within non-marketable securities (investment company fair value accounting) include investments made by our managed funds of funds including SVB Strategic Investors Fund, LP, SVB Strategic Investors Fund II, LP, SVB Strategic Investors Fund III, LP, SVB Strategic Investors Fund IV, LP, SVB Capital – NT Growth Partners, LP, and SVB Capital Preferred Return Fund, LP, and one of our co-investment funds, SVB Capital Partners II, LP. These investments represent investments in private equity and venture capital funds that invest primarily in U.S. and global technology and life sciences companies. Included in the fair value and unfunded commitments of fund investments under investment company fair value accounting are $297.8 million and $361.3 million, respectively, attributable to noncontrolling interests. It is estimated that we will receive distributions from the fund investments over the next 12 years, depending on the age of the funds.

(2)

Other investments within non-marketable securities (equity method accounting) include investments in debt funds and private equity and venture capital fund investments that invest in or lend money to primarily U.S. and global technology and life sciences companies. It is estimated that we will receive distributions from the fund investments over the next 10 years, depending on the age of the funds.

(3)

Private equity fund investments within non-marketable securities (cost method accounting) include investments in private equity and venture capital fund investments that invest primarily in U.S. and global technology and life sciences companies. Included in the $152.1 million is $122.9 million of unfunded commitments made by SVB Financial which may be transferred to certain new managed funds of funds (“New Fund Commitments”). These New Fund Commitments will remain the obligations of SVB Financial, and will continue to remain as such until we may later decide to transfer, sell or otherwise dispose of the investments, whether to a third party or to a new or existing fund managed by us. It is estimated that we will receive distributions from the fund investments over the next 10 years, depending on the age of the funds.

15. Legal Matters

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

16. Related Parties

SVB Financial has a commitment under a partially-syndicated revolving line of credit facility to Gold Hill Venture Lending 03, LP, a venture debt fund (“Gold Hill”), and its affiliated funds. SVB Financial has a 9.3% effective ownership interest in Gold Hill, as well as a 90.7% majority interest in its general partner, Gold Hill Venture Lending Partners 03, LLC. The line of credit is secured and bears an interest rate of prime plus one percent. In April 2010, SVB Financial decreased the revolving line of credit facility to Gold Hill from a total commitment amount of $75.0 million to $15.0 million. Of the $15.0 million, $6.2 million or 41.2% is syndicated to another lender. The highest outstanding balance under SVB Financial’s portion of the facility for the nine months ended September 30, 2010 and 2009 was $9.7 million and $37.6 million, respectively. There was no outstanding balance under the facility as of September 30, 2010. SVB Financial’s portion of the outstanding balance was $8.8 million as of December 31, 2009. The line of credit matures in May 2011.

During the nine months ended September 30, 2010, the Bank made loans to related parties, including companies with which certain of our directors are affiliated. Such loans: (a) were made in the ordinary course of business, (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and (c) did not involve more than the normal risk of collectability or present other unfavorable features.

17. Subsequent Events

We have evaluated all subsequent events and determined there are no events other than those discussed above that require disclosure.

ITEM 2.

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including in particular “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part 1, Item 2 of this report, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Management has in the past and might in the future make forward-looking statements orally to analysts, investors, the media and others. Forward-looking statements are statements that are not historical facts. Broadly speaking, forward-looking statements include, but are not limited to, the following:

•

Projections of our net interest income, noninterest income, earnings per share, noninterest expenses (including professional service, compliance, compensation and other costs), cash flows, balance sheet positions, capital expenditures, and capitalization or other financial items

•

Descriptions of our strategic initiatives, plans or objectives for future operations, including pending acquisitions

•

Forecasts of venture capital/private equity funding and investment levels

•

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

•

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

•

Descriptions of assumptions underlying or relating to any of the foregoing

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

•

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

•

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

•

The adequacy of our liquidity position, including sources of liquidity (such as funds generated through retained earnings)

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

The level of loan and deposit balances

•

The level of client investment fees and associated margins

•

The profitability of our products and services

•

Our strategic initiatives, including the expansion of operations in China, India, Israel, the United Kingdom and elsewhere

•

The expansion and growth of our noninterest income sources

•

The financial impact of continued growth of our funds management business

•

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

•

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

•

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

•

Payment upon conversion of convertible debt instruments

•

Changes in matched-terms under certain notes and associated interest rate swaps

•

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

•

The effect of application of certain accounting pronouncements

•

The effect of lawsuits and claims

•

Exceeding internal performance targets for 2010 with respect to incentive compensation expenses

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

For information with respect to factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see “Risk Factors” 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 report. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this filing are made only as of the date of this filing. We assume no obligation and do not intend to revise or update any forward-looking statements contained in this Quarterly Report on Form 10-Q.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our interim unaudited consolidated financial statements and accompanying notes as presented in Part I, Item 1 of this report and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2009 (“2009 Form 10-K”), as filed with the Securities and Exchange Commission (“SEC”) and as updated to reflect revised segment financial reporting in our Current Report on form 8-K filed on September 15, 2010.

Reclassifications

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

Management’s Overview of Third Quarter 2010 Performance

The highlights of our third quarter 2010 results included the following: (1) strong loan growth; (2) continued improvement in credit quality; (3) pre-tax gains of $23.6 million from sales of certain agency-backed available-for-sale securities; (4) continued growth in period-end deposits; and (5) continued purchases of available-for-sale securities, which has improved our net interest income.

Additional details of these highlights (compared to the third quarter of 2009, where applicable) is noted below:

•

Growth of $2.8 billion in average interest-earning available-for-sale securities to $5.3 billion, which have increased as a result of our continued deposit growth. Period-end available-for-sale securities were $6.0 billion.

•

An increase in net gains on investment securities to $46.6 million for the third quarter of 2010, compared to $3.9 million for the third quarter of 2009. Net gains on investment securities of $46.6 million for the third quarter of 2010 were attributable to the following:

•

Gains of $23.6 million from sales of certain agency-backed available-for-sale securities in the third quarter of 2010.

•

Net gains from our nonmarketable and marketable securities of $23.0 million. Net of noncontrolling interests, these gains were $6.2 million for the third quarter of 2010, compared to net losses of $1.0 million for the third quarter of 2009.

•

Period-end loans were $4.9 billion, which included the addition of 423 new loan clients during the third quarter of 2010, resulting in $534.8 million in new funded loans.

•

Provision for loan losses was $11.0 million for the third quarter of 2010, compared to $8.0 million for the third quarter of 2009. The provision for loan losses of $11.0 million for the third quarter of 2010 was caused primarily by an increase in period-end loan balances (from June 30, 2010 to September 30, 2010) and net charge-offs of $8.4 million, or 73 basis points as a percentage of average total gross loans (annualized). We consider our credit quality to be strong, and believe the size of our provision for loan losses has returned to levels that are consistent with a more normalized economic environment. Please refer to “Results of Operations – Provision for Loan Losses” below for further details on our provision for loan losses.

•

Growth in average deposit balances of $3.0 billion, or 33.8 percent, of which $1.6 billion was from noninterest-bearing demand deposits. This growth is reflective of the continued low interest rate environment and a lack of attractive market investment opportunities for our clients.

•

An increase in net interest income (fully taxable equivalent basis) of $9.5 million, primarily due to an increase in our average available-for-sale securities portfolio, as well as lower interest expense on deposits due to the low interest rate

environment. This increase was partially offset by a decrease in interest income from loans due to decreases in loan rates and a $46.0 million decrease in average loan balances compared to the comparable 2009 period.

•

A decrease of 56 basis points in our net interest margin to 3.14 percent, primarily due to significant growth of our deposits (the majority of which were invested in available-for-sale securities) and the low interest rate environment. These declines in our net interest margin were partially offset by a decrease in interest expense from deposits due to low market rates.

•

An increase of $24.4 million in noninterest expense to $104.2 million, primarily due to an increase of $16.4 million in compensation and benefits expenses. Incentive compensation and employee stock ownership plan (“ESOP”) expenses for the third quarter 2010 reflect our current expectation that we will achieve our internal performance targets for 2010 as compared to our 2009 incentive compensation levels, which were at half of target levels as we did not achieve all of our internal performance targets for 2009. In addition, salaries and wages expenses increased due to an increase in the number of average full-time equivalent (“FTE”) employees, which increased by 59 to 1,321 FTEs for the third quarter of 2010, compared to 1,262 FTEs for the third quarter of 2009.

•

In September 2010, we issued $350 million of 5.375% senior notes due in September 2020. We received net proceeds of $344.3 million after deducting underwriting discounts and commissions and other estimated expenses.

A summary of our performance for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands, except per share data and ratios)	2010			2009			% Change			2010			2009			% Change
Income Statement:
Diluted earnings per share	$	0.89		$	0.61			45.9	%	$	1.83		$	0.50			NM	%
Net income attributable to SVBFG		37,787			24,163			56.4			77,464			27,266			184.1
Net income available to common stockholders		37,787			20,608			83.4			77,464			16,630			NM
Net interest income		106,341			96,818			9.8			313,617			280,010			12.0
Net interest margin		3.14	%		3.70	%		(56	) bps		3.21	%		3.79	%		(58	) bps
Provision for loan losses	$	10,971		$	8,030			36.6	%	$	29,124		$	72,889			(60.0	)%
Noninterest income (1)		86,236			34,307			151.4			175,666			57,001			NM
Noninterest expense (2)		104,171			79,807			30.5			306,927			255,959			19.9
Balance Sheet:
Average loans, net of unearned income	$	4,498,487		$	4,544,510			(1.0	)%	$	4,243,431		$	4,811,481			(11.8	)%
Average noninterest-bearing demand deposits		6,924,973			5,373,486			28.9			6,947,666			5,050,329			37.6
Average interest-bearing deposits		4,994,248			3,536,936			41.2			4,653,117			3,376,846			37.8
Average total deposits		11,919,221			8,910,422			33.8			11,600,783			8,427,175			37.7
Ratios:
Return on average common SVBFG stockholders’ equity (annualized) (3)		11.84	%		9.94	%		19.1	%		8.56	%		2.78	%		NM	%
Return on average assets (annualized) (4)		1.02			0.84			21.4			0.72			0.33			118.2
Book value per common share (5)		30.23			25.43			18.9			30.23			25.43			18.9
Operating efficiency ratio (6)		53.95			60.61			(11.0	)		62.53			75.58			(17.3	)
Allowance for loan losses as a percentage of total period-end gross loans		1.52			1.85			(33	) bps		1.52			1.85			(33	) bps
Gross loan charge-offs as a percentage of average total gross loans (annualized)		1.08			4.03			(295	) bps		1.27			3.04			(177	) bps
Net loan charge-offs as a percentage of average total gross loans (annualized)		0.73			2.75			(202	) bps		0.85			2.58			(173	) bps
Other Statistics:
Average SVB prime lending rate		4.00	%		4.00	%		—	bps		4.00	%		4.00	%		—	bps
Average full-time equivalent employees		1,321			1,262			4.7	%		1,289			1,260			2.3	%
Period end full-time equivalent employees		1,341			1,259			6.5			1,341			1,259			6.5
Non-GAAP measures:
Non-GAAP net income available to common stockholders (7)	$	23,579		$	20,608			14.4	%	$	62,595		$	20,722			NM	%
Non-GAAP diluted earnings per common share (7)		0.55			0.61			(9.8	)		1.48			0.62			138.7
Non-GAAP operating efficiency ratio (8)		66.65	%		60.79	%		9.6			69.00	%		65.56	%		5.2
Non-GAAP noninterest income, net of noncontrolling interest (9)	$	45,042		$	29,190			54.3		$	116,566		$	88,573			31.6
Non-GAAP noninterest expense, net of noncontrolling interest (8)		101,232			76,935			31.6			297,877			242,760			22.7

Tangible common equity to tangible assets (10)		8.10	%		6.73	%		20.4			8.10	%		6.73	%		20.4
Tangible common equity to risk-weighted assets (10)		15.17			11.43			32.7			15.17			11.43			32.7

NM- Not meaningful

(1)

Noninterest income included net gains of $17.6 million and $34.4 million attributable to noncontrolling interests for the three and nine months ended September 30, 2010, respectively, compared to net gains of $5.1 million and net losses of $31.6 million for the comparable 2009 periods. See “Results of Operations – Noninterest Income” for a description of noninterest income (loss) attributable to noncontrolling interests.

(2)

Noninterest expense included $2.9 million attributable to noncontrolling interests for both of the three months ended September 30, 2010 and 2009, respectively, and $9.1 million for both of the nine months ended September 30, 2010 and 2009, respectively. See “Results of Operations – Noninterest Expense” for a description of noninterest expense attributable to noncontrolling interests.

(3)	Ratio represents annualized consolidated net income (loss) available to common stockholders divided by quarterly and year-to-date average SVB Financial Group (“SVBFG”) stockholders’ equity (excluding preferred equity).

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

(5)	Book value per common share is calculated by dividing total SVBFG stockholders’ equity (excluding preferred equity) by total outstanding common shares.

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

(7)

To supplement our unaudited condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we use certain non-GAAP measures. See “Non-GAAP Net Income and Non-GAAP Diluted Earnings Per Common Share” below for a reconciliation of these measures.

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

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

(10)	See “Capital Resources – Capital Ratios” for a reconciliation of non-GAAP tangible common equity to tangible assets and tangible common equity to risk-weighted assets.

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

We use and report non-GAAP net income and non-GAAP diluted earnings per common share, which excludes gains from the sale of certain agency and non- agency- backed available-for-sale securities during 2010 and non-cash charges relating to impairment of goodwill during 2009. We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that do not occur every reporting period. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and related trends, and when planning, forecasting and analyzing future periods. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or preferable to, financial measures prepared in accordance with GAAP.

A reconciliation of GAAP to non-GAAP net income and non-GAAP diluted earnings per common share for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,					Nine months ended September 30,
(Dollars in thousands, except share amounts)	2010			2009		2010			2009
Net income available to common stockholders	$	37,787		$	20,608	$	77,464		$	16,630
Impairment of goodwill (1)		—			—		—			4,092
Gains on sales of available-for-sale securities (2)		(23,605	)		—		(24,699	)		—
Tax impact of gains on sales of available-for-sale securities		9,397			—		9,830			—

Non-GAAP net income available to common stockholders	$	23,579		$	20,608	$	62,595		$	20,722

GAAP earnings per common share — diluted	$	0.89		$	0.61	$	1.83		$	0.50
Impact of impairment of goodwill (1)		—			—		—			0.12
Impact of gains on sales of available-for-sale securities (2)		(0.56	)		—		(0.58	)		—
Tax impact of gains on sales of available-for-sale securities		0.22			—		0.23			—

Non-GAAP earnings per common share — diluted	$	0.55		$	0.61	$	1.48		$	0.62

Weighted average diluted common shares outstanding		42,512,515			33,672,491		42,400,685			33,247,740

(1)	Non-tax deductible goodwill impairment charge for eProsper recognized in the first quarter of 2009.

(2)	Gains on the sales of $492.9 million and $157.9 million in certain agency and non-agency backed available-for-sale securities in the third quarter and second quarter of 2010, respectively.

Critical Accounting Policies and Estimates

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

There have been no significant changes during the nine months ended September 30, 2010 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 2009 Form 10-K.

Results of Operations

Net Interest Income and Margin (Fully Taxable Equivalent Basis)

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

Analysis of Changes to Net Interest Income 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.


	2010 Compared to 2009
	Three months ended September 30, Increase (decrease) due to change in									Nine months ended September 30, Increase (decrease) due to change in
(Dollars in thousands)	Volume			Rate			Total			Volume			Rate			Total
Interest income:
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities	$	267		$	85		$	352		$	1,824		$	(608	)	$	1,216
Available-for-sale securities (taxable) (1)		18,851			(8,038	)		10,813			65,184			(16,898	)		48,286
Available-for-sale securities (non-taxable) (1)		(78	)		(14	)		(92	)		(273	)		(80	)		(353	)
Loans, net of unearned income		(835	)		(1,498	)		(2,333	)		(30,719	)		5,387			(25,332	)

Increase (decrease) in interest income, net		18,205			(9,465	)		8,740			36,016			(12,199	)		23,817

Interest expense:
NOW deposits		13			—			13			23			7			30
Regular money market deposits		31			(72	)		(41	)		(12	)		(308	)		(320	)
Bonus money market deposits		682			(540	)		142			1,749			(2,565	)		(816	)
Money market deposits in foreign offices		14			(40	)		(26	)		66			(225	)		(159	)
Time deposits		77			(245	)		(168	)		(25	)		(527	)		(552	)
Sweep deposits		670			(1,608	)		(938	)		3,079			(7,200	)		(4,121	)

Total increase (decrease) in deposits expense		1,487			(2,505	)		(1,018	)		4,880			(10,818	)		(5,938	)
Short-term borrowings		5			5			10			4			4			8
5.375% senior notes		534			—			534			534			—			534
3.875% convertible senior notes		33			(5	)		28			99			(22	)		77
Junior subordinated debentures		(5	)		(57	)		(62	)		(8	)		(333	)		(341	)
Senior and subordinated notes		46			(176	)		(130	)		(50	)		(3,236	)		(3,286	)
Other long-term debt		(260	)		147			(113	)		(1,306	)		586			(720	)

Total increase (decrease) in borrowings expense		353			(86	)		267			(727	)		(3,001	)		(3,728	)

Increase (decrease) in interest expense, net		1,840			(2,591	)		(751	)		4,153			(13,819	)		(9,666	)

Increase (decrease) in net interest income	$	16,365		$	(6,874	)	$	9,491		$	31,863		$	1,620		$	33,483

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

Net Interest Income (Fully Taxable Equivalent Basis)

Three months ended September 30, 2010 and 2009

Net interest income increased by $9.5 million to $106.9 million for the three months ended September 30, 2010, compared to $97.4 million for the comparable 2009 period. Overall, we saw an increase in our net interest income primarily due to growth in our available-for-sale securities portfolio, which has increased as a result of our continued growth in deposits (growth in deposits is partly reflective of the continued low interest rate environment and the lack of attractive market investment opportunities for our clients). In addition, we saw an increase in net interest income due to lower costs of deposits as a result of the low interest rate environment.

Although our cost of funding benefited from the low interest rate environment, the low rate environment had a negative impact on the rates earned on our available-for-sale securities and loans, which partially offset the overall increase in our net interest income.

The main factors affecting interest income and interest expense for the three months ended September 30, 2010, compared to the comparable 2009 period are discussed below:

•

Interest income for the three months ended September 30, 2010 increased by $8.7 million primarily due to:

•

A $10.7 million increase in interest income on available-for-sale securities, primarily related to the growth in average balances of $2.8 billion due to new investments, which were purchased as a result of our continued deposit growth. This increase was partially offset by the re-investment of higher-yielding securities from sales and paydowns into lower-yielding securities due to the current low interest rate environment.

•

Additionally, this increase was also partially offset by a $2.3 million decrease in interest income on loans, primarily due to a decrease in loan rates reflecting the current low interest rate environment, as well as from a $46.0 million decrease in average loan balances for the three months ended September 30, 2010, compared to the comparable 2009 period.

•

Interest expense for the three months ended September 30, 2010 decreased by $0.8 million primarily due to:

•

A decrease in interest expense from interest-bearing deposits of $1.0 million, primarily due to declining market rates and our adjustment of our deposit rates throughout 2009 and the first half of 2010 to be in-line with current market rates. This decrease was partially offset by an increase in interest expense due to a $1.5 billion increase in average interest-bearing deposit balances.

•

Additionally, this decrease was also partially offset by a net increase in interest expense of $0.3 million related to our long-term debt, primarily due to the issuance of our 5.375% senior notes in September 2010. This increase in interest expense was partially offset by lower London Interbank Offered Rates (“LIBOR”) associated with interest rate swap agreements on our senior and subordinated notes.

