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 33.9% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Signature Bank (SBNY - Free Report) . Shares have lost about 33.9% 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 Q1 Earnings Beat on Higher Revenues
Signature Bank reported first-quarter 2022 earnings per share of $5.3, beating the Zacks Consensus Estimate of $4.31. Also, the bottom line substantially increased 63.6% from the prior-year quarter’s reported number.
Increase in revenues, supported by a rise in NII, drove the results. Growth in loan and deposit balances reflects a strong balance sheet position. Decent credit quality supported the results as well. Signature Bank’s elevated expenses and weak capital position were negatives.
Net income in the quarter was $338.5 million, up from the previous-year quarter’s $190.5 million. Pre-tax pre-provision earnings came in at $414.6 million, up 52% year over year.
Total income increased 35.8% from the prior-year quarter’s level to $608 million. The top line surpassed the Zacks Consensus Estimate of $606.9 million.
NII climbed 41.4% year over year to $573.6 million on higher average interest-earning assets. However, the NIM ontracted 11 basis points (bps) to 1.98%.
Non-interest income was $34.4 million, up 5.2% from the year-ago quarter’s number. Growth in fees and service charges led to the increase, but was partially offset by a decrease in net gains on sales of securities and loans.
Non-interest expenses of $193.4 million rose 16.2%. The upsurge chiefly stemmed from the rise in salaries and benefits due to the massive hiring of private client banking teams and operational support.
The efficiency ratio was 31.8%, declining from 37.9% reported as of Mar 31, 2021. A lower ratio indicates a rise in profitability.
Loans, excluding loans held for sale, as of Mar 31, 2022, were $66.4 billion, increasing 2.4% sequentially. Total deposits rose 2.9% sequentially, to $109.2 billion.
Decent Credit Quality
Net charge-offs were $17.8 million in the March quarter, down from $17.9 million in the prior-year quarter. The allowance for credit losses for loans and leases was $461.3 million, down from $521.8 million in the prior-year quarter. Provision for credit losses declined to $2.7 million from $30.9 million in the prior-year quarter, driven primarily by improved macroeconomic conditions.
However, the ratio of non-accrual loans to total loans was 0.27%, up 1 bps year over year.
Capital Ratios Weak, Profitability Ratios Improve
As of Mar 31, 2022, Tier 1 risk-based capital ratio was 11.37%, down from 12.18% as of Mar 31, 2021. The total risk-based capital ratio was 12.58 % down from the prior-year quarter’s 14.41%.
Nonetheless, return on average total assets was 1.16% in the reported quarter, up from 0.97% in the year-earlier quarter. As of Mar 31, 2022, the return on average common stockholders' equity was 17.44%, up from 13.02% in the year-ago quarter.
Outlook
Fee income is anticipated to increase 50% in the second quarter over the prior year.
Quarterly asset growth of $4 billion-$7 billion is anticipated. Quarterly loans are expected to grow at the higher end of $1billion-$2 billion range. Quarterly securities growth is expected at the higher end of $2 billion-$4 billion range.
Management forecasts demand deposit accounts to decline in 30-35% range in 2022.
Cash balance rate as a percentage of earning assets of 10-15% is targeted in 2022.
Management expects noninterest expenses to grow 16% over the prior year in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Signature Bank has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 33.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Signature Bank (SBNY - Free Report) . Shares have lost about 33.9% 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 Q1 Earnings Beat on Higher Revenues
Signature Bank reported first-quarter 2022 earnings per share of $5.3, beating the Zacks Consensus Estimate of $4.31. Also, the bottom line substantially increased 63.6% from the prior-year quarter’s reported number.
Increase in revenues, supported by a rise in NII, drove the results. Growth in loan and deposit balances reflects a strong balance sheet position. Decent credit quality supported the results as well. Signature Bank’s elevated expenses and weak capital position were negatives.
Net income in the quarter was $338.5 million, up from the previous-year quarter’s $190.5 million. Pre-tax pre-provision earnings came in at $414.6 million, up 52% year over year.
Revenues, Loans & Deposits Rise, Expenses Increase
Total income increased 35.8% from the prior-year quarter’s level to $608 million. The top line surpassed the Zacks Consensus Estimate of $606.9 million.
NII climbed 41.4% year over year to $573.6 million on higher average interest-earning assets. However, the NIM ontracted 11 basis points (bps) to 1.98%.
Non-interest income was $34.4 million, up 5.2% from the year-ago quarter’s number. Growth in fees and service charges led to the increase, but was partially offset by a decrease in net gains on sales of securities and loans.
Non-interest expenses of $193.4 million rose 16.2%. The upsurge chiefly stemmed from the rise in salaries and benefits due to the massive hiring of private client banking teams and operational support.
The efficiency ratio was 31.8%, declining from 37.9% reported as of Mar 31, 2021. A lower ratio indicates a rise in profitability.
Loans, excluding loans held for sale, as of Mar 31, 2022, were $66.4 billion, increasing 2.4% sequentially. Total deposits rose 2.9% sequentially, to $109.2 billion.
Decent Credit Quality
Net charge-offs were $17.8 million in the March quarter, down from $17.9 million in the prior-year quarter. The allowance for credit losses for loans and leases was $461.3 million, down from $521.8 million in the prior-year quarter. Provision for credit losses declined to $2.7 million from $30.9 million in the prior-year quarter, driven primarily by improved macroeconomic conditions.
However, the ratio of non-accrual loans to total loans was 0.27%, up 1 bps year over year.
Capital Ratios Weak, Profitability Ratios Improve
As of Mar 31, 2022, Tier 1 risk-based capital ratio was 11.37%, down from 12.18% as of Mar 31, 2021. The total risk-based capital ratio was 12.58 % down from the prior-year quarter’s 14.41%.
Nonetheless, return on average total assets was 1.16% in the reported quarter, up from 0.97% in the year-earlier quarter. As of Mar 31, 2022, the return on average common stockholders' equity was 17.44%, up from 13.02% in the year-ago quarter.
Outlook
Fee income is anticipated to increase 50% in the second quarter over the prior year.
Quarterly asset growth of $4 billion-$7 billion is anticipated. Quarterly loans are expected to grow at the higher end of $1billion-$2 billion range. Quarterly securities growth is expected at the higher end of $2 billion-$4 billion range.
Management forecasts demand deposit accounts to decline in 30-35% range in 2022.
Cash balance rate as a percentage of earning assets of 10-15% is targeted in 2022.
Management expects noninterest expenses to grow 16% over the prior year in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Signature Bank has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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.