2. SVB Financial
Shares of SVB Financial (SIVB) of Santa Clara, Calif., closed at $55.61 Wednesday, returning 17% year-to-date, after declining 10% during 2011.
The five-year total return for the stock was 11%, through Wednesday's close.
The shares trade for 1.4 times their reported Sept. 30 book value of $40.10, and for 15.5 times the consensus 2013 EPS estimate of $3.60 a share. The consensus 2014 EPS estimate is $3.80.
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, and 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. 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 third-quarter net interest margin was 3.12%, narrowing from 3.22% in the second quarter, but down only slightly from 3.13% in the third quarter of 2011. SVB said the margin narrowed mainly because of "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." Third-quarter noninterest income declined to $69.1 million, from $80.4 million the previous quarter, and $95.6 million a year earlier, reflecting higher gains on securities and derivatives in the prior periods. The company's total loans grew 5% sequentially and 29% year-over-year, to $8.2 billion, as of Sept. 30. SVB Financial's third-quarter return on average assets was 0.77% and its return on average common equity was 9.44%. JPMorgan Chase analyst Steven Alexopoulos on Nov. 13 pointed out 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." "With loan growth being one of the very few remaining tools left in the industry's toolkit to combat the [net interest margin] storm, SIVB is also well positioned from a NIM perspective," according to Alexopoulos. The analyst rates SVB Financial "Overweight," with a price target of $68, and estimates the company will earn $3.42 a share in 2013. "The key to SIVB's loan growth will be staying with innovation companies as they grow," Alexopoulos said. "With SIVB being one of the very few early stage lenders in the country, the company has a significant growth opportunity in staying with these companies as they become larger." SIVB data by YCharts
Interested in more on SVB Financial? See TheStreet Ratings' report card for this stock.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV