Signature Bank
Apr 24, 2012

Signature Bank Reports 2012 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, 2012.

Net income for the 2012 first quarter reached a record $42.4 million, or $0.90 diluted earnings per share, versus $34.6 million, or $0.82 diluted earnings per share, for the 2011 first quarter. The record net income for the 2012 first quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income, fueled by record deposit growth and record loan growth. These factors were partially offset by a decrease in non-interest income primarily from the 2011 gain on sale of an SBA interest-only strip security and an increase in non-interest expense.

Net interest income for the 2012 first quarter reached $126.8 million, up $23.1 million, or 22.3 percent, when compared with the 2011 first quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $15.28 billion at March 31, 2012, an increase of $2.9 billion, or 23.4 percent, from $12.38 billion at March 31, 2011. Average assets for the 2012 first quarter reached $14.85 billion, an increase of $2.82 billion, or 23.5 percent, compared with the 2011 first quarter.

Deposits for the 2012 first quarter rose a record $749.8 million, or 6.4 percent, to $12.5 billion at March 31, 2012. When compared with deposits at March 31, 2011, overall deposit growth for the last twelve months was 22.7 percent, or $2.31 billion. Excluding short-term escrow deposits of $921.6 million and brokered deposits of $47.7 million at the end of the 2012 first quarter and $774.0 million and $57.8 million, respectively, at year-end 2011, core deposits increased a record $612.3 million for the quarter. Average deposits for the 2012 first quarter reached $12.25 billion, an increase of $578.4 million, or 5.0 percent.

"We started the year off on a solid note with record deposit growth, record loan growth and record earnings driven by the strong performance of our existing teams. Moreover, we've provided another avenue for future expansion with the launch of our specialty finance subsidiary — Signature Financial — and the hiring of one of Long Island's most respected C&I-focused, middle market teams," remarked Joseph J. DePaolo, President and Chief Executive Officer.

"Our ability to consistently attract high-quality professionals, as we have done in the past and continued this quarter, is a tribute to the sound banking model we have established at Signature Bank. We look forward to the contributions of these new teams, as well as the further success of our existing teams," DePaolo said.

Scott A. Shay, Chairman of the Board, added: "This is an exciting time for Signature Bank. We implemented several initiatives this quarter to diversify our revenue streams and broaden our asset deployment. First, we strategically entered the specialty finance and leasing business with the appointment of one of the most highly respected management teams in their industry. Secondly, we added a well-regarded private client banking team, which further enhances our prospects for floating rate commercial and industrial loan growth. We are privileged to have these teams join us, which speaks volumes to Signature Bank's emergence as the bank of choice for the most talented bankers in New York that want a platform from which to provide the best in service to their clients."

Capital

The Bank's Tier 1 leverage, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.62 percent, 16.86 percent and 17.96 percent, respectively, as of March 31, 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 9.58 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 2012 first quarter was $126.8 million, an increase of $23.1 million, or 22.3 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $14.58 billion for the 2012 first quarter represent an increase of $2.86 billion, or 24.4 percent, from the 2011 first quarter. Yield on interest-earning assets for the 2012 first quarter decreased 30 basis points, to 4.30 percent, compared with the 2011 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 2012 decreased by 19 and 21 basis points, respectively, versus the 2011 first quarter to 0.72 percent and 0.87 percent. These decreases were predominantly due to lower prevailing interest rates.

Net interest margin for the 2012 first quarter was 3.50 percent versus 3.59 percent reported in the same period a year ago. On a linked quarter basis, net interest margin decreased 5 basis points. The linked quarter decrease was primarily due to a decline of $940,000 in loan prepayment penalty income.

Provision for Loan Losses

The Bank's provision for loan losses for the first quarter of 2012 was $10.7 million, a decrease of $1.7 million, or 13.5 percent, compared with the 2011 first quarter. The decrease was largely due to a decrease in charge-offs.

