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Redacted

CENTRAL POINT OF CONTACT 

REGIONAL INSTITUTIONS GROUP 

FINANCIAL INSTITUTION SUPERVISION AND CREDIT 

June 14, 2017 

Board of Directors 

SVB Financial Group 

3003 Tasman Drive 

Santa Clara, California 95054 

Dear Members of the Board: 

Enclosed is a copy of the Report of Inspection for SVB Financial Group (SVBFG), completed by examiners 

from the Federal Reserve Bank of San Francisco, using financial information as of September 30, 2016. 

The scope of the inspection focused on the effectiveness of risk management, the overall consolidated 

financial condition of the organization, and the potential negative impact of the parent company and 

non-bank affiliates on the company’s depository institution. The inspection concluded with a meeting 

with management on March 16, 2017 to discuss the findings and recommendations. 

The overall condition of SVBFG is satisfactory, and primarily reflects the overall satisfactory condition of the 

depository institution. Risk management is satisfactory and supported by sufficient board and management 

oversight. However, the risk monitoring and Management Information Systems (MIS) risk management 

subcomponent is downgraded to fair due to ineffective risk identification and monitoring processes in the 

Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance, and Enterprise Risk Management 

programs. Deficiencies noted during the August 2016 BSA/AML target resulted in the issuance of a 

Memorandum of Understanding to address weaknesses in monitoring processes, as well as improve the 

oversight of the BSA/AML program. In addition, the BSA/AML oversight Matter Requiring Attention (MRA) 

remains open until weaknesses in the risk assessment process are remediated and verified by examiners. A 

compliance MRA was also cited during this inspection requiring improvement in risk monitoring systems to 

ensure compliance with laws, regulations, and supervisory requirements. Finally, while management has 

addressed the prior MRA to develop an acceptable risk management framework that aggregates risks on a 

consolidated basis across the organization, the program will require additional time to fully implement. A 

new MRA is cited requiring management to make sufficient progress on the implementation plan such that 

processes and analyses are evidenced. The compliance and risk management MRAs are detailed on page 

two of the report. The successful and timely execution of plans to address regulatory concerns is necessary 

for risk management to remain effective. 

The financial condition of the company remains satisfactory. Consolidated asset quality is satisfactory 

with a manageable level of adverse classifications. Consolidated earnings continue to fully support 

operations, sufficiently fund the allowance for loan and lease losses (ALLL), and augment capital. 

Consolidated liquidity remains strong with sufficient sources of funds to support the company’s 

101 Market Street, San Francisco, California 94105 

Redacted

www.frbsf.org 

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Federal Reserve Bank of San Francisco	 RESTRICTED – FR 

Board of Directors
 

SVB Financial Group
 

June 14, 2017
 

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operations and meet its obligations. Consolidated capital remains satisfactory relative to the risk profile 

of the organization, and management continues to comply with the Dodd-Frank Act company-run stress 

testing (DFAST) requirements. However, during the October 2016 DFAST review, examiners noted 

weaknesses in model risk management and governance practices. Management committed to improve 

the documentation of models and support of management judgments to ensure consistency with the 

regulatory expectations described in SR 11-7 by September 30, 2017. 

On a stand-alone basis, the financial condition of the parent company remains satisfactory. The 

activities of the nondepository entities are limited in relation to the consolidated company and 

represent limited likelihood of significant negative impact on the subsidiary bank. The firm remains in 

compliance with laws and regulations, including Regulation W. However, management is currently 

awaiting the status of a request to extend the conformance deadline with the Volcker Rule to July 2022. 

If the extension is not granted, SVBFG may be required to liquidate approximately $194 million in 

covered funds at distressed prices. Although risk to the bank is mitigated by the parent company’s 

ability to absorb potential losses, the early divestiture of covered funds could impact relationships with 

fund managers and the bank’s core lending business. 

After you have reviewed the enclosed report1 and within 45 days of receipt, please advise us of the actions 

taken or planned to address the Matters Requiring Board Attention. Upon completion of your review, each 

director should sign the enclosed Signature of Directors page to acknowledge their review. This letter and 

the signed Directors page should be retained with the permanent records of the bank holding company. 

We welcome your comments or questions regarding this inspection or our general supervisory process. 

Redacted

If 

you have questions about this report of inspection, please do not hesitate to contact me at 

Redacted

Central Point of Contact 

cc:	 Greg Becker, Chief Executive Officer 

Suanne Mingrone, Head of Regulatory Relations 

California Department of Business Oversight 

Federal Deposit Insurance Corporation 

Consumer Financial Protection Bureau 

1 This document has been prepared by an examiner selected or approved by the Board of Governors of the Federal Reserve 

System. The document is the property of the Board of Governors and is furnished to directors and management for their 

confidential use. The document is strictly privileged and confidential under applicable law, and the Board of Governors has 

forbidden its disclosure in any manner without its permission, except in limited circumstances specified in the law (12 U.S.C 

1817(a) and 1831m) and in the regulations of the Board of Governors (12 C.F.R. 261.20). Under no circumstances should the 

directors, officers, employees, trustees or independent auditors disclose or make public this document or any portion thereof 

except in accordance with applicable law and the regulations of the Board of Governors. Any unauthorized disclosure of the 

document may subject the person or persons disclosing or receiving such information to the penalties of Section 641 of the U.S. 

Criminal Code (18 U.S.C. 641). Each director or trustee, in keeping with his or her responsibilities, should become fully informed 

regarding the contents of this document. In making this review, it should be noted that this document is not an audit, and 

should not be considered as such. 

BOG-FRS - Public Release, April 2023
RESTRICTED F.R. 

REPORT OF 

BANK HOLDING 

COMPANY INSPECTION 

THI S DOCUMEN T I S STRICTL Y CONFIDENTIA L 

This document has been prepared by an examiner selected or approved by the Board of Governors of the Federal Reserve System The document is 

the property of the Board of Governors and is furnished to directors and management for their confidential use. The document is strictly privileged 

and confidential under applicable law, and the Board of Governors has forbidden its disclosure in any manner without its permission, except in limited 

circumstances specified in the law (12 U.S.C 1817(a) and 1831m) and in the regulations of the Board of Governors (12 C.F.R. 261.20). Under no 

circumstances should the directors, officers, employees, trustees or independent auditors disclose or make public this document or any portion thereof 

except in accordance with applicable law and the regulations of the Board of Governors. Any unauthorized disclosure of the document may subject 

the person or persons disclosing or receiving such information to the penalties of Section 641 of the U.S. Criminal Code (18 U.S.C. 641). Each 

director or trustee, in keeping with his or her responsibilities, should become fully informed regarding the contents of this document. In making this 

review, it should be noted that this document is not an audit, and should not be considered as such. 

FEDERAL RESERVE BANK OF SAN FRANCISCO 

BHC Name: SVB FINANCIA L GROU P 

Location: SANT A CLARA, CALIFORNIA 

RSSD Number: 1031449 

Start Date: DECEMBE R 27, 2016 

Financial Statements as of: SEPTEMBE R 30, 2016 

Examination Date as of: SEPTEMBE R 30, 2016 

Conclude d on: MARC H 3, 2017 

BOG-FRS - Public Release, April 2023
REPORT OF 

BANK HOLDING COMPANY 

INSPECTION 

SVB Financial Group 

Bank Holding Company Name 

Physical Location Mailing Address 

Street: 3003 Tasman Drive Street/Box: 3003 Tasman Drive 

City: Santa Clara City: Santa Clara 

County: Santa Clara State: California 

State: California ZIP Code: 95054-1191 

Joint Concurrent X Independent 

Redacted 

Federal Reserve Bank Examiner-in-Charge 

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TABLE OF CONTENTS
 

Scope.......................................................................................................................................... 1
 

Matters Requiring Board Attention ........................................................................................... 2
 

Inspection Conclusions and Comments..................................................................................... 4
 

Risk Management ...................................................................................................................... 7
 

Financial Condition .................................................................................................................... 10
 

Impact ........................................................................................................................................ 12
 

Depository Institutions .............................................................................................................. 13
 

Other Matters ............................................................................................................................ 14
 

Signature of Directors ................................................................................................................ 15
 

Note: Except as indicated, amounts in tables are shown to the nearest thousand dollars. 

