Signature Bank Beats Earnings, but Stock Plunges Anyway. Here’s Why.

- Advertisement -


Signature was one of the first FDIC-insured banks to launch a blockchain-based digital payments platform.

- Advertisement -

Dreamstime

- Advertisement -

Signature Bank reported second-quarter results of $5.26 a diluted share, beating Wall Street expectations by 20 cents. But a drop in total deposits has caused shares to fall 9%.

Signature (ticker: SBNY) on Tuesday reported second-quarter net income of $339.2 million, or $5.26 diluted earnings per share, compared with $214.5 million, or $3.57 diluted earnings per share, for the same period in 2021. Signature had been expected to produce $5.06 a share, according to analysts polled by FactSet.

- Advertisement -

Signature’s stock have plunged 8.8%, to $178.92, in recent trading. The S&P 500 was up 1.9%.

The earnings beat was driven by a lower-than-anticipated provision of $4.2 million for credit losses and stronger fee income of $38 million, according to Stephens analyst Matt Breese,

However, Signature’s total deposits in the second quarter declined by $5.04 billion to $104.12 billion, driven mainly by a drop in client balances for Signature’s New York banking teams, which decreased by $2.4 billion, and its digital-asset banking team, which also fell by $2.4 billion, the statement said. This resulted in lower cash balances, which dropped by about 45% quarter over quarter, said Breese, adding that the decline was more than expected.

“Overall, we believe shares could be weak today on deposit flows, higher expenses and a smaller balance sheet,” Breese said in the note. He has an Overweight rating on Signature’s stock and a $415 target price.

Signature, of New York, is a commercial bank. It was one of the first FDIC-insured banks to launch a blockchain-based digital payments platform. Total assets rose nearly 20%, to $115.97 billion, as of June 30 compared with the same period in 2021. This represents a drop of 2% from Signature’s total assets of $118.45 billion as of Dec. 31.

On Tuesday, Signature said it would pay a cash dividend of 56 cents a share, payable on or after Aug. 12, to common shareholders of record on July 29. The bank said it would also pay a cash dividend of $12.50 a share, payable on or after Sept. 30, to preferred shareholders of record on Sept. 16.

Signature’s net interest income rose by 42%, to $649.1 million, in the second quarter. Analysts had expected $641.5 million, according to FactSet.

Write to Luisa Beltran at [email protected]

,

Credit: www.marketwatch.com /

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox