Signature Bank Reports 2015 Second Quarter Results
Tuesday, July 21, 2015
Posted by: Signature Bank
July 21, 2015 09:00 UTC
Signature Bank Reports 2015 Second Quarter Results
- Net Income for the 2015 Second Quarter Reached a Record $90.5 Million, or $1.77 Diluted Earnings Per Share, An Increase of $18.0 Million, or 24.8 Percent, from $72.5 Million, or $1.48 Diluted Earnings Per Share, Reported in the 2014 Second Quarter
- Total Deposits in the Second Quarter Grew $429.6 Million to $24.46 Billion, Including Core Deposit Growth of $413.5 Million; Total Deposits Have Grown $4.70 Billion, or 23.8 Percent, Since the End of the 2014 Second Quarter
- Average Deposits Increased $1.17 Billion, or 5.0 Percent, in the 2015 Second Quarter
- For the 2015 Second Quarter, Loans Increased $1.23 Billion, or 6.4 Percent, to $20.53 Billion. Since the End of the 2014 Second Quarter, Loans Have Increased 33.1 Percent, or $5.10 Billion
- Non-Accrual Loans were $41.6 Million, or 0.20 Percent of Total Loans, at June 30, 2015, Versus $27.8 Million, or 0.14 Percent, at the End of the 2015 First Quarter and $32.7 Million, or 0.21 Percent, at the End of the 2014 Second Quarter
- Net Interest Margin Was 3.27 Percent, Compared with 3.26 Percent for the 2015 First Quarter and 3.31 Percent for the 2014 Second Quarter
- Core Net Interest Margin Excluding Loan Prepayment Penalty Income Remained Unchanged at 3.17 Percent for the 2015 Second Quarter when Compared with the Previous Quarter
- Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based and Total Risk-Based Capital Ratios were 9.16 Percent, 11.85 Percent, 11.85 Percent and 12.63 Percent, Respectively, at June 30, 2015. Signature Bank Remains Significantly Above FDIC “Well Capitalized” Standards. Tangible Common Equity Ratio Was 9.01 Percent
- One Private Client Banking Team Joined During the 2015 Second Quarter and One Team Added Thus Far in the Third Quarter; To Date Five Teams Joined in 2015. Additionally, Bank Launched Municipal and Commercial Vehicle Finance Businesses
NEW YORK--(BUSINESS WIRE)-- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its second quarter ended June 30, 2015. Net income for the 2015 second quarter reached a record $90.5 million, or $1.77 diluted earnings per share, versus $72.5 million, or $1.48 diluted earnings per share, for the 2014 second quarter. The record net income for the 2015 second quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income, fueled by strong average deposit growth and loan growth. These factors were partially offset by an increase in non-interest expenses.
Net interest income for the 2015 second quarter reached $236.3 million, up $42.6 million, or 22.0 percent, when compared with the 2014 second quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $29.97 billion at June 30, 2015, an increase of $5.44 billion, or 22.2 percent, from $24.53 billion at June 30, 2014. Average assets for the 2015 second quarter reached $29.36 billion, an increase of $5.54 billion, or 23.2 percent, compared with the 2014 second quarter.
Deposits for the 2015 second quarter rose $429.6 million, or 1.8 percent, to $24.46 billion at June 30, 2015. When compared with deposits at June 30, 2014, overall deposit growth for the last twelve months was 23.8 percent, or $4.70 billion. Excluding short-term escrow and brokered deposits of $3.40 billion at the end of the 2015 second quarter and $3.38 billion at the end of the 2015 first quarter, core deposits increased $413.5 million for the quarter. Average deposits for the 2015 second quarter reached $24.56 billion, an increase of $1.17 billion, or 5.0 percent.
“With another record-setting quarter behind us, we continue to prove the success of the relationship-based banking model we created at the time of Signature Bank’s inception. While this quarter marked the Bank’s 14th year in operation, we still carefully and methodically execute on the same well-conceived game plan we put in place back in 2001,” explained Joseph J. DePaolo, President and Chief Executive Officer.
“We have repeatedly reported record results and consistently demonstrated stellar performance across all key metrics – deposits, loans and earnings – due to the ways in which we efficiently utilize capital to grow our business organically by attracting talent through the lift out of private client banking teams, without experiencing any of the disruptions typically associated with acquisitions or the chaos of consolidation. The lift out of teams, coupled with a philosophy focused on true relationship-based banking, delivered without any advertising or the presence of mass-market retail offices, has perfectly positioned the Bank to further leverage our human capital. We rely on our founding platform to guide us on our strategic path to continue to outperform within our industry,” DePaolo concluded.
Scott A. Shay, Chairman of the Board, commented: “As we approach the $30 billion mark in total assets, it is an appropriate time to reflect on how Signature Bank has impacted investors, depositors and the community. With respect to our investors, Signature Bank has delivered among the best market performance of any bank in the U.S. since its initial public offering. Our performance is a result of the superior returns on assets and equity we produced during some of the most challenging financial cycles. With respect to our depositors, we offer "sleep-at-night" safety, given the low level of risk we maintain in our balance sheet, from both a credit and interest rate perspective. Lastly, we’ve become an important part of the fabric of New York City’s tri-state area. In addition to creating over one thousand jobs at Signature Bank, our work with small and medium-sized businesses that provide many of the job opportunities in the metro-NY area, along with our focus on multi-family housing, allows us to build and strengthen communities. We look forward to continuing to positively affect all of our stakeholders as our position in the marketplace grows.”
