Continuing with its private client banking team expansion, Signature Bank SBNY has unveiled a business line with a nine-person team for the Healthcare Banking and Finance arm. The new private client banking team will work in the healthcare space by offering lending services and garnering deposits to clients.
The company has hired Matthew T. Huber as senior vice president and managing group director of the Healthcare Banking and Finance team.
The new lending vertical will serve non-profit and for-profit companies offering a range of healthcare services, as well as senior housing owners and operators, large physician practices, hospitals, drug and rehabilitation facilities, ambulatory surgery centers, skilled nursing homes, and facilities offering independent living, assisted living and memory care and continuing care retirement communities.
Management noted, “Signature Bank had been seeking the right opportunity to enter the healthcare banking and finance space for years. Healthcare is a continually evolving and everchanging industry, as baby boomers come of age, people live longer and medical technology advances. All this places an even greater demand for healthcare services, thereby elevating the opportunity for broader lending and finance services.”
Hence, leveraging the increasing need for commercial healthcare finance, the company is likely to witness decent lending activity.
Markedly, since the end of first-quarter 2022, the bank onboarded six private client banking teams, including one in New York. It expanded the footprint on the West Coast. Also, two teams were added in Reno, NV, marking its entry into the business-friendly state. Such coast-to-coast business expansion will drive lending activity. It will help the company meet its loan and securities growth target of $4-$7 billion for the ongoing quarter.
However, as the company continues to hire for business expansion, it is likely to see an increase in the cost base. Non-interest expenses witnessed a compound annual growth rate (CAGR) of 13.1% over the last four years (2018-2021), with a rising trend in the first quarter of 2022.
The upsurge chiefly stemmed from the rise in salaries and benefits due to the massive hiring of private client banking teams. The continuation of such a trend will hinder its bottom-line expansion. Further, management expects non-interest expenses to grow 16% in 2022.
The bank’s shares have declined 20% in the past year, wider than the industry’s fall of 8.1%.
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SBNY currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Markedly, in order to tackle the red-hot inflation, the Fed already raised interest rates by 25 basis points (bps) in March and by 50 bps this month (the biggest move in more than two decades), following which short-term interest rates now lie at 0.75-1.00%. Along with the rising rate environment, a continued rise in the demand for loans and decent economic growth are likely to drive lending activities for banks. Leveraging on this, a number of players are enhancing their capabilities on the back of expansion moves.
In early April, Citizens Financial Group, Inc. CFG completed the acquisition of Investors Bancorp, Inc. In July 2021, CFG announced that it would acquire Investors for $3.5 billion.
In February, CFG closed the acquisition of 80 East Coast branches and the national online deposit business from HSBC. The acquisitions will add $29 billion of deposits and $24 billion of loans, creating a strong foundation for revenue growth. Moreover, CFG will likely be able to strengthen its banking franchise and geographic reach.
Earlier this month, Fifth Third Bancorp FITB announced the completion of its acquisition of Dividend Finance, which is a leading fintech point-of-sale lender providing financing solutions for residential renewable energy and sustainability-focused home improvement.
The acquisition, announced in January, is accretive to Fifth Third as it enhances its digital service capabilities by providing its customers with solar and sustainable home improvement options.
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