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As filed with the Securities and Exchange Commission on March 19, 2002

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2001
OR

For the transition period from                              to                             

Commission File Number: 33-41102

SILICON VALLEY BANCSHARES

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (408) 654-7400

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

        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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / /

        The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing price of its common stock on January 31, 2002, on the Nasdaq National Market was $1,044,921,860.

        At January 31, 2002, 45,391,914 shares of the registrant's common stock ($0.001 par value) were outstanding.

Documents Incorporated by Reference

This report contains a total of 86 pages, including exhibits.
The Exhibit Index is on page 83.

TABLE OF CONTENTS

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PART I

ITEM 1. BUSINESS

General

        Silicon Valley Bancshares is a bank holding company and a financial holding company incorporated in Delaware. Our principal subsidiary, Silicon Valley Bank, is a California state-chartered bank and a member of the Federal Reserve System. Silicon Valley Bank's deposits are insured by the Federal Deposit Insurance Corporation.

        Our corporate headquarters is located at 3003 Tasman Drive, Santa Clara, California 95054 and our telephone number is (408) 654-7400. When we refer to "Silicon Valley Bancshares," or "we" or similar words, we intend to include Silicon Valley Bancshares and its subsidiaries collectively, including Silicon Valley Bank. When we refer to "Silicon," we are referring only to Silicon Valley Bancshares.

Business Overview

        We offer our clients products and services from five lines of banking and financial services, including commercial banking, investment banking, merchant banking, private banking, and knowledge banking. Through these five lines, we provide innovative banking and financial products and services to emerging growth and middle-market companies, focusing primarily on venture-backed technology and life sciences companies.

        A key component of our business strategy is to develop relationships with clients at an early stage and offer them banking products and services throughout their business life cycle. We have cultivated strong relationships with venture capital firms, many of which are also clients, providing us access to many other potential clients.

        Our unique business strategy and focus has resulted in significant growth over the last two decades. We currently operate 27 regional offices. The Bank operates throughout Silicon Valley: Fremont, Santa Clara, Palo Alto, and Sand Hill, which is the center of the venture capital community in California. Other regional offices in California include: Irvine, Los Angeles, Napa Valley, San Diego, San Francisco, Santa Barbara, and Sonoma. Office locations outside of California include: Phoenix, Arizona; Boulder, Colorado; West Palm Beach, Florida; Atlanta, Georgia; Chicago, Illinois; Boston, Massachusetts; Minneapolis, Minnesota; New York, New York; Durham, North Carolina; Portland, Oregon; Philadelphia, Pennsylvania; Austin, Texas; Dallas, Texas; Northern Virginia; and Seattle, Washington.

Five Lines of Banking and Financial Services

        During the latter part of 2001, we organized Silicon Valley Bancshares into five lines of banking and financial services as follows:

Commercial banking

        We provide deposit services, Internet banking, loans, investment products and services, cash management, international services, real estate services, specialty finance, and commercial finance.

Investment banking

        We provide merger and acquisition and corporate partnering services through our broker-dealer subsidiary, Alliant Partners.

Merchant banking

        We provide private equity and venture capital fund investments, international alliances and the management of two limited partnerships: a venture capital fund and a fund of funds.

Private banking

        We provide a wide array of loan, personal asset management, trust and estate planning, and mortgage services tailored for high-net-worth individuals.

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Knowledge banking

        We provide online business services, professional services and consulting services, including Client Exchange, an online bulletin board, resume and assets exchange service.

        In each of the industry sectors we serve, our products and services are tailored to the client's business life cycle, from the early stage through later stages.

Industry Sectors

Technology and Life Sciences

        We serve a variety of technology and life sciences industries and markets throughout the United States. Our clients generally keep large cash balances in their deposit accounts and usually do not borrow large amounts under their credit facilities. The primary source of funding for most clients is equity from venture capitalists and public markets. Lending to this market typically involves working capital lines of credit, equipment financing, asset acquisition loans, and bridge financing. Our technology and life sciences clients generally fall into the following industries:

Communications and Electronics

The world's growing demand for faster, more convenient communication is driving entrepreneurs to create new telecommunications services, the infrastructure for delivering them and advanced electronics for accessing them. Early-stage and mid-sized companies in these fields face intense competitive pressures from established global corporations. Additionally, they are challenged with the complexity of mastering rapidly evolving optical and semiconductor technology. We help these companies gain access to the capital they need to bring their innovations to market and gain the critical mass required for long-term success.

Software and Services

Through our software and services practice, we are a full-service provider of banking solutions for companies in the Web-enabled applications, system integration and enterprise software industries. We help software companies capitalize on new opportunities with speed and financial flexibility by providing a wide range of credit facilities, international services and other support. The online services market also remains a fertile ground for new service models, including application service providers, exchange services and various forms of e-commerce. We provide a broad range of banking and financial services, as well as assistance and referrals that help emerging companies become well-organized businesses with effective accounting, insurance, legal, and information technology consulting support.

Life Sciences

Our life sciences practice serves companies in the biotechnology, medical devices and healthcare services industries. The biotechnology industry includes companies involved in research and development of therapeutics and diagnostics for the medical and pharmaceuticals industries. The medical devices industry encompasses companies involved in the design, manufacturing and distribution of surgical instruments and medical equipment. Companies included in the healthcare services industry deal with patients either in a primary or secondary care role.

Emerging Technologies

Our extensive experience in serving technology entrepreneurs has taught us that promising new ideas may fit no existing mold. Our emerging technologies practice provides responsive banking resources for the earliest stage companies. These are companies that have little more than an intriguing idea and, perhaps, a few "angel" investors. At this critical stage, our most valuable contribution may be our expertise in the business life cycle and in guiding people through it.

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Industry Specific Finance

        We serve a variety of commercial enterprises outside of our technology and life sciences client base through our industry specific finance division. We continue to expand this strategy by identifying and evaluating industries whose financial services needs have been historically underserved. These industries include:

Media

We concentrate on mid-sized clients nationwide, providing growth capital to the radio, television, out-of-home media, and cable television industries. With our extensive experience in media market dynamics, we deliver financing solutions for mergers and acquisitions, recapitalizations, capital expansions, and working capital.

Premium Wineries

Having recognized the market opportunity early on, our premium wineries practice has become the dominant provider of financial services to the rapidly expanding U.S. premium wine industry. We focus on high-quality wineries and growers located in internationally recognized areas, including Napa, Sonoma, the Central Coast of California, and the states of Oregon and Washington.

Religious Lending

Growth in independent and non-denominational churches in America provides us with exceptional revenue opportunities. Entrepreneurs can come in all forms. Having the foresight to grow a church or move into a new area requires the same visionary instincts prevalent in our technology clients. Our religious lending practice focuses on providing the entrepreneurs in this segment with the expertise and financial solutions necessary to expand their facilities.

Products and Services

        Through our five lines of banking and financial services, we offer a variety of specialized lending products and other financial services to clients in various stages of the business life cycle. This strategy allows us to begin serving companies in their early stages and gradually expand these services as the companies grow.

Cash Management

        Silicon Valley Bank's cash management services include lockbox, credit cards, online reporting systems, and other banking services. These services are designed to help clients optimize cash flow, minimize borrowing costs and enhance their operating efficiency.

Commercial Finance

        We take an asset-based approach to commercial finance, lending on our clients' accounts receivable, inventory and equipment to increase their financial flexibility and minimize loan covenants.

Deposits

        At the core of our broad range of products and services is a strong and growing core business handling our clients' deposit accounts and day-to-day banking activities.

Equipment Leasing

        We provide direct leasing services that enable our clients to match the length of their financing to the life and usage of the equipment, thus minimizing equipment obsolescence issues. We offer flexible payment schedules, and our equipment leasing solutions are tailored to meet our clients' unique needs.

International Services

        We provide a wide range of services that help clients both inside and outside the U.S. expand their business internationally. These include foreign exchange and letters of credit as well as complex multi-party, multi-regional international financing programs.

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Investment Banking Services (Alliant Partners)

        Silicon Valley Bank's investment banking services help clients build their business by providing merger and acquisition and corporate partnering services to middle-market technology companies.

Investment Products & Services

        Once our clients access capital markets, we can put their cash to work in the investment vehicles that are right for them. These include high-grade money market mutual fund instruments, U.S. Treasury Bills, Government Agencies, Commercial Paper, and Repurchase Agreements.

