By a News Reporter-Staff News Editor at Economics Week -- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, announced results for its first quarter ended March 31, 2014.
Net income for the 2014 first quarter reached a record $66.0 million, or $1.37 diluted earnings per share, versus $50.6 million, or $1.06 diluted earnings per share, for the 2013 first quarter. The record net income for the 2014 first 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 and income tax expense. The 2014 first quarter included a $1.8 million tax charge related to New York State corporate income tax reform enacted on March 31, 2014. This reform lowered future marginal tax rates and changed apportionment factors resulting in a reduction of the Bank's state deferred tax assets.
Net interest income for the 2014 first quarter reached $186.5 million, up $38.4 million, or 25.9 percent, when compared with the 2013 first quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $23.10 billion at March 31, 2014, an increase of $4.83 billion, or 26.5 percent, from $18.27 billion at March 31, 2013. Average assets for the 2014 first quarter reached $22.70 billion, an increase of $4.86 billion, or 27.3 percent, compared with the 2013 first quarter.
Deposits for the 2014 first quarter rose a record $1.25 billion, or 7.3 percent, to $18.31 billion at March 31, 2014. When compared with deposits at March 31, 2013, overall deposit growth for the last twelve months was 23.7 percent, or $3.51 billion. Excluding short-term escrow and brokered deposits of $2.01 billion at the end of the 2014 first quarter and $1.66 billion at year-end 2013, core deposits increased a record $900.9 million for the quarter. Average deposits for the 2014 first quarter reached $17.77 billion, an increase of $930.0 million, or 5.5 percent.
"We started the year strong with another quarter of record financial performance and private client banking team expansion. We again saw record results in both earnings and deposits along with solid loan growth," stated Joseph J. DePaolo, President and Chief Executive Officer.
"Additionally, thus far in 2014, we further invested in the Bank's future with the addition of five teams, each bringing to us multiple talented and veteran banking professionals. We look forward to the contributions these new teams will make as well as the ongoing momentum of our existing banking groups. Moreover, we plan to open three private client banking offices later this year. With more than 90 teams now comprising the Signature Bank network, these latest appointments are representative of the fact that the marketplace is still ripe for opportunity to attract veteran bankers," DePaolo said.
Chairman of the Board Scott A. Shay, noted: "Oftentimes, the culture of an organization can change when transitioning from a private to a public company. In the 2014 first quarter, Signature Bank celebrated the tenth anniversary of its initial public offering, and since that time, our fundamental tenets have simply not changed in any significant way.
"We still believe that the safety and well being of our depositors is top priority in every lending and asset acquisition decision we make. We also know that depositors are very sensitive to service. Our distinctive service model of having dedicated private client banking teams serve as a single point of contact is the hallmark of our philosophy. We have remained steadfast and pledge to stay true to the founding principles that have characterized Signature Bank since we opened our doors May 1, 2001," he concluded. Capital The Bank's Tier 1 leverage, Tier 1 risk-based, and total risk-based capital ratios were approximately 8.51 percent, 14.05 percent and 15.10 percent, respectively, as of March 31, 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 8.28 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 first quarter was $186.5 million, an increase of $38.4 million, or 25.9 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $22.33 billion for the 2014 first quarter represent an increase of $4.82 billion, or 27.5 percent, from the 2013 first quarter. Yield on interest-earning assets for the 2014 first quarter decreased 10 basis points, to 3.92 percent, compared with the 2013 first quarter. This decrease was primarily attributable to prolonged low interest rates.
Average cost of deposits and average cost of funds for the first quarter of 2014 decreased by five and seven basis points, respectively, versus the 2013 first quarter to 0.49 percent and 0.57 percent. These decreases were predominantly due to prolonged low interest rates.
Net interest margin for the 2014 first quarter was 3.39 percent versus 3.43 percent reported in the same period a year ago. On a linked quarter basis, net interest margin increased seven basis points. The linked quarter increase was partly due to a rise of $1.5 million in loan prepayment penalty income which impacted net interest margin by three basis points. Excluding loan prepayment penalties in both quarters, linked quarter core margin increased four basis points to 3.25 percent. Three basis points of the increase were due to two less days in the 2014 first quarter. Provision for Loan Losses The Bank's provision for loan losses for the first quarter of 2014 was $8.2 million, a decrease of $1.7 million, or 17.5 percent, compared with the 2013 first quarter. The decline was largely due to a decrease in net charge-offs of $4.8 million.
Net recoveries for the 2014 first quarter were $244,000, or 0.01 percent, of average loans on an annualized basis, versus net charge offs of $2.8 million, or 0.09 percent, for the 2013 fourth quarter and $4.5 million, or 0.18 percent, for the 2013 first quarter. Non-Interest Income and Non-Interest Expense Non-interest income for the 2014 first quarter was $7.2 million, down $1.7 million when compared with $8.8 million reported in the 2013 first quarter. The decrease was led by a $1.8 million decline in net gains on sales of loans predominantly from our SBA pool assembly business.
Non-interest expense for the first quarter of 2014 was $70.0 million, an increase of $11.1 million, or 18.8 percent, versus $58.9 million reported in the 2013 first 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 36.2 percent for the 2014 first quarter versus 37.6 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 $699.2 million, or 5.2 percent, during the first quarter of 2014 to $14.22 billion, compared with $13.52 billion at December 31, 2013. At March 31, 2014, loans accounted for 61.5 percent of total assets, versus 60.4 percent at the end of the 2013 fourth quarter and 56.7 percent at the end of 2013 first quarter. Average loans, excluding loans held for sale, reached $13.81 billion in the 2014 first quarter, growing $1.06 million, or 8.3 percent, from the 2013 fourth quarter and $3.75 billion, or 37.3 percent, from the 2013 first 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 March 31, 2014, non-accrual loans were $36.2 million, representing 0.25 percent of total loans and 0.16 percent of total assets, compared with non-accrual loans of $31.3 million, or 0.23 percent of total loans, at December 31, 2013 and $35.1 million, or 0.34 percent of total loans, at March 31, 2013. At March 31, 2014, the ratio of allowance for loan and lease losses to total loans was 1.01 percent, versus 1.00 percent at December 31, 2013 and 1.09 percent at March 31, 2013. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 396 percent for the 2014 first quarter versus 431 percent for the fourth quarter of 2013 and 322 percent for the 2013 first quarter. Conference Call Signature Bank's management will host a conference call to review results of the 2014 first quarter on Tuesday, April 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 #29982536. International callers should dial 901-300-3484.
Keywords for this news article include: Finance, Economics, Signature Bank.
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