Signature Bank Reports 2012 Fourth Quarter and Year-End Results
Signature Bank Reports 2012 Fourth Quarter and Year-End Results
Deposit Growth, Loan Growth and Net Income All Reach Record Levels in 2012
- Net Income for the 2012 Fourth Quarter Reached a Record $50.1 Million, or $1.05 Diluted Earnings Per Share, An Increase of $10.1 Million, or 25.4 Percent, from $40.0 Million, or $0.85 Diluted Earnings Per Share Reported in the 2011 Fourth Quarter.
- Net Income for 2012 Reached a Record $185.5 Million or $3.91 Diluted Earnings Per Share, Compared with $149.5 Million or $3.37 Diluted Earnings Per Share in 2011, Up $36.0 Million, or 24.0 Percent.
- Deposits in the Fourth Quarter Rose $459.0 Million to $14.08 Billion. Average Deposits Increased $608.7 Million, or 4.6 Percent, in the 2012 Fourth Quarter.
- Deposits for 2012 Grew a Record $2.33 Billion, or 19.8 Percent. Core Deposits Up a Record $2.17 Billion, or 19.8 Percent. Average Deposits for 2012 at $13.08 Billion, Representing an Increase of $2.21 Billion, or 20.4 Percent, Versus $10.86 Billion in 2011.
- Loans Increased a Record $1.02 Billion, or 11.6 Percent, to $9.77 Billion in the 2012 Fourth Quarter Marking the Fourth Consecutive Quarter of Record Loan Growth. Since Year-end 2011, Loans Increased a Record $2.92 Billion, or 42.6 Percent.
- Non-Accrual Loans Decreased to $27.2 Million, or 0.28 Percent of Total Loans, at December 31, 2012, Versus $28.0 Million, or 0.32 Percent of Total Loans, at the End of the 2012 Third Quarter. Non-Accrual Loans at Year-end 2011 were $42.2 Million, or 0.62 Percent of Total Loans.
- Net Interest Margin Was 3.53 Percent for the 2012 Fourth Quarter, Compared with 3.56 Percent for the 2012 Third Quarter and 3.55 Percent for the 2011 Fourth Quarter.
- Core Net Interest Margin, Which Excludes Loan Prepayment Penalty Income, was 3.32 Percent for the 2012 Fourth Quarter, Compared with 3.41 Percent for the 2012 Third Quarter.
- Tier 1 Leverage, Tier 1 Risk-Based and Total Risk-Based Capital Ratios were 9.51 Percent, 15.32 Percent and 16.35 Percent, Respectively, at December 31, 2012. Signature Bank Remains Significantly Above FDIC "Well-Capitalized" Standards. Tangible Common Equity Ratio was 9.45 Percent.
- One Private Client Banking Team Joined During the 2012 Fourth Quarter; Four During the Full Year. Additionally, the Bank Launched Signature Financial in 2012, Marking Its Entry Into the Specialty Finance Arena.
Net income for the 2012 fourth quarter reached a record $50.1 million, or $1.05 diluted earnings per share, compared with $40.0 million, or $0.85 diluted earnings per share, for the 2011 fourth quarter. The record net income for the 2012 fourth quarter, when compared with the same period last year, is primarily the result of an increase in net interest income, fueled by record core deposit growth and record loan growth. These factors were partially offset by an increase in non-interest expenses.
Net interest income for the 2012 fourth quarter rose $21.9 million, or 17.5 percent, to $147.1 million, compared with the fourth quarter of 2011. This increase is primarily due to growth in average interest-earning assets. Total assets reached $17.46 billion at December 31, 2012, expanding $2.79 billion, or 19.0 percent, from $14.67 billion at December 31, 2011. Average assets for the 2012 fourth quarter reached $16.92 billion, an increase of $2.64 billion, or 18.5 percent, versus the comparable period a year ago.
Deposits for the 2012 fourth quarter rose $459.0 million, or 3.4 percent, to $14.08 billion at December 31, 2012. Overall deposit growth in 2012 was 19.8 percent, or a record $2.33 billion, when compared with deposits at the end of 2011. Excluding short-term escrow and brokered deposits of $994.8 million at year-end 2012 and $831.8 million at year-end 2011, core deposits increased a record $2.17 billion, or 19.8 percent, in 2012. Average total deposits for 2012 were $13.08 billion, growing $2.21 billion, or 20.4 percent, versus average total deposits of $10.86 billion for 2011.
"Signature Bank delivered another year of significant deposit, loan and top-line revenue growth in 2012, which also marked our fifth consecutive year of record earnings. The transformation of our well-capitalized balance sheet continued throughout the year, with all of our major lending areas contributing to the record loan growth, including commercial and industrial, commercial real estate including multi-family and specialty finance. At December 31, 2011, loans comprised 46.7 percent of the balance sheet and as of December 31, 2012, they are now at 56.0 percent. This transformation has helped to somewhat mitigate the effects of the prolonged low-interest rate environment on our net interest margin," said Joseph J. DePaolo, President and Chief Executive Officer.
