3. Signature Bank
Shares of Signature Bank (SBNY) of New York closed at $70.34 Wednesday, returning 17% year-to-date, following a 20% return during 2011. The five-year total return for the stock was 104%.
The shares trade for 2.1 times their reported Sept. 30 book value of $33.80, and for 16 times the consensus 2013 EPS estimate of $4.29. The consensus 2014 EPS estimate is $4.69.
Signature Bank had total assets of $16.5 billion as of Sept. 30. The bank reported third-quarter earnings of $47.7 million, or a dollar a share, increasing from $45.3 million, or 96 cents a share, in the second quarter, and $38.4 million, or 83 cents a share, in the third quarter of 2011. Total loans grew by 9% just in the third quarter, to $8.8 billion as of Sept. 30, growing by 28% from a year earlier.
Net interest income was up 6% sequentially and 20% year-over-year, to $141.7 million in the third quarter, and the company even bucked the industry trend, with its third-quarter net interest margin -- the difference between the average yield on loans and investments and the average cost for deposits and borrowings -- widening to 3.56%, from 3.54% the previous quarter, and 3.51% a year earlier, however, the bank said that if loan prepayment income was excluded, the margin "decreased 3 Basis Points to 3.41 Percent, compared with 3.44 Percent for the 2012 second quarter."Following the bank's earnings announcement, KBW analyst Christopher McGratty wrote that "in the world of modest economic growth, Signature continues to defy the banking odds, producing 36% [annualized] loan growth in what we had expected to be a seasonally slower growth quarter. Not only was the growth impressive, but we were particularly encouraged to see a 2-point improvement in efficiency (to 36.6%) as it appears that the company is already gaining operating leverage within Signature Financial." The efficiency ratio is, essential, the number of pennies of overhead for each dollar of revenue. Most banks struggle to get the efficiency ratio down to 50%, and Signature Bank is one of the most efficient publicly traded banks in the country, according to data supplied by Thomson Reuters Bank Insight. The bank reported a third-quarter return on average assets (ROA) of 1.18% and a return on average equity (ROE) of 12.24%. McGratty rates Signature Bank "Market Perform," with a price target of $70, and sees great things ahead for the bank: "Loan growth occurred across all asset classes and we learned that SBNY has recently hired two additional teams. Looking ahead, we expect the growth momentum to continue and we are now looking for 30% loan growth in 2013 versus 27% previously as results are likely to continue to benefit from further momentum in its core lending franchise but also recent initiatives within Signature Financial," which is the bank's specialty finance subsidiary. Jefferies analyst Casey Haire rates Signature Bank a "Buy," with a price target of $77, and said on Oct. 23 that the then consensus 2013 EPS estimate of $4.20 looked "conservative given the current EPS run-rate is already $4/share and the momentum within loan growth." Haire is out in front of the consensus, estimating the bank will earn $4.40 a share in 2013, followed by EPS of $4.85 in 2014. SBNY data by YCharts
Interested in more on Signature Bank? See TheStreet Ratings' report card for this stock.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV