Increase in loans from Signature Bank (SBNY), decrease in deposits


Although a growing regional bank, Signature BankSBNY stock price fell, reflecting changing investor sentiment on virtual currencies. Amid the collapse of the crypto ecosystem, investor concerns about significant pressure on deposit outflows have materialized.

Notably, bank shares are down 6% in the quarter-to-date period, compared to a 2.7% rise for the industry.

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From the beginning of the quarter to September 2, deposit balances decreased by $1.64 billion. This was driven by $4.27 billion outflows from the digital asset banking space due to slowing cryptocurrency markets.

Nonetheless, deposit balances, excluding digital asset banking, increased by $2.64 billion since the start of the quarter. The bank does not have stablecoin administrators who have algorithmic support or those who do not hold a 1:1 reserve of US dollars.

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

From the start of the current quarter to September 2, 2022, loan balances increased by $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 strong balance sheet position. Net deposits and loans recorded a five-year (2017-2021) compound annual growth rate (CAGR) of 33.5% and 18.7%, respectively. While deposits declined in the second quarter of 2022 primarily due to digital asset banking activity, the company has seen deposit growth every year since its inception in 2001.

SBNY remains focused on increasing deposits in its New York operations. Net lending increased in the first half of 2022. Notably, its lending dynamics benefited from expansion and diversification efforts. Signature Bank has geographically diversified its West Coast expansion.

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

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

Banks to consider

Some higher ranked bank stocks are OZK Bank OZK and First Hawaiian, Inc. FHB. Currently, OZK and FHB carry a Zacks rank #2 (buy).

OZK’s earnings estimates for the current year have not been revised in the past 30 days. OZK shares are down 5.1% over the past year.

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

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