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10 Big Banks With Solid Revenue

4. Signature Bank

Shares of Signature Bank (SBNY) of New York closed at $59.40 Monday, returning 19% year-to-date.

The bank on July 11 completed a stock offering to raise a net $253.2 million in common equity.

Second-quarter net income was $36.6 million, or 87 cents a share, increasing from $22.3 million, or 54 cents a share, in the second quarter of 2010. The provision for loan losses increased to $12.9 million in the second quarter, from $11.1 million a year earlier.

The bank reported that portfolio loans totaled $6.1 billion as of June 30, growing 8% during the second quarter and 29% from a year earlier.

Second-quarter pre-provision net revenue totaled $75.1 million according to SNL, increasing 62% from a year earlier, as net interest income increased 39% to $113 million.

The second-quarter net interest margin was 3.64%, expanding from 3.38% a year earlier. The operating ROA was 1.15% according to SNL.

After Signature Bank announced its second-quarter results, Cantor Fitzgerald analyst Michael Diana reiterated his buy rating for the shares while raising his price target to $72 from $68, saying the bank's growth was driven by a business model of "hiring teams of bankers from competitors," which "creates powerful deposit and revenue growth," and that its "credit quality deterioration in the downturn was relatively mild."

The shares trade for 15.7 times the 2012 consensus EPS estimate of $3.78.

The 18 analysts covering Signature Bank are evenly split between buy and hold ratings.

Signature Bank is a very unusual growth story in the current environment, successfully poaching commercial lenders and their clients from other banks. Along with the loan growth, business customers bring cheap deposits and the potential for increased fee income for investment, brokerage and asset management services.

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