J.P Morgan Maintains Overweight On SVB Financial Following Earnings Release

SVB Financial SIVB reported 4Q10 EPS of $0.41 per share. After excluding several items it deems to be not reflective of operating results, it estimates operating EPS of $0.43 per share, which fell short of our $0.50 estimate and consensus of $0.52. We thought the company delivered a bit of a volatile quarter with very strong loan growth of 45% adding $9 million to NII, but a 96 bps sequential decline in taxable investment securities yields contributing to an overall 7% annualized decline in NII as very strong deposit growth reemerged. Average deposits increased 12% unannualized in the quarter. Greater than expected loan growth meant provision came in above forecast driving $0.04 of the miss and the remainder of the earnings shortfall came from expenses reported above forecast. With benefits of a steeper curve over the near-term as well as intermediate term, and the loan growth engine in high gear at SIVB, we believe the company will maintain its premium to peers which renders SIVB an outperformer based on expected upside. J.P Morgan has an OW rating and $62. PT on SIVB SIVB closed Thursday at $54.32