Date of previous inspection: 11/9/15 

BOG-FRS - Public Release, April 2023
SCOPE 

Pursuant to Section 5 of the Bank Holding Company Act of 1956, as amended, examiners from the 

Federal Reserve Bank of San Francisco (FRB) conducted a roll-up inspection of SVB Financial Group 

(SVBFG) using financial statements and information as of September 30, 2016. This event represents 

the conclusion of the 2016 supervisory cycle. 

The primary objectives of the roll-up inspection were to assess and assign RFI (D) composite, 

component, and subcomponent ratings, which focus on risk management, the financial condition of the 

consolidated organization, and the potential negative impact of parent and nonbank operations on the 

sole depository institution, Silicon Valley Bank (SVB). Examiners also assessed the holding company's 

ability to act as a source of managerial and financial strength to SVB. In addition, the inspection scope 

included a review of the company's enterprise risk management (ERM) program, corporate compliance 

program, and model risk management function. 

As of September 30, 2016, the depository institution comprised 98.6 percent of the total assets of the 

consolidated company. As such, this inspection leveraged the work of the recent roll-up examination of 

the subsidiary bank conducted jointly by the FRB and the California Department of Business Oversight 

(CDBO) as of September 30, 2016. The inspection also leveraged other examination work and 

continuous monitoring activity conducted during the 2016 supervisory cycle, including the results of 

target examinations that focused on the following areas: 

Supervisory Event 2016 Rating Event Date 

Dodd Frank Act Stress Testing (SVBFG) In Compliance 10/03/16 

Bank Secrecy Act (SVB) Less than Satisfactory, with findings 08/08/16 

Regulatory Reporting (SVBFG) Satisfactory 08/08/16 

Consumer Compliance/CRA Satisfactory, with findings 06/20/16 

Asset Quality (SVB) Satisfactory, with findings 05/09/16 

Information Technology (SVB) Less than Satisfactory, with findings 03/14/16 

Peer Group Comparisons 

Throughout the inspection report, the performance of SVBFG is compared to peer-group averages of 

other bank holding companies (BHCs) of similar size and structure. The current peer group for SVBFG 

includes all BHCs with consolidated assets equal to or greater than $10.0 billion. 

Meetings with Management 

An exit meeting was held with management on March 16, 2017. Senior management was represented 

by President and Chief Executive Officer Greg Becker, Chief Risk Officer Laura Izurieta, Chief Financial 

Officer Mike Descheneaux, Treasurer Mike Kruse, Redacted , Redacted 

, Head of Internal Audit John Peters, Redacted 

, Chief Accounting Officer Kamran Husain, Head of Regulatory Relations Suanne Mingrone, 

and Redacted . The FRB was represented by Central Point of 

Contact (CPC) Redacted and Examiner-in-Charge (EIC) Redacted . 

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MATTERS REQUIRING BOARD ATTENTION 

Matters Requiring Attention (MRA)2 

MRA – Risk Management 

Issue: Management has developed a risk management framework to aggregate risks on a consolidated 

basis across business lines in accordance with SR 16-113

. However, additional time is required to fully 

implement the new framework. A multi-year implementation roadmap has been established to ensure 

consistency and completeness of risk management processes throughout the organization. The initial 

phase of the plan includes enhancing the Risk Control Self-Assessment (RCSA) process, collecting and 

analyzing the data from the RCSAs into an aggregated risk register to support the identification of 

horizontal risks, and producing a risk report that includes the firm’s cross-functional risks. The 

effectiveness of the risk management program will be assessed when these processes and results can be 

evaluated. 

Required Action: By December 31, 2017, management is required to complete the initial phase of the 

risk management implementation plan by: 

 Introducing the enhanced RCSA process to business units to enable the aggregation of risks.
 

 Developing the aggregated risk register to support the identification of horizontal risks and
 

enable trend analysis.
 

	 Producing a risk report that identifies cross-functional risks on a fully consolidated basis across 

all business lines, legal entities, and activities. The analysis to identify and assess these crossfunctional risks should be documented and auditable.
 

Management Response: Management agrees and has committed to address the MRA by December 31, 2017. 

MRA – Compliance Program 

Issue: The compliance department does not consistently meet supervisory expectations of SR 16-11 

requiring appropriate policies, controls, and risk monitoring systems are in place to comply with laws, 

regulations, and supervisory requirements. The compliance function currently relies on business units 

to self-regulate and assess their own compliance to policy and regulatory requirements. The system is 

prone to errors and omissions, evidenced by weaknesses in the monitoring processes for SVFG’s 

private equity investments and debt-previously-contracted investments. 

Required Action: By September 30, 2017, management is required to develop a comprehensive process 

to ensure business units comply with internal policies, regulations, and regulatory guidance. Effective 

internal and monitoring processes should include: 

 A formal system monitoring investments held by SVBFG to ensure compliance with applicable 

regulatory limitations.
 

 Establishing clear roles and responsibilities over the monitoring of compliance with laws and
 

regulations related to investments at SVBFG.
 

Management Response: Management agrees and has committed to address the MRA by September 30, 2017. 

2 Matters Requiring Attention are matters that are important and that the Federal Reserve is expecting a banking organization 

to address over time. 3 SR 16-11, Supervisory Guidance for Assessing Risk Management at Supervised Institutions with Total Consolidated Assets Less 

than $50 Billion < https://www.federalreserve.gov/supervisionreg/srletters/sr1611.htm> 

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MATTERS REQUIRING BOARD ATTENTION 

SUMMARY OF NEW FINDINGS 

Matters Requiring Attention 

Issue Expected 

Completion Date 

Risk Management 12/31/17 

Compliance Program 9/30/17 

SUMMARY OF OUTSTANDING FINDINGS 

Matters Requiring Attention 

Issue Main Category Status Comments 

Timeframe for 

Completion Date 

Cross-functional Risk 

Processes 

Management-Risk 

Management 

Close A new MRA will be 

cited requiring 

sufficient progress in 

implementing the new 

framework. 

Closed during current 

inspection. 

Liquidity Risk 

Management Policies 

Market/Liquidity Risk 

Management 

Close Closed during current 

inspection. 

Capital Adequacy and 

Contingency Planning 

Capital Close Closed during current 

inspection. 

Bank Secrecy Act/AML BSA/AML 

Issues Risk Management 

Pending 

Verification 

The remediation of this 

MRA required 

additional time to 

complete. 

3/31/17 

Model Risk 

Management 

Management - Risk 

Management 

Open 9/30/17 

BOG-FRS - Public Release, April 2023
INSPECTION CONCLUSIONS AND COMMENTS 

HOLDING COMPANY UNIFORM COMPOSITE RATING 

Safety and Soundness Inspection Ratings 

Inspection Start Date 

Current Inspection Prior Inspection Prior Inspection 

Inspection Start Date 12/27/16 11/09/15 10/06/14 

Risk Management 2 2 2 

Board/Senior Management Oversight 2 2 2 

Policies, Procedures & Limits 2 2 2 

Risk Monitoring & MIS 3 2 2 

Internal Controls 2 2 2 

Financial Condition 2 2 2 

Capital 2 2 2 

Asset Quality 2 2 2 

Earnings 2 2 2 

Liquidity 1 1 1 

Impact 2 2 2 

Composite Rating 2 2 2 

Depository Institution 2 2 2 

SVBFG has been assigned a uniform composite rating of 2. This rating is defined as follows: 

Composite 2 

A composite rating of "2" is assigned. Holding companies in this group are fundamentally sound but 

may have modest weaknesses in risk management or financial condition. The weaknesses could 

develop into conditions of greater concern but are believed correctable in the normal course of 

business. As such, the supervisory response is limited. Cash flow is adequate to service obligations, and 

the nondepository entities are unlikely to have a significant negative impact on the subsidiary 

depository institution(s). 

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INSPECTION CONCLUSIONS AND COMMENTS 

OVERALL CONDITION
 

The overall condition of SVBFG is satisfactory, primarily reflecting the overall satisfactory condition of 

the depository institution. Risk management is satisfactory and supported by sufficient board and 

management oversight. Nevertheless, the risk monitoring and Management Information Systems (MIS) 

risk management subcomponent is downgraded to fair due to weaknesses in the Bank Secrecy Act/AntiMoney Laundering (BSA/AML), compliance and ERM programs. The financial condition of the company 

remains satisfactory. All subcomponents are rated satisfactory with the exception of liquidity, which 

remains strong. The activities of the nondepository entities are unlikely to have a significant negative 

impact on the subsidiary bank, based on the limited activities of nondepository entities in relation to the 

consolidated company. However, management is currently awaiting the status of a request to extend 

the conformance deadline with the Volcker Rule to July 2022. If the extension is not granted, SVBFG 

may be required to liquidate covered funds at distressed prices. Although risk to the bank is mitigated 

by the parent company’s ability to absorb potential losses, the early divestiture of covered funds could 

impact relationships with fund managers and the bank’s core lending business; 

Risk management practices remain adequate. Board and senior management provides sufficient 

oversight of the company’s strategies and risk management framework; Policies, procedures, and limits 

remain acceptable. Internal controls are adequate, supported by an internal audit program which 

effectively identifies and escalates issues within the institution. However, weaknesses were noted in 

management’s ability to effectively identify and monitor key risks and vulnerabilities, resulting in a 

downgrade of the risk monitoring and MIS subcomponent to fair. Deficiencies noted during the 

August 2016 BSA target resulted in the issuance of a Memorandum of Understanding (MOU) to address 

weaknesses in monitoring processes, as well as improve the oversight of the BSA/AML program. The 

outstanding BSA oversight MRA remains in place until weaknesses in the BSA/AML risk assessment 

process are remediated and verified by examiners. A compliance MRA was cited during this inspection 

requiring improvement in risk monitoring systems to ensure compliance with laws, regulations, and 

supervisory requirements. Management committed to address this MRA by September 30, 2017. 

Finally, while management has developed an acceptable ERM framework that aggregates risks on a 

consolidated basis across the organization, the program will require additional time to fully implement. 

A multi-year implementation roadmap has been established to ensure consistency and completeness of 

risk management processes throughout the organization. A new MRA will be issued requiring 

management to complete the first phase of the implementation plan such that processes and analyses 

are evidenced. Management committed to address this MRA by December 31, 2017. The successful 

and timely execution of plans to address these regulatory concerns is necessary for risk management to 

remain effective. 

The financial condition of the company remains satisfactory. Consolidated asset quality is satisfactory 

with a manageable level of adverse classifications. Consolidated earnings continue to fully support 

operations, sufficiently fund the allowance for loan and lease losses (ALLL), and augment capital. 

Consolidated liquidity remains strong with sufficient sources of funds to support the company’s 

operations and meet its obligations. Consolidated capital remains satisfactory relative to the risk profile 

of the organization, and management continues to comply with the Dodd-Frank Act company-run stress 

(DFAST) testing requirements. Management has made progress towards remediating the model risk 

management MRA cited during the October 2016 DFAST review, which required improvement in the 

documentation of models and support of management judgments. Corrective action will be verified 

during the DFAST target in the fourth quarter of 2017. 

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INSPECTION CONCLUSIONS AND COMMENTS 

The potential of significant negative impact by the holding company and nonbank subsidiaries to SVB is 

limited. On a standalone basis, the parent company is in satisfactory condition. No significant financial 

weaknesses are at the nonbanks. The parent company has sufficient cash flow to fund operating 

expenses. The firm remains in compliance with laws and regulations, including Regulation W. However, 

as previously noted, a denial of the extension request to comply with the Volcker Rule may require 

SVBFG to liquidate covered funds at distressed prices. Although risk is mitigated by the sound financial 

condition of the parent company, the early divestiture of covered funds could disrupt the bank’s 

relationships with fund managers and portfolio companies. 

The depository institution remains in satisfactory condition. SVB is the only depository institution of 

SVBFG and was assigned a satisfactory composite CAMELS rating during the most recent roll-up 

examination, conducted jointly by the FRB and CDBO as of September 30, 2016. In addition, the FRB 

Consumer Compliance and Consumer Financial Protection Bureau (CFPB) examinations resulted in 

satisfactory ratings. However, in the examination report transmitted to the bank on October 21, 2016, 

the Reserve Bank noted weaknesses in bank procedures and staff knowledge that led to isolated 

violations of the flood hazard insurance provisions of Regulation H and Regulation CC (Expedited Funds 

Availability Act). Management has already taken steps to correct and prevent these issues from 

occurring in the future. The October 26, 2016 CFPB report also noted violations in loan originator 

compensation and Home Mortgage Disclosure Act reporting. The CFPB report cited MRAs to ensure 

that corrective action is performed to address the violations and the incorrect data related to mortgage 

originations and the Home Mortgage Disclosure Act. The Reserve Bank concurs with those findings. 

Redacted

Examiner-in-Charge 

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RISK MANAGEMENT 

COMPONENT RATING: 2 

Risk management remains satisfactory. Management of risk is largely effective and includes appropriate 

risk management practices over the credit, liquidity, market and legal functions. Board and senior 

management have demonstrated the ability and willingness to address problem areas, such as 

information technology, by providing sufficient resources and appropriate oversight to remediate issues. 

Model risk management has improved since the October 2016 DFAST target. Policies, procedures, and 

limits are satisfactory, cover all major business areas, and are appropriate for the firm’s significant 

activities. Internal controls remain satisfactory, primarily due to an effective audit program that 

continues to provide a reliable and effective assessment of internal control, governance, and risk 

management processes. However, the risk monitoring and MIS subcomponent is downgraded to fair 

due to ineffective risk identification and monitoring processes in the BSA/AML, compliance, and ERM 

programs. Although many of the weaknesses in these functions were identified by internal audit, these 

deficiencies resulted in the issuance of a MOU to address BSA/AML deficiencies and MRAs to improve 

compliance and risk management. Risk monitoring practices will require significant improvement to 

ensure compliance with laws, regulations, and supervisory requirements. 

Enterprise Risk Management 

Management has developed an ERM framework that aggregates risks on a consolidated basis across the 

organization, but implementation is ongoing. A multi-year implementation roadmap has been established 

to ensure consistency and completeness of risk management processes throughout the organization. The 

initial phase of the plan includes enhancing the RCSA process, collecting and analyzing the data from the 

RCSAs into an aggregated risk register to support the identification of horizontal risks, and producing a risk 

report that includes the firm’s cross-functional risks. The effectiveness of the risk management program 

will be assessed when these processes and results can be evaluated. Management committed to 

implement the initial phase of the plan by December 31, 2017. 