Nine months ended September 30, 2010 and 2009

Net interest income increased by $33.5 million to $315.2 million for the nine months ended September 30, 2010, compared to $281.7 million for the comparable 2009 period. Overall, we saw an increase in our net interest income primarily due to growth in our available-for-sale securities portfolio, which has increased as a result of our continued growth in deposits (growth in deposits is reflective of the continued low interest rate environment and the lack of attractive market investment opportunities for our clients). In addition, we saw an increase in net interest income due to lower costs of deposits and LIBOR rates associated with certain interest rate swaps as a result of the low interest rate environment. Although our cost of funding benefited from the low interest rate environment, lower loan balances and higher deposit balances decreased our overall net interest income.

The main factors affecting interest income and interest expense for the nine months ended September 30, 2010, compared to the comparable 2009 period are discussed below:

•

Interest income for the nine months ended September 30, 2010 increased by $23.8 million primarily due to:

•

A $47.9 million increase in interest income on available-for-sale securities, primarily related to the growth in average balances of $2.9 billion due to new investments, which were purchased as a result of our continued deposit growth. This increase was partially offset by the re-investment of higher-yielding securities from sales and paydowns into lower yielding securities due to the current low interest rate environment.

•

This increase was partially offset by a $25.3 million decrease in interest income on loans driven principally by a $568.1 million decrease in average loan balances for the nine months ended September 30, 2010, compared to the comparable 2009 period.

•

Interest expense for the nine months ended September 30, 2010 decreased by $9.7 million primarily due to:

•

A decrease in interest expense from interest-bearing deposits of $5.9 million, primarily due to declining market rates and our adjustment of our deposit rates throughout 2009 and the first half of 2010 to be in-line with current market rates. This decrease was partially offset by a $1.3 billion increase in average interest-bearing deposits.

•

A decrease in interest expense of $3.7 million related to our long-term debt, primarily due to lower LIBOR rates associated with interest rate swap agreements on our senior and subordinated notes.

Net Interest Margin (Fully Taxable-Equivalent Basis)

Our net interest margin was 3.14 percent and 3.21 percent for the three and nine months ended September 30, 2010, respectively, compared to 3.70 percent and 3.79 percent for the comparable 2009 periods. The decreases in net interest margin were

primarily due to the significant growth of our deposits, the majority of which were invested in available-for-sale securities and cash deposited at the Federal Reserve. As such, the overall mix of our interest-earning assets shifted to a higher proportion of lower-yielding assets. Additionally, sales and paydowns of available-for-sale securities during 2010 are being re-invested in lower-yielding securities due to the current low interest rate environment. These declines in our net interest margin were partially offset by a decrease in rates paid on our deposits and borrowings due to the decrease in market rates and overall low interest rate environment.

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

The average yield earned on interest-earning assets is the amount of annualized fully taxable-equivalent interest income expressed as a percentage of average interest-earning assets. The average rate paid on funding sources is the amount of annualized interest expense expressed as a percentage of average funding sources. The following tables set forth average assets, liabilities, noncontrolling interests and SVBFG stockholders’ equity, interest income, interest expense, annualized yields and rates, and the composition of our annualized net interest margin for the three and nine months ended September 30, 2010 and 2009, respectively.

Average Balances, Rates and Yields for the Three Months Ended September 30, 2010 and 2009


	Three months ended September 30,
	2010									2009
(Dollars in thousands)	Average Balance			Interest Income/ Expense			Yield/ Rate			Average Balance			Interest Income/ Expense			Yield/ Rate
Interest-earning assets:
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1)	$	3,740,869		$	2,719			0.29	%	$	3,370,898		$	2,367			0.28	%
Available-for-sale securities: (2)
Taxable		5,181,966			32,375			2.48			2,412,432			21,562			3.55
Non-taxable (3)		96,991			1,458			5.96			102,142			1,550			6.02
Total loans, net of unearned income (4)		4,498,487			80,716			7.12			4,544,510			83,049			7.25

Total interest-earning assets		13,518,313			117,268			3.45			10,429,982			108,528			4.12

Cash and due from banks		222,458									205,084
Allowance for loan losses		(77,937	)								(114,364	)
Other assets (5)		1,092,804									889,924

Total assets	$	14,755,638								$	11,410,626

Funding sources:
Interest-bearing liabilities:
NOW deposits	$	48,284		$	47			0.39	%	$	35,092		$	34			0.38	%
Regular money market deposits		154,716			104			0.27			122,809			145			0.47
Bonus money market deposits		1,809,122			1,350			0.30			1,035,822			1,208			0.46
Money market deposits in foreign offices		79,838			64			0.32			68,589			90			0.52
Time deposits		399,444			400			0.40			346,714			568			0.65
Sweep deposits		2,502,844			1,818			0.29			1,927,910			2,756			0.57

Total interest-bearing deposits		4,994,248			3,783			0.30			3,536,936			4,801			0.54
Short-term borrowings		52,949			26			0.19			42,134			16			0.15
5.375% senior notes		41,555			534			5.10			—			—			—
3.875% convertible senior notes		248,331			3,540			5.66			246,065			3,512			5.66
Junior subordinated debentures		55,621			831			5.93			55,956			893			6.33
Senior and subordinated notes		566,948			1,637			1.15			552,171			1,767			1.27
Other long-term debt		6,392			66			4.10			58,033			179			1.22

Total interest-bearing liabilities		5,966,044			10,417			0.69			4,491,295			11,168			0.99
Portion of noninterest-bearing funding sources		7,552,269									5,938,687

Total funding sources		13,518,313			10,417			0.31			10,429,982			11,168			0.42

Noninterest-bearing funding sources:
Demand deposits		6,924,973									5,373,486
Other liabilities		197,865									183,781
SVBFG stockholders’ equity		1,265,971									1,045,340
Noncontrolling interests		400,785									316,724
Portion used to fund interest-earning assets		(7,552,269	)								(5,938,687	)

Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity	$	14,755,638								$	11,410,626

Net interest income and margin				$	106,851			3.14	%				$	97,360			3.70	%

Total deposits	$	11,919,221								$	8,910,422

Average SVBFG stockholders’ equity as a percentage of average assets								8.58	%								9.16	%

Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis					(510	)								(542	)

Net interest income, as reported				$	106,341								$	96,818

(1)

Includes average interest-bearing deposits in other financial institutions of $237.8 million and $182.7 million for the three months ended September 30, 2010 and 2009, respectively. For the three months ended September 30, 2010 and 2009, balances also include $3.4 billion and $3.1 billion, respectively, deposited at the Federal Reserve Bank, 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 investments is presented on a fully taxable-equivalent basis using the federal statutory income tax rate of 35.0 percent for all periods presented.

(4)	Nonaccrual loans are reflected in the average balances of loans.

(5)	Average investment securities of $740.1 million and $505.3 million for the three months ended September 30, 2010 and 2009, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable securities.

Average Balances, Rates and Yields for the Nine Months Ended September 30, 2010 and 2009


	Nine months ended September 30,
	2010									2009
(Dollars in thousands)	Average Balance			Interest Income/ Expense			Yield/ Rate			Average Balance			Interest Income/ Expense			Yield/ Rate
Interest-earning assets:
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities (1)	$	4,048,242		$	8,444			0.28	%	$	3,190,730		$	7,228			0.30	%
Available-for-sale securities: (2)
Taxable		4,733,666			101,493			2.87			1,837,141			53,207			3.87
Non-taxable (3)		97,796			4,413			6.03			103,839			4,766			6.14
Total loans, net of unearned income (4)		4,243,431			230,216			7.25			4,811,481			255,548			7.10

Total interest-earning assets		13,123,135			344,566			3.51			9,943,191			320,749			4.31

Cash and due from banks		229,192									241,150
Allowance for loan losses		(77,207	)								(112,857	)
Goodwill		—									1,334
Other assets (5)		1,021,019									862,354

Total assets	$	14,296,139								$	10,935,172

Funding sources:
Interest-bearing liabilities:
NOW deposits	$	50,338		$	150			0.40	%	$	42,653		$	120			0.38	%
Regular money market deposits		148,548			305			0.27			151,394			625			0.55
Bonus money market deposits		1,519,282			3,430			0.30			977,096			4,246			0.58
Money market deposits in foreign offices		74,841			183			0.33			60,767			342			0.75
Time deposits		359,278			1,367			0.51			364,024			1,919			0.70
Sweep deposits		2,500,830			5,880			0.31			1,780,912			10,001			0.75

Total interest-bearing deposits		4,653,117			11,315			0.33			3,376,846			17,253			0.68
Short-term borrowings		47,807			65			0.18			44,990			57			0.17
5.375% senior notes		14,004			534			5.10			—			—			—
3.875% convertible senior notes		247,765			10,600			5.72			245,463			10,523			5.73
Junior subordinated debentures		55,750			2,231			5.35			55,939			2,572			6.15
Senior and subordinated notes		557,405			4,463			1.07			561,064			7,749			1.85
Other long-term debt		6,897			197			3.82			79,924			917			1.53

Total interest-bearing liabilities		5,582,745			29,405			0.70			4,364,226			39,071			1.20
Portion of noninterest-bearing funding sources		7,540,390									5,578,965

Total funding sources		13,123,135			29,405			0.30			9,943,191			39,071			0.52

Noninterest-bearing funding sources:
Demand deposits		6,947,666									5,050,329
Other liabilities		176,854									183,334
SVBFG stockholders’ equity		1,210,082									1,022,701
Noncontrolling interests		378,792									314,582
Portion used to fund interest-earning assets		(7,540,390	)								(5,578,965	)

Total liabilities, noncontrolling interest, and SVBFG stockholders’ equity	$	14,296,139								$	10,935,172

Net interest income and margin				$	315,161			3.21	%				$	281,678			3.79	%

Total deposits	$	11,600,783								$	8,427,175

Average SVBFG stockholders’ equity as a percentage of average assets								8.46	%								9.35	%

Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis					(1,544	)								(1,668	)

Net interest income, as reported				$	313,617								$	280,010

(1)

Includes average interest-bearing deposits in other financial institutions of $207.9 million and $179.0 million for the nine months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, balances also include $3.8 billion and $2.9 billion, respectively, deposited at the Federal Reserve Bank, 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 investments is presented on a fully taxable-equivalent basis using the federal statutory income tax rate of 35.0 percent for all periods presented.

(4)	Nonaccrual loans are reflected in the average balances of loans.

(5)	Average investment securities of $666.1 million and $481.1 million for the nine months ended September 30, 2010 and 2009, respectively, were classified as other assets as they were noninterest-earning assets. These investments primarily consisted of non-marketable securities.

Provision for Loan Losses

Our provision for loan losses is based on our evaluation of the adequacy of the existing allowance for loan losses in relation to total gross loans using historical and other objective information, and on our periodic assessment of the inherent and identified risk dynamics of the loan portfolio resulting from reviews of selected individual loans. The following table summarizes our allowance for loan losses for the three and nine months ended September 30, 2010 and 2009, respectively:


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2010			2009			2010			2009
Allowance for loan losses, beginning balance	$	71,789		$	110,473		$	72,450		$	107,396
Provision for loan losses		10,971			8,030			29,124			72,889
Gross loan charge-offs		(12,289	)		(46,553	)		(40,602	)		(110,464	)
Loan recoveries		3,898			14,763			13,397			16,892

Allowance for loan losses, ending balance	$	74,369		$	86,713		$	74,369		$	86,713

Provision as a percentage of total gross loans (annualized)		0.89	%		0.68	%		0.79	%		2.08	%
Gross loan charge-offs as a percentage of average total gross loans (annualized)		1.08			4.03			1.27			3.04
Net loan charge-offs as a percentage of average total gross loans (annualized)		0.73			2.75			0.85			2.58
Allowance for loan losses as a percentage of period-end total gross loans		1.52			1.85			1.52			1.85
Period-end total gross loans	$	4,900,129		$	4,692,498		$	4,900,129		$	4,692,498
Average total gross loans		4,534,485			4,583,320			4,277,371			4,852,543

Our provision for loan losses was $11.0 million for the three months ended September 30, 2010, an increase of $2.9 million compared to the comparable 2009 period. Gross loan charge-offs of $12.3 million for the three months ended September 30, 2010 were primarily from our life science and software client portfolios. Gross loan charge-offs included $3.2 million of loans that were reserved for and classified as impaired loans at June 30, 2010. Loan recoveries of $3.9 million for the three months ended September 30, 2010 were primarily from our hardware, software and life science client portfolios.

Our provision for loan losses was $29.1 million for the nine months ended September 30, 2010, a decrease of $43.8 million compared to the comparable 2009 period. Gross loan charge-offs of $40.6 million for the nine months ended September 30, 2010 were primarily from our life science, software and hardware client portfolios. Gross loan charge-offs included $9.2 million of loans that were reserved for and classified as impaired loans in the period prior to the charge-off. Loan recoveries of $13.4 million for the nine months ended September 30, 2010 were primarily from our software, hardware and life science client portfolios.

Noninterest Income

A summary of noninterest income for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,								Nine months ended September 30,
(Dollars in thousands)	2010		2009			% Change			2010		2009			% Change
Gains (losses) on investment securities, net	$	46,611	$	3,905			NM	%	$	67,420	$	(37,890	)		NM	%
Foreign exchange fees		9,091		7,491			21.4			26,207		22,574			16.1
Deposit service charges		7,324		6,906			6.1			22,283		20,319			9.7
Client investment fees		4,681		5,527			(15.3	)		13,562		17,355			(21.9	)
Credit card fees		3,139		2,300			36.5			8,853		6,696			32.2
Letters of credit and standby letters of credit income		2,752		3,019			(8.8	)		7,869		8,240			(4.5	)
Gains (losses) on derivative instruments, net		1,257		(1,090	)		NM			4,565		(2,123	)		NM
Other		11,381		6,249			82.1			24,907		21,830			14.1

Total noninterest income	$	86,236	$	34,307			151.4		$	175,666	$	57,001			NM

NM- Not meaningful

Included in net income is income and expense attributable to noncontrolling interests. We recognize, as part of our investment funds management business through SVB Capital and Sponsored Debt Funds & Strategic Investments, the entire income or loss from funds where we own significantly less than 100%. We also recognize, as part of our equity valuation business through SVB Analytics, the results of eProsper, of which we own 65%. We are required under GAAP to consolidate 100% of the results of entities that we are deemed to control, even though we may own less than 100% of such entities. The relevant amounts attributable to investors other than us are reflected under “Net (Income) Loss Attributable to Noncontrolling Interests” on our statements of income. The non-GAAP tables presented below, for noninterest income and net gains (losses) on investment securities, all exclude noncontrolling interests. We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide

meaningful supplemental information regarding our performance by excluding certain items that represent income attributable to investors other than us and our subsidiaries. Additionally, for 2010, we have also excluded the gains from sales of available-for-sale securities from our non-GAAP noninterest income. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods.

However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or preferable to, financial measures prepared in accordance with GAAP.

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


	Three months ended September 30,							Nine months ended September 30,
Non-GAAP noninterest income, net of noncontrolling interests (Dollars in thousands)	2010		2009		% Change			2010		2009			% Change
GAAP noninterest income (as reported)	$	86,236	$	34,307		151.4	%	$	175,666	$	57,001			NM	%
Less: gains on sales of available-for-sale securities		23,605		—		NM			24,699		—			NM

Noninterest income excluding gains on sales of available-for-sale securities		62,631		34,307		82.6			150,967		57,001			164.8
Less: income (losses) attributable to noncontrolling interests, including carried interest		17,589		5,117		NM			34,401		(31,572	)		NM

Non-GAAP noninterest income, net of noncontrolling interests	$	45,042	$	29,190		54.3		$	116,566	$	88,573			31.6

NM- Not meaningful

Gains (Losses) on Investment Securities, Net

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

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

We experience variability in the performance of our non-marketable and marketable private equity and venture capital investments from quarter to quarter, which results in net gains (losses) on investment securities. This variability is due to a number of factors, including changes in the values of our investments, changes in the amount of distributions or liquidity events and general economic and market conditions. Such variability may lead to volatility in the gains (losses) from investment securities and as such our results for a particular period are not indicative of our performance in a future period. Throughout 2009, as a result of the economic downturn, the valuations of our investments were affected by a more challenging venture capital environment and a significant slowdown of merger and acquisition (“M&A”) activities and initial public offerings (“IPOs”) among our portfolio companies. In the first three quarters of 2010, we saw some improvement in venture capital investment levels and increased M&A and IPO activity among these portfolio companies.

The following table provides a summary of non-GAAP net gains (losses) on investment securities, net of noncontrolling interests:


	Three months ended September 30,					Nine months ended September 30,
Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests (Dollars in thousands)	2010		2009			2010		2009
GAAP net gains (losses) on investment securities	$	46,611	$	3,905		$	67,420	$	(37,890	)
Less: gains on sales of available-for-sale securities		23,605		—			24,699		—

Net gains (losses) on investment securities excluding gains on sales of available-for-sale securities		23,006		3,905			42,721		(37,890	)
Less: income (losses) attributable to noncontrolling interests, including carried interest		16,817		4,880			33,159		(32,491	)

Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests	$	6,189	$	(975	)	$	9,562	$	(5,399	)

The net gains of $46.6 million for the three months ended September 30, 2010 were due to the following:

•

Net gains of $23.6 million from our available-for-sale securities resulting from the sale of $492.9 million of securities. These securities included $304.0 million of agency-issued mortgage-backed securities and $188.9 million of fixed rate agency-issued collateralized mortgage obligations. Securities sold were comprised primarily of smaller-dollar value positions. These sales were consistent with our ongoing efforts to efficiently manage our available liquid resources and mitigate duration risk of the portfolio.

•

Net gains of $23.0 million from our non-marketable and marketable securities, primarily due to $19.5 million of unrealized gains from valuation adjustments primarily related to our managed co-investment funds and managed funds of funds. In addition, our managed funds of funds recorded realized gains of $6.5 million from distributions, which were partially offset by realized losses of $3.7 million from our managed co-investment funds primarily related to acquisitions of two portfolio companies. The $3.7 million of realized losses were reclassifications of previously recorded unrealized losses.

The net gains of $67.4 million for the nine months ended September 30, 2010 were due to the following:

•

Net gains of $42.9 million from our non-marketable and marketable securities, primarily due to $31.5 million of unrealized gains primarily from valuation adjustments related to our managed co-investment funds and managed funds of funds. In addition, our managed funds of funds recorded realized gains of $14.3 million from distributions, which were partially offset by realized losses of $4.2 million from our managed co-investment funds primarily related to acquisitions of portfolio companies. The $4.2 million of realized losses were reclassifications of previously recorded unrealized losses.

•

Net gains of $24.5 million from our available-for-sale securities resulting primarily from the sale of $650.8 million of securities. These securities included $304.0 million of agency-issued mortgage-backed securities, $188.9 million of fixed rate agency-issued collateralized mortgage obligations, non-agency residential and commercial mortgage-backed securities of $123.3 million and agency-issued collateralized mortgage obligations of $34.6 million.