Online Banking

        Our web-enabled banking service gives our clients access to account information at any time and allows entrepreneurs to bank at their convenience.

Private Banking

        We provide private banking services to technology executives, venture capitalists and other professionals, nationwide. Our experienced relationship managers assist these individuals to leverage their time and resources to reach their personal and professional goals. Our private banking services include a wide array of loan, investment management and mortgage services tailored for each client.

Real Estate

        The Bank supports the real estate industry through a comprehensive line of loan and cash management products. We lend to developers, real estate investors, and real estate operating companies, as well as borrowers who purchase income properties. We also provide financing for affordable housing and community development in commercial real estate.

Specialty Finance

        We provide financial flexibility to non-traditional borrowers by converting their accounts receivable into working capital.

Equity Securities

        We frequently obtain rights to acquire stock in the form of warrants in certain client companies as part of negotiated credit facilities. We also make investments in venture capital funds and direct equity investments in companies. As of December 31, 2001, we held 1,673 warrants in 1,278 companies, made investments in 239 venture capital funds, and had private equity investments in 49 companies.

Consolidated Venture Capital Funds

        In 2000, we formed SVB Strategic Investors, LLC, the general partner of SVB Strategic Investors Fund, L.P. SVB Strategic Investors Fund, L.P. raised approximately $135.3 million in committed capital to invest as a limited partner in top-tier venture funds, leading regional venture funds and venture funds with a unique niche. We have committed capital of $15.0 million to SVB Strategic Investors Fund, L.P., representing an ownership interest of 11.0%, of which $3.0 million has been funded as of December 31, 2001. Also in 2000, we formed Silicon Valley BancVentures, Inc., the general partner of Silicon Valley BancVentures, L.P. Silicon Valley BancVentures, L.P. raised $56.1 million in committed capital to make private equity investments in emerging growth technology and life sciences companies throughout the United States. We have committed capital of $6.0 million to Silicon Valley BancVentures, L.P., representing an ownership interest of 10.7%, of which $1.5 million has been funded as of December 31, 2001.

Joint Ventures and Special Purpose Entities

        We are not engaged in, or a party to, any unconsolidated joint ventures or unconsolidated special purpose entities as of December 31, 2001.

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Acquisition

        On September 28, 2001, our subsidiary, SVB Securities, Inc., completed an acquisition of substantially all the assets of Alliant Partners, an investment banking firm providing merger and acquisition and corporate partnering services. Our investment banking business continues to do business under the name "Alliant Partners."

Competition

        The banking and financial services industry is highly competitive. Our current competitors include other banks and specialty and diversified financial services companies that offer lending, leasing and other financial products to our customer base. The principal competitive factors in our markets include product offerings, service and pricing. We believe we compete favorably in all of our markets in all of these areas.

Employees

        As of December 31, 2001, we employed approximately 981 full-time and part-time employees. None of our employees are represented by a labor union and our employee relations are considered good. Competition for qualified personnel in our industry is significant, particularly for client relationship manager positions and officers and employees with strong relationships with the venture capital community. Our future success will depend in part on our continued ability to attract, hire and retain qualified personnel.

Supervision and Regulation

        Our operations are subject to extensive regulation by federal and state banking regulatory agencies. This regulatory framework is intended primarily to protect Silicon Valley Bank's depositors and the federal deposit insurance fund from losses and is not for the benefit of our stockholders. As a bank holding company and a financial holding company, Silicon is subject to the Federal Reserve Board's supervision and examination under the Bank Holding Company Act (BHCA) as revised by the Gramm-Leach-Bliley Act, discussed below. Silicon Valley Bank, as a California-chartered bank and a member of the Federal Reserve System, is subject to primary supervision and examination by the Federal Reserve Board through the Federal Reserve Bank of San Francisco and the Commissioner of the California Department of Financial Institutions. The following summary describes some of the more significant laws, regulations and policies that affect our operations. It is not intended to be a complete listing of all laws that apply to us. Any change in the statutes, regulations or policies that apply to our operations may have a material effect on our business.

Gramm-Leach-Bliley Act

        On November 12, 1999, the Gramm-Leach-Bliley Act, or GLB Act, was signed into law which significantly changed the regulatory structure and oversight of the financial services industry. The GLB Act repealed the provisions of the Glass-Steagall Act that restricted banks and securities firms from affiliating. It also revised the BHCA to permit a qualifying bank holding company, called a financial holding company, to engage in a full range of financial activities, including banking, insurance, securities, and merchant banking activities. It permits financial holding companies to acquire many types of financial firms without the prior approval of the Federal Reserve Board. On November 14, 2000, Silicon became a financial holding company.

        The GLB Act provides expanded financial affiliation opportunities for existing bank holding companies and permits other financial services providers to acquire banks and become bank holding companies without ceasing any existing financial activities. Previously, a bank holding company could only engage in activities that were "closely related to banking." This limitation no longer applies to bank holding companies that qualify to be treated as financial holding companies. To qualify as a financial holding company, a bank holding company's subsidiary depository institutions must be well capitalized and have at least satisfactory general, managerial and Community Reinvestment Act examination ratings. A nonqualifying bank holding company is limited to activities that were permissible under the BHCA as of November 11, 1999.

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        The GLB Act changed the powers of national banks and their subsidiaries, and made similar changes in the powers of state bank subsidiaries. It permits a national bank to underwrite, deal in and purchase state and local revenue bonds. It also allows a subsidiary of a national bank to engage in financial activities that the bank cannot, except for general insurance underwriting and real estate development and investment. In order for a subsidiary to engage in new financial activities, the national bank and its depository institution affiliates must be well capitalized; have at least satisfactory general, managerial, and Community Reinvestment Act examination ratings; and meet other qualification requirements relating to total assets, subordinated debt, capital, risk management, and affiliate transactions. Subsidiaries of state banks can exercise the same powers as national bank subsidiaries if they satisfy the same qualifying rules that apply to national banks. For state banks that are members of the Federal Reserve System like Silicon Valley Bank, prior approval of the Federal Reserve is required before a bank can create a subsidiary to capitalize on the additional financial activities empowered by the GLB Act.

        The GLB Act also reformed the overall regulatory framework of the financial services industry. In order to implement its underlying purposes, the GLB Act pre-empted state laws that would restrict the types of financial affiliations that are authorized or permitted under the GLB Act, subject to specified exceptions for state insurance laws and regulations. With regard to securities laws, effective May 12, 2002, pursuant to the GLB Act the current blanket exemption for banks from being considered brokers or dealers under the Securities Exchange Act of 1934 will be eliminated and the exemption will be replaced with a number of more limited exemptions. Thus, previously exempted banks, such as Silicon Valley Bank, will become subject to the broker-dealer registration and supervision requirements of the Securities Exchange Act of 1934. As a result, as of the effective date, Silicon Valley Bank must register with the SEC as a broker-dealer and transfer activities deemed broker-dealer activities to its existing broker-dealer subsidiary. The exemption that prevented bank holding companies and banks that advise mutual funds from being considered investment advisers under the Investment Advisers Act of 1940 was also eliminated.

        Separately, the GLB Act imposes customer privacy requirements on any company engaged in financial activities. Under these requirements, a financial company is required to protect the security and confidentiality of customer nonpublic personal information. Also, for customers who obtain a financial product such as a loan for personal, family or household purposes, a financial company is required to disclose its privacy policy to the customer at the time the relationship is established and annually thereafter. The financial company must also disclose its policies concerning the sharing of the customer's nonpublic personal information with affiliates and third parties. If an exemption is not available, a financial company must provide consumers with a notice of its information-sharing practices that allows the consumer to reject the disclosure of its nonpublic personal information to third parties. Third parties that receive such information are subject to the same restrictions as the financial company on the reuse of the information. Finally, a financial company is prohibited from disclosing an account number or similar item to a third party for use in telemarketing, direct mail marketing or other marketing through electronic mail. Financial companies were required to be in compliance with these consumer privacy requirements no later than July 1, 2001.

