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CALIFORNIA DEPARTMENT OF BUSINESS OVERSIGHT 

DIVISION OF FINANCIAL INSTITUTIONS 

1515 K STREET, SUITE 200 

SACRAMENTO, CA 95814 

FEDERAL RESERVE BANK OF SAN FRANCISCO 

101 MARKET STREET 

SAN FRANCISCO, CA 94105 

February 14, 2018 

Board of Directors 

Silicon Valley Bank 

3003 Tasman Drive 

Santa Clara, California 95054 

Dear Members of the Board: 

Enclosed is the report of examination covering our recent review of Silicon Valley Bank. Examiners from 

the Federal Reserve Bank of San Francisco (FRBSF) and the California Department of Business Oversight 

(CDBO) commenced a roll-up examination on October 2, 2017, using financial information as of 

September 30, 2017, and loan data as of July 31, 2017. The event leveraged the results of all ongoing 

supervision work performed during this supervisory cycle, including four target examinations. The 

results of this examination were discussed with senior management on December 12, 2017. 

The overall condition of the bank is satisfactory. The bank’s financial condition remains sound, as 

evidenced by satisfactory asset quality, capital, and earnings, sensitivity to market risk, and strong 

liquidity. Asset quality remains satisfactory and reflects a manageable level of problem loans, as well as 

adequate credit administration and risk management. Management successfully resolved the Matters 

Requiring Attention (MRA) improving the monitoring of the bank’s high risk profile credits and 

documentation of credit review procedures. However, inconsistencies and gaps in capital call lending 

risk management processes were noted during the examination that could result in elevated credit risk. 

Management is required to complete an independent risk assessment of capital call lending activities to 

ensure that risk management processes and policies remain commensurate with the size, complexity, 

and growth of the portfolio. Vendor management processes should also capture all service providers, 

including the law firms that represent the bank in its capital call lending processes. Refer to the Matters 

Requiring Board Attention section of the report for details on corrective action. 

Capital levels remain satisfactory for the overall risk profile of the bank, and management has improved 

the documentation of the capital planning methodology in response to a prior examination MRA. 

Nevertheless, the capital assessment does not sufficiently detail how material risks are accounted for in 

the capital stack. Management is required to strengthen the capital adequacy assessment and planning 

methodology to support capital actions and decisions. Refer to the Matters Requiring Board Attention 

section of the report for details on corrective action. 

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Federal Reserve Bank of San Francisco 

Board of Directors
 

Silicon Valley Bank
 

February 14, 2018
 

Page 2 of 3
 

Overall, management and board supervision, as well as risk management are satisfactory. These ratings 

are based primarily on the bank’s sound financial condition, the manageable volume of areas for 

attention, and management’s commitment and ability to address the deficiencies. Management has 

sufficiently addressed information technology (IT) weaknesses and overall IT performance is now 

satisfactory. In addition, significant progress to address BSA/AML and Office of Foreign Assets Control 

(OFAC) program deficiencies is recognized, including improving the internal controls framework and 

remediating two MRAs related to the risk assessment and system implementation. Nevertheless, 

several key projects or action plans have not been fully implemented. Additional time will also be 

needed to demonstrate the effectiveness of new processes and controls, organizational changes, and 

management skills. As a result, previous Matters Requiring Immediate Attention related to oversight 

and internal controls, as well as the prior OFAC MRA remain open. The Memorandum of Understanding 

should remain in place until all weaknesses have been remediated and corrective actions are validated 

during the next examination cycle. These findings were communicated to the board of directors in a 

supervisory letter dated January 17, 2018. 

The new MRAs cited at this examination, along with the ongoing BSA/AML and OFAC program 

deficiencies, highlight areas of new and lingering weaknesses in the risk oversight and control function. 

Although risk management practices over the credit, liquidity, market and legal functions remain 

adequate, the bank’s rapid growth and turnover of key management positions have placed a strain on 

the compliance and Enterprise Risk Management functions with respect to oversight and challenge. As 

a result, weaknesses were noted in management’s ability to effectively identify and monitor key risks as 

well as ensure compliance with bank policies, regulatory rules and supervisory guidance. While the 

severity of these issues is mitigated by an experienced management team and an effective audit 

function, the board is required to direct management to ensure that the risk management structure is 

commensurate with the institution’s growing size, complexity, and risks. Refer to the Matters Requiring 

Board Attention section of the report for details on corrective action. 

After your review of the enclosed report and within 45 days of its receipt, please submit a written 

response to the FRBSF and the CDBO that includes management's actions and/or plans 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. 

BOG-FRS - Public Release, April 2023
As a reminder, this letter is the property of the Board of Governors, and is furnished to directors and 

management for their confidential use under applicable law.1 We welcome the opportunity to discuss 

any aspect of this letter or our supervisory process with members of the board or management. If you 

have any comments or questions, please do not hesitate to contact Central Point of Contact Redacted 

at Redacted or Redacted at Redacted 

Sincerely, 

Redacted 

Redacted 

Central Point of Contact 

Federal Reserve Bank of San Francisco 

Redacted 

Redacted 

California Department of Business Oversight 

By Redacted 

Redacted 

Assistant Deputy Commissioner Enclosure(s) 

cc: 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 he 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 

COMMERCIAL BANK EXAMINATION 

California Department of Business Oversight 

Federal Reserve Bank of San Francisco 

Bank Name : SILICO N VALLE Y BAN K 

Location: SANT A CLARA , CALIFORNI A 

RSSD Number: 802866 

Start Date: OCTOBE R 2, 2017 

Financial Statements as of: SEPTEMBE R 30, 2017 

Examination Date as of: SEPTEMBE R 30, 2017 

C o n c l u d eC o n c l u d e d on:: DECEMBE DECEMBE R 12, 2017 

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 m 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 

BOG-FRS - Public Release, April 2023
REPORT OF 

COMMERCIAL BANK 

EXAMINATION 

Silicon Valley Bank 

Bank Name 

Physical Location 

Street: 3003 Tasman Drive 

City: Santa Clara 

County: Santa Clara 

State: California 

Mailing Address 

Street/Box: 

3003 Tasman Drive 

City: Santa Clara 

State: California 

ZIP Code: 95054-1191 

X Joint Concurrent Independent 

Redacted 

Federal Reserve Bank Examiner-in-Charge 

Redacted 

California Department of Business Oversight EIC 

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TABLE OF CONTENTS
 

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

Matters Requiring Board Attention and
 

Examination Comments and Conclusions ...................................................................................3
 

Compliance with Enforcement Actions.............................................................................................9
 

Management / Risk Management ....................................................................................................10
 

Analysis of Financial Factors .............................................................................................................12
 

Concentrations..................................................................................................................................18
 

Summary of Items Subject to Adverse Classification /
 

Summary of Items Listed as Special Mention..............................................................................19
 

Items Subject to Adverse Classification ............................................................................................20
 

Items Listed for Special Mention ......................................................................................................21
 

Other Matters ...................................................................................................................................22
 

Signature of Directors .......................................................................................................................23
 

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

Date of previous examination: October 03, 2016 

BOG-FRS - Public Release, April 2023
SCOP E 

This report of examination presents the findings and conclusions of the roll-up safety and soundness 

examination of Silicon Valley Bank (SVB/bank) jointly conducted by examiners from the Federal Reserve 

Bank of San Francisco (FRBSF/Reserve Bank) and the California Department of Business Oversight 

(CDBO). Financial information presented in this report is as of September 30, 2017, and loan data as of 

July 31, 2017. The on-site portion of the examination commenced on October 2, 2017, and concluded 

on October 26, 2017. 

The examination included a risk-focused assessment of capital adequacy, asset quality, earnings, 

liquidity, and sensitivity to market risk. In addition, examiners evaluated management and risk 

management processes, including key control functions such as internal credit review and internal audit. 

Corrective actions taken by bank management to address prior examination findings were also reviewed 

for their status and adequacy. Lastly, the examination scope considered ongoing supervision work 

performed during the year, including the results of four target examinations conducted during the 2017 

supervisory cycle as summarized below. 

Supervisory Event 2017 Rating Event Date 

Information Technology Satisfactory February 27, 2017 

Asset Quality Target Satisfactory, with new and 

continued findings 

May 8, 2017 

Dodd-Frank Act Stress Test (DFAST) In Compliance, with new and 

continued findings 

October 2, 2017 

Bank Secrecy Act Less than Satisfactory, with 

continued findings 

October 16, 2017 

Of note, a concurrent review of the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) and Office of 

Foreign Assets Control (OFAC) compliance programs was conducted to assess management's progress in 

addressing supervisory concerns, and compliance with the Memorandum of Understanding (MOU). 

No Consumer Compliance or Community Reinvestment Act examinations were conducted during 2017. 

Asset Quality 

The assessment of asset quality included a review of 74 relationships totaling $2.2 billion, or 5.7 percent 

of commercial loans and commitments. When combined with the sample conducted during the 

May 2017 target review, loan portfolio coverage excluding Shared National Credit activity totaled 

17.4 percent for the 2017 supervisory cycle. Asset quality was evaluated over the course of two 

supervisory events, with an emphasis on portfolios with inherent high-risk credits, large concentrations, 

or rapid growth. The May 2017 Asset Quality Target focused on evaluating the administration of 

leveraged loans based on prudent risk management standards, management's progress in enhancing 

loan file information for pre-profit credits, and collateral documentation standards for capital call loans. 

This examination also incorporated a representative sample of leveraged and pre-profit credits, to 

further assess the adequacy of management's remediation of the outstanding MRA requiring enhanced 

loan documentation. 