The following tables provide a breakout of non-GAAP net gains (losses) on investment securities, net of noncontrolling interests, for the three and nine months ended September 30, 2010 and 2009:


	Three months ended September 30, 2010
(Dollars in thousands)	Managed Co- Investment Funds			Managed Funds Of Funds			Debt Funds		Available-For- Sale Securities		Other			Total
Unrealized gains	$	12,228		$	5,320		$	766	$	—	$	1,163		$	19,477
Realized (losses) gains		(3,676	)		6,505			761		23,605		(61	)		27,134

Total gains on investment securities, net	$	8,552		$	11,825		$	1,527	$	23,605	$	1,102		$	46,611

Less: gains on sales of available-for-sale securities		—			—			—		23,605		—			23,605
Less: income attributable to noncontrolling interests, including carried interest		6,710			10,081			26		—		—			16,817

Non-GAAP net gains on investment securities, net of noncontrolling interests	$	1,842		$	1,744		$	1,501	$	—	$	1,102		$	6,189


	Three months ended September 30, 2009
(Dollars in thousands)	Managed Co- Investment Funds			Managed Funds Of Funds			Debt Funds		Available-For- Sale Securities		Other			Total
Unrealized gains (losses)	$	2,896		$	(366	)	$	85	$	—	$	—		$	2,615
Realized (losses) gains		(342	)		3,146			657		8		(2,179	)		1,290

Total gains (losses) on investment securities, net	$	2,554		$	2,780		$	742	$	8	$	(2,179	)	$	3,905

Less: income attributable to noncontrolling interests, including carried interest		2,328			2,511			41		—		—			4,880

Non-GAAP net gains (losses) on investment securities, net of noncontrolling interests	$	226		$	269		$	701	$	8	$	(2,179	)	$	(975	)


	Nine months ended September 30, 2010
(Dollars in thousands)	Managed Co- Investment Funds			Managed Funds Of Funds			Debt Funds			Available-For- Sale Securities			Other			Total
Unrealized gains	$	13,188		$	15,839		$	661			—		$	1,798		$	31,486
Realized (losses) gains		(4,236	)		14,336			1,715			24,473			(354	)		35,934

Total gains on investment securities, net	$	8,952		$	30,175		$	2,376		$	24,473		$	1,444		$	67,420

Less: gains on sales of available-for-sale securities		—			—			—			24,699			—			24,699
Less: income (losses) attributable to noncontrolling interests, including carried interest		6,818			26,342			(1	)		—			—			33,159

Non-GAAP net gains on investment securities, net of noncontrolling interests	$	2,134		$	3,833		$	2,377		$	(226	)	$	1,444		$	9,562


	Nine months ended September 30, 2009
(Dollars in thousands)	Managed Co- Investment Funds			Managed Funds Of Funds			Debt Funds			Available-For- Sale Securities			Other			Total
Unrealized (losses) gains	$	(3,492	)	$	(37,914	)	$	1,867		$	—		$	—		$	(39,539	)
Realized (losses) gains		(1,772	)		5,203			1,780			(34	)		(3,528	)		1,649

Total (losses) gains on investment securities, net	$	(5,264	)	$	(32,711	)	$	3,647		$	(34	)	$	(3,528	)	$	(37,890	)

Less: (losses) income attributable to noncontrolling interests, including carried interest		(4,863	)		(28,425	)		797			—			—			(32,491	)

Non-GAAP net (losses) gains on investment securities, net of noncontrolling interests	$	(401	)	$	(4,286	)	$	2,850		$	(34	)	$	(3,528	)	$	(5,399	)

Foreign Exchange Fees

Foreign exchange fees were $9.1 million and $26.2 million for the three and nine months ended September 30, 2010, respectively, compared to $7.5 million and $22.6 million for the comparable 2009 periods. The increases were primarily due to improving business conditions for our clients, which has resulted in higher commissioned notional volumes. Commissioned notional volumes were $1.9 billion and $4.7 billion for the three and nine months ended September 30, 2010, respectively, compared to $1.3 billion and $3.4 billion for the comparable 2009 periods.

Deposit Service Charges

Deposit service charges were $7.3 million and $22.3 million for the three and nine months ended September 30, 2010, respectively, compared to $6.9 million and $20.3 million for the comparable 2009 periods. The increases were primarily due to a decrease in the earnings credit received by clients due to decreases in short-term market interest rates.

Client Investment Fees

Client investment fees were $4.7 million and $13.6 million for the three and nine months ended September 30, 2010, respectively, compared to $5.5 million and $17.4 million for the comparable 2009 periods. The decreases were primarily attributable to lower margins earned on certain products owing to historically low rates in the short-term fixed income markets, as well as a decrease in average client investment funds for the nine month period. The decreases in average client investment funds were primarily due to our clients’ desire to maintain short term liquidity provided by on balance sheet deposit accounts rather than invest in other options available in the current low interest rate environment. The following table summarizes average client investment funds for the three and nine months ended September 30, 2010 and 2009, respectively:


	Three months ended September 30,							Nine months ended September 30,
(Dollars in millions)	2010		2009		% Change			2010		2009		% Change
Client directed investment assets (1)	$	9,171	$	10,644		(13.8	)%	$	9,300	$	11,109		(16.3	)%
Client investment assets under management		6,803		5,477		24.2			6,215		5,574		11.5
Sweep money market funds		—		—		—			—		75		(100.0	)

Total average client investment funds (2)	$	15,974	$	16,121		(0.9	)	$	15,515	$	16,758		(7.4	)

(1)	Mutual funds and Repurchase Agreement Program assets.

(2)	Client investment funds are maintained at third-party financial institutions.

Period-end total client investment funds were $16.1 billion at September 30, 2010, compared to $15.6 billion at December 31, 2009. The increase was primarily due to an increase in client investment assets under management, mainly attributable to our success in obtaining a higher percentage of technology and life science IPO proceeds, secondary public offerings and private company financing rounds in a financing environment that showed early signs of improvement in the latter half of 2010.

Credit Card Fees

Credit card fees were $3.1 million and $8.9 million for the three and nine months ended September 30, 2010, respectively, compared to $2.3 million and $6.7 million for the comparable 2009 periods. The increases were primarily due to the addition of new clients and an increase in client activity.

Gains (Losses) on Derivative Instruments, Net

A summary of gains (losses) on derivative instruments, net, for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2010			2009			% Change			2010			2009			% Change
(Losses) gains on foreign exchange forward contracts, net:
Gains on client foreign exchange forward contracts, net (1)	$	131		$	360			(63.6	)%	$	750		$	1,304			(42.5	)%
(Losses) gains on internal foreign exchange forward contracts, net (2)		(2,698	)		(128	)		NM			680			(2,664	)		(125.5	)

Total (losses) gains on foreign exchange forward contracts, net		(2,567	)		232			NM			1,430			(1,360	)		NM
Change in fair value of interest rate swap		—			—			—						(170	)		(100.0	)
Change in fair value of other derivatives		62			—			NM			62			—			NM
Equity warrant assets: (3)
Gains (losses) on exercise, net		3,462			(506	)		NM			5,099			(338	)		NM
Change in fair value:
Cancellations and expirations		(513	)		(1,170	)		(56.2	)		(3,039	)		(3,644	)		(16.6	)
Other changes in fair value		813			354			129.7			1,013			3,389			(70.1	)

Total net gains (losses) on equity warrant assets (4)		3,762			(1,322	)		NM			3,073			(593	)		NM

Total gains (losses) on derivative instruments, net	$	1,257		$	(1,090	)		NM		$	4,565		$	(2,123	)		NM

NM-	Not meaningful

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

(2)

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

(3)	At September 30, 2010, we held warrants in 1,158 companies, compared to 1,250 companies at September 30, 2009.

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

Net gains on derivative instruments were $1.3 million for the three months ended September 30, 2010, compared to net losses of $1.1 million for the comparable 2009 period. The increase of $2.4 million was primarily attributable to the following:

•

Net gains on equity warrant assets of $3.8 million for the three months ended September 30, 2010, compared to net losses of $1.3 million for the comparable 2009 period. The net gains of $3.8 million for the three months ended September 30, 2010 were primarily driven by net gains of $3.5 million from the exercise of certain warrant positions and net gains of $0.8 million from valuation increases in our warrant portfolio, partially offset by losses of $0.5 million from warrant cancellations and expirations.

•

Net losses of $2.7 million from foreign exchange forward contracts hedging our foreign currency denominated loans in the third quarter of 2010, compared to net losses of $0.1 million for the comparable 2009 period. The net losses of $2.7 million in the third quarter of 2010 were primarily due to the weakening of the U.S. dollar against the Pound Sterling and Euro, and were partially offset by net gains of $2.9 million from revaluation of foreign currency denominated loans that are included in the line item “Other” as part of noninterest income.

Net gains on derivative instruments were $4.6 million for the nine months ended September 30, 2010, compared to net losses of $2.1 million for the comparable 2009 period. The increase of $6.7 million was primarily attributable to the following:

•

Net gains on equity warrant assets of $3.1 million for the nine months ended September 30, 2010, compared to net losses of $0.6 million for the comparable 2009 period. The net gains of $3.1 million for the nine months ended September 30, 2010 were primarily driven by net gains of $5.1 million from the exercise of certain warrant positions and net gains of $1.0 million from valuation increases in our warrant portfolio, partially offset by losses of $3.0 million from warrant cancellations and expirations.

•

Net gains from foreign exchange forward contracts hedging our foreign currency denominated loans of $0.7 million, compared to net losses of $2.7 million for the comparable 2009 period. The net gains of $0.7 million for the nine months ended September 30, 2010 were primarily due to the strengthening of the U.S. dollar against the Pound Sterling and Euro.

These gains were partially offset by net losses of $0.1 million from revaluation of foreign currency denominated loans that are included in the line item “Other” as part of noninterest income.

Other Noninterest Income

A summary of other noninterest income for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,							Nine months ended September 30,
(Dollars in thousands)	2010		2009			% Change		2010			2009		% Change
Fund management fees	$	2,702	$	2,437			10.9	$	8,098		$	7,625		6.2	%
Service-based fee income (1)		1,894		1,700			11.4		6,512			5,645		15.4
Unused commitment fees		1,352		906			49.2		3,959			2,465		60.6
Currency revaluation gains		661		275			140.4		987			383		157.7
Gains (losses) on foreign currency loans revaluation, net		2,871		(94	)		NM		(75	)		1,886		(104.0	)
Other		1,901		1,025			85.5		5,426			3,826		41.8

Total other noninterest income	$	11,381	$	6,249			82.1	$	24,907		$	21,830		14.1

NM-Not meaningful

(1)	Includes income from SVB Analytics and its subsidiary, eProsper.

Other noninterest income was $11.4 million and $24.9 million for the three and nine months ended September 30, 2010, respectively, compared to $6.2 million and $21.8 million for the comparable 2009 periods. The increase of $5.2 million for the three months ended September 30, 2010, compared to the comparable 2009 period was primarily due to revaluations of foreign currency denominated loans. Net gains from revaluation of foreign currency denominated loans of $2.9 million for the three months ended September 30, 2010 were primarily due to the weakening of the U.S. dollar against the Pound Sterling and Euro and were partially offset by net losses of $2.7 million from foreign exchange forward contracts, which we use to hedge the risk of our foreign currency denominated loans and are included in net gains (losses) on derivative instruments.

Noninterest Expense

A summary of noninterest expense for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,							Nine months ended September 30,
(Dollars in thousands)	2010		2009		% Change			2010		2009			% Change
Compensation and benefits	$	62,170	$	45,815		35.7	%	$	181,993	$	141,042			29.0	%
Professional services		12,618		12,109		4.2			37,358		35,452			5.4
Premises and equipment		5,548		5,892		(5.8	)		16,651		16,993			(2.0	)
Business development and travel		5,153		2,902		77.6			14,542		9,578			51.8
Net occupancy		5,131		4,198		22.2			14,468		13,346			8.4
FDIC assessments		2,637		2,589		1.9			13,273		13,853			(4.2	)
Correspondent bank fees		2,228		2,118		5.2			6,132		5,994			2.3
Provision for (reduction of) unfunded credit commitments		1,692		65		NM			2,561		(3,366	)		(176.1	)
Impairment of goodwill		—		—		—			—		4,092			(100.0	)
Other		6,994		4,119		69.8			19,949		18,975			5.1

Total noninterest expense	$	104,171	$	79,807		30.5		$	306,927	$	255,959			19.9

NM-	Not meaningful

We use and report non-GAAP noninterest expense and a non-GAAP operating efficiency ratio, which excludes noncontrolling interests. We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by: (i) excluding certain items that represent expense 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 requirement. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or preferable to, financial measures prepared in accordance with GAAP. The table below provides a summary of non-GAAP noninterest expense and non-GAAP operating efficiency ratio, both net of noncontrolling interests:


	Three months ended September 30,									Nine months ended September 30,
Non-GAAP operating efficiency ratio, net of noncontrolling interests (Dollars in thousands, except ratios)	2010			2009			% Change			2010			2009			% Change
GAAP noninterest expense	$	104,171		$	79,807			30.5	%	$	306,927		$	255,959			19.9	%
Less: amounts attributable to noncontrolling interests		2,939			2,872			2.3			9,050			9,107			(0.6	)
Less: impairment of goodwill		—			—			—			—			4,092			(100.0	)

Non-GAAP noninterest expense, net of noncontrolling interests	$	101,232		$	76,935			31.6		$	297,877		$	242,760			22.7

GAAP taxable equivalent net interest income	$	106,851		$	97,360			9.7		$	315,161		$	281,678			11.9
Less: (losses) attributable to noncontrolling interests		2			1			100.0			20			(29	)		(169.0	)

Non-GAAP taxable equivalent net interest income, net of noncontrolling interests		106,849			97,359			9.7			315,141			281,707			11.9
Non-GAAP noninterest income, net of noncontrolling interests (1)		45,042			29,190			54.3			116,566			88,573			31.6

Non-GAAP taxable equivalent revenue, net of noncontrolling interests	$	151,891		$	126,549			20.0		$	431,707		$	370,280			16.6

Non-GAAP operating efficiency ratio (2)		66.65	%		60.79	%		9.6			69.00	%		65.56	%		5.2

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

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

Compensation and Benefits

Compensation and benefits expense was $62.2 million for the three months ended September 30, 2010, compared to $45.8 million for the comparable 2009 period. The increase of $16.4 million was primarily due to an increase of $10.3 million in incentive compensation and ESOP expenses and an increase of $2.9 million in salaries and wages expense.

Compensation and benefits expense was $182.0 million for the nine months ended September 30, 2010, compared to $141.0 million for the comparable 2009 period. The increase of $41.0 million was primarily due to an increase of $29.0 million in incentive compensation and ESOP expenses and an increase of $4.8 million in salaries and wages expense.

Incentive compensation and ESOP expenses for the first three quarters of 2010 reflect our current expectation that we will achieve our internal performance targets for 2010 as compared to our 2009 incentive compensation levels, which were at half of target levels as we did not achieve all of our internal performance targets for 2009. In addition to lower incentive compensation levels, no ESOP expenses or company-wide merit increases were recorded in 2009. The increases in salaries and wages expense were primarily due to an increase in the average number of FTE employees, as well as from merit increases in the first quarter of 2010. Average FTE’s increased to 1,321 and 1,289 for the three and nine months ended September 30, 2010, respectively, compared to 1,262 and 1,260 for the comparable 2009 periods. This increase was to support our continued investment in growth initiatives and related infrastructure support.

Our variable compensation plans primarily consist of the Incentive Compensation Plan, Direct Drive Incentive Compensation Plan, Long-Term Cash Incentive Plan, 401(k) and ESOP Plan, Retention Program and Warrant Incentive Plan. Total costs incurred under these plans were $17.7 million and $51.9 million for the three and nine months ended September 30, 2010, respectively, compared to $8.0 million and $22.4 million for the comparable 2009 periods. These amounts are included in total compensation and benefits expense discussed above.

Business Development and Travel

Business development and travel expense was $5.2 million and $14.5 million for the three and nine months ended September 30,

2010, respectively, compared to $2.9 million and $9.6 million for the comparable 2009 periods. The increases were primarily reflective of our increased focus on global initiatives and increased activity due to improving economic and business conditions.

Federal Deposit Insurance Corporation (“FDIC”) Assessments

FDIC assessments were $2.6 million and $13.3 million for the three and nine months ended September 30, 2010, respectively, compared to $2.6 million and $13.9 million for the comparable 2009 periods. The decrease for the nine month period was primarily due to a special assessment fee of $5.0 million in the second quarter of 2009, partially offset by an increase in average deposit balances and an increase in FDIC assessment rates in 2010. Our FDIC assessment expense for future periods may be impacted by requirements adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which includes, among other things, the extension of unlimited deposit insurance coverage on non-interest bearing demand accounts for two years beginning December 31, 2010 for all insured depository institutions.

Provision for (Reduction of) Unfunded Credit Commitments

We calculate changes to our provision for unfunded credit commitments based on the credit commitments outstanding, as well as the credit quality of our loan commitments. We recorded a provision for unfunded credit commitments of $1.7 million for the three months ended September 30, 2010, compared to a provision of $0.1 million for the comparable 2009 period. The provision for unfunded credit commitments of $1.7 million for the three months ended September 30, 2010 is a function of the increase in our total unfunded credit commitments balance, the composition of commitments and the application of our reserve methodology to our unfunded loan portfolio. Total unfunded credit commitments balance increased to $5.9 billion as of September 30, 2010, compared to $5.3 billion as of June 30, 2010.

We recorded a provision for unfunded credit commitments of $2.6 million for the nine months ended September 30, 2010, compared to a reduction of provision of $3.4 million for the comparable 2009 period. The provision for unfunded credit commitments of $2.6 million for the nine months ended September 30, 2010 is a function of the increase in our total unfunded credit commitments balance, the composition of commitments and the application of the reserve methodology to our unfunded loan portfolio. Total unfunded credit commitments balance increased to $5.9 billion as of September 30, 2010, compared to $5.3 billion as of December 31, 2009.

Impairment of Goodwill

There was no goodwill on our balance sheet as of September 30, 2010. We recognized a non-cash non-tax deductible goodwill impairment charge of $4.1 million in the first quarter of 2009 related to eProsper, which represented 100% of the remaining goodwill.

Other Noninterest Expense

A summary of other noninterest expense for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,							Nine months ended September 30,
(Dollars in thousands)	2010		2009		% Change			2010		2009		% Change
Telephone	$	1,208	$	325		NM	%	$	3,438	$	3,042		13.0	%
Tax credit fund amortization		1,050		1,165		(9.9	)		3,107		3,458		(10.2	)
Client services		651		670		(2.8	)		2,006		1,402		43.1
Postage and supplies		571		165		NM			1,645		2,328		(29.3	)
Dues and publications		444		325		36.6			1,093		1,266		(13.7	)
Other		3,070		1,469		109.0			8,660		7,479		15.8

Total other noninterest expense	$	6,994	$	4,119		69.8		$	19,949	$	18,975		5.1

NM-	Not meaningful

Net (Income) Loss Attributable to Noncontrolling Interests

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

In the table below, noninterest (income) loss consists of investment gains and losses from our consolidated funds, currency revaluation gains (losses) from our managed funds and gains or losses recognized from the exercise of warrants held by one of our sponsored debt funds. Noninterest expense is primarily related to management fees paid by our managed funds to the Company’s subsidiaries as the general partner and to one of our consolidated sponsored debt funds for management of the funds. A summary of net (income) loss attributable to noncontrolling interests for the three and nine months ended September 30, 2010 and 2009, respectively, is as follows:


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2010			2009			% Change			2010			2009			% Change
Net interest (income) loss (1)	$	(2	)	$	(1	)		100.0	%	$	(20	)	$	29			(169.0	)%
Noninterest (income) loss (1)		(17,922	)		(5,114	)		NM			(35,668	)		32,946			NM
Noninterest expense (1)		2,939			2,872			2.3			9,050			9,107			(0.6	)
Carried interest (2)		333			(3	)		NM			1,267			(1,374	)		(192.2	)

Net (income) loss attributable to noncontrolling interests	$	(14,652	)	$	(2,246	)		NM		$	(25,371	)	$	40,708			(162.3	)

NM-	Not meaningful

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

(2)

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

Income Taxes

Our effective tax expense rate was 39.8 percent for the three months ended September 30, 2010, compared to 41.1 percent for the comparable 2009 period. The decrease in the tax rate was primarily attributable to the effect of lower non-deductible expenses as a percentage of pre-tax income in the third quarter of 2010.

