Signature Bank Reports 2006 Second Quarter Results
- Deposits Grew $391 Million to $3.71 Billion, Impacted by an Inflow of Short-Term Escrow Deposits
- Loans Increased $157 Million to $1.26 Billion
- Net Interest Margin Holds Steady at 2.81 Percent
- Net Income Reached $8.2 Million or $0.28 Diluted Earnings Per Share, An Increase of $11.9 Million from the Second Quarter of 2005; Net Income Increased $2.4 Million or 41 Percent Compared with Operating Net Income for the Second Quarter of 2005 (Excluding the Effect of the 2005 Special One-Time Bonus of $12 Million)
- Three Private Client Banking Teams Joined During the Second Quarter; Two Additional Teams Added at the Onset of the 2006 Third Quarter, Bringing Year-to-Date Number of New Teams to Seven
NEW YORK ... July 27, 2006 ... Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its 2006 second quarter ended June 30, 2006.
Net income for the quarter reached $8.2 million or $0.28 diluted earnings per share, compared with a net loss of $3.7 million or $0.12 diluted loss per share for the second quarter a year ago. Net income increased $2.4 million or 41 percent compared with operating net income for the second quarter of 2005, excluding the effects in 2005 of the special one-time bonus of cash and stock totaling $12.0 million, contributed by the Bank's former principal shareholder, in connection with the sale of their controlling shares. The net income growth is a result of increases in both net interest income and non-interest income, coupled with non-interest expense containment.
Net interest income for the quarter totaled $29.6 million, an increase of $6.5 million or 28 percent when compared with the second quarter of 2005. Total assets reached $4.7 billion at the end of the 2006 second quarter.
Deposits grew $390.6 million, or 12 percent, to $3.71 billion at June 30, 2006. Similar to other quarters, included in this amount are significant short-term escrow deposits, which, due to their nature and as expected, have been or will be released during the third quarter of 2006. The overall deposit growth represents an increase of more than $800.8 million, or 28 percent, when compared with deposits at June 30, 2005. Core deposits of $3.46 billion represent over 93 percent of total deposits.
"We certainly recognize that there are many opportunities available in the marketplace today due to continued consolidation and change. Clearly, we have positioned Signature Bank to take advantage of such opportunities. We are a very focused organization and have learned what we do best, as evidenced by the proven track record and steady core growth we have established since our inception five years ago," noted Joseph J. DePaolo, President and Chief Executive Officer.
"However, although we have enjoyed solid growth to date by serving the privately owned business niche and are making significant progress, we realize that we must have an even greater sense of urgency in this turbulent and competitive banking landscape to turn prospects into clients and deliver on their needs. We need to do more to capture potential clients who are re-thinking their current banking relationships with other institutions to ensure they choose Signature Bank. That said, we will strive to prudently increase core deposits and expand our loan portfolio at a faster pace, while continuing to recruit veteran banking teams, foster client relationships and grow this institution," DePaolo said.
Scott A. Shay, Chairman of the Board, added: "Despite a challenging capital markets environment and intensely competitive financial services arena, we maintained a stable net interest margin utilizing conservative balance sheet management strategies. Over the long-term, the net interest margin will be driven by growth in core deposits and loans generated from our relationship banking model. We continue to aggressively attract new teams, which will positively impact our financial performance and results toward this end."
Net Interest Income
Net interest income for the 2006 second quarter was $29.6 million, up 28 percent or $6.5 million from the same period last year. The net interest income growth was fueled by earning asset growth and an increased net interest margin. Average interest-earning assets for the second quarter of 2006 increased by $839.6 million, reflecting a 25 percent increase from the second quarter of last year. The net interest margin for the second quarter of 2006 increased 8 basis points to 2.81 percent when compared with the 2005 second quarter and on a linked quarter basis remained stable, down one basis point. Asset yields for the 2006 second quarter strengthened by 111 basis points to 5.40 percent, when compared with the 2005 second quarter, reflecting an improved asset mix and a more favorable market condition. During the second quarter, the average cost of funds increased by 103 basis points to 2.67 percent when compared with the same period last year and the average cost of deposits increased 93 basis points to 2.29 percent. The increases in costs of funds and deposits are reflective of the current interest rate environment and competitive marketplace.
The flat yield curve and competitive deposit market continue to present challenges for the Bank and industry. Net interest margin expansion will remain dependent upon increased core deposits and continued improvement in the loan-to-asset mix. Additionally, large movements in escrow deposits can cause considerable changes in margins in any given quarter.
Non-Interest Income and Non-Interest Expense
Non-interest income for the second quarter of 2006 rose 11 percent to $5.1 million versus $4.6 million reported for the same quarter last year. This improvement was largely the result of a $372,000 rise in fees and service charges.
