Signature Bank CEO Discusses Q3 2010 Results - Earnings Call Transcript

Signature Bank CEO Discusses Q3 2010 Results - Earnings Call Transcript
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Signature Bank, Inc. (

SBNY

)

Q3 2010 Earnings Call

October 26, 2010 10:00 a.m. ET

Executives

Joseph J. DePaolo - President & Chief Executive Officer

Eric R. Howell - Chief Financial Officer

Susan Lewis - Investor Relations

Analysts

Matthew Clark – KBW

Bob Ramsey - FBR Capital Markets

Lana Chan - BMO Capital Markets

Christopher Nolan – CRT Capital

Peyton Green – Sterne, Agee

Andy Stapp – B. Riley and Company

Presentation

Operator

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Good morning, Ladies and Gentlemen. Thank you for standing by, and welcome to the Signature Bank’s Fiscal 2010 Third Quarter Results Conference Call.

During today’s presentation all participates will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) Today’s conference is being recorded, October 26, 2010.

I would know like to turn the conference over to Joseph H. DePaolo, President and CEO, and Eric R. Howell, CFO of Signature Bank. Mr. DePaolo, please go ahead.

Joseph DePaolo

Thank you, Alisha. Good morning, and thank you for joining us today for the Signature Bank 2010 Third Quarter Results Conference Call.

Before I begin my formal remarks, Susan Lewis will read the forward-looking disclaimer. Please go ahead Susan.

Susan Lewis

Thank you, Joe. This conference call and oral statements made from time to time by our representatives contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties.

Forward-looking statement include information concerning our future results, interest rates and the interest rate environment, loan and deposit growth, loan performance, operations, competition, capitalization, new private clients, team hires, new office openings, the regulatory environment and business strategy.

These statements often include words such as may, believe, expect, anticipate and plan, estimate or other similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantying the 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 one, prevailing economic and regulatory conditions; two, changes in interest rates, loan demand, real estate values and competition, which can materially affect origination levels and gain-on-sale results in our business as well as other aspects of our financial performance. Three, the level of default, losses and prepayments on loans made by us, whether held in portfolio or sold in the hold-on secondary market which can materially affect charge-off levels and require credit-loss reserve levels; and four, competition for clients, loans, deposits, qualified personnel and desirable office location.

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 of 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 intent to update or advise 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 conference call or elsewhere might not reflect actual results.

Now, I’d like to turn the call back to Joe.

Joseph DePaolo

Thank you, Susan. I will provide some overview into the quarterly results and then Eric Howell, our Chief Financial Officer, will review the bank’s financial performance in greater detail. Eric and I will address your questions at the end of our remarks.

Signature Bank, again, hosted a quarter of strong financial performance across the board. Deposits grew 582 million, loans increased 208 million, net-interest margin expanded, non-performing loans declined and net income increased 80% reaching records level.

I will start by reviewing our ins. Net Income for the 2010 third quarter reached a record 27.4 million with $0.66 diluted earnings per share, an increase of 12.2 million, or 80% compared with 15.2 million, or $0.37 diluted earnings per share reported in the same period last year.

A considerable improvement in net income when compared with the third quarter of last year is mainly the result of an increase in net interest income. Fueled by significant core deposit growth and continued loan growth, these factors were partially offset by an increase in non-interest expense.

Looking at Deposits. Deposits increased 582 million to 9.05 billion. This includes quarterly core deposit growth of 409 million, or 5%. Since September 30

of last year, total deposits grew in excess of 2.25 billion or over 33%. Also in the quarter, relationship-based short-term escrow deposits rose 171 million, now totally 693 million. Average deposits in the third quarter were 8.7 billion, an increase of 2.18 billion, or 33% versus 6.61 billion for the 2009 third quarter.

Please keep in mind, this is a key deposit metric we closely monitor due to fluctuations in relationship-based short-term escrow deposits.

Non-interest bearing deposits of 2.12 billion represent a 23.5% of total deposits. With the considerable deposit growth, total assets reached 10.9 billion, an increase of 2.3 billion or 27% since the third quarter of last year.

Taking a look at loans now, loans during the 2010 third quarter reached 4.90 billion, up 208 million or 4.4%, representing nearly 45% of total assets at quarter end. The increase in loans was primarily driven by growth in commercial real estate and multi-family loans with continued conservative underwriting standards.

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