5. SVB Financial
Shares of SVB Financial (SVIB), of Santa Clara, CA are down 12% year-to-date.
The bank reported better-than-expected results for the third quarter, reporting a profit available to common shareholders of $37.6 million or 86 cents per share. In the third quarter of 2010, the bank's profit stripped of one-time gains was $23.6 million or 55 cents per share.
Pre-provision net revenue increased 23% to $51.84 million. The average loan balance increased 8% to $6 billion. The bank also managed to ward off pressure on margins by lowering its cost of deposits.Provision for loan losses increased from $0.1 million in the second quarter to $0.8 million in the third quarter on the back of increasing loans. The bank said allowance for loan losses as a percent of total loans declined to 1.25% from 1.27% in the previous quarter as credit quality improved. The bank has a bullish outlook for 2012, projecting average loan growth in the mid-teens, net interest income increase of about 10%, core fee income growth in the mid-single digits. SVB shares trade at about 13 times consensus 2012 estimates and at 1.3 times tangible book. The premium is well-deserved, according to RBC Capital, because of the "company's franchise value, superior long-term growth prospects, substantial capital base, and minimal real estate exposure." Morford has a sector perform rating on the stock with a price target of $52.
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