Recommending Signature Bank (SBNY) in 2020 wasn't the most popular call, and indeed this CRE-heavy lender did suffer through much of the year due to worries about the bank's exposure to multifamily and retail property in the New York City area. Since the election, though, the shares have rocketed up on increased confidence tied to COVID-19 vaccines (and the prospect of a return to more normal economic activity in 2H'21), and the shares have outperformed its peer group on a three-month, 12-month, and three-year basis.
Signature is not fully out of the woods yet, and 2021 will almost certainly see higher charge-offs, but 2021 will also see the company putting more of its under-utilized liquidity to work. What's more, I believe investors will see meaningful growth in C&I and specialty lending over the next few years, as well as growth in fee-generating businesses like its specialty mortgage servicing and SigNet digital banking platform. All told, I believe Signature is priced for double-digit long-term annualized total returns, and though it's a riskier-than-average bank, it's still worth a look after this big run.
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As Credit Stabilizes, Signature Bank's Growth Story Comes Into Play
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