The evaluation of credit risk management practices included a review of underwriting standards, risk 

monitoring, and the accuracy of the internal loan grading system. During this review, examiners 

evaluated management's progress in resolving two MRAs requiring the development of an enhanced 

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SCOPE 

framework to identify emerging credit risk and improvement of internal loan review procedures for line 

sheet preparation and credit assessments. Risk management over capital call lending, residential 

mortgages with a focus on underwriting practices, and compliance with Regulation O were also 

reviewed. In addition, an update on the loan loss reserve methodology was prepared. 

Peer Comparison 

Throughout the report, the performance of the bank is compared to national peer group averages of 

other commercial banks of similar size and structure. As of September 30, 2017, the peer group was 

comprised of 253 insured commercial banks having assets greater than $3.0 billion. 

Exit Meeting 

An exit meeting with senior management of the bank was held on December 12, 2017, to communicate 

final examination conclusions and findings. 

Present from senior management were the following: 

• Greg Becker, Executive Vice President (EVP) and Chief Executive Officer 

• Michael Descheneaux, EVP and President 

• Dan Beck, EVP and Chief Financial Officer 

• Marc Cadieux, EVP and Chief Credit Officer 

• Mike Dreyer, EVP and Chief Operations Officer 

• Laura Izurieta, EVP and Chief Risk Officer 

• John Peters, EVP and Head of Internal Audit 

•

•

•

• Bob Neitz, BSA Officer and Chief Compliance Officer 

•

• Michael Kruse, Treasurer 

•

• Kamran Husain, Chief Accounting Officer 

•

•

•

• Suanne Mingrone, Head of Regulatory Relations 

•

Redacted Redacted Redacted Redacted Redacted Redacted Redacted Redacted Redacted

Representing the FRBSF were the following: 

• Central Point of Contact and Examiner-in-Charge (EIC) Lead 

• , Asset Manager 

Representing the CDBO were the following: 

• , EIC 

Redacted Redacted Redacted

•

• , EIC 

Redacted Redacted

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MATTERS REQUIRING BOARD ATTENTION AND 

EXAMINATION COMMENTS AND CONCLUSIONS 

Matters Requiring Attention1 

Topic: Risk Management – Compliance and Independent Oversight 

Issue: While overall risk management and board and senior management oversight remain adequate, 

the bank’s rapid asset growth, coupled with turnover of key management positions in recent years, has 

placed stress on the compliance and enterprise risk management (ERM) functions. Examiners continued 

to identify instances across the business lines where risk management processes have not kept pace 

with growth, and where policies and practices require better alignment with supervisory guidance or 

more effective MIS and controls to appropriately mitigate risks. Viewed collectively, the root cause of 

these exceptions or weaknesses is the need for further strengthening of oversight from Corporate 

Compliance and ERM through ongoing effective challenge to policies, procedures, limits, 

strategies/plans, and model assumptions. As outlined in SR 16-11,

2 an institution’s risk management 

processes are expected to evolve in sophistication, commensurate with the institution’s asset growth, 

complexity, and risk. 

Required Action: Management is required to align risk management practices with SR 16-11 to ensure 

compliance with internal policies and relevant supervisory guidance and rules, as well as sufficient 

independent oversight to address the full range of risks for the institution. These actions include: 

•	 Establishing clear accountabilities, roles, and responsibilities over the system of internal controls 

(at both the business line and the risk management oversight level) to ensure compliance with 

internal policies, supervisory guidance, and regulations. 

•	 Establishing clear roles, responsibilities, and engagement strategy of the positions assigned to 

provide ongoing oversight and challenge to risk infrastructure and controls, plans, and model 

assumptions. Personnel performing this oversight should be independent from business lines 

and have a level of knowledge and expertise consistent with the size and complexity of the 

bank. 

•	 Providing evidence of the effective implementation of the above-mentioned system of internal 

controls and risk oversight structure in the form of a risk coverage map for the enterprise, 

internal reporting, and clear action plans to address to address the root cause of self-identified 

gaps in the compliance and effective challenge functions. Each action plan should include 

ownership and specific tasks. 

Management Response: CRO Laura Izurieta was receptive to the finding and agreed to implement 

these recommendations by September 30, 2018. 

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

to address over time. 2 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 AND 

EXAMINATION COMMENTS AND CONCLUSIONS 

Topic: Credit Risk Management – Capital Call Lending 

Issue: Risk management of capital call lending activities is inconsistent and requires attention in light of 

the rapid growth, size, and complexity of the portfolio. Capital call lending practices should be reevaluated to ensure that processes continue to effectively identify, monitor, and control credit risk. 

Required Action: Management is required to reassess capital call lending activities to ensure that risks 

are appropriately identified and controlled. The assessment should include at a minimum, the following 

areas: 

•	 Concentration limits, sub-limits, and monitoring reports should include additional detail to 

ensure the sufficient oversight of capital call activities, given the portfolio’s complexity, risk 

profile, and the bank’s substantial exposure to these activities. Reports should include analysis 

and consider sub-limits based on industry, product type, country, wealth management agents, 

high net worth borrowers, and any other segmentation that presents concentration risk. 

•	 Due diligence forms for capital call lending should be assessed for use in countries that present 

unique risk conditions. 

•	 Internal control processes should be evaluated to ensure that wealth management agents and 

high net worth borrowers are independently reviewed, appropriately risk rated, and assigned 

limits based on risk levels. 

•	 Final loan boarding processes should be reviewed to ensure documentation requirements are 

consistently applied and incorporate certification controls for due diligence forms and attorneyprovided consistency letters where appropriate. 

Management Response: CEO Greg Becker and CCO Marc Cadieux agreed that it would be appropriate 

to conduct an independent risk assessment of the capital call lending portfolio based on its current 

volume and growth, and committed to engage a third party and address these recommendations by 

September 30, 2018. 

Topic: Vendor Risk Management 

Issue: Management has not ensured that the vendor management program captures all outside service 

providers. Currently, several law firms that represent the bank in its capital call lending processes have 

not been included in the vendor management program. SR 13-193 states that “service providers” are 

broadly defined to include all entities that enter into a contractual relationship with a financial 

institution to provide business activities and services. 

Required Action: Management is required to conduct a review of centralized vendor management 

controls and processes to ensure all outside vendors are appropriately covered. These reviews should 

be commensurate with the level of risk in those relationships. Furthermore, reviews completed for 

unaccounted vendors, such as these legal firms, should be conducted by the necessary management 

and/or board committee. 

3 SR 13-19, Guidance on Managing Outsourcing Risk, < https://www.federalreserve.gov/supervisionreg/srletters/sr1319.htm > 

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MATTER S REQUIRIN G BOAR D ATTENTIO N AN D 

EXAMINATIO N COMMENT S AN D CONCLUSION S 

Management Response: Redacte d , and Michael Zuckert, 

EVP/General Counsel, were receptive to this finding and agreed to remediate the issue by May 31, 2018. 

Topic: Internal Capital Adequacy Assessment 

Issue: The capital planning methodology does not include sufficient analysis to ensure that material 

risks at the firm are appropriately considered in capital actions and decisions. The methodology relies 

heavily on the limited scenarios used for DFAST, which do not necessarily capture the company's full 

range of risks. The internal capital assessment lacks specificity in capital attribution and does not detail 

how material risks, including certain risks outlined in the Risk Appetite Statement, are accounted for in 

the capital stack. Finally, it is unclear how the capital limits derived for the holding company consider 

substantial non-bank holding company activities. 

Required Action: Management is required to strengthen the analysis and documentation behind the 

capital adequacy assessment and planning methodology to ensure effective identification, 

measurement, monitoring, and control of risks, consistent with expectations outlined in SR 16-11. 

Management should build sufficient granularity into the capital limits implemented to identify capital 

attribution for each risk segment, including applicable risks resulting from ERM Risk Identification efforts 

which are currently underway. Additionally, management should ensure that sufficient documentation 

is in place to understand quantitative methodologies and qualitative risk attribution processes. 

Documentation should also sufficiently describe and analyze the additional capital needs derived for 

holding company activity exposures. 

Management Response: Redacte d was receptive to the finding and 

agreed to remediate the issue by September 30, 2018. 

Summary of New Findings 

Matters Requiring Attention 

Issue 

Risk Management - Compliance and Independent Oversight September 30, 2018 

Expected 

Completion Date 

Credit Risk Management - Capital Call Lending September 30, 2018 

Vendor Risk Management May 31, 2018 

Internal Capital Adequacy Assessment September 30, 2018 

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SUMMARY OF OUTSTANDING FINDINGS 

Matters Requiring Immediate Attention (MRIA) 

Issue Status Comments 

Significant efforts have been made to address MRIA 

requirements, with the progress of remediation efforts 

acceptable. The completion of the EDD backlog and 

demonstrated effectiveness of improved CDD/EDD 

processes, among other internal control areas, remain in 

progress. 

Internal Controls: CDD, 

EDD, and Suspicious 

Activity Monitoring 

Carry Forward 

Significant efforts have been made to address MRIA 

requirements as evidenced by the hiring of qualified 

individuals to implement and manage the BSA/AML 

program. Nonetheless, remediation will depend on fully 

addressing all outstanding MRIAs/MRAs, as well as the 

demonstration of program effectiveness. BSA Officer 

oversight and ownership of the training program also 

needs strengthening. 

BSA Officer and 

Administration Carry Forward 

SUMMARY OF OUTSTANDING FINDINGS 

Matters Requiring Attention 

Issue Status Comments 

Program Oversight- Risk 

Assessment Close Management has satisfactorily remediated this deficiency. 

Risk Management of 

System Implementation Close Management has satisfactorily remediated this deficiency. 

BSA/OFAC Program Carry Forward Further improvement in the OFAC program is required to 

ensure ongoing compliance with OFAC requirements. 

Credit File 

Documentation and 

Support Close Management has satisfactorily remediated this deficiency. 

