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Signature Bank's (SBNY) Loans Increase, Deposits Decline

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Despite being a rapidly-growing regional bank, Signature Bank’s (SBNY - Free Report) share price has tumbled, reflecting investors’ changing opinion on virtual currencies. Amid the meltdown in the crypto ecosystem, investors’ concerns about significant deposit outflow pressure have materialized.

Notably, the bank’s shares have declined 6% in the quarter-to-date period against the industry’s rise of 2.7%.


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From the start of the quarter through Sep 2, deposit balances declined $1.64 billion. This has been driven by outflows of $4.27 billion in the digital asset banking space due to the downturn in cryptocurrency markets.

Nonetheless, deposit balances, excluding the digital asset banking business, have increased $2.64 billion quarter to date. The bank does not have stablecoin administrators that have algorithmic backing or those that do not hold a 1:1 US dollar reserve.

The increase in deposits has been contributed by Specialized Mortgage Banking Solutions, the Fund Banking Division, West Coast Banking, New York Banking and Venture Banking Group teams of $2.29 billion, $156 million, $97 million, $63 million and $31 million, respectively.

From the start of the ongoing quarter until Sep 2 2022, loan balances moved up $2.39 billion. The improvement in lending activity was supported by the company’s efforts to expand geographically and add new lending verticals.

Signature Bank has a robust balance-sheet position. Deposits and net loans witnessed a five-year (2017-2021) compound annual growth rate (CAGR) of 33.5% and 18.7%, respectively. While deposits declined in second-quarter 2022 mainly due to the digital asset banking business, the company has achieved growth in deposits every year since its inception in 2001.

SBNY stays focused on increasing deposits across its New York operations. Net loans increased in the first half of 2022. Markedly, its lending momentum has been benefiting from expansion and diversification efforts. Signature Bank has geographically diversified its expansion into the West Coast.

In addition to onboarding eight private client banking teams in 2021, the bank has hired 11 private banking teams from the start of second-quarter 2022. Loan growth from new lending verticals and teams is expected to continue to aid the bank’s prospects.

SBNY currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Banks to Consider

A couple of better-ranked bank stocks are Bank OZK (OZK - Free Report) and First Hawaiian, Inc. (FHB - Free Report) . Currently, OZK and FHB carry a Zacks Rank #2 (Buy).

OZK’s current-year earnings estimates have been unrevised over the past 30 days. OZK’s shares have declined 5.1% over the past year.

The consensus estimate for First Hawaiian’s current-year earnings has been revised 5.7% upward over the past 60 days. Over the past year, FHB’s shares have lost 6.1%.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Signature Bank (SBNY) - free report >>

First Hawaiian, Inc. (FHB) - free report >>

Bank OZK (OZK) - free report >>

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