Edgar Filing: SVB FINANCIAL GROUP

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended March 31, 2017



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

For the transition period from to .

Commission File Number: 000-15637

SVB FINANCIAL GROUP

(Exact name of registrant as specified in its charter)



Delaware		91-1962278
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



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

(408) 654-7400

(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer x Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)

Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

At April 30, 2017, 52,495,224 shares of the registrant’s common stock ($0.001 par value) were outstanding.

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TABLE OF CONTENTS



		Page
PART I - FINANCIAL INFORMATION		4

Item 1.	Interim Consolidated Financial Statements	4

	Interim Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 (Unaudited)	4

	Interim Consolidated Statements of Income for the three months ended March 31, 2017 and 2016 (Unaudited)	5

	Interim Consolidated Statements of Comprehensive Income for the three months ended March 31, 2017 and 2016 (Unaudited)	7

	Interim Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2017 and 2016 (Unaudited)	8

	Interim Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016 (Unaudited)	9

	Notes to Interim Consolidated Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	88

Item 4.	Controls and Procedures	90

PART II - OTHER INFORMATION		91

Item 1.	Legal Proceedings	92

Item 1A.	Risk Factors	92

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92

Item 3.	Defaults Upon Senior Securities	92

Item 4.	Mine Safety Disclosures	92

Item 5.	Other Information	92

Item 6.	Exhibits	92

SIGNATURES		93

INDEX TO EXHIBITS		94

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Glossary of Acronyms that may be used in this Report

AFS— Available-for-Sale

APIC— Additional Paid-in Capital

ASC— Accounting Standards Codification

ASU— Accounting Standards Update

CET— Common Equity Tier

EHOP— Employee Home Ownership Program of the Company

EPS— Earnings Per Share

ERI— Energy and Resource innovation

ESOP— Employee Stock Ownership Plan of the Company

ESPP— 1999 Employee Stock Purchase Plan of the Company

FASB— Financial Accounting Standards Board

FDIC— Federal Deposit Insurance Corporation

FHLB— Federal Home Loan Bank

FRB— Federal Reserve Bank

FTE— Full-Time Employee

FTP— Funds Transfer Pricing

GAAP— Accounting principles generally accepted in the United States of America

HTM— Held-to-Maturity

IASB— International Accounting Standards Board

IPO— Initial Public Offering

IRS— Internal Revenue Service

IT— Information Technology

LIBOR— London Interbank Offered Rate

M&A— Merger and Acquisition

OTTI— Other Than Temporary Impairment

SEC— Securities and Exchange Commission

SPD-SVB— SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China)

TDR— Troubled Debt Restructuring

UK— United Kingdom

VIE— Variable Interest Entity

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PART I - FINANCIAL INFORMATION

ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS (UNAUDITED)



(Dollars in thousands, except par value and share data)	March 31, 2017			December 31, 2016
Assets
Cash and cash equivalents	$	3,795,679		$	2,545,750
Available-for-sale securities, at fair value (cost of $12,360,744 and $12,588,783, respectively)	12,384,007			12,620,411
Held-to-maturity securities, at cost (fair value of $8,567,817 and $8,376,138, respectively)	8,615,695			8,426,998
Non-marketable and other securities	635,550			622,552
Total investment securities	21,635,252			21,669,961
Loans, net of unearned income	20,427,451			19,899,944
Allowance for loan losses	(243,130		)	(225,366		)
Net loans	20,184,321			19,674,578
Premises and equipment, net of accumulated depreciation and amortization	122,304			120,683
Accrued interest receivable and other assets	675,783			672,688
Total assets	$	46,413,339		$	44,683,660
Liabilities and total equity
Liabilities:
Noninterest-bearing demand deposits	$	33,587,934		$	31,975,457
Interest-bearing deposits	7,491,766			7,004,411
Total deposits	41,079,700			38,979,868
Short-term borrowings	5,163			512,668
Other liabilities	629,555			618,383
Long-term debt	795,465			795,704
Total liabilities	42,509,883			40,906,623
Commitments and contingencies (Note 12 and Note 15)
SVBFG stockholders’ equity:
Preferred stock, $0.001 par value, 20,000,000 shares authorized; no shares issued and outstanding	—			—
Common stock, $0.001 par value, 150,000,000 shares authorized; 52,427,709 shares and 52,254,074 shares outstanding, respectively	52			52
Additional paid-in capital	1,268,507			1,242,741
Retained earnings	2,477,814			2,376,331
Accumulated other comprehensive income	17,958			23,430
Total SVBFG stockholders’ equity	3,764,331			3,642,554
Noncontrolling interests	139,125			134,483
Total equity	3,903,456			3,777,037
Total liabilities and total equity	$	46,413,339		$	44,683,660

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

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SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)