Internal Credit Review 

Procedures Close Management has satisfactorily remediated this deficiency. 

Credit Risk Management 

Framework Carry Forward 

Management has developed an acceptable Management 

Action Plan and made progress identifying key risk 

indicators for its highest risk portfolios. Management is on 

track to develop a written framework by March 31, 2018. 

Compliance Program Close 

Closed and replaced with a new MRA to communicate and 

clarify repeat and new concerns. 

BOG-FRS - Public Release, April 2023
Safety and Soundness Examination Ratings 

Examination Start Date 

Current Exam 

10/02/17 

Prior Exam 

10/03/16 

Prior Exam 

10/13/15 

Uniform Composite Rating 2 2 2 

Component Ratings: 

Capital 2 2 2 

Asset Quality 2 2 2 

Management 2 2 2 

Earnings 2 2 2 

Liquidity 1 1 1 

Sensitivity to Market Risk 2 2 2 

Risk Management Rating 2 2 2 

The bank has been assigned a uniform composite rating of 2 (Satisfactory) based on information 

contained in this examination report and supporting workpapers. In accordance with the Uniform 

Financial Institutions Rating System, each bank is assigned a composite rating based on an evaluation of 

its managerial, operational, financial, and compliance performance. This rating is defined as follows: 

Composite 2 

Financial institutions with a composite 2 rating are fundamentally sound. For a financial institution to 

receive this rating, generally none of its component ratings should be more severe than 3. Only 

moderate weaknesses are present, and the board of directors and management are capable of and 

willing to correct them. These financial institutions are stable, can withstand business fluctuations, and 

are in substantial compliance with laws and regulations. Overall risk-management practices are 

satisfactory relative to the institution's size, complexity, and risk profile. There are no material 

supervisory concerns and, as a result, the supervisory response is informal and limited. 

OVERALL CONDITION 

The overall condition of the bank is satisfactory. Asset quality remains satisfactory, reflecting a 

manageable level of problem loans as well as adequate credit administration and risk management. 

Management successfully resolved two MRAs improving the monitoring of the bank's high risk profile 

credits and documentation of internal credit review processes, and is on track to remediate an MRA 

requiring the development of a risk management framework to identify emerging credit risk by 

March 31, 2018. However, examiners noted inconsistencies and gaps in capital call lending risk 

management processes that could result in elevated credit risk. A new MRA was cited requiring the 

completion of an independent risk assessment of capital call lending activities to ensure that risk 

management processes and policies remain commensurate with the size, complexity, and growth of the 

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MATTERS REQUIRING BOARD ATTENTION AND 

EXAMINATION COMMENTS AND CONCLUSIONS 

portfolio. Management committed to address this MRA by September 30, 2018. In addition, it was 

noted that several law firms that represent the bank in its capital call lending activities were not 

included in the vendor management program. A new MRA was cited to ensure that the vendor 

management program captures all service providers. Management committed to remediate this MRA 

by May 31, 2018. 

Earnings remain satisfactory, as net income has increased due to substantial asset growth and improving 

yields. Liquidity remains strong with substantial on-balance sheet liquidity to meet present and 

anticipated funding needs. Sensitivity to market risk continues to be appropriately managed. Capital 

levels remain satisfactory for the overall risk profile of the bank. Management has improved the 

documentation of the capital planning methodology in response to prior examination 

recommendations. However, the capital assessment does not sufficiently detail how material risks are 

accounted for in the capital stack. A new MRA was cited requiring the strengthening of the capital 

adequacy assessment and planning methodology to support capital actions and decisions. Management 

committed to address this MRA by September 30, 2018. 

Overall management remains satisfactory. The assessment is supported by the bank’s overall sound 

financial condition and progress made to implement corrective actions and address prior examination 

findings. Management has sufficiently addressed IT weaknesses and overall IT performance is now 

satisfactory. In addition, management made significant progress to address BSA/AML and OFAC 

program deficiencies, including improving the internal controls framework and remediating two MRAs 

related to risk assessment and system implementation. However, additional time is required to fully 

implement effective BSA program oversight and internal controls. The MOU will remain outstanding 

until all weaknesses have been remediated and corrective actions are validated during the next 

examination cycle. Additionally, while risk management processes are generally adequate, certain 

credit, compliance, and enterprise-wide oversight practices require improvement to ensure the 

effectiveness of risk identification, monitoring, and control. An MRA is cited requiring the strengthening 

of the risk management structure to ensure compliance with regulations, supervisory guidance, and 

internal guidance, as well as ensure sufficient independent oversight to address the full range of risks for 

the institution. Management committed to address this MRA by September 30, 2018. 

Redacted

FRBSF Examiner-in-Charge 

Redacted

CDBO Examiner-in-Charge 

Page 8 of 23 

BOG-FRS - Public Release, April 2023
COMPLIANCE WITH ENFORCEMENT ACTIONS 

Action Date 

Memorandum of Understanding 01/30/17 

The bank entered into a MOU with the FRBSF and the CDBO to address deficiencies in the BSA/AML and 

OFAC program, effective January 30, 2017. Although SVB continues to make adequate progress towards 

addressing the provisions of the MOU, key improvements are still in progress. The bank remains in 

noncompliance with five of the seven provisions pertaining to the remediation of board oversight, 

compliance program, customer due diligence, suspicious activity monitoring and reporting, and OFAC 

compliance. A separate BSA target supervisory letter was transmitted to the bank on January 17, 2018 

with additional detail on the status of compliance with the enforcement action. 

BOG-FRS - Public Release, April 2023
MANAGEMENT / RISK MANAGEMENT 

Management is evaluated against all factors necessary to operate the institution in a safe and sound manner and in 

accordance with acceptable practices. Consideration is given to technical competence, leadership, and administrative 

ability; compliance with regulations and statutes; ability to plan and respond to changing circumstances; effectiveness of 

management information systems; adequacy of and compliance with internal policies; responsiveness to recommendations 

from auditors and supervisory authorities; tendencies toward self-dealing; demonstrated willingness to serve the legitimate 

banking needs of the community; and management depth and succession. In addition, consideration is given to the extent 

that management is affected by or susceptible to dominant influence or concentration of authority and the overall 

performance of the institution and its risk profile. Consideration is given to the risk management rating, risk factors, and 

the adequacy of risk management associated with risk levels and risk trends. Consideration is also given to the impact of 

any information technology concerns on operational and other relevant risks, as well as the impact on legal or other risks of 

any findings with respect to fiduciary activities or compliance concerns. 

COMPONENT RATINGS 2/ 2 

Management 

Management and board performance remain satisfactory. This assessment primarily reflects the overall 

satisfactory condition of the bank as well as management's commitment and ability to address 

deficiencies by providing sufficient resources and appropriate oversight to remediate issues. 

Management is responsive to regulatory and audit recommendations, evidenced by the return of the IT 

function to a stable and satisfactory condition and the closure of four MRAs during the prior year. 

However, while progress has been made in addressing BSA deficiencies, additional time is required to 

comply with the MOU and fully remediate weaknesses in BSA oversight, internal controls and the OFAC 

program. 

The management team is qualified to supervise bank operations as well as prepare the bank for 

compliance with heightened regulatory standards required for institutions over the $50.0 billion asset 

threshold. While senior management has experienced significant turnover in the past two years, the 

current leadership team is now staffed with individuals that hold either considerable experience in their 

current capacity or relevant experience at similar-sized or large banks. Management is currently 

working on enhancing the risk management structure to support the bank's growth and ensure that 

risks are sufficiently identified, monitored and controlled. 

Risk Management 

Risk management remains generally satisfactory, reflecting adequate board and management oversight 

as well as sufficient policies and procedures over the bank's credit, liquidity, market, and legal functions. 

However, the bank's rapid growth and turnover of key management positions have placed a strain on 

the compliance and ERM functions, resulting in weakened risk monitoring and MIS that could impair 

management's ability to effectively identify and monitor key risks and vulnerabilities. In addition, while 

management has provided resources to address prior findings, examiners continue to identify instances 

across the business lines where risk management practices have not kept pace with growth. A 

contributing factor to continued findings is the lack of clarity in roles, responsibilities, and 

accountabilities within these functions with respect to independent risk oversight and challenge. 

Weaknesses were also noted in the system of controls and risk monitoring to ensure compliance with 

institutional policies, supervisory guidance, and regulations. An MRA is cited to align risk management 

practices with SR 16-11 and ensure compliance with regulations, supervisory guidance, and internal 

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MANAGEMENT / RISK MANAGEMENT 

guidance, as well as ensure sufficient independent oversight to address the full range of risks for the 

institution. Refer to the Matters Requiring Board Attention section of the report for additional detail. 

The audit program remains effective and compliant with SR 13-15

. The internal audit function continues 

to provide an independent and objective assessment of internal control, governance, and risk 

management processes. The 2017 audit plan is on track for timely completion, as staff resources and 

expertise, inclusive of co-sourced auditors, are sufficient. While the process for developing the audit 

universe is effective, management is currently enhancing processes to establish the audit universe 

through more formal documentation and mapping to operational processes, applications, models, 

vendors, and regulations. Auditable entities are generally audited at a frequency commensurate with 

their risk, with any deviations reported to the Audit Committee. Audits are comprehensive and 

workpapers adequately support their findings and conclusions. Finally, effective issues tracking 

processes are in place to monitor the status of open audit findings and validate corrective actions taken. 