Capital Standards Applicable to Silicon and Silicon Valley Bank

Silicon

The Federal Reserve Board has adopted minimum risk-based capital guidelines intended to provide a measure of capital that reflects the degree of risk associated with a banking organization's operations for both transactions reported on the balance sheet as assets and those recorded as off-balance sheet items. These include transactions, such as commitments, letters of credit and recourse arrangements. Under these guidelines, dollar amounts of assets and credit-equivalent amounts of off-balance sheet items are adjusted by one of several conversion factors and/or risk adjustment percentages. The Federal Reserve Board requires bank holding companies generally to maintain a minimum ratio of qualifying total capital to risk-adjusted assets of 8% (10% to be well capitalized) and a minimum ratio of Tier 1 capital to risk-adjusted assets of 4% (6% to be well capitalized). The Federal Reserve Board also requires Silicon to maintain a minimum amount of Tier 1 capital to total quarterly average assets, referred to as the Tier 1 leverage ratio. For a bank holding company in the highest of the five categories used by regulators to rate banking organizations, the minimum Tier 1 leverage ratio must be 3%. For all other institutions the ratio is 4% (5% to be well capitalized). In addition to these requirements, the Federal Reserve

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Board may set individual minimum capital requirements for specific institutions at rates substantially above the minimum guidelines and ratios. Under certain circumstances, Silicon must file written notice with, and obtain approval from, the Federal Reserve Board prior to purchasing or redeeming its equity securities. See "Item 1. Business—Supervision and Regulation—Prompt Corrective Action and Other Enforcement Mechanisms" for additional discussion of capital ratios.

Silicon Valley Bank

The federal banking agencies require a minimum ratio of qualifying total capital to risk-adjusted assets of 8% (10% to be well capitalized) and a minimum ratio of Tier 1 capital to risk-adjusted assets of 4% (6% to be well capitalized). In addition to the risk-based guidelines, federal banking regulators also require banking organizations to maintain a minimum Tier 1 leverage ratio. For a banking organization rated in the highest of the five categories used by regulators to rate banking organizations, the minimum Tier 1 leverage ratio must be 3%. For all other institutions the ratio is 4% (5% to be well capitalized). In addition to these uniform risk-based capital guidelines and leverage-ratio requirements that apply across the industry, the regulators have the discretion to set individual minimum capital requirements for specific institutions at rates substantially above the minimum guidelines and ratios. See "Item 8. Consolidated Financial Statements and Supplementary Data—Note 20 to the Consolidated Financial Statements—Regulatory Matters" for Silicon's and Silicon Valley Bank's capital ratios as of December 31, 2001.

In January 2002, the federal banking agencies adopted rules effective April 1, 2002 that govern the regulatory capital treatment of equity investments in nonfinancial companies made on or after March 13, 2000, and that are held under certain specified legal authorities by a bank holding company or bank. Under the rules, these equity investments will be subject to a separate capital charge that will reduce a bank holding company's or bank's Tier 1 capital and, correspondingly, will remove these assets from being taken into consideration in establishing a bank's or bank holding company's required capital ratios discussed above.

The rules provide for the following incremental Tier 1 capital charges: 8% of the adjusted carrying value of the portion of such aggregate investments that are up to 15% of Tier 1 capital; 12% of the adjusted carrying value of the portion of such aggregate investments that are between 15% and 25% of Tier 1 capital; and 25% of the adjusted carrying value of the portion of such aggregate investments that exceed 25% of Tier 1 capital. The rules normally do not apply to unexercised warrants acquired by a bank as additional consideration for making a loan or to equity securities that are acquired in satisfaction of a debt previously contracted (DPC) and that are held and divested in accordance with applicable law.

The federal banking agencies have also adopted a joint agency policy statement which provides that the adequacy and effectiveness of a bank's interest rate risk management process and the level of its interest rate exposures are critical factors in the evaluation of the bank's capital adequacy. A bank with material weaknesses in its interest rate risk management process or high levels of interest rate exposure relative to its capital will be directed by the federal banking agencies to take corrective actions. Financial institutions that have substantial amounts of their assets concentrated in high-risk loans or nontraditional banking activities and who fail to adequately manage these risks, may be required to set aside capital in excess of the regulatory minimums.

Bank Holding Company Regulation of Silicon

        As a registered bank holding company and a financial holding company, Silicon and its subsidiaries are subject to the Federal Reserve Board's supervision, regulation, examination, and reporting requirements under the Bank Holding Company Act, as revised by the GLB Act. Prior to becoming a financial holding company under the GLB Act, Silicon was required to seek the prior approval of the Federal Reserve Board before acquiring ownership or control of more than 5% of the outstanding shares of any class of voting securities, or substantially all of the assets, of any company, including a bank or bank holding company. As a financial holding company, the prior approval of the Federal Reserve Board is not required to acquire ownership or control of entities engaged in specified financial activities, although the existing restrictions on directly or indirectly acquiring shares of a bank or savings association

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are still applicable. In addition, prior to becoming a financial holding company, Silicon was generally allowed to engage, directly or indirectly, only in banking and other activities that were deemed by the Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. As a financial holding company under the GLB Act, Silicon is permitted to engage in a full range of financial activities, including banking, insurance and securities activities, and additional activities that the Federal Reserve Board determines to be financial in nature, incidental to such financial activities or complementary to a financial activity.

        The Federal Reserve Board requires Silicon to maintain minimum capital ratios discussed above. Under Federal Reserve Board regulations, a bank holding company is also required to serve as a source of financial and managerial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner. In addition, it is the Federal Reserve Board's policy that in serving as a source of strength to its subsidiary banks, a bank holding company should stand ready to use available resources to provide adequate capital funds to its subsidiary banks during periods of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks. A bank holding company's failure to meet its obligations to serve as a source of strength to its subsidiary banks or to observe established guidelines with respect to the payment of dividends by bank holding companies will generally be considered by the Federal Reserve Board to be an unsafe and unsound banking practice, or a violation of the Federal Reserve Board's regulations, or both.

        Silicon's ability to pay cash dividends is limited by generally applicable Delaware corporation law limits. In addition, there are statutory and regulatory limitations on the amount of dividends that may be paid to Silicon by Silicon Valley Bank. See "Item 1. Business—Supervision and Regulation—Restrictions on Dividends" for further discussion of current limitations on the ability of Silicon Valley Bank to pay dividends to Silicon.

        Silicon is also treated as a bank holding company under the California Financial Code. As such, Silicon and its subsidiaries are subject to periodic examination by, and may be required to file reports with, the California Department of Financial Institutions.

Regulation of Silicon Valley Bank

        Silicon Valley Bank is a California-chartered bank and a member of the Federal Reserve System. It is subject to primary supervision, periodic examination, and regulation by the Commissioner of the California Department of Financial Institutions, or the Commissioner, the Federal Reserve Board, and the Federal Deposit Insurance Corporation. The Federal Reserve Board and the Commissioner require Silicon Valley Bank to maintain minimum capital levels discussed above. Both the Federal Reserve Board and the Commissioner also have broad powers and remedies available if they determine that the financial condition, capital resources, asset quality, management, earnings prospects, liquidity, sensitivity to market risk, or other aspects of Silicon Valley Bank's operations are unsatisfactory, or that Silicon Valley Bank is violating or has violated any law or regulation.

Restrictions on Dividends

        Silicon is a legal entity separate and distinct from Silicon Valley Bank. Silicon Valley Bank is subject to various statutory and regulatory restrictions on its ability to pay dividends to Silicon. On September 28, 2001, Silicon Valley Bank paid a dividend of $140.0 million to Silicon. Consequently, under these regulatory restrictions, the remaining amount available for payment of dividends to Silicon by Silicon Valley Bank totaled $69.9 million at December 31, 2001. The Federal Reserve Board and the Commissioner have the authority to prohibit Silicon Valley Bank from engaging in activities that, in their opinion, constitute unsafe or unsound practices in conducting its business. It is possible, depending upon the financial condition of the bank and other factors, that they could assert that the payment of dividends or other payments might, under some circumstances, be an unsafe or unsound practice. Further, if Silicon Valley Bank fails to comply with its minimum capital requirements, its regulators could restrict its ability to pay dividends using prompt corrective action or other enforcement powers. The Commissioner may impose similar limitations on the conduct of California-chartered banks. See "Item 8. Consolidated Financial Statements and Supplementary Data—Note 20 to the Consolidated Financial Statements—Regulatory Matters" for further discussion on dividend restrictions.

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Transactions with Affiliates

        Silicon Valley Bank is subject to restrictions imposed by federal law on any extensions of credit to, or the issuance of a guarantee or letter of credit on behalf of, Silicon or other affiliates; the purchase of, or investments in, stock or other securities of Silicon or other affiliates; and the taking of such securities as collateral for loans, and the purchase of assets of Silicon or other affiliates. These restrictions prevent Silicon and such other affiliates from borrowing from Silicon Valley Bank unless the loans are secured by specified amounts of collateral. Any such secured loans and investments by Silicon Valley Bank to, or in, Silicon or to, or in, any other affiliate are limited individually, to 10% of Silicon Valley Bank's capital and surplus (as defined by federal regulations), and such secured loans and investments are limited to, in the aggregate, 20% of Silicon Valley Bank's capital and surplus (as defined by federal regulations). California law also imposes restrictions on transactions involving Silicon and other controlling persons of Silicon Valley Bank. Additional restrictions on transactions with affiliates may be imposed on Silicon Valley Bank under the prompt corrective action provisions of federal law. See "Item 1. Business—Supervision and Regulation—Prompt Corrective Action and Other Enforcement Mechanisms" for related discussion regarding restrictions on transactions with affiliates.

Prompt Corrective Action and Other Enforcement Mechanisms

        Federal banking agencies possess broad powers to take corrective and other supervisory action on an insured bank and its holding company. Federal laws require each federal banking agency to take prompt corrective action to resolve the problems of insured banks. Each federal banking agency has issued regulations defining five categories in which an insured depository institution will be placed, based on the level of its capital ratios: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.

        A bank that, based upon its capital levels, is classified as well capitalized, adequately capitalized or undercapitalized may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment. At each successive lower-capital category, an insured bank is subject to more restrictions, including restrictions on the bank's activities, operational practices or the ability to pay dividends. The federal banking agencies, however, may not treat an institution as critically undercapitalized unless its capital ratios actually warrant such treatment.

        In addition to measures taken under the prompt corrective action provisions, bank holding companies and insured banks may be subject to potential enforcement actions by the federal regulators for unsafe or unsound practices in conducting their businesses, or for violation of any law, rule, regulation, condition imposed in writing by the agency, or term of a written agreement with the agency. Enforcement actions may include the appointment of a conservator or receiver for the bank; the issuance of a cease and desist order that can be judicially enforced; the termination of the bank's deposit insurance; the imposition of civil monetary penalties; the issuance of directives to increase capital; the issuance of formal and informal agreements; the issuance of removal and prohibition orders against officers, directors, and other institution-affiliated parties; and the enforcement of such actions through injunctions or restraining orders based upon a judicial determination that the agency would be harmed if such equitable relief was not granted.

Safety and Soundness Guidelines

        The federal banking agencies have adopted guidelines to assist in identifying and addressing potential safety and soundness concerns before capital becomes impaired. The guidelines establish operational and managerial standards relating to: (i) internal controls, information systems, and internal audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) asset growth; and (v) compensation, fees, and benefits. In addition, the federal banking agencies have adopted safety and soundness guidelines for asset quality and for evaluating and monitoring earnings to ensure that earnings are sufficient for the maintenance of adequate capital and reserves.

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Premiums for Deposit Insurance

        Silicon Valley Bank's deposit accounts are insured by the Bank Insurance Fund, as administered by the Federal Deposit Insurance Corporation, up to the maximum permitted by law. The Federal Deposit Insurance Corporation's annual assessment for the insurance of Bank Insurance Fund deposits as of December 31, 2001, ranged from 0 to 27 basis points per $100 of insured deposits. The amount charged is based on the regulatory capital of an institution and on a supervisory assessment of its operational risk profile. At December 31, 2001, Silicon Valley Bank's assessment rate was the statutory minimum assessment.

        Silicon Valley Bank is also required to pay an annual assessment of approximately 1.8 basis points per $100 of insured deposits toward the retirement of U.S.-government-issued Financing Corporation bonds.

Interstate Banking and Branching

        Bank holding companies from any state may generally acquire banks and bank holding companies located in any other state, subject to nationwide and state-imposed deposit concentration limits and limits on the acquisition of recently established banks. Banks also have the ability, subject to specific restrictions, to acquire by acquisition or merger branches located outside their home state. The establishment of new interstate branches is also possible in those states with laws that expressly permit it. Interstate branches are subject to many of the laws of the states in which they are located.

Community Reinvestment Act and Fair Lending

        Silicon Valley Bank is subject to a variety of fair lending laws and reporting obligations involving home mortgage lending operations and the Community Reinvestment Act, or CRA, activities. The CRA generally requires the federal banking agencies to evaluate the record of a bank in meeting the credit needs of its local communities, including low-to moderate-income neighborhoods. A bank can become subject to substantial penalties and corrective measures for a violation of certain fair lending laws. The federal banking agencies may take compliance with such laws and CRA obligations into account when regulating and supervising other activities or assessing whether to approve certain applications. In April 2001, the Federal Reserve Board rated Silicon Valley Bank "satisfactory" in complying with its CRA obligations.

Regulation of Alliant Partners

        Our subsidiary Alliant Partners is registered as a broker-dealer with the SEC and as such is subject to regulation by the SEC and by self-regulatory organizations, such as the National Association of Securities Dealers, Inc. (NASD).

        Alliant Partners is subject to Rule 15c3-1 under the Securities Exchange Act of 1934 (the "Exchange Act"), which is designed to measure the general financial condition and liquidity of a broker-dealer. Under this rule, Alliant Partners is required to maintain the minimum net capital deemed necessary to meet broker-dealers' continuing commitments to customers and others. Under certain circumstances, this rule could limit the ability of Silicon Valley Bancshares and Silicon Valley Bank to withdraw capital from Alliant Partners.

        As a broker-dealer, Alliant Partners is also subject to other regulations covering the operations of its business, including sales and trading practices; use of client funds and securities; and conduct of directors, officers, and employees. Broker-dealers are also subject to regulation by state securities administrators in the states where they do business. Violations of the stringent regulations governing the actions of a broker-dealer can result in the revocation of broker-dealer licenses; the imposition of censures or fines; the issuance of cease and desist orders; and the suspension or expulsion from the securities business of a firm, its officers, or its employees. The SEC and the national securities exchange emphasize in particular the need for supervision and control by broker-dealers of their employees.

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ITEM 2. PROPERTIES

        In 1995, we relocated our corporate headquarters and main branch and entered into a 10-year lease on a two-story office building located at 3003 Tasman Drive, Santa Clara, California. In July 1997 and June 2000, we finalized amendments to the original lease associated with our corporate headquarters. The amendments provide for the lease of two additional premises, approximating 56,000 square feet each, adjacent to the existing headquarters facility. We began occupying the first of these additional premises in August 1998 and the second in December 2000.

        We currently operate 27 regional offices. The Bank operates throughout the Silicon Valley in Fremont, Santa Clara, Palo Alto, and on Sand Hill Road, which is the center of the venture capital community in California. Other regional offices in California include: Irvine, Los Angeles, Napa Valley, San Diego, San Francisco, Santa Barbara, and Sonoma. Office locations outside of California include: Phoenix, Arizona; Boulder, Colorado; West Palm Beach, Florida; Atlanta, Georgia; Chicago, Illinois; Boston, Massachusetts; Minneapolis, Minnesota; New York, New York; Durham, North Carolina; Portland, Oregon; Philadelphia, Pennsylvania; Austin, Texas; Dallas, Texas; Northern Virginia; and Seattle, Washington. All of our properties are occupied under leases, which expire at various dates through October 2008, and in most instances include options to renew or extend at market rates and terms. We also own leasehold improvements, equipment, furniture, and fixtures at our offices, all of which are used in our business activities.

ITEM 3. LEGAL PROCEEDINGS

        There were no legal proceedings requiring disclosure pursuant to this item pending at December 31, 2001, or at the date of this report.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were submitted to a vote by the stockholders of Silicon's common stock during the fourth quarter of 2001.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

        Our common stock is traded over the counter on the National Association of Securities Dealers Automated Quotation (Nasdaq) national market under the symbol "SIVB."

        The following table shows the high and low sales prices for our common stock for each quarterly period during the last two years, based on the daily closing price as reported by the Nasdaq National Market. The 2000 stock prices have been restated to reflect a two-for-one stock split distributed on May 15, 2000.

