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Signature Bank (SBNY) Q2 Earnings Beat, Expenses Decline
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Signature Bank’s (SBNY - Free Report) second-quarter 2018 adjusted earnings per share of $2.82 surpassed the Zacks Consensus Estimate of $2.80. Also, it compares favorably with $2.21 earned in the prior-year quarter.
Shares of Signature Bank lost 5% in full day trading session post its earnings release, reflecting investors’ concern over contracting net interest margin and decline in fee income.
Nevertheless, results reflected overall growth in revenues. In addition, loan and deposit balances displayed continued improvement. Also, lower non-interest expenses and provisions acted as tailwinds.
After considering some recurring items, net income for the second quarter came in at $154.6 million or $2.83 per share compared with $14 million or 26 cents recorded in the year-ago quarter.
Revenues Rise & Expenses Fall
Signature Bank’s total revenues in the quarter rose 3.1% from the prior-year quarter to $326.6 million. However, the reported figure missed the Zacks Consensus Estimate of $334 million.
Net interest income increased 4.5% year over year to $321 million, with support from 10.4% rise in average interest earnings assets. However, net interest margin contracted 17 basis points from the year-ago quarter to 2.94%.
Non-interest income was $5.6 million, down nearly 41.2% year over year. The decline was primarily on account of an increase in tax credit investments amortization.
Non-interest expenses of $112.6.3 million were down 3.2% from the prior-year quarter. The decline was mainly driven by write-downs of $11.5 million relating to repossessed New York City taxi medallions loans.
Efficiency ratio came in at 34.5% compared with 36.7% reported as of Jun 30, 2017. A lower ratio indicates improvement in profitability.
The company’s loans and leases, net as of Jun 30, 2018 were $33.9 billion, up 4.7% from Dec 31, 2017. Further, total deposits rose 4.6% from end-2017 to $35 billion.
Credit Quality: A Mixed Bag
The ratio of net charge-offs to annualized average loans came in at 0.04% compared with 3.04% in the prior-year quarter. In addition, provision for loan and lease losses steeply declined to $8 million from the year-ago quarter tally of $187.6 million.
However, the allowance for loan losses represented 0.62% of total loans as of Jun 30, 2018, compared with 0.60% as of Jun 30, 2017.
Capital Ratios
As of Jun 30, 2018, Tier 1 risk-based capital ratio was 12.10% compared with 11.68% as of Jun 30, 2017. Also, total risk-based capital ratio came in at 13.42% compared with 13.03% in the prior-year quarter. Tangible common equity ratio was 9.10%, down from 9.26% as of Jun 30, 2017.
The return on average assets was 1.39% in the reported quarter compared with 0.14% in the prior-year quarter. As of Jun 30, 2018, return on average common stockholders' equity came in at 15.22%, up from 1.48% as of Jun 30, 2017.
Our Viewpoint
Signature Bank’s second-quarter results reflect solid capital position and robust balance sheet growth. Further, with the lifting of SIFI threshold to $250 billion, Signature Bank will enjoy space for asset growth, through its strategic plans. The company remains focused on investing in infrastructure by enhancing payments platform and credit approval system.
However, rising interest rates continue to impact net interest margin due to its liability sensitive balance sheet, and remains a major concern.
Fifth Third Bancorp (FITB - Free Report) delivered a notable positive earnings surprise of 10.5% in second-quarter 2018. Adjusted earnings per share of 63 cents surpassed the Zacks Consensus Estimate of 57 cents. However, including certain one-time items, the bottom line came in at 80 cents, surging 78% year over year.
BancorpSouth reported second-quarter 2018 operating earnings of 56 cents per share, beating the Zacks Consensus Estimate by a penny. Also, the bottom line compared favorably with the year-ago quarter earnings of 41 cents.
Reflecting top-line strength and lower provisions, U.S. Bancorp’s (USB - Free Report) second-quarter 2018 earnings per share of $1.02 outpaced the Zacks Consensus Estimate by a penny. Also, results came ahead of the prior-year quarter earnings of 85 cents.
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Signature Bank (SBNY) Q2 Earnings Beat, Expenses Decline
Signature Bank’s (SBNY - Free Report) second-quarter 2018 adjusted earnings per share of $2.82 surpassed the Zacks Consensus Estimate of $2.80. Also, it compares favorably with $2.21 earned in the prior-year quarter.
Shares of Signature Bank lost 5% in full day trading session post its earnings release, reflecting investors’ concern over contracting net interest margin and decline in fee income.
Nevertheless, results reflected overall growth in revenues. In addition, loan and deposit balances displayed continued improvement. Also, lower non-interest expenses and provisions acted as tailwinds.
After considering some recurring items, net income for the second quarter came in at $154.6 million or $2.83 per share compared with $14 million or 26 cents recorded in the year-ago quarter.
Revenues Rise & Expenses Fall
Signature Bank’s total revenues in the quarter rose 3.1% from the prior-year quarter to $326.6 million. However, the reported figure missed the Zacks Consensus Estimate of $334 million.
Net interest income increased 4.5% year over year to $321 million, with support from 10.4% rise in average interest earnings assets. However, net interest margin contracted 17 basis points from the year-ago quarter to 2.94%.
Non-interest income was $5.6 million, down nearly 41.2% year over year. The decline was primarily on account of an increase in tax credit investments amortization.
Non-interest expenses of $112.6.3 million were down 3.2% from the prior-year quarter. The decline was mainly driven by write-downs of $11.5 million relating to repossessed New York City taxi medallions loans.
Efficiency ratio came in at 34.5% compared with 36.7% reported as of Jun 30, 2017. A lower ratio indicates improvement in profitability.
The company’s loans and leases, net as of Jun 30, 2018 were $33.9 billion, up 4.7% from Dec 31, 2017. Further, total deposits rose 4.6% from end-2017 to $35 billion.
Credit Quality: A Mixed Bag
The ratio of net charge-offs to annualized average loans came in at 0.04% compared with 3.04% in the prior-year quarter. In addition, provision for loan and lease losses steeply declined to $8 million from the year-ago quarter tally of $187.6 million.
However, the allowance for loan losses represented 0.62% of total loans as of Jun 30, 2018, compared with 0.60% as of Jun 30, 2017.
Capital Ratios
As of Jun 30, 2018, Tier 1 risk-based capital ratio was 12.10% compared with 11.68% as of Jun 30, 2017. Also, total risk-based capital ratio came in at 13.42% compared with 13.03% in the prior-year quarter. Tangible common equity ratio was 9.10%, down from 9.26% as of Jun 30, 2017.
The return on average assets was 1.39% in the reported quarter compared with 0.14% in the prior-year quarter. As of Jun 30, 2018, return on average common stockholders' equity came in at 15.22%, up from 1.48% as of Jun 30, 2017.
Our Viewpoint
Signature Bank’s second-quarter results reflect solid capital position and robust balance sheet growth. Further, with the lifting of SIFI threshold to $250 billion, Signature Bank will enjoy space for asset growth, through its strategic plans. The company remains focused on investing in infrastructure by enhancing payments platform and credit approval system.
However, rising interest rates continue to impact net interest margin due to its liability sensitive balance sheet, and remains a major concern.
Signature Bank Price, Consensus and EPS Surprise
Signature Bank Price, Consensus and EPS Surprise | Signature Bank Quote
Currently, Signature Bank carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Fifth Third Bancorp (FITB - Free Report) delivered a notable positive earnings surprise of 10.5% in second-quarter 2018. Adjusted earnings per share of 63 cents surpassed the Zacks Consensus Estimate of 57 cents. However, including certain one-time items, the bottom line came in at 80 cents, surging 78% year over year.
BancorpSouth reported second-quarter 2018 operating earnings of 56 cents per share, beating the Zacks Consensus Estimate by a penny. Also, the bottom line compared favorably with the year-ago quarter earnings of 41 cents.
Reflecting top-line strength and lower provisions, U.S. Bancorp’s (USB - Free Report) second-quarter 2018 earnings per share of $1.02 outpaced the Zacks Consensus Estimate by a penny. Also, results came ahead of the prior-year quarter earnings of 85 cents.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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