Signature Bank Reports 2012 Third Quarter Results

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Signature Bank Reports 2012 Third Quarter Results

  • Net Income for the 2012 Third Quarter Reached a Record $47.7 Million, or $1.00 Diluted Earnings Per Share, An Increase of $9.3 Million, or 24.4 Percent, from $38.4 Million, or $0.83 Diluted Earnings Per Share, Reported in the 2011 Third Quarter
  • Average Deposits Increased $672.3 Million, or 5.3 Percent, in the 2012 Third Quarter
  • Deposits in the Third Quarter Rose $670.0 Million, or 5.2 Percent, to $13.62 Billion, Including $114.0 Million in Short-term Escrow Deposit Growth. Deposits for the First Nine Months of 2012 Increased $1.87 Billion, or 15.9 Percent, and Deposits for the Past 12 Months Grew $2.44 Billion, or 21.8 Percent.
  • Loans Increased a Record $728.5 Million, or 9.1 Percent, to $8.76 Billion for the 2012 Third Quarter, Marking the Third Consecutive Quarter of Record Loan Growth
  • Loans Grew $1.91 Billion, or 27.8 Percent, in the First Nine Months of 2012, Already Surpassing Last Year's Full-year Record Growth
  • Non-Accrual Loans Decreased to $28.0 Million, or 0.32 Percent of Total Loans, at September 30, 2012, Compared with $31.9 Million, or 0.40 Percent, at the End of the 2012 Second Quarter and $51.1 Million, or 0.79 Percent, at the End of the 2011 Third Quarter
  • Net Interest Margin Increased 2 and 5 Basis Points, Respectively, to 3.56 Percent, Compared with 3.54 Percent for the 2012 Second Quarter and 3.51 Percent for the 2011 Third Quarter
  • Core Net Interest Margin Excluding Loan Prepayment Penalty Income Decreased 3 Basis Points to 3.41 Percent, Compared with 3.44 Percent for the 2012 Second Quarter
  • Tier 1 Leverage, Tier 1 Risk-Based and Total Risk-Based Capital Ratios were 9.60 Percent, 16.15 Percent and 17.23 Percent, Respectively, at September 30, 2012. Signature Bank Remains Significantly Above FDIC "Well Capitalized" Standards. Tangible Common Equity Ratio was 9.63 Percent
  • One Private Client Banking Team Joined and One Group Director Added to Existing Team During the 2012 Third Quarter; One Team Added Thus Far in 2012 Fourth Quarter

NEW YORK--(BUSINESS WIRE)-- Signature Bank (NAS: SBNY) , a New York-based full-service commercial bank, today announced results for its third quarter ended September 30, 2012.

Net income for the 2012 third quarter reached a record $47.7 million, or $1.00 diluted earnings per share, versus $38.4 million, or $0.83 diluted earnings per share, for the 2011 third quarter. The record net income for the 2012 third quarter, when compared with the third quarter of 2011, is primarily due to an increase in net interest income, fueled by strong deposit growth and record loan growth. These factors were partially offset by an increase in non-interest expense.


Net interest income for the 2012 third quarter reached $141.7 million, an increase of $23.8 million, or 20.2 percent, versus the 2011 third quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $16.46 billion at September 30, 2012, up $2.6 billion, or 18.8 percent, from $13.86 billion at September 30, 2011. Average assets for the 2012 third quarter reached $16.1 billion, an increase of $2.51 billion, or 18.5 percent, compared with the third quarter of last year.

Deposits for the 2012 third quarter increased $670.0 million, or 5.2 percent, to $13.62 billion at September 30, 2012. When compared with deposits at December 31, 2011, overall deposit growth during the first nine months of 2012 was 15.9 percent, or $1.87 billion. Excluding short-term escrow deposits of $981.7 million and brokered deposits of $93.0 million at the end of the 2012 third quarter and $867.8 million and $87.9 million, respectively, at the end of the 2012 second quarter, core deposits grew $550.9 million for the quarter. Average deposits for the 2012 third quarter reached $13.37 billion, an increase of $672.3 million, or 5.3 percent.

"We delivered another quarter of stellar deposit, loan and top-line revenue growth, marking our 12th consecutive quarter of record earnings. We continued the transformation of our well-capitalized balance sheet with another quarter of record loan growth stemming from all of our major lending areas, including commercial and industrial, commercial real estate and specialty finance. At September 30, 2011, loans were 46.5 percent of the balance sheet and now, they are in excess of 53 percent at September 30, 2012. This transformation has helped mitigate the effect from the prolonged low-interest rate environment on our net interest margin," explained Signature Bank President and Chief Executive Officer Joseph J. DePaolo.