Net charge-offs for the 2012 first quarter were $5.0 million, or 0.29 percent of average loans on an annualized basis, versus $11.9 million, or 0.71 percent, for the 2011 fourth quarter and $6.5 million, or 0.49 percent, for the 2011 first quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2012 first quarter was $9.1 million, down $6.0 million when compared with $15.1 million reported in the 2011 first quarter. The decrease was driven by a $5.3 million gain on sale of an SBA interest-only strip security in the 2011 first quarter.

Non-interest expense for the first quarter of 2012 was $50.4 million, an increase of $5.7 million, or 12.7 percent, versus $44.7 million reported in the 2011 first quarter. The increase was primarily a result of the addition of new private client banking teams.

The Bank's efficiency ratio improved to 37.1 percent for the 2012 first quarter versus 37.6 percent for the comparable period last year. Excluding the gain on sale of the SBA interest-only strip security in the 2011 first quarter, the efficiency ratio was 39.4 percent. The improvement was primarily due to growth in net interest income coupled with expense containment.

Loans

Loans, excluding loans held for sale, grew a record $512.4 million, or 7.5 percent, during the first quarter of 2012 to $7.36 billion, compared with $6.85 billion at December 31, 2011. At March 31, 2012, loans accounted for 48.2 percent of total assets, versus 46.7 percent at the end of the 2011 fourth quarter and 45.6 percent at the end of 2011 first quarter. Average loans, excluding loans held for sale, reached $7.06 billion in the 2012 first quarter, growing $406.9 million, or 6.1 percent, from the 2011 fourth quarter and $1.64 billion, or 30.2 percent, from the 2011 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, 2012, non-accrual loans were $35.5 million, representing 0.48 percent of total loans and 0.23 percent of total assets, compared with non-accrual loans of $42.2 million, or 0.62 percent of total loans, at December 31, 2011 and $39.0 million, or 0.69 percent of total loans, at March 31, 2011. At March 31, 2012, the ratio of allowance for loan losses to total loans was 1.25 percent, versus 1.26 percent at December 31, 2011 and 1.30 percent at March 31, 2011. Additionally, the ratio of allowance for loan losses to non-accrual loans, or the coverage ratio, was 259 percent for the 2012 first quarter versus 204 percent for the fourth quarter of 2011 and 188 percent for the 2011 first quarter.

Conference Call

Signature Bank's management will host a conference call to review results of the 2012 first quarter on Tuesday, April 24, 2012, at 10:00 AM ET. All participants should dial 480-629-9722 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 4531460. The replay will be available from approximately 12:00 PM ET on Tuesday, April 24, 2012 through 11:59 PM ET on Friday, April 27, 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. 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, 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 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)   2012       2011  
INTEREST AND DIVIDEND INCOME
Loans held for sale $ 778 968
Loans, net 92,294 75,022
Securities available-for-sale 57,349 52,212
Securities held-to-maturity 4,792 4,333
Other short-term investments     487       533  
  Total interest income     155,700       133,068  
INTEREST EXPENSE
Deposits 21,889 21,917
Federal funds purchased and securities sold under
agreements to repurchase 5,852 5,185
Federal Home Loan Bank advances     1,156       2,293  
  Total interest expense     28,897       29,395  
Net interest income before provision for loan losses 126,803 103,673
Provision for loan losses     10,664       12,322  
Net interest income after provision for loan losses     116,139       91,351  
NON-INTEREST INCOME
Commissions 2,369 2,315
Fees and service charges 3,706 3,949
Net gains on sales of securities 1,432 7,877
Net gains on sales of loans 1,421 1,333
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (5,214 ) (4,010 )
Portion of loss recognized in other comprehensive income (before taxes)   4,500       3,284  
Net impairment losses on securities recognized in earnings (714 ) (726 )
Net trading (loss) income (20 ) 43
Other income     920       276  
  Total non-interest income     9,114       15,067  
NON-INTEREST EXPENSE
Salaries and benefits 33,024 26,192
Occupancy and equipment 4,386 3,789
Other general and administrative     12,941       14,689  
  Total non-interest expense     50,351       44,670  
Income before income taxes     74,902       61,748
Income tax expense     32,533       27,164  
Net income   $ 42,369       34,584  
PER COMMON SHARE DATA
Earnings per share — basic $ 0.92 0.84
Earnings per share — diluted $ 0.90 0.82
 
