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Signature Bank (SBNY) Q4 Earnings Beat on Higher Revenues
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Signature Bank (SBNY - Free Report) reported fourth-quarter 2021 earnings per share of $4.34, beating the Zacks Consensus Estimate of $3.97. Also, the bottom line increased 33.1% from the prior-year quarter’s reported number.
Record growth in loan and deposit balances display a strong balance sheet position. Also, revenue growth supported the results. The bank was also included in the S&P 500 Index in the fourth quarter of 2021. Nevertheless, SBNY recorded elevated expenses, declined capital position and poor credit quality.
Net income in the quarter was $272 million compared with the previous-year quarter’s $173 million. Pre-tax pre-provision earnings came in at $385.4 million, up 47.4%.
In 2021, earnings were $15.03 per share compared with the prior-year figure of $9.96. The bottom line surpassed the consensus estimate of $14.68. Net income increased 73.8% to $918.4 million from the year-ago figure.
Total income increased 35.8% from the prior-year quarter’s level to $569.4 million. The top line surpassed the Zacks Consensus Estimate of $548.7 million.
Net interest income (NII) climbed 35.7% year over year to $535.9 million on higher average interest-earning assets. However, the net interest margin (on a tax-equivalent basis) contracted 32 basis points (bps) to 1.91%.
Non-interest income was $33.5 million, up 38.4% from the year-ago quarter’s number. Growth in fees and service charges led to the jump.
Non-interest expenses of $183.9 million rose 16.6%. The upsurge chiefly stemmed from the rise in salaries and benefits due to the massive hiring of private client banking teams.
The efficiency ratio was 32.3%, improving from 35.4% reported as of Dec 31, 2020. A lower ratio indicates a rise in profitability.
Loans, excluding loans held for sale, as of Dec 31, 2021, were $64.8 billion, marking a record increase 10.7%, sequentially. Total deposits rose a record 11.1%, sequentially, to $106.1 billion.
Credit Quality: A Mixed Bag
Net charge-offs were $33.7 million in the December quarter, up from $11.4 million recorded in the prior-year quarter. The ratio of non-accrual loans to total loans was 0.34%, up 9 bps year over year.
Nonetheless, allowance for credit losses for loans and leases was $474.4 million, down from $508.3 million in the prior-year quarter. Provision for credit losses declined to $6.9 million from $35.6 million in the prior-year quarter, mainly driven by improved macroeconomic conditions.
Capital & Profitability Ratios Decline
As of Dec 31, 2021, Tier 1 risk-based capital ratio was 10.49%, down from 11.2% as of Dec 31, 2020. The total risk-based capital ratio was 11.73 % compared with the prior-year quarter’s 13.54%.
Return on average total assets was 0.96% in the reported quarter, flat with the year-earlier quarter’s level. As of Dec 31, 2021, the return on average common stockholders' equity was 14.76%, up from 13.59% in the year-ago quarter.
Dividend Update
Signature Bank's board of directors announced a quarterly common stock dividend of 56 cents. The dividend will be paid out on or after Feb 11, 2022 to its shareholders of record at the close of business on Jan 28, 2022.
Our Take
The bank’s better-than-expected earnings performance and an improving balance-sheet position are positives. Top-line strength on the rising fee income and NII is expected to continue supporting its profitability.
However, continued escalating expenses are downsides. Also, strong deposit flows have been boosting excess cash balances, negatively impacting the margins.
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
Robust advisory business, reserve release and a rise in loan demand drove JPMorgan’s (JPM - Free Report) fourth-quarter 2021 earnings of $3.33 per share. The bottom line outpaced the Zacks Consensus Estimate of $3.01. Results included net credit reserve releases. Excluding this, earnings came in at $2.86 per share.
However, a disappointing trading performance, lower interest rates and higher operating expenses were the major headwinds to JPMorgan’s quarterly results. Also, JPM’s mortgage fees and related income plunged during the quarter.
Wells Fargo’s (WFC - Free Report) fourth-quarter 2021 earnings per share of $1.38 surpassed the Zacks Consensus Estimate of 1.09. Also, the bottom line improved 86% year over year. Results included certain non-recurring items.
Improved investment banking and other asset-based fees, and strong equity gains in WFC’s affiliated venture capital and private equity businesses, as well as lower costs, supported the bank’s performance. Yet, a decline in NII due to low yields from earning assets and lower loans were the undermining factors.
Citigroup (C - Free Report) delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 beat the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter’s level.
Citigroup’s investment banking revenues jumped, driven by equity underwriting and growth in advisory revenues. The dismal consumer banking business and higher operating expenses were the major headwinds.
