Signature Bank Reports 2013 Second Quarter Results
Signature Bank Reports 2013 Second Quarter Results
- Net Income for the 2013 Second Quarter Reached a Record $53.6 Million, or $1.12 Diluted Earnings Per Share, an Increase of $8.3 Million, or 18.4 Percent, from $45.3 Million, or $0.96 Diluted Earnings Per Share, Reported in the 2012 Second Quarter. Excluding a Pre-Tax $2.6 Million Gain on Sale of an SBA Interest-Only Strip Security, 2012 Second Quarter Net Income Was $43.8 Million, or $0.93 Diluted Earnings Per Share
- Total Deposits in the Second Quarter Grew $471.9 Million, or 3.2 Percent, to $15.27 Billion, Including Core Deposit Growth of $611.8 Million; Total Deposits For the First Half of 2013 Have Grown $1.19 Billion, or 8.4 Percent and Total Deposits for the Past 12 Months Increased $2.32 Billion, or 17.9 Percent
- Average Deposits Increased $525.8 Million, or 3.6 Percent, in the 2013 Second Quarter
- For the 2013 Second Quarter, Loans Increased $701.3 Million, or 6.8 Percent, to $11.07 Billion. Loans Grew $1.29 Billion, or 13.2 Percent, in the First Half of 2013
- Non-Accrual Loans were $35.9 Million, or 0.32 Percent of Total Loans, at June 30, 2013, Versus $35.1 Million, or 0.34 Percent, at the End of the 2013 First Quarter and $31.9 Million, or 0.40 Percent, at the End of the 2012 Second Quarter
- 2013 Second Quarter Net Interest Margin Decreased 7 Basis Points to 3.36 Percent, Compared with 3.43 Percent for the 2013 First Quarter and 3.54 Percent for the 2012 Second Quarter. Core Net Interest Margin Excluding Loan Prepayment Penalty Income Decreased 9 Basis Points to 3.21 Percent, Compared with 3.30 Percent for the 2013 First Quarter
- Tier 1 Leverage, Tier 1 Risk-Based and Total Risk-Based Capital Ratios were 9.14 Percent, 14.90 Percent and 15.94 Percent, Respectively, at June 30, 2013. Signature Bank Remains Significantly Above FDIC "Well Capitalized" Standards. Tangible Common Equity Ratio was 8.65 Percent
- Four Private Client Banking Teams Joined During the 2013 Second Quarter; Seven Added During First Half of 2013. Two Group Directors Added to Existing Teams in Second Quarter of 2013
Net income for the 2013 second quarter reached a record $53.6 million, or $1.12 diluted earnings per share, versus $45.3 million, or $0.96 diluted earnings per share, for the 2012 second quarter. The record net income for the 2013 second quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income, fueled by strong deposit and loan growth. These factors were partially offset by an increase in non-interest expenses.
Net interest income for the 2013 second quarter reached $154.5 million, up $20.3 million, or 15.2 percent, when compared with the 2012 second quarter. This increase is primarily due to growth in average interest-earning assets and an increase of $3.1 million in loan prepayment penalty income. Total assets reached $19.72 billion at June 30, 2013, an increase of $3.85 billion, or 24.2 percent, from $15.87 billion at June 30, 2012. The increase was due in part to the pre-investment of future cash flows in our securities portfolio given the advantageous interest rate environment at the end of the 2013 second quarter. Average assets for the 2013 second quarter reached $18.80 billion, an increase of $3.26 billion, or 21.0 percent, compared with the 2012 second quarter.
Deposits for the 2013 second quarter rose $471.9 million, or 3.2 percent, to $15.27 billion at June 30, 2013. When compared with deposits at December 31, 2012, overall deposit growth for the first half of 2013 was 8.4 percent, or $1.19 billion. Excluding short-term escrow deposits and brokered deposits of $842.4 million and $148.2 million at June 30, 2013, and $978.2 million and $152.3 million at March 31, 2013, respectively, core deposits increased $611.8 million for the quarter. Average deposits for the 2013 second quarter reached $15.11 billion, an increase of $525.8 million, or 3.6 percent.
"Despite increased competition in the marketplace -- particularly in the multi-family lending arena -- we again delivered strong growth and record performance. The second quarter marked Signature Bank's 15th consecutive quarter of record earnings, which is a testament to our client-centric, single-point-of-contact approach and superior execution. Our model allows us to stand out amongst our competitors," stated Joseph J. DePaolo, President and Chief Executive Officer.
"Furthermore, we continued to invest in the future as evidenced by the on-going build out of Signature Financial as well as the four private client banking teams we added this quarter, expanding our network of talented banking professionals. The addition of these four teams now brings the total number of teams hired this year to seven. We are also pleased two veteran banking group directors joined existing teams. We look forward to the contributions these experienced teams and bankers will make in the coming years," DePaolo noted.
Scott A. Shay, Chairman of the Board, added: "Our investment strategy has been unwavering - never too long or too short in duration - but tactically positioned to react to the volatile interest rate changes we have anticipated for some time. This view has buttressed our loan pricing discipline and willingness to shrink the size of our investment portfolio when we felt such conservatism was warranted. We are committed to taking a restrained, longer view on financial markets and by consequence, maintaining our deposit and loan pricing in a manner that has allowed us to serve our clients in all markets. It is our client-centric model, coupled with our commitment to depositor safety that attracts best-in-class bankers who want to put their clients first and foremost. Our pledge is to remain steadfast in our approach as we focus every day on further strengthening the long-term value of our banking franchise."
The Bank's Tier 1 leverage, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.14 percent, 14.90 percent and 15.94 percent, respectively, as of June 30, 2013. 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 8.65 percent. The Bank defines 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 2013 second quarter was $154.5 million, an increase of $20.3 million, or 15.2 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $18.46 billion for the 2013 second quarter represent an increase of $3.22 billion, or 21.1 percent, from the 2012 second quarter. Yield on interest-earning assets for the 2013 second quarter decreased 36 basis points, to 3.92 percent, compared with the 2012 second quarter. This decrease was primarily attributable to prolonged low interest rates.
Average cost of deposits and average cost of funds for the second quarter of 2013 decreased by 15 and 20 basis points, respectively, versus the 2012 second quarter to 0.51 percent and 0.61 percent. These decreases were predominantly due to prolonged low interest rates.
Net interest margin for the 2013 second quarter was 3.36 percent versus 3.54 percent reported in the same period a year ago. On a linked quarter basis, net interest margin decreased seven basis points. Excluding loan prepayment penalties in both quarters, linked quarter core margin declined nine basis points to 3.21 percent. The linked quarter decreases in overall and core margin are predominantly due to the reinvestment of cash flows from investments and commercial mortgages, including refinance activity, into lower yielding investments and loans.
Provision for Loan Losses
The Bank's provision for loan losses for the second quarter of 2013 was $9.7 million, a decrease of $634,000, or 6.2 percent, compared with the 2012 second quarter. The decrease was largely due to a decrease in net charge-offs of $1.2 million.
Net charge-offs for the 2013 second quarter were $3.5 million, or 0.13 percent of average loans on an annualized basis, versus $4.5 million, or 0.18 percent, for the 2013 first quarter and $4.7 million, or 0.25 percent, for the 2012 second quarter.
Non-Interest Income and Non-Interest Expense
Non-interest income for the 2013 second quarter was $9.3 million, down $598,000 when compared with $9.9 million reported in the 2012 second quarter. The decrease was due to a $3.2 million decline in net gains on sales of securities. The 2012 second quarter included a pre-tax $2.6 million gain on sale of an SBA interest-only strip security.
Non-interest expense for the second quarter of 2013 was $61.4 million, an increase of $6.6 million, or 12.0 percent, versus $54.9 million reported in the 2012 second quarter. The increase was primarily a result of the addition of new private client banking teams and our continued investment in the growth of Signature Financial.
The Bank's efficiency ratio improved to 37.5 percent for the 2013 second quarter versus 38.1 percent for the comparable period last year. The improvement was primarily due to growth in net interest income coupled with expense containment.
Loans, excluding loans held for sale, grew $701.3 million, or 6.8 percent, during the second quarter of 2013 to $11.07 billion, compared with $10.36 billion at March 31, 2013. At June 30, 2013, loans accounted for 56.1 percent of total assets, versus 56.7 percent at the end of the 2013 first quarter and 50.6 percent at the end of 2012 second quarter. Average loans, excluding loans held for sale, reached $10.74 billion in the 2013 second quarter, growing $684.6 million, or 6.8 percent, from the 2013 first quarter and $3.05 billion, or 39.6 percent, from the 2012 second 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 June 30, 2013, non-accrual loans were $35.9 million, representing 0.32 percent of total loans and 0.18 percent of total assets, compared with non-accrual loans of $35.1 million, or 0.34 percent of total loans, at March 31, 2013 and $31.9 million, or 0.40 percent of total loans, at June 30, 2012. At June 30, 2013, the ratio of allowance for loan and lease losses to total loans was 1.08 percent, versus 1.09 percent at March 31, 2013 and 1.21 percent at June 30, 2012. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 332 percent for the 2013 second quarter versus 322 percent for the first quarter of 2013 and 305 percent for the 2012 second quarter.
Signature Bank's management will host a conference call to review results of the 2013 second quarter on Tuesday, July 23, 2013, at 10:00 AM ET. All participants should dial 866-359-8135 at least ten minutes prior to the start of the call and reference conference ID # 21194339.
To hear a live web simulcast or to listen to the archived web cast following completion of the call, please visit the Bank's web site 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 800-585-8367 and enter conference ID # 21194339. The replay will be available from approximately 1:00 PM ET on Tuesday, July 23, 2013 through 11:59 PM ET on Friday, July 26, 2013.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 27 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 27 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 (2) - 2066 Hylan Blvd. and 1688 Victory 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
Six months ended
|(dollars in thousands, except per share amounts)||2013||2012||2013||2012|
|INTEREST AND DIVIDEND INCOME|
|Loans held for sale||$||755||753||1,672||1,530|
|Loans and leases, net||124,752||99,604||242,381||191,898|
|Other short-term investments||698||516||1,290||1,003|
|Total interest income||180,286||162,272||353,917||317,970|
Federal funds purchased and securities sold under agreements to repurchase
|Federal Home Loan Bank advances||1,481||1,089||2,666||2,245|
|Total interest expense||25,755||28,081||51,278||56,979|
|Net interest income before provision for loan and lease losses||154,531||134,191||302,639||260,991|
|Provision for loan and lease losses||9,669||10,303||19,595||20,967|
|Net interest income after provision for loan and lease losses||144,862||123,888||283,044||240,024|
|Fees and service charges||4,394||3,817||8,392||7,523|
|Net gains on sales of securities||898||4,136||2,426||5,568|
|Net gains on sales of loans||2,264||2,768||4,782||4,189|
|Other-than-temporary impairment losses on securities:|
|Total impairment losses on securities||(1,048||)||(4,165||)||(2,728||)||(9,379||)|
|Portion recognized in other comprehensive income (before taxes)||155||2,765||563||7,265|
|Net impairment losses on securities recognized in earnings||(893||)||(1,400||)||(2,165||)||(2,114||)|
|Net trading income||756||377||981||357|
|Total non-interest income||9,288||9,886||18,124||19,000|
|Salaries and benefits||40,987||36,740||80,250||69,763|
|Occupancy and equipment||4,748||4,272||9,499||8,658|
|Other general and administrative||15,712||13,839||30,630||26,778|
|Total non-interest expense||61,447||54,851||120,379||105,199|
|Income before income taxes||92,703||78,923||180,789||153,825|
|Income tax expense||39,101||33,641||76,554||66,174|
|PER COMMON SHARE DATA|
|Earnings per share - basic||$||1.13||0.97||2.21||1.89|
|Earnings per share - diluted||$||1.12||0.96||2.18||1.86|
|CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION|
|June 30,||December 31,|
|(dollars in thousands, except per share amounts)||(unaudited)|
|Cash and due from banks||$||122,313||86,186|
|Total cash and cash equivalents||137,900||93,965|
Securities available-for-sale (pledged $2,853,124 at June 30, 2013 and $2,467,409 at December 31, 2012)
Securities held-to-maturity (fair value $1,891,616 at June 30, 2013 and $755,469 at December 31, 2012; pledged $1,467,961 at June 30, 2013 and $543,351 at December 31, 2012)
|Federal Home Loan Bank stock||95,678||50,012|
|Loans held for sale||538,922||369,468|
|Loans and leases, net||10,946,732||9,664,337|
|Premises and equipment, net||36,626||32,192|
|Accrued interest and dividends receivable||66,076||64,367|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
Federal funds purchased and securities sold under agreements to repurchase
|Federal Home Loan Bank advances||1,525,163||590,000|
|Accrued expenses and other liabilities||176,612||138,078|
Preferred stock, par value $.01 per share; 61,000,000 shares authorized; none issued at June 30, 2013 and December 31, 2012
Common stock, par value $.01 per share; 64,000,000 shares authorized; 47,262,551 and 47,230,266 shares issued and outstanding at June 30, 2013 and December 31, 2012
|Additional paid-in capital||1,003,224||997,517|
|Net unrealized (losses) gains on securities, net of tax||(10,176||)||43,827|
|Total shareholders' equity||1,706,267||
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