     
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
March 31, December 31,
2012 2011
(dollars in thousands, except per share amounts)   (unaudited)      
ASSETS
Cash and due from banks $ 55,039 34,083
Short-term investments     3,907     6,071
  Total cash and cash equivalents     58,946     40,154
Securities available-for-sale (pledged $2,508,589 at March 31, 2012
and $2,672,093 at December 31, 2011) 6,609,053 6,512,855
Securities held-to-maturity (fair value $580,579 at March 31, 2012
and $571,980 at December 31, 2011; pledged $364,817 at
March 31, 2012 and $352,865 at December 31, 2011) 565,743 556,044
Federal Home Loan Bank stock 31,502 48,152
Loans held for sale 376,336 392,025
Loans, net 7,271,327 6,764,564
Premises and equipment, net 30,987 30,574
Accrued interest and dividends receivable 62,456 60,533
Other assets     274,017     261,219
  Total assets   $ 15,280,367     14,666,120
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing 3,330,030 3,148,436
Interest-bearing     9,173,892     8,605,702
  Total deposits     12,503,922     11,754,138
Federal funds purchased and securities sold under agreements
to repurchase 876,175 750,800
Federal Home Loan Bank advances 305,000 675,000
Accrued expenses and other liabilities     131,578     78,066
  Total liabilities     13,816,675     13,258,004
Shareholders' equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at March 31, 2012 and December 31, 2011
Common stock, par value $.01 per share; 64,000,000 shares authorized; - -
46,412,611 and 46,181,890 shares issued and outstanding
at March 31, 2012 and December 31, 2011 464 462
Additional paid-in capital 959,874 954,833
Retained earnings 465,401 423,032
Net unrealized gains on securities available-for-sale, net of tax     37,953     29,789
  Total shareholders' equity     1,463,692     1,408,116
  Total liabilities and shareholders' equity   $ 15,280,367     14,666,120
 
         
SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
 
 
Three months ended
(dollars in thousands, except ratios and per share amounts)  

March 31,
2012

   

December 31,
2011

   

March 31,
2011

PER COMMON SHARE
Net income - basic $ 0.92 $ 0.87 $ 0.84
Net income - diluted $ 0.90 $ 0.85 $ 0.82
Average shares outstanding - basic 46,205 46,179 41,349
Average shares outstanding - diluted 47,051 47,025 42,070
Book value $ 31.54 $ 30.49 $ 24.01
 
SELECTED FINANCIAL DATA
Return on average total assets 1.15 % 1.11 % 1.17 %
Return on average shareholders' equity 11.87 % 11.44 % 14.48 %
Efficiency ratio (1) 37.05 % 35.39 % 37.62 %

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

 

37.24 % 35.63 % 40.03 %
Yield on interest-earning assets 4.30 % 4.38 % 4.60 %
Cost of deposits and borrowings 0.87 % 0.91 % 1.08 %
Net interest margin 3.50 % 3.55 % 3.59 %
 

(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,
2012

   

December 31,
2011

   

March 31,
2011

CAPITAL RATIOS
Tangible common equity (2) 9.58 % 9.60 % 8.02 %
Tier 1 leverage 9.62 % 9.67 % 8.29 %
Tier 1 risk-based 16.86 % 17.08 % 13.87 %
Total risk-based 17.96 % 18.17 % 14.91 %
 
ASSET QUALITY
Non-accrual loans $ 35,492 $ 42,218 $ 38,981
Allowance for loan losses $ 91,786 $ 86,162 $ 73,211
Allowance for loan losses to non-accrual loans 258.61 % 204.09 % 187.81 %
Allowance for loan losses to total loans 1.25 % 1.26 % 1.30 %
Non-accrual loans to total loans 0.48 % 0.62 % 0.69 %
Quarterly net charge-offs to average loans (annualized) 0.29 % 0.71 % 0.49 %
 
(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 1 capital related ratios, to evaluate
capital levels.