Corporate Compliance 

The compliance function is undergoing a significant reorganization to ensure that appropriate policies, 

controls, and risk monitoring systems are in place to comply with laws, regulations, and supervisory 

requirements. The October 2016 bank examination identified weaknesses in the compliance function, 

including inconsistent documentation, outdated policies, and instances where the business line was not 

fully compliant with internal policies and regulatory guidance. During a review of merchant banking 

activity, weaknesses were also noted in the tracking of ownership information for the holding 

company’s private equity investments, potentially resulting in inaccurate regulatory reports and 

information for risk management purposes. This report includes an MRA requiring management to 

improve the compliance program to meet regulatory standards and ensure that the compliance 

framework is appropriate for the firm’s business lines and activities; Management committed to 

address this MRA by September 30, 2017. 

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RISK MANAGEMENT 

Model Risk Management 

Model risk management is improving. Management has made progress towards remediating the MRA 

cited during the October 2016 DFAST review, which required improved documentation and support to 

ensure the effectiveness of governance, policies, and controls over the model risk management 

framework. Validation and documentation standards have improved, and effective challenge is now 

documented at management subcommittee levels. In addition, management addressed internal audit 

recommendations to ensure the independence of the Model Risk Committee by reducing the business 

line influence over the committee through the addition of second line participants. The Model Risk 

Committee charter was also enhanced to include clearer definitions of roles and responsibilities. 

Board and Senior Management Oversight – 2 

Board and senior management oversight remains satisfactory. Risk management practices are 

adequate. The board and management team has demonstrated the ability to address weaknesses in the 

IT function, which has substantially improved. However, significant weaknesses were noted in the BSA 

program, and an MOU was issued to address deficiencies in internal controls processes as well as 

improve the oversight of the BSA/AML program. To remain effective, risk management must ensure the 

successful and timely execution of plans to address regulatory concerns and ensure compliance with 

BSA/AML requirements. 

Management continues to strengthen the risk management framework to support the firm’s growth and 

comply with heightened regulatory standards once the organization passes the $50 billion threshold. 

The DFAST program and reporting processes are commensurate with the company’s size and 

complexity. During the past year, the firm made significant changes to the management structure, 

including hiring a new Chief Risk Officer, Head of Enterprise Risk Management, and BSA Officer. The 

new additions to management are experienced and expected to provide the necessary leadership to 

remediate deficiencies and improve the performance of the compliance, BSA/AML and ERM programs. 

Policies, Procedures, and Limits – 2 

Policies, procedures, and limits are satisfactory. Management has established adequate policies, limits, 

and guidelines given the risks inherent in the firm’s significant activities; The reorganization of the 

compliance function will include an update of policies and procedures to ensure that all business units 

comply with laws, regulations, and supervisory requirements. The implementation of the revised ERM 

program will also include enhancing the policy framework and maintenance process to ensure that 

policies, standards, and procedures are consistent throughout the firm. 

Risk Monitoring and Management Information Systems – 3 

Risk monitoring and MIS are fair, reflecting weaknesses in management’s ability to effectively identify 

and monitor key risks and vulnerabilities. Significant deficiencies were noted in the BSA/AML function 

that weakened the ability to assess high risk customers and identify suspicious activities in a timely 

manner. The BSA/AML MOU includes provisions to address ineffective CDD, EDD, and suspicious activity 

monitoring systems as well as reduce the sizeable backlog of EDD reviews and suspicious activity 

monitoring reviews alerts. In addition, the compliance function does not have effective monitoring 

processes to ensure compliance with laws, regulations, and supervisory requirements. The review of 

merchant banking activity identified a lack of formal monitoring to ensure that investments held by 

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RISK MANAGEMENT 

SVBFG comply with applicable regulatory limitations. Gaps in monitoring processes could result in 

inaccurate regulatory reports and information for risk management purposes. Finally, the 

implementation of the new ERM framework to aggregate risks on a consolidated basis is still in the 

beginning stages; Until the ERM program is fully implemented, management’s ability to identify 

cross-functional risks within the firm's highly complex and interdependent business model will remain 

constrained. 

Internal Controls – 2 

Internal controls remain satisfactory; The system of internal controls adequately covers the firm’s major 

risks and business areas. The audit program continues to provide a reliable and effective assessment of 

internal control, governance, and risk management processes. Risk from process gaps, such as those 

noted in the compliance function, is mitigated by the strength of the internal audit program which 

effectively identifies and escalates weaknesses within the institution. 

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FINANCIAL CONDITION 

COMPONENT RATING: 2 

The financial condition of the company remains satisfactory. Consolidated capital remains at levels 

commensurate with the risk profile of the company. Consolidated asset quality is satisfactory with 

acceptable credit risk management practices and a moderate level of classified assets. Consolidated 

earnings continue to support operations, sufficiently fund the allowance for loan and lease losses, and 

augment capital. Consolidated liquidity remains strong. 

Capital – 2 

Consolidated capital remains satisfactory and sufficient to support the risk profile of the company. As of 

September 30, 2016, the tier 1 leverage, tier 1 risk-based capital, total risk-based capital, and common 

equity tier 1 ratios were 8.35 percent, 13.21 percent, 14.22 percent, and 12.75 percent, respectively. 

Risk-based capital ratios have modestly improved from the prior inspection. The tier 1 leverage ratio 

has also improved due to increasing earnings and slower deposit growth. Historically, strong asset 

growth generated from increasing deposit levels has placed downward pressure on the tier 1 leverage 

ratio, which remains below peer levels. Since the prior inspection, the tier 1 leverage capital ratio has 

increased by 68 basis points, due to equity capital benefiting from the combination of the increasing 

level of retained earnings totaling $370.7 million and modest asset growth of 3.7 percent. 

apital risk management is satisfactory; SVFG’s company-run stress testing framework and reporting 

continue to meet the minimum DFAST guidance requirements outlined in SR 14-34

, and DFAST results 

are incorporated into the firm’s capital adequacy and risk management processes; Policies and 

procedures are adequate and include an enhanced capital contingency plan to address potential 

stresses to capital. However, the October 2016 bank examination included an MRA to address 

insufficient documentation of the capital buffer methodology and governance over the capital planning 

process. Management committed to completing required actions by September 30, 2017. 

Asset Quality - 2 

Consolidated asset quality remains satisfactory. Although the level of problem loans increased slightly from 

the prior inspection, the level of adverse classifications remains manageable. As of September 30, 2016, 

classified credits totaled $1.1 billion and represented 28.5 percent of tier 1 capital and reserves, or 

6.3 percent when weighted for severity. The majority of problem assets are in the pre-profit and leveraged 

loan portfolios, which have been adversely affected by market uncertainty and lower than normal investor 

sentiment during the end of the 2015 investment cycle. 

Credit risk management remains satisfactory with acceptable credit administration practices. The 

bank’s internal credit review function is effective and provides an independent assessment of the loan 

portfolio. Concentration risk has moderated since the prior inspection. The level of early stage 

borrowers, which have historically generated the majority of losses, has declined as a percentage of 

total capital. Venture capital and private equity loans, which have had minimal losses, continue to 

4 SR 14-3, Supervisory Guidance on Dodd-Frank Act Company-Run Stress Testing for Banking Organizations with Total 

Consolidated Assets of More Than $10 Billion but Less Than $50 Billion 

<https://www.federalreserve.gov/bankinforeg/srletters/sr1403.htm> 

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FINANCIAL CONDITION 

increase. The shift in concentration levels has reduced some of the risk in the loan portfolio. The ALLL 

remains sufficient to absorb credit losses in the portfolio. 

