SVB Financial Group
) reported second-quarter 2014 earnings per share of $1.04,
comfortably beating the Zacks Consensus Estimate of 84 cents. This
marks the fourteenth consecutive quarter of delivering positive
earnings surprise. Results, however, came in lower than $1.06
earned in the year-ago quarter.
SVB Financial's results benefited from an increased interest income
and lower provision for loan losses, partially offset by higher
operating expenses and a fall in non-interest income. Improved
credit quality and growth in loans and deposits were among the
positives. However, capital ratios were a mixed bag and
profitability ratios deteriorated during the quarter.
Non-GAAP net income available to shareholders was $50.8 million,
reflecting a year-over-year increase of 4.5%.
Svb Financial Group - Earnings Surprise |
SVB Financial's total revenue came in at $219.20 million,
reflecting a decline of 18.3% from the prior-year quarter. Further,
it missed the Zacks Consensus Estimate of $252.0 million.
Net interest income (NII) rose 20.5% year over year to $205.0
million. However, net interest margin (NIM) decreased 61 basis
points (bps) from the prior-year quarter to 2.79%.
Non-GAAP non-interest income, net of noncontrolling interests, was
$49.5 million, reflecting a decline of 26.7% year over year.
Non-GAAP non-interest expense, net of noncontrolling interests,
rose 19.8% year over year to $168.2 million, driven by an increase
in all items.
Non-GAAP operating efficiency ratio increased to 65.97% from 59.01%
in the prior-year quarter. A fall in efficiency ratio indicates
improvement in profitability.
As of Jun 30, 2014, SVB Financial's net loans stood at $11.2
billion, up 18.2% year over year, while total deposits rose 51.7%
to $28.4 billion.
Asset quality was strong. The ratio of allowance for loan losses to
total gross loans was 1.06%, down 17 bps from the prior-year
quarter. Further, the ratio of net charge-offs to average gross
loans came in at 0.17%, down 32 bps year over year.
Provision for loan losses declined from $18.6 million in the
prior-year quarter to $1.9 million.
Profitability and Capital Ratios
SVB Financial's capital ratios were a mixed bag, while
profitability ratios deteriorated. As of Jun 30, 2014, Tier 1
risk-based capital ratio was 14.42% compared with 12.84% as of Jun
Total risk-based capital ratio came in at 15.36% versus 14.03% as
of Jun 30, 2013. Tangible equity to tangible assets ratio was 8.03%
compared with 8.34% as of Jun 30, 2013.
Non-GAAP return on average assets on an annualized basis was down
24 bps year over year to 0.64%. Non-GAAP return on average equity
came in at 8.50%, down 162 bps from the prior-year quarter.
SVB Financial boasts a history of sound growth, with consistent
improvement on the organic front.
However, increased expenses, a still low interest rate environment,
sluggish economic growth and stringent regulations are expected to
dent its profitability in the near term.
SVB Financial currently carries a Zacks Rank #3 (Hold).
Among other West banks, Westamerica Bancorp's (
) second-quarter earnings of 58 cents per share came in line with
the Zacks Consensus Estimate. Zions Bancorporation's (
) second-quarter adjusted earnings of 57 cents comfortably beat the
Zacks Consensus Estimate of 46 cents. Bank of Commerce Holdings (
) is slated to report on Jul 30.
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