Signature Bank Reports 2011 First Quarter Results

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

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

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

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

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

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

Capital

The Bank’s tier one leverage, tier one risk-based, and total risk-based capital ratios were approximately 8.29 percent, 13.87 percent and 14.91 percent, respectively, as of March 31, 2011. Each of these ratios is well in excess of regulatory requirements. The Bank’s strong risk-based capital ratios reflect the relatively low risk profile of the Bank’s balance sheet. The Bank’s tangible common equity ratio remains strong at 8.02 percent.

Net Interest Income

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

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

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

Provision for Loan Losses

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

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

Non-Interest Income and Non-Interest Expense

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

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

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

Loans

Loans, excluding loans held for sale, grew $395.5 million, or 7.5 percent, during the first quarter of 2011 to $5.64 billion, compared with $5.24 billion at December 31, 2010. At March 31, 2011, loans accounted for 45.6 percent of total assets, versus 44.9 percent at the end of the 2010 fourth quarter and 46.1 percent at the end of 2010 first quarter. Average loans, excluding loans held for sale, reached $5.42 billion in the 2011 first quarter, growing $414.8 million, or 8.3 percent, from the 2010 fourth quarter and $997.4 million, or 22.5 percent, from the 2010 first quarter. The increase in loans for the quarter was primarily driven by growth in commercial real estate and multi-family loans underwritten within the Bank’s stringent standards.

At March 31, 2011, non-accrual loans were $39.0 million, representing 0.69 percent of total loans and 0.31 percent of total assets, compared with non-accrual loans of $34.1 million, or 0.65 percent of total loans, at December 31, 2010 and $44.4 million, or 0.99 percent of total loans, at March 31, 2010. At March 31, 2011, the ratio of allowance for loan losses to total loans was 1.30 percent, versus 1.29 percent at December 31, 2010 and 1.33 percent at March 31, 2010. Additionally, the ratio of allowance for loan losses to non-accrual loans, or the coverage ratio, was 188 percent for the 2011 first quarter versus 197 percent for the fourth quarter of 2010 and 135 percent for the 2010 first quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2011 first quarter on Tuesday, April 26, 2011, at 10:00 AM ET. All participants should dial 480-629-9723 at least ten minutes prior to the start of the call.

To hear a live web simulcast or to listen to the archived web cast following completion of the call, please visit the Bank’s web site at www.signatureny.com, click on the "Investor Relations" tab, then select "Company News," followed by "Conference Calls," to access the link to the call. To listen to a telephone replay of the conference call, please dial 303-590-3030 and enter reservation identification number 4432114. The replay will be available from approximately 12:00 PM ET on Tuesday, April 26, 2011 through 11:59 PM ET on Friday, April 29, 2011.

About Signature Bank

Signature Bank, member FDIC, a New York-based full-service commercial bank with 24 private client offices throughout the New York metropolitan area, serves the needs of privately owned businesses, their owners and senior managers through dozens of private client groups. The Bank offers a wide variety of business and personal banking products and services as well as investment, brokerage, asset management and insurance products and services through its subsidiary, Signature Securities Group Corporation, a licensed broker-dealer, investment adviser and member FINRA/SIPC.

Signature Bank's 24 offices are located: In Manhattan - 261 Madison Avenue; 300 Park Avenue; 71 Broadway; 565 Fifth Avenue; 950 Third Avenue; 200 Park Avenue South; 1020 Madison Avenue and 50 West 57th Street. Brooklyn - 26 Court Street; 84 Broadway and 6321 New Utrecht Avenue. Westchester - 1C Quaker Ridge Road, New Rochelle and 360 Hamilton Avenue, White Plains. Long Island - 1225 Franklin Avenue, Garden City; 279 Sunrise Highway, Rockville Centre; 68 South Service Road, Melville; 923 Broadway, Woodmere; 40 Cuttermill Road, Great Neck and 100 Jericho Quadrangle, Jericho. Queens - 36-36 33rd Street, Long Island City; 78-27 37th Avenue, Jackson Heights and 8936 Sutphin Blvd., Jamaica. Bronx - 421 Hunts Point Avenue, Bronx. Staten Island - 2066 Hylan Blvd.

For more information, please visit www.signatureny.com.

This press release and oral statements made from time to time by our representatives contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Forward-looking statements include information concerning our future results, interest rates and the interest rate environment, loan and deposit growth, loan performance, operations, new private client team hires, new office openings and business strategy. These statements often include words such as "may," "believe," "expect," "anticipate," "intend," "plan," "estimate" or other similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements. These factors include but are not limited to: (i) prevailing economic conditions; (ii) changes in interest rates, loan demand, real estate values, and competition, which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance, including earnings on interest-bearing assets; (iii) the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit loss reserve levels; (iv) changes in the banking and other financial services regulatory environment and (v) competition for qualified personnel and desirable office locations. Additional risks are described in our quarterly and annual reports filed with the FDIC. You should keep in mind that any forward-looking statements made by Signature Bank speak only as of the date on which they were made. New risks and uncertainties come up from time to time, and we cannot predict these events or how they may affect the Bank. Signature Bank has no duty to, and does not intend to, update or revise the forward-looking statements after the date on which they are made. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this release or elsewhere might not reflect actual results.