Signature Bank Reports 2012 Second Quarter Results

Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its second quarter ended June 30, 2012.

Net income for the 2012 second quarter reached a record $45.3 million, or $0.96 diluted earnings per share, versus $36.6 million, or $0.87 diluted earnings per share, for the 2011 second quarter. The record net income for the 2012 second quarter, versus the 2011 second quarter, 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 second quarter reached $134.2 million, an increase of $21.2 million, or 18.8 percent, versus the 2011 second quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $15.87 billion at June 30, 2012, up $2.79 billion, or 21.3 percent, from $13.08 billion at June 30, 2011. Average assets for the 2012 second quarter reached $15.54 billion, an increase of $2.81 billion, or 22.0 percent, compared with the 2011 second quarter.

Deposits for the 2012 second quarter increased $449.7 million, or 3.6 percent, to $12.95 billion at June 30, 2012. When compared with deposits at December 31, 2011, overall deposit growth during the first half of 2012 was 10.2 percent, or $1.2 billion. Excluding short-term escrow deposits of $867.8 million and brokered deposits of $87.9 million at the end of the 2012 second quarter and $921.6 million and $47.7 million, respectively, at the end of the 2012 first quarter, core deposits grew $463.3 million for the quarter. Average deposits for the 2012 second quarter reached $12.7 billion, an increase of $448.7 million, or 3.7 percent.

“We continued to demonstrate strength in our financial performance this quarter as evidenced by record earnings and record loan growth as well as significant growth in deposits. Furthermore, one of the highlights of the 2012 second quarter was the introduction of Signature Financial, our new specialty finance subsidiary. Signature Financial is an excellent growth opportunity for the Bank that further diversifies our revenue streams and is a natural fit for our progress,” explained Signature Bank President and Chief Executive Officer Joseph J. DePaolo.

“We are pleased with the initial results from the launch of this new business endeavor, as well as the ongoing success of our Private Client Banking and Commercial Real Estate Banking teams. Moreover, we continue to seek new private client banking teams interested in joining our institution, as the market still affords us many opportunities on which to capitalize,” DePaolo noted.

Scott A. Shay, Chairman of the Board, said: "In these uncertain economic times -- where both foreign and U.S. capital markets remain unstable -- we have stayed firmly centered on meeting the banking needs of our clients. For the past decade, our veteran relationship bankers have provided steadfast assistance to our clients throughout various economic cycles. Our outwardly focused commitment to our clients’ success is again reflected in the Bank’s ongoing strong financial performance, with the 2012 second quarter being a continuation of our pace.”

Capital

The Bank’s Tier 1 leverage, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.57 percent, 16.45 percent and 17.55 percent, respectively, as of June 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 9.55 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 second quarter was $134.2 million, up $21.2 million, or 18.8 percent, versus the 2011 second quarter, primarily due to growth in average interest-earning assets. Average interest-earning assets of $15.24 billion for the 2012 second quarter represent an increase of $2.78 billion, or 22.4 percent, from the 2011 second quarter. Yield on interest-earning assets for the 2012 second quarter decreased 35 basis points, to 4.28 percent, versus the 2011 second quarter. 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 second quarter of 2012 decreased by 20 and 25 basis points, respectively, compared with the 2011 second quarter to 0.67 percent and 0.81 percent. These decreases were predominantly due to the continued effect of the prolonged low interest rate environment.

Net interest margin for the 2012 second quarter was 3.54 percent versus 3.64 percent reported in the 2011 second quarter. On a linked quarter basis, net interest margin increased 4 basis points. The linked quarter increase was primarily the result of an increase of $1.8 million in loan prepayment penalty income.

Provision for Loan and Lease Losses

The Bank’s provision for loan and lease losses for the 2012 second quarter was $10.3 million, a decrease of $2.5 million, or 19.8 percent, versus the 2011 second quarter. The decrease was largely due to a decrease in charge-offs.

Net charge-offs for the 2012 second quarter were $4.7 million, or 0.25 percent of average loans on an annualized basis, compared with $5.0 million, or 0.29 percent, for the 2012 first quarter and $7.7 million, or 0.53 percent, for the 2011 second quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2012 second quarter was $9.9 million, a decrease of $361,000 versus $10.2 million reported in the 2011 second quarter.

Non-interest expense for the 2012 second quarter rose $9.6 million, or 21.3 percent, to $54.9 million versus $45.2 million reported in the 2011 second quarter. 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 38.1 percent for the second quarter of 2012 compared with 36.7 percent for same period last year. The increase was primarily due to the hiring for Signature Financial.

Loans

Loans, excluding loans held for sale, grew a record $664.9 million, or 9.0 percent, during the 2012 second quarter to $8.03 billion, versus $7.36 billion at March 31, 2012. At June 30, 2012, loans accounted for 50.6 percent of total assets, compared with 48.2 percent at the end of the 2012 first quarter and 46.7 percent at the end of the 2011 second quarter. Average loans, excluding loans held for sale, were $7.69 billion in the 2012 second quarter, an increase of $632.4 million, or 9.0 percent, from the 2012 first quarter and $1.84 billion, or 31.4 percent, from the 2011 second quarter. The increase in loans for the quarter was primarily driven by growth in commercial real estate and multi-family loans as well as the launch of the Bank’s specialty finance business.

At June 30, 2012, non-accrual loans were $31.9 million, representing 0.40 percent of total loans and 0.20 percent of total assets, versus non-accrual loans of $35.5 million, or 0.48 percent of total loans, at March 31, 2012 and $44.2 million, or 0.72 percent of total loans, at June 30, 2011. At June 30, 2012, the ratio of allowance for loan and lease losses to total loans was 1.21 percent, versus 1.25 percent at March 31, 2012 and 1.28 percent at June 30, 2011. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 305 percent for the 2012 second quarter versus 259 percent for the first quarter of 2012 and 177 percent for the 2011 second quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2012 second quarter on Tuesday, July 24, 2012, at 10:00 AM ET. All participants should dial 480-629-9835 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 4548852. The replay will be available from approximately 12:00 PM ET on Tuesday, July 24, 2012 through 11:59 PM ET on Friday, July, 27, 2012.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 25 private client offices throughout the New York metropolitan area. The Bank’s growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers. Signature Bank offers a wide variety of business and personal banking products and services. The Bank operates Signature Financial, LLC, a specialty finance subsidiary focused on equipment finance and leasing, transportation financing and taxi medallion financing. Investment, brokerage, asset management and insurance products and services are offered through the Bank’s subsidiary, Signature Securities Group Corporation, a licensed broker-dealer, investment adviser and member FINRA/SIPC.

Signature Bank's 25 offices are located: In Manhattan (9) - 261 Madison Avenue; 300 Park Avenue; 71 Broadway; 565 Fifth Avenue; 950 Third Avenue; 200 Park Avenue South; 1020 Madison Avenue; 50 West 57th Street and 2 Penn Plaza. Brooklyn (3) - 26 Court Street; 84 Broadway and 6321 New Utrecht Avenue. Westchester (2) - 1C Quaker Ridge Road, New Rochelle and 360 Hamilton Avenue, White Plains. Long Island (6) - 1225 Franklin Avenue, Garden City; 279 Sunrise Highway, Rockville Centre; 68 South Service Road, Melville; 923 Broadway, Woodmere; 40 Cuttermill Road, Great Neck and 100 Jericho Quadrangle, Jericho. Queens (3) - 36-36 33rd Street, Long Island City; 78-27 37th Avenue, Jackson Heights and 8936 Sutphin Blvd., Jamaica. Bronx (1) - 421 Hunts Point Avenue, Bronx. Staten Island (1) - 2066 Hylan Blvd.

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

This press release and oral statements made from time to time by our representatives contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. 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.