Signature Bank Reports 2014 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, 2014. Net income for the 2014 second quarter reached a record $72.5 million, or $1.48 diluted earnings per share, versus $53.6 million, or $1.12 diluted earnings per share, for the 2013 second quarter. The record net income for the 2014 second quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income, fueled by record deposit growth and strong loan growth. These factors were partially offset by an increase in non-interest expenses.

Net interest income for the 2014 second quarter reached $193.7 million, up $39.2 million, or 25.4 percent, when compared with the 2013 second quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $24.53 billion at June 30, 2014, an increase of $4.80 billion, or 24.4 percent, from $19.72 billion at June 30, 2013. Average assets for the 2014 second quarter reached $23.82 billion, an increase of $5.02 billion, or 26.7 percent, compared with the 2013 second quarter.

Deposits for the 2014 second quarter rose a record $1.45 billion, or 7.9 percent, to $19.76 billion at June 30, 2014. When compared with deposits at June 30, 2013, overall deposit growth for the last twelve months was 29.4 percent, or $4.49 billion. Excluding short-term escrow and brokered deposits of $2.45 billion at the end of the 2014 second quarter and $2.01 billion at the end of the 2014 first quarter, core deposits increased a record $1.01 billion for the quarter. Average deposits for the 2014 second quarter reached $19.09 billion, an increase of $1.32 billion, or 7.4 percent.

“The 2014 second quarter again demonstrated our ability to deliver strong deposit and loan growth, which led to our 19^th consecutive quarter of record earnings. Furthermore, the public offering we completed during the second quarter was very well received, and fortifies Signature Bank’s already strong and stable foundation and capital position. The common equity we raised equips us with the additional resources necessary to further support our rapidly expanding network,” explained Joseph J. DePaolo, President and Chief Executive Officer.

“During the past several years, we have invested time, effort and capital to diligently and prudently broaden our offerings and capabilities, extend our geographic footprint and diversify our revenue stream through the addition of complementary business offerings. We are proud of these ongoing accomplishments, which are achieved through the efforts of our colleagues as we also continue to grow across all facets of Signature Bank – deposits, loans, teams and top-line revenue,” DePaolo stated.

“As Signature Bank’s reputation continues to strengthen, we have become the bank-of-choice throughout the New York area for bankers and clients alike. By augmenting our already strong capital position with the proceeds from our recent public common stock offering, we can further accelerate our proven and disciplined abilities to capture a portion of the vast opportunities available in the marketplace. Our clients know we are always looking out for them, and our growth is validation of our unrelenting commitment to depositor safety, first and foremost. In fact, it is interesting to note that during the second quarter, Signature Bank was the ONLY large cap bank to rank on Forbes’ 2014 list of America’s 50 Most Trustworthy Financial Companies. We believe this stems from the depositor-centric nature of our Bank,” noted Scott A. Shay, Chairman of the Board.

Capital

In June 2014, the Bank raised net proceeds of $257.2 million of common stock in a public offering, after the deduction of offering expenses. In July 2014, the Underwriter exercised the overallotment option resulting in additional net proceeds of $38.6 million of common stock. Proceeds from the offering will be used to continue the Bank’s growth in serving its niche market of privately owned businesses. The Bank’s Tier 1 leverage, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.55 percent, 15.65 percent and 16.69 percent, respectively, as of June 30, 2014. 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 9.34 percent. The Bank defines 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 2014 second quarter was $193.7 million, an increase of $39.2 million, or 25.4 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $23.46 billion for the 2014 second quarter represent an increase of $5.00 billion, or 27.1 percent, from the 2013 second quarter. Yield on interest-earning assets for the 2014 second quarter decreased nine basis points, to 3.83 percent, compared with the 2013 second quarter. This decrease was primarily attributable to prolonged low interest rates.

Average cost of deposits and average cost of funds for the second quarter of 2014 decreased by three and five basis points, respectively, versus the 2013 second quarter to 0.48 percent and 0.56 percent. These decreases were predominantly due to prolonged low interest rates.

