Loans, Allowance for Loan Losses and Allowance for Unfunded Credit Commitments | Loans, Allowance for Loan Losses and Allowance for Unfunded Credit Commitments We serve a variety of commercial clients in the technology, life science/healthcare, private equity/venture capital and premium wine industries. Our technology clients generally tend to be in the industries of hardware (semiconductors, communications, data, storage, and electronics), software/internet (such as infrastructure software, applications, software services, digital content and advertising technology), and energy and resource innovation ("ERI"). Because of the diverse nature of ERI products and services, for our loan-related reporting purposes, ERI-related loans are reported under our hardware, software/internet, life science/healthcare and other commercial loan categories, as applicable. Our life science/healthcare clients primarily tend to be in the industries of biotechnology, medical devices, healthcare information technology and healthcare services. Loans made to private equity/venture capital firm clients typically enable them to fund investments prior to their receipt of funds from capital calls. Loans to the premium wine industry focus on vineyards and wineries that produce grapes and wines of high quality. In addition to commercial loans, we make consumer loans through SVB Private Bank and provide real estate secured loans to eligible employees through our EHOP. Our private banking clients are primarily private equity/venture capital professionals and executive leaders in the innovation companies they support. These products and services include real estate secured home equity lines of credit, which may be used to finance real estate investments and loans used to purchase, renovate or refinance personal residences. These products and services also include restricted stock purchase loans and capital call lines of credit. We also provide community development loans made as part of our responsibilities under the Community Reinvestment Act. These loans are included within “Construction loans” below and are primarily secured by real estate. The composition of loans, net of unearned income of $121 million and $125 million at March 31, 2017 and December 31, 2016 , respectively, is presented in the following table: (Dollars in thousands) March 31, 2017 December 31, 2016 Commercial loans: Software/internet $ 5,458,203 $ 5,627,031 Hardware 1,097,835 1,180,398 Private equity/venture capital 8,426,831 7,691,148 Life science/healthcare 1,735,987 1,853,004 Premium wine 203,736 200,156 Other 473,918 393,551 Total commercial loans 17,396,510 16,945,288 Real estate secured loans: Premium wine (1) 672,831 678,166 Consumer loans (2) 2,012,977 1,926,968 Other 43,281 43,487 Total real estate secured loans 2,729,089 2,648,621 Construction loans 70,755 64,671 Consumer loans 231,097 241,364 Total loans, net of unearned income (3) $ 20,427,451 $ 19,899,944 (1) Included in our premium wine portfolio are gross construction loans of $103 million and $110 million at March 31, 2017 and December 31, 2016 , respectively. (2) Consumer loans secured by real estate at March 31, 2017 and December 31, 2016 were comprised of the following: (Dollars in thousands) March 31, 2017 December 31, 2016 Loans for personal residence $ 1,735,925 $ 1,655,349 Loans to eligible employees 207,420 199,291 Home equity lines of credit 69,632 72,328 Consumer loans secured by real estate $ 2,012,977 $ 1,926,968 (3) Included within our total loan portfolio are credit card loans of $242 million and $224 million at March 31, 2017 and December 31, 2016 , respectively. Credit Quality The composition of loans, net of unearned income of $121 million and $125 million at March 31, 2017 and December 31, 2016 , respectively, broken out by portfolio segment and class of financing