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Signature Bank (SBNY) Q2 Earnings and Revenues Beat Estimates

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Signature Bank (SBNY - Free Report) reported second-quarter 2022 earnings per share of $5.26, beating the Zacks Consensus Estimate of $5.06. Also, the bottom line increased a whopping 47% from the prior-year quarter’s reported number.

The results were supported by a significant increase in non-interest income (NII) and fee income. However, the rise in non-interest expenses was a matter of concern.

Net income in the quarter was $339.2 million, up from the previous-year quarter’s $214.5 million. Pre-tax pre-provision earnings came in at $476.7 million, up 54.5% year over year.

Revenues, Loan & Expenses Rise

Total income increased 43% from the prior-year quarter to $686.8 million. The top line surpassed the Zacks Consensus Estimate of $678.9 million.

NII climbed 42% year over year to $649.1 million, mainly due to high average interest-earning assets and higher prevailing interest rates. The net interest margin increased to 2.23% in the second quarter of 2022 from 2.02% compared with the prior year quarter.

Non-interest income was $37.7 million, up 61% from the year-ago quarter’s number. Growth in fees and service charges and other income, including foreign currency activity and commissions, led to the increase in overall non-interest income.
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Non-interest expenses of $210 million rose 22% from the prior-year quarter. The upsurge chiefly stemmed from the rise in salaries and benefits from the hiring of private client banking teams, national banking practices and operational support. In addition, there was a rise in consulting and professional fees related to various new projects.

The efficiency ratio was 30.6%, declining from 35.8% reported as of Jun 30, 2021. A lower ratio indicates a rise in profitability.

Loans, excluding loans held for sale, as of Jun 30, 2022, were $5.6 billion, up 8.4% sequentially. Total deposits for the second quarter decreased by $5.04 billion to $104.12 billion.

Credit Quality Improves

The allowance for credit losses for loans and leases was $445.9 million, down from $514.8 million in the prior-year quarter. Provision for credit losses declined to $4.2 million from $8.3 million in the prior-year quarter, driven primarily by improved macroeconomic conditions.

The ratio of non-accrual loans to total loans was 0.23%, down 2 basis points (bps) year over year. However, the net charge-offs were $19.7 million in the second quarter, up from $15.3 million in the prior-year quarter.

Strong Profitability Ratio, Weak Capital Ratios

The return on average total assets was 1.14% in the reported quarter, up from 0.94% in the year-earlier quarter. As of Jun 30, 2022, the return on average common stockholders' equity was 17.94%, up from 13.61% in the year-ago quarter.

However, as of Jun 30, 2022, Tier 1 risk-based capital ratio was 10.76%, down from 11.20% as of Jun 30, 2021. The total risk-based capital ratio was 11.85%, down from the prior-year quarter’s 12.77%.

Our Take

Signature Bank’s impressive results in the second quarter were primarily backed by growth in NII and fee income. Furthermore, the company’s credit quality improved from the prior-year quarter and there was solid growth with respect to loans. However, high expenses were an undermining factor.

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.

Signature Bank Price, Consensus and EPS Surprise

Signature Bank Price, Consensus and EPS Surprise

Signature Bank price-consensus-eps-surprise-chart | Signature Bank Quote

Performance of Other Banks

U.S. Bancorp (USB - Free Report) reported second-quarter 2022 earnings per share of $1.09 (excluding merger and integration-related charges of 10 cents), which beat the Zacks Consensus Estimate of 1.07 per share. However, the results do not compare favorably with the prior-year quarter’s figure of $1.28.

Results were supported by an increase in revenues, average loan growth and lower non-performing assets. The company’s credit quality was decent in the quarter. However, higher expenses and elevated provision for credit losses were the offsetting factors.

First Republic Bank’s (FRC - Free Report) second-quarter 2022 earnings per share of $2.16 surpassed the Zacks Consensus Estimate of $2.05. Additionally, the bottom line improved 10.8% from the year-ago quarter.

Results have been supported by an increase in NII and non-interest income. The company’s capital position was strong in the quarter. Yet, higher expenses and elevated provision for credit losses were the offsetting factors.

JPMorgan’s (JPM - Free Report) second-quarter 2022 earnings of $2.76 per share missed the Zacks Consensus Estimate of $2.85. The reported quarter’s results included a net credit reserve build of $428 million.

Investors are discouraged by JPMorgan’s quarterly performance and suspension of share repurchases and are concerned over the challenging geopolitical and macroeconomic outlook.


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