Signature Bank
Oct 23, 2012

Signature Bank Reports 2012 Third Quarter Results

NEW YORK--(BUSINESS WIRE)-- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its third quarter ended September 30, 2012.

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."

Capital

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

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.

Conference Call

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.

       
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
 

Three months ended
September 30,

Nine months ended

September 30,

(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
Securities available-for-sale 53,354 56,870 167,288 165,281
Securities held-to-maturity 5,135 4,715 14,740 13,713
Other short-term investments     508     502     1,512     1,431  
Total interest income     169,102     148,819     487,073     425,721  
INTEREST EXPENSE
Deposits 20,982 23,545 63,927 68,662
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  
NON-INTEREST INCOME
Commissions 1,841 2,172 6,275 6,872
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  
NON-INTEREST EXPENSE
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  
Net income   $ 47,698     38,350     135,349     109,550  
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
 
SIGNATURE BANK    
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
September 30, December 31,
2012 2011
(dollars in thousands, except per share amounts)   (unaudited)    
ASSETS
Cash and due from banks $ 40,231 34,083
Short-term investments     9,902   6,071
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
Other assets     299,851   261,219
Total assets   $ 16,459,254   14,666,120
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing 3,879,044 3,148,436
Interest-bearing     9,744,569   8,605,702
Total deposits     13,623,613   11,754,138
Federal funds purchased and securities sold under agreements
to repurchase 786,000 750,800
Federal Home Loan Bank advances 330,000 675,000
Accrued expenses and other liabilities     135,359   78,066
Total liabilities     14,874,972   13,258,004
Shareholders' equity
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
Retained earnings 558,381 423,032
Net unrealized gains on securities available-for-sale, net of tax     40,863   29,789
Total shareholders' equity     1,584,282   1,408,116
Total liabilities and shareholders' equity   $ 16,459,254   14,666,120
 
SIGNATURE BANK        
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
 
 

Three months ended
September 30,

Nine months ended
September 30,

(dollars in thousands, except ratios and per share amounts)   2012   2011   2012   2011
PER COMMON SHARE
Net income - basic $ 1.02 $ 0.84 $ 2.91 $ 2.56
Net income - diluted $ 1.00 $ 0.83 $ 2.86 $ 2.52
Average shares outstanding - basic 46,792 45,532 46,516 42,760
Average shares outstanding - diluted 47,529 46,338 47,333 43,531
Book value $ 33.80 $ 29.57 $ 33.80 $ 29.57
 
SELECTED FINANCIAL DATA
Return on average total assets 1.18 % 1.12 % 1.17 % 1.15 %
Return on average shareholders' equity 12.24 % 12.56 % 12.08 % 12.68 %
Efficiency ratio (1) 36.62 % 36.08 % 37.24 % 36.78 %

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

36.60 % 36.47 % 37.54 % 37.96 %
Yield on interest-earning assets 4.25 % 4.43 % 4.28 % 4.55 %
Cost of deposits and borrowings 0.75 % 1.00 % 0.81 % 1.05 %
Net interest margin 3.56 % 3.51 % 3.54 % 3.58 %
 

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

 
 
   

September 30,
2012

 

June 30,
2012

 

December 31,
2011

 

September 30,
2011

CAPITAL RATIOS
Tangible common equity (2) 9.63 % 9.55 % 9.60 % 9.85 %
Tier 1 leverage 9.60 % 9.57 % 9.67 % 9.84 %
Tier 1 risk-based 16.15 % 16.45 % 17.08 % 17.28 %
Total risk-based 17.23 % 17.55 % 18.17 % 18.37 %
 
ASSET QUALITY
Non-accrual loans $ 28,026 $ 31,905 $ 42,218 $ 51,134
Allowance for loan and lease losses $ 102,910 $ 97,403 $ 86,162 $ 83,526
Allowance for loan and lease losses to non-accrual loans 367.19 % 305.29 % 204.09 % 163.35 %
Allowance for loan and lease losses to total loans 1.18 % 1.21 % 1.26 % 1.30 %
Non-accrual loans to total loans 0.32 % 0.40 % 0.62 % 0.79 %
Quarterly net charge-offs to average loans (annualized) 0.22 % 0.25 % 0.71 % 0.44 %
 

(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
September 30, 2012 September 30, 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 $ 100,108 87 0.35 % 249,426 177 0.28 %
Investment securities 7,079,719 58,910 3.33 % 6,615,503 61,910 3.74 %
Commercial loans, mortgages and leases 7,990,214 105,179 5.24 % 5,880,249 81,615 5.51 %
Residential mortgages and consumer loans 389,170 3,975 4.06 % 386,321 4,272 4.39 %
Loans held for sale     258,929   951   1.46 %   206,636   845   1.62 %
Total interest-earning assets     15,818,140   169,102   4.25 %   13,338,135   148,819   4.43 %
Non-interest-earning assets     284,815           250,020        

