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Citigroup Cuts Regional Banks

SVB Financial Group
Shares of SVB Financial Group (SIVB) of Sana Clara, Calif., closed at $56.65 Thursday, returning 19% year-to-date, following a 10% decline during 2011.

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The shares trade for 1.1 times tangible book value, according to Thomson Reuters Bank Insight, and for 15 times the consensus 2013 earnings estimate of $3.78 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $3.48.

Citigroup Analyst Josh Levin has a neutral rating for SVB Financial, and on Friday lowered his price target for the shares to $60 from $60, while leaving his 2012 EPS estimate unchanged at $3.45, and lowering his 2013 EPS estimate by 15 cents to $4.05, and his 2014 estimate by 40 cents, to $4.70.

Levin estimates that SVB Financial Group's net interest margin will increase from 3.27% this year to 3.36% in 2013 and 3.57% in 2014. However, under Citigroup's "flat rate scenario," with interest rates remaining second-quarter 2012 levels through 2014, Levin estimates that SVB Financial Group's net interest margin will increase from 3.26% this year to 3.28% in 2013 and 3.32% in 2014.

The analyst said that "SIVB has one of the most differentiated business models in banking," focusing on lending to innovative "companies in fields such as software, hardware and life sciences," and "given that these industries are enjoying growth well above the broader economy, SIVB is enjoying growth well above other regional banks."

"Despite the many positive attributes of the SIVB story," Levin said "we think it is trading close to fairly valued."

Interested in more on SVB Financial Group? See TheStreet Ratings' report card for this stock.

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