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Is Beat in Store for SVB Financial (SIVB) in Q2 Earnings?

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SVB Financial Group (SIVB - Free Report) is scheduled to report second-quarter 2021 results on Jul 22, after market close. The company largely caters to the start-up, venture capital and private equity community. Demand for loan from such niche sectors continued to improve during the quarter.

Though overall lending scenario remained subdued during the to-be-reported quarter, the company is expected to have witnessed sizeable growth in loan balance. The Zacks Consensus Estimate for average total interest-earning assets of $137.7 billion suggests a 16.7% jump from the prior quarter’s reported number.

Despite near-zero interest rates and flattening of the yield curve, SVB Financial’s net interest income (NII) is likely to have increased in the to-be-reported quarter given the solid loan demand from niche sectors. The consensus estimate for NII (on tax equivalent basis) is pegged at $742 million, which implies growth of 11.6% sequentially.

Other Factors at Play

Non-Interest Income: As deposit balance continues to rise, deposit service charges are expected to have increased. The consensus estimate for the same is pegged at $25.85 million, indicating a 2.8% rise on a sequential basis.

As consumer confidence improved in the second quarter and individuals received stimulus checks, there was an improvement in credit card loans. Thus, the Zacks Consensus Estimate for credit card fee of $28.6 million indicates a rise of 3.7%.

The Zacks Consensus Estimate for client investment fees of $21 million suggests 4.6% improvement from the previous quarter’s reported figure.

However, the consensus estimate for lending-related fees of $15.4 million indicates a 1.7% fall from the prior quarter. The Zacks Consensus Estimate for foreign exchange fees is pegged at $57 million, on par with the prior-quarter level.

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 $161 million reflects a rise of 1.3% sequentially.

The Zacks Consensus Estimate for investment banking fees of $108 million suggests 23.9% plunge sequentially. The consensus estimate for commission of $20.8 million indicates a 14.9% decline from the prior quarter.

Therefore, the consensus estimate for total non-interest income of $397 million reflects a 46.6% decrease.

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 second-quarter 2021.

However, the Zacks Consensus Estimate for total non-performing assets of $156 million suggests a jump of 62.5% sequentially. The consensus estimate for total non-performing loans of $139 million suggests a rise of 46.3%.

Key Development During the Quarter

In late June, SVB Financial completed the previously announced $900-million deal to acquire Boston Private Financial Holdings, Inc., which pioneers in providing streamlined wealth management, trust, and banking services to households, individuals, businesses and non-profits.     

The acquisition, announced in January, has accentuated SVB Financial’s commitment to its wealth management business, as it will be better competent to impart the guidance and solutions to increase opportunities for its clients in the long term. The adoption of Boston Private’s digital platforms will accelerate the company’s technology development.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for SVB Financial this time around. The combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — increases the odds of an earnings beat. This is the case here.

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 +0.34%.

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

SVB Financial Group Price and EPS Surprise

SVB Financial Group Price and EPS Surprise

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

The Zacks Consensus Estimate for earnings of $6.48 per share has moved 2% upward over the past 30 days. The figure indicates a year-over-year improvement of 46.6%. The consensus estimate for sales of $1.08 billion suggests growth of 22.9%.


Other Banks to Consider

Here are few other bank stocks that you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases.

BankUnited (BKU - Free Report) is scheduled to release earnings on Jul 22. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +3.07%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank OZK (OZK - Free Report) is slated to report quarterly results on Jul 22. The company currently has an Earnings ESP of +7.68% and a Zacks Rank of 2.

Regions Financial (RF - Free Report) is slated to report quarterly results on Jul 23. The company has an Earnings ESP of +1.96% and a Zacks Rank of 3, currently.

In-Depth Zacks Research for the Tickers Above

Choose a ticker to receive a FREE report - normally $25 each:

Regions Financial Corporation (RF) - free report >>

BankUnited, Inc. (BKU) - free report >>

SVB Financial Group (SIVB) - free report >>

Bank OZK (OZK) - free report >>

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