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Signature Bank (SBNY) Q4 Earnings Beat on Higher Revenues
Signature Bank (SBNY - Free Report) reported fourth-quarter 2021 earnings per share of $4.34, beating the Zacks Consensus Estimate of $3.97. Also, the bottom line increased 33.1% from the prior-year quarter’s reported number.
Record growth in loan and deposit balances display a strong balance sheet position. Also, revenue growth supported the results. The bank was also included in the S&P 500 Index in the fourth quarter of 2021. Nevertheless, SBNY recorded elevated expenses, declined capital position and poor credit quality.
Net income in the quarter was $272 million compared with the previous-year quarter’s $173 million. Pre-tax pre-provision earnings came in at $385.4 million, up 47.4%.
In 2021, earnings were $15.03 per share compared with the prior-year figure of $9.96. The bottom line surpassed the consensus estimate of $14.68. Net income increased 73.8% to $918.4 million from the year-ago figure.
Revenues, Loans & Deposits Rise, Expenses Increase
Total income increased 35.8% from the prior-year quarter’s level to $569.4 million. The top line surpassed the Zacks Consensus Estimate of $548.7 million.
Net interest income (NII) climbed 35.7% year over year to $535.9 million on higher average interest-earning assets. However, the net interest margin (on a tax-equivalent basis) contracted 32 basis points (bps) to 1.91%.
Non-interest income was $33.5 million, up 38.4% from the year-ago quarter’s number. Growth in fees and service charges led to the jump.
Non-interest expenses of $183.9 million rose 16.6%. The upsurge chiefly stemmed from the rise in salaries and benefits due to the massive hiring of private client banking teams.
The efficiency ratio was 32.3%, improving from 35.4% reported as of Dec 31, 2020. A lower ratio indicates a rise in profitability.
Loans, excluding loans held for sale, as of Dec 31, 2021, were $64.8 billion, marking a record increase 10.7%, sequentially. Total deposits rose a record 11.1%, sequentially, to $106.1 billion.
Credit Quality: A Mixed Bag
Net charge-offs were $33.7 million in the December quarter, up from $11.4 million recorded in the prior-year quarter. The ratio of non-accrual loans to total loans was 0.34%, up 9 bps year over year.
Nonetheless, allowance for credit losses for loans and leases was $474.4 million, down from $508.3 million in the prior-year quarter. Provision for credit losses declined to $6.9 million from $35.6 million in the prior-year quarter, mainly driven by improved macroeconomic conditions.
Capital & Profitability Ratios Decline
As of Dec 31, 2021, Tier 1 risk-based capital ratio was 10.49%, down from 11.2% as of Dec 31, 2020. The total risk-based capital ratio was 11.73 % compared with the prior-year quarter’s 13.54%.
Return on average total assets was 0.96% in the reported quarter, flat with the year-earlier quarter’s level. As of Dec 31, 2021, the return on average common stockholders' equity was 14.76%, up from 13.59% in the year-ago quarter.
Dividend Update
Signature Bank's board of directors announced a quarterly common stock dividend of 56 cents. The dividend will be paid out on or after Feb 11, 2022 to its shareholders of record at the close of business on Jan 28, 2022.
Our Take
The bank’s better-than-expected earnings performance and an improving balance-sheet position are positives. Top-line strength on the rising fee income and NII is expected to continue supporting its profitability.
However, continued escalating expenses are downsides. Also, strong deposit flows have been boosting excess cash balances, negatively impacting the margins.
Signature Bank Price, Consensus and EPS Surprise
Signature Bank price-consensus-eps-surprise-chart | 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
Robust advisory business, reserve release and a rise in loan demand drove JPMorgan’s (JPM - Free Report) fourth-quarter 2021 earnings of $3.33 per share. The bottom line outpaced the Zacks Consensus Estimate of $3.01. Results included net credit reserve releases. Excluding this, earnings came in at $2.86 per share.
However, a disappointing trading performance, lower interest rates and higher operating expenses were the major headwinds to JPMorgan’s quarterly results. Also, JPM’s mortgage fees and related income plunged during the quarter.
Wells Fargo’s (WFC - Free Report) fourth-quarter 2021 earnings per share of $1.38 surpassed the Zacks Consensus Estimate of 1.09. Also, the bottom line improved 86% year over year. Results included certain non-recurring items.
Improved investment banking and other asset-based fees, and strong equity gains in WFC’s affiliated venture capital and private equity businesses, as well as lower costs, supported the bank’s performance. Yet, a decline in NII due to low yields from earning assets and lower loans were the undermining factors.
Citigroup (C - Free Report) delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 beat the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter’s level.
Citigroup’s investment banking revenues jumped, driven by equity underwriting and growth in advisory revenues. The dismal consumer banking business and higher operating expenses were the major headwinds.