	Three months ended March 31,
(Dollars in thousands, except per share amounts)	2017			2016
Interest income:
Loans	$	227,341		$	197,942
Investment securities:
Taxable	89,803			91,050
Non-taxable	646			596
Federal funds sold, securities purchased under agreements to resell and other short-term investment securities	3,136			2,070
Total interest income	320,926			291,658
Interest expense:
Deposits	1,717			1,188
Borrowings	9,216			9,049
Total interest expense	10,933			10,237
Net interest income	309,993			281,421
Provision for credit losses (1)	30,734			33,475
Net interest income after provision for credit losses	279,259			247,946
Noninterest income:
Gains (losses) on investment securities, net	15,970			(4,684		)
Gains on equity warrant assets, net (2)	6,690			6,606
Foreign exchange fees	26,247			26,966
Credit card fees	17,730			15,507
Deposit service charges	13,975			12,672
Client investment fees	9,026			7,995
Lending related fees	8,961			7,813
Letters of credit and standby letters of credit fees	6,639			5,589
Other (2)	12,421			7,670
Total noninterest income	117,659			86,134
Noninterest expense:
Compensation and benefits	147,176			122,262
Professional services	25,419			19,000
Premises and equipment	15,858			14,984
Business development and travel	9,195			12,246
Net occupancy	11,651			10,035
FDIC and state assessments	8,682			6,927
Correspondent bank fees	3,445			3,652
Other	16,207			14,793
Total noninterest expense (1)	237,633			203,899
Income before income tax expense	159,285			130,181
Income tax expense (3)	51,405			53,584
Net income before noncontrolling interests	107,880			76,597
Net (income) loss attributable to noncontrolling interests	(6,397		)	2,577
Net income available to common stockholders (3)	$	101,483		$	79,174
Earnings per common share—basic (3)	$	1.94		$	1.53
Earnings per common share—diluted (3)	1.91			1.52


(1)	Our consolidated statements of income were modified from prior period's presentation to conform to the current period's presentation, which reflects our provision for loan losses and provision for unfunded credit commitments together as our “provision for credit losses”. In prior periods, our provision for unfunded credit commitments were reported as a component of noninterest expense.

(2)

Our consolidated statements of income were modified from prior period's presentation to conform to the current period's presentation, which reflects a new line item to separately disclose net gains on equity warrant assets. In prior periods, net gains on equity warrant assets were reported as a component of gains on derivative instruments, net. We removed the line item gains on derivative instruments, net and reclassified all other gains on derivative instruments, net to other noninterest income.

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(3)

Included in income tax expense, net income available to common shareholders, earnings per common share-basic and earnings for common share-diluted, for the three months ended March 31, 2017, are tax benefits recognized associated with the adoption of Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting in the first quarter of 2017. This guidance was adopted on a prospective basis with no change to prior period amounts.

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

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SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)



	Three months ended March 31,
(Dollars in thousands)	2017			2016
Net income before noncontrolling interests	$	107,880		$	76,597
Other comprehensive (loss) income, net of tax:
Change in cumulative translation gains (losses):
Foreign currency translation gains (losses)	957			(254		)
Related tax (expense) benefit	(390		)	104
Change in unrealized (losses) gains on available-for-sale securities:
Unrealized holding (losses) gains	(7,757		)	170,831
Related tax benefit (expense)	3,136			(69,603		)
Reclassification adjustment for (gains) losses included in net income	(608		)	746
Related tax expense (benefit)	248			(304		)
Amortization of unrealized gains on securities transferred from available-for-sale to held-to-maturity	(1,771		)	(2,567		)
Related tax benefit	713			1,033
Other comprehensive (loss) income, net of tax	(5,472		)	99,986
Comprehensive income	102,408			176,583
Comprehensive (income) loss attributable to noncontrolling interests	(6,397		)	2,577
Comprehensive income attributable to SVBFG	$	96,011		$	179,160

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

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SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)



	Common Stock			Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income			Total SVBFG Stockholders’ Equity			Noncontrolling Interests			Total Equity
(Dollars in thousands)	Shares	Amount		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income			Total SVBFG Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2015	51,610,226	$	52	$	1,189,032		$	1,993,646	$	15,404		$	3,198,134		$	135,097		$	3,333,231
Common stock issued under employee benefit plans, net of restricted stock cancellations	47,921	—		(250		)	—		—			(250		)	—			(250		)
Common stock issued under ESOP	43,165	—		4,328			—		—			4,328			—			4,328
Income tax effect from stock options exercised, vesting of restricted stock and other (1)	—	—		(8,483		)	—		—			(8,483		)	—			(8,483		)
Net income (loss)	—	—		—			79,174		—			79,174			(2,577		)	76,597
Capital calls and distributions, net	—	—		—			—		—			—			(2,524		)	(2,524		)
Net change in unrealized gains and losses on AFS securities, net of tax	—	—		—			—		101,670			101,670			—			101,670
Amortization of unrealized gains on securities transferred from AFS to HTM, net of tax	—	—		—			—		(1,534		)	(1,534		)	—			(1,534		)
Foreign currency translation adjustments, net of tax	—	—		—			—		(150		)	(150		)	—			(150		)
Share-based compensation, net	—	—		8,155			—		—			8,155			—			8,155
Balance at March 31, 2016	51,701,312	$	52	$	1,192,782		$	2,072,820	$	115,390		$	3,381,044		$	129,996		$	3,511,040
Balance at December 31, 2016	52,254,074	$	52	$	1,242,741		$	2,376,331	$	23,430		$	3,642,554		$	134,483		$	3,777,037
Common stock issued under employee benefit plans, net of restricted stock cancellations	162,797	—		6,743			—		—			6,743			—			6,743
Common stock issued under ESOP	10,838	—		2,094			—		—			2,094			—			2,094
Income tax effect from stock options exercised, vesting of restricted stock and other (1)	—	—		—			—		—			—			—			—
Net income	—	—		—			101,483		—			101,483			6,397			107,880
Capital calls and distributions, net	—	—		—			—		—			—			(1,755		)	(1,755		)
Net change in unrealized gains and losses on AFS securities, net of tax	—	—		—			—		(4,981		)	(4,981		)	—			(4,981		)
Amortization of unrealized gains on securities transferred from AFS to HTM, net of tax	—	—		—			—		(1,058		)	(1,058		)	—			(1,058		)
Foreign currency translation adjustments, net of tax	—	—		—			—		567			567			—			567
Share-based compensation, net	—	—		16,929			—		—			16,929			—			16,929
Balance at March 31, 2017	52,427,709	$	52	$	1,268,507		$	2,477,814	$	17,958		$	3,764,331		$	139,125		$	3,903,456