The quality of the investment portfolio is acceptable. Investments primarily consist of US Government 

backed securities and have historically represented approximately 50 percent of total assets. Nonbank 

investments totaled $397.0 million and represented 1.0 percent of total consolidated assets as of 

September 30, 2016. These investments primarily consist of investment in funds that totaled 

$251.6 million and warrants with a balance of $145.3 million. 

Earnings - 2 

Consolidated earnings performance remains satisfactory due to strong loan growth, gains on equity 

warrants, and satisfactory asset quality. Earnings continue to fully support operations, sufficiently fund 

the loan loss reserve, and augment capital. The company reported consolidated net income for the 

nine months ended September 30, 2016 of $283.2 million for a return on average assets (ROAA) of 

0.87 percent. Consolidated earnings include $4.9 million from SVB Capital. Net income increased 

slightly by $26.8 million from prior year; however, the ROAA has remained stable due to strong asset 

growth. The net interest margin has improved due to the shift in earning assets from securities to loans. 

Liquidity – 1 

Consolidated liquidity remains strong. Liquidity levels, supplemented by cash flows from the investment 

portfolio, are sufficient to meet operational needs and fund client loans. Consolidated liquid assets, 

which include $2.3 billion in cash and cash equivalents, provide substantial coverage of projected cash 

outflows. Excess funding has been deployed to the bank’s investment portfolio, which, at $20;5 billion 

with available unpledged liquidity of $17.8 billion, also serves as a significant source of liquidity. 

Secondary sources of liquidity include $1.7 billion in Federal Home Loan Borrowing lines and 

$813.0 million at the FRB discount window. 

Liquidity risk management is adequate. The bank remediated the MRA from the prior year to 

incorporate liquidity risk management practices in holding company policies. The board has approved a 

separate parent liquidity policy that clearly outlines the parent liquidity limit of two times parent annual 

operating expenses. ALCO reports include stand-alone parent liquidity cash flow projections and stress 

testing which support the current levels of cash held at the holding company. Cash flow projections and 

stress testing practices are adequate; however, the documentation of the distributions and capital calls 

related to SVB Capital, which can vary from period to period, could be enhanced and reviewed by model 

risk management to ensure that projections of cash flow remain reliable. 

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IMPACT 

COMPONENT RATING: 2
 

The bank holding company and its nonbank subsidiaries pose limited likelihood of significant negative 

impact to SVB. On a standalone basis, the parent company is in satisfactory condition. Overall risk 

management of parent and nonbank activities remains adequate, and the parent’s financial and 

managerial resources continue to support SVB as needed. 

Risk management practices remain appropriate; Oversight of the parent company’s strategic investing 

and funds management business, primarily conducted through SVB Capital, remains satisfactory. 

!lthough SV apital’s activities have inherently higher levels of operational, legal, and reputational risk, 

risk is mitigated by an experienced management team. The firm remains in compliance with laws and 

regulations, including Regulation W. However, management is currently awaiting the status of an 

extension request to comply with the Volcker Rule. If the extension is not granted, SVBFG may be 

required to liquidate approximately $194 million in covered funds at distressed prices. While the parent 

company is capable of absorbing potential losses, the early divestiture of covered funds could impact 

the bank’s business relationships with fund managers and portfolio companies. Weaknesses were also 

noted in the monitoring of merchant banking activities, which could result in inaccurate regulatory 

reports and information for risk management purposes. Management committed to address the MRA 

to improve monitoring practices by September 30, 2017. 

Parent liquidity remains sufficient to meet ongoing capital and funding needs. Forecasted cash inflows, 

which include dividends from the bank, warrant monetization, and cash from investments managed by 

SVB Capital, are expected to outpace cash outflows through September 2018. Cash at the holding 

company, totaling $450.3 million as of September 30, 2016, is sufficient to meet obligations over the 

next 24 months. Leverage is moderate, with debt service limited to interest payments. As of 

September 30, 2016, holding company debt represented 20.7 percent of equity capital and the double 

leverage ratio is relatively low at 97.9 percent. The bank resumed paying dividends to the holding 

company during the third quarter of 2016. Dividends, which are projected to total approximately 

20 percent of net income each quarter, are reasonable based on the satisfactory condition of the bank 

and earnings performance. 

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DEPOSITORY INSTITUTIONS 

COMPONENT RATING: 2 

The subsidiary bank remains in satisfactory condition. This assessment is based on the roll-up 

examination conducted jointly by the CDBO and the FRB as of September 30, 2016. Asset quality is 

satisfactory with a manageable level of problem assets. Capital levels are satisfactory and 

commensurate with the bank's risk profile. Earnings are satisfactory and sufficient to support 

operations, adequately fund the loan loss reserve, and augment capital. Liquidity remains strong, 

benefiting from substantial deposits that are invested in short-term, low risk securities. Sensitivity to 

market risk is adequately managed, and the balance sheet is well positioned to benefit from rising 

interest rates. 

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OTHER MATTERS 

BSA/AML and Office of Foreign Assets Control (OFAC) Compliance Program 

The company’s S!/!ML and OF! compliance programs were considered less than satisfactory during 

the August 2016 BSA target. A MOU was executed on January 26, 2017 to address deficiencies in 

internal controls processes, as well as improve the oversight of the BSA/AML program. Board and senior 

management have hired a new BSA manager with the requisite subject matter expertise to remediate 

the deficiencies described in the MOU. The BSA oversight MRA that was cited in 2015 remains in place 

until weaknesses in the BSA/AML risk assessment process are remediated and verified by examiners. 

Information Technology 

The Information Technology (IT) target examination report transmitted to the bank on June 14, 2016 

noted that IT remains less than satisfactory, but has improved. The board has provided the necessary 

resources to address IT weaknesses, including hiring qualified IT leaders. However, IT management was 

not yet considered stable as management required additional time to execute on their plans to upgrade 

IT processes, people, and technology. The bank has also complied with the Board Resolution (BR) by 

submitting appropriate action plans to address deficiencies and return IT to a satisfactory condition. The 

status of the BR will be updated following the February 2017 IT examination. 

The cybersecurity program remains effective. Management has effectively integrated cybersecurity into 

its risk management and information security programs, and the bank remains in compliance with the 

Gramm‐Leach‐liley !ct; The Security Office has leveraged the FFIEC Cybersecurity Assessment Tool to 

evaluate the bank’s cybersecurity preparedness and reported the results to executive management and 

the board. 

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SIGNATURE OF DIRECTORS 

We, the undersigned directors of SVB Financial Group, have personally reviewed the contents of the 

Report of Bank Holding Company Inspection as of September 30, 2016. 

Signature of Directors Date 

Greg W. Becker 

Eric A. Benhamou 

David M. Clapper 

Roger F. Dunbar 

Joel P. Friedman 

Lata Krishman 

Jeffrey N. Maggioncalda 

Mary J. Miller 

Kate D. Mitchell 

John F. Robinson 

Garin K. Staglin 

NOTE: This form should remain attached to the Report of Bank Holding Company Inspection and be 

retained in the holding company’s file for review during subsequent inspections; The signature of 

committee members will suffice only if the committee includes outside directors and a resolution has 

been passed by the full board delegating the review to such committee. 

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CONFIDENTIAL
 

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CONFIDENTIAL SECTION 

PRINCIPAL OFFICERS AND DIRECTORS 

Name Meetings Years Shares Compensation Occupation or 

Address Missed1 on Owned (Bonus) Principal Business 

Board Affiliation 

Chairman 

Dunbar, Roger F.
 