receivable, is as follows: (Dollars in thousands) March 31, 2017 December 31, 2016 Commercial loans: Software/internet $ 5,458,203 $ 5,627,031 Hardware 1,097,835 1,180,398 Private equity/venture capital 8,426,831 7,691,148 Life science/healthcare 1,735,987 1,853,004 Premium wine 876,567 878,322 Other 587,954 501,709 Total commercial loans 18,183,377 17,731,612 Consumer loans: Real estate secured loans 2,012,977 1,926,968 Other consumer loans 231,097 241,364 Total consumer loans 2,244,074 2,168,332 Total loans, net of unearned income $ 20,427,451 $ 19,899,944 The following table summarizes the aging of our gross loans, broken out by portfolio segment and class of financing receivable as of March 31, 2017 and December 31, 2016 : (Dollars in thousands) 30 - 59 Days Past Due 60 - 89 Days Past Due Greater Than 90 Days Past Due Total Past Due Current Loans Past Due 90 Days or More Still Accruing Interest March 31, 2017: Commercial loans: Software/internet $ 26,927 $ 3,331 $ 38 $ 30,296 $ 5,350,664 $ 38 Hardware 7,406 4 20 7,430 1,071,772 20 Private equity/venture capital 33,878 3,235 — 37,113 8,399,895 — Life science/healthcare 708 20 2 730 1,743,014 2 Premium wine 3,037 1,201 — 4,238 869,106 — Other 1,684 300 — 1,984 591,996 — Total commercial loans 73,640 8,091 60 81,791 18,026,447 60 Consumer loans: Real estate secured loans 3,115 — — 3,115 2,005,869 — Other consumer loans — — — — 228,813 — Total consumer loans 3,115 — — 3,115 2,234,682 — Total gross loans excluding impaired loans 76,755 8,091 60 84,906 20,261,129 60 Impaired loans 4,888 2,207 38,353 45,448 157,168 — Total gross loans $ 81,643 $ 10,298 $ 38,413 $ 130,354 $ 20,418,297 $ 60 December 31, 2016: Commercial loans: Software/internet $ 37,087 $ 1,162 $ 6 $ 38,255 $ 5,507,575 $ 6 Hardware 5,591 36 27 5,654 1,118,065 27 Private equity/venture capital 689 — — 689 7,747,222 — Life science/healthcare 283 551 — 834 1,827,490 — Premium wine 1,003 4 — 1,007 876,185 — Other 34 300 — 334 504,021 — Total commercial loans 44,687 2,053 33 46,773 17,580,558 33 Consumer loans: Real estate secured loans 850 — — 850 1,923,266 — Other consumer loans 1,402 — — 1,402 237,353 — Total consumer loans 2,252 — — 2,252 2,160,619 — Total gross loans excluding impaired loans 46,939 2,053 33 49,025 19,741,177 33 Impaired loans 34,636 3,451 11,180 49,267 185,193 — Total gross loans $ 81,575 $ 5,504 $ 11,213 $ 98,292 $ 19,926,370 $ 33 The following table summarizes our impaired loans as they relate to our allowance for loan losses, broken out by portfolio segment and class of financing receivable as of March 31, 2017 and December 31, 2016 : (Dollars in thousands) Impaired loans for which there is a related allowance for loan losses Impaired loans for which there is no related allowance for loan losses Total carrying value of impaired loans Total unpaid principal of impaired loans March 31, 2017: Commercial loans: Software/internet $ 123,305 $ 1,531 $ 124,836 $ 132,588 Hardware 27,531 2,002 29,533 34,307 Private equity/venture capital 346 — 346 346 Life science/healthcare 38,552 741 39,293 42,478 Premium wine 3,321 — 3,321 3,321 Other 1,659 — 1,659 1,953 Total commercial loans 194,714 4,274 198,988 214,993 Consumer loans: Real estate secured loans 1,480 — 1,480 2,768 Other consumer loans 2,148 — 2,148 2,148 Total consumer loans 3,628 — 3,628 4,916 Total $ 198,342 $ 4,274 $ 202,616 $ 219,909 December 31, 2016: Commercial loans: Software/internet $ 121,658 $ 1,090 $ 122,748 $ 129,648 Hardware 65,395 — 65,395 70,683 Private equity/venture capital — — — — Life science/healthcare 38,361 — 38,361 41,130 Premium wine 3,187 — 3,187 3,187 Other 867 — 867 867 Total commercial loans 229,468 1,090 230,558 245,515 Consumer loans: Real estate secured loans 1,504 — 1,504 2,779 Other consumer loans 2,398 — 2,398 2,398 Total consumer loans 3,902 — 3,902 5,177 Total $ 233,370 $ 1,090 $ 234,460 $ 250,692 The following table summarizes our average impaired loans, broken out by portfolio segment and class of financing receivable for the three months ended March 31, 2017 and 2016 : Three months ended March 31, Average impaired loans Interest income on impaired loans (Dollars in thousands) 2017 2016 2017 2016 Commercial loans: Software/internet $ 109,916 $ 89,367 $ 422 $ 421 Hardware 34,110 24,426 572 397 Private equity/venture capital 358 — 2 — Life science/healthcare 38,942 39,690 150 133 Premium wine 3,213 2,171 38 17 Other 1,061 3,853 4 7 Total commercial loans 187,600 159,507 1,188 975 Consumer loans: Real estate secured loans 1,488 135 — — Other consumer loans 2,148 34 8 — Total consumer loans 3,636 169 8 — Total average impaired loans $ 191,236 $ 159,676 $ 1,196 $ 975 The following tables summarize the activity relating to our allowance for loan losses for the three months ended March 31, 2017 and 2016 , broken out by portfolio segment: Three months ended March 31, 2017 (Dollars in thousands) Beginning Balance December 31, 2016 Charge-offs Recoveries Provision for (Reduction of) Loan Losses Foreign Currency Translation Adjustments Ending Balance March 31, 2017 Commercial loans: Software/internet $ 97,388 $ (7,980 ) $ 1,171 $ 18,719 $ 204 $ 109,502 Hardware 31,166 (4,024 ) 267 (4,080 ) (45 ) 23,284 Private equity/venture capital 50,299 — — 6,706 73 57,078 Life science/healthcare 25,446 (1,732 ) 36 7,708 84 31,542 Premium wine 4,115 — — 226 2 4,343 Other 4,768 (294 ) 297 (390 ) (4 ) 4,377 Total commercial loans 213,182 (14,030 ) 1,771 28,889 314 230,126 Total consumer loans 12,184 — 21 790 9 13,004 Total allowance for loan losses $ 225,366 $ (14,030 ) $ 1,792 $ 29,679 $ 323 $ 243,130 Three months ended March 31, 2016 (Dollars in thousands) Beginning Balance December 31, 2015 Charge-offs Recoveries Provision for (Reduction of) Loan Losses Foreign Currency Translation Adjustments (1) Ending Balance March 31, 2016 Commercial loans: Software/internet $ 103,045 $ (22,161 ) $ 3,960 $ 21,632 $ 422 $ 106,898 Hardware 23,085 (1,486 ) 239 1,959 39 23,836 Private equity/venture capital 35,282 — — 8,243 161 43,686 Life science/healthcare 36,576 (2,395 ) 491 (4,303 ) (84 ) 30,285 Premium wine 5,205 — — 39 — 5,244 Other 4,252 (30 ) 74 5,145 106 9,547 Total commercial loans 207,445 (26,072 ) 4,764 32,715 644 219,496 Total consumer loans 10,168 (102 ) 49 626 12 10,753 Total allowance for loan losses $ 217,613 $ (26,174 ) $ 4,813 $ 33,341 $ 656 $ 230,249 (1) Reflects foreign currency translation adjustments within the allowance for loan losses. Prior period amounts were previously reported with loan recoveries and have been revised to conform to current period presentation. The following table summarizes the activity relating to our allowance for unfunded credit commitments for the three months ended March 31, 2017 and 2016 : Three months ended March 31, (Dollars in thousands) 2017 2016 Beginning balance $ 45,265 $ 34,415 Provision for unfunded credit commitments 1,055 134 Foreign currency translation adjustments 15 (8 ) Ending balance (1) $ 46,335 $ 34,541 (1) See Note 12—"Off-Balance Sheet Arrangements, Guarantees and Other Commitments" of the "Notes to Interim Consolidated Financial Statements (unaudited)" under Part I, Item 1 of this report for additional disclosures related to our commitments to extend credit. The following table summarizes the allowance for loan losses individually and collectively evaluated for impairment as of March 31, 2017 and December 31, 2016 , broken out by portfolio segment: March 31, 2017 December 31, 2016 Individually Evaluated for Impairment Collectively Evaluated for Impairment Individually Evaluated for Impairment Collectively Evaluated for Impairment (Dollars in thousands) Allowance for loan losses Recorded investment in loans Allowance