NEW YORK … October 26, 2010 … Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its third quarter ended September 30, 2010.
Net income for the 2010 third quarter reached a record $27.4 million, or $0.66 diluted earnings per share, compared with $15.2 million, or $0.37 diluted earnings per share, for the 2009 third quarter. The record net income for the 2010 third quarter, compared with the same period last year, is primarily the result of an increase in net interest income, fueled by core deposit growth and continued loan growth. These factors were partially offset by an increase in non-interest expenses.
Net interest income for the 2010 third quarter reached $89.1 million, an increase of $20.5 million, or 29.9 percent, versus the 2009 third quarter primarily due to growth in average interest-earning assets. Total assets were $10.93 billion at September 30, 2010, up $2.33 billion, or 27.1 percent, from $8.6 billion at September 30, 2009. Average assets for the 2010 third quarter reached $10.66 billion, an increase of $2.35 billion, or 28.3 percent, versus the third quarter of last year.
Deposits for the 2010 third quarter rose $581.8 million, or 6.9 percent, to $9.05 billion at September 30, 2010. This includes core deposit growth of $409.4 million, coupled with an increase of $170.6 million in short-term escrow deposits. When compared with deposits at December 31, 2009, overall deposit growth during the first nine months of 2010 totaled $1.83 billion, or 25.3 percent. Since September 30, 2009, overall deposit growth through third quarter-end 2010 was $2.25 billion, or 33.0 percent.
"Once again, Signature Bank reported strong growth by adhering to the business model we established at our inception in 2001. This is evidenced by another quarter of strong financial performance across all facets of our business, including deposit growth, high-quality loan growth, increased net interest margin, lower non-performing loans and record earnings. Our ability to consistently take advantage of the ever-changing financial services landscape by placing our priorities on depositor safety first and foremost has demonstrated to the marketplace the real strengths of our institution. Our reputation as a quality service provider and our strong financial condition have combined to attract core client relationships from our competitors. As a result, we continue to make significant advances in capturing market share throughout the New York MSA. This is a testament to the experienced banking professionals that have joined us throughout our existence," noted Joseph J. DePaolo, President and Chief Executive Officer of Signature Bank.
Scott A. Shay, Chairman of the Board, noted: "We are pleased to report another quarter of robust growth across the board. At the risk of sounding repetitive from quarter to quarter, we remind shareholders that we are guided by our 'depositor-first' philosophy, which requires us to maintain prudent lending standards, a high-quality securities portfolio and a high degree of service to our clients. Our growth fundamentally stems from our recognition as the 'sleep at night,' safe bank for New York-area banking clients attempting to navigate through the choppy waters of our unsettled economy. For investors viewing the bank through a financial lens, this is beneficial as well, as exhibited by our exceptional efficiency ratio, our low level of non-performing assets, our increasing return on equity and our strong and stable net interest margin. We remain dedicated to maintaining our focus on our depositors as well as our strict principles for managing the balance sheet."
The Bank's tier one leverage, tier one risk-based, and total risk-based capital ratios were approximately 8.66 percent, 13.50 percent and 14.51 percent, respectively, as of September 30, 2010. 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 8.41 percent.
Net Interest Income
Net interest income on a tax-equivalent basis for the 2010 third quarter was $89.1 million, an increase of $20.5 million, or 29.8 percent, when compared with the same period a year ago, primarily due to growth in average interest-earning assets. Average interest-earning assets of $10.38 billion for the third quarter of 2010 were up $2.36 billion, or 29.4 percent, from the 2009 third quarter. Yield on interest-earning assets for the 2010 third quarter decreased 37 basis points, to 4.59 percent, compared with the 2009 third quarter. This decrease was primarily attributable to lower prevailing interest rates and unusually high levels of short-term investments.
Average cost of deposits and average cost of funds for the third quarter of 2010 decreased by 31 and 40 basis points to 1.02 percent and 1.27 percent, respectively, versus the 2009 third quarter. These decreases are predominantly due to lower prevailing interest rates.