Total assets

  $ 16,102,955           13,588,155        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand 720,411 801 0.44 % 578,496 795 0.55 %
Money market 8,074,961 16,596 0.82 % 7,031,894 18,626 1.05 %
Time deposits 945,912 3,585 1.51 % 914,800 4,124 1.79 %
Non-interest-bearing demand deposits     3,626,662   -   -     2,728,370   -   -  
Total deposits     13,367,946   20,982   0.62 %   11,253,560   23,545   0.83 %
Borrowings     1,098,667   6,449   2.34 %   969,940   7,414   3.03 %
Total deposits and borrowings     14,466,613   27,431   0.75 %   12,223,500   30,959   1.00 %
Other non-interest-bearing liabilities
and shareholders' equity     1,636,342           1,364,655        
Total liabilities and shareholders' equity   $ 16,102,955           13,588,155        
OTHER DATA
Net interest income / interest rate spread       141,671   3.50 %       117,860   3.43 %
Net interest margin           3.56 %           3.51 %
Ratio of average interest-earning assets
to average interest-bearing liabilities           109.34 %           109.12 %
 
SIGNATURE BANK            
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Nine months ended Nine months ended
September 30, 2012 September 30, 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 $ 90,288 230 0.34 % 135,109 292 0.29 %
Investment securities 7,160,982 183,310 3.41 % 6,283,608 180,133 3.82 %
Commercial loans, mortgages and leases 7,331,863 289,272 5.27 % 5,462,387 229,732 5.62 %
Residential mortgages and consumer loans 381,259 11,780 4.13 % 388,166 12,755 4.39 %
Loans held for sale     248,546   2,481   1.33 %   240,530   2,809   1.56 %
Total interest-earning assets     15,212,938   487,073   4.28 %   12,509,800   425,721   4.55 %
Non-interest-earning assets     285,078           276,522        
Total assets   $ 15,498,016           12,786,322        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand 679,946 2,328 0.46 % 634,545 2,480 0.52 %
Money market 7,784,412 50,756 0.87 % 6,425,345 53,813 1.12 %
Time deposits 918,455 10,843 1.58 % 920,662 12,369 1.80 %
Non-interest-bearing demand deposits     3,389,576   -   -     2,612,348   -   -  
Total deposits     12,772,389   63,927   0.67 %   10,592,900   68,662   0.87 %
Borrowings     1,157,344   20,483   2.36 %   1,042,022   22,539   2.89 %
Total deposits and borrowings     13,929,733   84,410   0.81 %   11,634,922   91,201   1.05 %
Other non-interest-bearing liabilities
and shareholders' equity     1,568,283           1,151,400        
Total liabilities and shareholders' equity   $ 15,498,016           12,786,322        
OTHER DATA
Net interest income / interest rate spread       402,663   3.47 %       334,520   3.50 %
Net interest margin           3.54 %           3.58 %
Ratio of average interest-earning assets
to average interest-bearing liabilities           109.21 %           107.52 %
 
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 after-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
September 30,

Nine months ended
September 30,

(dollars in thousands, except per share amounts)   2012   2011   2012   2011
Net income (as reported) $ 47,698 38,350 $ 135,349 109,550
Gains on sales of SBA interest-only strip securities - - (2,664 ) (7,434 )
Tax effect     -     -       1,136     3,281  
Net income - excluding after-tax effect of gains on sales of SBA
interest-only strip securities   $ 47,698     38,350     $ 133,821     105,397  
 
Diluted earnings per share (as reported) $ 1.00 0.83 $ 2.86 2.52
Gains on sales of SBA interest-only strip securities - - (0.05 ) (0.17 )
Tax effect     -     -       0.02     0.07  
Diluted earnings per share - excluding after-tax effect of gains on sales of
SBA interest-only strip securities   $ 1.00     0.83     $ 2.83     2.42  
 
 
The following table reconciles net interest margin (as reported) to core net interest margin excluding loan prepayment penalty income:
 

Three months ended
September 30,

Nine months ended
September 30,

    2012   2011   2012   2011
Net interest margin (as reported) 3.56 % 3.51 % 3.54 % 3.58 %
Margin contribution from loan prepayment penalty income     (0.15 )%   (0.05 )%     (0.11 )%   (0.07 )%
Core net interest margin - excluding loan prepayment penalty income     3.41 %   3.46 %     3.43 %   3.51 %
 

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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