Wednesday, FBR Capital Markets downgraded Signature Bank (SBNY) shares to Market Perform from Outperform and increased its price target to $32. The brokerage raised its 2009 operating EPS estimate to $1.25 from $1.17, and its 2010 estimate to $1.45 from $1.42.
Analyst Bob Ramsey downgraded the stock on valuation, despite strong 2009 second quarter results. Following a 20% rise in the shares over the past month, while the S&P 500 was up about 9%, the stock now trades at 1.8x tangible book and 21.6x estimated 2010 EPS, a level from which the analyst sees little upside in the current economic environment.
The analyst continues to consider SBNY one of the "haves" in the financial industry, with above-average long-term growth prospects and below-average credit risk. Accordingly, the analyst believes the stock deserves its current premium valuation. However, the analyst sees limited upside from current levels.
Due to its smaller relative concentration of assets invested in loans, SBNY's earnings stream is less sensitive to credit losses than most other banks. The analyst also noted that SBNY's business model provides incentives for "acquired" lending teams to pull in the strongest relationships, which should have a favorable impact on loan quality.
Despite these strengths, the analyst expects continued credit deterioration in metro New York in coming quarters, which he expects will be a manageable headwind for SBNY. The analyst provides his estimates of SBNY's NCOs by loan portfolio in 2009 and 2010, and he offers sensitivity around his estimates so that investors can make their own assumptions and evaluate the impact on earnings.
Currently, SBNY is down $1.43 or 4.56% and trading at $29.96.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.