Skip to main content
Investor Relations

Press Release

Signature Bank Reports 2006 Third Quarter Results

Company Release - 10/26/2006 6:00 AM ET

NEW YORK--(BUSINESS WIRE)--

Signature Bank (Nasdaq: SBNY)

    --  Deposits at $3.54 Billion; Impacted by Expected Outflows of
        $300 Million in Short-Term Escrow Deposits. Deposits Increased
        Approximately $130.0 Million Excluding These Outflows

    --  Loans Reach $1.40 Billion, Up $141 Million or 11 Percent

    --  Net Income at $8.3 Million or $0.28 Diluted Earnings Per
        Share, An Increase of $1.9 Million, or 29 Percent, From the
        2005 Third Quarter

    --  Four Private Client Banking Teams Headed by Five Group
        Directors Joined During the Third Quarter; Total Number of New
        Teams Added Year-to-Date at Nine

    --  Conversion of All Information Technology Services Away From
        Former Parent Company Successfully Completed

Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its 2006 third quarter ended September 30, 2006.

Net income for the quarter was $8.3 million or $0.28 diluted earnings per share, a 29 percent increase when compared with net income of $6.4 million or $0.22 diluted earnings per share, reported in the third quarter of last year. Net income for the 2006 third quarter was affected primarily by an increase in net interest income, which was partially offset by an increase in expenses associated with the hiring of four new private client banking teams and the opening of two new offices; one on the Upper East Side of Manhattan and one in Jackson Heights, Queens.

Net interest income for the quarter totaled $30.7 million, an increase of $5.6 million or 22 percent when compared with the third quarter of 2005. Total assets were $4.7 billion at the end of the third quarter of 2006.

Deposits for the third quarter decreased $171.7 million, totaling $3.54 billion at September 30, 2006. This includes the release of approximately $300.0 million of short-term escrow deposits that occurred during the third quarter of 2006, which, due to their nature, was expected. Excluding these short-term escrow outflows, deposits increased approximately $130.0 million for the quarter. The overall deposit growth represents an increase of $412.6 million, or 13 percent, when compared with deposits at September 30, 2005. Core deposits of $3.22 billion for the 2006 third quarter represent 91 percent of total deposits.

"We once again had a successful recruiting quarter where we added four private client banking teams, bringing the total number of teams added to the Signature Bank network to nine this year. To date, we have hired nearly 40 private client banking team professionals, almost double the amount we added for all of last year. We ended the quarter with 47 teams in place, which are headed by 58 Group Directors. This represents an increase of 11 Group Directors since the beginning of the year. The opportunity to bring on board the type of teams we are looking for is clearly present, and we are focused on taking advantage of this," stated Joseph J. DePaolo, President and Chief Executive Officer.

"The addition of teams and the opening of new offices serve as the building blocks of this organization. These initiatives are crucial to the Bank's future expansion and rapidly emerging presence within the marketplace. We are fast becoming the largest mid-sized commercial bank headquartered in the metropolitan-NY area catering to the needs of privately owned businesses," DePaolo continued.

Scott A. Shay, Chairman of the Board, noted: "Clearly, the banking industry is facing a tough interest rate environment as evidenced by the significant margin compression experienced by many of our competitors. However, we continue to navigate our way through these challenging times by sticking to our key fundamental strategy of growing both core deposits and loans as a percentage of the balance sheet. We believe we have demonstrated that commitment, time and again, throughout our brief history."

Net Interest Income

Net interest income for the 2006 third quarter was $30.7 million, up 22 percent or $5.6 million from the comparable period last year. The net interest income growth was fueled by earning asset growth and an increase in net interest margin. Average interest-earning assets for the third quarter of 2006 increased by $758.5 million, reflecting a 21 percent increase from the third quarter of last year. Asset yields for the 2006 third quarter strengthened by 117 basis points to 5.63 percent, when compared with the 2005 third quarter, reflecting an improved asset mix and more favorable market conditions. During the third quarter, the average cost of funds increased by 114 basis points to 2.94 percent when compared with the same quarter last year, and the average cost of deposits increased 87 basis points to 2.42 percent. The increases in costs of funds and deposits are reflective of the current interest rate environment and competitive marketplace.

Net interest income for the nine-month period ended September 30, 2006 was $89.3 million, up $19.2 million or 27 percent, from the comparable period last year.

