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10 Big Banks With Solid Revenue

3. SVB Financial Group

Shares of SVB Financial Group (SIVB) of Santa Clara, Calif., closed at $60.54 Monday, returning 14% year-to-date.

The company's main subsidiary is Silicon Valley Bank, and as the name would imply, the bank specializes in lending to technology companies. Reuters reported in June that SVB Financial was looking to acquire banking licenses in India and China, while waiting for regulatory approval in China for its joint venture with Shanghai Pudong Development Bank Co. Ltd.

Second-quarter net income available to common shareholders was $65.8 million, or $1.50 a share, increasing from $21.1 million, or 50 cents a share, in the second quarter of 2010. The second-quarter provision was just $134 thousand, declining from $7.4 million a year earlier. The second-quarter results also included $71.7 million in gains on securities, which were only $4.8 million in the second quarter of 2010.

The second-quarter net interest margin was 3.13%, declining from 3.20% a year earlier. The operating ROA was 1.97%, again reflecting the securities gains.

Second-quarter Pre-provision net revenue was $61.9 million according to SNL, increasing 62% from a year earlier. Net interest income increased 23% year-over-year, to $130.5 million, as total loans grew 30% to $19.4 million as of June 30.

Following the second-quarter earnings announcement Boenning & Scattergood analyst Jason O'Donnell reiterated his "Outperform" rating for SVB Financial, with a $68 price target for the shares, saying the company's "earnings power continues to impress." The analyst expects the company's net interest margin "to expand further in 2H11 and accelerate higher in 2012 as deposit growth slows."

The shares trade for 17.4 times the 2012 consensus EPS estimate of $3.51, which is the priciest forward P/E among this group of 10 banks stocks.

Out of 15 analysts covering SVB Financial, seven rate the shares a buy, while the remaining eight analysts all have neutral ratings.
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