Overall internal controls are acceptable. The BSA/AML internal control framework has improved but 

additional time is required to ensure that updated processes are operating effectively. Refer to the 

separate supervisory letter communicating the results of the October 2017 BSA target examination for 

additional detail. While IT operations have stabilized and is now satisfactory, Internal Audit and the IT 

General Controls SOX review noted weaknesses in E-Banking and access controls. The area of E-Banking 

was rated as “Needs Improvement” in the December 2016 audit report, primarily due to vulnerabilities 

in authentication controls introduced during a software update. Management has remediated the 

application code, retested applications for similar vulnerabilities and implemented enhanced testing 

processes. The SOX review also cited a significant deficiency related to SVB’s decentralized and manual 

application access management processes. The risk of ineffective access controls is mitigated by existing 

compensating processes, and management has initiated projects to address control issues. Remediation 

efforts for internal control weaknesses will be reviewed during the 2018 IT examination. 

SR 13-01, Supplemental Policy Statement on the Internal Audit Function and Its Outsourcing, 

< https://www.federalreserve.gov/supervisionreg/srletters/sr1301.htm > 

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ANALYSIS OF FINANCIAL FACTORS 

Asset Quality 

Component Rating: 2 

Asset quality remains satisfactory. The internal loan grading system is reliable and continues to be 

supported by timely problem loan identification and effective internal loan review processes. Also 

considered in this rating are credit administration and risk management practices. 

Volume and Trend of Criticized Assets 

The volume of problem assets decreased over the past year due to positive investor sentiment in late 

2016 that led to continued financial support for many sponsor-dependent borrowers. As of 

July 31, 2017, adversely classified assets totaled $916.6 million or 23.7 percent of capital and reserves, 

compared to 28.5 percent a year ago. Credits listed as special mention also declined by $91.3 million to 

$273.2 million during this period. Improving credit quality is further reflected in other key credit 

performance metrics such as net credit losses, which totaled $45.3 million through the third quarter of 

2017 for a 0.3 percent loss rate, compared to 0.5 percent through September 30, 2016. The levels of 

past due and nonaccrual loans remain stable. 

Notwithstanding these favorable aspects, the outlook for loan quality remains dependent on conditions 

and trends in the innovation sector. Although favorable venture capital investment conditions in late 

2016 have resulted in improved trends in credit quality, management noted that September 2017 

industry data indicated that venture fundraising declined significantly when compared to 2016 totals. 

Exit activity and initial purchase offerings have also declined since the prior year. Management 

continues to monitor investor sentiment and market conditions to determine whether prolonged trends 

could adversely impact investor-dependent loans. 

Credit Risk Management 

Credit risk management processes remain satisfactory, based on effective board and committee 

oversight, acceptable risk monitoring, and a credible internal loan review function. Since the prior 

examination, management successfully resolved two MRAs improving the monitoring of the bank’s high 

risk profile credits and documentation of credit review procedures. Policies and procedures now 

require increased transparency into the resolution plans of classified pre-profit credits and enhanced 

support for key assumptions pertinent to the underwriting of leveraged loans. In addition, internal loan 

review procedures have been augmented with detailed instructions for evaluating specialty lending 

areas, including capital call, leveraged, and pre-profit credits. 

Management has developed acceptable policies and processes, as well as job aides and other forms of 

guidance to supervise nearly every credit-related activity. However, concerns were raised regarding the 

risk management of capital call loans, which represent the largest and fastest-growing loan segment 

with a concentration of over 400.0 percent of capital. While this portfolio has had a history of strong 

credit quality through prudent underwriting, inconsistencies and gaps noted in risk management 

processes could result in elevated credit risk. A new MRA is issued requiring the completion of an 

independent risk assessment of capital call lending activities to ensure that risk management processes 

and policies remain commensurate with the size, complexity, and growth of the portfolio. In addition, it 

was noted that several law firms that represent the bank in its capital call lending processes were not 

included in the vendor management program. A new MRA is cited to ensure that the vendor 

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ANALYSIS OF FINANCIAL FACTORS 

management program captures all service providers. Refer to the Matters Requiring Board Attention 

section of the report for details on the two MRAs and required corrective action. 

Credit MIS remains acceptable and includes a number of reports designed to monitor and measure 

credit-related conditions. Management has made progress in remediating the MRA requiring the 

development of a risk management framework to identify emerging credit risk. Initially, the framework 

will include analysis of metrics and thresholds that point to meaningful risk correlation within the bank’s 

high risk loan segments, including leveraged and pre-profit loans; with analysis subsequently applied in a 

similar manner to lower risk profile groups. This analysis will be used to support the formulation of Key 

Risk Indicators (KRIs) designed to monitor and measure portfolio conditions through standardized 

reports. 

Internal Credit Review 

The internal credit review function remains satisfactory and provides an effective challenge over credit 

administration. The team maintains appropriate independence from the loan production function and 

provides objective assessments for each loan division. Personnel in the group are qualified and 

sufficiently trained, with ongoing training tailored to the bank’s specialty lending areas where 

appropriate. Policies, job aides, procedures, and other forms of guidance are acceptable. Management 

successfully remediated a prior MRA to augment line sheet procedures with prescriptive instructions for 

analyzing capital call, pre-profit, and leveraged lending. Lastly, management is implementing a 

succession plan to cross train a new manager to succeed the head of internal credit review, who plans to 

retire in early 2018. 

Allowance for Loan and Lease Losses 

The loan loss reserve methodology is acceptable and the level of the reserve remains appropriate, 

totaling $249.0 million, or 1.1 percent of total loans as of September 30, 2017. The reserve adequately 

covers net losses at 4.1 times, nonaccrual loans at 2.0 times, and classified assets at 0.27 times. 

Although these metrics have fluctuated since the prior examination, they remain directionally consistent 

with the credit risk in the portfolio. The ALLL policy is comprehensive and provides clear standards for 

generating appropriate and supported reserve allocations. The policy defines standards for ASC 450 

formula computations for homogenous loan pools, qualitative factors, and ASC 310 specific allocations 

for loans designated as impaired. Additionally, management has created a loan pool matrix to more 

effectively analyze performing impaired loans that are neither past due nor on nonaccrual status. 

Regulation O 

The bank is in compliance with Regulation O requirements. Management has corrected the violations 

cited at the prior full-scope examination and strengthened policies, procedures, and monitoring 

processes to ensure that inadvertent insider overdrafts do not recur. Policies and procedures have been 

updated to prohibit the funding of insider overdrafts. In addition, senior management and the board 

adequately monitor loans for non-preferential terms and conditions, credit quality, and ongoing 

compliance with Regulation O lending limits. 

Investment Portfolio 

The quality and risk management of the investment portfolio remains satisfactory. The investment 

securities portfolio totaled $23.4 billion or 46.5 percent of average assets, with over 99.0 percent of 

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ANALYSIS OF FINANCIAL FACTORS 

portfolio consisting of low risk U.S. Treasury and government agency securities. Risk monitoring is 

acceptable, as evidenced by adequate documentation of pre-purchase assessments and ongoing 

monitoring as well as sufficient oversight provided by the Asset/Liability Committee (ALCO). Investment 

strategy objectives continue to focus on capital preservation, liquidity, and interest rate risk 

management. Management’s plan to increase municipal bond holdings over time to a range of 10.0 

percent of investments is prudent and well-controlled. 

Earnings 

Component Rating: 2 

Earnings remain satisfactory. Through September 30, 2017, the bank reported net income of 

$358.8 million for a return on average assets (ROAA) of 1.02 percent, a significant increase from the 

ROAA of 0.85 percent reported for 2016. The improvement in earnings is primarily attributed to 

substantial asset growth and an increase in the federal funds rate resulting in higher loan and 

investment yields. Provision expenses to the ALLL have decreased since the prior year, which has helped 

offset increasing compensation and related expenses used to fund the bank’ growth initiatives and 

improvement of the risk management infrastructure. 

The net interest margin (NIM) also improved due to increasing interest rates but continues to be 

constrained by the level of loans relative to total assets. Substantial deposit inflows from the bank’s 

clientele, which includes venture capital and private equity firms with significant levels of cash, have 

resulted in excess funds deployed into a sizable and lower-yielding investment portfolio. The downward 

pressure on the NIM is slightly offset by the low cost of funds provided by the bank’s large and stable 

core deposit base. 

Budgeting practices are adequate and based on reasonable assumptions. Management monitors 

earnings performance through the use of budget variance reports that are distributed to all business line 

owners on a monthly basis. The bank is on track to meet 2017 budget projections. 

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ANALYSIS OF FINANCIAL FACTORS 

Capital 

Component Rating: 2 

Capital levels remain satisfactory relative to the overall risk profile of the institution. Capital ratios 

declined slightly year-over-year as a result of strong asset growth outpacing capital accretion. While the 

tier 1 leverage ratio continues to trail peer levels, risk is mitigated by the sizable investment portfolio 

relative to total assets. Risk-weighted capital ratios remain comparable to peer. Capital continues to be 

supported by the bank’s retained earnings and satisfactory asset quality. 

Board and senior management oversight is appropriate. Current and projected capital levels and trends 

are reviewed monthly by the ALCO and quarterly by the Finance Committee. Management has 

improved the documentation of the capital planning methodology by including key assumptions to 

support the composition and derivation of capital buffers. However, aspects of the capital planning 

methodology, specifically with regards to capital attribution, require additional attention. Analysis for 

capital limits requires increased granularity to ensure that material risks at the firm are appropriately 

incorporated to support capital actions and decisions. In addition, many limits do not have justification 

as to why they are appropriate for the firm (e.g. “floor” of 350 bps, or starting base at the adequately 

capitalized minimum). Following a gap analysis performed by , project plans 

related to capital management and planning were developed which are expected to address capital 

attribution to credit risk; however, it would be prudent to also distinguish other enterprise risks. Refer 

to the Matters Requiring Board Attention section of the report for additional detail regarding 

deficiencies and required corrective action. 