Our effective tax expense rate was 39.4 percent for the nine months ended September 30, 2010, compared to 44.2 percent for the comparable 2009 period. The decrease in the tax rate was primarily attributable to the effect of lower non-deductible expenses as a percentage of pre-tax income for the nine months ended September 30, 2010, and the effect of the $4.1 million goodwill impairment charge associated with eProsper in the first quarter of 2009.

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

Operating Segment Results

We have four operating segments for which we report our financial information: Global Commercial Bank, Relationship Management, SVB Capital and Other Business Services.

In accordance with ASC 280, we report segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reporting segments. Please refer to Note 11-”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 segment information for the three and nine months ended September 30, 2010 and 2009, respectively.

Global Commercial Bank


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2010			2009			% Change			2010			2009			% Change
Net interest income	$	84,775		$	88,596			(4.3	)%	$	253,044		$	273,957			(7.6	)%
Provision for loan losses		(8,376	)		(3,153	)		165.7			(25,856	)		(60,862	)		(57.5	)
Noninterest income		31,399			27,025			16.2			89,123			80,686			10.5
Noninterest expense		(58,706	)		(42,715	)		37.4			(171,037	)		(131,636	)		29.9

Income before income tax expense	$	49,092		$	69,753			(29.6	)	$	145,274		$	162,145			(10.4	)

Total average loans, net of unearned income	$	3,485,505		$	3,576,973			(2.6	)	$	3,280,358		$	3,822,200			(14.2	)
Total average assets		3,749,453			3,697,379			1.4			3,551,018			3,932,869			(9.7	)
Total average deposits		11,762,637			8,757,704			34.3			11,420,631			8,265,536			38.2

Three months ended September 30, 2010 compared to the three months ended September 30, 2009

Net interest income from our Global Commercial Bank (“GCB”) decreased by $3.8 million for the three months ended September 30, 2010, primarily due to (1) a decrease in the FTP earned for deposits due to decreases in market interest rates and (2) a decrease in interest income resulting from a decrease of $91.5 million in average loan balances. These decreases were partially offset by an increase in the FTP earned for deposits due to significant deposit growth.

The provision for loan losses for GCB was $8.4 million for the three months ended September 30, 2010, an increase of $5.2 million compared to the comparable 2009 period. The provision for loan losses of $8.4 million for the three months ended September 30, 2010 was primarily attributable to increases in period-end loan balances, as well as net charge-offs primarily from our life science and software client portfolios.

Noninterest income increased by $4.4 million for the three months ended September 30, 2010, primarily due to an increase in foreign exchange fees and credit card fees. The increase in foreign exchange fees was primarily due to improving business conditions for our clients, which has resulted in higher commissioned notional volumes. Commissioned notional volumes increased to $1.9 billion for the three months ended September 30, 2010, compared to $1.3 billion for the comparable 2009 period. The increase in credit card fees was primarily due to the addition of new clients and an increase in client activity.

Noninterest expense increased by $16.0 million for the three months ended September 30, 2010, primarily due to an increase in compensation and benefits expense of $15.3 million. The increase in compensation and benefits expense was attributable to an increase in incentive compensation, ESOP, and salaries and wages expenses. Incentive compensation and ESOP expenses for the third quarter 2010 reflect our current expectation that we will achieve our internal performance targets for 2010 as compared to our 2009 incentive compensation levels, which were at half of target levels as we did not achieve all of our internal performance targets for 2009. The increase in salaries and wages was primarily due to the increase in the average number of FTE employees at GCB, which increased to 860 for the three months ended September 30, 2010, compared to 811 for the comparable 2009 period. The increase in average FTE’s was attributable to increases in positions for product development, operational, sales and advisory, as well as to support our global commercial banking operations and initiatives.

Nine months ended September 30, 2010 compared to the nine months ended September 30, 2009

Net interest income from our GCB decreased by $20.9 million for the nine months ended September 30, 2010, primarily due to a decrease in interest income resulting from a decrease in average loan balances, which decreased by $541.8 million to $3.3 billion, and a decrease in the FTP earned for deposits due to decreases in market interest rates. These decreases were partially offset by an increase in the FTP earned for deposits due to significant deposit growth.

The provision for loan losses for GCB was $25.9 million for the nine months ended September 30, 2010, a decrease of $35.0 million compared to the comparable 2009 period. The provision for loan losses of $25.9 million for the nine months ended September 30, 2010 was primarily attributable to gross charge-offs from our life science, hardware and software client portfolios, partially offset by loan recoveries primarily from our software and life science client portfolios. The higher provision for loan losses for the nine months ended September 30, 2009 was primarily due to higher net charge-offs primarily from our software, venture capital/private equity and hardware industry portfolios.

Noninterest income increased by $8.4 million for the nine months ended September 30, 2010, primarily due to an increase in foreign exchange fees, credit card fees, and deposit service charges, partially offset by a decrease in client investment fees. The increase in foreign exchange fees was primarily due to improving business conditions for our clients, which has resulted in higher commissioned notional volumes. Commissioned notional volumes increased to $4.7 billion for the nine months ended September 30, 2010, compared to $3.4 billion for the comparable 2009 period. The increase in credit card fees was primarily due to the addition of new clients and an increase in client activity. The increase in deposit service charges was primarily due to a decrease in the earnings credit received by clients due to decreases in short-term market interest rates. The decrease in client investment fees was primarily attributable to lower margins earned on certain products owing to historically low rates in the short-term fixed income markets, as well as a decrease in average balances of client investment funds.

Noninterest expense increased by $39.4 million for the nine months ended September 30, 2010, primarily due to an increase in compensation and benefits expense of $35.7 million. The increase in compensation and benefits expense was attributable to an increase in incentive compensation, ESOP, and salaries and wages expenses. Incentive compensation and ESOP expenses for the first nine months of 2010 reflect our current expectation that we will achieve our internal performance targets for 2010 as compared to our 2009 incentive compensation levels, which were at half of target levels as we did not achieve all of our internal performance targets for 2009. The increase in salaries and wages was primarily due to the increase in the average number of FTE employees at GCB, which increased to 838 for the nine months ended September 30, 2010, compared to 803 for the comparable 2009 period, as well as from merit increases in the first quarter of 2010.

Relationship Management


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2010			2009			% Change			2010			2009			% Change
Net interest income	$	8,543		$	8,582			(0.5	)%	$	25,017		$	25,897			(3.4	)%
Provision for loan losses		(2,639	)		(4,855	)		(45.6	)		(3,206	)		(11,979	)		(73.2	)
Noninterest income		360			333			8.1			1,047			944			10.9
Noninterest expense		(4,785	)		(2,972	)		61.0			(14,452	)		(9,858	)		46.6

Income before income tax expense	$	1,479		$	1,088			35.9		$	8,406		$	5,004			68.0

Total average loans, net of unearned income	$	982,614		$	945,694			3.9		$	943,969		$	966,939			(2.4	)
Total average assets		982,881			946,811			3.8			945,024			968,384			(2.4	)
Total average deposits		176,734			146,367			20.7			193,030			155,679			24.0

Three months ended September 30, 2010 compared to the three months ended September 30, 2009

The provision for loan losses for Relationship Management was $2.6 million for the three months ended September 30, 2010, a decrease of $2.2 million compared to the comparable 2009 period. The decrease was primarily due to a decrease in gross charge-offs in the third quarter of 2010 compared to the comparable 2009 period.

Noninterest expense increased by $1.8 million for the three months ended September 30, 2010, primarily due to an increase in compensation and benefits expense of $1.4 million attributable to an increase in incentive compensation expenses.

Nine months ended September 30, 2010 compared to the nine months ended September 30, 2009

Net interest income decreased by $0.9 million for the nine months ended September 30, 2010, primarily due to a decrease in interest income resulting from a decrease in average loan balances, particularly loans to targeted high-net-worth individuals, and a decrease in the FTP earned for deposits due to decreases in market interest rates. These decreases were partially offset by an increase in the FTP earned for deposits due to deposit growth.

The provision for loan losses for Relationship Management was $3.2 million for the nine months ended September 30, 2010, a decrease of $8.8 million compared to the comparable 2009 period. The decrease was primarily due to a decrease in gross charge-offs for the nine months ended September 30, 2010 compared to the comparable 2009 period.

Noninterest expense increased by $4.6 million for the nine months ended September 30, 2010, primarily due to an increase in compensation and benefits expense of $3.8 million attributable to an increase in incentive compensation expenses.

SVB Capital


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2010			2009			% Change			2010			2009			% Change
Net interest loss	$	—		$	(10	)		(100.0	)%	$	(1	)	$	(13	)		(92.3	)%
Noninterest income		6,418			3,014			112.9			14,270			3,015			NM
Noninterest expense		(2,752	)		(3,355	)		(18.0	)		(9,654	)		(9,991	)		(3.4	)

Income (loss) before income tax expense	$	3,666		$	(351	)		NM		$	4,615		$	(6,989	)		(166.0	)

Total average assets	$	119,055		$	96,077			23.9		$	108,449		$	91,412			18.6

NM-	Not meaningful

SVB Capital’s components of noninterest income primarily include net gains and losses on marketable and non-marketable securities, preferred allocations and fund management fees, all net of noncontrolling interests. When we refer to net gains and losses on marketable and non-marketable securities in the discussion below, we are referring to net gains and losses from marketable and non-marketable securities and preferred allocations, 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’ investments, changes in the amount of distributions and general economic and market conditions. Such variability may lead to volatility in the gains and losses from investment securities and cause our results to differ from period to period. Results for a particular period may not to be indicative of future performance. In 2009, the valuation of our consolidated investment funds was affected by a more challenging venture capital environment and a significant slowdown of M&A activities and IPOs. The net gains for the three and nine months ended September 30, 2010 were primarily due to an increase in valuations for private companies and increased IPO and M&A activities during 2010. As a result, we saw higher unrealized gains in the three and nine months ended September 30, 2010, compared to the comparable 2009 periods.

Three months ended September 30, 2010 compared to the three months ended September 30, 2009

Noninterest income increased by $3.4 million to $6.4 million for the three months ended September 30, 2010, primarily due to net gains on investment securities for the three months ended September 30, 2010. SVB Capital’s components of noninterest income primarily include the following:

•

Net gains on investment securities of $3.6 million for the three months ended September 30, 2010, compared to net gains of $0.4 million for the comparable 2009 period. The net gains on investment securities of $3.6 million for the three months ended September 30, 2010 were primarily related to net gains of $1.9 million from five of our managed funds of funds attributable to unrealized valuation gains and realized gains from distributions, as well as net gains of $1.8 million from valuation adjustments and carried interest from one of our managed co-investment funds.

•

We received fund management fees of $2.7 million for the three months ended September 30, 2010, compared to $2.4 million for the comparable 2009 period. The increase in fund management fees was primarily due to additional management fees associated with closing transactions of two funds in the third quarter of 2009 and one fund in the third quarter of 2010 in the SVB Preferred Return Funds family. Typically, a fund of funds is formed through multiple closing transactions in which limited partners enter into investment commitments.

Noninterest expense decreased by $0.6 million for the three months ended September 30, 2010, primarily due to a decrease in professional services expense. This decrease was primarily attributable to higher legal costs in 2009 relating to newly formed funds.

Nine months ended September 30, 2010 compared to the nine months ended September 30, 2009

Noninterest income increased by $11.3 million to $14.3 million for the nine months ended September 30, 2010, primarily due to higher net gains on investment securities for the nine months ended September 30, 2010. SVB Capital’s components of noninterest income primarily include the following:

•

Net gains on investment securities of $6.0 million for the nine months ended September 30, 2010, compared to net losses of $4.7 million for the comparable 2009 period. The net gains on investment securities of $6.0 million for the nine months ended September 30, 2010 were primarily related to net gains of $4.0 million from five of our managed funds of funds attributable to unrealized valuation gains and realized gains from distributions, as well as net gains of $2.2 million from valuation adjustments and carried interest from one of our managed co-investment funds.

•

We received fund management fees of $8.1 million for the nine months ended September 30, 2010, compared to $7.6 million for the comparable 2009 period.

Other Business Services

Our Other Business Services group is comprised of SVB Analytics, as well as our Sponsored Debt Funds & Strategic Investments.


	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2010			2009			% Change			2010			2009			% Change
Net interest loss	$	(16	)	$	(76	)		(78.9	)%	$	(108	)	$	(156	)		(30.8	)%
Noninterest income		2,995			41			NM			8,643			4,399			96.5
Noninterest expense		(3,559	)		(2,806	)		26.8			(10,853	)		(13,055	)		(16.9	)

Loss before income tax expense	$	(580	)	$	(2,841	)		(79.6	)	$	(2,318	)	$	(8,812	)		(73.7	)

Total average assets	$	89,362		$	87,396			2.2		$	91,481		$	79,244			15.4

NM-	Not meaningful

Included in noninterest income are net gains and losses on investment securities, net of noncontrolling interests and carried interest, from our sponsored debt funds and strategic investments. When we refer to net gains and losses on investment securities in the discussion below, we are referring to net gains and losses from investment securities, net of noncontrolling interests and carried interest.

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

A summary of noninterest income for SVB Analytics and Sponsored Debt Funds & Strategic Investments is as follows:


	Three months ended September 30,								Nine months ended September 30,
(Dollars in thousands)	2010		2009			% Change			2010		2009			% Change
SVB Analytics	$	1,590	$	1,490			6.7	%	$	5,724	$	5,032			13.8	%
Sponsored Debt Funds & Strategic Investments		1,405		(1,449	)		(197.0	)		2,919		(633	)		NM

Total noninterest income	$	2,995	$	41			NM		$	8,643	$	4,399			96.5

NM-	Not meaningful

Three months ended September 30, 2010 compared to the three months ended September 30, 2009

Noninterest income increased by $3.0 million, primarily due to the following:

•

Net gains on investment securities of $1.3 million for the three months ended September 30, 2010, compared to net losses of $1.4 million for the comparable 2009 period. Net gains on investment securities of $1.3 million for the three months ended September 30, 2010 were due to net gains of $1.5 million primarily from three of our debt fund investments mainly attributable to unrealized valuation gains and realized gains from distributions and net gains of $0.2 million from distributions from certain strategic venture capital fund investments. These gains were partially offset by net losses of $0.5 million due to other-than-temporary impairment of certain strategic venture capital investments.

Noninterest expense increased by $0.8 million for the three months ended September 30, 2010, primarily due to an increase in compensation and benefits expense at SVB Analytics attributable to an increase in incentive compensation and ESOP expenses.

Nine months ended September 30, 2010 compared to the nine months ended September 30, 2009

Noninterest income increased by $4.2 million, primarily due to net gains on investment securities from our Sponsored Debt Funds & Strategic Investments, as well as an increase in SVB Analytics’ revenues. Other Business Services’ components of noninterest income primarily include the following:

•

Net gains on investment securities of $2.2 million for the nine months ended September 30, 2010, compared to net losses of $0.7 million for the comparable 2009 period. The net gains on investment securities of $2.2 million for the nine months ended September 30, 2010 were due to net gains of $2.4 million primarily from three of our debt fund investments attributable to unrealized valuation gains and realized gains from distributions, net gains of $0.7 million from distributions from certain strategic venture capital fund investments, and net gains of $0.5 million from one of our direct equity investments in a privately held company. These gains were partially offset by net losses of $1.5 million due to other-than-temporary impairment of certain strategic venture capital investments.

•

Net gains from currency revaluation adjustments of $0.6 million for the nine months ended September 30, 2010 related to one of our debt funds.

•

An increase in SVB Analytics’ revenues to $5.7 million for the nine months ended September 30, 2010, compared to $5.0 million for the comparable 2009 period, primarily as a result of an increase in the number of valuations performed for clients, partially offset by a reduction in the average fee earned per valuation.

Noninterest expense decreased by $2.2 million for the nine months ended September 30, 2010, primarily due to a non-tax deductible charge of $4.1 million related to impairment of goodwill recognized in the first quarter of 2009 resulting from changes in our outlook for eProsper’s future financial performance. This decrease was partially offset by an increase in compensation and benefits expense at SVB Analytics, attributable to an increase in incentive compensation and ESOP expenses, as well as an increase in salaries and wages expense as a result of merit increases in the first quarter of 2010.

Consolidated Financial Condition

Our total assets were $15.7 billion at September 30, 2010, an increase of $2.9 billion, or 21.9 percent, compared to $12.8 billion at December 31, 2009. The increase was primarily due to increases in available-for-sale securities due to our deposit growth.

Cash and Due from Banks

Cash and due from banks totaled $3.4 billion at September 30, 2010, a decrease of $67.4 million, or 2.0 percent, compared to $3.5 billion at December 31, 2009. The decrease was primarily due to the investment of excess cash previously held at the Federal Reserve Bank into available-for-sale securities, partially offset by increases in cash from deposit growth. As of September 30, 2010 and December 31, 2009, $2.9 billion and $3.1 billion, respectively, of our cash and due from banks was deposited at the Federal Reserve Bank and was earning interest at the Federal Funds target rate, and interest-earning deposits in other financial institutions were $261.0 million and $171.6 million, respectively.

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

Federal funds sold, securities purchased under agreements to resell and other short-term investments were $391.2 million at September 30, 2010, an increase of $333.0 million compared to $58.2 million at December 31, 2009. The increase was primarily due to the investment of net proceeds of $344.3 million from our issuance of 5.375% senior notes in September 2010. These proceeds were invested in short-term agency discount notes.

Investment Securities

Investment securities totaled $6.7 billion at September 30, 2010, an increase of $2.2 billion, or 48.3 percent, compared to $4.5 billion at December 31, 2009. The increase was primarily related to purchases of variable rate agency-issued collateralized mortgage obligations and U.S. agency debentures, which were purchased with the excess cash from our continued deposit growth.

Available-for-Sale Securities

Our available-for-sale portfolio is managed to maximize portfolio yield over the long-term in a manner consistent with our liquidity, credit diversification, and asset/liability strategies. Available-for-sale securities were $6.0 billion at September 30, 2010, an increase of $2.1 billion, or 52.4 percent, compared to $3.9 billion at December 31, 2009. The increase was primarily due to a $2.0 billion increase in variable rate agency-issued collateralized mortgage obligations and an $830.0 million increase in U.S. agency debentures, partially offset by a $380.4 million decrease in fixed rate agency-issued collateralized mortgage obligations and a $226.8 million decrease in agency-issued mortgage-backed securities.

Portfolio duration is a standard measure used to approximate changes in the market value of fixed income instruments due to a change in market interest rates. The measure is an estimate based on the level of current market interest rates, expectations for changes in the path of forward rates and the effect of forward rates on mortgage prepayment speed assumptions and will fluctuate with changes in market interest rates. Changes in portfolio duration are also impacted by changes in the mix of longer versus shorter term-to-maturity securities. At September 30, 2010, estimated portfolio duration was 1.1 years, compared to 2.3 years at December 31, 2009. The decrease is due, in part to the purchase of $2.0 billion in variable-rate agency issued collateralized mortgage obligations during the second and third quarters of 2010. The decrease in long-term market rates through the third quarter of 2010 also had a substantial impact on the duration of fixed-rate mortgage securities and callable notes. A general decrease in market interest rates increases the likelihood that mortgage prepayments will increase and that callable notes will, in fact, be called. The result of the interest rate effect is a contraction in portfolio duration.

Non-Marketable Securities

Non-marketable securities primarily represent investments managed by SVB Capital and investments in Sponsored Debt Funds & Strategic Investments as part of our investment funds management business and include funds of funds, co-investment funds and debt funds, as well as direct equity investments in portfolio companies and fund investments. Included in our non-marketable securities carried under investment company fair value accounting are amounts that are attributable to noncontrolling interests. We are required under GAAP to consolidate 100% of these investments that we are deemed to control, even though we may own less than 100% of such entities. Non-marketable securities of $656.1 million ($280.1 million net of noncontrolling interests) as of September 30, 2010, increased by $102.6 million or 18.5 percent, from $553.5 million ($233.0 million net of noncontrolling interests) as of December 31, 2009. The increase was primarily attributable to additional capital calls for fund investments, as well as from unrealized gains from our non-marketable securities.