Redacted

(1)(4)(5)(6)
 

Directors 

Redacted

Becker, Gregory W.
 

Benhamou, Eric A.
 

Redacted

(4)(5)(6)
 

Clapper, David M.
 

Redacted

(1)(3)(6)
 

Redacted

Friedman, Joel P.
 

(4)(5)(6)
 

Redacted

Krishnan, Lata
 

(1)(4)
 

Maggioncalda, Jeff
 

Redacted

(2)(3)
 

Miller, Mary
 

Redacted

(1)(4)
 

0 12 16,995 217,000 

(200,093) 

Chairman SVB and 

SVBFG. Retired from 

Ernst & Young as Global 

Vice Chairman 

0 5 130,287 925,000 

(1,225,000) 

President and Chief 

Executive Officer of SVB 

and SVBFG 

0 12 10,882 98,250 

(100,046) 

Chairman and CEO of 

Benhamou Global 

Ventures, LLC 

0 12 15,691 113,000 

(100,046) 

CEO of Minerva Surgical, 

Inc., a medical device 

company 

1 12 20,691 94,500 

(100,046) 

Retired from Accenture 

as President of Business 

Process Outsourcing 

1 9 12,793 95,250 

(100,046) 

Chief Financial Officer of 

Shah Capital Partners, a 

private equity firm 

focused on investments 

in technology businesses 

1 4 5,686 84,000 

(100,046) 

Former CEO of Financial 

Engines, Provides 401(k) 

planning guidance 

0 1 2,722 82,500 

(100,046) 

Former Under Secretary 

for Domestic Finance, 

U.S. Department of 

Treasury 

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CONFIDENTIAL SECTION 

PRINCIPAL OFFICERS AND DIRECTORS 

Name 

Address 

Meetings 

Missed1 

Years on 

Board 

Shares 

Owned 

Compensation 

(Bonus) 

Occupation or 

Principal Business 

Affiliation 

Mitchell, Kate 

(2)(3)(6) 

0 6 7,949 113,250 

(100,046) 

Co-founder and 

Managing Partner of 

Scale Venture Partners; 

Board member of 

National Venture Capital 

Association 

Robinson, John 

(1)(2)(3)(6) 

0 6 6,456 135,000 

(100,046) 

Former Deputy 

Comptroller of the 

Currency and EVP of 

Washington Mutual Bank 

Staglin, Garin 

(2)(5) 

0 5 12,391 79,500 

(100,046) 

Proprietor of Staglin 

Family Vineyards 

Compensation from Proxy Statement and amounts are as of December 31, 2016. Bonus in the form of stock awards. 

Principal Officers 

Becker, Greg W. 1993 130,287 925,000 

(1,225,000) 

President and Chief 

Executive Officer of SVB 

and SVBFG 

Cardieux, Marc C. 1992 30,697 450,000 

(350,000) 

Chief Credit Officer 

China, John D 1998 33,218 500,000 

(525,000) 

Head of Relationship 

Banking 

Cox, Philip C. 2009 300,000 

(286,765) 

Head of EMEA and India; 

President of U.K. Branch 

Descheneaux, Michael R 2006 38,680 600,000 

(575,000) 

Chief Financial Officer 

Draper, Michelle A. 2013 390,000 

(375,000) 

Chief Marketing Officer 

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CONFIDENTIAL SECTION 

PRINCIPAL OFFICERS AND DIRECTORS 

Name Year joined Shares Compensation Occupation or 

SVBFG Owned (Bonus) Principal Business 

Affiliation 

Dreyer, Michael 2016 N/A Chief Operations Officer 

Edmonds-Waters, 2003 375,000 Head of Human 

Christopher D. (280,000) Resources 

Izurieta, Laura 2016 410,000 Chief Risk Officer 

Leone, Roger 2015 350,000 Chief Information Officer 

(250,000) 

Wallace, Bruce E. 1994 475,000 Chief Digital Officer 

(440,000) 

Zuckert, Michael S. 2014 450,000 General Counsel 

(330,000) 

Regular schedule of board of directors’ meetings: Quarterly 

Committees (Chair in Bold): 

(1) Audit 

(2) Compensation 

(3) Credit 

(4) Finance 

(5) Governance 

(6) Risk 

1 Number of meetings missed out of a total of 10 held since the previous inspection. 

C 

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CONFIDENTIAL SECTION 

CONDITION OF THE BANK HOLDING COMPANY 

1.	 Scope of inspection. 

Inspection findings contained in this report were based upon financial statements as of 

September 30, 2016. During the on-site inspection, the bank holding company’s board minutes, 

corporate records, and financial statements were reviewed, and discussions were held with 

management. The parent company was reviewed using current internal management reports 

and financial statements. Components analyzed which had a direct bearing on its overall rating 

included cash flow, leverage, and liquidity. The inspection scope included a review of the 

company’s corporate governance structure, corporate compliance program, model risk 

management function, and the ERM program. The subsidiary bank analysis was based on the 

examination conducted jointly by the CDBO and the FRB as of September 30, 2016. The 

inspection also leveraged examination work and continuous monitoring activity conducted 

during the 2016 supervisory cycle. 

2.	 Prospects of the holding company. 

The prospects for the holding company remain favorable. The company continues to approach 

the $50 billion large bank threshold, beyond which will require compliance with heightened 

regulatory standards; Given the company’s growth plans and regulatory requirements, 

management and the board have made significant changes to the risk management and 

compliance framework. Management continues to allocate resources to address deficiencies in 

the BSA/AML/OFAC and compliance programs. Credit quality remains manageable; classified 

assets have increased since the prior inspection. The majority of problem assets are in the preprofit and leveraged loan portfolios, which were adversely affected by market uncertainty and 

lower than normal investor sentiment during the end of the 2015 investment cycle. 

Management is closely tracking the performance of leveraged loans to determine if losses or 

deterioration are indicative of a systemic weakness in the credit portfolio. 

Management has a positive outlook for 2017, as they believe that improving business conditions 

and exit markets will drive the formation of new companies and investments. Challenges noted 

include global market volatility and uncertainty which may affect the firm’s clients; Management 

is also unclear on how the new administration’s trade and tax policies will affect their clients that 

conduct business globally. 

3.	 Evaluate management and the board of directors. In addition, appraise the policies with 

respect to the level of control and supervision exercised over subsidiaries, including risk 

evaluation and control, and management information systems. 

All relevant and material rationale supporting the evaluation of management and the board of 

directors has been sufficiently documented in the open section of the report. Policies and 

procedures are adequate and discussed in the open section of the report. 

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CONDITION OF THE BANK HOLDING COMPANY 

4.	 Subsidiary bank(s) date of most recent examination and rating. 

CAMELS Risk Management Agency Date 

Current 222212/2 2 Joint 09/30/16 

Prior 222212/2 2 Joint 09/30/15 

5.	 Is the holding company a member of a chain banking organization? No. If so, summarize
 

significant problems at any affiliated holding company or subsidiary banks or in the chain
 

organization.
 

6.	 List individuals or groups that own or control five percent or more of the outstanding voting 

shares of the bank holding company’s shares.

Shareholder	 Number of Shares5 Percentage Owned 

BlackRock, Inc.	 4,267,100 8.17 

The Vanguard Group	 3,930,352 7.52 

Harding Loevner LP	 2,659,081 5.09 

T. Rowe Price Associates, Inc.	 2,647,195 5.07 

7.	 Other supervisory concerns. 

None. 

