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SVB Financial (SIVB) to Report Q4 Earnings: What's in Store?

SVB Financial Group SIVB is slated to announce fourth-quarter and 2020 results on Jan 21, after market close. Notably, the overall lending scenario remained weak in the to-be-reported quarter, owing to the pandemic-related scare. While growth in commercial real estate loans was modest, commercial and industrial loans witnessed a drastic decline in the quarter. Thus, growth in total commercial loans (constituting a major part of SVB Financial’s loan portfolio) remained modest.

Nevertheless, the Zacks Consensus Estimate for average total interest-earning assets indicates growth in the quarter. The consensus estimate for the same of $89.7 billion suggests a 7.1% rise from the prior quarter. Also, despite near-zero interest rates and overall muted loan growth, SVB Financial’s net interest income (NII) is likely to have increased in the quarter. The consensus estimate for NII is pegged at $561 million, suggesting an increase of 6.3% sequentially.

Management anticipates fourth-quarter NII of $555-$570 million. This includes $10-$12 million of estimated paycheque protection program loan interest and fees, net of deferred loan origination costs.

Net interest margin is projected to be 2.45-2.55%.

Other Key Estimates for Q4

Non-Interest Income: Deposit service charge is expected to have increased, driven by a rise in deposit balances. The consensus estimate for the same is pegged at $23.7 million, indicating a 7.5% rise on a sequential basis.

However, the consensus estimate for lending-related fees is pegged at $12.2 million, indicating a 9.9% decline from the prior quarter. The Zacks Consensus Estimate for commissions of $15.2 million indicates a 6.7% decline from the previous quarter’s reported number.

Further, the Zacks Consensus Estimate for investment banking revenues of $72 million suggests a 21.7% decline from the previous quarter’s reported figure.

The consensus estimate for foreign exchange fees is pegged at $44 million, which indicates a marginal rise sequentially. Moreover, the Zacks Consensus Estimate for credit card fee of $23.7 million indicates a rise of 3.9%.

Thus, the consensus estimate for total non-interest income of $296 million suggests a decline of 46% sequentially.

Credit Quality: After having built substantial reserves in the first half of 2020 to combat the coronavirus-induced economic slowdown, SVB Financial is not expected to have recorded significantly higher provisions in the quarter.

However, the Zacks Consensus Estimate for total non-performing assets of $116 million suggests a rise of 8.4% sequentially. Further, the consensus estimate for total non-performing loans is pegged at $177 million, which indicates a jump of 67%.

What the Zacks Model Unveils

Our proven model shows that SVB Financial does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for SVB Financial is -0.49%.

Zacks Rank: The company currently carries a Zacks Rank #3.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $3.75 per share, indicating a year-over-year decline of 25.9%. The estimated figure has been unchanged over the past seven days.

The consensus estimate for sales is pegged at $869.2 million, which suggests growth of 2.6% from the prior-year quarter.

SVB Financial Group Price and EPS Surprise

 

SVB Financial Group price-eps-surprise | SVB Financial Group Quote

Stocks to Consider

Here are a few finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

The Earnings ESP for Commerce Bancshares, Inc. CBSH is +0.99% and it carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Jan 20.

BankUnited, Inc. BKU is slated to release earnings figures on Jan 21. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.46%.

Capital One Financial Corporation COF is slated to release earnings figures on Jan 26. The company currently carries a Zacks Rank #2 and has an Earnings ESP of +3.50%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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Capital One Financial Corporation (COF): Free Stock Analysis Report
 
Commerce Bancshares, Inc. (CBSH): Free Stock Analysis Report
 
BankUnited, Inc. (BKU): Free Stock Analysis Report
 
SVB Financial Group (SIVB): Free Stock Analysis Report
 
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