Loans

Loans, net of unearned income were $4.9 billion at September 30, 2010, an increase of $311.1 million, or 6.8 percent, compared to $4.5 billion at December 31, 2009. Unearned income was $40.9 million at September 30, 2010, compared to $34.9 million at December 31, 2009. The majority of our loans are commercial in nature. Total gross loans were $4.9 billion at September 30, 2010, an increase of $317.2 million, or 6.9 percent, compared to $4.6 billion at December 31, 2009. The increase was primarily due to increases in loans to software industry clients. The breakdown of total gross loans and total loans as a percentage of gross loans by category is as follows:


	September 30, 2010					December 31, 2009
(Dollars in thousands)	Amount		Percentage			Amount		Percentage
Commercial loans:
Software	$	1,618,840		33.0	%	$	1,394,848		30.4	%
Hardware		546,121		11.2			556,807		12.2
Clean Technology		147,701		3.0			72,233		1.6
Venture Capital/Private Equity		754,696		15.4			936,693		20.4
Life Science		607,771		12.4			519,791		11.4
Premium Wine		145,719		3.0			143,114		3.1
All other sectors		228,002		4.7			160,179		3.5

Commercial loans (1)		4,048,850		82.7			3,783,665		82.6

Real estate secured loans:
Premium Wine		320,958		6.5			298,947		6.5
Consumer loans		297,348		6.1			241,284		5.3

Real estate secured loans		618,306		12.6			540,231		11.8

Construction loans		50,203		1.0			60,336		1.3
Consumer loans		182,770		3.7			198,734		4.3

Total gross loans	$	4,900,129		100.0	%	$	4,582,966		100.0	%

(1)	Included within our commercial loans portfolio are business credit card loans to commercial clients. At September 30, 2010 and December 31, 2009, our business credit card loans portfolio totaled $32.9 million and $24.6 million, respectively.

The following table provides a summary of loans by size and category. The breakout of the categories is based on total client balances (individually or in the aggregate) as of September 30, 2010:


	September 30, 2010
(Dollars in thousands)	Less than Five Million		Five to Ten Million		Ten to Twenty Million		Twenty to Thirty Million		Thirty Million or More		Total
Commercial loans:
Software	$	700,572	$	238,312	$	333,807	$	286,149	$	60,000	$	1,618,840
Hardware		262,933		120,794		107,143		20,917		34,334		546,121
Clean Technology		45,436		19,416		42,849		—		40,000		147,701
Venture Capital/Private Equity		202,233		157,128		88,135		140,403		166,797		754,696
Life Science		231,053		92,144		115,089		20,000		149,485		607,771
Premium Wine (1)		65,421		19,782		47,544		12,972		—		145,719
All other sectors		70,984		12,312		86,784		—		57,922		228,002

Commercial loans		1,578,632		659,888		821,351		480,441		508,538		4,048,850

Real estate secured loans:
Premium Wine (1)		106,037		89,745		64,326		60,850		—		320,958
Consumer loans (2)		208,614		41,908		26,775		20,051		—		297,348

Real estate secured loans		314,651		131,653		91,101		80,901		—		618,306

Construction loans		16,204		21,523		12,476		—		—		50,203
Consumer loans (2)		82,474		24,013		36,283		—		40,000		182,770

Total gross loans	$	1,991,961	$	837,077	$	961,211	$	561,342	$	548,538	$	4,900,129

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

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

At September 30, 2010, gross loans (individually or in the aggregate) totaling $1.1 billion, or 22.7 percent of our portfolio, were equal to or greater than $20 million to any single client. These loans represented 36 clients, and of these loans, $20.1 million were on nonaccrual status as of September 30, 2010.

The following table provides a summary of loans by size and category. The breakout of the categories is based on total client balances (individually or in the aggregate) as of December 31, 2009:


	December 31, 2009
(Dollars in thousands)	Less than Five Million		Five to Ten Million		Ten to Twenty Million		Twenty to Thirty Million		Thirty Million or More		Total
Commercial loans:
Software	$	701,055	$	171,299	$	281,376	$	173,901	$	67,217	$	1,394,848
Hardware		269,009		86,736		86,222		71,577		43,263		556,807
Clean Technology		27,926		—		24,193		20,114		—		72,233
Venture Capital/Private Equity		238,869		149,289		176,807		136,305		235,423		936,693
Life Science		285,646		84,781		103,697		45,667		—		519,791
Premium Wine (1)		70,809		18,729		38,661		14,915		—		143,114
All other sectors		74,401		18,765		46,888		20,125		—		160,179

Commercial loans		1,667,715		529,599		757,844		482,604		345,903		3,783,665

Real estate secured loans:
Premium Wine (1)		98,244		82,202		56,630		61,871		—		298,947
Consumer loans (2)		152,786		48,434		—		20,207		19,857		241,284

Real estate secured loans		251,030		130,636		56,630		82,078		19,857		540,231

Construction loans		20,358		18,212		21,766		—		—		60,336
Consumer loans (2)		108,263		33,356		10,000		—		47,115		198,734

Total gross loans	$	2,047,366	$	711,803	$	846,240	$	564,682	$	412,875	$	4,582,966

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

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

At December 31, 2009, gross loans (individually or in the aggregate) totaling $977.6 million, or 21.3 percent of our portfolio, were equal to or greater than $20 million to any single client. These loans represented 33 clients, and of these loans $20.4 million were on nonaccrual status as of December 31, 2009.

The credit profile of our clients varies across our loan portfolio, based on the nature of the lending we do for different market segments. Clients across all industry segments and loan categories have been affected by the weakened economic environment in recent periods. Our technology and life sciences loan portfolio includes loans to clients at all stages of their life cycles, beginning with the early-stage, venture-backed companies. Loans provided to early-stage, venture-backed company clients represent a relatively small percentage of our portfolio at approximately 10 percent of total gross loans at September 30, 2010, compared to 11 percent at December 31, 2009. Typically these loans are made to companies with modest or negative cash flows and no established record of profitable operations. Repayment of these loans may be dependent upon receipt by borrowers of additional equity financing from venture capitalists or others, or in some cases, a successful sale to a third party or a public offering. Although we continued to see signs of improvement in the third quarter of 2010, venture capital financing activity as well as IPOs and M&A activities has slowed significantly in recent periods, owing to a weakened economic environment. Venture capital firms may provide financing at lower levels, more selectively or on less favorable terms, which may have an adverse effect on our borrowers that are otherwise dependent on such financing to repay their loans to us. When repayment is dependent upon the next round of venture investment and there is an indication that further investment is unlikely or will not occur, it is often likely the company would need to be sold to repay debt in full. If reasonable efforts have not yielded a likely buyer willing to repay all debt at the close of the sale or on commercially viable terms, the account will most likely be deemed to be impaired.

At September 30, 2010, our lending to venture capital/private equity firms represented 15.4 percent of total gross loans, compared to 20.4 percent of total gross loans at December 31, 2009. Many of these clients have capital call lines of credit, the repayment of which is dependent on the payment of capital calls by the underlying limited partner investors in the funds managed by these firms.

At September 30, 2010, our asset-based lending, which consists primarily of working capital lines, and our accounts receivable factoring represented 8.3 percent and 7.2 percent, respectively, of total gross loans, compared to 7.8 percent and 6.5 percent, respectively at December 31, 2009. The repayment of these arrangements is dependent on the financial condition, and payment ability, of third parties with whom our clients do business which could be impacted.

Approximately 44.6 percent and 7.9 percent of our outstanding total gross loan balances as of September 30, 2010 were to entities based in the states of California and Massachusetts, respectively, compared to 44.9 percent and 9.0 percent, respectively, as of

December 31, 2009. Other than California, there are no states with balances greater than 10 percent.

See generally “Risk Factors – Credit Risks” below in Item 1A of Part II.

Credit Quality and Allowance for Loan Losses

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


(Dollars in thousands)	September 30, 2010			December 31, 2009
Gross nonperforming loans:
Loans past due 90 days or more still accruing interest	$	—		$	2,456
Impaired loans		45,017			50,227

Total gross nonperforming loans		45,017			52,683
OREO		—			220

Total nonperforming assets	$	45,017		$	52,903

Nonperforming loans as a percentage of total gross loans		0.92	%		1.15	%
Nonperforming assets as a percentage of total assets		0.29			0.41
Allowance for loan losses	$	74,369		$	72,450
As a percentage of total gross loans		1.52	%		1.58	%
As a percentage of total gross nonperforming loans		165.20			137.52
Allowance for loan losses for impaired loans	$	6,538		$	8,868
As a percentage of total gross loans		0.13	%		0.19	%
As a percentage of total gross nonperforming loans		14.52			16.83
Allowance for loan losses for total gross performing loans	$	67,831		$	63,582
As a percentage of total gross loans		1.38	%		1.39	%
As a percentage of total gross performing loans		1.40			1.40
Reserve for unfunded credit commitments (1)	$	15,892		$	13,331
Total gross loans		4,900,129			4,582,966
Total gross performing loans		4,855,112			4,530,283
Total unfunded credit commitments		5,892,077			5,338,726

(1)	The “Reserve for unfunded credit commitments” is included as a component of “Other Liabilities”. See “Provision for (Reduction of) Unfunded Credit Commitments” above for a discussion of the changes to the reserve.

Impaired Loans

Included in the $45.0 million of impaired loans at September 30, 2010 are $24.0 million of loans modified in troubled debt restructurings (“TDR’s”), where concessions have been granted to borrowers experiencing financial difficulties, in an attempt to maximize collection. Refer to Note 6 “Loans and Allowance for Loan Losses” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report for further details. Subsequent to September 30, 2010, we received cash payments totaling $8.9 million relating to a loan included in our impaired loan balance as of September 30, 2010. This was a paydown of the remaining loan balance and not a recovery. As such, this payment will not have an impact on our fourth quarter 2010 allowance for loan losses.

Average impaired loans for the three and nine months ended September 30, 2010 were $45.5 million and $48.9 million, respectively, compared to $95.1 million and $98.6 million for the comparable 2009 periods. If the impaired loans had not been impaired, $0.7 million and $2.4 million in interest income would have been recorded for the three and nine months ended September 30, 2010, respectively, compared to $2.1 million and $5.7 million for the comparable 2009 periods.

Accrued Interest Receivable and Other Assets

A summary of accrued interest receivable and other assets at September 30, 2010 and December 31, 2009 is as follows:


(Dollars in thousands)	September 30, 2010		December 31, 2009		% Change
Derivative assets, gross (1)	$	122,757	$	106,623		15.1	%
Deferred tax assets		22,510		53,037		(57.6	)
Accrued interest receivable		42,834		44,265		(3.2	)
FHLB and FRB stock		38,312		38,888		(1.5	)
Prepaid FDIC assessments		20,474		28,178		(27.3	)
Foreign exchange spot contract assets, gross		88,413		13,653		NM
Marketable securities		19,045		33		NM
OREO		—		220		(100.0	)
Other assets		41,337		44,550		(7.2	)

Total accrued interest receivable and other assets	$	395,682	$	329,447		20.1

NM-	Not meaningful

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

Deferred Tax Assets

Our deferred tax assets balance was $22.5 million at September 30, 2010, compared to $53.0 million at December 31, 2009. The decrease was primarily due to the change in the deferred tax liability balance relating to the increase in the fair value of our available-for-sale securities portfolio. We also pay quarterly estimated taxes to the Internal Revenue Service and certain state and foreign taxing authorities.

Prepaid FDIC Assessments

In November 2009 the FDIC required insured financial institutions to prepay their estimated quarterly risk-based assessments for the 2010 through 2012 fiscal years. The decrease of $7.7 million was due to the amortization of this prepayment for the nine months ended September 30, 2010.

Foreign Exchange Spot Contract Assets

Foreign exchange spot contract assets represent unsettled client trades at the end of the period. The increase of $74.8 million was primarily due to increased client trade activity at period-end, and is largely offset by an increase in foreign exchange spot contract liabilities. (See “Other Liabilities” section below).

Marketable Securities

Marketable securities represent investments that were originally made within our non-marketable securities portfolio that have been converted into publicly-traded securities. The increase of $19.0 million was primarily due to the IPO of one of our portfolio companies in the third quarter of 2010.

Derivatives, Net

Derivative instruments are recorded as a component of other assets and other liabilities on the balance sheet. The following table provides a summary of derivative assets (liabilities), net at September 30, 2010 and December 31, 2009:


(Dollars in thousands)	September 30, 2010			December 31, 2009			% Change
Assets (liabilities):
Equity warrant assets	$	42,569		$	41,292			3.1	%
Interest rate swaps—assets		67,257			46,895			43.4
Foreign exchange forward and option contracts—assets		12,657			18,436			(31.3	)
Other derivatives		274			—			NM
Foreign exchange forward and option contracts—liabilities		(13,296	)		(15,870	)		(16.2	)

Total derivatives, net	$	109,461		$	90,753			20.6

Equity Warrant Assets

In connection with negotiating credit facilities and certain other services, we frequently obtain rights to acquire stock in the form of equity warrant assets in certain client companies. At September 30, 2010, we held warrants in 1,158 companies, compared to 1,225 companies at December 31, 2009. The change in fair value of equity warrant assets is recorded in gains on derivatives instruments, net, in noninterest income, a component of consolidated net income. The following table provides a summary of transactions and valuation changes for equity warrant assets for the three and nine months ended September 30, 2010 and 2009, respectively:


	Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	2010			2009			2010			2009
Balance, beginning of period	$	40,597		$	47,704		$	41,292		$	43,659
New equity warrant assets		2,733			989			5,946			4,755
Non-cash increases in fair value		813			354			1,013			3,389
Exercised equity warrant assets		(1,061	)		(5,431	)		(2,643	)		(5,800	)
Terminated equity warrant assets		(513	)		(1,170	)		(3,039	)		(3,557	)

Balance, end of period	$	42,569		$	42,446		$	42,569		$	42,446

Interest Rate Swaps

For information on our interest rate swaps, see Note 9-”Derivative Financial Instruments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

Foreign Exchange Forward and Foreign Currency Option Contracts

We enter into foreign exchange forward contracts and foreign currency option contracts with clients involved in international activities, either as the purchaser or seller, depending upon the clients’ need. For each forward or option contract entered into with our clients, we enter into an opposite way forward or option contract with a correspondent bank, which mitigates the risk of fluctuations in currency rates. We enter into forward contracts with correspondent banks to economically hedge currency exposure risk related to certain foreign currency denominated loans. Revaluations of foreign currency denominated loans are recorded on the line item “Other” as part of noninterest income, a component of consolidated net income. We have not experienced nonperformance by a counterparty and therefore have not incurred related losses. Further, we anticipate performance by all counterparties. We had no net exposure for foreign exchange forward and foreign currency option contracts at September 30, 2010, compared to net exposure risk of $2.6 million at December 31, 2009.

Deposits

Deposits were $12.4 billion at September 30, 2010, an increase of $2.1 billion, or 20.2 percent, compared to $10.3 billion at December 31, 2009. The increase in our deposit balance was primarily from increases in our noninterest-bearing demand deposits of $1.2 billion, interest-bearing money market deposits of $775.4 million and interest-bearing sweep deposits of $99.1 million. The overall increase in deposit balances was primarily due to the lack of attractive market investment opportunities for our clients. Additionally, we saw growth in our interest-bearing sweep deposits primarily due to our clients’ desire to take advantage of the convenience of the daily sweep product combined with the competitive rates we pay on the product. At September 30, 2010, 40.0 percent of our total deposits were interest-bearing deposits, compared to 39.0 percent at December 31, 2009.

At September 30, 2010, the aggregate balance of time deposit accounts individually exceeding $100,000 totaled $336.9 million, compared to $281.2 million at December 31, 2009. At September 30, 2010, substantially all time deposit accounts exceeding $100,000 in balances 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.

We opted out of the extended unlimited insurance coverage provided by the FDIC’s Temporary Liquidity Guarantee Program owing to our strong capital and liquidity position. As a result, our unlimited insurance coverage for noninterest-bearing transaction accounts expired on June 30, 2010 under the current program. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Financial Reform Act”) extends, however, such unlimited insurance coverage for two years beginning December 31, 2010.

Long-Term Debt

At September 30, 2010 and December 31, 2009, we had long-term debt of $1.2 billion and $856.7 million, respectively. At September 30, 2010, long-term debt included 5.375% Senior Notes, 5.70% senior notes and 6.05% subordinated notes, 2008 Convertible Notes, junior subordinated debentures and 4.99% notes payable related to one of our debt fund investments. For more information on our long-term debt, see Note 8- “Short-Term Borrowings and Long-Term Debt” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

Other Liabilities

A summary of other liabilities at September 30, 2010 and December 31, 2009, respectively, is as follows:


(Dollars in thousands)	September 30, 2010		December 31, 2009		%Change
Foreign exchange spot contract liabilities, gross	$	99,247	$	19,638		NM	%
Accrued compensation		60,441		37,873		59.6
Derivative liabilities, gross (1)		13,296		15,870		(16.2	)
Reserve for unfunded credit commitments		15,892		13,331		19.2
Other		74,407		53,235		39.8

Total other liabilities	$	263,283	$	139,947		88.1

NM- Not meaningful

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

Foreign Exchange Spot Contract Liabilities

Foreign exchange spot contract liabilities represent unsettled client trades at the end of the period. The increase of $79.6 million was primarily due to increased client trade activity at period-end, and is largely offset by an increase in foreign exchange spot contract assets. (See “Accrued Interest Receivable and Other Assets” section above).

Accrued Compensation

Accrued compensation includes amounts for our Incentive Compensation Plan, vacation, Direct Drive Incentive Compensation Plan, Long-Term Cash Incentive Plan, Retention Program, Warrant Incentive Plan, ESOP and other compensation arrangements. The increase of $22.6 million reflects our current expectation that we will achieve our internal performance targets for 2010 as compared to our 2009 incentive compensation accruals, which were at half of target levels as we did not achieve all of our internal performance targets for 2009. In addition to lower incentive compensation accruals, no ESOP accruals were recorded in 2009.

Noncontrolling Interests

Noncontrolling interests totaled $427.7 million and $345.8 million at September 30, 2010 and December 31, 2009, respectively. The increase of $81.9 million was primarily due to equity transactions, which included $78.7 million of contributed capital from investors in four of our managed funds of funds for investing in limited partnerships, as well as net income attributable to noncontrolling interests of $25.4 million for the nine months ended September 30, 2010, primarily from two of our managed funds of funds.

Fair Value Measurements

At September 30, 2010, approximately 42.1 percent of our total assets, or $6.6 billion, consisted of financial assets recorded at fair value on a recurring basis, compared to 34.4 percent of our total assets, or $4.4 billion as of December 31, 2009. Of these assets as of September 30, 2010, 92.6 percent used valuation methodologies involving market-based or market-derived information, collectively Level 1 and 2 measurements, to measure fair value, and 7.4 percent of these financial assets were measured using model-based techniques, or Level 3 measurements. This compares to 90.7 percent and 9.3 percent, respectively, as of December 31, 2009. Almost all of our financial assets valued using Level 3 measurements at September 30, 2010 and December 31, 2009 represented non-marketable securities. At September 30, 2010, 0.1 percent of total liabilities, or $13.3 million, consisted of financial liabilities recorded at fair value on a recurring basis, which were valued using market-observable inputs, compared to 0.1 percent, or $15.9 million as of December 31, 2009. There were no transfers between Level 1 and Level 2 and no material transfers between Level 3 and Level 2 during the nine months ended September 30, 2010 and 2009. During the three and nine months ended September 30, 2010, there was a transfer of $10.8 million from Level 3 to Level 1 due to the IPO of one of our portfolio companies. Our valuation processes include a number of key controls that are designed to ensure that fair value is calculated appropriately.