Stockholders

        There were 912 registered holders of stock as of December 31, 2001. Additionally, we believe there were approximately 9,340 beneficial holders of our common stock whose shares are held in the name of brokerage firms or other financial institutions. We are not provided with the number or identities of all of these stockholders, but have estimated the number of such stockholders from the number of stockholder documents requested by these firms for distribution to their customers.

Dividends

        We have not paid cash dividends on our common stock since 1992 and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Our ability to pay cash dividends is limited by generally applicable corporate and banking laws and regulations. See "Item 1. Business—Supervision and Regulation—Restrictions on Dividends," and "Item 8. Consolidated Financial Statements and Supplementary Data—Note 20 to the Consolidated Financial Statements—Regulatory Matters" for additional discussion on restrictions and limitations on the payment of dividends.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

        The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and supplementary data as presented in Item 8 of this report. Certain reclassifications have been made to our prior years results to conform to 2001 presentations. Such reclassifications had no effect on the results of operations or stockholders' equity. In addition, the common stock summary information has been restated to reflect two-for-one stock splits distributed on May 1, 1998 and May 15, 2000.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following management discussion and analysis of financial condition and results of operations in conjunction with our consolidated financial statements and supplementary data as presented in Item 8 of this report. This discussion and analysis includes "forward-looking statements" as that term is used in the securities laws. All statements regarding our expected financial position, business and strategies are forward-looking statements. In addition, in this discussion and analysis, the words "anticipates," "believes," "estimates," "seeks," "expects," "plans," "intends," and similar expressions, as they relate to Silicon Valley Bancshares or our management, are intended to identify forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, and have based these expectations on our beliefs as well as our assumptions, such expectations may prove to be incorrect.

        For information with respect to factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see the section titled "Risk Factors" at the end of this section. We urge investors to consider these factors carefully in evaluating the forward-looking statements contained in this discussion and analysis. All subsequent written or oral forward-looking statements attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this filing are made only as of the date of this filing. We do not intend, and undertake no obligation, to update these forward-looking statements.

        Certain reclassifications have been made to our prior years' results to conform to 2001 presentations. Such reclassifications had no effect on our results of operations or stockholders' equity.

Critical Accounting Policies

Marketable and Non-Marketable Warrant, Equity and Venture Capital Fund Investment Securities

        Marketable warrant, equity and venture capital fund investment securities are classified as available-for-sale and are accounted for at fair value. Unrealized gains or losses on marketable warrant securities, venture capital fund investments or equity investments are recorded upon the establishment of a readily determinable fair value of the underlying security. Unrealized gains and losses on available-for-sale securities, after applicable taxes, are excluded from earnings and are reported in accumulated other comprehensive income, which is a separate component of stockholders' equity, until realized. We are typically contractually precluded from taking steps to secure the current unrealized gains associated with many of these equity instruments. Hence, the amount of income we realize from these equity instruments in future periods may vary materially from the current unrealized amount due to fluctuations in the market prices of the underlying common stock of these companies.

        We record non-marketable warrant securities, venture capital fund investments and other private equity investments, on a cost basis less any identified impairment. The asset value of non-marketable equity securities is reduced when declines in value are considered to be other than temporary. Any estimated loss is recorded in noninterest income as a loss from equity securities along with income recognized on similar assets, if any. Venture capital fund limited partner investment interests are reported under the cost method as our interests are considered minor, in that we own less than 5%, and have no influence over the related venture capital fund's operating and financial policies. Our cost in these venture capital fund investments is reduced by distributions until fully recovered. Distributions in excess of the venture capital fund limited partner investment cost are recognized as investment gains in noninterest income.

        Investments held by Silicon Valley BancVentures, L.P. are recorded using investment accounting rules and consist of stock in private companies that are not traded in a public market and are subject to restrictions on resale. These investments are carried at estimated fair value determined by the general partner after giving consideration to operating results, financial conditions, recent sales, prices of issuers' securities and other pertinent information. The general partner, Silicon Valley BancVentures, Inc. is controlled by Silicon Valley Bancshares. Any gains or losses resulting from changes in the estimated fair value of the investments are recorded as investment gains or losses on our

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consolidated statements of income. Because of the inherent uncertainty of valuations, however, those estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. Silicon Valley BancVentures, L.P. may also have risk associated with its concentration of investments in certain geographic areas and certain industries.

        The investments in limited partnerships, held by SVB Strategic Investors Fund, L.P., are recorded using investment accounting rules, calculated as the percentage of its interest in the total fair market value of the partnerships. These partnerships are venture capital partnerships that hold investments in publicly traded securities. These stocks may be subject to selling restrictions and limitations or held in escrow. These stocks were valued by the general partners of these partnerships and may be discounted from market prices. These venture capital partnerships also hold investments which are not currently traded in a public market and are subject to restrictions on resale. These investments are carried by the venture capital partnerships at estimated fair value as determined by the general partner after giving consideration to operating results, financial conditions, recent sales, prices of issuers' securities, and other pertinent information. Any gains or losses resulting from changes in the estimated fair value of the investments are recorded as investment gains or losses on our consolidated statements of income. The general partner of SVB Strategic Investors Fund, L.P., SVB Strategic Investors, LLC is controlled by Silicon Valley Bancshares. SVB Strategic Investors, LLC generally utilizes the valuations assigned to the venture capital fund investments by their general partners. Because of the uncertainty of valuations, however, these estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. The partnerships may also have risk associated with its concentration of investments in certain geographic areas and certain industries.

        We consider our marketable and non-marketable warrant, equity and venture capital fund investment securities accounting policies to be critical, as the timing and amount of income, if any, from these instruments, typically depend upon factors beyond our control. These factors include the general condition of the public equity markets, levels of mergers and acquisitions activity, and legal and contractual restrictions on our ability to sell the underlying securities. Therefore, we cannot predict future gains with any degree of accuracy and any gains are likely to vary materially from period to period. In addition, our investments in marketable or non-marketable venture capital funds and equity investment securities could lose value or become worthless which would reduce our net income or could cause a net loss in any period. For example, in 2001 we wrote-down the gross value of our venture capital fund and equity investment securities, excluding the impact of minority interest-owned investments, by $7.4 million. Furthermore, we may not be able to realize gains from marketable warrant securities in future periods, or our realized gains may be materially less than the current level of unrealized gains disclosed in this filing, due to changes in investor demand for initial public offerings and fluctuations in the market prices of the underlying common stock of these companies.

Allowance for Loan Losses

        We define credit risk as the possibility of sustaining a loss because other parties to the financial instrument fail to perform in accordance with the terms of the contract. Through the administration of loan policies and monitoring of the loan portfolio, our management seeks to reduce such credit risks. While we follow underwriting and credit monitoring procedures which we believe are appropriate in growing and managing the loan portfolio, in the event of nonperformance by these other parties, our potential exposure to credit losses could significantly affect our consolidated financial position and earnings.

        We consider our accounting policies related to our allowance for loan losses to be critical as it involves material estimates by our management and is particularly susceptible to possible change in the near term. The process of anticipating loan losses is imprecise. An estimate of possible changes or range of possible changes cannot be made. Our management applies the following evaluation process to our loan portfolio to estimate the required allowance for loan losses.

        We maintain a systematic process to evaluate individual loans for inherent risk of loan losses. The process segregates risk of loan losses, primarily through an internal risk rating methodology. This evaluation includes, but is not limited to, such factors as payment status, the financial condition of the borrower, borrower compliance with loan

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covenants, underlying collateral values, potential loan concentrations, and general economic conditions. Our policies require that certain credit relationships, exceeding specific dollar values, be reviewed by a committee of senior management, at least quarterly. Our review process evaluates the appropriateness of the risk rating and allocation of allowance for loan losses, as well as other account management functions. In addition, our management receives and approves an analysis for all impaired loans, as defined by the Statement of Financial Accounting Standards (SFAS) No. 114 "Accounting by Creditors for Impairment of a Loan." The allowance for loan losses is allocated based on a formula allocation for similarly risk-rated loans, or for specific risk issues, which suggest a probable loss factor exceeding the formula allocation for a specific loan, or for individual impaired loans as determined by SFAS No. 114. At our management's discretion judgmental allowance for loan losses may be established for loss expectations for specific lending industry sectors, for national or international economic conditions affecting the loan portfolio, or for policy or personnel changes. The judgmental allowance is not assigned to individual loans and may fluctuate period to period based on management's perception of changing risks in the lending environment.