(1)

During the first quarter of 2017 we adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require that all excess tax benefits and tax deficiencies associated with share-based compensation be recognized in income tax expense or benefit in the income statement. Previously, tax effects resulting from changes in the Company's share price subsequent to grant date of share-based compensation awards were recorded through additional paid-in-capital in stockholders' equity at the time of vesting and exercise. This guidance was adopted on a prospective basis with no change to prior period amounts. See Note 1—"Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements (unaudited)" under Part I, Item 1 of this report for additional details.

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

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SVB FINANCIAL GROUP AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



	Three months ended March 31,
(Dollars in thousands)	2017			2016
Cash flows from operating activities:
Net income before noncontrolling interests	$	107,880		$	76,597
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	30,734			33,475
Changes in fair values of equity warrant assets, net of proceeds from exercises	(1,545		)	(2,317		)
Changes in fair values of derivatives, net	3,887			3,159
(Gains) losses on investment securities, net	(15,970		)	4,684
Depreciation and amortization	12,391			11,536
Amortization of premiums and discounts on investment securities, net	400			4,931
Amortization of share-based compensation	9,203			6,877
Amortization of deferred loan fees	(23,650		)	(24,042		)
Deferred income tax benefit	(15,386		)	(5,982		)
Excess tax benefit from exercise of stock options and vesting of restricted shares (1)	(6,063		)	—
Changes in other assets and liabilities:
Accrued interest receivable and payable, net	(6,750		)	(4,628		)
Accounts receivable and payable, net	(1,976		)	552
Income tax receivable and payable, net	65,524			28,711
Accrued compensation	(89,653		)	(101,241		)
Foreign exchange spot contracts, net	30,995			9,541
Other, net	(3,290		)	14,208
Net cash provided by operating activities	96,731			56,061
Cash flows from investing activities:
Purchases of available-for-sale securities	(595,543		)	—
Proceeds from sales of available-for-sale securities	2,078			1,864,396
Proceeds from maturities and pay downs of available-for-sale securities	824,551			364,101
Purchases of held-to-maturity securities	(589,855		)	(98,199		)
Proceeds from maturities and pay downs of held-to-maturity securities	416,206			351,834
Purchases of non-marketable and other securities	(545		)	(12,412		)
Proceeds from sales and distributions of non-marketable and other securities	26,950			9,977
Net increase in loans	(519,454		)	(991,939		)
Purchases of premises and equipment	(10,599		)	(13,680		)
Net cash (used for) provided by investing activities	(446,211		)	1,474,078
Cash flows from financing activities:
Net increase (decrease) in deposits	2,099,832			(383,055		)
Net decrease in short-term borrowings	(507,505		)	(774,900		)
(Distributions to noncontrolling interests), net of contributions from noncontrolling interests	(1,755		)	(2,524		)
Tax effect from stock exercises (1)	—			(8,483		)
Proceeds from issuance of common stock, ESPP, and ESOP	8,837			4,078
Net cash provided by (used for) financing activities	1,599,409			(1,164,884		)
Net increase in cash and cash equivalents	1,249,929			365,255
Cash and cash equivalents at beginning of period	2,545,750			1,503,257
Cash and cash equivalents at end of period	$	3,795,679		$	1,868,512
Supplemental disclosures:
Cash paid during the period for:
Interest	$	17,956		$	17,407
Income taxes	3,304			35,778
Noncash items during the period:
Changes in unrealized gains and losses on available-for-sale securities, net of tax	$	(4,981	)	$	101,670
Distributions of stock from investments	357			34


(1)	During the first quarter of 2017 we adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. This guidance was adopted on a prospective basis with no change to prior period amounts. See Note 1—"Basis of Presentation" of the "Notes to Interim Consolidated Financial Statements (unaudited)" under Part I, Item 1 of this report for additional details.

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

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SVB FINANCIAL GROUP AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.	Basis of Presentation

SVB Financial Group is a diversified financial services company, as well as a bank holding company and a financial holding company. SVB Financial was incorporated in the state of Delaware in March 1999. Through our various subsidiaries and divisions, we offer a variety of banking and financial products and services to support our clients of all sizes and stages throughout their life cycles. In these notes to our consolidated financial statements, when we refer to “SVB Financial Group,” “SVBFG”, the “Company,” “we,” “our,” “us” or use similar words, we mean SVB Financial Group and all of its subsidiaries collectively, including Silicon Valley Bank (the “Bank”), unless the context requires otherwise. When we refer to “SVB Financial” or the “Parent” we are referring only to the parent company, SVB Financial Group (not including subsidiaries).

The accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal and recurring nature that are, in the opinion of management, necessary to fairly present our financial position, results of operations and cash flows in accordance with GAAP. Such unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of results to be expected for any future periods. These unaudited interim consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016 (“2016 Form 10-K”).

The accompanying unaudited interim consolidated financial statements have been prepared on a consistent basis with the accounting policies described in Consolidated Financial Statements and Supplementary Data—Note 2—“Summary of Significant Accounting Policies” under Part II, Item 8 of our 2016 Form 10-K.

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

Principles of Consolidation and Presentation

Our consolidated financial statements include the accounts of SVB Financial Group and consolidated entities. We consolidate voting entities in which we have control through voting interests or entities through which we have a controlling financial interest in a variable interest entity ("VIE"). We determine whether we have a controlling financial interest in a VIE by determining if we have: (a) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses, or (c) the right to receive the expected returns of the entity. Generally, we have significant variable interests if our commitments to a limited partnership investment represent a significant amount of the total commitments to the entity. We also evaluate the impact of related parties on our determination of variable interests in our consolidation conclusions. We consolidate VIEs in which we are the primary beneficiary based on a controlling financial interest. If we are not the primary beneficiary of a VIE, we record our pro-rata interests or our cost basis in the VIE, as appropriate, based on other accounting guidance within GAAP.

VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. We assess VIEs to determine if we are the primary beneficiary of a VIE. A primary beneficiary is defined as a variable interest holder that has a controlling financial interest. A controlling financial interest requires both: (a) power to direct the activities that most significantly impact the VIE’s economic performance, and (b) obligation to absorb losses or receive benefits of a VIE that could potentially be significant to a VIE. Under this analysis, we also evaluate kick-out rights and other participating rights which could provide us a controlling financial interest. The primary beneficiary of a VIE is required to consolidate the VIE.

We also evaluate fees paid to managers of our limited partnership investments. We exclude those fee arrangements that are not deemed to be variable interests from the analysis of our interests in our investments in VIEs and the determination of a primary beneficiary, if any. Fee arrangements based on terms that are customary and commensurate with the services provided are deemed not to be variable interests and are, therefore, excluded.

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All significant intercompany accounts and transactions with consolidated entities have been eliminated. We have not provided financial or other support during the periods presented to any VIE that we were not previously contractually required to provide.

Adoption of New Accounting Standards

In March 2016, the FASB issued a new accounting standard update (ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718)), which includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under the ASU, an entity recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement in the period when the awards vest or are settled. The guidance also permits an entity to make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. We adopted this guidance on January 1, 2017 and elected to estimate the number of awards that are expected to vest which, is consistent with the previous accounting guidance. In addition, we also elected to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using the prospective transition method.

Previously, tax effects resulting from changes in the Company's share price subsequent to grant date of share-based compensation awards were recorded through additional paid-in capital in stockholders' equity at the time of vesting and exercise. The adoption of the amended accounting guidance resulted in a $6.1 million reduction of income tax expense (that previously would have been reflected as additional paid-in capital), or a benefit of $0.12 per diluted common share, for the three months ended March 31, 2017. We expect the impact of this amendment will vary period to period depending on the volatility of the Company's stock price and the timing of vesting and/or settlement of awards.

Recent Accounting Pronouncements

In May 2014, the FASB issued a new accounting standard update (ASU 2014-09, Revenue from Contracts with Customers (Topic 606)), which provides revenue recognition guidance that is intended to create greater consistency with respect to how and when revenue from contracts with customers is shown in the income statement. This guidance will be effective January 1, 2018, either on a full retrospective approach or a modified retrospective approach, with early adoption permitted, but not before January 1, 2017. This guidance is not applicable to financial instruments and, therefore, is not expected to impact a majority of our revenue, which is primarily net interest income. We continue to evaluate the impact of this guidance to our noninterest income and on our presentation and disclosures.

In January 2016, the FASB issued a new accounting standard update (ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825)), which will significantly change the income statement impact of equity investments, and the recognition of changes in fair value of financial liabilities. This guidance will be effective on January 1, 2018, on a prospective basis with a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. Upon adoption we expect to carry our cost method venture capital and private equity fund investments at fair value. The actual adjustment to opening retained earnings will depend upon the fair value of our investments at the adoption date.

In February 2016, the FASB issued a new accounting standard update (ASU 2016-02, Leases (Topic 842)), which will require for all operating leases the recognition of a right-of-use asset and a lease liability, in the statement of financial position. The lease cost will be allocated over the lease term on a straight-line basis. This guidance will be effective on January 1, 2019, on a modified retrospective basis, with early adoption permitted. We plan to adopt the lease accounting guidance in the first quarter of 2019. We are currently evaluating the impact this guidance will have on our financial position, results of operation and stockholders’ equity.

In March 2016, the FASB issued a new accounting standard update (ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)), which is intended to improve the operability and understandability of the implementation guidance by clarifying the following: how an entity should identify the unit of accounting for the principal versus agent evaluation; how the control principle applies to transactions, such as service arrangements; reframes the indicators to focus on a principal rather than an agent, removes the credit risk and commission indicators and clarifies the relationship between the control principle and the indicators; and revises the existing illustrative examples and adds new illustrative examples. This guidance will be effective January 1, 2018, either on a full retrospective approach or a modified retrospective approach, with early adoption permitted, but not before January 1, 2017. We are currently evaluating the impact this guidance will have on our financial position, results of operation and stockholders’ equity.