The net interest margin for the 2006 third quarter increased 3 basis points to 2.78 percent when compared with the same quarter last year. On a linked quarter basis, net interest margin was down 3 basis points.

The net interest margin continues to be impacted by the flat to inverted yield curve and a competitive deposit market. Net interest margin expansion in future periods will remain dependent upon core deposit growth and continued improvement in our loan-to-asset mix. Additionally, large movements in short-term escrow deposits can result in considerable changes in margins in any given quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the third quarter of 2006 was $5.1 million, compared with $4.9 million reported for the same period last year. This improvement was largely the result of a $429,000 rise in fees and service charges. The increase was partially mitigated by a decrease of $262,000 in net gains on sales of securities and loans.

For the first nine months of 2006, non-interest income was $15.1 million versus $13.8 million for the comparable period last year. The increase of $1.3 million, or 9.2 percent, was due mostly to increased fees and service charges, which are reflective of the growth in client balances and activity.

Non-interest expense for the quarter ended September 30, 2006 was $20.6 million, versus $17.6 million in the third quarter last year. This rise is primarily due to the addition of new private client teams and offices. At the close of the 2006 third quarter, the Bank employed 58 Group Directors and 47 private client teams versus 43 Group Directors and 34 teams, respectively, at the end of the third quarter of last year. This represents an increase of over 35 percent, or 15 Group Directors and 13 teams, added since the third quarter of last year. Additionally, five new Signature Bank offices were opened since September 30, 2005.

The Bank's efficiency ratio temporarily declined to 57.5 percent for the third quarter of 2006, versus 55.7 percent for the second quarter of 2006, primarily due to the growth in salaries and benefits from the addition of new private clients teams and increased occupancy expense associated with new offices.

Loans

For the third quarter, loans, excluding loans held for sale, increased $141.4 million or 11.2 percent to $1.40 billion at September 30, 2006, compared with $1.26 billion at June 30, 2006. Loans at September 30, 2006 have increased $528.6 million, or 60.6 percent, compared to September 30, 2005. At September 30, 2006, loans to total assets stood at 29.7 percent, up from 26.8 percent at the end of the second quarter of 2006.

Loans held for sale were $103.1 million as of September 30, 2006, a decrease of $2.6 million from June 30, 2006. The periodic fluctuation in loans held for sale is primarily due to the timing of SBA loan purchases and subsequent pool sales.

At September 30, 2006, non-performing loans remained steady at $8.9 million, which represents 0.88 percent of total loans. Quarterly net charge-offs to average loans remained low at 0.03 percent.

Capital

Signature Bank's capital ratios remain strong. The Bank's tier 1 risk-based, total risk-based and leverage capital ratios were approximately 17.12 percent, 17.66 percent and 8.31 percent, respectively, as of September 30, 2006, well in excess of regulatory requirements. The ratios reflect the relatively low risk profile of the balance sheet.

In conclusion, DePaolo said: "We continue to build the Signature Bank franchise through the recruitment of new teams and the continued successes of our established ones. We have made great strides toward this end since the beginning of the year and certainly are seeing the ongoing efforts of our private client teams and senior lenders reflected in our financial performance. We have continually realized strong, steady growth in our loan portfolio, while sustaining solid core deposit growth. The landscape of the marketplace continues to present opportunities for the Bank and we look forward to the challenge of capitalizing on those opportunities."

Conference Call

Signature Bank's management will host a conference call to review results of the 2006 third quarter on Thursday, October 26, 2006 at 10:00 AM ET. Participants should dial 800-867-0448 at least ten minutes prior to the start of the call. International callers should dial 303-262-2125.

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. Refer to conference identification number 3034. To listen to a telephone replay of the conference call, please dial 303-590-3000 and enter reservation identification number 11074135. The replay will be available from approximately 12:00 PM ET on Thursday, October 26, 2006, through 11:59 PM ET on Tuesday, October 31, 2006.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 18 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 18 offices are located throughout the metropolitan New York area. In Manhattan - 261 Madison Avenue; 300 Park Avenue; 71 Broadway; 565 Fifth Avenue; 950 Third Avenue; 200 Park Avenue South and 1020 Madison Avenue. 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, Long Island City and 78-27 37th Avenue, Jackson Heights. Bronx - 421 Hunts Point Avenue, Hunts Point.

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, 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 other similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements. These factors include but are not limited to: (i) prevailing economic conditions; (ii) changes in interest rates, loan demand, real estate values, and competition, which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance; (iii) the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit loss reserve levels; 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.

SIGNATURE BANK
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)


                                 Three months ended Nine months ended
                                    September 30,      September 30,
                                 -------------------------------------
(dollars in thousands, except
 per share amounts)                2006     2005      2006     2005
----------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME
Loans held for sale                $1,420      723     3,584    2,391
Loans, net                         25,035   12,747    65,001   31,410
Securities available-for-sale      31,138   22,837    91,038   62,629
Securities held-to-maturity         4,078    4,137    12,019   12,329
Other short-term investments          414      202     1,376      788
----------------------------------------------------------------------
      Total interest income        62,085   40,646   173,018  109,547
----------------------------------------------------------------------
INTEREST EXPENSE
Deposits                           20,422   11,694    56,288   28,121
Fed funds purchased and
 securities sold under
agreements to repurchase            6,744    2,425    15,824    5,748
Federal Home Loan Bank advances     3,528    1,200     9,573    4,931
Other short-term borrowings           740      296     1,992      625
----------------------------------------------------------------------
      Total interest expense       31,434   15,615    83,677   39,425
----------------------------------------------------------------------
Net interest income before
 provision for loan losses         30,651   25,031    89,341   70,122
Provision for loan losses             746      803     2,634    2,081
----------------------------------------------------------------------
Net interest income after
 provision for loan losses         29,905   24,228    86,707   68,041
----------------------------------------------------------------------
NON-INTEREST INCOME
Commissions                         1,775    1,715     5,190    4,819
Fees and service charges            2,368    1,939     7,023    5,501
Net gains on sales of securities
 and loans                            450      712     1,328    1,829
Other income                          534      547     1,524    1,650
----------------------------------------------------------------------
      Total non-interest income     5,127    4,913    15,065   13,799
----------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and benefits              12,865   10,218    36,694   40,892
Occupancy and equipment             2,417    1,821     6,620    5,231
Other general and administrative    5,297    5,550    16,046   15,849
----------------------------------------------------------------------
      Total non-interest expense   20,579   17,589    59,360   61,972
----------------------------------------------------------------------
Income before income taxes         14,453   11,552    42,412   19,868
Income tax expense                  6,174    5,143    17,937   11,407
----------------------------------------------------------------------
Net income                         $8,279    6,409    24,475    8,461
----------------------------------------------------------------------
PER COMMON SHARE DATA
Earnings per share - basic          $0.28     0.22      0.83     0.29
Earnings per share - diluted        $0.28     0.22      0.82     0.29
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                            September 30, December 31,
                                                2006         2005
(dollars in thousands, except per share
 amounts)                                    (unaudited)
----------------------------------------------------------------------
ASSETS
Cash and due from banks                         $107,874       80,558
Short-term investments                            19,727        5,651
----------------------------------------------------------------------
      Total cash and cash equivalents            127,601       86,209
----------------------------------------------------------------------
Securities available-for-sale (pledged
 $1,397,431 at September 30, 2006 and
 $946,430 at December 31, 2005)                2,527,264    2,570,799
Securities held-to-maturity (fair market
 value $374,607 at September 30, 2006 and
 $390,401 at December 31, 2005; pledged
 $153,207 at September 30, 2006 and
 $175,730 at December 31, 2005)                  382,498      399,501
Federal Home Loan Bank stock                      17,411       14,468
Loans held for sale                              103,127      138,395
Loans, net                                     1,388,765      995,103
Premises and equipment, net                       21,279       17,785
Accrued interest and dividends receivable         27,814       20,817
Other assets                                     118,746      141,861
----------------------------------------------------------------------
      Total assets                            $4,714,505    4,384,938
----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing                           1,022,705    1,277,207
Interest bearing                               2,520,393    2,210,526
----------------------------------------------------------------------
      Total deposits                           3,543,098    3,487,733
----------------------------------------------------------------------
Fed funds purchased and securities sold
 under agreements to repurchase                  467,000      260,000
Federal Home Loan Bank advances                  270,000      220,000
Other short-term borrowings                       23,293       20,000
Accrued expenses and other liabilities            34,210       46,223
----------------------------------------------------------------------
      Total liabilities                        4,337,601    4,033,956
----------------------------------------------------------------------
Shareholders' equity
Preferred stock, par value $.01; 61,000,000
 shares authorized and unissued at
 September 30, 2006 and December 31, 2005              -            -
Common stock, par value $.01; 64,000,000
 shares authorized, 29,495,407 shares
 issued and outstanding at September 30,
 2006; 64,000,000 shares authorized,
 29,378,397 shares issued and outstanding
 at December 31, 2005                                295          294
Additional paid-in capital                       364,047      361,617
Unearned compensation                                  -         (680)
Retained earnings                                 37,278       12,803
Accumulated other comprehensive loss:
Net unrealized depreciation on securities
 available-for-sale, net of tax effect           (24,716)     (23,052)
----------------------------------------------------------------------
      Total shareholders' equity                 376,904      350,982
----------------------------------------------------------------------
      Total liabilities and shareholders'
       equity                                 $4,714,505    4,384,938
----------------------------------------------------------------------
SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)