        Our evaluation process was designed to determine the adequacy of the allowance for loan losses. This process attempts to assess the risk of losses inherent in the loan portfolio by segregating the allowance for loan losses into three components: "specific," "loss migration" and "general." The specific component is established by allocating a portion of the allowance for loan losses to individual classified credits on the basis of specific circumstances and assessments. The loss migration component is calculated as a function of the historical loss migration experience of the internal loan credit risk rating categories. The general component, composed of allocated and unallocated portions that supplement the first two components, includes: our management's judgment of the effect of current and forecasted economic conditions on the borrowers' abilities to repay, an evaluation of the allowance for loan losses in relation to the size of the overall loan portfolio, an evaluation of the composition of, and growth trends within, the loan portfolio, consideration of the relationship of the allowance for loan losses to nonperforming loans, net charge-off trends, and other factors. While this evaluation process uses historical and other objective information, the classification of loans and the establishment of the allowance for loan losses, relies, to a great extent, on the judgment and experience of our management.

        The allowance for loan losses is established through a provision for loan losses charged to expense. Our allowance for loan loss is established for loan losses not yet recognized. At December 31, 2001, we consider our allowance for loan losses to be our best estimate using the historical loan loss experience and our perception of variables potentially leading to deviation from the historical loss experience.

        See "Item 8.—Consolidated Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Footnote 1. Significant Accounting Policies" for further disclosure of our significant accounting policies.

Results of Operations

Earnings Summary

        We reported net income in 2001 of $88.2 million, compared with net income of $159.1 million in 2000 and $52.2 million in 1999. Diluted earnings per share totaled $1.79 in 2001, compared to $3.23 in 2000 and $1.23 in 1999. Return on average equity in 2001 was 13.5%, compared with 33.3% in 2000 and 21.9% in 1999. Return on average assets in 2001 was 2.0% compared with 3.1% in 2000 and 1.3% in 1999.

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        The decrease in net income for 2001, as compared to 2000, resulted primarily from a decline in both net interest income and noninterest income, partially offset by decreases in the provision for loan losses and in noninterest expense. The increase in net income for 2000 as compared to 1999, was primarily attributable to growth in both net interest income and noninterest income, partially offset by increases in the provision for loan losses and in noninterest expense. The major components of net income and changes in these components are summarized in the following table for the years ended December 31, 2001, 2000, and 1999, and are discussed in more detail on the following pages.

Net Interest Income and Margin

        Net interest income is defined as the difference between interest earned, primarily on loans, federal funds sold, securities purchased under agreement to resell, and interest paid on funding sources, primarily deposits. Net interest income is our principal source of revenue. Net interest margin is defined as the amount of net interest income, on a fully taxable-equivalent basis, expressed as a percentage of average interest-earning assets. The average yield earned on interest-earning assets is the amount of taxable-equivalent interest income expressed as a percentage of average interest-earning assets. The average rate paid on funding sources is defined as interest expense as a percentage of average interest-earning assets.

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        The following table sets forth average assets, liabilities, minority interest and stockholders' equity, interest income and interest expense, average yields and rates, and the composition of our net interest margin for the years ended December 31, 2001, 2000 and 1999.

(1)

Includes average interest-bearing deposits in other financial institutions of $568, $501, and $255 in 2001, 2000, and 1999, respectively.

(2)

Interest income on nontaxable investments is presented on a fully taxable-equivalent basis using the federal income tax rate of 35% in 2001, 2000 and 1999. These adjustments were $5,815, $3,746, and $2,961 for the years ended December 31, 2001, 2000, and 1999, respectively.

(3)

Average loans include average nonaccrual loans of $21,565, $24,337, and $37,827 in 2001, 2000, and 1999, respectively.

(4)

Average loans are net of average unearned income of $7,669, $9,929, and $9,328 in 2001, 2000, and 1999, respectively.

(5)

Loan interest income includes loan fees of $37,407, $26,183, and $15,738 in 2001, 2000 and 1999, respectively.

(6)

The 8.25% annual distribution to SVB Capital I, which is the special-purpose trust formed for the purpose of issuing the trust-preferred securities, is recorded as a component of noninterest expense.

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        Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as "volume change." Net interest income is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing liabilities, referred to as "rate change." The following table sets forth changes in interest income and interest expense for each major category of interest-earning assets and interest-bearing liabilities. The table also reflects the amount of change attributable to both volume and rate changes for the years indicated. Because of the numerous simultaneous volume and rate changes during any period, it is not possible to allocate such changes between volume and rate. For this table, changes that are not solely due to either volume or rate are allocated in proportion to the percentage changes in average volume and average rate. Changes relating to investments in non-taxable municipal securities are presented on a fully taxable-equivalent basis using the federal income tax rate of 35% in 2001, 2000 and 1999.

        Net interest income, on a fully taxable-equivalent basis, totaled $268.8 million in 2001, a decrease of $64.8 million, or 19.4%, from the $333.6 million in 2000. The decrease in net interest income was attributable to an $84.4 million, or 21.6%, decline in interest income, offset by a $19.6 million, or 34.4%, decrease in interest expense over the comparable prior-year period. Net interest income, on a fully taxable-equivalent basis, totaled $333.6 million in 2000, an increase of $125.2 million, or 60.1%, compared to the $208.4 million total in 1999. The increase in net interest income was attributable to a $105.7 million, or 37.1%, increase in interest income, combined with a $19.5 million, or 25.5%, decrease in interest expense over the comparable prior year period.

        The $84.4 million decrease in interest income for 2001, as compared to 2000, was the result of a $40.2 million unfavorable volume variance, combined with a $44.2 million unfavorable rate variance. The $40.2 million unfavorable volume variance resulted from an $839.3 million, or 17.4%, decrease in average interest-earning assets over the comparable prior-year period. The decrease in average interest-earning assets resulted primarily from lower investable funds as the result of a decline in our client deposits, which decreased $990.7 million, or 21.7%, from 2000 to 2001. The decrease in average interest-earning assets was primarily concentrated in highly liquid, federal funds sold, and securities purchased under agreement to resell, which decreased $801.0 million.

        Average loans increased $76.8 million, or 4.9%, in 2001 as compared to 2000, resulting in an $8.9 million favorable volume variance. Although we continued to add high-quality loans to our portfolio throughout 2001, the current slowdown in our clients' capital markets and venture capital funding reduced those opportunities and impeded our ability to increase loan balances.

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        Average investment securities for 2001 decreased $115.1 million, or 6.0%, compared to 2000, resulting in a $6.3 million unfavorable volume variance. The decrease in investment securities was primarily centered in U.S. agency securities and resulted from a corresponding decrease in client deposits.

        Average federal funds sold and securities purchased under agreement to resell in 2001 decreased a combined $801.0 million, or 61.1%, over the prior year, resulting in a $42.8 million unfavorable volume variance. This decrease was a result of the aforementioned decline in investable funds related to the decline in our clients' average deposit balances.

        Unfavorable rate variances associated with each component of interest-earning assets combined to decrease interest income by $44.2 million in 2001, as compared to the prior year. Short-term market interest rates decreased during the past year. As a result, we earned lower yields during 2001 on federal funds sold, securities purchased under agreements to resell, and our investment securities, a significant portion of which were short-term in nature, resulting in a combined $31.0 million unfavorable rate variance as compared to the prior year. In 2001, we incurred a $13.1 million unfavorable rate variance associated with our loan portfolio. The average yield on loans in 2001 decreased 80 basis points to 11.2% from 12.0% in the prior year. Approximately 72.2% of our loan balance was prime-rated based at December 31, 2001, the majority of the remaining loan balance was fixed rate.

        The yield on average interest-earning assets decreased 60 basis points in 2001 from the prior year. This decrease primarily resulted from a decline in short-term market rates; thus, we earned lower yields on each component of our interest-earning assets.

        The $105.7 million increase in interest income for 2000, as compared to 1999, was the result of a $62.6 million favorable volume variance, combined with a $43.1 million favorable rate variance. The $62.6 million favorable volume variance resulted from a $1.0 billion, or 27.4%, increase in average interest-earning assets over the comparable prior-year period. The increase in average interest-earning assets resulted from strong growth in our average deposits, which increased $890.9 million, or 24.2%, from 1999 to 2000. The increase in average interest-earning assets was primarily centered in highly liquid, federal funds sold, securities purchased under agreement to resell, and investment securities, which collectively increased $1.0 billion.