In April 2016, the FASB issued a new accounting standard update (ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing), which amends the new revenue recognition guidance on accounting for licenses of intellectual property and identifying performance obligations. The amendments clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time or a point in time. The amendments also clarify when a promised good or service is separately identifiable,

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that is distinct within the context of the contract, and allow entities to disregard items that are immaterial in the context of a contract. The effective date and transition requirements for this update are the same as those of the new standard. This guidance is effective January 1, 2018, on either a full retrospective approach or a modified retrospective approach, with early adoption permitted, but not before January 1, 2017. We are currently evaluating the impact this guidance will have on our financial position, results of operation and stockholders’ equity.

In June 2016, the FASB issued a new accounting standard update (ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments), which amends the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance will be effective January 1, 2020, on a modified retrospective approach, with early adoption permitted, but not before January 1, 2019. We are currently evaluating the impact this guidance will have on our financial position, results of operation and stockholders’ equity.

In August 2016, the FASB issued a new accounting standard update (ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments), which clarifies the guidance on eight specific cash flow issues. This guidance will be effective January 1, 2018 on a full retrospective approach, with early adoption permitted. We are currently evaluating the impact this guidance will have on our statement of cash flows.

Reclassifications

Certain prior period amounts, primarily related to the changes to our income statement presentation of net gains on derivative instruments and provision for unfunded credit commitments have been reclassified to conform to current period presentations.


2.	Stockholders’ Equity and EPS

Accumulated Other Comprehensive Income

The following table summarizes the items reclassified out of accumulated other comprehensive income into the Consolidated Statements of Income (unaudited) for the three months ended March 31, 2017 and 2016:



		Three months ended March 31,
(Dollars in thousands)	Income Statement Location	2017			2016
Reclassification adjustment for (gains) losses included in net income	Gains (losses) on investment securities, net	$	(608	)	$	746
Related tax expense (benefit)	Income tax expense	248			(304		)
Total reclassification adjustment for (gains) losses included in net income, net of tax		$	(360	)	$	442

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EPS

Basic EPS is the amount of earnings available to each share of common stock outstanding during the reporting period. Diluted EPS is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares include incremental shares issuable for stock options and restricted stock units outstanding under our 2006 Equity Incentive Plan and our ESPP. Potentially dilutive common shares are excluded from the computation of dilutive EPS in periods in which the effect would be antidilutive. The following is a reconciliation of basic EPS to diluted EPS for the three months ended March 31, 2017 and 2016:



	Three months ended March 31,
(Dollars and shares in thousands, except per share amounts)	2017		2016
Numerator:
Net income available to common stockholders	$	101,483	$	79,174
Denominator:
Weighted average common shares outstanding-basic	52,344		51,646
Weighted average effect of dilutive securities:
Stock options and ESPP	440		264
Restricted stock units	395		175
Denominator for diluted calculation	53,179		52,085
Earnings per common share:
Basic	$	1.94	$	1.53
Diluted	$	1.91	$	1.52

The following table summarizes the weighted-average common shares excluded from the diluted EPS calculation due to the antidilutive effect for the three months ended March 31, 2017 and 2016:



	Three months ended March 31,
(Shares in thousands)	2017	2016
Stock options	—	351
Restricted stock units	21	14
Total	21	365


3.	Share-Based Compensation

For the three months ended March 31, 2017 and 2016, we recorded share-based compensation and related tax benefits as follows:



	Three months ended March 31,
(Dollars in thousands)	2017			2016
Share-based compensation expense	$	9,203		$	6,877
Income tax benefit related to share-based compensation expense	(3,015		)	(2,117		)

Unrecognized Compensation Expense

As of March 31, 2017, unrecognized share-based compensation expense was as follows:



(Dollars in thousands)	Unrecognized Expense		Weighted Average Expected Recognition Period - in Years
Stock options	$	8,005	2.27
Restricted stock units	42,706		2.50
Total unrecognized share-based compensation expense	$	50,711

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Share-Based Payment Award Activity

The table below provides stock option information related to the 2006 Equity Incentive Plan for the three months ended March 31, 2017:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life - in Years	Aggregate Intrinsic Value of In-The- Money Options
Outstanding at December 31, 2016	1,010,557		$	87.24
Exercised	(140,698	)	65.76
Forfeited	(1,605	)	93.18
Outstanding at March 31, 2017	868,254		90.71		3.80	$	82,818,255
Vested and expected to vest at March 31, 2017	848,536		90.25		3.76	81,319,775
Exercisable at March 31, 2017	442,135		76.45		2.69	48,474,704

The aggregate intrinsic value of outstanding options shown in the table above represents the pre-tax intrinsic value based on our closing stock price of $186.09 as of March 31, 2017. The total intrinsic value of options exercised during the three months ended March 31, 2017 was $16.5 million, compared to $2.0 million for the comparable 2016 period.

