Signature Bank, founded in New York in 2001, can look back on eventful two decades. In that time, the financial institution has evolved from a traditional lender to a technology company. "Since our founding, the bank has grown dramatically and has transformed organically, especially in the last three years," Joseph DePaolo clarifies.
The financial institution kicked off a new era in early 2019 with the launch of "Signet." This real-time digital payment platform uses blockchain technology and enables transactions 24/7/365, a decisive advantage not only in the case of cyber currencies, which are traded around the clock.
A look at recent business performance shows that crypto is also currently driving growth at the company. In the second quarter of 2021 alone, Signature increased deposits from customers with digital assets by USD 6.3 billion, bringing total assets in this area to USD 18 billion. In fact, the new digital assets accounted for more than half of the record USD 11.6 billion increase in total deposits at the bank. With a total of USD 85.5bn, Signature is currently already ranked 22nd on S&P Global's list.
Remarkably, the bank for high net worth individuals and institutions has managed all of its deposit growth since its inception two decades ago without acquisitions. Going forward, Signature intends to continue on this more conservative path. "We remain focused on the purely organic growth that has made this institution successful," explains CEO DePaolo. The manager considers the development of long-term customer relationships most important for maintaining the course of success.
Signature has plenty of growth opportunities on its own. These include further commercial banking offerings such as the loans launched around two years ago specifically for private equity and venture capital companies. But the biggest potential is likely to be in blockchain-based products and services. Here, Signature has recently attracted renewed attention in the industry. In the middle of the year, for example, the company became the first US financial services provider to integrate stablecoins into its digital payment platform Signet to enable dollar payments. According to experts, stablecoins will play an increasingly large role in commerce and decentralized finance (DeFi) due to their speed and reliability. In addition, crypto lending is also a new growth area in the Signature portfolio.
For a long time, Signature stock eked out a shadowy existence on the stock market. But in the wake of the focus on Bitcoin & Co, Wall Street is paying much more attention to the company. Synchronous with the rise of cryptos, there was an initial spark in the stock last November. Within a few weeks, the price more than tripled. The upward movement really took off after the "Golden Cross" at the end of December. The 100 day average intersected the longer 200 day average from below and provided a strong bullish signal. Since March of this year, the bank stock has now had to process this rise and has therefore entered a consolidation phase, which is taking place in the USD 250 area. However, analysts see further opportunities for gains: Wall Street's average 12-month price target is USD 320, which corresponds to an increase of 27%.
In order to achieve an attractive yield with the new Softcallable Barrier Reverse Convertible, Signature shares are welcome to continue their breather. The CHF-denominated product has a coupon of 8.00% p.a., while the USD version even offers a yield of 9.00% p.a.. The only requirement is that the barrier remains intact during the maximum term of 15 months. Both products are equipped with a comfortable risk buffer of 35%. The softcallable function can shorten the term of the products to a minimum of half a year. The first observation day takes place after 6 months - and subsequently every quarter.
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