        Average loans decreased $11.5 million, or 0.7%, in 2000 as compared to 1999, resulting in a $1.2 million unfavorable volume variance. While we increased the number of client lending relationships in most of our technology and life science industry sectors, as well as in specialized lending products, growth in our loan portfolio during 2000 had been impacted by several different factors. First, many of our clients, primarily in the technology and life science sectors, had received significant cash inflows from the capital markets and venture capital community during the early part of 2000. This increase in the amount of equity raised by our clients had mitigated their need for debt from us. Second, beginning in 1999, we began an initiative to reduce the average loan amount in our loan portfolio, and as a result, had reduced the average loan balance outstanding from approximately $0.8 million in 1999 to approximately $0.5 million by the end of 2000. This initiative was essentially complete as of the 2000 year-end. Lastly, we exited several industry-specific finance areas in 2000, such as entertainment and healthcare services, reducing loans outstanding over $100.0 million. This initiative was essentially complete as of 2000 year-end.

        Average investment securities for 2000 increased $355.8 million, or 22.6%, compared to 1999, resulting in a $21.4 million favorable volume variance. The strong growth in average deposits combined with fairly consistent average loans during 2000, generated excess funds that were largely invested in U.S. agency securities, obligations of states and political subdivisions, and money market mutual funds.

        Average federal funds sold and securities purchased under agreement to resell in 2000 increased a combined $692.6 million, or 112.0%, over 1999, resulting in a $42.4 million favorable volume variance. This increase was largely due to the aforementioned strong growth in average deposits during 2000 and our need to maintain a satisfactory level of liquidity.

        Favorable rate variances associated with each component of interest-earning assets combined to increase interest income by $43.1 million in 2000, as compared to 1999. Short-term market interest rates increased on an overall basis during 2000. As a result, we earned higher yields during 2000 on federal funds sold, securities purchased under

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agreements to resell, and our investment securities, a significant portion of which were short-term in nature, resulting in a $15.8 million favorable rate variance as compared to the prior year. The average yield on loans in 2000 increased 180 basis points from the respective prior year, accounting for the remaining $27.3 million of the total favorable rate variance. This decrease was primarily attributable to a 124 basis points increase in our weighted average prime rate in 2000 as compared to the similar prior-year period. Approximately 77.5% of our loan balance was prime rate-based at the end of 2000.

        The yield on average interest-earning assets increased 60 basis points in 2000 from 1999. This increase primarily resulted from a rise in the average yield on loans, largely due to an increase in our average prime rate, as well as an increase in short-term market rates, which resulted in higher yields on federal funds sold, and securities purchased under agreement to resell.

        Total interest expense in 2001 decreased $19.6 million from 2000. This decrease was due to a favorable rate variance of $17.0 million, combined with a favorable volume variance of $2.5 million. The favorable rate variance largely resulted from a reduction, between 2000 and 2001 in the average rate paid on our bonus money market deposit product from 2.0% to 1.2%, and from 4.1% to 3.1% on our time-deposit product.

        The average cost of funds paid on average interest-bearing liabilities in 2001 was 2.0%, down from 2.5% in 2000. This decrease in the average cost of funds was largely due to a decrease of 80 basis points in the average rate paid on our bonus money market deposit product and a 100 basis point decrease on the average rate paid on our time-deposit product.

        Interest expense in 2000 decreased $19.5 million from 1999. This decrease was due to a favorable rate variance of $19.9 million, offset by an unfavorable volume variance of $0.4 million. The favorable rate variance largely resulted from a reduction in the average rate paid on our bonus money market deposit product, from 3.1% in 1999 to 2.0% in 2000. We took this action during the last half of 1999 in order to lower total deposits and total assets and thereby increase our Tier 1 leverage capital ratio. As a result, the average bonus money market account balance decreased more than $600.0 million from 1999 to 2000. However, this decrease was partially offset by an increase in average time deposits, which was related to cash-securing letters of credit issued on behalf of our clients.

        The average cost of funds paid on average interest-bearing liabilities decreased 60 basis points from 1999 to 2000. This decrease in the average cost of funds was largely due to a decrease of 110 basis points in the average rate paid on our bonus money market deposit product.

Provision for Loan Losses

        The provision for loan losses is based on our evaluation of the adequacy of the existing allowance for loan losses in relation to total loans and on our periodic assessment of the inherent and identified risk dynamics of the loan portfolio resulting from reviews of selected individual loans and loan commitments.

        Our provision for loan losses totaled $16.7 million in 2001 compared to $54.6 million in 2000 and $52.4 million in 1999. The decrease in our provision for loan losses in 2001 was principally in response to the decrease in net charge-offs. We incurred net charge-offs of $18.1 million in 2001, compared to $52.6 million in 2000, and $26.6 million in 1999. For a more detailed discussion of credit quality and the allowance for loan losses, see "Item 7. Critical Accounting Policies" and "Item 7. Financial Condition—Credit Quality and the Allowance for Loan Losses."

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Noninterest Income

        The following table summarizes the components of noninterest income for the past three years.

        Noninterest income decreased $118.8 million, or 62.6%, in 2001 compared to 2000. This decrease was largely due to a $77.8 million decrease in income from the disposition of client warrants, combined with a $49.4 million decline in investment (losses) gains. Noninterest income increased $130.8 million, or 222.2%, in 2000 as compared to 1999. This increase was largely due to a $53.3 million increase in income from the disposition of client warrants, coupled with a $36.0 million increase in investment gains and a $31.3 million increase in client investment fees.

        Client investment fees totaled $41.6 million in 2001 compared to $35.8 million in 2000 and $4.5 million in 1999. We offer private label investment products to clients on which we earn fees ranging from 11 to 107 basis points on the average balance of these products. At December 31, 2001, $9.3 billion in client funds were invested in these private label investment products, including $7.4 billion in the mutual fund products, as compared to $10.8 billion and $7.1 billion, respectively, for 2000. The increase in client investment fees of $5.8 million reflects an increase in sales fees.

        Letter of credit fees, foreign exchange fees, and other trade finance income totaled $12.7 million in 2001, a decrease of $5.9 million, or 31.9%, from the $18.6 million total in 2000, and a decrease of $1.4 million, or 9.8%, from the $14.0 million total in 1999. These decreases reflect a reduction in the volume of client foreign exchange transactions during 2001 versus the comparable prior-year periods.

        Income from the disposition of client warrants totaled $8.5 million in 2001, compared to $86.3 million in 2000 and $33.0 million in 1999. We have historically obtained rights to acquire stock, in the form of warrants, in certain clients, primarily as part of negotiated credit facilities. The receipt of warrants does not change the loan covenants or other collateral control techniques we employ to mitigate the risk of a loan becoming nonperforming. The collateral requirements on loans with warrants are similar to lending arrangements where warrants are not obtained. The timing and amount of income from the disposition of client warrants typically depends upon factors beyond our control, including the general condition of the public equity markets as well as the merger and acquisition environment. We therefore cannot predict the timing and amount of income with any degree of accuracy and it is likely to vary materially from period to period.

        Deposit service charges totaled $6.2 million in 2001, an increase of $2.9 million, or 85.7%, compared to the $3.3 million reported in 2000, and an increase of $3.4 million, or 124.2% from the $2.8 million in 1999. Clients compensate us for depository services either through earnings credits computed on their demand deposit balances, or via explicit payments recognized as deposit service charges income. Clients earned lower credits in 2001 compared to 2000 due to lower average client deposit balances and lower market interest rates. As such, our clients had fewer credits to offset explicit deposit service charges. Thus, we earned higher explicit deposit service charges in 2001, as compared to 2000 and 1999.

        We incurred $12.4 million in losses on investment securities in 2001, compared to gains of $37.1 in 2000 and gains of $1.1 million in 1999. The 2001 losses primarily related to write-down of certain venture capital fund and direct equity investments. The 2001 net investment losses include $5.8 million related to minority interest losses in

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SVB Strategic Investors Fund, L.P. and Silicon Valley BancVentures, L.P. The 2000 gains primarily related to a gain of $26.2 million realized on the sale of a venture capital fund investment, which completed its initial public offering in 1999. The 1999 gains primarily related to distributions received from venture capital fund investments. All sales of available-for-sale investment securities were conducted as a normal component of our asset/liability and liquidity management activities.