"Our relationship-based, single-point-of-contact model, coupled with our healthy balance sheet, once again led to the Bank earning many accolades this year, including being named among the top five banks in the U.S. by Forbes, Bank Director Magazine and the ABA Banking Journal. The foundation for our continued success lies in our core philosophy of maintaining a conservative and well-capitalized balance sheet for our depositors. Depositor safety has been -- and always will be - at the forefront of our business model," DePaolo explained.
Scott A. Shay, Chairman of the Board, added: "This past year we again demonstrated our consistency, discipline and reputation as the bank of choice for New York privately owned businesses, based on two hallmarks of our institution, namely, safety and service. In terms of safety, our capital ratios continue to be considerably higher than our mega-bank competitors. Additionally, our balance sheet is straightforward, enabling us to boast a very low non-performing asset ratio of 0.19 percent. This commitment to safety also allows clients to rest easy knowing their funds are secure in a credit worthy institution. Furthermore, our ability to distinguish the Bank in the marketplace through unparalleled service is a direct reflection of our dedicated, talented colleagues, who treat each client as their most important. We pledge to stand by these two pillars in 2013 and beyond."
The Bank's tier 1 leverage, tier 1 risk-based, and total risk-based capital ratios were approximately 9.51 percent, 15.32 percent and 16.35 percent, respectively, as of December 31, 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 9.45 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 fourth quarter was $147.1 million, up $21.9 million, or 17.5 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $16.58 billion for the 2012 fourth quarter represent an increase of $2.56 billion, or 18.3 percent, from the 2011 fourth quarter. Yield on interest-earning assets for the 2012 fourth quarter decreased 22 basis points, to 4.16 percent, versus the fourth 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 2012 fourth quarter decreased by 18 and 22 basis points to 0.58 percent and 0.69 percent, respectively, versus the comparable period a year ago. These decreases were predominantly due to the continued effect of the prolonged low interest rate environment.
Net interest margin for the 2012 fourth quarter was 3.53 percent versus 3.55 percent reported in the 2011 fourth quarter. On a linked quarter basis, net interest margin decreased three basis points. The linked quarter decrease was primarily due to the continued effect of the prolonged low interest rate environment. Excluding loan prepayment penalty income in both quarters, linked quarter core margin declined nine basis points to 3.32 percent.
Provision for Loan Losses
The Bank's provision for loan losses for the fourth quarter of 2012 was $10.4 million, a decrease of $4.2 million, or 28.8 percent, versus the 2011 fourth quarter. The decrease was due to a decrease in net charge-offs of $6.1 million.
Net charge-offs for the fourth quarter of 2012 were $5.9 million, or 0.25 percent of average loans on an annualized basis, versus $4.6 million, or 0.22 percent, for the 2012 third quarter and $11.9 million, or 0.71 percent, for the 2011 fourth quarter.
Non-Interest Income and Non-Interest Expense
Non-interest income for the 2012 fourth quarter was $8.9 million, up $1.0 million from $7.9 million reported in the fourth quarter of last year. The increase was due to an increase of $1.8 million in net gains on sales of SBA loans.
Non-interest expense for the 2012 fourth quarter was $58.1 million, an increase of $11.0 million, or 23.3 percent, versus $47.1 million reported in the 2011 fourth quarter. The increase was primarily a result of the addition of new private client banking teams and the hiring of more than 50 professionals for the launch of Signature Financial.
The Bank's efficiency ratio increased slightly to 37.2 percent for the fourth quarter of 2012 compared with 35.4 percent for the same period a year ago. The increase was primarily due to the hiring for Signature Financial.
Loans, excluding loans held for sale, expanded a record $1.02 billion, or 11.6 percent, during the 2012 fourth quarter to $9.77 billion, versus $8.76 billion at September 30, 2012. Due to the expected increase in capital gains taxes for 2013, the fourth quarter loan growth includes approximately $184 million in loans that would have closed in 2013. At December 31, 2012, loans accounted for 56.0 percent of total assets, compared with 53.2 percent at the end of the 2012 third quarter and 46.7 percent at the end of 2011. Average loans, excluding loans held for sale, reached $9.19 billion in the 2012 fourth quarter, growing $810.5 million, or 9.7 percent, from the 2012 third quarter and $2.54 billion, or 38.1 percent, from the fourth quarter of 2011. The increase in loans for the quarter and the year was primarily driven by growth in commercial real estate and multi-family loans as well as specialty finance, which traditionally experiences strong seasonal growth during the fourth quarter. At December 31, 2012, non-accrual loans were $27.2 million, representing 0.28 percent of total loans and 0.16 percent of total assets, versus non-accrual loans of $28.0 million, or 0.32 percent of total loans, at September 30, 2012 and $42.2 million, or 0.62 percent of total loans, at December 31, 2011. At the end of the 2012 fourth quarter, the ratio of allowance for loan losses to total loans was 1.10 percent, versus 1.18 percent at September 30, 2012 and 1.26 percent at December 31, 2011. Additionally, the ratio of allowance for loan losses to non-accrual loans, or the coverage ratio, was 395 percent for the 2012 fourth quarter versus 367 percent for the 2012 third quarter and 204 percent for the 2011 fourth quarter.