"Additionally, the successful introduction and subsequent implementation of our recently established specialty finance business, Signature Financial, headed by experienced professionals, has allowed us to again focus on the hiring of our traditional banking teams. Hence, we are pleased to have added two additional teams and a group director to the Signature Bank network," DePaolo noted.

Scott A. Shay, Chairman of the Board, said: "This has been a quarter in which all of Signature Bank's cylinders -- new and established -- worked in tandem. Deposits broadly funded robust loan growth as more clients on both sides of our balance sheet recognize that Signature Bank's service is best in class. We achieved earnings growth despite challenging headwinds from the Federal Reserve's QE3 policy, which has put substantial pressure on spreads throughout the market. We continue to think of our depositors first as we maintain a conservative and well-capitalized balance sheet in anticipation of an ongoing murky economic outlook."

Capital

The Bank's Tier 1 leverage, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.60 percent, 16.15 percent and 17.23 percent, respectively, as of September 30, 2012. Each of these ratios is well in excess of regulatory requirements. The Bank's strong risk-based capital ratios reflect the relatively low risk profile of the Bank's balance sheet. The Bank's tangible common equity ratio remains strong at 9.63 percent. The Bank defines the tangible common equity ratio as the ratio of tangible common equity to adjusted tangible assets and calculates this ratio by dividing total consolidated common shareholders' equity by consolidated total assets.

Net Interest Income

Net interest income for the 2012 third quarter was $141.7 million, up $23.8 million, or 20.2 percent, versus the 2011 third quarter, primarily due to growth in average interest-earning assets. Average interest-earning assets of $15.82 billion for the 2012 third quarter represent an increase of $2.48 billion, or 18.6 percent, when compared with the 2011 third quarter. Yield on interest-earning assets for the 2012 third quarter decreased 18 basis points, to 4.25 percent, versus the third quarter of last year. This decrease was primarily attributable to the continued effect of the prolonged low interest rate environment.

Average cost of deposits and average cost of funds for the third quarter of 2012 decreased by 21 and 25 basis points, respectively, compared with the 2011 third quarter to 0.62 percent and 0.75 percent. These decreases were predominantly due to the continued effect of the prolonged low interest rate environment.

Net interest margin for the 2012 third quarter was 3.56 percent versus 3.51 percent reported in the 2011 third quarter. On a linked quarter basis, net interest margin increased 2 basis points. The linked quarter increase was primarily the result of an increase of $2.3 million in loan prepayment penalty income.

Provision for Loan and Lease Losses

The Bank's provision for loan and lease losses for the 2012 third quarter was $10.1 million, a decrease of $2.1 million, or 16.9 percent, versus the comparable period last year. The decrease was largely due to a decrease in charge-offs.

Net charge-offs for the 2012 third quarter were $4.6 million, or 0.22 percent of average loans on an annualized basis, compared with $4.7 million, or 0.25 percent, for the 2012 second quarter and $7.0 million, or 0.44 percent, for the 2011 third quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2012 third quarter was $8.3 million, a decrease of $500 thousand versus $8.8 million reported in the 2011 third quarter. The decrease was due to a $1.2 million decline in net gains on sales of securities.

Non-interest expense for the 2012 third quarter rose $9.2 million, or 20.2 percent, to $54.9 million versus $45.7 million reported in the same period a year ago. The increase was primarily a result of the addition of new private client banking teams and the launch of Signature Financial.

The Bank's efficiency ratio increased slightly to 36.6 percent for the third quarter of 2012 compared with 36.1 percent for same period last year. The increase was primarily due to the hiring for Signature Financial. On a linked quarter basis, the Bank's efficiency ratio improved to 36.6 percent from 38.1 percent for the second quarter of 2012 as we are now gaining leverage from our specialty finance business.

Loans

Loans, excluding loans held for sale, grew a record $728.5 million, or 9.1 percent, during the 2012 third quarter to $8.76 billion, versus $8.03 billion at June 30, 2012. At September 30, 2012, loans accounted for 53.2 percent of total assets, compared with 50.6 percent at the end of the 2012 second quarter and 46.5 percent at the end of the 2011 third quarter. Average loans, excluding loans held for sale, were $8.38 billion in the 2012 third quarter, an increase of $686.9 million, or 8.9 percent, from the 2012 second quarter and $2.11 billion, or 33.7 percent, from the 2011 third quarter. The increase in loans for the quarter was primarily driven by growth in commercial real estate and multi-family loans as well as specialty finance.