The Bank’s Tier 1 leverage, common equity Tier 1 risk-based, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.16 percent, 11.85 percent, 11.85 percent, and 12.63 percent, respectively, as of June 30, 2015. 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 9.01 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 2015 second quarter was $236.3 million, an increase of $42.6 million, or 22.0 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $28.99 billion for the 2015 second quarter represent an increase of $5.53 billion, or 23.6 percent, from the 2014 second quarter. Yield on interest-earning assets for the 2015 second quarter decreased 13 basis points, to 3.70 percent, compared with the 2014 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 2015 decreased by eight and nine basis points, respectively, versus the 2014 second quarter to 0.40 percent and 0.47 percent. These decreases were predominantly due to prolonged low interest rates.
Net interest margin for the 2015 second quarter was 3.27 percent versus 3.31 percent reported in the same period a year ago. On a linked quarter basis, net interest margin increased one basis point. Excluding loan prepayment penalties in both quarters, linked quarter core margin remained unchanged at 3.17 percent for both periods.
Provision for Loan Losses
The Bank’s provision for loan losses for the second quarter of 2015 was $9.0 million, compared with $7.9 million for the 2015 first quarter and $7.6 million for the 2014 second quarter. The increase was largely due to an increase in net charge-offs.
Net charge-offs for the 2015 second quarter were $2.6 million, or 0.05 percent of average loans on an annualized basis, versus $1.5 million, or 0.03 percent, for the 2015 first quarter and $718,000, or 0.02 percent, for the 2014 second quarter.
Non-Interest Income and Non-Interest Expense
Non-interest income for the 2015 second quarter was $9.8 million, down $2.6 million when compared with $12.4 million reported in the 2014 second quarter. The decrease was predominantly due to a $4.2 million decrease in net gains on sales of securities mostly due to a $4.4 million gain on sale of an SBA interest-only strip security in the 2014 second quarter.
Non-interest expense for the second quarter of 2015 was $84.9 million, an increase of $11.9 million, or 16.4 percent, versus $73.0 million reported in the 2014 second quarter. The increase was primarily a result of the addition of new private client banking teams and our continued investment in Signature Financial, as well as an increase in costs in our risk management and compliance related activities.
The Bank’s efficiency ratio improved to 34.5 percent for the 2015 second quarter versus 35.4 percent for the comparable period last year. The improvement was primarily due to growth in net interest income.
Loans, excluding loans held for sale, grew $1.23 billion, or 6.4 percent, during the second quarter of 2015 to $20.53 billion, compared with $19.30 billion at March 31, 2015. At June 30, 2015, loans accounted for 68.5 percent of total assets, versus 67.5 percent at the end of the 2015 first quarter and 62.9 percent at the end of 2014 second quarter. Average loans, excluding loans held for sale, reached $19.98 billion in the 2015 second quarter, growing $1.55 billion, or 8.4 percent, from the 2015 first quarter and $5.08 billion, or 34.1 percent, from the 2014 second quarter. The increase in loans for the quarter was primarily driven by growth in commercial real estate and multi-family loans.
At June 30, 2015, non-accrual loans were $41.6 million, representing 0.20 percent of total loans and 0.14 percent of total assets, compared with non-accrual loans of $27.8 million, or 0.14 percent of total loans, at March 31, 2015 and $32.7 million, or 0.21 percent of total loans, at June 30, 2014. At June 30, 2015, the ratio of allowance for loan and lease losses to total loans was 0.86 percent, versus 0.88 percent at March 31, 2015 and 0.98 percent at June 30, 2014. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 426 percent for the 2015 second quarter versus 614 percent for the first quarter of 2015 and 459 percent for the 2014 second quarter.
Signature Bank’s management will host a conference call to review results of the 2015 second quarter on Tuesday, July 21, 2015, 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 #80820311. 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 #80820311. The replay will be available from approximately 1:00 PM ET on Tuesday, July 21, 2015 through 11:59 PM ET on Friday, July 24, 2015.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 29 private client offices throughout the New York metropolitan area, including those in Manhattan, Brooklyn, Westchester, Long Island, Queens, the Bronx, Staten Island and Connecticut. 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. Its specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. Signature Securities Group Corporation, a wholly owned Bank subsidiary, is a licensed broker-dealer, investment adviser and member FINRA/SIPC, offering investment, brokerage, asset management and insurance products and services.
Signature Bank was named the Best Bank in America by Forbes for 2015 and the only large cap bank to appear on Forbes’ list of America’s 50 Most Trustworthy Financial Companies. Signature Bank also was voted Best Business Bank by the New York Law Journal in the publication’s fifth annual reader survey; named the nation’s fifth top-performing bank by ABA Banking Journal; and ranked seventh on Bank Director magazine’s 2014 Bank Performance Scorecard for banks with assets between $5 and $50 billion.
For more information, please visit www.signatureny.com.