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January 15, 2021 | Top Picks | Ticker: SIVB

PE Ratio:  22.35

Beta: 2.15

Market Cap: $24 B

EPS:   $20.64

Silicon Valley Bank (NASDAQ: SIVB) is focused on providing loans, banking services, and venture capital to the start-up community in Northern California and other technology-forward cities in the United States.

Most banks struggle in a low-interest-rate environment. But not SVB, as it’s known in Silicon Valley. Almost half the company’s loans are the short-term variety provided to start-ups that have large amounts of venture capital backing. In fact, most of their customers are the portfolio companies of the strongest venture firms in the world - such as Sequoia Capital, Andreessen Horowitz, and Accel. These short-term loans carry much higher interest rates, and many times SVB also receives stock (in the form of warrants) as part of their financing deals. That is, they participate in equity gains when the company is sold or goes public.  

While other companies provide similar services in the Silicon Valley area such as Bank of America and First Republic, venture debt-funding is a niche area for these large institutions. Silicon Valley Bank is uniquely positioned to support the tech-forward economy of California.  

Beyond start-up banking, SVB has extended into providing private client services to the wealthy entrepreneurs who build successful companies.  

- SG

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