As of September 30, 2010, our available-for-sale portfolio, consisting primarily of agency-issued mortgage-backed securities, agency-issued collateralized mortgage obligations, U.S. agency debentures and U.S. treasury securities, represented $6.0 billion, or 91.0 percent of our portfolio of assets measured at fair value on a recurring basis, compared to $3.9 billion, or 89.2 percent, as of December 31, 2009. These instruments were primarily classified as Level 2 because their valuations were based on indicative prices corroborated by observable market quotes or pricing models with all significant inputs derived from or corroborated by observable market data. The fair value of our available-for-sale fixed-income investment securities portfolio is sensitive to changes in levels of market interest rates and market perceptions of credit quality of the underlying securities. Market valuations and impairment analyses on assets in the fixed-income investment portfolio are reviewed and monitored on a quarterly basis.

To the extent available-for-sale investment securities are used to secure borrowings, changes in the fair value of those securities could have an impact on the total amount of secured financing available. We pledge securities to the Federal Home Loan Bank of San Francisco and the discount window at the Federal Reserve Bank. The market value of collateral pledged to the Federal Home Loan Bank of San Francisco (comprised entirely of U.S. agency debentures) at September 30, 2010 totaled $1.0 billion, all of which was unused and available to support additional borrowings. The market value of collateral pledged at the discount window of the Federal Reserve Bank in accordance with our risk management practices at September 30, 2010 totaled $88.7 million, all of which was unused and available to support additional borrowings. We have repurchase agreements in place with multiple securities dealers, which allow us to access short-term borrowings by using available-for-sale securities as collateral. At September 30, 2010, we had not utilized our repurchase lines to secure borrowed funds.

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

During the three and nine months ended September 30, 2010, the Level 3 assets that are measured at fair value on a recurring basis experienced net unrealized fair value increases totaling $9.5 million and $18.6 million, respectively. The unrealized gains for the three and nine months ended September 30, 2010 were primarily due to valuation increases in underlying fund investments in our managed funds of funds. During the three and nine months ended September 30, 2009, the Level 3 assets that are measured at fair value on a recurring basis experienced net unrealized fair value increases of $0.9 million and decreases of $45.3 million, respectively. The unrealized losses for the nine months ended September 30, 2009 were primarily due to valuation decreases in underlying fund investments in our managed funds of funds. Realized gains related to the Level 3 assets for the three and nine months ended September 30, 2010 of $6.3 million and $15.2 million, respectively, related primarily to gains from distributions from underlying fund investments in our managed funds of funds. Realized gains related to the Level 3 assets for the three and nine months ended September 30, 2009 of $4.5 million and $5.3 million, respectively, related primarily to gains from distributions from underlying fund investments in our managed funds of funds.

The valuation of non-marketable securities and equity warrant assets in shares of private company capital stock is subject to significant judgment. The inherent uncertainty in the process of valuing securities for which a ready market does not exist may cause our estimated values of these securities to differ significantly from the values that would have been derived had a ready market for the securities existed, and those differences could be material. The timing and amount of changes in fair value, if any, of these financial instruments depend upon factors beyond our control, including the performance of the underlying companies, fluctuations in the market prices of the preferred or common stock of the underlying companies, general volatility and interest rate market factors, and legal and contractual restrictions. The timing and amount of actual net proceeds, if any, from the disposition of these financial instruments depend upon factors beyond our control, including investor demand for initial public offerings, levels of merger and acquisition activity, legal and contractual restrictions on our ability to sell, and the perceived and actual performance of portfolio companies. All of these factors are difficult to predict. (See “Risk Factors” under Item 1A of Part II below.)

Capital Resources

Our management seeks to maintain adequate capital to support anticipated asset growth, operating needs and unexpected credit risks, and to ensure that SVB Financial and the Bank are in compliance with all regulatory capital guidelines. Our primary sources of new capital include retained earnings and proceeds from the sale and issuance of capital stock or other securities. Our management engages in a regular capital planning process in an effort to make effective use of the capital available to us. 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 unexpected credit losses, investment activity, potential product and business expansions, acquisitions and strategic or infrastructure investments.

Common Stock

For information on our common stock, see Note 2- “Stockholders’ Equity and Earnings Per Share” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

SVBFG Stockholders’ Equity

SVBFG stockholders’ equity totaled $1.3 billion at September 30, 2010, an increase of $140.3 million, or 12.4 percent compared to $1.1 billion at December 31, 2009. This increase was primarily the result of net income for the nine months ended September 30, 2010, an increase in accumulated other comprehensive income primarily due to an increase in the fair value of our available-for-sale securities portfolio, and an increase in additional-paid-in-capital from issuances of common stock during the nine months ended September 30, 2010.

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

The Federal Reserve has not issued any minimum guidelines for the tangible common equity to tangible assets ratio or the tangible common equity to risk-weighted assets ratio.

Both the capital ratios of SVB Financial and the Bank were in excess of regulatory guidelines to be “well-capitalized” at September 30, 2010 and December 31, 2009. Capital ratios for SVB Financial and the Bank are set forth below:


	September 30, 2010			December 31, 2009
SVB Financial:
Total risk-based capital ratio		19.11	%		19.94	%
Tier 1 risk-based capital ratio		15.04			15.45
Tier 1 leverage ratio		8.77			9.53
Tangible common equity to tangible assets ratio (1)		8.10			8.78
Tangible common equity to risk-weighted assets ratio (1)		15.17			15.05

Bank:
Total risk-based capital ratio		16.86	%		17.05	%
Tier 1 risk-based capital ratio		12.65			12.45
Tier 1 leverage ratio		7.30			7.67
Tangible common equity to tangible assets ratio (1)		7.38			7.50
Tangible common equity to risk-weighted assets ratio (1)		13.23			12.53

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

Core earnings growth and realized gains from the sale of certain available-for-sale securities had a positive impact on regulatory total and tier 1 capital for SVB Financial and the Bank at September 30, 2010, compared to December 31, 2009. Increases in loans and available-for-sale securities relative to cash balances resulted in a general decline in capital ratios as the overall mix of risk-weighted assets shifted to higher risk-weighted loans and available-for-sale securities relative to cash. The tier 1 risk-based capital ratio at SVB Financial was also negatively impacted by growth in noncontrolling interest which is excluded from regulatory tier 1 capital. The same ratio at the Bank is not impacted by noncontrolling interest and therefore improved slightly. For both SVB Financial and the Bank, decreases in the Tier 1 leverage ratio reflect continued growth in average assets which is due primarily to an increase in client deposits.

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


	SVB Financial						Bank
Non-GAAP tangible common equity and tangible assets (Dollars in thousands, except ratios)	September 30, 2010			December 31, 2009			September 30, 2010			December 31, 2009
GAAP SVBFG stockholders' equity	$	1,268,611		$	1,128,343		$	1,069,238		$	914,068
Less:
Intangible assets		891			665			—			—

Tangible common equity	$	1,267,720		$	1,127,678		$	1,069,238		$	914,068

GAAP Total assets	$	15,660,069		$	12,841,399		$	14,484,823		$	12,186,203
Less:
Intangible assets		891			665			—			—

Tangible assets	$	15,659,178		$	12,840,734		$	14,484,823		$	12,186,203

Risk-weighted assets	$	8,354,326		$	7,494,498		$	8,079,741		$	7,293,332
Tangible common equity to tangible assets		8.10	%		8.78	%		7.38	%		7.50	%
Tangible common equity to risk-weighted assets		15.17			15.05			13.23			12.53

For both SVB Financial and the Bank, the tangible common equity to tangible assets ratio decreased due primarily to an increase in tangible assets which primarily reflects our continued growth in deposit balances. This increase was partially offset by an increase in tangible equity from an increase in retained earnings. For both SVB Financial and the Bank, the increase in tangible common equity to risk-weighted asset ratio is reflective of a higher proportion of cash and investment securities relative to loans.

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 private equity fund investments. These instruments involve, to varying degrees, elements of credit risk. Credit risk is defined as the possibility of sustaining a loss because other parties to the financial instrument fail to perform in accordance with the terms of the contract. For details of our commitments to extend credit, and commercial and standby letters of credit, please refer to Note 12-”Off-Balance Sheet Arrangements, Guarantees, and Other Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

Commitments to Invest in Venture Capital/Private Equity Funds

We make commitments to invest in venture capital and private equity funds, which in turn make investments generally in, or in some cases make loans to, privately held companies. Commitments to invest in these funds are generally made for a ten-year period from the inception of the fund. Although the limited partnership agreements governing these investments typically do not restrict the general partners from calling 100% of committed capital in one year, it is customary for these funds to generally call most of the capital commitment over 5 to 7 years. The actual timing of future cash requirements to fund such 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.

At September 30, 2010, we had $523.1 million in total capital commitments in venture capital/private equity funds, of which $207.2 million was unfunded or uncalled. Included in the $207.2 million unfunded commitments are commitments of $122.9 million made by SVB Financial which may be transferred to certain new managed funds of funds (“New Fund Commitments”). These New Fund Commitments will remain the obligations of SVB Financial, and will continue to remain as such until we may later decide to transfer, sell or otherwise dispose of the investments, whether to a third party or to a new or existing fund managed by us. While the actual cash requirements of the total unfunded commitments are dependent on various factors, we currently expect capital calls of approximately $60 million for the next 12 months.

For further details on our commitments to invest in private equity funds, refer to Note 12-”Off-Balance Sheet Arrangements, Guarantees, and Other Commitments” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

Liquidity

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

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

Our deposit base is, and historically has been, our primary source of liquidity. Our deposit levels and cost of deposits may fluctuate from time to time due to a variety of factors, including market conditions, prevailing interest rates, changes in client deposit behaviors, availability of insurance protection, and our offering of deposit products. At September 30, 2010, our period-end total deposit balances increased by $2.1 billion to $12.4 billion, compared to $10.3 billion at December 31, 2009. The overall increase in deposit balances was primarily due to the lack of attractive market investment opportunities for our clients. This growth through the third quarter of 2010 had been a continuing trend since 2009. In 2009, noninterest-bearing demand deposits increased in part due to clients’ preference for the security provided by unlimited FDIC insurance for noninterest-bearing transaction accounts. Although the FDIC had extended such insurance coverage for participating financial institutions from its prior expiration date of June 30, 2010 to December 31, 2010, we opted out of such extended coverage and our unlimited insurance coverage for noninterest-bearing transaction accounts expired on June 30, 2010. As of July 1, 2010, such insurance coverage was subject to a $250,000 maximum pursuant to FDIC rules. Our election to opt out was based primarily on our assessment of our liquidity position and the associated costs of maintaining such extended coverage. Subsequent to our decision, the Financial Reform Act, which was enacted on July 21, 2010, has extended such unlimited insurance coverage for two years beginning December 31, 2010. As such, the availability of such unlimited insurance may have an impact on future deposit levels. Nevertheless, despite any fluctuations in our deposit levels or cost of deposits, the level of which we cannot predict, we continue to expand on opportunities to increase our liquidity and take steps to carefully manage our liquidity.

Our liquidity requirements can also be met through the use of our portfolio of liquid assets. Our definition of liquid assets includes cash and cash equivalents in excess of the minimum levels necessary to carry out normal business operations, investment securities maturing within nine months, investment securities eligible and available for financing or pledging purposes with a maturity in excess of nine months and anticipated near-term cash flows from investments. During the second quarter of 2010, we sold all of our remaining non-agency residential and commercial mortgage-backed securities of $123.3 million, as well as agency-issued collateralized mortgage obligations of $34.6 million. During the third quarter of 2010, we sold $304.0 million of agency-issued mortgage-backed securities and $188.9 million of fixed rate agency-issued collateralized mortgage obligations.

On a stand-alone basis, SVB Financial’s primary liquidity channels include dividends from the Bank, its investment portfolio assets, and its ability to raise debt and capital. The ability of the Bank to pay dividends is subject to certain regulations described in “Business–Supervision and Regulation–Restriction on Dividends” under Part I, Item 1 of our 2009 Form 10-K.

Consolidated Summary of Cash Flows

Below is a summary of our average cash position and statement of cash flows for the nine months ended September 30, 2010 and 2009, respectively. Please refer to our Interim Statements of Cash Flows for the nine months ended September 30, 2010, and 2009 under Part I, Item 1 of this report.


	Nine months ended September 30,
(Dollars in thousands)	2010			2009
Average cash and due from banks	$	229,192		$	241,150
Average federal funds sold, securities purchased under agreements to resell and other short-term investment securities		4,048,242			3,190,730

Average cash and cash equivalents	$	4,277,434		$	3,431,880

Percentage of total average assets		29.9	%		31.4	%

Net cash provided by operating activities	$	176,591		$	102,801
Net cash used for investing activities		(2,427,491	)		(942,019	)
Net cash provided by financing activities		2,516,416			2,513,321

Net increase in cash and cash equivalents	$	265,516		$	1,674,103

Average cash and cash equivalents increased by $845.6 million to $4.3 billion for the nine months ended September 30, 2010, compared to $3.4 billion for the comparable 2009 period, primarily due to the increase in deposit balances. The increase in deposit balances was primarily due to the lack of attractive market investment opportunities due to the current low interest rate environment.

Cash provided by operating activities was $176.6 million for the nine months ended September 30, 2010, which included net income before noncontrolling interests of $102.8 million. Significant adjustments for noncash items that increased cash provided by operating activities included $29.1 million of provision for loan losses, a $22.6 million increase in accrued compensation, a $23.9 million decrease in income tax receivable, $18.7 million of amortization of premiums on investment securities, $14.4 million of depreciation and amortization and $9.9 million of share-based compensation expense. Significant adjustments for noncash items that decreased cash provided by operating activities included $67.4 million of net gains on investment securities, $10.8 million of account receivable and $4.9 million of deferred warrant-related loan fee amortization.

Cash used for investing activities was $2.4 billion for the nine months ended September 30, 2010. Net cash outflows included purchases of available-for-sale securities of $4.2 billion, a net increase in loans of $354.5 million, purchases of non-marketable securities of $115.5 million and purchases of premises and equipment of $21.0 million. Net cash inflows included proceeds from the sales, maturities and pay downs of available-for-sale securities of $2.2 billion, sales of non-marketable securities of $38.1 million and the recovery of $13.4 million from loans previously charged-off.

Cash provided by financing activities was $2.5 billion for the nine months ended September 30, 2010. Net cash inflows included increases in deposits of $2.1 billion, net proceeds from issuance of our 5.375% Senior Notes of $344.3 million, capital contributions from noncontrolling interests of $56.5 million, net increase in short-term borrowings of $21.0 million and proceeds from issuance of common stock of $15.2 million. Net cash outflows included $6.8 million from the repurchase of a warrant under the Capital Purchase Program.

Cash and cash equivalents at September 30, 2010 were $3.8 billion, compared to $4.1 billion at September 30, 2009.

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 and changes in the shape and level of the yield curve. Other market risks include foreign currency exchange risk and equity price risk. These risks are not considered significant and no separate quantitative information concerning them is presented herein.

Interest rate risk is managed by our Asset/Liability Committee (“ALCO”), which is a management committee. ALCO reviews sensitivities of assets and liabilities to changes in interest rates, structural changes in investment and funding portfolios, loan and deposit activity and current market conditions. Adherence to relevant policies, which are approved by the Finance Committee of our Board of Directors, is monitored on an ongoing basis.

Management of interest rate risk is carried out primarily through strategies involving our investment securities and funding portfolios. In addition, our policies permit off-balance sheet derivative instruments to manage interest rate risk.

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

Market Value of Portfolio Equity and Net Interest Income

One application of the aforementioned simulation model involves measurement of the impact of market interest rate changes on our market value of portfolio equity (“MVPE”). MVPE is defined as the market value of assets, less the market value of liabilities, adjusted for any off-balance sheet items. A second application of the simulation model measures the impact of market interest rate changes on our net interest income (“NII”).

The following table presents our MVPE and NII sensitivity exposure at September 30, 2010 and December 31, 2009, related to an instantaneous and sustained parallel shift in market interest rates of 100 and 200 basis points (“bps”), respectively.


	Estimated MVPE		Estimated Increase/ (Decrease) In MVPE						Estimated NII		Estimated Increase/ (Decrease) In NII
Change in interest rates (basis points)	Estimated MVPE		Amount			Percent			Estimated NII		Amount			Percent
	(Dollars in thousands)
September 30, 2010:
+200	$	1,590,233	$	22,096			1.4	%	$	539,980	$	104,547			24.0	%
+100		1,536,628		(31,509	)		(2.0	)		477,733		42,300			9.7
-		1,568,137		—			—			435,433		—			—
-100		1,694,301		126,164			8.0			408,566		(26,867	)		(6.2	)
-200		1,663,707		95,570			6.1			398,350		(37,083	)		(8.5	)

December 31, 2009:
+200	$	1,491,262	$	(37,645	)		(2.5	)%	$	515,333	$	75,569			17.2	%
+100		1,510,211		(18,696	)		(1.2	)		470,398		30,634			7.0
-		1,528,907		—			—			439,764		—			—
-100		1,567,122		38,215			2.5			424,444		(15,320	)		(3.5	)
-200		1,626,056		97,149			6.4			406,626		(33,138	)		(7.5	)

The estimated MVPE in the preceding table is based on a discounted cash flow analysis using market interest rates provided by publicly available sources that we deem reliable. These estimates are highly assumption-dependent and will change regularly as our asset/liability structure changes, as interest rate environments evolve, and as we change our assumptions in response to relevant circumstances. These calculations do not reflect changes we may make to reduce our MVPE exposure in response to a change in market interest rates. We expect to continue to manage our interest rate risk utilizing on and off-balance sheet strategies, as appropriate.

As with any method of measuring interest rate risk, certain limitations are inherent in the method of analysis presented in the preceding table. We are exposed to yield curve risk, prepayment risk and basis risk which cannot be fully modeled and expressed using the above methodology. Accordingly, the results in the preceding table should not be relied upon as a precise indicator of actual results in the event of changing market interest rates. Additionally, the resulting MVPE and NII estimates are not intended to represent, and should not be construed to represent the underlying value.

Our base case MVPE at September 30, 2010 increased from December 31, 2009 by $39.2 million primarily due to the overall growth in the balance sheet as our loans and available-for-sale securities grew by $311.1 million and $2.1 billion, respectively. These increases were partially offset by our deposits and long-term debt, which grew by $2.1 billion and $369.2 million, respectively. The growth in long-term debt was primarily due to the issuance of our $350 million in 5.375% Senior Notes. MVPE rose in the simulated upward 200 bps interest rate movement due to our significant growth in floating rate available-for-sale securities, and noninterest-bearing deposits. Additionally, with the historically low level of interest rates, our deposit rates are also at or near their absolute floors thus decreasing some of the effect of the downward rate shocks.

Our expected 12-month NII at September 30, 2010 decreased from December 31, 2009 by $4.3 million due primarily to growth in our deposits, long-term debt, and a lower interest rate forecast. These are partially offset by growth in our available-for-sale securities portfolio. Our overall balance sheet grew by $2.8 billion from December 31, 2009 to September 30, 2010. The growth was principally attributed to increases in our available-for-sale securities portfolio and deposits. NII sensitivity increased in both the simulated upward and downward interest rate movements due primarily to the large growth in the floating rate available-for-sale securities, and noninterest-bearing deposits. In addition to these changes, other general contributing factors include changes in balance sheet mix, changes in deposit repricing assumptions, and a lower projected forward rate curve.

