2. SVB Financial
Shares of SVB Financial (SIVB - Get Report) 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
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