When Signature Bank first commenced operations in May of 2001, the commercial financial institution was primarily focused on serving the needs of privately owned business clients and their senior managers – a niche the co-founders believed was grossly underserved by larger financial institutions.
“Our premise was not to compete for the business of mass market retailers or Fortune 500 companies but rather to cater to privately owned and middle market businesses who are generally underserved by the banking industry,” noted Joseph DePaolo, one of Signature’s co-founders and current president and CEO. “When we opened our doors on May 1, 2001 we had a balance sheet of $50 million and capital of $42.5 million. Today, as of December 31, we are a $47 billion bank.”
DePaolo, who co-founded the bank with John Tamberlane and Scott Shay, says that growth has been completely organic.
“Our growth was not based upon any acquisitions; we acquired experienced bankers as opposed to acquiring banks because our clients appreciate and demand that experience,” DePaolo said. “And while our success wasn’t instant – we went from losing $3 million a month when we first opened our doors to making a half billion dollars annually – we have been able to grow and thrive because of our unique focus.”
Signature, which recently celebrated 15 years as a public entity, offers a wide range of business and personal banking products and services as well as investment, brokerage, wealth management and insurance products and services through its subsidiary, Signature Securities Group Corporation, or Signature Securities.
The New York-based institution has 31 private client offices throughout the metropolitan area and expanded its footprint to the West Coast with the opening of its first full-service private client banking office in San Francisco in 2018. And during what was deemed a volatile year for the banking industry, Signature’s stock surged – the bank declared a cash dividend of $0.56 per share to common stockholders of record at the close of business on November 1, 2018 – and the bank has enjoyed a streak of beating earnings estimates for the past several years.
“Net income for the 2018 fourth quarter was $160.8 million, or $2.94 diluted earnings per share, versus $114.9 million, or $2.11 diluted earnings per share reported in the 2017 fourth quarter,” Signature noted in a statement. “Tier 1 leverage, common equity tier 1 risk-based, tier 1 risk-based, and total risk-based capital ratios were approximately 9.70 percent, 12.09 percent, 12.09 percent, and 13.39 percent, respectively. Signature Bank remains significantly above FDIC ‘well-capitalized’ standards. Tangible common equity ratio remains strong at 9.21 percent.”
According to public reports, deposits during the 2018 fourth quarter increased $287.5 million, or 0.8 percent, to $36.38 billion at December 31, 2018, while non-interest bearing deposits decreased $142.5 million and represent 33.0 percent of total deposits.
“Overall deposit growth in 2018 was 8.8 percent, or $2.94 billion, when compared with deposits at the end of 2017,” the bank reported.
And in January, Signature launched Signet, a proprietary digital payment platform that will allow its clients to make instantaneous USD payments in real time, 24 hours a day, seven days a week, 365 days a year.
“Our primary focus has always been to listen to our clients and solve whatever need they might have,” noted Frank Santora, senior vice president and director of Signature’s newly formed Digital Asset Solutions Team. “Quicker, more secure payments have always been a priority so Signature invested in a technology that could make that happen.”
Signet makes use of blockchain technology, a decentralized, distributed and public digital ledger that is used to record transactions across many computers so that any involved record cannot be altered retroactively, without the alteration of all subsequent blocks. In making use of this innovation, Signature is allowing its commercial clients to settle transactions in real time, safely and securely without incurring any transaction fees and requiring a minimum account balance of $250,000.
“Typically, in the case of real-time payments, funds are transferred between two different institutions,” the Bank noted in a press release. “With Signet, funds are transferred in real-time between commercial clients of Signature Bank, eliminating any dependence on a third party.”
“This is the first time a bank has developed a blockchain that is insured by the FDIC,” Santora said. “We felt this was an important innovation to focus on because there are a lot of negatives with other forms of payment: Wire transfers and checks can be subject to reversal and are reliant upon US banking hours. Also, multiple parties need to be involved to consummate the transaction. With Signet, transaction costs are reduced, as are operation risks and payment can extend beyond regular business hours.”
And Santora says the platform has been well received and in the first month of its introduction has even attracted national clients like American Powernet.
“A number of ecosystems are already interested and on board because it is a platform that is extremely relevant,” Santora said.
According to DePaolo, Signet is just one of Signature Bank’s competitive advantages, positioning the bank for even more growth and expansion in the future.
“We’ve just expanded to the West Coast and have a national presence with Signature Financial,” DePaolo said. “But we still operate as a large regional community bank, maintaining a strong focus on attracting and retaining the industry’s most talented bankers who serve as private client banking teams, providing a single point of contact to meet client needs. We’re also proud of the veteran management team that we’ve built with decades of collective financial services experience spanning major international institutions.”
Signature, which was recently listed by Forbes as the 40th largest bank in the country, has nine offices in Manhattan; four in Brooklyn; two in Westchester; seven on Long Island; four in Queens; one in the Bronx; two on Staten Island; one in Greenwich, CT; and one in San Francisco, CA.
DePaolo predicts those offices will expand in the future if Signature continues to fulfill their original mission of catering to an underserved private business clientele.
“Our success is defined by our ability to stay focused on our clients’ needs,” DePaolo concluded.