Net interest margin for the 2014 second quarter was 3.31 percent versus 3.36 percent reported in the same period a year ago. On a linked quarter basis, net interest margin decreased eight basis points. The linked quarter decrease was partly due to a decline of $2.0 million in loan prepayment penalty income which impacted net interest margin by five basis points. Excluding loan prepayment penalties in both quarters, linked quarter core margin decreased three basis points to 3.22 percent. Approximately two basis points of the decrease were due to one more day in the 2014 second quarter.

Provision for Loan Losses

The Bank’s provision for loan losses for the second quarter of 2014 was $7.6 million, a decrease of $2.0 million, or 21.0 percent, compared with the 2013 second quarter. The decline was largely due to a decrease in net charge-offs of $2.8 million.

Net charge-offs for the 2014 second quarter were $718,000, or 0.02 percent of average loans on an annualized basis, versus net recoveries of $244,000, or 0.01 percent, for the 2014 first quarter and net charge-offs of $3.5 million, or 0.13 percent, for the 2013 second quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2014 second quarter was $12.4 million, up $3.1 million when compared with $9.3 million reported in the 2013 second quarter. The increase was predominantly due to a $3.5 million increase in net gains on sales of securities mostly due to a $4.4 million gain on sale of an SBA interest-only strip security.

Non-interest expense for the second quarter of 2014 was $73.0 million, an increase of $11.6 million, or 18.8 percent, versus $61.4 million reported in the 2013 second quarter. The increase was primarily a result of the addition of new private client banking teams and an asset-based lending team, as well as the continued investment in Signature Financial.

The Bank’s efficiency ratio improved to 35.4 percent for the 2014 second quarter versus 37.5 percent for the comparable period last year. The improvement was primarily due to growth in net interest income.

Loans

Loans, excluding loans held for sale, grew $1.21 billion, or 8.5 percent, during the second quarter of 2014 to $15.43 billion, compared with $14.22 billion at March 31, 2014. At June 30, 2014, loans accounted for 62.9 percent of total assets, versus 61.5 percent at the end of the 2014 first quarter and 56.1 percent at the end of 2013 second quarter. Average loans, excluding loans held for sale, reached $14.90 billion in the 2014 second quarter, growing $1.10 billion, or 7.9 percent, from the 2014 first quarter and $4.16 billion, or 38.8 percent, from the 2013 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 specialty finance.

At June 30, 2014, non-accrual loans were $32.7 million, representing 0.21 percent of total loans and 0.13 percent of total assets, compared with non-accrual loans of $36.2 million, or 0.25 percent of total loans, at March 31, 2014 and $35.9 million, or 0.32 percent of total loans, at June 30, 2013. At June 30, 2014, the ratio of allowance for loan and lease losses to total loans was 0.98 percent, versus 1.01 percent at March 31, 2014 and 1.08 percent at June 30, 2013. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 459 percent for the 2014 second quarter versus 396 percent for the first quarter of 2014 and 332 percent for the 2013 second quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2014 second quarter on Tuesday, July 22, 2014, at 10:00 AM ET. All participants should dial 866-359-8135 at least ten minutes prior to the start of the call and reference conference ID #70924569. International callers should dial 901-300-3484.

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 800-585-8367 or 404-537-3406 and enter conference ID #70924569. The replay will be available from approximately 1:00 PM ET on Tuesday, July 22, 2014 through 11:59 PM ET on Friday, July 25, 2014.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 27 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 27 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; 97 Broadway and 6321 New Utrecht Avenue. Westchester (2) - 1C Quaker Ridge Road, New Rochelle and 360 Hamilton Avenue, White Plains. Long Island (7) - 1225 Franklin Avenue, Garden City; 53 North Park Avenue, Rockville Centre; 68 South Service Road, Melville; 923 Broadway, Woodmere; 40 Cuttermill Road, Great Neck; 100 Jericho Quadrangle, Jericho and 360 Motor Parkway, Hauppauge. 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 (2) - 2066 Hylan Blvd. and 1688 Victory 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 teams and other 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 and can change as a result of many possible events or factors, not all of which are known to us or in our control. 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. 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.