Thursday, July 25, 2019

Liability-Sensitive Signature Bank Investing In Next Growth Drivers

At a time when asset-sensitive balance sheets are starting to really take a bite out of bank earnings, Signature Bank’s (SBNY) liability-sensitive balance sheet certainly stands out. That isn’t to say that Signature is going to reap a windfall as rates decline, but whereas many banks are look at 10bp-20bp of spread compression (or worse) over the next year or two, Signature will likely see some modest improvement. On top of that, Signature has been investing fairly aggressively to expand its private banking and venture/private equity banking capabilities.

With what I think will prove to be manageable exposure to New York multi-family real estate and new growth opportunities to pursue, I believe Signature is undervalued. Pre-provision profit growth over the next couple of quarters won’t look very exciting, and could well limit share price appreciation, but by early 2020 I believe the Street will start rewarding the stock for the above-average pre-provision profit growth it should start delivering.

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Liability-Sensitive Signature Bank Investing In Next Growth Drivers

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