                               Three months ended   Nine months ended
                               ---------------------------------------
                               September September September September
(dollars in thousands, except     30,       30,       30,       30,
 ratios and per share amounts)   2006      2005      2006      2005
----------------------------------------------------------------------
PER SHARE
Net income - basic                $0.28     $0.22     $0.83     $0.29
Net income - diluted              $0.28     $0.22     $0.82     $0.29
Average shares outstanding -
 basic                           29,483    29,357    29,446    29,343
Average shares outstanding -
 diluted                         29,875    29,710    29,855    29,683
Book value                       $12.78    $11.84    $12.78    $11.84

SELECTED FINANCIAL DATA
Return on average total assets     0.71%     0.67%     0.73%     0.31%
Return on average
 shareholders' equity              9.09%     7.33%     9.25%     3.31%
Efficiency ratio                  57.52%    58.74%    56.85%    73.85%
Yield on interest-earning
 assets                            5.63%     4.46%     5.42%     4.27%
Cost of deposits and
 borrowings                        2.94%     1.80%     2.71%     1.62%
Net interest margin                2.78%     2.75%     2.80%     2.73%



                               September   June    December  September
                                  30,       30,       31,       30,
                                 2006      2006      2005      2005
----------------------------------------------------------------------
CAPITAL RATIOS
Tier one leverage                  8.31%     8.45%     8.67%     9.48%
Tier one risk-based               17.12%    17.44%    19.55%    22.30%
Total risk-based                  17.66%    17.97%    20.08%    22.84%

ASSET QUALITY
Non-performing loans             $8,937    $8,891    $8,845    $8,719
Allowance for loan losses       $12,339   $11,696   $10,050    $8,897
Allowance for loan losses to
 non-performing loans            138.07%   131.55%   113.62%   102.04%
Allowance for loan losses to
 total loans                       0.88%     0.93%     1.00%     1.02%
Non-performing loans to total
 loans                             0.64%     0.71%     0.88%     1.00%
Quarterly net charge-offs to
 average loans (annualized)        0.03%     0.03%     0.03%     0.01%
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)



