Signature Bank
Apr 26, 2011

Signature Bank Reports 2011 First Quarter Results

NEW YORK--(BUSINESS WIRE)-- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its first quarter ended March 31, 2011. Signature Bank Net income for the 2011 first quarter reached a record $34.6 million, or $0.82 diluted earnings per share, versus $22.1 million, or $0.54 diluted earnings per share, for the 2010 first quarter. The record net income for the 2011 first quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income, fueled by core deposit growth and strong loan growth. These factors were partially offset by increases in the provision for loan losses and non-interest expenses.

Net interest income for the 2011 first quarter reached $103.7 million, up $24.9 million, or 31.6 percent, when compared with the 2010 first quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $12.38 billion at March 31, 2011, an increase of $2.64 billion, or 27.1 percent, from $9.74 billion at March 31, 2010. Average assets for the 2011 first quarter reached $12.02 billion, an increase of $2.55 billion, or 26.9 percent, compared with the 2010 first quarter.

Deposits for the 2011 first quarter rose a record $747.9 million, or 7.9 percent, to $10.19 billion at March 31, 2011. When compared with deposits at March 31, 2010, overall deposit growth for the last twelve months was 29.0 percent, or $2.29 billion.

"Our single-point-of-contact approach has been the cornerstone of our success. Our emphasis on depositor safety has clearly differentiated Signature Bank in the marketplace during the past decade. All of this is evidenced by yet another quarter where the Bank posted record earnings, record deposit growth and solid loan expansion," remarked Joseph J. DePaolo, President and Chief Executive Officer.

"2011 is off to a solid start based on our depositor-focused model and sound balance sheet. Given the tremendous opportunities in the New York metro area, we expect our founding model will allow us to further expand our franchise as we continue to attract veteran bankers to our network," DePaolo said.

Scott A. Shay, Chairman of the Board, added: "When we first opened the Bank, senior management had an audacious goal — to attract $10 billion in organic deposits by our 10th anniversary — a feat we believe that no other bank has accomplished. Frankly, we thought this was a tall order but continued to strive with every effort toward meeting that goal. To our pleasant surprise, we reached the $10 billion deposit mark one month shy of the Bank's 10th anniversary. This remarkable deposit growth was truly organic and achieved without the pursuit of any advertising campaigns. We accomplished this feat by placing the interests of our depositors first in terms of safety and service. Looking ahead, we believe this commitment will drive the continued progress of Signature Bank."

Capital

The Bank's tier one leverage, tier one risk-based, and total risk-based capital ratios were approximately 8.29 percent, 13.87 percent and 14.91 percent, respectively, as of March 31, 2011. 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 8.02 percent.

Net Interest Income

Net interest income for the 2011 first quarter was $103.7 million, an increase of $24.9 million, or 31.6 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $11.72 billion for the 2011 first quarter represent an increase of $2.63 billion, or 28.9 percent, from the 2010 first quarter. Yield on interest-earning assets for the 2011 first quarter decreased 25 basis points, to 4.60 percent, compared with the 2010 first quarter. This decrease was primarily attributable to lower prevailing interest rates.

Average cost of deposits and average cost of funds for the first quarter of 2011 decreased by 21 and 34 basis points to 0.91 percent and 1.08 percent, respectively, versus the 2010 first quarter. These decreases were predominantly due to lower prevailing interest rates.

Net interest margin for the 2011 first quarter was 3.59 percent versus 3.51 percent reported in the same period a year ago. On a linked quarter basis, net interest margin increased nine basis points. The linked quarter increase was primarily due to lower deposit costs, continued loan growth and an increase of $1.9 million in loan prepayment penalty income.

Provision for Loan Losses

The Bank's provision for loan losses for the first quarter of 2011 was $12.3 million, an increase of $1.1 million, or 9.7 percent, compared with the 2010 first quarter. The increase was largely driven by the growth in the loan portfolio.

Net charge-offs for the 2011 first quarter were $6.5 million, or 0.49 percent of average loans on an annualized basis, versus $14.6 million, or 1.16 percent, for the 2010 fourth quarter and $6.4 million, or 0.59 percent, for the 2010 first quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2011 first quarter was $15.1 million, up $3.9 million when compared with $11.1 million reported in the 2010 first quarter. The increase was driven by a $5.3 million gain on sale of an SBA interest-only strip security.