        Other noninterest income largely consisted of service-based fee income, and totaled $14.3 million in 2001 compared to $8.5 million in 2000 and $3.5 million in 1999. The increase in 2001, as compared to 2000 and 1999, was primarily due to increases of $1.6 million in venture capital fund management fees and $1.1 million in corporate finance fees. Additionally, we earned a higher volume of cash management and loan documentation services fees related to our growing client base.

Noninterest Expense

        Noninterest expense in 2001 totaled $183.5 million, a $14.9 million, or 7.5%, decrease from 2000. Total noninterest expense was $198.4 million in 2000, an increase of $72.7 million, or 57.9%, from 1999. We closely monitor our level of noninterest expense using a variety of financial ratios, including the efficiency ratio. The efficiency ratio is calculated by dividing the amount of adjusted noninterest expense by adjusted revenues. Noninterest expense is adjusted to exclude amortization of investments in tax credit funds and, costs associate with other real estate owned, minority interest and retention and warrant incentive plans. Revenues are adjusted to exclude income associated with minority interest, the disposition of client warrants and gains or losses related to investment securities. This ratio reflects the level of operating expense required to generate $1 of operating revenue. Our efficiency ratio was 52.5% for 2001, compared to 45.6% and 53.5% in 2000 and 1999, respectively.

        The table on the following page presents the detail of noninterest expense and the incremental contribution of each expense line item to our efficiency ratio.

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        Compensation and benefits expenses totaled $89.1 million in 2001, a $17.3 million, or 16.3%, decrease from the $106.4 million incurred in 2000. The decrease in compensation and benefits expenses was largely the result of a decrease in performance-based compensation associated with our incentive bonuses and employee stock ownership plan. Average FTE personnel increased from 830 in 2000 to 970 in 2001. Compensation and benefits expenses totaled $106.4 million in 2000, a $32.6 million, or 44.2%, increase over the $73.8 million incurred in 1999. This increase was largely the result of an increase in the number of average full-time equivalent personnel (FTE) we employed in 2000, combined with an increase in performance-based compensation associated with our incentive bonuses and employee stock ownership plan. Average FTE personnel increased from 645 in 1999 to 830 in 2000. The increase in FTE personnel from 1999 through 2001 was primarily due to a combination of our efforts to develop and support new markets through geographic expansion; to develop and expand products, services, and industry sectors; and to build an infrastructure sufficient to support present and prospective business activities. We are continuing our specific measures to control FTE personnel during 2002 due to the current economic slowdown in our marketplace.

        Professional services expenses, which consist of costs associated with corporate legal services, litigation settlements, accounting and auditing services, consulting, and our board of directors totaled $24.5 million in 2001, a $3.7 million, or 17.8%, increase from the $20.8 million total in 2000. We incurred $11.8 million in professional services expenses in 1999. The increase in professional services expenses in 2001, compared to 2000, reflects the extensive efforts we have undertaken to continue to build and support our infrastructure, as well as evaluate and pursue new business opportunities. The increasing trend in professional services expenses during the past three years also reflects our efforts in outsourcing several corporate functions, such as internal audit, facilities management and credit review, where we believe we can achieve a combination of cost savings and increased quality of service. The increase in professional services in 2000 as compared to 1999, primarily related to an increase in consulting fees associated with several business initiatives.

        Occupancy, furniture, and equipment expenses totaled $30.1 million in 2001, $21.4 million in 2000, and $12.9 million in 1999. The increase in occupancy, furniture, and equipment expenses in 2001 as compared to 2000, was primarily the result of an increase in personnel as well as the addition of new regional offices in Northern California. The increase in occupancy, furniture and equipment expenses in 2000 as compared to 1999, was primarily attributable to certain nonrecurring costs in connection with the expansion of our existing corporate headquarters facility during the fourth quarter of 2000, the addition of new regional offices, and an increase in recurring expenses associated with our additional office space.

        Business development and travel expenses totaled $10.2 million in 2001, a decrease of $1.0 million, or 9.2%, compared to the $11.2 million total in 2000. We incurred $6.6 million in business development and travel expenses in 1999. The decrease in costs associated with business development, and travel expense in 2001 as compared to 2000, was primarily due to our efforts to control noninterest expense. The increase in business development and travel expense in 2000, compared to 1999, was largely attributable to overall growth in our business, including both an increase in the number of FTE personnel and expansion into new geographic markets.

        Total telephone expenses were $4.3 million in 2001, $2.8 million in 2000, and $1.8 million in 1999. Postage and supplies expenses totaled $4.0 million, $3.5 million, and $2.6 million in 2001, 2000, and 1999, respectively. The increase in both telephone expenses and postage and supplies expenses during each of the past two years resulted from overall growth in our business, including both an increase in the number of FTE personnel and expansion into new geographic markets.

        Trust preferred securities distributions totaled $3.3 million in 2001, 2000, and 1999. These amounts resulted from the issuance of $40.0 million in cumulative trust preferred securities during the second quarter of 1998. The trust preferred securities pay a fixed rate quarterly distribution of 8.25% and have a maximum maturity of 30 years.

        Advertising and promotion expenses totaled $3.1 million, $3.4 million, and $2.3 million in 2001, 2000 and 1999, respectively. The decrease in advertising and promotion expenses during 2001 was primarily the result of our effort to control noninterest expense. The increase in advertising and promotion expenses during 2000 reflected our efforts to increase our marketing nationwide.

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        Retention and warrant incentive plans expense totaled $1.5 million in 2001, $17.3 million in 2000, and $2.1 million in 1999. Under the provisions of the retention and warrant incentive plans, employees are compensated with a fixed percentage of gains realized on warrant and certain venture capital fund and direct equity investments. The decrease in retention and warrant plans expense was directly related to the decline in warrant, venture capital fund, and direct equity investment gains over the comparable 2000 and 1999 periods.

        Other noninterest expenses, excluding the affect of tax credit fund investment amortization, totaled $10.7 million in 2001 and $8.2 million in 2000 and 1999. The increase in other noninterest expenses in 2001, compared to 2000 and 1999, was primarily attributable to higher insurance and data processing costs in 2001 as compared to 2000 and 1999, primarily due to the overall growth in our business.

Income Taxes

        Our effective income tax rate was 37.5% in 2001, compared to 40.4% in 2000 and 39.5% in 1999. The change in our effective income tax rate from 2000 to 2001 was primarily due to an increase in items giving rise to permanent tax benefits. The increase in tax rate from 1999 to 2000 was principally attributable to changes in our multi-state income tax rate.

Minority Interests

        The minority interest limited partner's share of losses related to SVB Strategic Investors Fund, L.P. and Silicon Valley BancVentures, L.P. increased by a total of $7.1 million between 2000 and 2001. The increase in minority interest limited partner losses was primarily due to a write-down of minority interest-owned investments of $5.8 million. The remaining increase in minority interest limited partner losses primarily related to fund management fees associated with SVB Strategic Investors Fund, L.P. and Silicon Valley BancVentures, L.P.

Financial Condition

        Assets totaled $4.2 billion at December 31, 2001, a decrease of $1.5 billion, or 25.9% compared to $5.6 billion at December 31, 2000, primarily concentrated in a $1.2 billion decrease in federal funds sold and securities purchased under agreement to resell.

Federal Funds Sold and Securities Purchased under Agreement to Resell

        Federal funds sold and securities purchased under agreement to resell totaled a combined $212.2 million at December 31, 2001, a decrease of $1.2 billion, or 84.7%, compared to the $1.4 billion outstanding at the prior year end. This decrease was attributable to reduced investible funds as a result of a decline in our clients' deposit balances during 2001.

Investment Securities

        For a description of the accounting policies related to investment securities, see Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Item 8. Note 1 to the Consolidated Financial Statements—Significant Accounting Policies—Investment Securities.

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        The following table details the composition of investment securities, which were classified as available-for-sale and reported at fair value, except for nonmarketable Federal Reserve Bank stock and tax credit funds, venture capital fund investments, and other private equity investments, which were reported on a cost basis less any identified impairment, at December 31, 2001, 2000, and 1999.