                   Three months ended          Three months ended
                   September 30, 2006          September 30, 2005
               -------------------------------------------------------
                          Interest Average            Interest Average
(dollars in     Average    Income/  Yield/  Average    Income/  Yield/
 thousands)      Balance   Expense   Rate    Balance   Expense   Rate
----------------------------------------------------------------------
INTEREST-
 EARNING ASSETS
Short-term
 investments      $10,004     117    4.64%    $12,389     109    3.49%
Investment
 securities     2,981,439  35,513    4.76%  2,754,301  27,067    3.93%
Commercial
 loans and
 commercial
 mortgages      1,015,869  19,559    7.64%    618,931   9,587    6.15%
Residential
 mortgages        156,694   2,187    5.58%     68,794     997    5.80%
Consumer loans    132,858   3,289    9.82%     99,166   2,163    8.65%
Loans held for
 sale              78,540   1,420    7.17%     63,283     723    4.53%
----------------------------------------------------------------------
Total interest-
 earning assets 4,375,404  62,085    5.63%  3,616,864  40,646    4.46%
----------------------------------------------------------------------
Non-interest-
 earning assets   248,791                     199,228
----------------------------------------------------------------------
Total assets   $4,624,195                  $3,816,092
----------------------------------------------------------------------
INTEREST-
 BEARING
 LIABILITIES
Interest-
 bearing
 deposits
NOW and
 interest-
 bearing
 checking         234,024     973    1.65%    209,562     349    0.66%
Money market
 accounts       1,804,448  16,516    3.63%  1,567,888   8,935    2.26%
Certificates of
 deposit          255,536   2,933    4.55%    319,747   2,410    2.99%
Non-interest-
 bearing
 deposits       1,052,944       -       -     897,193       -       -
----------------------------------------------------------------------
Total deposits  3,346,952  20,422    2.42%  2,994,390  11,694    1.55%
----------------------------------------------------------------------
Borrowings        897,612  11,012    4.87%    455,074   3,921    3.42%
----------------------------------------------------------------------
Total deposits
 and borrowings 4,244,564  31,434    2.94%  3,449,464  15,615    1.80%
----------------------------------------------------------------------
Other non-
 interest
 bearing
 liabilities
 and
 shareholders'
 equity           379,631                     366,628
Total
 liabilities
 and
 shareholders'
 equity        $4,624,195                  $3,816,092
----------------------------------------------------------------------
OTHER DATA
Net interest
 income /
 interest rate
 spread                    30,651    2.69%             25,031    2.66%
----------------------------------------------------------------------
Net interest
 margin                              2.78%                       2.75%
----------------------------------------------------------------------
Ratio of
 average
 interest-
 earning assets
 to average
 interest-
 bearing
 liabilities                       103.08%                     104.85%
----------------------------------------------------------------------
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)



                    Nine Months Ended           Nine months ended
                   September 30, 2006          September 30, 2005
               -------------------------------------------------------
                          Interest Average            Interest Average
(dollars in     Average    Income/  Yield/  Average    Income/  Yield/
 thousands)      Balance   Expense   Rate    Balance   Expense   Rate
----------------------------------------------------------------------
INTEREST-
 EARNING
 ASSETS
Short-term
 investments      $16,212     608    5.01%    $16,432     350    2.85%
Investment
 securities     3,014,321 103,825    4.59%  2,650,640  75,396    3.79%
Commercial
 loans and
 commercial
 mortgages        928,034  51,101    7.36%    539,533  23,604    5.85%
Residential
 mortgages        104,779   4,286    5.45%     71,759   2,904    5.40%
Consumer loans    131,875   9,614    9.75%     77,490   4,902    8.46%
Loans held for
 sale              71,429   3,584    6.71%     74,219   2,391    4.31%
----------------------------------------------------------------------
Total
 interest-
 earning
 assets         4,266,650 173,018    5.42%  3,430,073 109,547    4.27%
----------------------------------------------------------------------
Non-interest-
 earning
 assets           244,054                     189,552
----------------------------------------------------------------------
Total assets   $4,510,704                  $3,619,625
----------------------------------------------------------------------
INTEREST-
 BEARING
 LIABILITIES
Interest-
 bearing
 deposits
NOW and
 interest-
 bearing
 checking         225,766   2,478    1.47%    197,048     959    0.65%
Money market
 accounts       1,777,538  45,033    3.39%  1,505,408  22,066    1.96%
Certificates
 of deposit       279,808   8,777    4.19%    247,334   5,096    2.75%
Non-interest-
 bearing
 deposits       1,033,253       -       -     815,922       -       -
----------------------------------------------------------------------
Total deposits  3,316,365  56,288    2.27%  2,765,712  28,121    1.36%
----------------------------------------------------------------------
Borrowings        815,317  27,389    4.49%    492,889  11,304    3.07%
----------------------------------------------------------------------
Total deposits
 and
 borrowings     4,131,682  83,677    2.71%  3,258,601  39,425    1.62%
----------------------------------------------------------------------
Other non-
 interest
 bearing
 liabilities
 and
 shareholders'
 equity           379,022                     361,024
Total
 liabilities
 and
 shareholders'
 equity        $4,510,704                  $3,619,625
----------------------------------------------------------------------
OTHER DATA
Net interest
 income /
 interest rate
 spread                    89,341    2.71%             70,122    2.65%
----------------------------------------------------------------------
Net interest
 margin                              2.80%                       2.73%
----------------------------------------------------------------------
Ratio of
 average
 interest-
 earning
 assets to
 average
 interest-
 bearing
 liabilities                       103.27%                     105.26%
----------------------------------------------------------------------

Source: Signature Bank

Contact: 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