Regulatory Matters

12 Months Ended

Dec. 31, 2019

Banking and Thrift [Abstract]

Regulatory Matters

Regulatory Matters

SVB Financial and the Bank are subject to various regulatory capital adequacy requirements administered by the Federal Reserve Board and the DBO. The Federal Deposit Insurance Corporation Improvement Act of 1991 required that the federal regulatory agencies adopt regulations defining five capital categories for banks: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.

In July 2013, the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency published final rules establishing a comprehensive capital framework for U.S. banking organizations (the “Capital Rules”), which implement the Basel III regulatory capital reforms and changes required by the Dodd-Frank Act. “Basel III” refers to the internationally agreed regulatory capital framework adopted by the Basel Committee.

There are three categories of capital under the new Basel III standards; CET 1, additional Tier 1 and Tier 2. CET 1 includes common stock plus related surplus and retained earnings, less certain deductions. Additional Tier 1 capital includes qualifying preferred stock and trust preferred securities, less certain deductions. Additional Tier 1, together with CET 1, equal total Tier 1 capital. Tier 2 capital includes primarily certain qualifying unsecured subordinated debt and qualifying allowances for loan and lease losses. Tier 1 capital together with Tier 2 capital equal total capital.

Under the Capital Rules, the minimum capital ratios applicable to SVB Financial and the Bank are as follows: 4.5% CET1 capital, 6.0% Tier 1 capital, 8.0% Total capital and 4.0% Tier 1 leverage. In addition, banking organizations must meet a 2.5% CET1 risk-based capital conservation buffer requirement in order to avoid constraints on capital distributions, such as dividends and equity repurchases, and certain bonus compensation for executive officers. The severity of the constraints would depend on the amount of the shortfall and the banking organization’s “eligible retained income” (that is, four-quarter trailing net income, net of distributions and tax effects not reflected in net income).

As of December 31, 2019, both SVB Financial and the Bank exceed the required ratios under the Capital Rules and were considered “well-capitalized” for regulatory purposes under existing capital guidelines as well. The following table presents the capital ratios for the Company and the Bank under federal regulatory guidelines, compared to the minimum regulatory capital requirements, as of December 31, 2019 and 2018:

	Capital Ratios					Capital Amounts
(Dollars in thousands)	Actual		Required Minimum (1)		Well Capitalized Minimum	Actual		Required Minimum (1)		Well Capitalized Minimum
December 31, 2019:
CET 1 risk-based capital:
SVB Financial	12.58	%	7.0	%	N/A	$	5,857,744	$	3,260,424	N/A
Bank	11.12		7.0		6.5	4,949,393		3,115,151		$	2,892,640
Tier 1 risk-based capital:
SVB Financial	13.43		8.5		6.0	6,257,442		3,959,086		2,794,649
Bank	11.12		8.5		8.0	4,949,393		3,782,683		3,560,172
Total risk-based capital:
SVB Financial	14.23		10.5		10.0	6,630,022		4,890,636		4,657,748
Bank	11.96		10.5		10.0	5,321,850		4,672,726		4,450,215
Tier 1 leverage:
SVB Financial	9.06		4.0		N/A	6,257,442		2,763,146		N/A
Bank	7.30		4.0		5.0	4,949,393		2,713,367		3,391,709
December 31, 2018:
CET 1 risk-based capital:
SVB Financial	13.41	%	6.4	%	N/A	$	5,167,270	$	2,456,151	N/A
Bank	12.41		6.4		6.5	4,604,689		2,365,385		$	2,411,765
Tier 1 risk-based capital:
SVB Financial	13.58		7.9		6.0	5,231,476		3,034,068		2,311,671
Bank	12.41		7.9		8.0	4,604,689		2,921,946		2,968,326
Total risk-based capital:
SVB Financial	14.45		9.9		10.0	5,567,562		3,804,625		3,852,785
Bank	13.32		9.9		10.0	4,940,776		3,664,028		3,710,408
Tier 1 leverage:
SVB Financial	9.06		4.0		N/A	5,231,476		2,308,592		N/A
Bank	8.10		4.0		5.0	4,604,689		2,272,912		2,841,139

N/A "Well-Capitalized Minimum" CET 1 risk-based capital and Tier 1 leverage ratios are not formally defined under applicable banking regulations for bank holding companies.

(1)

The percentages as of December 31,2019 represent the minimum capital ratios plus, the fully phased-in 2.5% CET1 capital conservation buffer under the Capital Rules.