This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

3 Growing Bank Stocks for Black Friday

3. Signature Bank

Shares of Signature Bank (SBNY - Get Report) 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 Chart SBNY data by YCharts

Interested in more on Signature Bank? See TheStreet Ratings' report card for this stock.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BAC $15.81 0.00%
FRC $57.00 0.00%
RF $9.61 0.00%
SIVB $122.90 0.00%
SBNY $123.35 0.00%


DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs