Raymond James on Wednesday cut its rating on Signature Bank to market perform from strong buy after the lender disclosed plans to diversity its business and limit its exposure to digital currencies. “While we remain bullish on the bank’s long-term prospects to produce superior loan growth, operating efficiency, and credit metrics, we see near-to intermediate-term headwinds related to its balance sheet initiatives,” analyst David J. Long said in a research note. The bank’s plan to diversify its business model will likely result in slower growth and net interest margin compression, Long said. Signature Bank has disclosed plans to limit its digital currency-related deposit exposure to less than 20% of total deposits and run off $8 billion to $12 billion of deposits in the next several months. Meanwhile, its largest lending portfolio, capital call lines of credit, “will remain stagnant or potentially decline as it focuses on deposit gathering within its fund banking business,” Long said. Shares of Signature Bank are down 2.8% in premarket trades.
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