Non-interest expense for the first quarter of 2011 was $44.7 million, an increase of $4.9 million, or 12.4 percent, versus $39.7 million reported in the 2010 first quarter. The increase was primarily a result of the addition of new private client banking teams and increased client related expenses.

The Bank's efficiency ratio improved to 37.6 percent for the 2011 first quarter versus 44.2 percent for the comparable period last year. Excluding the gain on sale of the SBA interest-only strip security, the efficiency ratio was 39.4 percent. The improvement was primarily due to growth in net interest income and increased non-interest income coupled with expense containment.

Loans

Loans, excluding loans held for sale, grew $395.5 million, or 7.5 percent, during the first quarter of 2011 to $5.64 billion, compared with $5.24 billion at December 31, 2010. At March 31, 2011, loans accounted for 45.6 percent of total assets, versus 44.9 percent at the end of the 2010 fourth quarter and 46.1 percent at the end of 2010 first quarter. Average loans, excluding loans held for sale, reached $5.42 billion in the 2011 first quarter, growing $414.8 million, or 8.3 percent, from the 2010 fourth quarter and $997.4 million, or 22.5 percent, from the 2010 first 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 March 31, 2011, non-accrual loans were $39.0 million, representing 0.69 percent of total loans and 0.31 percent of total assets, compared with non-accrual loans of $34.1 million, or 0.65 percent of total loans, at December 31, 2010 and $44.4 million, or 0.99 percent of total loans, at March 31, 2010. At March 31, 2011, the ratio of allowance for loan losses to total loans was 1.30 percent, versus 1.29 percent at December 31, 2010 and 1.33 percent at March 31, 2010. Additionally, the ratio of allowance for loan losses to non-accrual loans, or the coverage ratio, was 188 percent for the 2011 first quarter versus 197 percent for the fourth quarter of 2010 and 135 percent for the 2010 first quarter.

Conference Call

Signature Bank's management will host a conference call to review results of the 2011 first quarter on Tuesday, April 26, 2011, 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 4432114. The replay will be available from approximately 12:00 PM ET on Tuesday, April 26, 2011 through 11:59 PM ET on Friday, April 29, 2011.

About Signature Bank

Signature Bank, member FDIC, a New York-based full-service commercial bank with 24 private client offices throughout the New York metropolitan area, serves 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 FINRA/SIPC.

Signature Bank's 24 offices are located: 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; 78-27 37th Avenue, Jackson Heights and 8936 Sutphin Blvd., Jamaica. 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, 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 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.

     
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
 
Three months ended March 31,
(dollars in thousands, except per share amounts) 2011         2010  
INTEREST AND DIVIDEND INCOME
Loans held for sale $ 968 1,005
Loans, net 75,022 60,991
Securities available-for-sale 52,212 43,162
Securities held-to-maturity 4,333 3,172
Other short-term investments 533         450  
  Total interest income 133,068         108,780  
INTEREST EXPENSE
Deposits 21,917 21,058
Federal funds purchased and securities sold under
agreements to repurchase 5,185 6,395
Federal Home Loan Bank advances 2,293         2,570  
  Total interest expense 29,395         30,023  
Net interest income before provision for loan losses 103,673 78,757
Provision for loan losses 12,322         11,233  
Net interest income after provision for loan losses 91,351         67,524  
NON-INTEREST INCOME
Commissions 2,315 2,242
Fees and service charges 3,949 3,522
Net gains on sales of securities 7,877 12,668
Net gains on sales of loans 1,333 1,473
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (4,010 ) (22,552 )
Portion of loss recognized in other comprehensive income (before taxes) 3,284         13,047  
Net impairment losses on securities recognized in earnings (726 ) (9,505 )
Net trading income 43 5
Other income 276         722  
  Total non-interest income 15,067         11,127  
NON-INTEREST EXPENSE
Salaries and benefits 26,192 24,311
Occupancy and equipment 3,789 3,686
Other general and administrative 14,689         11,747  
  Total non-interest expense 44,670         39,744  
Income before income taxes 61,748 38,907
Income tax expense 27,164         16,813  
Net income $ 34,584         22,094  
PER COMMON SHARE DATA
Earnings per share — basic $ 0.84 0.54
Earnings per share — diluted $ 0.82 0.54
 
