Signature Bank, the New York metropolitan bank with 24 private client branches including two in Westchester, said on July 11 that it raised $253.2 million from a 4.7 million-share public offering at $56.25 a share.
Signature Bank, the fastest-growing bank in the nation, said it will use the proceeds to further fuel its rapid growth. The first time the bank raised capital was back in 2004. It has since come back to the market several times to raise additional capital to fund its balance-sheet growth.
Despite tough times for the banking industry, 10-year-old Signature continues to grow. In 2009, its deposits grew by $1.83 billion and in 2010, by $2.22 billion. In the first half of this year, it again grew by $1.42 billion.
The bank focuses on privately owned businesses, their owners and senior managers, a market CEO Joseph DePaolo describes as still underserved.
“This is a very large market but it”™s underserved,” DePaolo said in an interview. “It”™s underserved because larger institutions are concentrating on mass-market retail with many branches and they are also concentrating on the Fortune 500 but they leave the middle piece somewhat underserved and they are not really handling those clients in a proper manner.”
Taking a team approach
The bank has been bringing in teams of small-business commercial bankers from larger banks who bring to Signature their expertise and profitable books of business. It”™s a strategy that has served extremely well since the bank”™s founding in May 2001. DePaolo said it”™s a strategy that can withstand an economic downturn. “You hire a team that is well-known, that has a book of business and knows how to develop business.”
Signature Bank teams usually come from banks where they spent a significant amount of time, he explained. “They are disenchanted because the institution they have worked for has changed for the worse, not for the better. After mergers and acquisitions, the new institution handles clients differently than the way they used to be handled.”
These teams ”“ comprising three to six members each ”“ function as a single point of contact for clients. But at major institutions, DePaolo said, “one section of the client is dealing with middle market, some section of the client is dealing with commercial real estate side, some are dealing with the retail branch. Another section of the client is dealing with wealth management.”
Future expansion in Westchester
DePaolo also said the bank plans to bring in more bankers for Westchester.
Signature has four teams in the county, two in its New Rochelle location and two in White Plains. “We look at Westchester as a place where there is more opportunity to grow. And we would like to hire more teams,” he added. “It”™s growing but it”™s not growing nearly as much as it is in New York City. And I think we need to have a little bit more focus on the county.”
Analysts following Signature agree it has much growth potential. The bank also emerged unscathed from the financial crisis, thanks to its conservative balance sheet and its distaste for risky loans and mortgage-backed securities.
Bob Ramsey, an analyst from Arlington, Va.-based investment bank Friedman, Billings, Ramsey & Co., noted Signature is the fastest-growing bank of its size in the U.S.: “Signature is a very large, $12 billion bank that is growing at an annual pace that”™s north of 20 percent right now. It is the only bank that is growing that fast. In order to grow that fast, you do require periodically additional capital to fund that growth. And that is what they are doing here.”
Signature Bank”™s growth sets it apart from its peers in the Northeast, Ramsey said. “Other than a story like Signature, the best-case scenario would be someone getting 4-5 percent year-over-year growth. But most banks are actually flat, slightly down, whereas Signature is doing 30. So Signature, certainly on a relative basis, is doing much better than (its) peers,” he said.
“I think that more recently, as they really have grown as a relationship-oriented bank, they had even more successes bringing people over because now, people in the New York metropolitan area know what Signature Bank is,” the analyst said. “It”™s a bank that bankers know better. It has a very strong reputation. So they are certainly gaining traction as they gained in size, which makes it easier to continue to bring in new business.”
