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NEW YORK (
SVB Financial (SIVB - Get Report) has been on a loan-growth tear, which sets the company apart during a time of major challenge for the banking industry.
JPMorgan Chase analyst Steven Alexopoulos on Tuesday said that "in the backdrop of a slowing economy and the fiscal cliff, as people and companies continue to innovate, we see SIVB as one of the few banks positioned to post strong loan growth, with a 3-year avg loan [compounded annual growth rate] of 20.3% (vs. peers at 0.3%) likely to remain intact."
That's an amazingly strong loan growth rate during a sluggish economic recovery, and "with loan growth being one of the very few remaining tools left in the industry's toolkit to combat the [net interest margin, or NIM] storm, SIVB is also well positioned from a NIM perspective," according to Alexopoulos.
SVB Financial is the holding company for
Silicon Valley Bank, which has offices in the United Kingdom, Israel, China and India, in addition to 27 offices throughout the United States.
The company focuses on lending to technology companies, providing multiple services to venture capital and private equity firms that invest in tech and biotech, and also on private banking services for high net worth individuals, in its home market in the Silicon Valley area.
SVB Financial had $21.6 billion in total assets as of Sept. 30. The company reported third-quarter net income available to common shareholders of $42.3 million, or 94 cents a share, declining from $47.6 million, or $1.06 a share, in the second quarter, but increasing from $37.6 million, or 86 cents a share, during the third quarter of 2011.
Earnings were down sequentially because SVB in the second quarter booked "pre-tax gains of $5.0 million from the sale of certain available-for-sale securities and pre-tax gains of $4.2 million from the sale of certain assets related to our equity management services business." Excluding the gains, second-quarter earnings would have been $42.1 million, or 94 cents a share.
The company's total loans grew 5% sequentially and 29% year-over-year, to $8.2 billion, as of Sept. 30.
Third-quarter net interest income was $154.4 million, increasing from $151.9 million the previous quarter, and $135.5 million, a year earlier. The net interest margin -- the difference between the average yield on loans and investments and the average cost for deposits and borrowings -- was a tax-adjusted 3.12%, narrowing from 3.22% in the second quarter, but down only slightly from 3.13% in the third quarter of 2011. The company said that the narrowing of the margin was "primarily due to a decrease in the overall yield of our loan and available-for-sale securities portfolios," and that "the decrease in yields was partially offset by growth in average loan balances, which has resulted in a favorable change in our mix of interest-earning assets."