 

 
                       
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Three months ended Three months ended
March 31, 2012 March 31, 2011
(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 $ 91,049 75 0.33 % 65,529 46 0.28 %
Investment securities 7,158,136 62,553 3.50 % 5,961,281 57,032 3.83 %

Commercial loans and commercial

  mortgages

6,689,168 86,702 5.21 % 5,039,144 69,463 5.59 %
Residential mortgages 170,414 1,875 4.40 % 186,376 2,186 4.69 %
Consumer loans 200,569 3,717 7.45 % 196,224 3,373 6.97 %
Loans held for sale     265,929     778     1.18 %       271,180     968     1.45 %
Total interest-earning assets     14,575,265     155,700     4.30 %       11,719,734     133,068     4.60 %
Non-interest-earning assets     271,225                   302,269            
Total assets   $ 14,846,490                   12,022,003            
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand 658,742 776 0.47 % 675,457 836 0.50 %
Money market 7,497,906 17,445 0.94 % 5,769,563 16,939 1.19 %
Time deposits 891,494 3,668 1.65 % 925,330 4,142 1.82 %
Non-interest-bearing demand deposits     3,198,843     -     -         2,437,952     -     -  
Total deposits     12,246,985     21,889     0.72 %       9,808,302     21,917     0.91 %
Borrowings     1,107,780     7,008     2.54 %       1,205,706     7,478     2.52 %
Total deposits and borrowings     13,354,765     28,897     0.87 %       11,014,008     29,395     1.08 %
Other non-interest-bearing liabilities
and shareholders' equity     1,491,725                   1,007,995            
Total liabilities and shareholders' equity   $ 14,846,490                   12,022,003            
OTHER DATA
Net interest income / interest rate spread         126,803     3.43 %             103,673     3.52 %
Net interest margin               3.50 %                   3.59 %
Ratio of average interest-earning assets
to average interest-bearing liabilities               109.14 %                   106.41 %
 
SIGNATURE BANK      
NON-GAAP FINANCIAL MEASURES
(unaudited)
 

Management believes that the presentation of certain 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 include the Bank's (i) tangible common equity ratio, (ii) net income and diluted
earnings per share excluding the afer-tax effect of gains from the sales of SBA interest-only strip securities and (iii) core
net interest margin excluding loan prepayment penalty income. 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 and diluted earnings per share (as reported) to net income
and diluted earnings per share excluding the after-tax effect of gains from the sales of SBA interest-only strip securities:

 
Three months ended March 31,
(dollars in thousands, except per share amounts)   2012     2011
Net income (as reported) $ 42,369 34,584
Gains on sales of SBA interest-only strip securities (39 ) (5,291 )
Tax effect     17       2,327  
Net income - excluding after-tax effect of gains on sales of SBA
interest-only strip securities   $ 42,347       31,620  
 
Diluted earnings per share (as reported) $ 0.90 0.82
Gains on sales of SBA interest-only strip securities - (0.13 )
Tax effect     -       0.06  
Diluted earnings per share - excluding after-tax effect of gains on sales of
SBA interest-only strip securities   $ 0.90       0.75  
 
 

The following table reconciles net interest margin (as reported) to core net interest margin excluding loan prepayment
penalty income:

 
Three months ended March 31,
      2012     2011
Net interest margin (as reported) 3.50 % 3.59 %
Margin contribution from loan prepayment penalty income     (0.06 )%     (0.08 )%
Core net interest margin - excluding loan prepayment penalty income     3.44 %     3.51 %

Signature Bank
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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