Signature Bank

NASDAQ:SBNY  
325.92
-13.71 (-4.04%)
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Why Signature Bank May Be the Best Bank in the World







Fundamentals

##Symbol##SBNY

Signature Bank is one of the most impressive regional banks in the United States, if not the most impressive. All banks have decisions to make as to which business lines they will focus on. Those business lines range from consumer debt, commercial debt, mortgage debt and any sort of combination of those. SBNY has clearly decided on a business, and they are dominating it.

If we look at all regional banks in the United States over $500 million in market cap (about 70 banks) and compare SBNY head-to-head with them, this what we will find:

The bank has the most Money Market Deposits / Total Deposits. Has more residential mortgage loans than 96% of the peers and more commercial mortgage loans than 90% of them. The bank's average deposit size is larger than 90% of peers. It has the lowest level 3 liabilities (those tricky "mark-to-model" aka make up your own value liabilities). That's wonderful transparency. The company doesn't like to play in the consumer realm with consumer debt to total debt lower than 92% of peers. All of this data in visual format is available in CML Pro.

So what does all of this mean? The net result (no pun intended), is that the bank has a higher net income margin % (the percent of revenue kept as earnings) than 96% of its peers and it's fundamentals altogether look impeccable.

SBNY's revenue (TTM) has risen for more than five consecutive quarters which triggers as "trend" as has net income. We'll dive deep into the guts of that in the body of this article.

Technicals   |   Support: 145.5   |   Resistance: 148.46   

Golden Cross Alert:
The 50-day MA is now above the 200-day MA.
Swing Golden Cross Alert: The short-term 10 day MA is now above the 50 day MA.

SBNY has a five bull (top rated) technical rating because it's trading above its 10-, 50-and 200- day moving averages and the stock is up on the day.

Here are the consensus estimates for next quarter. Note that last quarter's actual result is included at the far right.
EARNINGS ESTIMATES
Earnings Date EPS Revenue (Mean) Revenue (Median) Last Quarter (Actual)
2015-07-28 $1.68 $241.1 M $241.0 M $224.8 M Provided by ZACKS


Let's look at the core elements that drive the company's fundamental rating.


Fundamentals Rating Summary



METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Revenue (TTM US$ Millions) 844 677 566

Operating Margin (QTR) 2.886 2.76 2.49 RISING

Net Income (TTM US$ Millions) 314 244 194

Cash from Operations (TTM US$ Millions) 674 237 288 RISING

Non-Performing Loans/Loans 0.14% 0.25% 0.34% FALLING





Stock Returns and Chart

SBNY is up +17.7% over the last three months and up +17.6% over the last six months. The stock price is up +19.7% over the last year.

Before we dig into the fundamental trends that drive the rating, let's look at a two-year stock chart with regression channel and 10-day momentum (on the bottom).
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Now let's examine the visualizations of the critical financial measures.



METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Revenue (TTM US$ Millions) 844677566


Revenue (TTM) has increased for at least five consecutive quarters which triggers a "trend" (in this case it's over 30 consecutive quarters, each to new all-time highs). Revenue has grown 25% year-over-year and 49% over two-years. Any number over 20% year-over-year has an added impact on the fundamental (star) rating.

What do all these numbers mean?
SBNY's fundamental rating benefited these results:
1. The one-year change was positive.
2. The one-year change was greater than +20% (an extra boost to the rating).
3. The two-year change was positive.
Finally, the five+ consecutive quarters of an upward trend in revenue benefited the fundamental (star) rating.

Let's look at Revenue (TTM US$ Millions) in the chart below.


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Operating Revenues/Operating Expense 2.8862.762.49RISING


This ratio (which simply represents how much revenue is generated per one dollar of expense) must be at a minimum above 1.0 in order for a company to turn an operating profit. For the latest quarter SBNY showed a ratio of 2.886. That is an absurdly high number. For context Facebook is at 1.4, WFC is at 1.7, JPM and Citigroup are at 1.6 and BAC is at 1.35. SBNY is showing HUGE margins.

What do all these numbers mean?
A year ago Operating Revenues/Operating Expense was 2.76. In the last year we can see operating margins are increasing and are also currently greater than 1.0 (the critical level).

SBNY's fundamental rating was affected from the operating margin numbers in two ways:
1. The current value is above 1.0 (the firm generates an operating profit).
2. The one-year change was positive (raises the rating).

Let's look at Operating Revenues/Operating Expense in the chart below with the total assets in the orange line.


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Net Income (TTM US$ Millions) 314244194

Net Income (after tax profit) over the trailing twelve months (TTM) for SBNY is rising (and "trending") and has risen for 30 consecutive quarters to all-time highs, just like revenue (TTM). The bank has seen a 29% rise year-over-year in earnings.

In our next chart we plot Net Income (TTM US$ Millions) in the blue bars and the quarterly results in the gold line.


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Cash from Operations (TTM US$ Millions) 674237288RISING


Cash from Operations (TTM US$ Millions) is a critical determinant of stock price since market cap is the present value of all future free cash flows. For SBNY the metric is rising, up 183% year-over-year to a new all-time high of $674 million (TTM).

For our next chart we plot Cash from Operations (TTM US$ Millions) in the blue bars through time.



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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Non-Performing Loans/Loans 0.14%0.25%0.34%FALLING


Non-performing loans are the "bad kind" and SBNY's level is ridiculously low. Non-Performing Loans/Loans in the most recent quarter for SBNY was 0.14% which is down 43% from last year's value of 0.25% (down is good). Further, we can see that Non-performing loans over total loans today relative to two-years ago is decreasing (-57.43%) from two year's value of 0.34%. For context, J.P. Morgan is JPM is at 0.9%, Bank of America (BAC) and Wells Fargo (WFC) are at 1.4% and Citigroup (C) is at 1.1%.

In our final time series chart we plot Non-Performing Loans/Loans in the blue bars.

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Summary
SIVB has essentially the highest earnings margin of any bank, has seen revenue (TTM) and earnings (TTM) hit all-time highs for more than 30 consecutive quarters (that's more than 7-years), has very large deposits, plays in the mortgage realm and sees lower "bad" loans than almost every bank in the world. The technicals are strong, the stock is strong and this very well may be the best bank in the United States.