Redacted

The bank paid $60.0 million in dividends to the parent company through the third quarter of 2017. The 

2017 capital plan allows for up to 30.0 percent of quarterly net income to be upstreamed in anticipation 

of future uses of cash at the holding company, which may include share repurchases, dividends, or by 

way of recent example, the retirement of trust-preferred securities as management seeks to simplify the 

capital structure. Each quarter, management performs a dividend analysis to ensure that regulatory 

requirements are met and the bank continues to hold capital that meets internal policy thresholds. 

DFAST Review 

The October 2017 DFAST review concluded that the bank remains in compliance with the minimum 

DFAST guidance requirements outlined in SR 14-036

. However, DFAST reporting requires better support 

and analysis of the model methodologies and outcomes, including the overlay process. In addition, 

while management made efforts to improve Model Risk Management (MRM) policies and procedures, 

examiners identified areas in oversight and documentation requiring further improvement. 

Management will also be required to validate the process used to extend the paths of the company’s 

additional variables used in each scenario. The two MRAs requiring improvement in MRM oversight and 

the rationale and support of the DFAST framework are detailed in a separate supervisory letter 

transmitted to the bank on February 5, 2018. 

6 SR 14-03, Supervisory Guidance on Implementing Dodd-Frank Act Company-Run Stress Tests for Banking Organizations with 

Total Consolidated Assets of more than $10 Billion but less than $50 Billion 

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

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ANALYSIS OF FINANCIAL FACTORS 

Liquidity 

Component Rating: 1 

Liquidity remains strong. The bank maintains substantial and reliable access to funds on favorable terms 

to meet present and anticipated liquidity needs. As of September 30, 2017, on-balance sheet liquidity 

represented 46.7 percent of total assets, consisting of unencumbered high quality securities of 

$20.6 billion and deposits held at the Federal Reserve of $2.7 billion. Funding remains centered in the 

stable and well-diversified core deposit base which at 84.0 percent of total assets, is well above the peer 

group average of 69.8 percent. The bank continues to attract low-cost funding from highly liquid clients, 

which includes many fast-growing technology startups and their venture capital investors. Secondary 

funding sources include unused, secured lines of credit with the Federal Home Loan Bank and FRB 

Discount Window of $3.4 billion and $719.0 million, respectively, as well as repo lines of $2.3 billion. 

Funds management practices are adequate. Management has adequately planned and communicated 

the strategy for managing excess deposits through off-balance sheet investment alternatives for the 

client base, while making tactical decisions in targeted product pricing and client segments as necessary 

for on-balance sheet deposit retention. Policies ensure sufficient funding for both anticipated and 

unanticipated events, including establishing a liquidity buffer for unexpected liquidity stress events. 

Contingency funding plan and liquidity stress testing practices are adequate and in line with interagency 

guidance. 

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ANALYSIS OF FINANCIAL FACTORS 

Sensitivity to Market Risk 

Component Rating: 2 

Sensitivity to market risk is satisfactory. The balance sheet remains asset-sensitive, primarily due to an 

asset base largely comprised of variable-rate instruments and a relatively short-term investment 

securities portfolio with an average duration of only 2.7 years. Nonetheless, market risk is considered to 

be moderate due to the bank’s exposure to potential decreasing rates and growing exposure to foreign 

exchange risk. The notional value of derivative exposures increased substantially by $1.7 billion or 

65.4 percent from the prior year, mainly due to an increase in FX derivatives to accommodate 

customers. The risk of these foreign transactions is mitigated by immediate settlement on the spot 

market. 

The bank’s asset liability management (ALM) model indicates that net interest income (NII) and the 

economic value of equity (EVE) benefit from a rising rate environment. As of September 30, 2017, the 

model projects that NII would increase between 14.6 percent and 43.9 percent for upward parallel rate 

shocks between 100 basis points and 300 basis points on a static balance sheet. Equity at risk is also 

projected to increase in all positive rate shock environments. More specifically, a rate shock of up 200 

basis points would increase NII by $427.0 million and EVE by $1.0 billion from the base scenario. 

Overall, board and management oversight of market risk is adequate. Policies, including ALM model 

scenarios and limits, are reviewed and approved by the ALCO and the Finance Committee with 

appropriate frequency. Internal controls, model risk management, and internal audit’s oversight over 

the market risk function are also adequate. The Treasury function has completed its implementation of 

the new ALM model, , and now has access to a more comprehensive set of scenario 

measurement and reporting capabilities. Model inputs and assumptions are in line with internal policies 

as well as regulatory guidance, with 

Redacted

’s recent independent validation noting no significant 

Redacted

issues. Nonetheless, while the Chief Risk Officer sits in on ALCO meetings, meeting minutes do not 

evidence detailed oversight or challenge to business decisions. The Treasury function has grown in 

complexity over the past several years, and examination and audit findings point to a need for ongoing 

and independent monitoring and challenge for market risk. Refer to the Matters Requiring Board 

Attention section for additional detail regarding improvement in risk management. 

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Silicon Valley Bank 

Concentrations of Credit 

Commitments as a percent of Tier 1 Capital and Reserves 

July 31, 2017 

RESTRICTED – FR 

CONCENTRATIONS 

Concentration Risk 

While the bank experienced 

loan growth of $4.3 billion 

during the past year, overall 

concentration risk remains 

considerable but stable due to 

diversification in the loan 

portfolio. As noted in the 

chart, the bank’s loans can be 

divided into three segments 

based on their risk 

characteristics. Loan growth 

was primarily driven by 

inherently low risk segments, 

which account for nearly half of 

all credit exposures. High risk 

loan segments declined slightly as a percentage of capital and reserves, while some growth occurred in 

the inherently moderate risk loan segments. 

Inherently low risk segments are represented by capital call loans extended through the private equity 

and venture capital groups. These loans totaled $17.2 billion or 445.1 percent of capital and reserves, 

an increase from 430.4 percent year-over-year. Although growth in these segments was high at 

$2.2 billion, these loans are considered lower risk as the bank has reported negligible credit losses in this 

portfolio over the past 20 years. Credit risk is mitigated by prudently-applied underwriting terms which 

generally limit line advances to no more than 25 percent of the remaining callable capital. 

Inherently moderate risk loans increased by $1.3 billion over the past year; however, growth relative to 

capital and reserves was low, increasing from 283.4 percent to 290.6 percent. These loans are 

considered to have moderate risk as they primarily consist of asset-based extensions of credit to 

corporate clients in the technology and life science industries, real estate secured loans extended to 

winery clients, and residential real estate secured financing extended to the investors, founders, 

entrepreneurs, and executives associated with existing commercial clients. Underwriting terms, debt 

service thresholds, and collateral margins for these loans are in line with industry practices. 

Inherently high risk segments, consisting of pre-profit and sponsor-led buyout credit commitments, 

represent 245.0 percent of capital and reserves. While the combined portfolios increased by 

$873 million during the past year, their size relative to capital and reserves declined slightly due to 

increasing capital levels. These loan groups are considered high risk as pre-profit credits are dependent 

on investor sentiment for repayment, and sponsor-led buyout borrowers are highly leveraged with 

repayment dependent on meeting projections. In both cases, secondary sources of repayment are 

nonexistent outside of intangible assets such as intellectual property or business enterprise value. 

Inherent high risk is mitigated by the underwriting and risk selection process. Pre-profit credits are 

approved only after a determination that the borrower has obtained sufficient support from a familiar 

and reputable sponsor. Leveraged loan approvals are granted after a thorough screening by both the 

bank and sponsor to confirm that business plans are realistic and align with the bank’s covenant 

structure. 

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BOG-FRS - Public Release, April 2023

inherently moderate risk credits 

Inherently 

low risk 

credits 

Private Equity Firm 

339% 

Venture Capital 

100% 

Leveraged 

70% 

Pre Profit 

Companies 

175% 

Private 

Client 

Large Corp 

134% 

Other 

3% 

Non-Niche 

8% 

Inherently 

high risk credits 

Mid Stage 

58% 

Early Stage 

60% 

late Stage 

54% 

Angel/Seed 

firm 

1% 

E1 

4% 

28% Wine 

Corp 

tech 

44% 
SUMMARY OF ITEMS SUBJECT TO ADVERSE CLASSIFICATION / 

SUMMARY OF ITEMS LISTED AS SPECIAL MENTION 

SUMMARY OF ITEMS SUBJECT TO ADVERSE CLASSIFICATION 

CATEGORY Substandard Doubtful Loss Total 

Loans and Leases 809,910 106,694 0 916,604 

Securities 0 0 0 0 

OREO 0 0 0 0 

Other Assets 0 0 0 0 

Other Transfer Risk 0 0 0 0 

Subtotal 809,910 106,694 0 916,604 

Contingent Liabilities 0 0 0 0 

Totals at Current Exam [07/31/17] 809,910 106,694 0 916,604 

Totals at Prior Exam [09/30/16] 911,893 109,003 0 1,020,896 

SUMMARY OF LISTED FOR SPECIAL MENTION 

Current Exam 

07/31/17 

Prior Exam 

09/30/16 

Loans / Leases 273,248 364,508 

BOG-FRS - Public Release, April 2023
ITEMS SUBJECT T O ADVERSE CLASSIFICATION 

Includes assets and off-balance sheet items which are detailed in the following categories: 

Substandard Assets. A substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral 

pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of debt. They are characterized 

by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. 

Doubtful. An asset classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the 

weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. 

Loss Assets. An asset classified loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This 

classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off 

this basically worthless asset even though partial recovery may be affected in the future. 

Asset Category 

Description Substandard Doubtful Loss 

LOANS 

12,056 

4,210 

4,368 

5,686 

2,500 

7,283 

17,213 

4,625 

13,201 

20,651 

6,283 

6,267 

250 

4,406 

2,431 

10 

7,084 

4,728 

11,500 

4,972 

29,600 

4,611 

11,400 

4,864 

2,000 

9,600 

Total Loans Reviewed 161,951 39,848 0 

Loans Not Reviewed 647,959 66,846 0 

Total Classified Assets 809,910 106,694 0 

Redacte Redacted 

BOG-FRS - Public Release, April 2023
ITEMS LISTED FOR SPECIAL MENTION 

SPECIAL MENTION LOANS AMOUNT 

Redacted 10,375 

Redacted 800 

Redacted 17,800 

Total Loans Reviewed 28,975 

Loans Not Reviewed 244,273 

Total Special Mention Credits 273,248 

Total at Prior Examination [09/30/16] 364,508 

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OTHER MATTERS 

Bank Secrecy Act (BSA) / Anti-Money Laundering (AML) 

The BSA/AML supervisory report transmitted to the bank on January 17, 2018 noted that the BSA/AML 

compliance program is improving but remains less than satisfactory. Management made significant 

progress in addressing deficiencies noted during the prior examination, including improving the internal 

controls framework and remediating two MRAs related to risk assessment and system implementation. 

However, additional time is required to fully implement effective program oversight and internal 

controls. While management significantly reduced the backlog of Enhanced Due Diligence reviews, 

thirty percent of the backlog remained at the time of the October target review. Further, continued 

changes within the Financial Crimes Risk Management (FCRM) organization raise some concerns about 

the bank’s ability to effectively and fully remediate deficiencies with the BSA program. As a result, the 

oversight and internal controls MRIAs remain open. The OFAC MRA also remains open. Despite efforts 

to improve the OFAC program, unidentified control gaps and technology related issues continue to delay 

progress in developing a comprehensive OFAC program. The MOU will remain in place until these BSA 

deficiencies are remediated. 

Information Technology (IT) 

The February 2017 IT target examination confirmed that management and the board has sufficiently 

addressed weaknesses and returned the IT function to a satisfactory condition. IT executive 

management remains stable with key positions filled by qualified leaders and skilled personnel. The 

board has allocated the necessary resources to support initiatives to upgrade systems, processes, and 

technology. Since issues were first cited in 2015, management has completed a root cause analysis of 

control breakdowns, identified current tools to ensure proper implementation and configuration, 

remediated weaknesses in application implementation and maintenance processes, and developed an IT 

Strategic Plan that aligns with business objectives and provides appropriate strategic direction for IT 

initiatives. Management has effectively integrated cybersecurity into its risk management and 

information security programs, and the bank remains GLBA compliant. Notwithstanding the overall 

satisfactory condition of the IT function, internal audits and the IT General Controls SOX review continue 

to identify control issues. Risk is mitigated through existing compensating controls, and management 

has initiated projects to improve control processes. 

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SIGNATURE OF DIRECTORS 

We, the undersigned directors of Silicon Valley Bank, have personally reviewed the contents of the 

report of examination as of September 30, 2017. 

Signature of Directors Date 

Roger F. Dunbar, Chairman 

Greg W. Becker 

Eric A. Benhamou 

David M. Clapper 

John Clendening 

Joel P. Friedman 

Lata Krishnan 

Jeff N. Maggioncalda 

Mary John Miller 

Kate D. Mitchell 

John F. Robinson 

Garen K. Staglin 

NOTE: This form should remain attached to the report of examination and be retained in the bank’s file for review 

during subsequent examinations. 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. 

Page 23 of 23 

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CONFIDENTIAL
 

BOG-FRS - Public Release, April 2023
 

 

 

Redacted Redacted Redacted Redacted Redacted Redacted Redacted

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CONFIDENTIAL SECTION 

DIRECTORS 

Year of 

Birth 

Year Elected 

Name * to Board Occupation or Principal Business Affiliation 

1, 4, 5, 6 Dunbar, Roger F. 0 2004 Chairman of SVB & SVB Financial Group, 

Retired E&Y executive for strategic growth 

markets and venture capital services 

Becker, Greg W. 0 2011 President & CEO of SVBFG, CEO of SVB 

4, 5, 6 Benhamou, Eric A. 0 2005 Founding CEO of an early stage VC firm 

1, 3, 6 Clapper, David M. 1 2005 CEO of a medical device company, former 

executive at other life science companies 

3 Clendening, John NA 2017 President & CEO of provider of Internetrelated services, former executive at 

Charles Schwab’s investor services division 

and CEO of its subsidiary bank 

4, 5, 6 Friedman, Joel P. 1 2004 Retired, former executive at Accenture 

1, 4 Krishnan, Lata 1 2008 CFO of a PE firm focused on technology 

businesses 

2, 3 Maggioncalda, Jeffrey N. 0 2012 Former founding CEO of technologyenabled financial advisor, Financial Engines 

1, 4 Miller, Mary J. 0 2015 Former Under Secretary for Domestic 

Finance, U.S. Department of the Treasury 

2, 3, 6 Mitchell, Kate D. 1 2010 Co-founding Managing Partner of a VC firm 

focused on the technology and healthcare 

sectors 

1, 2, 3, 6 Robinson, John F. 1 2010 Former Deputy Comptroller of the 

Currency, EVP of Washington Mutual Bank 

2, 5 Staglin, Garen K. 2 2011 Proprietor of Staglin Family Vineyards, 

director and PE/VC investor in growth 

technology companies and developing 

businesses 

Redacted Redacted Redacted Redacted Redacted

*Number of meetings missed of a total of 10 held since the prior full-scope examination. 

Director John Clendening was appointed to the board effective August 3, 2017. 

Regular schedule of directors’ meetings: At least quarterly 

A
 

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CONFIDENTIAL SECTION 

DIRECTORS 

Fee paid each director:	 Non-employee directors receive fees and stock options, and are reimbursed 

for reasonable expenses incurred in connection with attendance at meetings. 

The fee structure is as follows: 

Annual Retainer: $60,000 

Chairman of the Board: $150,000 

Audit Committee Chair: $20,000 

Compensation and Risk Committee Chairs: $15,000 

Credit, Finance, and Governance Committee Chairs: $12,000 

Audit Committee Members: $2,500 (in person), $1,250 (by telephone) 

All Other Committees: $1,500 (in person), $750 (by telephone) 

Strategic Planning or Other Extended Meetings: $3,000/day 

Committees: 

1. Audit Committee 

2. Compensation Committee 

3. Credit Committee 

4. Finance Committee 

5. Governance Committee 

6. Risk Committee 

B
 

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EXECUTIVE OFFICERS 

RESTRICTED – FR 

Name and Title Area of Responsibility 

Year of 

Birth 

Years 

with 

Bank 

Years in 

Present 

Position 

Compensation 

(Bonus) 

Becker, Greg W. CEO 

Redacted

24 9 $950,000 

($1,148,750) 

Mr. Becker has served as CEO of SVB since April 2011. He joined the company and bank in 1993 as part 

of the Northern California Technology Division. He was appointed COO in 2003 and, later, President in 

2008. He was also a co-founder and managing director of SVB Capital, which manages global venture 

fund-of-funds and co-investment funds. Mr. Becker currently serves on the Board of the Bay Area 

Council and as Chairman of the Board of the Silicon Valley Leadership Group. 

Beck, Daniel CFO 

Redacted

<1 <1 $525,000 

Mr. Beck joined the bank as CFO in June 2017. Prior to joining the bank, he served at Bank of the West 

as CFO and Treasurer for two years, and Controller for seven years. In his former positions, he was 

responsible for leadership of the finance function, along with large scale transformation programs, and 

played a lead role in the company’s successful submission of its first Comprehensive Capital Analysis 

and Review stress test. Prior to Bancwest, he held financial positions at Wells Fargo and Freddie Mac 

and worked at Deloitte & Touche and E*Trade Financial Corporation earlier in his career. 

Cadieux, Marc C. CCO 

Redacted

25 4 $475,000 

($375,000) 

Mr. Cadieux has served as CCO of USB since 2013. Since joining the bank in 1992, he has held positions 

of increasing responsibility in the areas of credit administration, business development, and 

relationship management. He was appointed Assistant CCO in 2009. He has also served as the Risk 

Manager for SVB’s Eastern Division where he oversaw commercial lending activities on the East Coast, 

in Canada, the United Kingdom, and Israel. 

China, John D. Head of Technology 

Banking 

Redacted

21 3 $525,000 

($525,000) 

Mr. China has served as the Head of Relationship Banking since 2014, overseeing all aspects of the 

company’s relationships with the venture capital and private equity, private bank and commercial bank 

communities. He joined the company in 1996 as a Senior Relationship Manager and has since held 

various leadership roles at the company and its subsidiary, SVB Capital, including Head of the Venture 

Capital Group and Head of the Private Equity Group. 

Cox, Phillip C. Head of EMEA; 

President of UK Branch 

Redacted

7 7 $364,594 

($275,000) 

Mr. Cox has served as Head of Europe, Middle East and Asia (EMEA) and India since joining the bank in 

2009 and is responsible for developing the company’s business across these regions. He has led the 

establishment of the UK Branch banking business in 2012 and its expansion into UK Technology lending. 

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EXECUTIVE OFFICERS 

Previously, he served as Head of Commercial Banking at Bank of Scotland in London, a division of the 

Lloyds Banking Group, and was responsible for the relationship management, origination, and 

operational aspects of the business. He was also with The Royal Bank of Scotland (RBS) prior to that for 

23 years and held a variety of positions, including Managing Director of Transport and Infrastructure 

Finance and Regional Managing Director of the North England region. 

Descheneaux, Michael R. President 

Redacted

10 <1 $700,000 

($625,000) 

Mr. Descheneaux was recently promoted from CFO to President of SVB in June of 2017. He joined the 

company in 2006 as Managing Director of Accounting and Financial Reporting and was appointed as 

CFO in 2007. Previously, he was Managing Director with Navigant Consulting from 2004 to 2006 and 

the head of Financial Services Practice as well as other leadership positions for the Central and Eastern 

Europe region of Arthur Anderson from 1995 to 2002, the latter tenure during which he also served as 

the Lead Audit Partner for Telecommunications and High-Tech Practice and advised large, public and 

multinational clients. He is a Certified Public Accountant, as well as, a member of the American 

Institute of CPAs and the Association of Certified Fraud Examiners. 

Draper, Michelle A. Chief Marketing Officer 

Redacted

3 3 $425,000 

($340,000) 

Ms. Draper joined the Bank as Chief Marketing Officer in 2013. Previously, she was with Charles 

Schwab & Co. for nearly twenty years and most recently served as SVP of Institutional Services 

marketing. During her tenure with Charles Schwab, she also served as Director of Investor Services 

Segment Marketing and VP of Advisor Services Marketing Programs, developing marketing strategies 

for both the retail and institutional side. 

Dreyer, Michael L. Chief Operations 

Officer 

Redacted

2 2 $500,000 

($475,000) 

Mr. Dreyer joined the company as COO in November 2015 to lead the global technology and 

infrastructure teams. Prior to joining the bank, he served as COO for the Americas businesses of 

Monitise Plc in 2014 and CIO for Visa, Inc. from 2005 through 2014. Prior to these roles, he was an SVP 

for Visa for seven years and VP for American Express for two years. 

Edmonds-Waters, 

Christopher D. 

Head of Human 

Resources 

Redacted

13 9 $400,000 

($325,000) 

Mr. Edmonds-Waters joined the company in 2003 as Director of Organization Effectiveness and was 

appointed Head of Human Resources in 2007. Prior to joining the company, he held numerous senior 

human resources positions from 1996 through 2003 at Charles Schwab & Co. where he specialized in 

management learning and development and launched the company’s online training system. 

Izurieta, Laura Chief Risk Officer 1 1 $500,000 

($205,000) 

Redacted

Ms. Izurieta joined the bank as CRO in August 2016. She has over 20 years of experience in operations, 

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EXECUTIVE OFFICERS 

risk management, large program delivery and culture change at other banking organizations. 

Previously, she was EVP and CRO, Retail and Direct Bank at Capital One, where she had also served as 

SVP of Enterprise Risk Management, VP of Corporate Reputation and Governance, VP of Home Loans 

and VP of IT since 2000. Prior to Capital One, she held positions at Freddie Mac and Bank of America. 

Peters, John Head of Internal Audit 

Redacted

11 3 $375,000 

($312,000) 

Mr. Peters has served as the bank’s Chief Audit Executive for over ten years. He holds more than 35 

years of audit, operational and consulting experience, including more than nine years with KPMG in its 

external audit group. Immediately prior to joining SVB, he worked at HP-Mercury Interactive as its 

Director of Internal Audit where he was responsible for the development and execution of their 

internal audit plan. Mr. Peters is a CPA and a member of the American Institute of CPAs. 

Zuckert, Michael S. General Counsel 

Redacted

3 3 $500,000 

($380,000) 

Mr. Zuckert is the General Counsel of SVB Financial Group, joining the Company in 2014 from Citigroup, 

where he most recently served as Deputy General Counsel. During his twelve years with Citi, he gained 

experience in a wide range of legal matters, most recently focusing on Citi Holdings and mergers and 

acquisitions. From 1987 through 2002, he worked at Morgan Stanley as a Principal in the legal 

department, covering investment banking and principal investing, and later served as COO for a private 

equity fund at Morgan Stanley. 

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1.	 Discuss any other relevant matters regarding the bank’s management not previously addressed. 

 

 

 

 

 

 

 

2.	 If the bank is in a weakened or extended condition, what aid may be expected from shareholders 

or others? 

 

 

 

 

 

 

 

 

 

MANAGEMENT AND CONTROL 

During the October 2017 committee meetings, the board approved management’s proposal to 

merge the Corporate Compliance function with the Financial Crimes Risk Management unit. Under 

this organizational change, the current BSA Officer also assumes the position of Chief Compliance 

Officer, with two direct reports: a Deputy Compliance Officer, and a Deputy BSA Officer. While this 

change is expected to provide additional talent and resource support to the compliance function 

with respect to monitoring and testing, its sustainability and impact to the BSA compliance 

program are uncertain and will need to be validated over time. 

All other relevant and material matters supporting the evaluation of management and the board of 

directors have been addressed within the open section of this report. 

Not applicable; the bank is not in a weakened or extended condition. 

3.	 (a) List each major shareholder (5% or more) of the bank and the respective percentage of 

ownership. When the major shareholder is a bank holding company, list its major 

shareholders and the percent controlled. 

Shareholder	 Number of Shares Percentage Owned 

BlackRock, Inc. 5,361,630 10.2% 

The Vanguard Group 3,930,352 7.5% 

Harding Loevner LP 2,659,081 5.1% 

T. Rowe Price Associates, Inc. 2,647,195	 5.1% 

(b)	 Comment on the extent to which a particular director(s), shareholder(s), or executive 

officer(s) controls or dominates the bank’s policies and operations. 

There is no evidence to suggest dominant influence by any one director, shareholder, or 

executive officer. Control over policy making and operations remains centered in the bank’s 

executive officers and senior management, whose influences are commensurate with their 

responsibilities. Meeting minutes indicate that the board of directors is engaged in the 

institution’s overall activities and responsible for reviewing and approving all policies, 

procedures, and limits. 

(c)	 Comment on any adverse effects of insiders on operating policies, procedures, or the 

overall financial condition of the bank. 

No such adverse effects were noted. 

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MANAGEMENT AND CONTROL 

(d)	 Provide the aggregate amount of borrowings by directors, executive officers, principal 

shareholders, and their related interests (as defined in Regulation O). Describe any 

material loans or other transactions between the bank and its executive officers, directors, 

or its direct or indirect principal shareholder(s) and their interest(s), and assess the impact 

of the transactions on the bank. (An interest would include any holding company affiliate 

or outside business interest of a bank or holding company insider in which 25 percent or 

more is controlled.) 

As of July 31, 2017, the aggregate commitment to directors, executive officers, principal 

shareholders, and their related interests totaled $35.3 million to nine individuals and six 

Redacted

entities. The outstanding balance on these loans totaled $23.0 million. Credits to

Redacted

 and a related entity, consisting primarily of two land development loans, represent 

, represent the next largest commitment at $10.0 million, for which $5.0 million is Redacted Redacted Redacted

the largest amount at $18.0 million, for which $15.9 million is currently funded. 

Redacted Redacted

Credits (two 

term loans and one commercial line) to related entity, 

currently funded. The bank also granted two lines totaling $5.5 million to

 related entities, 

Redacted

Based on the sample of loans reviewed at this examination and board meeting minutes 

documenting discussion and approval of insider loans, insider loans are not granted on 

preferential terms and do not present any other adverse features. 

4.	 Has any director, officer, or employee allegedly embezzled, abstracted, or otherwise criminally 

misused the funds of the bank since the previous examination? No. 

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RATINGS AND GENERAL INFORMATION 

1. State the bank's rating at this examination and the date and rating at the last examination. 

Briefly discuss the rationale for the rating and reasons for any departures from Federal Reserve 

guidelines with respect to the CAMELS component ratings and the composite rating. 

CAMELS Risk Management Agency Date 

Current 222212/2 2 FRB 10/02/17 

Prior 020000/0 NA FRB 05/08/17 

Composite and Risk Management 

The composite and component ratings reflect the overall satisfactory condition of the bank and are 

consistent with Federal Reserve guidelines. Risk management practices remain generally 

satisfactory as reflected by acceptable board and management oversight and internal controls 

across most areas; and overall adequate policies and procedures. Management Information 

Systems remains fair due to weaknesses in risk identification and monitoring processes within the 

BSA/AML compliance and ERM functions. There were no departures from Federal Reserve 

guidelines with respect to the Risk Management rating. Please refer to the open section of the 

report for more detailed discussion of financial ratings and risk management practices. 

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 stripe, expressed as strong, satisfactory, fair, marginal, or weak. 

Risk Management and Controls 

Risk 

Category 

Inherent 

Risk 

Board and 

Senior 

Mgmt 

Oversight 

Policies, 

Procedures 

and 

Risk Limits 

Management 

Information 

Systems 

Internal Residual 

Controls 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 Increasing 

Operational Considerable Satisfactory Satisfactory Satisfactory Fair Moderate Stable 

Legal / Compliance Considerable Fair Satisfactory Fair Fair Considerable Increasing 

Overall Considerable Satisfactory Satisfactory Fair Satisfactory Considerable Increasing 

2. Discuss the prospects of the bank. 

Prospects are favorable. The bank remains financially sound and continues to exhibit stable to 

positive performance trends. The current board and management have demonstrated the 

willingness and expertise to manage the bank effectively. In addition, the bank has demonstrated 

the ability to grow while maintaining stable capital ratios, despite a tier 1 leverage ratio that will 

BOG-FRS - Public Release, April 2023
continue to trail peer as a result of substantial deposit growth. The bank continues its plans to 

establish offices in Germany and Canada. However, BSA/AML and OFAC compliance (though 

improving), as well as the framework for the ERM and compliance function, remain a concern with 

processes and controls requiring additional time to implement. Management expects the bank to 

have breached the $50 billion threshold for four continuous quarters by the end of 2018, but action 

plans to fully address supervisory issues and move towards large bank standards may extend 

further than 2018. 

3. Was a meeting held with the full board of directors to discuss matters subject to criticism? No. If 

not, give the names of directors and officers with whom the bank's condition was discussed. 

