Signature Bank

Fourth-quarter 2022 net income was $301 million, up $29 million, or 11%, from $272 million a year ago, and diluted EPS was $4.65 versus $4.34 last year. Pretax pre-provision earnings were $451 million, up $65 million, or 17%, year over year. Net interest income was $639 million, up $103 million, or 19%, from the 2021 fourth quarter but down $35 million, or 5%, from the prior quarter. Net interest margin was 2.31% on a tax-equivalent basis, down 7 basis points sequentially. Total deposits declined $14.2 billion, or 14%, to $89 billion, while noninterest-bearing deposits fell to $31.5 billion, or 36% of total deposits. Full-year 2022 loans grew $9.4 billion, or 15%, and management said 2023 has already started with $1.8 billion of total deposit growth, including $2.5 billion of traditional deposit inflows offset by a $700 million decline in digital deposits. Guidance-wise, management expects to reduce digital deposits by another $3 billion to $5 billion by year-end 2023, plans to keep cash in the $4 billion to $6 billion range, expects the first-quarter NIM to be down about 10 basis points, and said loan balances are likely to be flat to down a little as capital call lines and other portfolios resize.

Joseph DePaolo framed 2022 as a year of execution on growth goals, citing 12 private client banking teams hired, entry into Nevada, the launch of healthcare banking and finance, and record earnings. His tone was confident but defensive on deposits: he emphasized that the bank chose not to chase rationally priced high-cost funding and instead wanted a more granular, stable base, even if that meant an annual deposit decline. He also said Signature remains committed to digital-asset-related banking over the long term, but only with clearer regulation and more confidence in the ecosystem.

Stephen Wyremski focused on the mechanics behind the quarter: net interest income was $639 million, NIM was 2.31%, deposit costs rose to 1.91%, borrowing balances averaged $4.5 billion with a 3.80% cost, and overall cost of funds reached 1.99%. He noted the firm plans to keep cash between $4 billion and $6 billion and expects to pay down borrowings as traditional deposits return, which should help margins. On capital, he highlighted a CET1 ratio of 10.42% and total risk-based capital of 12.33%, and the company raised the common dividend by $0.14 to $0.70 per share starting in 1Q23.

Analysts focused mainly on deposit runoff, margin pressure, loan growth, and crypto exposure. Management said the $2.3 billion of high-rate deposits left mostly in 4Q, that digital deposits still have another $3 billion to $5 billion of planned runoff, and that loan balances are likely to be flat to down a little as capital call lines and some larger lending businesses shrink. On crypto, management stressed that Signature does not trade, custody, or invest in crypto assets, said Signet volumes remained strong, and argued that clearer regulation is needed rather than a retreat from the space.