Signature Bank Defies Trends of Peers (SBNY)

Signature Bank (NASDAQ: SBNY) shares are doing something unusual, rallying on a secondary offering.  On September 2, Signature announced that it was selling 3.5 million shares and would give underwriters a 525,000 over-allotment option.  That morning it was at $29.00.  Now, the compan announced early this morning that it priced those shares at $29.00 after closing at $30.07 yesterday.  The demand was very high as it ended up selling a total of 4.7 million shares and gave the underwriters a 700,000 share over-allotment option.

The company had originally planned to sell $100 million worth ofstock.  This larger offering was about $136.3 million before sellingfees.  Friedman Billings Ramsey was the lead manager in theunderwriting, and co-managers are Oppenheimer and Sandler O’Neill.With Oppenheimer being the co-manager, maybe the bank will be off ofMeredith Whitney’s hit list of pans for the time being.

Before this offering the market cap was $931 million,accounting for the 4% rise today.  What is more interesting is how the shares rallied into the offering rather thanselling off.  A 4% rise on adiscounted offering where the buyers who subscribed into the secondarycould have short sold while they wait forshares is not the usual path that traders see. 

With all of the saleproceeds going to the bank itself, traders are looking at this as ashoring up of capital and as being a growth engine for expansion in the New Yorkarea in a time when other banks are being lined up in front of thefiring squad.

Its 52-week trading range is $22.31 to $38.20.

Jon C. Ogg
September 9, 2008