The table below provides information for restricted stock units under the 2006 Equity Incentive Plan for the three months ended March 31, 2017:



	Shares		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2016	670,969		$	106.64
Granted	54,240		185.72
Vested	(36,414	)	105.65
Forfeited	(9,263	)	107.70
Nonvested at March 31, 2017	679,532		112.99


4.	Variable Interest Entities

Our involvement with VIEs includes our investments in venture capital and private equity funds, debt funds, private and public portfolio companies and our investments in qualified affordable housing projects.

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The following table presents the carrying amounts and classification of significant variable interests in consolidated and unconsolidated VIEs as of March 31, 2017 and December 31, 2016:



(Dollars in thousands)	Consolidated VIEs		Unconsolidated VIEs		Maximum Exposure to Loss in Unconsolidated VIEs
March 31, 2017:
Assets:
Cash and cash equivalents	$	10,959	$	—	$	—
Non-marketable and other securities (1)	196,708		326,169		326,169
Accrued interest receivable and other assets	236		—		—
Total assets	$	207,903	$	326,169	$	326,169
Liabilities:
Other liabilities (1)	387		81,650		—
Total liabilities	$	387	$	81,650	$	—
December 31, 2016:
Assets:
Cash and cash equivalents	$	11,469	$	—	$	—
Non-marketable and other securities (1)	196,140		314,810		314,810
Accrued interest receivable and other assets	294		—		—
Total assets	$	207,903	$	314,810	$	314,810
Liabilities:
Other liabilities (1)	517		58,095		—
Total liabilities	$	517	$	58,095	$	—


(1)	Included in our unconsolidated non-marketable and other securities portfolio at March 31, 2017 and December 31, 2016 are investments in qualified affordable housing projects of $132.8 million and $112.4 million, respectively, and related unfunded commitments of $81.7 million and $58.1 million, respectively.

Non-marketable and other securities

Our non-marketable and other securities portfolio primarily represents investments in venture capital and private equity funds, SPD Silicon Valley Bank Co., Ltd. (the Bank's joint venture bank in China ("SPD-SVB")), debt funds, private and public portfolio companies and investments in qualified affordable housing projects. A majority of these investments are through third party funds held by SVB Financial in which we do not have controlling or significant variable interests. These investments represent our unconsolidated VIEs in the table above. Our non-marketable and other securities portfolio also includes investments from SVB Capital. SVB Capital is the funds management business of SVB Financial Group, which focuses primarily on venture capital investments. The SVB Capital family of funds is comprised of direct venture funds that invest in companies and funds of funds that invest in other venture capital funds. We have a controlling and significant variable interest in four of these SVB Capital funds and consolidate these funds for financial reporting purposes.

All investments are generally nonredeemable and distributions are expected to be received through the liquidation of the underlying investments throughout the life of the investment fund. Investments may only be sold or transferred subject to the notice and approval provisions of the underlying investment agreement. Subject to applicable regulatory requirements, including the Volcker Rule, we also make commitments to invest in venture capital and private equity funds. For additional details, 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.

The Bank also has variable interests in low income housing tax credit funds, in connection with fulfilling its responsibilities under the Community Reinvestment Act ("CRA"), that are designed to generate a return primarily through the realization of federal tax credits. These investments are typically limited partnerships in which the general partner, other than the Bank, holds the power over significant activities of the VIE; therefore, these investments are not consolidated. For additional information on our investments in qualified affordable housing projects see Note 6—"Investment Securities" of the "Notes to Interim Consolidated Financial Statements (unaudited)" under Part I, Item 1 of this report.

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As of March 31, 2017, our exposure to loss with respect to the consolidated VIEs is limited to our net assets of $207.5 million and our exposure to loss for our unconsolidated VIEs is equal to our investment in these assets of $326.2 million.


5.	Cash and Cash Equivalents

The following table details our cash and cash equivalents at March 31, 2017 and December 31, 2016:



(Dollars in thousands)	March 31, 2017		December 31, 2016
Cash and due from banks (1)	$	3,612,954	$	2,476,588
Securities purchased under agreements to resell (2)	178,037		64,028
Other short-term investment securities	4,688		5,134
Total cash and cash equivalents	$	3,795,679	$	2,545,750


(1)	At March 31, 2017 and December 31, 2016, $2.4 billion and $1.1 billion, respectively, of our cash and due from banks was deposited at the Federal Reserve Bank and was earning interest at the Federal Funds target rate, and interest-earning deposits in other financial institutions were $773 million and $721 million, respectively.


(2)	At March 31, 2017 and December 31, 2016, securities purchased under agreements to resell were collateralized by U.S. Treasury securities and U.S. agency securities with aggregate fair values of $182 million and $66 million, respectively. None of these securities were sold or repledged as of March 31, 2017 and December 31, 2016.


6.	Investment Securities

Our investment securities portfolio consists of: (i) an available-for-sale securities portfolio and a held-to-maturity securities portfolio, both of which represent interest-earning investment securities, and, (ii) a non-marketable and other securities portfolio, which primarily represents investments managed as part of our funds management business.