At September 30, 2012, non-accrual loans were $28.0 million, representing 0.32 percent of total loans and 0.17 percent of total assets, versus non-accrual loans of $31.9 million, or 0.40 percent of total loans, at June 30, 2012 and $51.1 million, or 0.79 percent of total loans, at September 30, 2011. At September 30, 2012, the ratio of allowance for loan and lease losses to total loans was 1.18 percent, versus 1.21 percent at June 30, 2012 and 1.30 percent at September 30, 2011. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 367 percent for the 2012 third quarter versus 305 percent for the second quarter of 2012 and 163 percent for the third quarter of 2011.

Conference Call

Signature Bank's management will host a conference call to review results of the 2012 third quarter on Tuesday, October 23, 2012, at 10:00 AM ET. All participants should dial 480-629-9692 at least ten minutes prior to the start of the call.

To hear a live Web simulcast or to listen to the archived webcast following completion of the call, please visit the Bank's website at www.signatureny.com, click on the "Investor Relations" tab, then select "Company News," followed by "Conference Calls," to access the link to the call. To listen to a telephone replay of the conference call, please dial 303-590-3030 and enter reservation identification number 4568293. The replay will be available from approximately 12:00 PM ET on Tuesday, October 23, 2012 through 11:59 PM ET on Friday, October 26, 2012.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 25 private client offices throughout the New York metropolitan area. The Bank's growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers. Signature Bank offers a wide variety of business and personal banking products and services. The Bank operates Signature Financial, LLC, a specialty finance subsidiary focused on equipment finance and leasing, transportation financing and taxi medallion financing. Investment, brokerage, asset management and insurance products and services are offered through the Bank's subsidiary, Signature Securities Group Corporation, a licensed broker-dealer, investment adviser and member FINRA/SIPC.

Signature Bank's 25 offices are located: In Manhattan (9) - 261 Madison Avenue; 300 Park Avenue; 71 Broadway; 565 Fifth Avenue; 950 Third Avenue; 200 Park Avenue South; 1020 Madison Avenue; 50 West 57th Street and 2 Penn Plaza. Brooklyn (3) - 26 Court Street; 84 Broadway and 6321 New Utrecht Avenue. Westchester (2) - 1C Quaker Ridge Road, New Rochelle and 360 Hamilton Avenue, White Plains. Long Island (6) - 1225 Franklin Avenue, Garden City; 279 Sunrise Highway, Rockville Centre; 68 South Service Road, Melville; 923 Broadway, Woodmere; 40 Cuttermill Road, Great Neck and 100 Jericho Quadrangle, Jericho. Queens (3) - 36-36 33rd Street, Long Island City; 78-27 37th Avenue, Jackson Heights and 8936 Sutphin Blvd., Jamaica. Bronx (1) - 421 Hunts Point Avenue, Bronx. Staten Island (1) - 2066 Hylan Blvd.

For more information, please visit www.signatureny.com.

This press release and oral statements made from time to time by our representatives contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties.You should not place undue reliance on those statements because they are subject to numerous risks and uncertainties relating to our operations and business environment, all of which are difficult to predict and may be beyond our control.Forward-looking statements include information concerning our future results, interest rates and the interest rate environment, loan and deposit growth, loan performance, operations, new private client team hires, new office openings and business strategy.These statements often include words such as "may," "believe," "expect," "anticipate," "intend," "potential," "opportunity," "could," "project," "seek," "should," "will," would," "plan," "estimate" or other similar expressions.As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results.They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements.These factors include but are not limited to: (i) prevailing economic conditions; (ii) changes in interest rates, loan demand, real estate values and competition, any of which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance, including earnings on interest-bearing assets; (iii) the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit loss reserve levels; (iv) changes in monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; (v) changes in the banking and other financial services regulatory environment and (vi) competition for qualified personnel and desirable office locations.As you read and consider forward-looking statements, you should understand that these statements are not guarantees of performance or results.They involve risks, uncertainties and assumptions and can change as a result of many possible events or factors, not all of which are known to us or in our control.Although we believe that these forward-looking statements are based on reasonable assumptions, beliefs and expectations, if a change occurs or our beliefs, assumptions and expectations were incorrect, our business, financial condition, liquidity or results of operations may vary materially from those expressed in our forward-looking statements.Additional risks are described in our quarterly and annual reports filed with the FDIC.You should keep in mind that any forward-looking statements made by Signature Bank speak only as of the date on which they were made. New risks and uncertainties come up from time to time, and we cannot predict these events or how they may affect the Bank.Signature Bank has no duty to, and does not intend to, update or revise the forward-looking statements after the date on which they are made.In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this release or elsewhere might not reflect actual results.

    
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
 

Three months ended
September 30,

Nine months ended

September 30,

(dollars in thousands, except per share amounts) 2012 2011 2012 2011
INTEREST AND DIVIDEND INCOME
Loans held for sale$9518452,4812,809
Loans and leases, net109,15485,887301,052242,487
Securities available-for-sale53,35456,870167,288165,281
Securities held-to-maturity5,1354,71514,74013,713
Other short-term investments  508  502  1,512  1,431 
Total interest income  169,102  148,819  487,073  425,721 
INTEREST EXPENSE
Deposits20,98223,54563,92768,662
Federal funds purchased and securities sold under
agreements to repurchase5,3665,80417,15516,602
Federal Home Loan Bank advances  1,083  1,610  3,328  5,937 
Total interest expense  27,431  30,959  84,410  91,201 
Net interest income before provision for loan and lease losses141,671117,860402,663334,520
Provision for loan and lease losses  10,072  12,122  31,039  37,295 
Net interest income after provision for loan and lease losses  131,599  105,738  371,624  297,225 
NON-INTEREST INCOME
Commissions1,8412,1726,2756,872
Fees and service charges4,0293,77011,55211,451
Net gains on sales of securities3451,5705,91313,158
Net gains on sales of loans2,4741,0956,6633,247
Other-than-temporary impairment losses on securities:
Total impairment losses on securities(98)(3,413)(9,478)(11,651)
Portion recognized in other comprehensive income (before taxes) (336) 3,197  6,929  9,903 
Net impairment losses on securities recognized in earnings(434)(216)(2,549)(1,748)
Net trading income20373560210
Other (loss) income  (118) 357  (1,074) 947 
Total non-interest income  8,340  8,821  27,340  34,137 
NON-INTEREST EXPENSE
Salaries and benefits37,63529,665107,39884,430
Occupancy and equipment4,0454,23712,70412,022
Other general and administrative  13,260  11,802  40,037  39,143 
Total non-interest expense  54,940  45,704  160,139  135,595 
Income before income taxes84,99968,855238,825195,767
Income tax expense  37,301  30,505  103,476  86,217 
Net income $47,698  38,350  135,349  109,550 
PER COMMON SHARE DATA
Earnings per share - basic$1.020.842.912.56
Earnings per share - diluted$1.000.832.862.52
 
SIGNATURE BANK  
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
September 30,December 31,
20122011
(dollars in thousands, except per share amounts) (unaudited)  
ASSETS
Cash and due from banks$40,23134,083
Short-term investments  9,902 6,071
Total cash and cash equivalents  50,133 40,154
Securities available-for-sale (pledged $2,520,707 at September 30, 2012
and $2,672,093 at December 31, 2011)6,267,7046,512,855
Securities held-to-maturity (fair value $663,879 at September 30, 2012
and $571,980 at December 31, 2011; pledged $459,890 at
September 30, 2012 and $352,865 at December 31, 2011)643,896556,044
Federal Home Loan Bank stock38,31248,152
Loans held for sale411,668392,025
Loans and leases, net8,653,5706,764,564
Premises and equipment, net31,59330,574
Accrued interest and dividends receivable62,52760,533
Other assets  299,851 261,219
Total assets $16,459,254 14,666,120
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing3,879,0443,148,436
Interest-bearing  9,744,569 8,605,702
Total deposits  13,623,613 11,754,138
Federal funds purchased and securities sold under agreements
to repurchase786,000750,800
Federal Home Loan Bank advances330,000675,000
Accrued expenses and other liabilities  135,359 78,066
Total liabilities  14,874,972 13,258,004
Shareholders' equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at September 30, 2012 and December 31, 2011--
Common stock, par value $.01 per share; 64,000,000 shares authorized;
46,866,750 and 46,181,890 shares issued and outstanding
at September 30, 2012 and December 31, 2011469462
Additional paid-in capital984,569954,833
Retained earnings558,381423,032
Net unrealized gains on securities available-for-sale, net of tax  40,863 29,789
Total sha
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