8.	 RFI/C (D) Rating: 

RFI/C (D)	 Date 

Current	 222/2 (2) 09/30/16 

RFI/C (D)	 Date 

Prior	 222/2 (2) 09/30/15 

Composite - 2 

Refer to the comments in the open section of the report and the rationale for the assigned 

composite rating. No additional comments relative to this rating are warranted. 

Risk Management - 2 

Refer to the comments in the open section of the report and the rationale for the assigned risk 

management rating. No additional comments relative to this rating are warranted. 

5 Information from SVBFG Proxy Statement as of December 31, 2015. Note that SVBFG holds 100 percent ownership of the bank. 

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CONDITION OF THE BANK HOLDING COMPANY 

Risk Matrix 

The table below summarizes the risk profile of the institution. "Inherent risk" assesses the nature, 

complexity, and volume of the activities giving rise to the risk in question; it is rated as low, limited, 

moderate, considerable, or high. Risk controls assess the strength of risk management processes and 

controls for each risk, expressed as strong, satisfactory, fair, marginal, or weak. 

Risk 

Category 

Inherent 

Risk 

Board and 

Senior 

Mgmt 

Oversight 

Policies, 

Procedures 

and 

Risk Limits 

Management 

Information 

Systems 

Internal 

Controls 

Residual 

Risk 

Trend 

of Risk 

Credit Considerable Satisfactory Satisfactory Satisfactory Satisfactory Considerable Increasing 

Liquidity Low Satisfactory Satisfactory Satisfactory Satisfactory Low Stable 

Market Moderate Satisfactory Satisfactory Satisfactory Satisfactory Moderate Stable 

Operational Considerable Fair Satisfactory Satisfactory Fair Considerable Increasing 

Legal/ 

Compliance High Fair Satisfactory Fair Fair High Increasing 

Overall Considerable Satisfactory Satisfactory Fair Satisfactory Considerable Increasing 

9. Recommendations for supervisory action. 

None 

10. Information Technology. (Indicate name of service provider or turnkey software, and describe 

any internet banking services.) 

SVBFG operates a world-wide Multiprotocol Label Switching (MPLS) network with multiple data 

centers to support global operations. The primary data center, which hosts the bank's core 

banking systems, and most production systems and applications, is scheduled to be relocated 

from Salt Lake City, UT to a co-location (CoLo) facility in Chandler, AZ in 2017. The backup data 

center was recently transferred from the Santa Clara, CA data center (Tasman) to a CoLo in 

Dallas, TX. Both CoLo facilities are operated by Redacted. The Tasman and Salt Lake City data 

centers will be decommissioned following successful migrations to the CoLo facilities. A third 

data center is located in a London CoLo, which is leased from a third party provider. The UK data 

center does not host any production applications to support U.S. or UK operations. Its systems 

are used primarily to run security and network administration tools. As the company continues 

to increase global operations, management plans to expand the UK data center to host 

applications and systems to better support UK and European clients. 

SVB operates two in-house core processing systems, Redacted and Redacted 

, while the Private Bank has outsourced its core banking 

applications to Redacted . The Redacted core banking platform is used 

primarily for domestic accounts, and is operated as an Redacted customized application. Redacted has 

been retained to support on-going maintenance and any customization. Redacted interfaces 

with numerous internally developed applications and outsourced functions. Most of the 

company's internally developed applications are written in Microsoft.Net, Java, or Visual Basic, 

is the bank's core processing platform used outside the U.S. Ongoing maintenance and 

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Redacted has been outsourced to Redacted

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CONFIDENTIAL SECTION 

CONDITION OF THE BANK HOLDING COMPANY 

customization of . Both systems are running parallel and use 

a communicator to interface. The IT organization also supports SVBFG and the other nonbank 

affiliated companies. 

SVB provides online banking services to both commercial and retail customers through two 

separate websites. The Private Bank offers retail banking services such as bill pay, money and 

wire transfers, remote deposit capture and mobile banking to its high net worth clients who are 

normally associated with companies using SV’s commercial banking products through a third 

party provider; The bank’s proprietary commercial online application, 

Redacted

, provides clients 

with a suite of banking products including bill pay, ACH, sweep account services, DDA, remote 

deposit capture, lockbox and wire transfers. The 

Redacted

 system also has a UK component for 

use by clients located in Great Britain or U.S customers who need international banking services. 

It offers a limited suite of services including ACH and expedited money transfers. Each on-line 

banking platform relies heavily on vendor services that are either directly integrated in the 

system or seamlessly transferred to the vendor’s website. Of note, SVB converted to 

Redacted

for ACH processing in 2016. Some services are not integrated within the online platforms and 

clients must login directly to those vendor websites to utilize those services. SVB is currently 

working on a front-end system ( ) that would significantly improve its customers’ online 

banking experience; SV’s technology was developed in-house and interfaces with 

both the and core systems; The Private ank’s online system has been outsourced 

and is powered by ; 

Redacted Redacted Redacted Redacted Redacted

SV’s employs a multi-sourcing strategy where vendor-sourced labor complements existing staff. 

SVB uses strategic outsourcing partners with U.S. and offshore operations, for various services 

such as application support, development, testing, service desk, and release management. 

Management is implementing a vendor consolidation strategy to reduce system complexity, to 

gain greater leverage in vendor relationships, to improve service performance, and to move 

institutional knowledge in-house. 

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CONFIDENTIAL SECTION 

LIQUIDITY AND DEBT INFORMATION 

Parent-Only Short-term GAP Position 

0-3 0 Days 31-9 0 Days 91 days - 1 year 

Liquid Assets 500,014 

Commercial Paper 

Net GAP 500,014 102 14,638 

Net cumulative GAP 500,014 494,076 508,714 

Long-Term Debt 

List all unaffiliated long-term debt in the following format indicating the issues that qualify as Tier 2 capital. 

Borrower Description Original 

Amount On Date Rate Due Date 

Present 

Outstanding6 

SVBFG 

Junior Subordinated 

Debenture 

(Trust Preferred) 

50,000 10/30/2003 7.00 10/15/2033 54,537 

SVBFG Senior Note 350,000 9/20/2010 5.375 9/15/2020 347,440 

SVBFG Senior Note 350,000 1/29/2015 3.500 1/29/2025 346,900 

6

 As of September 30, 2016 

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ADMINISTRATIVE MATTERS 

Final meeting date: March 16, 2017 

Final meeting held with: Senior management was represented by President and Chief Executive 

Officer Greg Becker, Chief Risk Officer Laura Izurieta, Chief Financial Officer 

Mike Descheneaux, Treasurer Mike Kruse, 

, , 

Head of Internal Audit John Peters, 

, Chief Accounting Officer Kamran Husain, Head of Regulatory 

Relations Suanne Mingrone, and 

. The FRB was represented by CPC and EIC 

. 

