SVB Financial Group (SIVB) is a bank holding company based in Santa Clara, CA. Since inception, the company has assisted innovators in the technology and biotech sectors, along with their investors, explains Martin Fridson, editor of Forbes/Fridson Income Securities Investor.
The banking company is a key advisor and lender to companies in sectors such as Hardware & Frontier Technology; Software & Internet; Life Sciences & Healthcare; Energy & Resource Innovation; Private Equity & Venture Capital; and the Premium Wine Industry.
(Editor's note: Martin Fridson will be participating in the MoneyShow Virtual Event. On Tuesday, May 12th, Martin will be discussing "New Outcomes for Income". Register for FREE.)
SIVB has historically achieved strong growth, driven by the exceptional growth of its clients and their related industries. The company reported first quarter 2020 net income of $132.3 million or $2.55 per share, missing analysts’ $3.07 estimates.
Results were down sharply, due to higher loan loss provisions on top of the expected increase in realized loan losses, tied to weakening economic conditions arising from the COVID-19 pandemic.
Despite the likelihood of higher loan loss provisions and lower earnings throughout 2020, we are constructive on SVB’s outlook, given the banking company’s strong capital position and present low level of non-performing loans.
Our recommendation in the Forbes/Fridson Income Securities newsletter is for the SVB Financial Group 5.25% Fixed Rate, Non-Cumulative Perpetual (SIVBP). This issue has a par value of $25.00 and an annual cash dividend of $1.3125.
At the current price $24.82, this issue offers a current annualized yield 5.29%; the call date is 02/15/25 and the yield to call is 5.42%. Dividends on this issue are taxed at the 15%-20% rate.
This preferred is split-rated between investment grade and non-investment grade. However, senior debt ratings are investment grade by both Moody’s and S&P. As a result, we recommend this issue for low- to medium- risk taxable portfolios. Buy up to $25.50 for a 5.15% current yield and a 4.79% yield to call.
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