Available-for-Sale Securities

The components of our available-for-sale investment securities portfolio at March 31, 2017 and December 31, 2016 are as follows:



	March 31, 2017
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value
Available-for-sale securities, at fair value:
U.S. Treasury securities	$	8,182,666	$	24,878	$	(1,454	)	$	8,206,090
U.S. agency debentures	2,066,507		12,763		(1,457		)	2,077,813
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations—fixed rate	1,661,505		2,707		(13,883		)	1,650,329
Agency-issued collateralized mortgage obligations—variable rate	445,575		668		(662		)	445,581
Equity securities	4,491		430		(727		)	4,194
Total available-for-sale securities	$	12,360,744	$	41,446	$	(18,183	)	$	12,384,007



	December 31, 2016
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Carrying Value
Available-for-sale securities, at fair value:
U.S. Treasury securities	$	8,880,358	$	30,323	$	(1,190	)	$	8,909,491
U.S. agency debentures	2,065,535		14,443		(1,603		)	2,078,375
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations—fixed rate	1,163,017		3,046		(13,398		)	1,152,665
Agency-issued collateralized mortgage obligations—variable rate	474,238		685		(640		)	474,283
Equity securities	5,635		748		(786		)	5,597
Total available-for-sale securities	$	12,588,783	$	49,245	$	(17,617	)	$	12,620,411

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The following tables summarize our unrealized losses on our AFS securities portfolio into categories of less than 12 months, or 12 months or longer as of March 31, 2017 and December 31, 2016:



	March 31, 2017
	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses
Available-for-sale securities:
U.S. Treasury securities	$	1,377,573	$	(1,454	)	$	—	$	—		$	1,377,573	$	(1,454	)
U.S. agency debentures	513,209		(1,457		)	—		—			513,209		(1,457		)
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations—fixed rate	843,542		(7,607		)	214,507		(6,276		)	1,058,049		(13,883		)
Agency-issued collateralized mortgage obligations—variable rate	179,675		(454		)	48,464		(208		)	228,139		(662		)
Equity securities	2,042		(727		)	—		—			2,042		(727		)
Total temporarily impaired securities: (1)	$	2,916,041	$	(11,699	)	$	262,971	$	(6,484	)	$	3,179,012	$	(18,183	)

(1)

As of March 31, 2017, we identified a total of 189 investments that were in unrealized loss positions, of which 36 investments totaling $263.0 million with unrealized losses of $6.5 million have been in an impaired position for a period of time greater than 12 months. As of March 31, 2017, we do not intend to sell any impaired fixed income investment securities prior to recovery of our adjusted cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our adjusted cost basis. Based on our analysis as of March 31, 2017, we deem all impairments to be temporary, and therefore changes in value for our temporarily impaired securities as of the same date are included in other comprehensive income. Market valuations and impairment analyses on assets in the available-for-sale securities portfolio are reviewed and monitored on a quarterly basis.



	December 31, 2016
	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses
Available-for-sale securities:
U.S. Treasury securities	$	879,255	$	(1,190	)	$	—	$	—		$	879,255	$	(1,190	)
U.S. agency debentures	513,198		(1,603		)	—		—			513,198		(1,603		)
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations—fixed rate	635,566		(6,704		)	227,480		(6,694		)	863,046		(13,398		)
Agency-issued collateralized mortgage obligations—variable rate	258,325		(613		)	6,068		(27		)	264,393		(640		)
Equity securities	3,693		(786		)	—		—			3,693		(786		)
Total temporarily impaired securities (1):	$	2,290,037	$	(10,896	)	$	233,548	$	(6,721	)	$	2,523,585	$	(17,617	)


(1)	As of December 31, 2016, we identified a total of 174 investments that were in unrealized loss positions, of which 20 investments totaling $233.5 million with unrealized losses of $6.7 million have been in an impaired position for a period of time greater than 12 months.

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The following table summarizes the fixed income securities, carried at fair value, classified as available-for-sale as of March 31, 2017 by the remaining contractual principal maturities. For U.S. Treasury securities and U.S. agency debentures, the expected maturity is the actual contractual maturity of the notes. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as available-for-sale typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower rate environments.



	March 31, 2017
(Dollars in thousands)	Total		One Year or Less		After One Year to Five Years		After Five Years to Ten Years		After Ten Years
U.S. Treasury securities	$	8,206,090	$	2,321,436	$	5,884,654	$	—	$	—
U.S. agency debentures	2,077,813		500,035		1,577,778		—		—
Residential mortgage-backed securities:
Agency-issued collateralized mortgage obligations - fixed rate	1,650,329		—		—		622,312		1,028,017
Agency-issued collateralized mortgage obligations - variable rate	445,581		—		—		—		445,581
Total	$	12,379,813	$	2,821,471	$	7,462,432	$	622,312	$	1,473,598

Held-to-Maturity Securities

The components of our held-to-maturity investment securities portfolio at March 31, 2017 and December 31, 2016 are as follows:



	March 31, 2017
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Held-to-maturity securities, at cost:
U.S. agency debentures (1)	$	641,421	$	7,106	$	(1,948	)	$	646,579
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	3,020,929		5,498		(16,694		)	3,009,733
Agency-issued collateralized mortgage obligations—fixed rate	3,223,055		638		(30,595		)	3,193,098
Agency-issued collateralized mortgage obligations—variable rate	299,257		217		(477		)	298,997
Agency-issued commercial mortgage-backed securities	1,292,744		1,242		(11,558		)	1,282,428
Municipal bonds and notes	138,289		295		(1,602		)	136,982
Total held-to-maturity securities	$	8,615,695	$	14,996	$	(62,874	)	$	8,567,817


(1)	Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States.