Redacted

Redacted

Redacted

Redacted Redacted

Redacted

Redacted

Contact person(s) for Suanne Mingrone, Head of Regulatory Relations 

records of bank holding 

company: 

Redacted

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CONFIDENTIAL SECTION 

PARENT COMPANY COMPARATIVE BALANCE SHEET 

09/30/16 12/31/15 12/31/14 

ASSETS 

Cash and due from banks 465,890 377,013 314,236 

Investment securities 22,992 25,602 27,605 

Loans and leases, net 842 7,429 1,336 

Investments in and receivables due from bank 

subsidiaries 3,405,808 3,062,742 2,406,007 

Investments in and receivables due from nonbank 

subsidiaries 115,398 110,915 173,594 

Investments in and receivables due from BHC 

subsidiaries 0 0 0 

Premises and equipment 11,201 10,876 11,824 

Intangible assets 0 0 0 

Other assets 442,468 483,535 381,818 

Total Assets 4,464,599 4,078,112 3,316,420 

LIABILITIES 

Short-term borrowings 0 0 0 

Long-term borrowings 0 0 0 

Subordinated notes and debentures 694,340 693,682 348,436 

Other liabilities 104,013 107,921 77,470 

Balances due to subsidiaries 73,195 78,375 72,752 

Total Liabilities 871,548 879,978 498,658 

STOKHOLDERS’ EQUITY 

Perpetual preferred stock 0 0 0 

Common stock 52 52 51 

Common surplus 1,219,555 1,189,032 1,120,350 

Retained earnings 2,276,865 1,993,646 1,654,657 

Accumulated other comprehensive income 96,579 15,404 42,704 

Other equity capital components 0 0 0 

Total Stockholders’ Equity 3,593,051 3,198,134 2,817,762 

Total Liabilities and Total Stockholders’ Equity 4,464,599 4,078,112 3,316,420 

Total Debt to Total Stockholders’ Equity 19.32% 21.69% 12.37% 

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CONFIDENTIAL SECTION 

PARENT COMPANY COMPARATIVE INCOME STATEMENT 

Period Ended Year Ended Year Ended 

09/30/16 12/31/15 12/31/14 

INCOME 

Income from subsidiaries: 

Dividends 20,000 0 0 

Interest 30 151 117 

Management and service fees 13,032 14,932 12,717 

Other income 0 0 0 

Securities gains (losses) 15,060 38,284 13,869 

Other income 41,992 60,311 55,637 

Total Income 90,114 113,678 82,340 

EXPENSES 

Personnel expense 16,499 21,918 23,874 

Interest 23,823 30,716 19,147 

Provisions (63) (49) (786) 

Other expenses 24,139 36,406 33,541 

Total Expenses 64,398 88,991 75,776 

Net operating income 25,716 24,687 6,564 

Income tax (paid) benefit 7,283 14,448 15,037 

Extraordinary items 0 0 0 

Equity in retained earnings of subsidiaries 264,786 333,665 272,398 

Net Income 283,219 343,904 263,925 

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CONFIDENTIAL SECTION 

CONSOLIDATED COMPARATIVE BALANCE SHEET 

09/30/16 12/31/15 12/31/14 

ASSETS 

Cash and due from banks 2,330,157 1,364,678 1,694,140 

Investment securities 20,463,356 25,177,382 21,076,070 

Federal funds sold and repurchase agreements 163,719 125,391 95,611 

Loans and leases held for sale 0 0 0 

Loans and leases, net of unearned income 19,112,265 16,742,070 14,391,286 

Less: ALLL 240,565 217,613 165,359 

Trading account assets 160,669 98,936 63,085 

Premises and fixed assets 56,519 48,315 35,562 

Other real estate owned 0 0 0 

Affiliated investments 79,363 80,345 81,115 

Intangible assets 0 0 0 

Other assets 1,162,454 1,279,163 2,080,258 

Total Assets 43,287,937 44,698,667 39,351,768 

LIABILITIES 

Deposits 38,196,677 39,147,665 34,352,245 

Federal funds purchased and repurchase 

agreements 0 135,000 0 

Other borrowed money 178,550 781,255 105,264 

Subordinated notes and debentures 795,971 796,702 453,443 

Minority interest 130,266 135,097 1,238,662 

Other liabilities 393,422 504,814 384,392 

Total Liabilities 39,694,886 41,500,533 36,534,006 

STOKHOLDERS’ EQUITY 

Perpetual preferred stock 0 0 0 

Common stock 52 52 51 

Common surplus 1,219,555 1,189,032 1,120,350 

Retained earnings 2,276,865 1,993,646 1,654,657 

Less: Treasury Stock 0 0 0 

Accumulated other comprehensive income 96,579 15,404 42,704 

Other equity capital components 0 0 0 

Total Stockholders’ Equity 3,593,051 3,198,134 2,817,762 

Total Liabilities and Total Stockholders’ Equity 43,287,937 44,698,667 39,351,768 

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CONFIDENTIAL SECTION 

CONSOLIDATED COMPARATIVE INCOME STATEMENT 

Period Ended Year Ended Year Ended 

09/30/16 12/31/15 12/31/14 

Interest Income 

Loan interest and fees 617,456 693,147 610,945 

Lease financing receivables 0 0 0 

Interest-bearing bank balances 5,633 6,017 6,322 

Investment securities 262,822 347,552 274,508 

Trading account income 0 0 0 

Federal funds sold and repurchase agreements 141 38 49 

Other interest income 1,510 4,614 2,863 

Total Interest Income 887,562 1,051,368 894,687 

Interest Expense 

Deposits 3,984 5,448 12,115 

Federal funds purchased and repurchase 

agreements 351 20 0 

Borrowed funds 25,218 31,539 19,881 

Other interest expense 2,592 3,334 3,326 

Total Interest Expense 32,145 40,341 35,322 

Net Interest Income 855,417 1,011,027 859,365 

Provision for loan and lease losses 88,624 97,629 59,486 

Noninterest Income 

Fiduciary activities 0 0 0 

Service charges and fees 37,235 44,841 38,856 

Trading account income 69,189 87,492 76,669 

Other noninterest income 223,560 334,657 472,542 

Security gains (losses) 11,567 1,201 (18,598) 

Total Noninterest Income 341,551 468,191 569,469 

Noninterest Expense 

Salaries and employee benefits 372,336 471,732 407,818 

Premises and fixed assets 39,003 46,678 42,627 

Other noninterest expense 214,873 259,605 266,426 

Total Noninterest Expense 626,212 778,015 716,871 

Income (loss) before income taxes, extraordinary 

items, and other adjustments 482,823 604,733 653,703 

Income taxes (credits) 195,508 228,754 173,762 

Minority interest 3,405 30,916 214,790 

Extraordinary items and adjustments, net 691 1,159 1,226 

Net Income 283,219 343,904 263,925 

M
 BOG-FRS - Public Release, April 2023
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RESTRICTED – FR 

CONFIDENTIAL SECTION 

CONSOLIDATED CAPITAL CALCULATIONS 

Period Ended Year Ended Year Ended 

09/30/16 12/31/15 12/31/14 

Tier 1 Common RBC 12.75 12.28 12.68 

Tier 1 RBC 13.21 12.83 12.91 

Total RBC 14.22 13.84 13.92 

Tier 1 Leverage 8.35 7.63 7.74 

Tangible Tier 1 Leverage 0.00 0.00 7.48 

Equity Cap/Total Assets 8.30 7.15 7.16 

Cash Dividends/Net Income 0.00 0.00 0.00 

Equity Capital Growth Rate 13.17 13.50 43.30 

Asset Growth Rate 3.72 13.59 48.96 

Selected $ Amounts 

Tier 1 Capital 3,621,798 0 2,808,948 

Tier 2 Capital 276,676 261,221 221,203 

Total Risk Based Capital 3,898,474 3,586,466 3,030,151 

Total Risk Weighted On-BS 0 0 16,470,797 

Total Risk Weighted Off-BS 0 0 5,291,306 

Total On & Off Balance Sheet 27,407,758 25,919,594 21,762,103 

Total Risk Weighted Assets 27,407,758 25,919,594 21,762,103 

Avg Assets (Qtr Ended) 43,356,375 43,589,850 36,273,168 

Cash Dividends 0 0 0 

N
 BOG-FRS - Public Release, April 2023