Signature Bank shares have now lost nearly half of their value in 2022 as its plummeting cryptocurrency exposure continues to weigh on the S&P 500 component.
SBNY Signature Bank,
joined the S&P 500 in December and has fallen 48% this year through Thursday, compared to a 23.1% drop in the S&P 500 SPX index,
and an 18.4% drop in the index-listed fund SPDR S&P Regional Banking KRE,
Shares of the bank had hit a record close of $366.00 on Jan. 12, but closed Thursday at $167.55, the lowest close since Feb. 1, 2021. They have fallen 15.3% this week , on track for the biggest weekly decline since April 2020. , and have fallen 45.3% while losing ground in 11 of the past 13 weeks.
While the bank held about $29 billion in cryptocurrency deposits, stocks appear to have been oversold, analysts said in recent weeks. But the stock continued to weaken amid steep bitcoin BTCUSD losses,
and other cryptocurrencies. Bitcoin is down 56% this year in Friday morning trading.
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Jefferies analyst Casey Haire said last month that Signature Bank’s (SBNY) earnings in 2023 would still be $20 per share, even if it scrapped all of its crypto deposit business. The earnings figure would still convert to a price-to-earnings ratio of 9.5, Haire said, which is in line with SPDR’s Regional Banking ETF (KRE).
The FactSet consensus for 2023 earnings per share was $26.70.
“Given our belief that SBNY’s crypto deposit franchise will survive, we consider the stock to be oversold at these levels,” Haire said at the time.
When Haire wrote his research note on May 13, Signature Bank stock closed at $201.20.
The stock was up 1.9% in morning trade on Friday, but has fallen 15.1% since May 13, while the regional banking ETF has slipped 4.6%.
Despite Signature Bank’s chaotic reception in the stock market, analysts only slightly cut second-quarter earnings estimates, according to FactSet data.
When last checked, Wall Street expected Signature Bank to earn $5.09 per share in the second quarter, compared to $5.10 per share as of May 31 and $5.13 per share as of April 29, according to FactSet. .
And all 17 analysts polled by FactSet have the equivalent of buy ratings on the stock, with the average price target of $340.38 implying a near doubling in price.
The company’s mid-quarter update to May 13 showed core loan growth of $1.7 billion and a decline of $1.4 billion in deposit balances, tied to volatility in the market. crypto space.
Sifting through those numbers, Janney analyst Jake Civiello reiterated a buy rating on May 16 and issued a fair value estimate of $325 per share.
“We have long believed that SBNY has been a way for non-bank investors to gain exposure to digital assets through a highly regulated financial institution,” Civiello said. “We reaffirm that exposure to SBNY is almost entirely deposit-based and not loan-based. That said, recent stock price volatility reminds us that the pendulum swings both ways when it comes to aggressive investors.
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