SBNY got up before the sun and released 2Q16 earnings a little earlier than scheduled.
Full press release: http://www.businesswire.com/news/home/20160720005175/en/Sign…
Net Income for the 2016 Second Quarter Reached $102.2 Million, or $1.90 Diluted Earnings Per Share, An Increase of $11.8 Million, or 13.0 Percent, from $90.5 Million, or $1.77 Diluted Earnings Per Share, Reported in the 2015 Second Quarter. 2016 Second Quarter Net Income Includes a $24.3 Million Increase in the Provision for Loan Losses Predominantly for Chicago Taxi Medallion Loans
Total Deposits in the Second Quarter Grew $1.47 Billion to $29.58 Billion; Total Deposits Have Grown $5.12 Billion, or 21.0 Percent, Since the End of the 2015 Second Quarter
Average Deposits Increased $1.39 Billion, or 5.0 Percent, in the 2016 Second Quarter
For the 2016 Second Quarter, Loans Increased $1.67 Billion, or 6.7 Percent, to $26.71 Billion. Since the End of the 2015 Second Quarter, Loans Have Increased 30.1 Percent, or $6.18 Billion
Non-Accrual Loans were $129.5 Million, or 0.48 Percent of Total Loans, at June 30, 2016, Versus $105.0 Million, or 0.42 Percent, at the End of the 2016 First Quarter and $41.6 Million, or 0.20 Percent, at the End of the 2015 Second Quarter. The Increase in Non-Accrual Loans for the Quarter Was Predominantly Due to Taxi Medallion Loans
Net Interest Margin Was 3.18 Percent, Compared with 3.32 Percent for the 2016 First Quarter and 3.27 Percent for the 2015 Second Quarter. Core Net Interest Margin Excluding Loan Prepayment Penalty Income Decreased Five Basis Points to 3.12 Percent for the 2016 Second Quarter when Compared with the 2016 First Quarter. Four Basis Points of the Decline Is Due to the April 2016 Subordinated Debt Issuance
Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based and Total Risk-Based Capital Ratios were 9.60 Percent, 12.00 Percent, 12.00 Percent and 13.67 Percent, Respectively, at June 30, 2016. Signature Bank Remains Significantly Above FDIC “Well Capitalized” Standards. Tangible Common Equity Ratio Was 9.52 Percent
In April 2016, the Bank Successfully Issued $260.0 Million in Subordinated Debt to Institutional Investors
Two Private Client Banking Teams Joined During the 2016 Second Quarter; To Date Three Teams Joined in 2016
As I see it, Net Income was $102 million, or $1.90. up 7.3%, from $1.77 a year ago. However, it would have been $2.35, up 33%, if they hadn’t taken a $24.3 million increase in provision for possible Chicago taxi medallion losses (due to Uber). This brings them up to 30% of the total of those loans, so I guess they decided to take as much of the possible hit that they could see, all at once, and get it out of the way. When they stop taking these additional provisions their apparent earnings will skyrocket.
Just the way I see it though. Please decide for yourself.
When they stop taking these additional provisions their apparent earnings will skyrocket.
Just the way I see it though. Please decide for yourself.
That makes sense Saul. The main problem I see is that with this very low interest rate environment it will be hard for banks (large and small) to grow their earnings/revenue. I don’t foresee low rates going away anytime soon.
And SBNY’s efficiency ratio was 0.31. If you understand anything efficiency ratios you’ll know that that is beyond amazing. And their book value was up 22.6% to $65 from $53 a year ago.
The main problem I see is that with this very low interest rate environment it will be hard for banks (large and small) to grow their earnings/revenue.
Small businesses in need of expansion capitol have to be loving these low rates. And the deposits don’t cost the bank much at all. Business loans are usually shorter term or are linked to variable rates of some sort so in a rising rate environment the bank won’t get hit as badly as a bank loaded with 30 year home loans at low rates.
For many years I needed an inventory loan in the spring and could always pay it off by August so I never had a problem paying whatever the rate was, even that year of 19% interest.
JT ~ Debt free but keep a line of credit handy for special opportunities. Currently 4 1/2%
I’m relieved that the market is starting to realize the same things I was seeing. When I looked an hour or so ago, SBNY was down about $9 and I bought a little at $120.85. It’s now at $123.30 which is a bit better.
Agreed. Amazing how much of the call Q&A was focused on the medallion loans (Chicago and NY, specifically), which constitute such a small percentage of SBNY’s total business. All fair questions when that small percentage eats up 20% of a quarter’s NI. The management commentary (which seemed to satisfy the querying analysts) is that this one-time charge should put the medallion concerns to bed, at least for a while. Listen to the call and make your own decision on whether that optimism is accurate. (FWIW, my take is that management is being very conservative with their medallion valuations, assumptions and charges.)
I almost pulled the trigger on buying some more (it’s already a relatively high percentage for me), but I’ve spent the last 3 earnings seasons buying on immediate drops, only to watch them continue falling for days or more after. Am I learning from past mistakes or irrationally trying to predict and time a market with no memory? Time will tell.
They call me,
Net interest income, which doesn’t include the Provision for loan and lease losses (Medallion), was up:
2015 Q2: 22%
2015 Q3: 21.8%
2015 Q4: 21.08%
2016 Q1: 25.1%
2016 Q2: 19.2%
I think the 19.2% might have been a miss, although I don’t know of a place to find what was estimated.
Is this worrisome to anyone? Q1 was such a positive jump…kind of a let down this Q, no?