What happened
Shares of Signature Bank (SBNY) traded more than 10% higher as of 2 p.m. EDT after the bank reported earnings results from the first quarter of the year.
So what
The $85 billion asset bank based in New York reported a record profit of $190.5 million, or $3.24 diluted earnings per share, in the first quarter of the year, up from $99.6 million in the first quarter of 2020. Total revenue of more than $439 million in the first quarter also grew significantly year over year.
Both profits and revenue topped analysts' expectations for the first quarter of 2021. Notably, Signature grew net interest income considerably year over year, which not many banks are doing right now because the lower-rate environment dulls interest income from loans, and loan growth has been hard to come by.
Image source: Getty Images.
Signature also continued to grow deposits nicely, with total deposits up more than $10 billion and non-interest-bearing deposits up nearly $3.8 billion from the fourth quarter of 2020. Also in the quarter, Signature reported a nearly 1% return on average assets and a 13% return on average common shareholder's equity.
Now what
After another very strong quarter of earnings, Signature trades at a high premium of roughly 239% to its tangible book value (equity minus intangible assets and goodwill).
While that's high for a bank, Signature offers several niche banking products including venture banking and its Signet platform, which leverages blockchain technology to create a real-time digital payments platform.
Investors have rewarded banks with these verticals that can execute. I also think it's early days for Signature's Signet platform, so I definitely still like this stock despite the high premium it trades at.