Non-interest expense for the quarter ended June 30, 2006 was $19.3 million, compared with $28.6 million in the second quarter a year ago. Excluding the effects of the special one-time bonus paid in the second quarter of 2005, non-interest expense increased $2.7 million or 16 percent. This increase is primarily due to the addition of new private client teams and locations. At the close of the 2006 second quarter, the Bank had 53 Group Directors and 43 private client teams in place versus 43 Group Directors and 34 teams, respectively, at the end of the second quarter of last year. This represents an increase of about 25 percent, or ten Group Directors and nine teams added since the second quarter of last year.
The Bank's efficiency ratio improved to 55.7 percent for the second quarter of 2006, compared with 57.3 percent for the first quarter of 2006, primarily due to the growth in interest income and non-interest income, along with prudent expense management.
For the second quarter, loans, excluding loans held for sale, increased $156.7 million or 14.2 percent to $1.26 billion at June 30, 2006, compared with $1.10 billion at March 31, 2006. At June 30, 2006, loans to total assets stand at 26.8 percent, up from 24.5 percent at the end of the first quarter of 2006.
Loans held for sale were $105.7 million as of June 30, 2006, a decrease of 2.5 percent or $2.7 million from March 31, 2006. The periodic fluctuation in loans held for sale is primarily due to the timing of SBA loan purchases and subsequent pool sales.
At June 30, 2006, non-performing loans decreased to $8.9 million from $9.0 million at March 31, 2006, which represents 0.71 percent of total loans. Quarterly net charge-offs to average loans remained low at 0.03 percent.
Signature Bank's capital ratios remain strong. The Bank's tier 1 risk-based, total risk-based and leverage capital ratios were approximately 17.44 percent, 17.97 percent and 8.45 percent, respectively, as of June 30, 2006, well in excess of regulatory requirements. The ratios reflect the relatively low risk profile of the balance sheet.
DePaolo concluded, "We are committed to finding bankers who have built strong reputations in the markets they serve and creating a home for them at Signature Bank, either at an existing location or by opening a new office. In fact, to kick off the 2006 third quarter, we named two additional teams that will head two new locations: one on the Upper East Side of Manhattan and the other in Jackson Heights, Queens, which is expected to open in the latter part of the third quarter. We now have 55 Group Directors in place who head 45 teams, operating out of 17 metro-N.Y. area offices. We intend to continue to benefit from the changing face of the banking industry on all fronts and seize the many opportunities available to us."
Signature Bank's management will host a conference call to review results of the 2006 second quarter on Thursday, July 27, 2006 at 10:00 AM ET. Participants should dial 800-240-2134 at least ten minutes prior to the start of the call. International callers should dial 303-262-2143.
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. Refer to conference identification number 34814. To listen to a telephone replay of the conference call, please dial 303-590-3000 and enter reservation identification number 11066677. The replay will be available from approximately 12:00 PM ET on Thursday, July 27, 2006, through 11:59 PM ET on Tuesday, August 1, 2006.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 17 private client offices located in the New York metropolitan area, serving the needs of privately owned businesses, their owners and senior managers through dozens of private client groups. The Bank offers a wide variety of business and personal banking products and services as well as investment, brokerage, asset management and insurance products and services through its subsidiary, Signature Securities Group Corporation, a licensed broker-dealer, investment adviser and member NASD/SIPC.
Signature Bank's 17 offices are located throughout the metropolitan New York area. In Manhattan - 261 Madison Avenue; 300 Park Avenue; 71 Broadway; 565 Fifth Avenue; 950 Third Avenue; 200 Park Avenue South and 1020 Madison Avenue. Brooklyn - 26 Court Street and 84 Broadway. Westchester - 1C Quaker Ridge Road, New Rochelle and 360 Hamilton Avenue, White Plains. Long Island - 1225 Franklin Avenue, Garden City; 279 Sunrise Highway, Rockville Centre; 58 South Service Road, Melville and 923 Broadway, Woodmere. Queens - 36-36 33rd Street, Long Island City. Bronx - 421 Hunts Point Avenue, Hunts Point.
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. Forward-looking statements include information concerning our future results, interest rates, loan and deposit growth, operations, new private client team hires, new office openings and business strategy. These statements often include words such as "may," "believe," "expect," "anticipate," "intend," "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, which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance; (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; and (iv) competition for qualified personnel and desirable office locations. Additional factors are described in our quarterly and annual reports.
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.
For Further Information:
Eric R. Howell, Chief Financial Officer
Susan J. Lewis, 646-822-1825, firstname.lastname@example.org