What Happened
Signature Bank (SBNY) saw its stock price jump 13.2% in February, according to S&P Global Market Intelligence.
The New York-based bank outperformed most stocks for the month as the S&P 500 was down 3.2% in February, and the Nasdaq Composite dropped 3.4% in the month. Signature Bank is up 2.5% year to date (YTD), while the S&P 500 is down 8% YTD as of March 3.
Image source: Getty Images.
So what
Signature Bank is a private bank for high-net worth individuals and their businesses with about $118 billion in assets under management. It has 37 private client offices, mostly in the major money centers with most of them in the New York City area. But it also has four offices in the Los Angeles area, two in the Charlotte/Durham region, and one each in Connecticut and San Francisco. In addition, Signature is one of just two banks in the country that has its own blockchain-based payments network -- Signet. The Signet platform facilitates cryptocurrency trading in real-time between institutional traders and crypto exchanges, with no transaction fees.
Both of these businesses have been growing rapidly. In the fourth quarter of 2021, deposits increased $10.6 billion year over year to $106.1 billion, with $2.4 billion of those deposits on the Signet platform. Also, loans increased a record $6.3 billion in the most recent quarter. It led to record net income in Q4 of $272 million, or $4.34 earnings per share (EPS), a 57% increase year over year. Even more impressive is the fact that this is Signature's fifth straight quarter of record earnings. That's incredible sustained growth.
Now what
Can Signature make it six straight quarters of record year-over-year earnings? That's hard to say, but the bank is in a great position to continue its strong growth over the next few quarters and beyond. With Signet driving a lot of growth in deposits, the company expects continued growth in fee income as Signet should benefit from the growth of cryptocurrency investing as one of the first movers.
On the Q4 earnings call, Chief Operating Officer Eric Howell expects 10% growth in fee income in the first quarter and 20% to 30% growth beyond that. Also, the expectation of successive interest rate hikes this year should boost its interest income. The bank is extremely well run with a low efficiency ratio of 32.3% in Q4, down from 35.4% in Q3 and 37.6% in Q4 of 2020.
It also continues to expand with plans for a new private client office in New Jersey in 2022 and the hiring of additional banking teams, predominantly on the West coast.