	December 31, 2016
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Held-to-maturity securities, at cost:
U.S. agency debentures (1)	$	622,445	$	7,840	$	(1,198	)	$	629,087
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	2,896,179		6,919		(24,526		)	2,878,572
Agency-issued collateralized mortgage obligations—fixed rate	3,362,598		788		(31,274		)	3,332,112
Agency-issued collateralized mortgage obligations—variable rate	312,665		176		(1,339		)	311,502
Agency-issued commercial mortgage-backed securities	1,151,363		1,237		(7,638		)	1,144,962
Municipal bonds and notes	81,748		8		(1,853		)	79,903
Total held-to-maturity securities	$	8,426,998	$	16,968	$	(67,828	)	$	8,376,138


(1)	Consists of pools of Small Business Investment Company debentures issued and guaranteed by the U.S. Small Business Administration, an independent agency of the United States.

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The following tables summarize our unrealized losses on our held-to-maturity securities portfolio into categories of less than 12 months and 12 months or longer as of March 31, 2017 and December 31, 2016:



	March 31, 2017
	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses
Held-to-maturity securities:
U.S. agency debentures	$	117,916	$	(1,948	)	$	—	$	—		$	117,916	$	(1,948	)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	2,152,438		(15,863		)	21,350		(831		)	2,173,788		(16,694		)
Agency-issued collateralized mortgage obligations—fixed rate	2,749,432		(25,442		)	213,674		(5,153		)	2,963,106		(30,595		)
Agency-issued collateralized mortgage obligations—variable rate	89,927		(469		)	3,234		(8		)	93,161		(477		)
Agency-issued commercial mortgage-backed securities	1,106,777		(11,453		)	14,225		(105		)	1,121,002		(11,558		)
Municipal bonds and notes	38,086		(613		)	33,644		(989		)	71,730		(1,602		)
Total temporarily impaired securities (1):	$	6,254,576	$	(55,788	)	$	286,127	$	(7,086	)	$	6,540,703	$	(62,874	)

(1)

As of March 31, 2017, we identified a total of 478 investments that were in unrealized loss positions, of which 96 investments totaling $286.1 million with unrealized losses of $7.1 million have been in an impaired position for a period of time greater than 12 months. As of March 31, 2017, we do not intend to sell any impaired fixed income investment securities prior to recovery of our adjusted cost basis, and it is more likely than not that we will not be required to sell any of our securities prior to recovery of our adjusted cost basis, which is consistent with our classification of these securities. Based on our analysis as of March 31, 2017, we deem all impairments to be temporary. Market valuations and impairment analyses on assets in the held-to-maturity securities portfolio are reviewed and monitored on a quarterly basis.



	December 31, 2016
	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses			Fair Value of Investments		Unrealized Losses
Held-to-maturity securities:
U.S. agency debentures	$	118,721	$	(1,198	)	$	—	$	—		$	118,721	$	(1,198	)
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	1,801,861		(23,558		)	21,917		(968		)	1,823,778		(24,526		)
Agency-issued collateralized mortgage obligations—fixed rate	2,729,889		(25,723		)	228,220		(5,551		)	2,958,109		(31,274		)
Agency-issued collateralized mortgage obligations—variable rate	251,012		(1,339		)	—		—			251,012		(1,339		)
Agency-issued commercial mortgage-backed securities	999,440		(7,494		)	14,934		(144		)	1,014,374		(7,638		)
Municipal bonds and notes	42,267		(877		)	30,586		(976		)	72,853		(1,853		)
Total temporarily impaired securities (1):	$	5,943,190	$	(60,189	)	$	295,657	$	(7,639	)	$	6,238,847	$	(67,828	)


(1)	As of December 31, 2016, we identified a total of 462 investments that were in unrealized loss positions, of which 85 investments totaling $295.7 million with unrealized losses of $7.6 million have been in an impaired position for a period of time greater than 12 months.

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The following table summarizes the remaining contractual principal maturities on fixed income investment securities classified as held-to-maturity as of March 31, 2017. For U.S. agency debentures, the expected maturity is the actual contractual maturity of the notes. Expected maturities for mortgage-backed securities may differ significantly from their contractual maturities because mortgage borrowers have the right to prepay outstanding loan obligations with or without penalties. Mortgage-backed securities classified as held-to-maturity typically have original contractual maturities from 10 to 30 years whereas expected average lives of these securities tend to be significantly shorter and vary based upon structure and prepayments in lower rate environments.



	March 31, 2017
	Total				One Year or Less				After One Year to Five Years				After Five Years to Ten Years				After Ten Years
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. agency debentures	$	641,421	$	646,579	$	—	$	—	$	75,459	$	76,306	$	565,962	$	570,273	$	—	$	—
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	3,020,929		3,009,733		—		—		317,056		315,424		77,461		76,978		2,626,412		2,617,331
Agency-issued collateralized mortgage obligations - fixed rate	3,223,055		3,193,098		—		—		—		—		160,700		158,587		3,062,355		3,034,511
Agency-issued collateralized mortgage obligations - variable rate	299,257		298,997		—		—		—		—		—		—		299,257		298,997
Agency-issued commercial mortgage-backed securities	1,292,744		1,282,428		—		—		—