       
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
March 31, December 31,
2011 2010
(dollars in thousands, except per share amounts)   (unaudited)        
ASSETS
Cash and due from banks $ 75,451 31,558
Short-term investments   4,697         14,741  
  Total cash and cash equivalents   80,148         46,299  
Securities available-for-sale (pledged $1,960,280 at March 31, 2011
and $1,553,412 at December 31, 2010) 5,571,827 5,249,286
Securities held-to-maturity (fair value $462,857 at March 31, 2011
and $450,315 at December 31, 2010; pledged $344,441 at
March 31, 2011 and $337,453 at December 31, 2010) 456,565 447,896
Federal Home Loan Bank stock 29,754 38,439
Loans held for sale 324,273 382,463
Loans, net 5,566,910 5,177,268
Premises and equipment, net 29,536 29,385
Accrued interest and dividends receivable 53,467 53,211
Other assets   267,782         248,842  
  Total assets   $ 12,380,262         11,673,089  
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing 2,556,737 2,449,968
Interest-bearing   7,632,410         6,991,259  
  Total deposits   10,189,147         9,441,227  
Federal funds purchased and securities sold under agreements
to repurchase 735,000 658,000
Federal Home Loan Bank advances 365,000 558,000
Other short-term borrowings 6,144 6,200
Accrued expenses and other liabilities   92,091         65,115  
  Total liabilities   11,387,382         10,728,542  
Shareholders' equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;

none issued at March 31, 2011 and December 31, 2010

Common stock, par value $.01 per share; 64,000,000 shares authorized; - -
41,351,540 and 41,347,540 shares issued and outstanding
at March 31, 2011 and December 31, 2010 414 413
Additional paid-in capital 689,649 689,035
Retained earnings 308,095 273,511
Net unrealized losses on securities available-for-sale, net of tax   (5,278 )       (18,412 )
  Total shareholders' equity   992,880         944,547  
  Total liabilities and shareholders' equity   $ 12,380,262         11,673,089  
 
       
SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
 
 

Three months ended

(dollars in thousands, except ratios and per share amounts)  

March 31,
2011

 

December 31,
2010

   

March 31,
2010

PER COMMON SHARE
Net income - basic $ 0.84 $ 0.74 $ 0.54
Net income - diluted $ 0.82 $ 0.72 $ 0.54
Average shares outstanding - basic 41,349 41,129 40,638
Average shares outstanding - diluted 42,070 41,830 41,235
Book value $ 24.01 $ 22.84 $ 20.45
 
SELECTED FINANCIAL DATA
Return on average total assets 1.17% 1.08% 0.95%
Return on average shareholders' equity 14.48% 12.91% 10.94%
Efficiency ratio (1) 37.62% 38.69% 44.22%

Efficiency ratio excluding net gains on sales of securities
  and net impairment losses on securities recognized
  in earnings (1)

40.03% 39.42% 45.83%
Yield on interest-earning assets 4.60% 4.56% 4.85%
Cost of deposits and borrowings 1.08% 1.14% 1.42%
Net interest margin 3.59% 3.50% 3.51%
 

(1) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income before provision for loan
    losses and non-interest income.

 
      March 31,

2011

  December 31,

2010

    March 31,

2010

CAPITAL RATIOS
Tangible common equity (2) 8.02% 8.09% 8.56%
Tier one leverage 8.29% 8.62% 9.10%
Tier one risk-based 13.87% 14.21% 13.66%
Total risk-based 14.91% 15.21% 14.62%
 
ASSET QUALITY
Non-accrual loans $ 38,981 $ 34,134 $ 44,427
Allowance for loan losses $ 73,211 $ 67,396 $ 59,954
Allowance for loan losses to non-accrual loans 187.81% 197.45% 134.95%
Allowance for loan losses to total loans 1.30% 1.29% 1.33%
Non-accrual loans to total loans 0.69% 0.65% 0.99%
Quarterly net charge-offs to average loans (annualized) 0.49% 1.16% 0.59%
 
(2)  

We define tangible common equity as the ratio of tangible common equity to adjusted tangible assets (the "TCE ratio") and
calculate this ratio by dividing total consolidated common shareholders' equity by consolidated total assets (we had no
intangible assets at any of the dates presented above). Tangible common equity is considered to be a non-GAAP financial
measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in
accordance with GAAP. The TCE ratio is a metric used by management to evaluate the adequacy of our capital levels. In
addition to tangible common equity, management uses other metrics, such as tier one capital related ratios, to evaluate capital levels.

