The earnings beat was driven by a lower-than-anticipated provision of $4.2 million for credit losses and stronger fee income of $38 million, according to Stephens analyst Matt Breese.
However, Signature’s total deposits in the second quarter declined by $5.04 billion to $104.12 billion, driven mainly by a drop in client balances for Signature’s New York banking teams, which decreased by $2.4 billion, and its digital-asset banking team, which also fell by $2.4 billion, the statement said. This resulted in lower cash balances, which dropped by about 45% quarter over quarter, said Breese, adding that the decline was more than expected.
“Overall, we believe shares could be weak today on deposit flows, higher expenses and a smaller balance sheet,” Breese said in the note. He has an Overweight rating on Signature’s stock and a $415 target price.
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