for loan losses Recorded investment in loans Allowance for loan losses Recorded investment in loans Allowance for loan losses Recorded investment in loans Commercial loans: Software/internet $ 38,563 $ 124,836 $ 70,939 $ 5,333,367 $ 28,245 $ 122,748 $ 69,143 $ 5,504,283 Hardware 2,674 29,533 20,610 1,068,302 9,995 65,395 21,171 1,115,003 Private equity/venture capital 35 346 57,043 8,426,485 — — 50,299 7,691,148 Life science/healthcare 13,580 39,293 17,962 1,696,694 8,709 38,361 16,737 1,814,643 Premium wine 513 3,321 3,830 873,246 520 3,187 3,595 875,135 Other 342 1,659 4,035 586,295 233 867 4,535 500,842 Total commercial loans 55,707 198,988 174,419 17,984,389 47,702 230,558 165,480 17,501,054 Total consumer loans 1,074 3,628 11,930 2,240,446 1,123 3,902 11,061 2,164,430 Total $ 56,781 $ 202,616 $ 186,349 $ 20,224,835 $ 48,825 $ 234,460 $ 176,541 $ 19,665,484 Credit Quality Indicators For each individual client, we establish an internal credit risk rating for that loan, which is used for assessing and monitoring credit risk as well as performance of the loan and the overall portfolio. Our internal credit risk ratings are also used to summarize the risk of loss due to failure by an individual borrower to repay the loan. For our internal credit risk ratings, each individual loan is given a risk rating of 1 through 10. Loans risk-rated 1 through 4 are performing loans and translate to an internal rating of “Pass”, with loans risk-rated 1 being cash secured. Loans risk-rated 5 through 7 are performing loans, however, we consider them as demonstrating higher risk, which requires more frequent review of the individual exposures; these translate to an internal rating of “Performing (Criticized)”. When a significant payment delay occurs on a criticized loan, the loan is impaired. The loan is also considered for nonaccrual status if full repayment is determined to be improbable. All of our nonaccrual loans are risk-rated 8 or 9 and are classified under the nonperforming impaired category. (For further description of nonaccrual loans, refer to Note 2—“Summary of Significant Accounting Policies” under Part II, Item 8 of our 2016 Form 10-K). Loans rated 10 are charged-off and are not included as part of our loan portfolio balance. We review our credit quality indicators for performance and appropriateness of risk ratings as part of our evaluation process for our allowance for loan losses. The following table summarizes the credit quality indicators, broken out by portfolio segment and class of financing receivables as of March 31, 2017 and December 31, 2016 : (Dollars in thousands) Pass Performing (Criticized) Performing Impaired (Criticized) Nonperforming Impaired (Nonaccrual) Total March 31, 2017: Commercial loans: Software/internet $ 4,858,104 $ 522,856 $ 25,165 $ 99,671 $ 5,505,796 Hardware 938,269 140,933 27,464 2,069 1,108,735 Private equity/venture capital 8,436,841 167 346 — 8,437,354 Life science/healthcare 1,588,709 155,035 7,153 32,140 1,783,037 Premium wine 854,409 18,935 2,831 490 876,665 Other 573,527 20,453 357 1,302 595,639 Total commercial loans 17,249,859 858,379 63,316 135,672 18,307,226 Consumer loans: Real estate secured loans 1,997,248 11,736 — 1,480 2,010,464 Other consumer loans 228,162 651 536 1,612 230,961 Total consumer loans 2,225,410 12,387 536 3,092 2,241,425 Total gross loans $ 19,475,269 $ 870,766 $ 63,852 $ 138,764 $ 20,548,651 December 31, 2016: Commercial loans: Software/internet $ 4,924,923 $ 620,907 $ 46,143 $ 76,605 $ 5,668,578 Hardware 985,889 137,830 58,814 6,581 1,189,114 Private equity/venture capital 7,747,317 594 — — 7,747,911 Life science/healthcare 1,707,499 120,825 6,578 31,783 1,866,685 Premium wine 865,354 11,838 2,696 491 880,379 Other 480,845 23,510 464 403 505,222 Total commercial loans 16,711,827 915,504 114,695 115,863 17,857,889 Consumer