 
                                   
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Three months ended Three months ended
March 31, 2011 March 31, 2010
(dollars in thousands)  

Average
Balance

     

Interest
Income/
Expense

     

Average
Yield/
Rate

         

Average
Balance

     

Interest
Income/
Expense

     

Average
Yield/
Rate

INTEREST-EARNING ASSETS
Short-term investments $ 65,529 46 0.28 % 177,013 80 0.18 %
Investment securities 5,961,281 57,032 3.83 % 4,292,101 46,704 4.35 %

Commercial loans and commercial
  mortgages

5,039,144 69,463 5.59 % 4,062,781 55,737 5.56 %
Residential mortgages 186,376 2,186 4.69 % 177,033 2,188 4.94 %
Consumer loans 196,224 3,373 6.97 % 184,515 3,066 6.74 %
Loans held for sale   271,180       968       1.45 %           197,153       1,005       2.07 %
Total interest-earning assets   11,719,734       133,068       4.60 %           9,090,596       108,780       4.85 %
Non-interest-earning assets   302,269                           384,993                
Total assets   $ 12,022,003                           9,475,589                
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW accounts 675,457 836 0.50 % 692,948 1,121 0.66 %
Money market accounts 5,769,563 16,939 1.19 % 4,222,752 15,271 1.47 %
Time deposits 925,330 4,142 1.82 % 821,712 4,666 2.30 %
Non-interest-bearing deposits   2,437,952       -       -             1,900,217       -       -  
Total deposits   9,808,302       21,917       0.91 %           7,637,629       21,058       1.12 %
Borrowings   1,205,706       7,478       2.52 %           908,748       8,965       4.00 %
Total deposits and borrowings   11,014,008       29,395       1.08 %           8,546,377       30,023       1.42 %
Other non-interest-bearing liabilities
and shareholders' equity   1,007,995                           929,212                
Total liabilities and shareholders' equity   $ 12,022,003                           9,475,589                
OTHER DATA
Net interest income / interest rate spread           103,673       3.52 %                   78,757       3.43 %
Net interest margin                   3.59 %                           3.51 %
Ratio of average interest-earning assets
to average interest-bearing liabilities                   106.41 %                           106.37 %
 
 
SIGNATURE BANK
NON-GAAP FINANCIAL MEASURES
(unaudited)
 

Management believes that the presentation of net income and diluted earnings per share excluding the after tax effect
of a net gain from the sale of an SBA interest-only strip security, which are non-GAAP financial measures, assists
investors when comparing results period-to-period in a more consistent manner and provides a better measure of
Signature Bank's results. These non-GAAP measures should not be considered a substitute for GAAP-basis measures
and results. We strongly encourage investors to review our consolidated financial statements in their entirety and not to
rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be
possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

 

The following table presents a reconciliation of net income (as reported) to net income excluding the after tax effect of
the net gain from the sale of an SBA interest-only strip security along with the resulting diluted earnings per share:

 
Three months ended March 31,
(dollars in thousands, except per share amounts) 2011     2010
Net income (as reported) $ 34,584 22,094
Net gain on sale of an SBA interest-only strip security (5,291 ) -
Tax effect 2,327     -
Net income - excluding after tax effect of net gain on sale of an SBA
interest-only strip security $ 31,620     22,094
Diluted earnings per share - excluding after tax effect of net gain on sale of
an SBA interest-only strip security $ 0.75 0.54

Signature Bank
Investor Contact:
Eric R. Howell, 646-822-1402
Chief Financial Officer
ehowell@signatureny.com
or
Media Contact:
Susan J. Lewis, 646-822-1825
slewis@signatureny.com

Source: Signature Bank

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