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Press Release

Signature Bank Reports 2006 First Quarter Results

Company Release - 4/28/2006 6:00 AM ET

NEW YORK--(BUSINESS WIRE)--April 28, 2006--Signature Bank (Nasdaq: SBNY)

    --  Net Income Rose 39 Percent to $8.0 Million or $0.27 Diluted
        Earnings Per Share Versus $5.7 Million or $0.19 Diluted
        Earnings Per Share in the 2005 First Quarter

    --  Expected Outflows of Short-Term Escrow Deposits in Excess of
        $250 Million Led to a Deposit Decrease of $163.6 Million;
        Deposits Increased Over $130.0 Million Excluding These

    --  Loans Increased $98 Million, Up 10 Percent for the Quarter;
        Average Loans Increased $118 Million, Up 13 Percent for the

    --  Two Private Client Teams Joined and 16th Location Opened
        During the Quarter; Two Additional Private Client Teams Joined
        in April 2006

Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its 2006 first quarter ended March 31, 2006.

Net income for the quarter increased 39 percent to $8.0 million, or $0.27 diluted earnings per share versus $5.7 million or $0.19 diluted earnings per share for the first quarter last year. The improvement in net income is primarily attributable to the growth in deposits, loans and the further leveraging of the Bank's infrastructure.

Net interest income totaled $29.1 million for the quarter, an increase of $7.1 million or 32 percent, compared with the 2005 first quarter. Total assets at the quarter-end were $4.49 billion.

Deposits in the first quarter decreased $163.6 million, totaling $3.32 billion at March 31, 2006. This includes the release of over $250 million of short-term escrow deposits that occurred during the first quarter of 2006, which, due to their nature, was expected. Excluding these short-term escrow deposits, deposits increased approximately $130.0 million in the quarter. In addition, off-balance sheet money market deposits rose $201.2 million to $680.4 million, as a result of increases in off-balance sheet short-term escrow deposits.

"As we approach the Bank's five-year anniversary, we continue to achieve solid earnings growth by expanding our loan portfolio and growing core deposits as well as capitalizing on increased efficiencies within the organization. Loans were up nearly $100 million this past quarter, and we are on target to achieve a 30 percent loan-to-asset ratio by year-end. Clients are continuing to recognize the strong capabilities of our Group Directors, Private Client Teams and Senior Lenders, as evidenced by this quarter's results," stated Joseph J. DePaolo, President and Chief Executive Officer.

"During the first quarter, we remained focused on recruitment, with the addition of two teams, three Group Directors and two Senior Lenders, and the opening of our 16th location in Union Square in January 2006. Additionally, in the second quarter, we have already added another two teams and two Group Directors. This brings our totals to 52 Group Directors and 42 Private Client Banking Teams. We are continually identifying and attracting seasoned bankers to join our team as we expand our network," DePaolo added.

Scott A. Shay, Chairman of the Board, noted: "The value of our franchise is strengthening amid ongoing industry consolidation. The pipeline for additional recruitment remains strong, as ongoing acquisitions within the metro-New York banking arena will likely lead to disarray, further client segmentation and relationship dilution. As in the past, we expect this to translate into opportunity for the growth of Signature Bank."

Net Interest Income

Net interest income for the first quarter 2006 was $29.1 million, representing a $7.1 million or 32 percent increase from the first quarter 2005. Average interest earning assets for the first quarter of 2006 increased by $913.3 million, reflecting a 27.8 percent increase from the first quarter 2005. Asset yields for the 2006 first quarter strengthened by 119 basis points to 5.23 percent, when compared with the first quarter of 2005, benefiting from higher short-term rates and more favorable market conditions. During the first quarter of 2006, the average cost of funds increased by 111 basis points to 2.50 percent when compared with the first quarter of last year. The increase in the cost of funds is reflective of the competitive marketplace. The net interest margin for the 2006 first quarter increased 9 basis points to 2.82 percent, versus the same period last year. On a linked quarter basis, net interest margin decreased 7 basis points predominantly due to the outflow of the significant short-term escrow deposits which was expected, due to their nature. These short-term escrow deposits had helped to accelerate margin expansion in the fourth quarter of 2005. These funds were temporarily replaced with higher cost short-term borrowings. The effect of the escrow deposit outflow was approximately 8 basis points.

The Bank expects that due to the flat yield curve and competitive deposit market its cost of funds will continue to increase with the rise in short-term rates; however, this rise should be mitigated by a stable core deposit mix.

Non-Interest Income and Non-Interest Expense

Non-interest income for the first quarter of 2006 was $4.8 million, an increase of $562,000 or 13.1 percent, versus $4.3 million reported in the comparable period a year ago. This improvement was largely the result of a $721,000 increase in fees and service charges and a $107,000 increase in commissions from brokerage activities. These increases were partially offset by a decrease of $201,000 in net gains on sales of securities and loans.

Non-interest expense for the first quarter was $19.5 million, compared with $15.7 million in the same period last year. This increase was primarily due to the addition of new Private Client Teams and locations as well as increased growth in client activity.

The Bank's efficiency ratio improved to 57.3 percent for first quarter 2006, compared with 59.8 percent for the first quarter of last year. This improvement in efficiencies continues to occur while the Bank aggressively adds Private Client personnel. Additionally, the Bank successfully completed the transition of all non-information technology services away from our former parent company, Bank Hapoalim, during the quarter. The Bank expects to complete the transition of information technology services away from Bank Hapoalim by September 30, 2006.


For the first quarter, loans, excluding loans held for sale, increased $97.8 million or 9.7 percent to $1.1 billion at March 31, 2006, compared with $1.0 billion at December 31, 2005. The Bank's loan pipeline continues to benefit from several key initiatives the Bank began implementing throughout 2005, which included enhancing its commercial real estate lending capabilities, coupled with the increased efforts of the Bank's established Private Client Teams and Senior Lenders.

Loans held for sale were $108.4 million as of March 31, 2006, a decrease of $30.0 million or 22 percent from December 31, 2005. The periodic fluctuation in loans held for sale is predominantly due to the timing of SBA loan purchases and subsequent pool sales.

At March 31, 2006, non-performing loans increased to $9.0 million from $8.8 million at December 31, 2005, representing 0.82 percent of total loans. Quarterly net charge-offs to average loans remained low at 0.06 percent. The non-performing loan balance is predominantly made up of two loans, one of which the Bank restructured in January 2006. The restructuring resulted in additional collateral and an anticipated significant pay-down within the year.


Signature Bank's capital ratios remain strong. The Bank's tier 1 risk-based, total risk-based and leverage capital ratios were approximately 18.57 percent, 19.11 percent and 8.42 percent, respectively, as of March 31, 2006, well in excess of regulatory requirements. The ratios reflect the relatively low risk profile of the balance sheet.

Conference Call

Signature Bank's management will host a conference call to review results of the 2006 first quarter on Friday, April 28, 2006, at 10:00 a.m. ET. Participants should dial 800-257-6607 at least ten minutes prior to the start of the call. International callers should dial 303-262-2131. 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, 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 33248. To listen to a telephone replay of the conference call, please dial 303-590-3000 and enter reservation identification number 11058440. The replay will be available from approximately 12:00 p.m. ET on Friday, April 28, 2006, through 6:00 p.m. ET on Wednesday, May 3, 2006.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 16 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 16 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 and 200 Park Avenue South. 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 in Long Island City. Bronx -- 421 Hunts Point Avenue, Hunts Point.

For more information, please visit

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 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.


                                                  Three months ended
                                                       March 31,
(dollars in thousands, except per share amounts)    2006       2005
Loans held for sale                                 $1,247       $763
Loans, net                                          18,686      8,505
Securities available-for-sale                       29,823     19,049
Securities held-to-maturity                          3,963      4,051
Other short-term investments                           343        307
     Total interest income                          54,062     32,675
Deposits                                            16,784      7,347
Fed funds purchased and securities sold under
agreements to repurchase                             4,413      1,136
Federal Home Loan Bank advances                      3,278      2,113
Other short-term borrowings                            470         23
     Total interest expense                         24,945     10,619
Net interest income before provision for loan
 losses                                             29,117     22,056
Provision for loan losses                              916        626
Net interest income after provision for loan
 losses                                             28,201     21,430
Commissions                                          1,643      1,536
Fees and service charges                             2,368      1,647
Net gains on sales of securities and loans             361        562
Other income                                           472        537
     Total non-interest income                       4,844      4,282
Salaries and benefits                               11,679      9,183
Occupancy and equipment                              2,099      1,698
Other general and administrative                     5,681      4,858
     Total non-interest expense                     19,459     15,739
Income before income taxes                          13,586      9,973
Income tax expense                                   5,628      4,246
Net income                                          $7,958     $5,727
Earnings per share - basic                           $0.27      $0.20
Earnings per share - diluted                          0.27       0.19