The simulation model used for above analysis embeds floors in our interest rate scenarios which prevent model benchmark rates from resulting in negative rates. Current modeling assumptions maintain the SVB prime lending rate at its existing level (currently at 4.0%) until the National Prime Index has been adjusted upward by a minimum of 75 bps (to 4.0%), as we did not lower the Bank’s prime lending rate despite the 75 bps decrease in the target Federal Funds rates in December 2008. These assumptions may change in future periods based on management discretion. Actual changes in our deposit pricing strategies may differ from our current model assumptions and may have an impact on our overall sensitivity.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, among other things, processes, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of our most recently completed fiscal quarter, pursuant to Exchange Act Rule 13a-15(b). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Please refer to Note 15-”Legal Matters” of the “Notes to Interim Consolidated Financial Statements (unaudited)” under Part I, Item 1 of this report.

ITEM 1A.

RISK FACTORS

Our business faces significant risks, including market and economic environment, credit, market/liquidity, operational, legal/regulatory and strategic/reputation risks. The factors described below may not be the only risks we face and are not intended to serve as a comprehensive listing or be applicable only to the category of risk under which they are disclosed. The risks described below are generally applicable to more than one of the following categories of risks. Additional risks that we do not yet know of or that we currently think are immaterial may also impair our business operations. If any of the events or circumstances described in the following factors actually occurs, our business, financial condition and/or results of operations could suffer.

There are no material changes from the risk factors set forth in our 2009 Form 10-K, as updated in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2010 (as filed with the SEC on May 7, 2010) and June 30, 2010 (as filed with the SEC on August 6, 2010).

Risks Relating to Market and Economic Environment

The continuation or worsening of recent market and economic conditions may adversely affect our industry, business, results of operations and ability to access capital.

Overall deterioration in domestic or global economic conditions, especially in the technology, life science, venture capital/private equity and premium wine industry niches or overall financial capital markets may adversely affect our business, growth, results of operations and ability to access capital. A global, domestic or significant regional economic slowdown or recession, could harm us by adversely affecting our clients’ and prospective clients’ access to capital to fund their businesses, their ability to sustain and grow their businesses, the level of funds they have available to maintain deposits, their demand for loans, their ability to repay loans and otherwise.

The United States has been in a serious economic downturn, as have economies around the world. Financial markets have been volatile, business and consumer spending has declined, and overall business activities have slowed, including a general slowdown in mergers and acquisitions (“M&A”) and initial public offerings (“IPOs”) of companies—events upon which the venture capital and private equity community relies to “exit” their investments. Overall venture capital financing activity has also slowed in recent periods. There have been limited signs of economic recovery recently, such as a modest increase in the number of IPOs and M&A activity levels, yet economic conditions continue to be challenging. If recent market and economic conditions persist, our clients will continue to be adversely impacted, as will our investment returns, valuations of companies, and overall levels of venture capital and private equity investments, which may have a material and adverse effect on our business, financial condition and results of operations. A worsening of these conditions could likely exacerbate the adverse effect on us.

As a result of recent economic conditions, the capital and credit markets have experienced extreme volatility and disruption. SVB Financial depends on access to equity and debt markets as one of its primary sources to raise capital. There has been some improvement to market conditions, particularly access to equity and debt markets; however, if recent levels of market disruption and volatility continue or worsen, there can be no assurance that we will not experience an adverse effect, which may be material, on our ability to access capital and on our business, financial condition and results of operations.

Credit Risks

If our clients fail to perform under their loans, our business, results of operations and financial condition could be adversely affected.

As a lender, we face the risk that our client borrowers will fail to pay their loans when due. If borrower defaults cause large aggregate losses, it could have a material adverse effect on our business, results of operations and financial condition. We reserve for such losses by establishing an allowance for loan losses, the increase of which results in a charge to our earnings as a provision for loan losses. We have established an evaluation process designed to determine the adequacy of our allowance for loan losses. While this evaluation process uses historical and other objective information, the classification of loans and the forecasts and establishment of loan losses are dependent to a great extent on our subjective assessment based upon our experience and judgment. Actual losses are difficult to forecast, especially if such losses stem from factors beyond our historical experience or are otherwise inconsistent or out of pattern with regards to our credit quality assessments. There can be no assurance that our allowance for loan losses will be sufficient to absorb future loan losses or prevent a material adverse effect on our business, financial condition and results of operations.

Because of the credit profile of our loan portfolio, our levels of nonperforming assets and charge-offs can be volatile. We may need to make material provisions for loan losses in any period, which could reduce net income or increase net losses in that period.

Our loan portfolio has a credit profile different from that of most other banking companies. In addition, the credit profile of our clients varies across our loan portfolio, based on the nature of the lending we do for different market segments. In our portfolios for emerging, early-stage and mid-stage companies, many of our loans are made to companies with modest or negative cash flows and no established record of profitable operations. Repayment of these loans may be dependent upon receipt by borrowers of additional equity financing from venture capitalists or others, or in some cases, a successful sale to a third party or a public offering. In recent periods, due to the overall weakening of the economic environment, venture capital financing activity has slowed, and IPOs and M&A activities have slowed significantly. If economic conditions worsen or do not continue to improve, such activities may slow down even further. Venture capital firms may provide financing at lower levels, more selectively or on less favorable terms, which may have an adverse effect on our borrowers that are otherwise dependent on such financing to repay their loans to us. Moreover, collateral for many of our loans often includes intellectual property, which is difficult to value and may not be readily salable in the case of default. Because of the intense competition and rapid technological change that characterizes the companies in the technology and life science industry sectors, a borrower’s financial position can deteriorate rapidly.

Additionally, we may enter into accounts receivable financing arrangements with our company clients. The repayment of these arrangements is dependent on the financial condition, and payment ability, of third parties with whom our clients do business. Such third parties may be unable to meet their financial obligations to our clients, especially in a weakened economic environment.

In our portfolio of venture capital and private equity firm clients, many of our clients have capital call lines of credit, the repayment of which is dependent on the payment of capital calls by the underlying limited partner investors in the funds managed by these firms. These limited partner investors may face liquidity issues or have difficulties meeting their financial commitments, especially during unstable economic times, which may lead to our clients’ inability to meet their repayment obligations to us.

We have been increasing our efforts to lend to corporate technology and large corporate clients, including some companies with greater levels of debt relative to their equity, and have increased the average size of our loans over time. Increasing our larger loan commitments could increase the impact on us of any single borrower default.

We lend to targeted high net-worth individual clients through our Private Client Services (“PCS”) group. These individual clients may face difficulties meeting their financial commitments, especially during a challenging economic environment, and may be unable to repay their loans. We also lend to premium wineries and vineyards through our SVB Wine group. Repayment of loans made to these clients may be dependent on overall grape supply (which may be adversely affected by poor weather or other natural conditions) and overall wine demand and sales, or other sources of financing or income (which may be adversely affected by a challenging economic environment). See “Loans” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Consolidated Financial Condition” under Item 2 of Part I of this report.

For all of these reasons, our level of nonperforming loans, loan charge-offs and allowance for loan losses can be volatile and can vary materially from period to period. Increases in our level of nonperforming loans or loan charge-offs may require us to increase our provision for loan losses in any period, which could reduce our net income or cause net losses in that period. Additionally, such increases in our level of nonperforming loans or loan charge-offs may also have an adverse effect on our credit ratings and market perceptions of us.

The borrowing needs of our clients may be volatile, especially during a challenging economic environment. We may not be able to meet our unfunded credit commitments, or adequately reserve for losses associated with our unfunded credit commitments, which could have a material effect on our business, financial condition, results of operations and reputation.

A commitment to extend credit is a formal agreement to lend funds to a client as long as there is no violation of any condition established under the agreement. The actual borrowing needs of our clients under these credit commitments have historically been lower than the contractual amount of the commitments. A significant portion of these commitments expire without being drawn upon. Because of the credit profile of our clients, we typically have a substantial amount of total unfunded credit commitments, which is reflected off our balance sheet. At September 30, 2010, we had $5.9 billion in total unfunded credit commitments. Actual borrowing needs of our clients may exceed our expected funding requirements, especially during a challenging economic environment when our client companies may be more dependent on our credit commitments due to the lack of available credit elsewhere, the increasing costs of credit, or the limited availability of financings from more discerning and selective venture capital/private equity firms. In addition, limited partner investors of our venture capital/private equity fund clients may fail to meet their underlying investment commitments due to liquidity or other financing issues, which may impact our clients’ borrowing needs. Any failure to meet our unfunded credit commitments in accordance with the actual borrowing needs of our clients may have a material adverse effect on our business, financial condition, results of operations and reputation.

Additionally, we establish a reserve for losses associated with our unfunded credit commitments. The level of the reserve for unfunded credit commitments is determined by following a methodology similar to that used to establish our allowance for loan losses

in our funded loan portfolio. The reserve is based on credit commitments outstanding, credit quality of the loan commitments, and management’s estimates and judgment, and is susceptible to significant changes. There can be no assurance that our reserve for unfunded credit commitments will be adequate to provide for actual losses associated with our unfunded credit commitments. An increase in the reserve for unfunded credit commitments in any period may result in a charge to our earnings, which could reduce our net income or increase net losses in that period.

Market/Liquidity Risks

Our current level of interest rate spread may decline in the future. Any material reduction in our interest rate spread, or a sustained period of low market interest rates, could have a material adverse effect on our business, results of operations or financial condition.

A major portion of our net income comes from our interest rate spread, which is the difference between the interest rates paid by us on amounts used to fund assets and the interest rates and fees we receive on our interest-earning assets. We fund assets using deposits and other borrowings. While we are increasingly offering more interest-bearing deposit products, a majority of our deposit balances are from our noninterest bearing products. Our interest-earning assets include outstanding loans extended to our clients and securities held in our investment portfolio. Overall, the interest rates we pay on our interest-bearing liabilities and receive on our interest-earning assets, and our level of interest rate spread, could be affected by a variety of factors, including changes in market interest rates, competition, and a change over time in the mix of loans, investment securities, deposits and other liabilities on our balance sheet.

Changes in market interest rates, such as the Federal Funds rate, generally impact our interest rate spread. While changes in interest rates do not produce equivalent changes in the revenues earned from our interest-earning assets and the expenses associated with our interest-bearing liabilities, increases in market interest rates will nevertheless likely cause our interest rate spread to increase. Conversely, if interest rates decline, our interest rate spread will likely decline. Decreases in market interest rates, especially during 2008 and 2009, have caused our interest rate spread to decline significantly, which has reduced our net income in the past. Sustained low levels of market interest rates will likely continue to put pressure on our results of operations. Unexpected interest rate declines may also adversely affect our business forecasts and expectations. Interest rates are highly sensitive to many factors beyond our control, such as inflation, recession, global economic disruptions, unemployment and the fiscal and monetary policies of the federal government and its agencies.

Any material reduction in our interest rate spread or the continuation of sustained low levels of market interest rates could have a material adverse effect on our business, results of operations and financial condition.

Liquidity risk could impair our ability to fund operations and jeopardize our financial condition.

Liquidity is essential to our business. We require sufficient liquidity to meet our expected, as well as unexpected, financial obligations and requirements. An inability to raise funds through deposits, borrowings, equity/debt offerings and other sources could have a substantial negative effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities, or on terms attractive to us, could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could detrimentally impact our access to liquidity sources include a reduction in our credit ratings, an increase in costs of capital in financial capital markets, a decrease in the level of our business activity due to a market downturn or adverse regulatory action against us, or a decrease in depositor or investor confidence in us. Our ability to borrow could also be impaired by factors that are not specific to us, such as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole.

Additionally, our credit ratings are important to our liquidity and our business. A reduction in our credit ratings could adversely affect our liquidity and competitive position, increase our borrowing costs, and limit our access to the capital markets. Moreover, a reduction in our credit ratings could increase the interest rates we pay on deposits, or adversely affect perceptions about our creditworthiness or our overall reputation.

Equity warrant asset, venture capital and private equity funds and direct equity investment portfolio gains or losses depend upon the performance of the portfolio investments and the general condition of the public equity markets, which are uncertain and may vary materially by period.

In connection with negotiated credit facilities and certain other services, we frequently obtain equity warrant assets giving us the right to acquire stock in certain client companies. We also make investments through our SVB Capital family of funds in venture capital and private equity funds and direct investments in companies, which are required to be carried at fair value. The fair value of these warrants and investments are reflected in our financial statements and are adjusted on a quarterly basis. Fair value changes are generally recorded as unrealized gains or losses through consolidated net income. 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, the timing of our receipt of relevant

financial information, general volatility and interest rate market factors, and legal and contractual restrictions. The timing and amount of our realization 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 and future value of portfolio companies. Because of the inherent variability of these financial instruments and the markets in which they are bought and sold, the fair market value of these financial instruments might increase or decrease materially, and the net proceeds realized upon disposition might be less than the then-current recorded fair market value.

We cannot predict future realized or unrealized gains or losses, and any such gains or losses are likely to vary materially from period to period. Additionally, the value of our equity warrant asset portfolio depends on the number of warrants we obtain, and in future periods, we may not be able to continue to obtain such equity warrant assets to the same extent we have historically achieved.

Public equity offerings and mergers and acquisitions involving our clients or a slowdown in venture capital investment levels may reduce the borrowing needs of our clients, which could adversely affect our business, results of operations and financial condition.

While an active market for public equity offerings and mergers and acquisitions generally has positive implications for our business, one negative consequence is that our clients may pay off or reduce their loans with us if they complete a public equity offering, are acquired by or merge with another entity or otherwise receive a significant equity investment. The recent economic conditions reflect a slowdown in such transactions, however if the levels of such transactions were to increase, our total outstanding loans may decline. Moreover, our capital call lines of credit are typically utilized by our venture capital fund clients to make investments prior to receipt of capital called from their respective limited partners. A slowdown in overall venture capital investment levels may reduce the need for our clients to borrow from our capital call lines of credit. Any significant reduction in the outstanding amounts of our loans or under our lines of credit could have a material adverse effect on our business, results of operations and financial condition.

Failure to raise additional funds from third-party investors for our funds managed by SVB Capital may require us to use capital to fund commitments to other funds, which may have a material adverse effect on our business, financial condition and reputation.

From time to time, we form new investment funds through our funds management division, SVB Capital. These funds include funds that invest in other venture capital and private equity funds (which we refer to as funds of funds) and portfolio companies (which we refer to as direct equity funds). Our managed funds are typically structured as limited partnerships, heavily funded by third party limited partners and ultimately managed by us through our SVB Capital division. SVB Financial typically will also make a significant capital commitment to each of these funds as a limited partner.

Prior to forming a new fund of funds, SVB Financial has made and may make investment commitments intended for the new fund, in order to show potential investors the types of funds in which the new fund will invest. Until these investments are transferred to the new fund, which typically will occur upon the acceptance of binding commitments from third-party limited partners (the “closing”), these investments are obligations of SVB Financial. If we fail to attract sufficient capital from third-party investors to conduct the closing of a fund, we may be required to permanently allocate capital to these investments when we otherwise had intended them to be temporary obligations. If, under such circumstances, we decide to sell these investments or fail to meet our obligations, we may lose some or all of the capital that has already been deployed and may be subject to legal claims. Any unexpected permanent allocation of capital toward these investments, loss of capital contributed to these investments or legal claims against us could have a material adverse effect on our business and financial condition, as well as our reputation.

The soundness of other financial institutions could adversely affect us.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, and other institutional clients, which may result in payment obligations to us or to our clients due to products arranged by us. Many of these transactions expose us to credit and market risk that may cause our counterparty or client to default. In addition, we are exposed to market risk when the collateral we hold cannot be realized or is liquidated at prices not sufficient to recover the full amount of the secured obligation. There is no assurance that any such losses would not materially and adversely affect our business, results of operations and financial condition.

Operational Risks

If we fail to retain our key employees or recruit new employees, our growth and results of operations could be adversely affected.

We rely on key personnel, including a substantial number of employees who have technical expertise in their subject matter area and/or a strong network of relationships with individuals and institutions in the markets we serve. If we were to have less success in

recruiting and retaining these employees than our competitors, for reasons including regulatory restrictions on compensation practices or the availability of more attractive opportunities elsewhere, our growth and results of operations could be adversely affected.

The manner in which we structure our employee compensation could adversely affect our results of operations and cash flows, as well as our ability to attract, recruit and retain key employees.

In May 2006, in an effort to align our equity grant rate to that of other financial institutions similar to us, we committed to restrict the total number of shares of our common stock issued under stock options, restricted stock awards, restricted stock unit awards, stock bonus awards and any other equity awards granted during a fiscal year as a percentage of the total number of shares outstanding on a prospective basis. In light of this restriction, we may in the future consider taking other actions to modify employee compensation structures, such as granting cash compensation or other cash-settled forms of equity compensation, which may result in an additional charge to our earnings.

How we structure our equity compensation may also have an adverse effect on our ability to attract, recruit and retain key employees. Our decision in May 2006 to reduce equity awards to be granted on a prospective basis, and any other similar changes limiting our equity awards that we may adopt in the future, could negatively impact our hiring and retention strategies. Moreover, economic conditions have in the past reduced our share price, particularly during 2009, causing existing employee options and equity awards to have exercise prices higher—in some cases, meaningfully higher—than our actual share price. These factors could adversely affect our ability to attract, recruit and retain certain key employees.

The occurrence of fraudulent activity or breaches of our information security could have a material adverse effect on our business, financial condition and results of operations.

As a financial institution, we are susceptible to fraudulent activity that may be committed against us or our clients, which may result in financial losses to us or our clients, privacy breaches against our clients, or damage to our reputation. Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. In recent periods, there has been a rise in electronic fraudulent activity within the financial services industry, especially in the commercial banking sector due to cyber criminals targeting commercial bank accounts. Consistent with industry trends, we have also experienced an increase in attempted electronic fraudulent activity in recent periods.

Information pertaining to us and our clients are maintained, and transactions are executed, on our internal networks and Internet-based systems, such as our online banking system. The secure maintenance and transmission of confidential information, as well as execution of transactions over these systems, are essential to protect us and our clients against fraud and to maintain our clients’ confidence. Increases in criminal activity levels and sophistication, advances in computer capabilities, new discoveries, vulnerabilities in third-party technologies (including browsers and operating systems) or other developments could result in a compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions and to protect data about us, our clients and underlying transactions, as well as the technology used by our clients to access our systems. Although we have developed systems and processes that are designed to detect and prevent security breaches and periodically test our security, failure to mitigate breaches of security could result in losses to us or our clients, result in a loss of business and/or clients, cause us to incur additional expenses, affect our ability to grow our online services or other businesses, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition and results of operations.

More generally, publicized information concerning security problems could inhibit the use or growth of the Internet as a means of conducting commercial transactions. Our ability to provide financial services over the Internet would be severely impeded if clients became unwilling to transmit confidential information online. As a result, our business, financial condition and results of operations could be adversely affected.

We face risks associated with the ability of our information technology systems and our people and processes to support our operations and future growth effectively.

In order to serve our target clients effectively, we have developed a comprehensive array of banking and other products and services. In order to support these products and services, we have developed and purchased or licensed information technology and other systems and processes. As our business continues to grow, we will continue to invest in and enhance these systems, and our people and processes. These investments and enhancements may affect our future profitability and overall effectiveness. From time to time, we may change, consolidate, replace, add or upgrade existing systems or processes, which if not implemented properly to allow for an effective transition, may have an adverse effect on our operations, including business interruptions which may result in inefficiencies, revenue losses, client losses, exposure to fraudulent activities, or damage to our reputation. For example, we are in the process of implementing a new universal banking system that will replace our current platform. Or, we may outsource certain operational functions to consultants or other third parties to enhance our overall efficiencies, which if not performed properly, could also have an adverse effect on us. There can be no assurance that we will be able to effectively maintain or improve our systems and processes, or utilize outsourced talent, to meet our business needs efficiently. Any failure of such could adversely affect our operations, financial condition, results of operations, future growth and reputation.

Business disruptions and interruptions due to natural disasters and other external events beyond our control can adversely affect our business, financial condition and results of operations.

