We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Signature Bank (SBNY) Down 6.6% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Signature Bank (SBNY - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Signature Bank due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Signature Bank Q2 Earnings Miss on Higher Expenses & Provisions
Signature Bank reported second-quarter 2020 earnings per share of $2.21, missing the Zacks Consensus Estimate of $2.27. Also, the bottom line decreased 18.5% from the prior-year quarter’s reported tally.
Results were adversely impacted by escalating expenses and higher provisions. However, a rise in net interest margin acted as a tailwind. Also, higher loan and deposit balances display a strong capital position.
Net income for the second quarter was $117.2 million compared with the previous-year quarter’s $147.3 million. Pre-tax pre-provision earnings came in at $247.9 million, up 17.3% year over year.
Signature Bank’s total revenues decreased 18.3% from the prior-year quarter to $399.8 million. However, the top line outpaced the Zacks Consensus Estimate of $387.8 million.
Net interest income climbed 18.6% year over year to $387.1 million on rise in average interest earning assets. Further, net interest margin expanded 3 basis points to 2.77%.
Non-interest income was $12.7 million, down 25.3% year over year.
Non-interest expenses of $151.9 million flared up 15.2% from the prior-year quarter. This upsurge chiefly stemmed from rise in salaries and benefits due to massive hiring for new business initiatives.
Efficiency ratio was 38% compared with the 38.4% reported as of Jun 30, 2019. A lower ratio indicates a rise in profitability.
The company’s loans and leases, as of Jun 30, 2020, were $44.8 billion, up 10.3% sequentially. Further, total deposits rose 19% sequentially to $50.2 billion.
Credit Quality Deteriorates
The company recorded net charge-offs of $4.6 million in the June-end quarter compared with net recoveries of $3.7 million witnessed in the prior-year quarter. In addition, provision for loan and lease losses went up year over year to $93 million on coronavirus concerns.
The ratio of non-accrual loans to total loans was 0.10%, down from the 0.11% recorded in the prior-year quarter. Allowance for credit losses for loans and leases came in at $444.7 million, up 78% year over year.
Capital Ratios Deteriorates
As of Jun 30, 2020, Tier 1 risk-based capital ratio was 10.40% compared with 11.55% on Jun 30, 2019. Furthermore, total risk-based capital ratio was 12.13% compared with the prior-year quarter’s 12.79%. Tangible common equity ratio was 7.99%, down from 9.41% recorded as of Jun 30, 2019.
Return on average assets was 0.82% in the reported quarter compared with the year-earlier quarter’s 1.21%. As of Jun 30, 2020, return on average common stockholders' equity was 9.79%, down from 12.89% witnessed as of Jun 30, 2019.
Outlook
Management expects expense range in 2020 to decline from the 15% level over the next few quarters.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Signature Bank has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Signature Bank has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Signature Bank (SBNY) Down 6.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Signature Bank (SBNY - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Signature Bank due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Signature Bank Q2 Earnings Miss on Higher Expenses & Provisions
Signature Bank reported second-quarter 2020 earnings per share of $2.21, missing the Zacks Consensus Estimate of $2.27. Also, the bottom line decreased 18.5% from the prior-year quarter’s reported tally.
Results were adversely impacted by escalating expenses and higher provisions. However, a rise in net interest margin acted as a tailwind. Also, higher loan and deposit balances display a strong capital position.
Net income for the second quarter was $117.2 million compared with the previous-year quarter’s $147.3 million. Pre-tax pre-provision earnings came in at $247.9 million, up 17.3% year over year.
Revenues Fall, Loans & Deposits Increase, Expenses Escalate
Signature Bank’s total revenues decreased 18.3% from the prior-year quarter to $399.8 million. However, the top line outpaced the Zacks Consensus Estimate of $387.8 million.
Net interest income climbed 18.6% year over year to $387.1 million on rise in average interest earning assets. Further, net interest margin expanded 3 basis points to 2.77%.
Non-interest income was $12.7 million, down 25.3% year over year.
Non-interest expenses of $151.9 million flared up 15.2% from the prior-year quarter. This upsurge chiefly stemmed from rise in salaries and benefits due to massive hiring for new business initiatives.
Efficiency ratio was 38% compared with the 38.4% reported as of Jun 30, 2019. A lower ratio indicates a rise in profitability.
The company’s loans and leases, as of Jun 30, 2020, were $44.8 billion, up 10.3% sequentially. Further, total deposits rose 19% sequentially to $50.2 billion.
Credit Quality Deteriorates
The company recorded net charge-offs of $4.6 million in the June-end quarter compared with net recoveries of $3.7 million witnessed in the prior-year quarter. In addition, provision for loan and lease losses went up year over year to $93 million on coronavirus concerns.
The ratio of non-accrual loans to total loans was 0.10%, down from the 0.11% recorded in the prior-year quarter. Allowance for credit losses for loans and leases came in at $444.7 million, up 78% year over year.
Capital Ratios Deteriorates
As of Jun 30, 2020, Tier 1 risk-based capital ratio was 10.40% compared with 11.55% on Jun 30, 2019. Furthermore, total risk-based capital ratio was 12.13% compared with the prior-year quarter’s 12.79%. Tangible common equity ratio was 7.99%, down from 9.41% recorded as of Jun 30, 2019.
Return on average assets was 0.82% in the reported quarter compared with the year-earlier quarter’s 1.21%. As of Jun 30, 2020, return on average common stockholders' equity was 9.79%, down from 12.89% witnessed as of Jun 30, 2019.
Outlook
Management expects expense range in 2020 to decline from the 15% level over the next few quarters.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Signature Bank has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Signature Bank has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.