What's in Store for SVB Financial (SIVB) This Earnings Season?

SVB Financial Group SIVB is slated to announce first-quarter 2021 results on Apr 22, after market close. The company largely caters to the start-up, venture capital and private equity community, and demand for loan from such niche sectors continued to improve.

Thus, though overall lending scenario remained muted, the company is expected to have witnessed sizeable growth in loan balance. The Zacks Consensus Estimate for average total interest-earning assets of $113.7 billion suggests a 15.1% jump from the prior quarter’s reported number.

Also, despite near-zero interest rates, SVB Financial’s net interest income (NII) is likely to have increased in the to-be-reported quarter with support from steepening of the yield curve and solid loan demand from niche sectors. The consensus estimate for NII (on tax equivalent basis) is pegged at $647 million, which implies growth of 8.6% sequentially.

Other Key Factors at Play

Non-Interest Income: As deposit balance continues to rise, deposit service charge is expected to have increased. The consensus estimate for the same is pegged at $23.6 million, indicating a 1.6% rise on a sequential basis.

Further, as consumer confidence improved in the first quarter and individual received stimulus checks, there was an improvement in credit card loans. Thus, the Zacks Consensus Estimate for credit card fee of $26 million indicates a rise of 2.2%.

Additionally, the Zacks Consensus Estimate for client investment fees of $27 million suggests 8.2% improvement from the previous quarter’s reported figure.

However, the consensus estimate for lending-related fees of $14.1 million indicates a 28.5% plunge from the prior quarter. Also, the Zacks Consensus Estimate for foreign exchange fees of $47.3 million suggests a 7.4% decline.

Thus, the consensus estimate for core fee income (including client investment fees, foreign exchange fees, credit card fees, deposit service charges, lending-related fees and letters of credit fees) of $151 million reflects a decline of 3.2% sequentially.

In a separate filing with the Securities and Exchange Commission, based on performance through Feb 25, the company expects pre-tax net gains on investment securities and equity warrant assets to be in the range of $230-$300 million. This included the results of the company’s completed sale of all of its common shares of BigCommerce Holdings, Inc. as of Feb 16, which resulted in pre-tax gains on investment securities of nearly $43 million.

Expenses: SVB Financial has been witnessing a continued rise in overall expenses over the past several quarters because of investments in technology upgrades and hiring. Also, as the company is expanding inorganically, expenses related to these will be incurred. Thus, expenses are likely to have risen in the to-be-reported quarter.

Credit Quality: Given the gradual economic improvement following the coronavirus mayhem last year, SVB Financial is likely to have recorded a decline or reversal in provision for credit losses in first-quarter 2021.

However, the Zacks Consensus Estimate for total non-performing assets of $152 million suggests a rise of 44.8% sequentially.

What the Zacks Model Unveils

We can’t conclusively predict an earnings beat for SVB Financial this time around. This is because the stock 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 0.00%.

Zacks Rank: The company currently carries a Zacks Rank #1 (Strong Buy).

SVB Financial Group Price and EPS Surprise

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

The Zacks Consensus Estimate for earnings of $6.94 per share has moved 22.8% upward over the past 30 days. The figure indicates a year-over-year surge of 172.2%. Also, the consensus estimate for sales of $1.24 billion suggests growth of 50.3%.

Banks to Consider

Here are a few bank 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.

BankUnited BKU is scheduled to release earnings on Apr 22. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +0.64%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Associated BancCorp ASB is +0.93% and it has a Zacks Rank #3 at present. The company is slated to report quarterly numbers on Apr 22.

Prosperity Bancshares, Inc. PB is slated to report quarterly results on Apr 28. The company currently has an Earnings ESP of +2.44% and a Zacks Rank of 3.

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