Signature Bank Reports 2014 Third Quarter Results

Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its third quarter ended September 30, 2014.

Net income for the 2014 third quarter reached a record $76.8 million, or $1.52 diluted earnings per share, versus $60.2 million, or $1.25 diluted earnings per share, for the 2013 third quarter. The record net income for the 2014 third quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income, fueled by strong deposit and loan growth. These factors were partially offset by an increase in non-interest expenses.

Net interest income for the 2014 third quarter reached $205.3 million, up $37.9 million, or 22.6 percent, when compared with the 2013 third quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $25.95 billion at September 30, 2014, an increase of $4.94 billion, or 23.5 percent, from $21.00 billion at September 30, 2013. Average assets for the 2014 third quarter reached $25.37 billion, an increase of $4.99 billion, or 24.4 percent, compared with the 2013 third quarter.

Deposits for the 2014 third quarter rose a record $1.56 billion, or 7.9 percent, to $21.32 billion at September 30, 2014. When compared with deposits at December 31, 2013, overall deposit growth for the first nine months of 2014 was 25.0 percent, or $4.26 billion. Excluding short-term escrow and brokered deposits of $2.79 billion at September 30, 2014, and $2.45 billion at June 30, 2014, core deposits increased a record $1.22 billion for the quarter. Average deposits for the 2014 third quarter reached $20.66 billion, an increase of $1.57 billion, or 8.2 percent.

“This marks our 20^th consecutive quarter where we reported record earnings. Signature Bank has consistently delivered strong financial results, and we are well recognized in the marketplace for our disciplined approach to private client banking, our client-centric single-point-of-contact delivery model and the careful attention to and management of our balance sheet. Once again, this quarter, we have demonstrated that by remaining focused on our founding philosophies, we have continually delivered record results across the key metrics we deem most critical to the success of our institution – earnings, deposits and loans,” said Joseph J. DePaolo, President and Chief Executive Officer.

“The way we differentiate ourselves in client care does not go unnoticed. For example, this quarter, the Bank was ranked the best business bank by the New York Law Journal’s readers. Law firms comprise a meaningful part of our client mix, and this is a testament to the fact that we truly stand out amongst professional services organizations, such as law firms. While some of the other rankings we have recently achieved signify the strength and quality of the Bank, this, perhaps most importantly, is a direct result of the opinions of our clients about the service and commitment we pride ourselves on delivering. This is ultimately reflected in our financial performance, just as it was this quarter and has been since our inception,” DePaolo explained.

Scott A. Shay, Chairman of the Board, added: “As Signature Bank’s reputation grows, we are continuously gaining traction throughout the New York banking marketplace. Both current as well as potential clients crave the type of exceptional and unrivaled personalized service we deliver. They also recognize the value in the safety of our balance sheet, which today, stands out in the industry. It has become known across the metro-New York banking arena that when it matters most, when clients have needs to address that are vital to their businesses or when a quick decision and rapid turnaround is needed, clients receive service at Signature Bank that makes a difference to the success of their businesses. Clients are also aware that when markets are volatile or the next financial fad is introduced in the marketplace, the Bank will not be distracted or tempted to lose sight of its primary mission of depositor safety first and foremost. We keep our clients' interests top of mind when it comes to our balance sheet as well as our service model, and have shown this time and again.”

Capital

The Bank’s Tier 1 leverage, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.45 percent, 15.49 percent and 16.51 percent, respectively, as of September 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 9.25 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 third quarter was $205.3 million, an increase of $37.9 million, or 22.6 percent, versus the same period last year, primarily due to growth in average interest-earning assets. The increase, however, was partially offset by a decrease of $1.4 million in loan prepayment penalty income. Average interest-earning assets of $25.02 billion for the 2014 third quarter represent an increase of $5.04 billion, or 25.2 percent, from the 2013 third quarter. Yield on interest-earning assets for the 2014 third quarter decreased 12 basis points, to 3.75 percent, compared with the 2013 third quarter. This decrease was primarily attributable to prolonged low interest rates.

Average cost of deposits and average cost of funds for the third quarter of 2014 decreased by five and four basis points, respectively, versus the 2013 third quarter to 0.46 percent and 0.54 percent. These decreases were predominantly due to prolonged low interest rates.

Net interest margin for the 2014 third quarter was 3.25 percent versus 3.32 percent reported in the same period a year ago. On a linked quarter basis, net interest margin decreased six basis points. Excluding loan prepayment penalties in both quarters, linked quarter core margin declined eight basis points to 3.14 percent. Seven basis points of the linked quarter decreases in overall and core margin are due to an increase in average cash of $444.0 million resulting from the Bank’s capital raise in the late 2014 second quarter and continued record deposit growth coupled with a difficult market for securities reinvestment.

Provision for Loan Losses

The Bank’s provision for loan losses for the third quarter of 2014 was $7.7 million, a decrease of $3.3 million, or 30.3 percent, compared with the 2013 third quarter. The decline was largely driven by a decrease of $1.6 million in charge-offs.

Net charge-offs for the 2014 third quarter were $1.5 million, or 0.04 percent of average loans on an annualized basis, versus $718,000, or 0.02 percent, for the 2014 second quarter and $3.1 million, or 0.11 percent, for the 2013 third quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2014 third quarter was $8.1 million, up $200,000 when compared with $7.9 million reported in the 2013 third quarter. The increase was mostly due to a rise in commissions, fees and service charges and net gains on sales of loans along with a decline in write-downs on other than temporary impairment of securities. These improvements were offset by a decrease in net gains on sales of securities.

Non-interest expense for the third quarter of 2014 was $74.3 million, an increase of $11.9 million, or 19.1 percent, versus $62.3 million reported in the 2013 third quarter. The increase was primarily a result of new private client banking teams joining, the addition of an asset based lending team and our continued investment in the growth of Signature Financial, as well as an increase in costs in our risk management and compliance related activities.

The Bank’s efficiency ratio improved to 34.8 percent for the 2014 third quarter versus 35.6 percent for the comparable period last year. The improvement was primarily due to growth in net interest income coupled with expense containment.

Loans

Loans, excluding loans held for sale, grew $1.12 billion, or 7.3 percent, during the third quarter of 2014 to $16.55 billion, compared with $15.43 billion at June 30, 2014. At September 30, 2014, loans accounted for 63.8 percent of total assets, versus 62.9 percent at the end of the 2014 second quarter and 57.6 percent at the end of 2013 third quarter. Average loans, excluding loans held for sale, reached $15.85 billion in the 2014 third quarter, growing $944.5 million, or 6.3 percent, from the 2014 second quarter and $4.29 billion, or 37.1 percent, from the 2013 third 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 September 30, 2014, non-accrual loans were $24.4 million, representing 0.15 percent of total loans and 0.09 percent of total assets, compared with non-accrual loans of $32.7 million, or 0.21 percent of total loans, at June 30, 2014 and $40.2 million, or 0.33 percent of total loans, at September 30, 2013. At September 30, 2014, the ratio of allowance for loan and lease losses to total loans was 0.95 percent, versus 0.98 percent at June 30, 2014 and 1.05 percent at September 30, 2013. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 642 percent for the 2014 third quarter versus 459 percent for the second quarter of 2014 and 316 percent for the 2013 third quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2014 third quarter on Tuesday, October 21, 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 #14109061. 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 "Investor Information," then, under "Company News," select "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 #14109061. The replay will be available from approximately 1:00 PM ET on Tuesday, October 21, 2014 through 11:59 PM ET on Friday, October 24, 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 89-36 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 team 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. 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.