Our operations can be subject to natural disasters and other external events beyond our control, such as earthquakes, fires, severe weather, public health issues, power failures, telecommunication loss, major accidents, terrorist attacks, acts of war, and other natural and man-made events. Our corporate headquarters and a portion of our critical business offices are located in California near major earthquake faults. Such events of disaster, whether natural or attributable to human beings, could cause severe destruction, disruption or interruption to our operations or property. Financial institutions, such as us, generally must resume operations promptly following any interruption. If we were to suffer a disruption or interruption and were not able to resume normal operations within a period consistent with industry standards, our business could suffer serious harm. In addition, depending on the nature and duration of the disruption or interruption, we might be vulnerable to fraud, additional expense or other losses, or to a loss of business and/or clients. We have implemented a business continuity management program and we continue to enhance it on an ongoing basis. There is no assurance that our business continuity management program can adequately mitigate the risks of such business disruptions and interruptions.

Additionally, natural disasters and external events could affect the business and operations of our clients, which could impair their ability to pay their loans or fees when due, impair the value of collateral securing their loans, cause our clients to reduce their deposits with us, or otherwise adversely affect their business dealings with us, any of which could have a material adverse effect on our business, financial condition and results of operations.

We face reputation and business risks due to our interactions with business partners, service providers and other third parties.

We rely on third parties, both in the United States and internationally in countries such as India, in a variety of ways, including to provide key components of our business infrastructure or to further our business objectives. These third parties may provide services to us and our clients or serve as partners in business activities. We rely on these third parties to fulfill their obligations to us, to accurately inform us of relevant information and to conduct their activities professionally and in a manner that reflects positively on us. Any failure of our business partners, service providers or other third parties to meet their commitments to us or to perform in accordance with our expectations could result in operational issues, increased expenditures, damage to our reputation or loss of clients, which could harm our business and operations, financial performance, strategic growth or reputation.

We depend on the accuracy and completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also may rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, under our accounts receivable financing arrangements, we rely on information, such as invoices, contracts and other supporting documentation, provided by our clients and their account debtors to determine the amount of credit to extend. Similarly, in deciding whether to extend credit, we may rely upon our customers’ representations that their financial statements conform to U.S. GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. We also may rely on customer representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our clients. Our financial condition, results of operations, financial reporting and reputation could be negatively affected if we rely on materially misleading, false, inaccurate or fraudulent information.

Our accounting policies and methods are key to how we report our financial condition and results of operations. They require management to make judgments and estimates about matters that are uncertain.

Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Our management must exercise judgment in selecting and applying many of these accounting policies and methods so they comply with U.S. GAAP and reflect management’s judgment of the most appropriate manner to report our financial condition and results. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which might be reasonable under the circumstances yet might result in our reporting materially different amounts than would have been reported under a different alternative.

Changes in accounting standards could materially impact our financial statements.

From time to time, the FASB or the SEC may change the financial accounting and reporting standards that govern the preparation of our financial statements. In addition, the bodies that interpret the accounting standards (such as banking regulators or

outside auditors) may change their interpretations or positions on how these standards should be applied. These changes may be beyond our control, can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retrospectively, or apply an existing standard differently, also retrospectively, in each case resulting in our revising or restating prior period financial statements.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

If we identify material weaknesses in our internal control over financial reporting or are otherwise required to restate our financial statements, we could be required to implement expensive and time-consuming remedial measures and could lose investor confidence in the accuracy and completeness of our financial reports. We may also face regulatory enforcement or other actions, including the potential delisting of our securities from NASDAQ. This could have an adverse effect on our business, financial condition and results of operations, including our stock price, and could potentially subject us to litigation.

Legal/Regulatory Risks

We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business.

SVB Financial Group, including the Bank, is extensively regulated under federal and state laws and regulations governing financial institutions, including those imposed by the FDIC, the Federal Reserve and the California Department of Financial Institutions. Federal and state laws and regulations govern, limit or otherwise affect the activities in which we may engage and may affect our ability to expand our business over time. In addition, a change in the applicable statutes, regulations or regulatory policy could have a material effect on our business, including limiting the types of financial services and products we may offer or increasing the ability of nonbanks to offer competing financial services and products. These laws and regulations also require financial institutions, including SVB Financial and the Bank, to maintain certain minimum levels of capital, which may require us to raise additional capital in the future or affect our ability to use our capital resources for other business purposes. In addition, increased regulatory requirements (and the associated compliance costs), whether due to the adoption of new laws and regulations, changes in existing laws and regulations, or more expansive or aggressive interpretations of existing laws and regulations, may have a material adverse effect on our business, financial condition and results of operations.

Additional requirements under our regulatory framework intended to strengthen the U.S. financial system could adversely affect us.

Recent government efforts to strengthen the U.S. financial system have resulted in the imposition of additional regulatory requirements, including expansive financial services regulatory reform legislation. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Financial Reform Act”) was enacted. This legislation sets out sweeping regulatory changes. The requirements include, among others: (i) new requirements on banking, derivative and investment activities, including modified capital requirements, the repeal of the prohibition on the payment of interest on business demand accounts, debit card interchange fee requirements, and the “Volcker Rule,” which restricts the sponsorship, or the acquisition or retention of ownership interests, in private equity funds; (ii) corporate governance and executive compensation requirements; (iii) enhanced financial institution safety and soundness regulations, including increases in assessment fees and deposit insurance coverage; and (iv) the establishment of new regulatory bodies, such as the Bureau of Consumer Financial Protection. Certain provisions are effective immediately; however, much of the Financial Reform Act is subject to further rulemaking (at least 200 implementation rulemakings) and/or studies (at least 60 further studies or reports). As such, while we are subject to the legislation, we cannot fully assess the impact of the Financial Reform Act until final rules are implemented, which depending on the rule, could be within six to 24 months from the enactment of the Financial Reform Act, or later.

Current and future legal and regulatory requirements, restrictions and regulations, including those imposed under the Financial Reform Act, may have a material and adverse effect on our business, financial condition, and results of operations and may make it more difficult for us to attract and retain qualified executive officers and employees.

If we were to violate international, federal or state laws or regulations governing financial institutions, we could be subject to disciplinary action that could have a material adverse effect on our business, financial condition, results of operations and reputation.

International, federal and state banking regulators possess broad powers to take supervisory or enforcement action with respect to financial institutions. Other regulatory bodies, including the SEC, NASDAQ, the Financial Industry Regulatory Authority (“FINRA”) and state securities regulators, regulate broker-dealers, including our subsidiary, SVB Securities. If SVB Financial Group were to violate, even if unintentionally or inadvertently, the laws governing public companies, financial institutions and broker-

dealers, the regulatory authorities could take various actions against us, depending on the severity of the violation, such as revoking necessary licenses or authorizations, imposing censures, civil money penalties or fines, issuing cease and desist or other supervisory orders, and suspending or expelling from the securities business a firm, its officers or employees. Supervisory actions could result in higher capital requirements, higher insurance premiums, higher levels of liquidity available to meet the Bank’s financial needs and limitations on the activities of SVB Financial Group. These remedies and supervisory actions could have a material adverse effect on our business, financial condition, results of operations and reputation.

SVB Financial relies on dividends from its subsidiaries for most of its cash revenues.

SVB Financial is a holding company and is a separate and distinct legal entity from its subsidiaries. It receives substantially all of its cash revenues from dividends from its subsidiaries, primarily the Bank. These dividends are a principal source of funds to pay operating costs, borrowings, if any, and dividends, should SVB Financial elect to pay any. Various federal and state laws and regulations limit the amount of dividends that the Bank and certain of our nonbank subsidiaries may pay to SVB Financial. Also, SVB Financial’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.

Strategic/Reputation Risks

Concentration of risk increases the potential for significant losses.

Concentration of risk increases the potential for significant losses in our business. Our clients are concentrated by industry niches: technology, life science, venture capital/private equity and premium wine. Many of our client companies are concentrated by certain stages within their life cycles, such as early-stage or mid-stage, and many of these companies are venture capital-backed. Our loan concentrations are derived from our borrowers engaging in similar activities or types of loans extended to a diverse group of borrowers that could cause those borrowers to be similarly impacted by economic or other conditions. Any adverse effect on any of our areas of concentration could have a material impact on our business, results of operations and financial condition. Due to our concentrations, we may suffer losses even when economic and market conditions are generally favorable for our competitors.

Decreases in the amount of equity capital available to our portfolio companies could adversely affect our business, growth and profitability.

Our core strategy is focused on providing banking products and services to companies, including in particular to emerging stage to mid-stage companies, that receive financial support from sophisticated investors, including venture capital or private equity firms, “angels,” and corporate investors. We derive a meaningful share of our deposits from these companies and provide them with loans as well as other banking products and services. In some cases, our lending credit decision is based on our analysis of the likelihood that our venture capital or angel-backed client will receive additional rounds of equity capital from investors. If the amount of capital available to such companies decreases, it is likely that the number of new clients and investor financial support to our existing borrowers could decrease, which could have an adverse effect on our business, profitability and growth prospects.

Among the factors that have affected and could in the future affect the amount of capital available to our portfolio companies are the receptivity of the capital markets, the prevalence of IPO’s or M&A activity of companies within our technology and life science industry sectors, the availability and return on alternative investments and general economic conditions in the technology, life science and venture capital/private equity industries. Reduced capital markets valuations could reduce the amount of capital available to our client companies, including companies within our technology and life science industry sectors.

Because our business and strategy are largely based on this venture capital/private equity financing framework focused on our particular client niches, any material changes in the framework, including adverse trends in investment or fundraising levels, may have a materially adverse effect on our business, strategy and overall profitability.

We face competitive pressures that could adversely affect our business, results of operations, financial condition and future growth.

Other banks and specialty and diversified financial services companies and debt funds, many of which are larger than we are, offer lending, leasing, other financial products and advisory services to our client base. In addition, we compete with hedge funds and private equity funds. In some cases, our competitors focus their marketing on our industry sectors and seek to increase their lending and other financial relationships with technology companies or special industries such as wineries. In other cases, our competitors may offer a broader range of financial products to our clients. When new competitors seek to enter one of our markets, or when existing market participants seek to increase their market share, they sometimes undercut the pricing and credit terms prevalent in that market, which could adversely affect our market share or ability to exploit new market opportunities. Our pricing and credit terms could deteriorate if we act to meet these competitive challenges, which could adversely affect our business, results of operations, financial condition and future growth. Similarly, competitive pressures could adversely affect the business, results of operations, financial condition and future growth of our non-banking services, including our access to capital and attractive investment opportunities for our funds business.

Our ability to maintain or increase our market share depends on our ability to meet the needs of existing and future clients.

Our success depends, in part, upon our ability to adapt our products and services to evolving industry standards and to meet the needs of existing and potential future clients. A failure to achieve market acceptance for any new products we introduce, a failure to introduce products that the market may demand, or the costs associated with developing, introducing and providing new products and services could have an adverse effect on our business, results of operations, growth prospects and financial condition.

We face risks in connection with our strategic undertakings.

If appropriate opportunities present themselves, we may engage in strategic activities, which could include acquisitions, joint ventures, partnerships, investments or other business growth initiatives or undertakings. There can be no assurance that we will successfully identify appropriate opportunities, that we will be able to negotiate or finance such activities or that such activities, if undertaken, will be successful.

In order to finance future strategic undertakings, we might obtain additional equity or debt financing. Such financing might not be available on terms favorable to us, or at all. If obtained, equity financing could be dilutive and the incurrence of debt and contingent liabilities could have a material adverse effect on our business, results of operations and financial condition.

Our ability to execute strategic activities successfully will depend on a variety of factors. These factors likely will vary based on the nature of the activity but may include our success in integrating the operations, services, products, personnel and systems of an acquired company into our business, operating effectively with any partner with whom we elect to do business, retaining key employees, achieving anticipated synergies, meeting management’s expectations and otherwise realizing the undertaking’s anticipated benefits. Our ability to address these matters successfully cannot be assured. In addition, our strategic efforts may divert resources or management’s attention from ongoing business operations and may subject us to additional regulatory scrutiny. If we do not successfully execute a strategic undertaking, it could adversely affect our business, financial condition, results of operations, reputation and growth prospects. In addition, if we were to conclude that the value of an acquired business had decreased and that the related goodwill had been impaired, that conclusion would result in an impairment of goodwill charge to us, which would adversely affect our results of operations.

We face risks associated with international operations.

One component of our strategy is to expand internationally. To date, we have opened offices in China, India, Israel and the United Kingdom. We plan to expand our operations in those locations and may expand beyond these countries. Our efforts to expand our business internationally carry with them certain risks, including risks arising from the uncertainty regarding our ability to generate revenues from foreign operations. In addition, there are certain risks inherent in doing business on an international basis, including, among others, legal, regulatory and tax requirements and restrictions, uncertainties regarding liability, tariffs and other trade barriers, difficulties in staffing and managing foreign operations, incremental requirement of management’s attention and resources, differing technology standards or customer requirements, cultural differences, political and economic risks and financial risks, including currency and payment risks. These risks could adversely affect the success of our international operations and could have a material adverse effect on our overall business, results of operations and financial condition. In addition, we face risks that our employees may fail to comply with applicable laws and regulations governing our international operations, including the U.S. Foreign Corrupt Practices Act and foreign laws and regulations, which could have a material adverse effect on us.

Our business reputation is important and any damage to it could have a material adverse effect on our business.

Our reputation is very important to sustain our business, as we rely on our relationships with our current, former and potential clients and stockholders, the venture capital and private equity communities, and the industries that we serve. Any damage to our reputation, whether arising from regulatory, supervisory or enforcement actions, matters affecting our financial reporting or compliance with SEC and exchange listing requirements, negative publicity, or our conduct of our business or otherwise could have a material adverse effect on our business.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

(REMOVED AND RESERVED)

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

See Index to Exhibits at end of report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		SVB Financial Group

Date: November 5, 2010		/s/ MICHAEL DESCHENEAUX
		Michael Descheneaux
		Chief Financial Officer
		(Principal Financial Officer)


		SVB Financial Group

Date: November 5, 2010		/s/ KAMRAN HUSAIN
		Kamran Husain
		Chief Accounting Officer
		(Principal Accounting Officer)

INDEX TO EXHIBITS


Exhibit Number		Incorporated by Reference				Filed Herewith
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
3.1	Restated Certificate of Incorporation	8-K	000-15637	3.1	May 31, 2005

3.2	Amended and Restated Bylaws	8-K	000-15637	3.2	July 27, 2010

3.3	Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock	8-K	000-15637	3.3	December 8, 2008

3.4	Certificate of Designations for Fixed Rate Cumulative Perpetual Preferred Stock, Series B	8-K	000-15637	3.4	December 15, 2008

4.1	Indenture dated as of May 20, 2003 between SVB Financial and Wells Fargo Bank Minnesota, National Association	S-3	333-107994	4.1	August 14, 2003

4.2	Form of Note	S-3	333-107994	4.1	August 14, 2003

4.3	Registration Rights Agreement dated as of May 20, 2003, between SVB Financial and the initial purchasers named therein	S-3	333-107994	4.3	August 14, 2003

4.4	Junior Subordinated Indenture, dated as of October 30, 2003 between SVB Financial and Wilmington Trust Company, as trustee	8-K	000-15637	4.12	November 19, 2003

4.5	7.0% Junior Subordinated Deferrable Interest Debenture due October 15, 2033 of SVB Financial	8-K	000-15637	4.13	November 19, 2003

4.6	Amended and Restated Trust Agreement, dated as of October 30, 2003, by and among SVB Financial as depositor, Wilmington Trust Company as property trustee, Wilmington Trust Company as Delaware trustee, and the Administrative Trustees named therein	8-K	000-15637	4.14	November 19, 2003

4.7	Certificate Evidencing 7% Cumulative Trust Preferred Securities of SVB Capital II, dated October 30, 2003	8-K	000-15637	4.15	November 19, 2003

4.8	Guarantee Agreement, dated October 30, 2003, between SVB Financial and Wilmington Trust Company, as trustee	8-K	000-15637	4.16	November 19, 2003

4.9	Agreement as to Expenses and Liabilities, dated as of October 30, 2003, between SVB Financial and SVB Capital II	8-K	000-15637	4.17	November 19, 2003

4.10	Certificate Evidencing 7% Common Securities of SVB Capital II, dated October 30, 2003	8-K	000-15637	4.18	November 19, 2003

4.11	Officers’ Certificate and Company Order, dated October 30, 2003, relating to the 7.0% Junior Subordinated Deferrable Interest Debentures due October 15, 2033	8-K	000-15637	4.19	November 19, 2003

4.12	Amended and Restated Preferred Stock Rights Agreement, dated as of January 29, 2004, between SVB Financial and Wells Fargo Bank Minnesota, N.A.	8-A12G/A	000-15637	4.20	February 27, 2004

4.13	Amendment No. 1 to Amended & Restated Preferred Stock Rights Agreement, dated as of August 2, 2004, by and between SVB Financial and Wells Fargo Bank, N.A.	8-A12G/A	000-15637	4.13	August 3, 2004

4.14	Amendment No. 2 to Amended & Restated Preferred Stock Rights Agreement, dated as of January 29, 2008, by and between SVB Financial and Wells Fargo Bank, N.A.	8-A/A	000-15637	4.14	January 29, 2008

4.15	Amendment No. 3 to Amended and Restated Preferred Stock Rights Agreement, dated as of April 30, 2008, by and between SVB Financial and Wells Fargo Bank, N.A	8-A/A	000-15637	4.20	April 30, 2008

Exhibit

Number

Incorporated by Reference

Filed
Herewith

Exhibit Description

Form

File No.

Exhibit

Filing Date

4.16

Amendment No. 4 to Amended and Restated Preferred Stock Rights Agreement, dated as of January 15, 2010, by and between SVB Financial, Wells Fargo Bank, N.A. and American Stock Transfer & Trust Company, LLC

8-A/A

000-15637

4.22

January 19, 2010

4.17

Indenture for 3.875% Convertible Senior Notes Due 2011, dated as of April 7, 2008, by and between Wells Fargo Bank, N.A., as Trustee, and SVB Financial

8-K

000-15637

4.1

April 7, 2008

4.18

Letter Agreement re Call Option Transaction, dated as of April 1, 2008, by and between SVB Financial and JPMorgan Chase Bank, National Association.

8-K

000-15637

4.2

April 7, 2008

4.19

Letter Agreement re Call Option Transaction, dated as of April 1, 2008, by and between SVB Financial and Bank of America, N.A.

8-K

000-15637

4.3

April 7, 2008

4.20

Letter Agreement re Warrants, dated as of April 1, 2008, by and between SVB Financial and JPMorgan Chase Bank, National Association.

8-K

000-15637

4.4

April 7, 2008

4.21

Letter Agreement re Warrants, dated as of April 1, 2008, by and between SVB Financial and Bank of America, N.A.

8-K

000-15637

4.5

April 7, 2008

4.22

Warrant, dated December 12, 2008 to purchase shares of Common Stock of SVB Financial Group

8-K

000-15637

4.21

December 15, 2008

4.23

Indenture, dated September 20, 2010, by and between SVB Financial Group and U.S. Bank National Association, as trustee

8-K

000-15637

4.1

September 20, 2010

4.24

Form of 5.375% Senior Note due 2020

8-K

000-15637

4.2

September 20, 2010

*10.35

SVB Financial Group Long-Term Cash Incentive Plan

8-K

000-15637

10.35

July 27, 2010

31.1

Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Executive Officer

31.2

Rule 13a-14(a) / 15(d)-14(a) Certification of Principal Financial Officer

32.1

Section 1350 Certifications

101.INS

XBRL Instance Document

***

101.SCH

XBRL Taxonomy Extension Schema Document

***

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

***

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

***

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

***

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

***

*	Denotes management contract or any compensatory plan, contract or arrangement.

**	Furnished herewith

***

Pursuant to Rule 406T of Regulation S-T, XBRL (Extensible Business Reporting Language) information is submitted and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.