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5 Small-Cap Bank Stock Plays for 2013 From Credit Suisse

5. Signature Bank


Shares of Signature Bank (SBNY) of New York closed at $71.55 Wednesday, returning 19% year-to-date, following a 7% decline last year.

The shares trade for 2.1 times tangible book value, according to Thomson Reuters Bank Insight, and for 16.6 times the consensus 2013 earnings estimate of $4.30 a share, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $4.72.

Signature Bank had total assets of $16.5 billion as of Sept. 30. The bank reported very strong loan growth of 9% in the third quarter, to $8.8 billion as of Sept. 30, with loans growing by 28% from a year earlier.

Earnings have been consistent, with operating returns on average assets ranging from 1.13% to 1.23% over the past five quarters, according to Thomson Reuters Bank Insight. The company earned $47.7 million, or a dollar a share, during the third quarter, 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.

The bank's net interest margin widened to 3.56%, from 3.54% the previous quarter, and 3.51% a year earlier, however, the bank said in its third-quarter earnings release that excluding loan prepayment income, the margin "decreased 3 Basis Points to 3.41 Percent, compared with 3.44 Percent for the 2012 second quarter."

Clark's price target for Signature Bank is $82, and the analyst expects the company to maintain its organic growth strategy with a 2013 EPS estimate of $4.40, increasing to $4.90 in 2014.

SBNY Chart SBNY data by YCharts

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