Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Hierarchy Tables Present Information about Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following fair value hierarchy table presents information about our assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2013:



(Dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at March 31, 2013
Assets
Available-for-sale securities:
U.S. treasury securities	$	—	$	100,046	$	—	$	100,046
U.S. agency debentures	—		3,483,903		—		3,483,903
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	—		1,347,830		—		1,347,830
Agency-issued collateralized mortgage obligations - fixed rate	—		3,855,067		—		3,855,067
Agency-issued collateralized mortgage obligations - variable rate	—		1,602,853		—		1,602,853
Agency-issued commercial mortgage-backed securities	—		419,335		—		419,335
Municipal bonds and notes	—		90,503		—		90,503
Equity securities	5,879		2,747		—		8,626
Total available-for-sale securities	5,879		10,902,284		—		10,908,163
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	—		—		701,076		701,076
Other venture capital investments	—		—		124,786		124,786
Total non-marketable securities (fair value accounting)	—		—		825,862		825,862
Other assets:
Marketable securities	913		9,265		—		10,178
Interest rate swaps	—		8,506		—		8,506
Foreign exchange forward and option contracts	—		13,752		—		13,752
Equity warrant assets	—		6,287		66,046		72,333
Loan conversion options	—		1,529		—		1,529
Client interest rate derivatives	—		653		—		653
Total assets (1)	$	6,792	$	10,942,276	$	891,908	$	11,840,976
Liabilities
Foreign exchange forward and option contracts	$	—	$	11,513	$	—	$	11,513
Client interest rate derivatives	—		691		—		691
Total liabilities	$	—	$	12,204	$	—	$	12,204


(1)	Included in Level 1, Level 2, and Level 3 assets are $0.8 million, $8.8 million, and $740 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

The following fair value hierarchy table presents information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2012:



(Dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2012
Assets
Available-for-sale securities:
U.S. treasury securities	$	—	$	25,247	$	—	$	25,247
U.S. agency debentures	—		3,447,628		—		3,447,628
Residential mortgage-backed securities:
Agency-issued mortgage-backed securities	—		1,473,433		—		1,473,433
Agency-issued collateralized mortgage obligations - fixed rate	—		4,103,974		—		4,103,974
Agency-issued collateralized mortgage obligations - variable rate	—		1,772,748		—		1,772,748
Agency-issued commercial mortgage-backed securities	—		422,098		—		422,098
Municipal bonds and notes	—		93,529		—		93,529
Equity securities	4,520		—		—		4,520
Total available-for-sale securities	4,520		11,338,657		—		11,343,177
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	—		—		665,921		665,921
Other venture capital investments	—		—		127,091		127,091
Total non-marketable securities (fair value accounting)	—		—		793,012		793,012
Other assets:
Marketable securities	1,144		9,184		—		10,328
Interest rate swaps	—		9,005		—		9,005
Foreign exchange forward and option contracts	—		13,541		—		13,541
Equity warrant assets	—		8,143		66,129		74,272
Loan conversion options	—		890		—		890
Client interest rate derivatives	—		558		—		558
Total assets (1)	$	5,664	$	11,379,978	$	859,141	$	12,244,783
Liabilities
Foreign exchange forward and option contracts	$	—	$	12,847	$	—	$	12,847
Client interest rate derivatives	—		590		—		590
Total liabilities	$	—	$	13,437	$	—	$	13,437


(1)	Included in Level 1, Level 2, and Level 3 assets are $1.1 million, $8.7 million, and $708 million, respectively, attributable to noncontrolling interests calculated based on the ownership percentages of the noncontrolling interests.

Additional Information about Level 3 Assets Measured at Fair Value on a Recurring Basis

The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for the three months ended March 31, 2013 and 2012, respectively:



(Dollars in thousands)	Beginning Balance		Total Realized and Unrealized Gains (Losses) Included in Income			Purchases		Sales			Issuances		Distributions and Other Settlements			Transfers Into Level 3		Transfers Out of Level 3			Ending Balance
Three months ended March 31, 2013
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	$	665,921	$	22,510		$	29,744	$	—		$	—	$	(17,099	)	$	—	$	—		$	701,076
Other venture capital investments	127,091		2,188			166		(21		)	—		(1,077		)	—		(3,561		)	124,786
Total non-marketable securities (fair value accounting) (1)	793,012		24,698			29,910		(21		)	—		(18,176		)	—		(3,561		)	825,862
Other assets:
Equity warrant assets (2)	66,129		1,459			—		(2,250		)	1,926		364			—		(1,582		)	66,046
Total assets	$	859,141	$	26,157		$	29,910	$	(2,271	)	$	1,926	$	(17,812	)	$	—	$	(5,143	)	$	891,908
Three months ended March 31, 2012
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	$	611,824	$	12,104		$	21,716	$	—		$	—	$	(25,288	)	$	—	$	—		$	620,356
Other venture capital investments	124,121		(3,587		)	7,724		(307		)	—		—			—		—			127,951
Other investments	987		21			—		—			—		(6		)	—		—			1,002
Total non-marketable securities (fair value accounting) (1)	736,932		8,538			29,440		(307		)	—		(25,294		)	—		—			749,309
Other assets:
Equity warrant assets (2)	63,030		3,795			—		(3,643		)	2,300		1			—		(266		)	65,217
Total assets	$	799,962	$	12,333		$	29,440	$	(3,950	)	$	2,300	$	(25,293	)	$	—	$	(266	)	$	814,526


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


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

Unrealized Gains Included in Earnings Attributable to Level 3 Assets Held

The following table presents the amount of unrealized gains (losses) included in earnings during the period (which is inclusive of noncontrolling interest) attributable to Level 3 assets still held at March 31, 2013 and March 31, 2012:



	Three months ended March 31,
(Dollars in thousands)	2013		2012
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments	$	22,621	$	11,649
Other venture capital investments	526		(2,610		)
Other investments	—		21
Total non-marketable securities (fair value accounting) (1)	23,147		9,060
Other assets:
Equity warrant assets (2)	1,181		1,674
Total unrealized gains	$	24,328	$	10,734
Unrealized gains attributable to noncontrolling interests	$	21,187	$	7,242


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


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

Quantitative Information About Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for certain of our Level 3 fair value measurements at March 31, 2013 and December 31, 2012. We have not included in this table our venture capital and private equity fund investments (fair value accounting) as we use net asset value per share (as obtained from the general partners of the investments) as a practical expedient to determine fair value.



(Dollars in thousands)	Fair value		Valuation Technique	Significant Unobservable Inputs	Weighted Average
March 31, 2013:
Other venture capital investments (fair value accounting)	$	124,786	Private company equity pricing	(1)	(1	)
Equity warrant assets (private portfolio)	66,046		Modifed Black-Scholes option pricing model	Volatility	42.0	%
				Risk-Free interest rate	0.4	%
				Marketability discount (2)	22.5	%
				Remaining life assumption (3)	45.0	%
December 31, 2012:
Other venture capital investments (fair value accounting)	127,091		Private company equity pricing	(1)	(1	)
Equity warrant assets (private portfolio)	66,129		Modifed Black-Scholes option pricing model	Volatility	45.2	%
				Risk-Free interest rate	0.4	%
				Marketability discount (2)	22.5	%
				Remaining life assumption (3)	45.0	%

(1)

In determining the fair value of our other venture capital investment portfolio, we evaluate a variety of factors related to each underlying private portfolio company including, but not limited to, actual and forecasted results, cash position, recent or planned transactions and market comparable companies. Additionally, we have ongoing communication with the portfolio companies and venture capital fund managers, to determine whether there is a material change in fair value. These factors are specific to each portfolio company and a weighted average or range of values of the unobservable inputs is not meaningful.

(2)

Our marketability discount is applied to all private company warrants to account for a general lack of liquidity due to the private nature of the associated underlying company. The quantitative measure used is based on long-run averages and is influenced over time by various factors, including market conditions. On a quarterly basis, a sensitivity analysis is performed on our marketability discount.

(3)

We adjust the contractual remaining term of private company warrants based on our best estimate of the actual remaining life, which we determine by utilizing historical data on cancellations and exercises. At March 31, 2013, the weighted average contractual remaining term was 6.4 years, compared to our estimated remaining life of 2.9 years. On a quarterly basis, a sensitivity analysis is performed on our remaining life assumption.

Summary of Estimated Fair Values of Financial Instruments Not Carried at Fair Value

The following fair value hierarchy table presents the estimated fair values of our financial instruments that are not carried at fair value at March 31, 2013 and December 31, 2012:



			Estimated Fair Value
(Dollars in thousands)	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2013:
Financial assets:
Cash and cash equivalents	$	1,519,249	$	1,519,249	$	—	$	—
Non-marketable securities (cost and equity method accounting)	389,926		—		—		431,115
Net commercial loans	7,915,726		—		—		8,086,157
Net consumer loans	816,959		—		—		853,520
FHLB and FRB stock	39,806		—		—		39,806
Accrued interest receivable	64,375		—		64,375		—
Financial liabilities:
Other short-term borrowings	7,460		7,460		—		—
Non-maturity deposits (1)	19,137,749		19,137,749		—		—
Time deposits	172,159		—		172,054		—
5.375% Senior Notes	348,048		—		390,831		—
6.05% Subordinated Notes (2)	53,993		—		58,390		—
7.0% Junior Subordinated Debentures	55,153		—		53,608		—
Accrued interest payable	1,967		—		1,967		—
Off-balance sheet financial assets:
Commitments to extend credit	—		—		—		21,109
December 31, 2012:
Financial assets:
Cash and cash equivalents	$	1,008,983	$	1,008,983	$	—	$	—
Non-marketable securities (cost and equity method accounting)	391,253		—		—		425,741
Net commercial loans	8,013,563		—		—		8,180,597
Net consumer loans	822,719		—		—		860,772
FHLB and FRB stock	39,806		—		—		39,806
Accrued interest receivable	64,167		—		64,167		—
Financial liabilities:
Federal funds purchased	160,000		160,000		—		—
Other short-term borrowings	6,110		6,110		—		—
Non-maturity deposits (1)	19,021,264		19,021,264		—		—
Time deposits	155,188		—		155,027		—
5.375% Senior Notes	347,995		—		393,701		—
6.05% Subordinated Notes (2)	54,571		—		61,639		—
7.0% Junior Subordinated Debentures	55,196		—		51,959		—
Accrued interest payable	6,494		—		6,494		—
Off-balance sheet financial assets:
Commitments to extend credit	—		—		—		20,562


(1)	Includes noninterest-bearing demand deposits, interest-bearing checking accounts, money market accounts and interest-bearing sweep deposits.


(2)	At March 31, 2013 and December 31, 2012, included in the carrying value and estimated fair value of our 6.05% Subordinated Notes was $8.5 million and $9.0 million, respectively, related to hedge accounting associated with the notes.

Summary of Estimated Fair Values of Investments and Remaining Unfunded Commitments for Each Major Category of Investments

The following table is a summary of the estimated fair values of these investments and remaining unfunded commitments for each major category of these investments as of March 31, 2013:



(Dollars in thousands)	Carrying Amount		Fair Value		Unfunded Commitments
Non-marketable securities (fair value accounting):
Venture capital and private equity fund investments (1)	$	701,076	$	701,076	$	448,482
Non-marketable securities (equity method accounting):
Other investments (2)	52,180		53,679		17,258
Non-marketable securities (cost method accounting):
Venture capital and private equity fund investments (3)	160,870		199,504		51,007
Total	$	914,126	$	954,259	$	516,747

(1)

Venture capital and private equity fund investments within non-marketable securities (fair value accounting) include investments made by our managed funds of funds and one of our direct venture funds. These investments represent investments in venture capital and private equity funds that invest primarily in U.S. and global technology and life sciences companies. Included in the fair value and unfunded commitments of fund investments under fair value accounting are $624 million and $440 million, respectively, attributable to noncontrolling interests. It is estimated that we will receive distributions from the fund investments over the next 10 to 13 years, depending on the age of the funds and any potential extensions of terms of the funds.

(2)

Other investments within non-marketable securities (equity method accounting) include investments in debt funds and venture capital and private equity fund investments that invest in or lend money to primarily U.S. and global technology and life sciences companies. It is estimated that we will receive distributions from the fund investments over the next 10 to 13 years, depending on the age of the funds.

(3)

Venture capital and private equity fund investments within non-marketable securities (cost method accounting) include investments in venture capital and private equity fund investments that invest primarily in U.S. and global technology and life sciences companies. It is estimated that we will receive distributions from the fund investments over the next 10 to 13 years, depending on the age of the funds and any potential extensions of the terms of the funds.

- Definition

Tabular disclosure of the amount of gains or losses for the period included in earnings or resulted in a change to net assets, have arisen from the use of significant unobservable inputs (level 3) to measure the fair value of assets, liabilities, and financial instruments classified in shareholders' equity.

+ References+ Details

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 18

-Subparagraph c(2), d, e, f

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 10

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 11

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13467-108611

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

-Subparagraph a, b, c(1), d(1)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 45

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6447952&loc=d3e13220-108610

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-Subparagraph a, c(1), c(2), c(3), d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 12

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13476-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 30

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

+ Details

- Definition

Tabular disclosure of the fair value of investees that calculate net asset value per share (including by unit, membership interest, or other equity (ownership interest) unit measure) (alternative investments), whether measured at fair value on a recurring or nonrecurring basis, by major category of assets and liabilities (as defined), including, for example, (i) fair value measurements at the reporting date, (ii) the level within the fair value hierarchy in which the fair value measurements fall, (iii) a reconciliation of beginning and ending balances for those alternative investments that are measured at fair value using unobservable inputs (Level 3 - fair value hierarchy fair value measurement inputs), (iv) the inputs and valuation techniques used to measure fair value, (v) a discussion of changes to valuation techniques and inputs, if any, during the period, (vi) a description of the nature and risk associated with the alternative investments, and (vii) a discussion of the probability that any of the alternative investments are to be sold.

+ References+ Details