loans: Real estate secured loans 1,914,512 9,604 — 1,504 1,925,620 Other consumer loans 238,256 499 786 1,612 241,153 Total consumer loans 2,152,768 10,103 786 3,116 2,166,773 Total gross loans $ 18,864,595 $ 925,607 $ 115,481 $ 118,979 $ 20,024,662 Troubled Debt Restructurings As of March 31, 2017 we had 21 TDRs with a total carrying value of $95.4 million where concessions have been granted to borrowers experiencing financial difficulties, in an attempt to maximize collection. There were $2.9 million of unfunded commitments available for funding to the clients associated with these TDRs as of March 31, 2017 . The following table summarizes our loans modified in TDRs, broken out by portfolio segment and class of financing receivables at March 31, 2017 and December 31, 2016 : (Dollars in thousands) March 31, 2017 December 31, 2016 Loans modified in TDRs: Commercial loans: Software/internet $ 59,419 $ 52,646 Hardware 10,687 14,870 Life science/healthcare 21,561 24,176 Premium wine 3,177 3,194 Other 33 387 Total commercial loans 94,877 95,273 Consumer loans: Other consumer loans 536 786 Total consumer loans 536 786 Total $ 95,413 $ 96,059 The following table summarizes the recorded investment in loans modified in TDRs, broken out by portfolio segment and class of financing receivable, for modifications made during the three months ended March 31, 2017 and 2016 : Three months ended March 31, (Dollars in thousands) 2017 2016 Loans modified in TDRs during the period: Commercial loans: Software/internet $ 6,309 $ 10,854 Other — 505 Total commercial loans 6,309 11,359 Total consumer loans — — Total loans modified in TDRs during the period (1) $ 6,309 $ 11,359 (1) There were $6.2 million of partial charge-offs during the three months ended March 31, 2017 and $3.8 million of partial charge-offs during the three months ended March 31, 2016 . During the three months ended March 31, 2017 and 2016, new TDRs of $6.3 million and $2.4 million , respectively, were modified through payment deferrals granted to our clients. During the three months ended March 31, 2016, new TDRs of $9.0 million were modified through partial forgiveness of principal. The related allowance for loan losses for the majority of our TDRs is determined on an individual basis by comparing the carrying value of the loan to the present value of the estimated future cash flows, discounted at the pre-modification contractual interest rate. For certain TDRs, the related allowance for loan losses is determined based on the fair value of the collateral if the loan is collateral dependent. The following table summarizes the recorded investment in loans modified in TDRs within the previous 12 months that subsequently defaulted during the three months ended March 31, 2017 . There were no loans modified in TDRs within the previous 12 months that subsequently defaulted during the three months ended March 31, 2016. Three months ended March 31, (Dollars in thousands) 2017 TDRs modified within the previous 12 months that defaulted during the period: Commercial loans: Hardware $ 3,105 Total commercial loans 3,105 Consumer loans: Other consumer loans 536 Total consumer loans 536 Total TDRs modified within the previous 12 months that defaulted in the period $ 3,641 Charge-offs and defaults on previously restructured loans are evaluated to determine the impact to the allowance for loan losses, if any. The evaluation of these defaults may impact the assumptions used in calculating the reserve on other TDRs and impaired loans as well as management’s overall outlook of macroeconomic factors that affect the reserve on the loan portfolio as a whole. After evaluating the charge-offs and defaults experienced on our TDRs we determined that no change to our reserving methodology was necessary to determine the allowance for loan losses as of March 31, 2017 . |