What is it in the cards for the gains of the first quarter of Signature Bank (SBNY)?
Signature Bank SBNY is expected to report its first quarter 2022 results before the opening bell on April 19. The company’s revenues and profits are expected to have seen year-over-year increases.
Signature Bank is one of the leading banks in the cryptocurrency industry, with large deposits coming from its digital asset business. In the most recently reported quarter, the bank’s earnings beat the Zacks consensus estimate on the back of higher non-interest income and record growth in loan and deposit balances. However, an increase in operating expenses was slowing factor.
Notably, Signature Bank has an impressive track record of earnings surprises. It beat estimates in four quarters, delivering a surprise 10.8% profit, on average tracking.
Signature Bank Price and EPS Surprise
Signature Bank price-eps-surprise | Signature Bank Quote
The company’s activities in the quarter to be reported were enough to earn analysts’ confidence. As a result, the Zacks consensus estimate for first quarter results of $4.31 has risen slightly over the past month. Additionally, the figure indicates a 33% increase from the number reported a year ago. The revenue consensus estimate is pegged at $604,500,000, suggesting year-over-year growth of 37.6%.
Now let’s discuss the factors that are likely to have a quarterly impact on business performance:
Loans: Credit activity accelerated in the first quarter. According to the latest news from the Fed Datacommercial and consumer loans, including credit cards, commercial and industrial loans, and residential and commercial real estate loans, were considerably strong in January and February.
In 2021, the bank onboarded eight private client banking teams – two in New York, four on the West Coast, a corporate mortgage finance team and a Small Business Administration (SBA) origination team.
Therefore, even though the first quarter is generally a seasonally bright quarter for SBNY lending business, these past efforts should have driven loan growth in the SBA lending, mortgage warehouse, commercial real estate and fund banking businesses over the course of the year. trimester.
Based on management guidance, first quarter non-multifamily commercial real estate loans are expected to increase by $250 million to $750 million.
Net interest income (NII): The management expects that the balances of loans and investment securities increased by 3 to 7 billion in the first quarter of 2022. This should have resulted in interest income in the first quarter of 2022, in turn driving the average balance of interest-generating assets.
Additionally, the low-cost source of funding, non-interest bearing deposits, representing 41.8% of total deposits (as of December 31, 2021), is expected to have reduced interest expense and eased pressure on the NII as of first trimester.
Therefore, average interest-earning assets and strong average growth in deposits and loans likely contributed to the growth of the MNI in the first quarter.
The consensus estimate for NII before provision for credit losses is set at $573 million, suggesting sequential growth of 6.9%.
Non-interest income: Supported by the continued growth of its West Coast business and expanding digital filing initiative, commissions are expected to have increased. The consensus mark for the same is pegged at $4.1 million, indicating a marginal sequential increase.
The business expansion and deposit growth should result in fees and service charges. Zacks’ consensus estimate for the same is pegged at $23.3 million, suggesting an 8.2% increase from the previous quarter’s reported figure.
Overall, Zacks’ consensus estimate for non-interest revenue is pegged at $34.8 million, suggesting a 4.1% increase from the prior quarter’s reported figure. Management expects first quarter fee income to grow 10% year over year.
Expenses: Signature Bank’s costs are expected to have continued to increase in the quarter under review, given investments in technology and digitization efforts. As the business continues to expand, the hiring of private banking teams and operational support to meet the bank’s needs is expected to result in higher payroll costs.
In addition, rising inflation should have resulted in high non-interest expense in the reportable quarter. Such an increase is likely to have dampened bottom-line growth in the first quarter.
Our proven model does not predict a profit for SBNY beat this time. Indeed, the company has not the right combination of two key ingredients – Positive ESP Earnings and Zacks #3 Rank (Hold) or higher – to increase the chance of a beat result this time.
You can discover the best stocks to buy or sell before they’re flagged with our Income ESP filter.
ESP Earnings: The ESP Signature Bank profit is -1.59%.
Zack’s Ranking: The company currently carries a Zacks rank of 3.
Actions worth a look
A few financial stocks that you may want to consider, as they have the right combination of elements to show a beating in profits in their next releases according to our model, are Commerce Bancshares, Inc. CBSH and Associated Bank-Corp ASB.
The ESP profit for the Bancshares Trade is +2.33% and it carries a Zacks Rank #2 (Buy) at present.
CBSH is expected to release its quarterly numbers on April 19.
Associated BancCorp is expected to release its quarterly results on 21 April.
ASB, currently sports a Zacks rank of 1, has an ESP gains of + 0.81%.
Stay up to date with upcoming results announcements with the Zacks Earnings Schedule.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.