Signature Signs on the Profit Line

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On Jan. 29, 2009, Signature Bank (SBNY Quote) reported that it swung to a profit in Q4 FY08 on improved interest and noninterest income. Net income available to common shareholders stood at $13.07 million or $0.37 per share compared to a loss of $3.03 million or $0.10 per share in Q4 FY07. Excluding one-time charges, the company earned $16.90 million or $0.48 per share, which beat the consensus estimate of $0.37 per share.

Signature's interest and dividend income grew 14.2% to $91.65 million, on increased income on loans and securities available for sale. Total interest earning assets surged 23.1% to $6.67 billion, while average yield on interest earning assets declined 43 basis points to 5.46%. Total interest expense plunged 22.3% to $32.75 million, as average rate paid on deposits and borrowings slipped 113 basis points to 2.05%, partly offset by a 21.1% rise in total deposits and borrowings to $6.36 billion. Subsequently, net interest income before provision for loan losses soared 54.7% to $58.90 million. On a tax-equivalent basis, net interest margin advanced to 3.51% from 2.81%, while net interest spread increased to 3.41% from 2.71%. Meanwhile, noninterest income was $4.31 million compared to noninterest loss of $12.98 million a year ago. The bank's efficiency ratio (excluding the impairment loss) improved to 45.31% from 53.94% in Q4 FY07.

SBNY's provision for credit losses mounted 24.0% to $8.67 million, while annualized net charge offs to average loans decreased to 0.32% from 0.47%. Nonperforming loans climbed 71.8% to $31.89 million, while nonperforming loans as a percentage of total loans remained flat at 0.92%. Moreover, the bank continues to be well capitalized, by having total risk-based capital and Tier 1 risk-based capital ratios of 17.83% and 17.00%, respectively, as on December 31, 2008.

For FY08, SBNY's net income swelled 57.5% to $42.97 million or $1.35 per share. Total interest income rose 7.2% to $323.46 million, while noninterest income more than tripled to $27.65 million.

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