                                              March 31,   December 31,
                                                2006         2005
(dollars in thousands, except per share      (unaudited)
Cash and due from banks                          $83,850      $80,558
Short-term investments                             4,170        5,651
     Total cash and cash equivalents              88,020       86,209
Securities available-for-sale (pledged
 $1,293,672 at March 31, 2006 and $946,430
 at December 31, 2005)                         2,600,543    2,570,799
Securities held-to-maturity (fair market
 value $395,966 at March 31, 2006 and
 $390,401 at December 31, 2005; pledged
 $177,933 at March 31, 2006 and $175,730 at
 December 31, 2005)                              407,950      399,501
Federal Home Loan Bank stock                      18,068       14,468
Loans held for sale                              108,435      138,395
Loans, net                                     1,092,117      995,103
Premises and equipment, net                       19,439       17,785
Accrued interest and dividends receivable         23,673       20,817
Other assets                                     136,376      141,861
     Total assets                             $4,494,621   $4,384,938
Non-interest bearing                             962,217    1,277,207
Interest bearing                               2,361,954    2,210,526
     Total deposits                            3,324,171    3,487,733
Fed funds purchased and securities sold
 under agreements
to repurchase                                    454,225      260,000
Federal Home Loan Bank advances                  300,000      220,000
Other short-term borrowings                        2,467       20,000
Accrued expenses and other liabilities            60,934       46,223
     Total liabilities                         4,141,797    4,033,956
Shareholders' equity
Preferred stock, par value $.01; 61,000,000
 shares authorized and unissued at March 31,
 2006 and December 31, 2005                            -            -
Common stock, par value $.01; 64,000,000
 shares authorized, 29,451,866 shares issued
 and outstanding at March 31, 2006;
 64,000,000 shares authorized, 29,378,397
 shares issued and outstanding at December
 31, 2005                                            295          294
Additional paid-in capital                       365,123      361,617
Unearned compensation                             (3,000)        (680)
Retained earnings                                 20,761       12,803
Accumulated other comprehensive loss:
Net unrealized depreciation on securities
 available-for-sale, net of tax effect           (30,355)     (23,052)
     Total shareholders' equity                  352,824      350,982
     Total liabilities and shareholders'
      equity                                  $4,494,621   $4,384,938

                                             Three Months Ended
(dollars in thousands, except ratios  March 31, December 31, March 31,
 and per share amounts)                  2006       2005        2005
Net income - basic                       $0.27        $0.25     $0.20
Net income - diluted                     $0.27        $0.25     $0.19
Average shares outstanding - basic      29,395       29,366    29,319
Average shares outstanding - diluted    29,766       29,716    29,688
Book value                              $11.98       $11.95    $11.47

Return on average total assets            0.73%        0.70%     0.67%
Return on average shareholders'
 equity                                   9.28%        8.51%     6.88%
Efficiency ratio                         57.30%       58.36%    59.76%
Yield on interest-earning assets          5.23%        4.78%     4.04%
Cost of deposits and borrowings           2.50%        1.96%     1.39%
Net interest margin                       2.82%        2.89%     2.73%

Tier one leverage                         8.42%        8.67%    10.11%
Tier one risk-based                      18.57%       19.55%    25.75%
Total risk-based                         19.11%       20.08%    26.36%

Non-performing loans                    $9,005       $8,845    $5,979
Allowance for loan losses              $10,817      $10,050    $8,285
Allowance for loan losses to non-
 performing loans                       120.12%      113.62%   138.57%
Allowance for loan losses to total
 loans                                    0.98%        1.00%     1.26%
Non-performing loans to total loans       0.82%        0.88%     0.91%
Quarterly net charge-offs to average
 loans (annualized)                       0.06%        0.03%     0.00%

                  Three Months Ended           Three Months Ended
                    March 31, 2006               March 31, 2005
                         Interest Average             Interest Average
(dollars in   Average     Income/  Yield/  Average     Income/  Yield/
  thousands)   Balance    Expense   Rate    Balance    Expense   Rate
 investments     $7,907       94    4.82%    $25,061      150    2.43%
 securities   3,064,319   34,035    4.44%  2,566,845   23,257    3.62%
 loans and
 mortgages      839,509   14,548    7.03%    471,740    6,295    5.41%
 mortgages       73,708      964    5.23%     76,527      977    5.11%
 loans          131,140    3,174    9.82%     62,958    1,233    7.94%
Loans held
 for sale        77,880    1,247    6.49%     78,058      763    3.96%
 assets       4,194,463   54,062    5.23%  3,281,189   32,675    4.04%
 assets         242,983                      180,891
Total assets $4,437,446                   $3,462,080
NOW and
 checking       214,337      683    1.29%    185,235      296    0.65%
Money market
 accounts     1,718,289   12,981    3.06%  1,477,734    5,978    1.64%
 of deposit     322,490    3,120    3.92%    185,619    1,073    2.35%
 deposits     1,003,467        -       -     774,319        -       -
 deposits     3,258,583   16,784    2.09%  2,622,907    7,347    1.14%
Borrowings      794,334    8,161    4.17%    482,050    3,272    2.75%
 deposits and
 borrowings   4,052,917   24,945    2.50%  3,104,957   10,619    1.39%
Other non-
 and share-
  equity        384,529                      357,123
 and share-
 equity      $4,437,446                   $3,462,080
Net interest
 income /
 rate spread              29,117    2.73%              22,056    2.65%
Net interest
 margin                             2.82%                        2.73%
Ratio of
 assets to
 liabilities                      103.49%                      105.68%

    CONTACT: Signature Bank
             Investor Contact:
             Eric R. Howell, 646-822-1402
             Media Contact:
             Susan J. Lewis, 646-822-1825

    SOURCE: Signature Bank