SVB Financial Group’s first-quarter profits available to common investors rose 18% to $40.9 million, or $0.90 per diluted share, from $34.8 million, or $0.78 per diluted share, in the year-earlier first quarter. We are not changing our $55 per share fair value estimate or our narrow economic moat rating at this time.

Noninterest expense rose 13% to $149 million. Noninterest income climbed 33% year over year to $78.6 million, helped by gains on investment securities, which more than tripled to $27.4 million (though these gains were more than halved from fourth-quarter levels), and gains on derivative instruments, which gained 85% to $11 million. On a fully taxable equivalent basis, net interest income was $163.6 million, up 8% from $151.4 million.

Net interest margin (FTE) was 3.25%, compared with 3.13% and 3.30% in the fourth quarter and year-earlier first quarter, respectively, while average interest-earning assets rose 10%. Average loans rose 5% sequentially and 28% on a year-on-year basis. Nonperforming loans made up 0.50% of total gross loans, compared with 0.42% in the fourth quarter and 0.58% in 2012’s first quarter. The company continues to perform well in its niche as banker to the innovation sector of the economy, adding 438 new early stage companies as clients in the latest quarter, up from 352 a year earlier.

In our view, SVB should continue to profitably mine the many relationships in the entrepreneurial arena that it has built over the years. We expect expansion in Asia to continue to garner the bank’s attention, with its interest in the region evidenced by this week’s appointment of Chief Credit Officer David Jones as president of the bank’s operations in Asia. We were encouraged by the bank’s more-upbeat expectations for its net interest income and related margin–which came as a result of lower-than-expected prepayments on mortgagebacked securities–though we also expect challenges such as competitive pressures to remain.