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Signature Bank (SBNY) Up 13.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Signature Bank (SBNY - Free Report) . Shares have added about 13.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Signature Bank due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Signature Bank Gains Despite Q4 Earnings Miss, Costs Rise
Signature Bank’s fourth-quarter 2022 earnings per share of $4.65 lagged the Zacks Consensus Estimate of $4.92. However, the bottom line increased 7.1% from the prior-year quarter. We had projected earnings of $5.42 per share.
Results were hurt by increases in non-interest expenses and provisions. However, higher revenues acted as a tailwind.
Net income available to common shareholders was $291.7 million, up 11% from the previous-year quarter. Pre-tax pre-provision earnings were $450.6 million, up 16.9% year over year.
For 2022, earnings were $20.76 per share, which missed the Zacks Consensus Estimate of $21.01. The bottom line, however, increased 38.1% year over year. We had projected earnings of $21.55 per share for 2022. Net income was $1.30 billion, up 47.7% from the previous year’s reported figure.
Revenues Improve, Expenses Rise
Quarterly total revenues increased 20.1% from the prior-year quarter to $683.9 million. However, the top line lagged the Zacks Consensus Estimate of $687 million. Our estimate for revenues was $717.4 million.
For 2022, revenues were $2.70 billion, up 34.7% year over year. The top line met the Zacks Consensus Estimate. Our estimate for 2022 revenues was $2.73 billion.
Quarterly net interest income increased 19.2% year over year to $638.7 million mainly due to loans and securities growth, along with higher prevailing market interest rates. Our estimate for the metric was $671.8 million. The net interest margin was 2.30% in the fourth quarter, up from 1.90% a year ago. We had projected a net interest margin of 2.41% for the fourth quarter.
Non-interest income was $45.2 million, up 35.2% from the year-ago quarter’s number. Growth in fees and service charges, commissions and other income led to the increase in overall non-interest income. Our estimate for the metric was $45.6 million.
Non-interest expenses of $233.3 million rose 26.8% from the prior-year quarter. The rise was due to an increase in almost all cost components, except for FDIC assessment fees. We had projected non-interest expenses of $231 million for the quarter.
At the end of the fourth quarter of 2022, the efficiency ratio was 34.11%, up from 32.31% reported in the prior-year quarter. An increase in the efficiency ratio indicates a deterioration in profitability.
As of Dec 31, 2022, loans and leases, excluding loans held for sale, were $74.29 billion, up marginally from the end of the previous quarter. Total deposits were $88.59 billion, down 13.8% from the prior-quarter end.
Credit Quality: Mixed Bag
Allowance for credit losses for loans and leases was $489.9 million, up 3.3% from the prior-year quarter. The provision for credit losses increased significantly to $42.8 million from $6.9 million in the prior-year quarter.
However, the ratio of non-accrual loans to total loans was 0.25%, down 9 basis points (bps) year over year. Net charge-offs to average loans (annualized) was 0.10%, down from 0.22% a year earlier.
Profitability & Capital Ratios Strong
The return on average total assets was 1.06% in the reported quarter, up from 0.96% in the year-earlier quarter. The return on average common stockholders' equity was 16.35%, up from 14.76% in the year-ago quarter.
As of Dec 31, 2022, the Tier 1 risk-based capital ratio was 11.21%, up from 10.51% as of Dec 31, 2021. The total risk-based capital ratio was 12.33%, up from the prior-year quarter’s 11.76%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -11.59% due to these changes.
VGM Scores
Currently, Signature Bank has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Signature Bank has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Signature Bank (SBNY) Up 13.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Signature Bank (SBNY - Free Report) . Shares have added about 13.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Signature Bank due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Signature Bank Gains Despite Q4 Earnings Miss, Costs Rise
Signature Bank’s fourth-quarter 2022 earnings per share of $4.65 lagged the Zacks Consensus Estimate of $4.92. However, the bottom line increased 7.1% from the prior-year quarter. We had projected earnings of $5.42 per share.
Results were hurt by increases in non-interest expenses and provisions. However, higher revenues acted as a tailwind.
Net income available to common shareholders was $291.7 million, up 11% from the previous-year quarter. Pre-tax pre-provision earnings were $450.6 million, up 16.9% year over year.
For 2022, earnings were $20.76 per share, which missed the Zacks Consensus Estimate of $21.01. The bottom line, however, increased 38.1% year over year. We had projected earnings of $21.55 per share for 2022. Net income was $1.30 billion, up 47.7% from the previous year’s reported figure.
Revenues Improve, Expenses Rise
Quarterly total revenues increased 20.1% from the prior-year quarter to $683.9 million. However, the top line lagged the Zacks Consensus Estimate of $687 million. Our estimate for revenues was $717.4 million.
For 2022, revenues were $2.70 billion, up 34.7% year over year. The top line met the Zacks Consensus Estimate. Our estimate for 2022 revenues was $2.73 billion.
Quarterly net interest income increased 19.2% year over year to $638.7 million mainly due to loans and securities growth, along with higher prevailing market interest rates. Our estimate for the metric was $671.8 million. The net interest margin was 2.30% in the fourth quarter, up from 1.90% a year ago. We had projected a net interest margin of 2.41% for the fourth quarter.
Non-interest income was $45.2 million, up 35.2% from the year-ago quarter’s number. Growth in fees and service charges, commissions and other income led to the increase in overall non-interest income. Our estimate for the metric was $45.6 million.
Non-interest expenses of $233.3 million rose 26.8% from the prior-year quarter. The rise was due to an increase in almost all cost components, except for FDIC assessment fees. We had projected non-interest expenses of $231 million for the quarter.
At the end of the fourth quarter of 2022, the efficiency ratio was 34.11%, up from 32.31% reported in the prior-year quarter. An increase in the efficiency ratio indicates a deterioration in profitability.
As of Dec 31, 2022, loans and leases, excluding loans held for sale, were $74.29 billion, up marginally from the end of the previous quarter. Total deposits were $88.59 billion, down 13.8% from the prior-quarter end.
Credit Quality: Mixed Bag
Allowance for credit losses for loans and leases was $489.9 million, up 3.3% from the prior-year quarter. The provision for credit losses increased significantly to $42.8 million from $6.9 million in the prior-year quarter.
However, the ratio of non-accrual loans to total loans was 0.25%, down 9 basis points (bps) year over year. Net charge-offs to average loans (annualized) was 0.10%, down from 0.22% a year earlier.
Profitability & Capital Ratios Strong
The return on average total assets was 1.06% in the reported quarter, up from 0.96% in the year-earlier quarter. The return on average common stockholders' equity was 16.35%, up from 14.76% in the year-ago quarter.
As of Dec 31, 2022, the Tier 1 risk-based capital ratio was 11.21%, up from 10.51% as of Dec 31, 2021. The total risk-based capital ratio was 12.33%, up from the prior-year quarter’s 11.76%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -11.59% due to these changes.
VGM Scores
Currently, Signature Bank has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Signature Bank has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.