Net interest margin on a tax-equivalent basis for the 2010 third quarter was 3.41 percent versus 3.39 percent reported in the third quarter of last year. On a linked quarter basis, net interest margin on a tax-equivalent basis increased three basis points. The linked quarter expansion was primarily due to lower deposit costs, continued loan growth, investment of cash balances and the run-off of higher cost borrowings.
Provision for Loan Losses
The Bank's provision for loan losses for the third quarter of 2010 was $10.4 million, a decrease of $1.4 million, or 12.2 percent, compared to the 2009 third quarter. The decrease was primarily driven by the decrease in non-performing loans. The Bank, however, continued to provide for loan losses in excess of charge-offs to recognize the effect of the challenging economic environment on the Bank's loan portfolio.
Net charge-offs for the 2010 third quarter were $6.8 million, or 0.56 percent of average loans on an annualized basis, compared with $6.3 million, or 0.55 percent, for the 2010 second quarter and $6.6 million, or 0.66 percent, for the 2009 third quarter.
Non-Interest Income and Non-Interest Expense
Non-interest income for the 2010 third quarter was $11.3 million, an increase of $4.0 million compared to the $7.3 million reported in the 2009 third quarter. The increase was predominantly due to an increase in net gains on sales of securities of $3.5 million and an increase in net gains on sales of loans of $1.1 million. This was partially offset by an increase of $1.5 million in other-than-temporary impairment losses on securities.
Non-interest expense for the third quarter of 2010 was $42.5 million, up $3.9 million, or 10.1 percent, when compared with the $38.6 million reported in the 2009 third quarter. The increase was primarily a result of the addition of new private client banking teams and growth in client activity.
The Bank's efficiency ratio improved to 42.3 percent for the third quarter of 2010 versus 50.8 percent for the third quarter of last year. The improvement was primarily due to growth in net interest income coupled with expense containment.
Loans, excluding loans held for sale, grew $208.2 million, or 4.4 percent, during the 2010 third quarter to $4.9 billion at September 30, 2010, compared to $4.69 billion at June 30, 2010. At September 30, 2010, loans accounted for 44.8 percent of total assets, compared to 45.1 percent at June 30, 2010. Average loans, excluding loans held for sale, reached $4.79 billion in the 2010 third quarter, growing $240.6 million, or 5.3 percent, from the 2010 second quarter. The increase in loans for the quarter was primarily driven by growth in commercial real estate and multi-family loans underwritten within the Bank's stringent standards.
At September 30, 2010, non-performing loans decreased 24 percent to $33.8 million, representing 0.69 percent of total loans and 0.31 percent of total assets, compared with non-performing loans of $44.6 million, or 0.95 percent of total loans, at June 30, 2010 and $51.2 million, or 1.24 percent of total loans, at September 30, 2009. At the end of the 2010 third quarter, the ratio of allowance for loan losses to total loans was 1.40 percent, versus 1.38 percent at June 30, 2010 and 1.20 percent at September 30, 2009. Additionally, the ratio of allowance for loan losses to non-performing loans, or the coverage ratio, increased to 203 percent for the third quarter of 2010 compared with 145 percent for the second quarter of 2010 and 97 percent for the 2009 third quarter.
Signature Bank's management will host a conference call to review results of the 2010 third quarter on Tuesday, October 26, 2010, at 10:00 AM ET. All participants should dial 480-629-9723 at least ten minutes prior to the start of the call.
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 303-590-3030 and enter reservation identification number 4374779. The replay will be available from approximately 12:00 PM ET on Tuesday, October 26, 2010 through 11:59 PM ET on Friday, October 29, 2010.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 23 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 23 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; 1020 Madison Avenue and 50 West 57th Street. Brooklyn - 26 Court Street; 84 Broadway and 6321 New Utrecht Avenue. 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; 68 South Service Road, Melville; 923 Broadway, Woodmere; 40 Cuttermill Road, Great Neck and 100 Jericho Quadrangle, Jericho. Queens - 36-36 33rd Street, Long Island City and 78-27 37th Avenue, Jackson Heights. Bronx - 421 Hunts Point Avenue, Bronx. Staten Island - 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. 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," "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; (iv) changes in the banking and other financial services regulatory environment and (v) competition for qualified personnel and desirable office locations. 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.
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