Signature Bank's management will host a conference call to review results of the 2012 fourth quarter and year-end on Tuesday, January 22, 2013, 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 4588501. The replay will be available from approximately 12:00 PM ET on Tuesday, January 22, 2013 through 11:59 PM ET on Friday, January 25, 2013.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 26 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 26 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 (7) - 1225 Franklin Avenue, Garden City; 279 Sunrise Highway, Rockville Centre; 68 South Service Road, Melville; 923 Broadway, Woodmere; 40 Cuttermill Road, Great Neck; 100 Jericho Quadrangle, Jericho and 360 Motor Parkway, Hauppauge. 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
Twelve months ended
|(dollars in thousands, except per share amounts)||2012||2011||2012||2011|
|INTEREST AND DIVIDEND INCOME|
|Loans held for sale||$||1,027||962||3,508||3,772|
|Loans and leases, net||116,785||90,908||417,837||333,395|
|Other short-term investments||568||386||2,079||1,817|
|Total interest income||173,483||154,795||660,556||580,516|
|Federal funds purchased and securities sold under|
|agreements to repurchase||4,977||5,722||22,132||22,324|
|Federal Home Loan Bank advances||1,127||1,368||4,455||7,305|
|Total interest expense||26,340||29,528||110,750||120,729|
|Net interest income before provision for loan and lease losses||147,143||125,267||549,806||459,787|
|Provision for loan and lease losses||10,388||14,581||41,427||51,876|
|Net interest income after provision for loan and lease losses||136,755||110,686||508,379||407,911|
|Fees and service charges||3,952||3,571||15,503||15,022|
|Net gains on sales of securities||974||1,229||6,887||14,387|
|Net gains on sales of loans||2,610||807||9,273||4,054|
|Other-than-temporary impairment losses on securities:|
|Total impairment losses on securities||(2,115||)||(621||)||(11,593||)||(12,272||)|
|Portion recognized in other comprehensive income (before taxes)||1,590||280||8,520||10,183|
|Net impairment losses on securities recognized in earnings||(525||)||(341||)||(3,073||)||(2,089||)|
|Net trading income||200||109||759||319|
|Other (loss) income||(246||)||341||(1,320||)||1,287|
|Total non-interest income||8,899||7,902||36,239||42,038|
|Salaries and benefits||39,298||30,107||146,696||114,537|
|Occupancy and equipment||4,590||4,282||17,294||16,303|
|Other general and administrative||14,216||12,742||54,253||51,884|
|Total non-interest expense||58,104||47,131||218,243||182,724|
|Income before income taxes||87,550||71,457||326,375||267,225|
|Income tax expense||37,416||31,482||140,892||117,699|
|PER COMMON SHARE DATA|
|Earnings per share - basic||$||1.07||0.87||3.98||3.43|
|Earnings per share - diluted||$||1.05||0.85||3.91||3.37|
|CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION|
|December 31,||December 31,|
|(dollars in thousands, except per share amounts)||(unaudited)|
|Cash and due from banks||$||86,186||34,083|
|Total cash and cash equivalents||93,965||40,154|
|Securities available-for-sale (pledged $2,467,409 and $2,672,093 at|
|December 31, 2012 and 2011)||6,130,356||6,512,855|
|Securities held-to-maturity (fair value $755,469 and $571,980 at|
|December 31, 2012 and 2011; pledged $543,351 and $352,865 at|
|December 31, 2012 and 2011)||739,835||556,044|
|Federal Home Loan Bank stock||50,012||48,152|
|Loans held for sale||369,468||392,025|
|Loans and leases, net||9,664,337||6,764,564|
|Premises and equipment, net||32,192||30,574|
|Accrued interest and dividends receivable||64,367||60,533|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Federal funds purchased and securities sold under agreements|
|Federal Home Loan Bank advances||590,000||675,000|
|Accrued expenses and other liabilities||138,078||78,066|
|Preferred stock, par value $.01 per share; 61,000,000 shares authorized; none|
|issued at December 31, 2012 and 2011||-||-|
|Common stock, par value $.01 per share; 64,000,000 shares authorized;|
|47,230,266 and 46,181,890 shares issued and outstanding|
|at December 31, 2012 and 2011||472||462|
|Additional paid-in capital||997,517||954,833|
|Net unrealized gains on securities available-for-sale, net of tax||43,827||
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