Signature Bank Reports 2012 Third Quarter Results
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
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."
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, 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.
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.
|CONSOLIDATED STATEMENTS OF OPERATIONS|
Three months ended
Nine months ended
|(dollars in thousands, except per share amounts)||2012||2011||2012||2011|
|INTEREST AND DIVIDEND INCOME|
|Loans held for sale||$||951||845||2,481||2,809|
|Loans and leases, net||109,154||85,887||301,052||242,487|
|Other short-term investments||508||502||1,512||1,431|
|Total interest income||169,102||148,819||487,073||425,721|
|Federal funds purchased and securities sold under|
|agreements to repurchase||5,366||5,804||17,155||16,602|
|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 losses||141,671||117,860||402,663||334,520|
|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|
|Fees and service charges||4,029||3,770||11,552||11,451|
|Net gains on sales of securities||345||1,570||5,913||13,158|
|Net gains on sales of loans||2,474||1,095||6,663||3,247|
|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 income||203||73||560||210|
|Other (loss) income||(118||)||357||(1,074||)||947|
|Total non-interest income||8,340||8,821||27,340||34,137|
|Salaries and benefits||37,635||29,665||107,398||84,430|
|Occupancy and equipment||4,045||4,237||12,704||12,022|
|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 taxes||84,999||68,855||238,825||195,767|
|Income tax expense||37,301||30,505||103,476||86,217|
|PER COMMON SHARE DATA|
|Earnings per share - basic||$||1.02||0.84||2.91||2.56|
|Earnings per share - diluted||$||1.00||0.83||2.86||2.52|
|CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION|
|September 30,||December 31,|
|(dollars in thousands, except per share amounts)||(unaudited)|
|Cash and due from banks||$||40,231||34,083|
|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)||6,267,704||6,512,855|
|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)||643,896||556,044|
|Federal Home Loan Bank stock||38,312||48,152|
|Loans held for sale||411,668||392,025|
|Loans and leases, net||8,653,570||6,764,564|
|Premises and equipment, net||31,593||30,574|
|Accrued interest and dividends receivable||62,527||60,533|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Federal funds purchased and securities sold under agreements|
|Federal Home Loan Bank advances||330,000||675,000|
|Accrued expenses and other liabilities||135,359||78,066|
|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, 2011||469||462|
|Additional paid-in capital||984,569||954,833|
|Net unrealized gains on securities available-for-sale, net of tax||40,863||29,789|
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