A meeting with the board of directors was not required but will be scheduled in mid-2018. The 

meeting will include discussion of the findings of this examination, and provide a summary of key 

risks, the results of supervisory events that took place during the 2017 cycle, and the supervisory 

plan for 2018. 

4. Provide the composite ratings and dates of the most recent bank specialty examinations (EDP, 

trust, consumer, CRA) and bank holding company inspection, if applicable. If any specialty 

examination or inspection resulted in a problem rating, discuss any adverse impact of those 

particular weaknesses on the overall safety and soundness of the bank. 

Examination Type (if applicable) Examination Start Date Composite Rating 

Bank Holding Company (top tier) 12/27/16 222/22 

Trust NA NA 

IT 02/27/17 2222/2 

Consumer Compliance 06/20/16 2 

CRA 06/20/16 Satisfactory 

5. Loan Sampling 

Summary of Loan Coverage ($,000) 

Number 

of 

Relation 

ships 

Worked 

Number 

of Lines 

Worked 

Dollar 

Volume 

Worked 

(incl. OBS) 

Total Loans 

(incl. OBS) 

Total 

Loans 

Coverage 

Percent 

Dollar 

Volume 

Com'l 

Worked 

(incl. OBS) 

Total Com'l 

(incl. OBS) 

Com'l 

Loans 

Coverage 

Percent 

74 215 2,167,098 38,003,064 5.70 2,035,558 35,473,918 5.74 

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RATINGS AND GENERAL INFORMATION 

6. Suggestions for next examination 

Refer to examination workprograms and conclusion memos, and the Issues Tracking Log for 

suggested areas to review at the next examination. Also refer to the 2018 Institutional Overview, 

Risk Assessment, and Supervisory Plan for scope and resource projections. 

•	 An examiner assigned to review the Risk Management MRA is recommended due to the 

nature and breadth of issues. 

•	 Management indicated intentions to grow the portfolio of larger growth capital loans 

during the recent examination. If the bank experiences substantial growth in such loans, 

which currently total only $68.7 million or less than 2.0 percent of capital, the upcoming 

asset quality target review may consider incorporating a few newly originated growth 

capital loans to get an understanding of the level of risk and quality of risk management 

practices for this segment. 

•	 Similarly, given that early stage growth capital facilities represent the highest risk of loss 

within the technology and life science niches, examiners may consider selecting a sample of 

early stage growth capital loans for review. 

•	 Verify that management has improved the analysis behind the capital limit structure to at 

the minimum clearly show and support the attribution of capital to the top tier risks to the 

firm. 

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CDBO EXAMINATION INFORMATION 

Examination entry date: 10/2/17 

Field completion date: 10/26/17 

Exit meeting date: 12/12/17 

Date submitted to AD: 

Quarter end call date: 9/30/17 

Trial balance date: 7/31/17 

Entry date of last Federal exam: 10/3/16 

Entry date of previous DBO exam: 10/3/16 

Type of examination: Independent Concurrent X Joint 

Processor: DBO X Federal Other State 

IT Complexity Category: Type C Type B X Type A No IT rating assigned 

Billable Examination (FC 501) due to institution's problem status: Yes No X 

TOTAL 

(Net of 

Training) 

EXAMINER NAME ASSIGNMENT TRAINING 

Safety and Soundness Examination 

Redacted EIC 456 

Redacted AM 256 

Redacted Loss Analysis 30 

Redacted Loan Review 142 

Redacted Loan Review 30 

Redacted State Specific, 

Loan Review 

72 

Redacted DFAST assist 116 

Redacted Loan Review 65 

Redacted Internal Loan 

Review 

144 

Redacted Loan Review 110 

Redacted Loan Review 80 

Total DBO S&S Exam Hours 1,501 

Budgeted Hours 1,800 

Variance (299) 

Federal Hours (On-Site) 1,517 

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Assets 09/30/17 12/31/16 

Total Loans and Leases 22,189,328 19,886,488 

 Less: ALLL 249,010 225,248 

Loans and Leases (net) 21,940,318 19,661,240 

Interest-Bearing Balances 2,713,975 1,853,416 

Federal Funds Sold and Securities Purchased Under Agreements to Resell 0 0 

Trading Account Assets 250,909 128,138 

Securities: HTM (at amortized cost) 11,055,006 8,426,998 

 AFS (at fair value) 12,365,892 12,599,823 

 Total Earning Assets 48,388,764 42,727,289 

Cash and Noninterest-Bearing Balances 694,941 605,304 

Premises and Fixed Assets 55,675 49,857 

OREO 0 0 

Intangible Assets 0 0 

Other Assets 725,740 610,369 

TOTAL ASSETS 49,940,631 44,068,115 

Liabilities 

Deposits 41,986,251 36,716,644 

Federal Funds Purchased & Securities Sold Under Agreement to Repurchase 0 0 

Other Borrowed Money 4,840 513,166 

Other Liabilities 590,310 431,427 

Subordinated Notes and Debentures 0 46,646 

 Total Liabilities 46,211,741 40,644,688 

Equity Capital 

Perpetual Preferred Stock 0 0 

Common Equity Capital (includes net unrealized holding gains or losses on AFS 

securities) 3,728,890 3,423,427 

Other Equity Capital 0 0 

 Total Equity Capital
 3,728,890 3,423,427 

TOTAL LIABILITIES AND EQUITY CAPITAL
 49,940,631 44,068,115 

Off-Balance Sheet Items 

Unused Loan Commitments 14,593,683 15,135,798 

Letters of Credit 1,831,322 1,630,767 

Interest Rate Contracts 664,422 623,035 

Amounts are shown to the nearest thousand dollars. 

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COMPARATIVE STATEMENT OF FINANCIAL CONDITION 

Balance Sheet Structure 

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COMPARATIVE STATEMENT OF INCOME 

Income Statement and Change in Equity Capital 

Interim Period 

09/30/17 

Year Ended 

12/31/16 

Year Ended 

12/31/15 

Interest Income 

 Interest and Fee Income on Loans and Leases
 745,904 833,795 692,635 

 Interest on Securities
 296,260 348,882 347,252 

 Other Interest Income
 18,019 13,221 10,664 

 Total Interest Income 1,060,183 1,195,898 1,050,551 

Interest Expense 

 Interest on Deposits 6,195 5,612 5,449 

 Interest on Federal Funds Purchased and Other Borrowings 293 1,087 42 

 Interest on Subordinated Notes and Debentures 467 906 633 

 Total Interest Expense
 6,978 7,605 6,124 

 Net Interest Income
 1,053,205 1,188,293 1,044,427 

Noninterest Income 

 Service Charges on Deposit Accounts
 40,758 49,971 44,841 

 Other Fee Income
 108,169 134,813 108,312 

 Other Noninterest Income
 135,968 151,840 126,753 

 Total Noninterest Income 284,895 336,624 279,906 

Noninterest Expense 

 Salaries and Employee Benefits
 423,145 477,682 438,666 

 Premises and Fixed Assets Expense (net)
 44,177 50,470 42,118 

 Other Noninterest Expense
 225,546 278,874 230,999 

 Total Noninterest Expense 692,868 807,026 711,783 

Provision for Loan and Lease Losses 67,390 95,650 97,677 

Securities Gains or Losses 0 13,827 0 

 Net Operating Income (before tax) 577,842 636,068 514,873 

Applicable Income Taxes 219,046 256,439 208,009 

 Net Operating Income (after tax) 358,796 379,629 306,864 

Extraordinary Credits and Charges (net of income tax) 0 0 0 

 Net Income 358,796 379,629 306,864 

Dividends Declared 0 0 0 

Sale or Purchase of Capital 19,909 18,209 28,323 

Other Increases/Decreases (includes changes in net 

 Unrealized gains or losses on AFS securities) (13,242) 6,544 (25,328) 

 Net Change in Equity Accounts 305,463 364,382 659,859 

Amounts are shown to the nearest thousand dollars. 

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CAPITAL CALCULATIONS 

09/30/17 12/31/16 

Common Equity Tier 1 Capital 

Common stock + related surplus 1,378,649 1,358,739 

Retained earnings 2,340,226 2,041,430 

Accum Other Comprehensive Inc (AOCI) 10,015 23,258 

Common equity tier 1 minority interest 0 0 

Common equity tier 1 capital elements 3,728,890 3,423,427 

Less: 

Goodwill 0 0 

Intangible assets 0 0 

Deferred tax assets 0 0 

Other adjustments 9,222 26,195 

Common Equity Tier 1 Capital 3,719,668 3,397,232 

Additional Tier 1 Capital 

Additional tier 1 instruments + related surplus 0 0 

Non-qualifying instruments subject to phase-out 0 0 

Minority interests not incl. in common equity 0 0 

Less: Additional tier 1 capital deductions 0 0 

Additional tier 1 capital 0 0 

Tier 1 Capital 3,719,668 3,397,232 

Tier 2 Capital 

Tier 2 capital instruments + related surplus 0 0 

Non-qualifying instruments subject to phase-out 0 0 

Total minority interest not included in tier 1 0 0 

Allowance for loan losses includable in tier 2 297,182 270,477 

Unrealized gains on AFS includable in tier 2 0 0 

Less: Tier 2 capital deductions 0 0 

Tier 2 Capital 297,182 270,477 

Total Capital 4,016,850 3,667,709 

Risk-Weighted Asset Calculation 

Risk-weighted balance sheet assets 24,254,238 20,980,068 

Risk-weighted off-balance sheet items 5,716,675 5,876,782 

Market risk equivalent assets 0 0 

Gross Risk-Weighted Assets 29,970,913 26,856,850 

Less: Excess ALLL and ATRR 0 0 

Total Risk-Weighted Assets 29,970,913 26,856,850 

Adjusted Average Total Assets 49,005,883 44,289,329 

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